Q&A:

Here are some notes and answers to Export Coal Questions:

With reference to the access of RB1 and RB3 coal, what is relationship between seller and the mines?
1. As a start it is important to point out that final contract and LC will be directly between buyer and
seller. The seller is also the exporter, which is Richards Bay Coal Terminal (RBCT). RBCT have
export licence, permits and export allocation. The transaction gets handled by the RBCT attorneys
after the agreements (agreements between various parties on buyers and sellers side) get put
into place and the buyer is vetted (POF and ability to transact has been verified). There is a coal
SWAP (explained point 4) which takes place between the coal mines and RBCT. We as facilitators
have relationship direct with coal mines (3 of them) and relationship with buyers. The coal mines
through their coal SWAP have relationship with RBCT. We as seller facilitators are also handling
certain supply chain solutions for the three coal mines (e.g. management consulting services,
logistics and procurement).

What are the verifiable quantities available?

2. We have been mandated to sell a maximum of 150 000 tons of RB3/RB1 coal per month. RBCT
can load 10 000 t/h and 200 000 tons per day. The coal terminal at Richards Bay has four ship
loaders, two of which have a nominal loading rate of 8 500 t/h, one with a rate of 10 000 t/h, and
the fourth with a rate of 11 000 t/h. RBCT has an export target of 77-million tonnes for 2019.
RBCT export volume is public knowledge and Financial Statements can be viewed.

Do seller and mine have account with Transnet (railways)?

3. Yes. Although this is not a factor as explained in Coal Swaps point 4.

Does the seller have RBCT allocation?

4. Yes RBCT have export license and “slot allocation”. The coal mine does a Coal SWAP with RBCT. A
Coal SWAP is a contract in which two counterparties undertake to make reciprocal periodic
payments whose calculation rules and frequency are defined in the contract. Such product is used
in order to set the price of the underlying in advance: the buyer and the seller agree to exchange
future payments periodically. The first one pays a fixed price while the second one pays a variable
price which depends on the market price of the underlying. In the case of swaps on API2, API4
and NEWC there is no physical exchange of the underlying, in fact only cash flows deriving from
the difference between the fixed price and the variable price are exchanged. This instrument
allows managing the price risk in the energy markets. In the case of coal, swaps can be used to
reduce risk in the event of a rise in the market (for a power company) or in the event of a fall (for
a mining company). Our prices are linked to API4.

Is there any expiry on allocation?

5. Allocation still valid and active. At this stage it is indefinitely until and if Government enforces
otherwise. To date, 19 million tons per annum has been allocated to meet the needs of black
economic empowered mining entities.

Provide a draft Supply and Purchase Agreement (SPA)?

6. Yes we can through SPA. Payment terms are “at sight” of documents as stipulated in LC. (SPA will
be enclosed).
Once instrument is in place, how long before first vessel can be loaded?
7. Seller shall issue Buyer with confirmed Laycan for loading, where such loading shall take place
within 15 to 18 days of signatures to this contract, subject to Letters of Credit being correctly
issued.

What is the availability of coal?

8. As mentioned in point 2 we have been mandated to sell a maximum of 150 000 tons of RB3/RB1
coal per month, we therefore after the 15 to 18 days lead time can supply a maximum of 150 00
tons per month. MOQ on CFR basis is 50 000 tons and on FOB bass 30 000 tons. There is
continuous supply of export coal been delivered daily to RBCT for export.

What is RBCT role?

9. Coal mines deliver coal daily to RBCT. RBCT accepts the coal and stockpiles it for export. RBCT do
a coal SWAP and then become owners of the coal. RBCT arranges inspection and testing of coal
through reputable testing and verification companies such as SGS. RB3 and RB1 coal is then split
for export. RBCT assume role of exporter and seller of coal. All documents, contracts,
specification report, allocation and payments are routed through RBCT.