Development of Chulmakanskoye Coalfield Lokuchakitskiy Site

Dolguchan LLC

as of April 2019Brief Investment Memorandum

Strictly confidential

August 2018

Page 2 of 16

► Dolguchan LLC (hereinafter – the “Company”) formerly was a part of Kolmar Group, now is anindependent metallurgical coal mining producer. The Company is engaged in a development ofChulmakanskoye Coalfield (hereinafter – “Project”, “Dolguchan”), located on the territory of theRepublic of Sakha (Yakutia), Neryungri District, Russia. The Project includes development ofthe following principal objects:§ Open pit;§ Processing plant with an installed capacity of 1.5 mln t per annum;§ Underground mine with planned capacity of 1-1,5 mlt t per annum.

► Coal reserves estimation according to JORC criteria was prepared by IMC Montan in March2018. As of 01 January 2018 the Company had total coal reserves of 103 mln tons (Measured+ Indicated).

► The Company’s assets are in the Far East region of Russia. Railway infrastructure is readilyavailable for coal export routes through Vanino and Primorsk seaports.

► As of 2018 Company has successfully recovered operations on Open pit. In 2018 volume ofcoal mined by open-cast method will reach 0.15 mln t.

► Currently, the Company is looking for potential strategic partnership to boost investments intoprocessing plant and underground mine construction.

Dolguchan is a promising mining asset located in the Russian Far EastBrief Project Description

ChinaJapan

Korea

RussiaDolguchan

Approved license for dangerous works on site –

fire and blasting. Nov 2017

20152013 2017 2019

20182022

2020 2025Develop. and mining program by Rostekhnadzor. Jan 2018

Dolguchan LLC obtained a mining operations license

Approved design for open cut mining – listed on

minutes of RCC on Hard Fossils. Oct 2017

Approved permission for industrial safety on site from Rostekhnadzor. Dec 2017

Commissioning of open-pit mining. 2018

20112009

20072005

Planned start of processing

Planned start of underground mining

Preparation of interim report by IMC Montan. 2018

Supply of raw coal to local consumers (Neryungrinskaya

power station) as thermal coal

- exporting seaports

Geographic LocationSource: Management

Key MilestonesSource: Management, IMC Montan

Normal operations Open cut mining

August 2018

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The Company has distinctive investment attractiveness

Key Investment Considerations

Substantial resource base

Premium coking coal

Favourable cash costs

Well-developed infrastructure

§ As of 01 January 2018 the Company had 103 mln tons of Measured and Indicated coal reserves according to JORC and82.3 mln tons according to Russian standards (A+B+C1).

§ Company’s license area is surrounded by several undistributed parts of nearby coalfields. Resource base can beincreased up to ~700 mln tons potentially.

§ Dolguchan targeted to produce grades “K”, “KZh” and “SS” coals, according to Russian classification, where K and KZhgrades outperforming international benchmarks like HCC and SHCC with even higher specs, like 99% vitrinite contentand low Sulphur.

§ Dolguchan is located near the city of Neryungri in developed coal mining region and has already have establishedadjacent infrastructure.

§ Neryungri is connected by rail to the Baikal-Amur and Trans-Siberian highways. The proximity to the largest seaportprovides extensive logistics opportunities for export procurements.

§ In 2021 coking coal from Dolguchan will be favorably positioned on the global metallurgical coal cost curve just as acomparable Denisovsky project and with almost the same level of cash costs.

§ In subsequent years the company has an upside potential to move in the first quartile of the curve with the Total CashCost of about 90 USD/t FOB.

Scalability of the Project

§ Depending on market conditions and availability of funds Project team examines three scenarios for Projectdevelopment. Currently the Company successfully recovered mining operations on open pit and laid a foundation forsubsequent expansion of production what will create positive cash flow. A transition to the large coal enterprise willrequire additional capital expenditures but will allow to create the highest value for shareholders and utilize the resourcebase of Lokuchakitskiy coalfield in the most efficient way.

August 2018

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► Deposit development concept has been considered in the "Technical andeconomic justification of the final parameters for calculating theChulmakanskoye coal field Lokuchakitskiy site south-eastern part coalreserves" by ООО ROSTOV NII GIPROMASHPROJECT in 2009; and OOOIMC Montan performed open-cast optimization based on the deposit 3Dmodel.

► Lokuchakitskiy site seams are not continuous in thickness and the reservessuitable for underground mining are spread sporadically. This will significantlyimpact the completeness of reserves extraction.

► Lokuchakitskiy site assumes a combined method of extraction, including open-cast and underground mining. Scoping study prepared by IMC Montanassumes gradual production volume increase in open-pit from 0.5 mln t in2018 to 1.0 mln t in 2020 and later. Coal mining by open-cast method will finishin 2027. According to open-cast optimization prepared by IMC Montan averagestripping ratio will be 13.8 m3/t in 2018-2027. Underground mining will start in2022 with a mining of ROM coal during the construction of a mine, will reach aproduction capacity of circa 1.0 Mt per annum in 2025 and continue until 2050.

► According to the Production Program on Lokuchakitsky site the Company willmine coking coal of grades K, Kzh, oxidized coal of the same grades and asmall volume of thermal coal grade SS.

► Expected losses during production period on both open pit and undergroundwill reach a level of 15%, dilution will account for 4%.

Starting from open-cast method the Company will move to underground mining operations in 2022-2050 …Project Development

Production Program of Lokuchakitskiy Site Source: IMC Montan

0

500

1 000

1 500

2 000

2 500

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

th. t

Open pit

Underground

Mining Operations by Type of WorksSource: IMC Montan

100% 97%84% 86%

48% 48% 45%

3%16% 14%

52% 52% 55%

100%

0%

20%

40%

60%

80%

100%

2018-2021 2022 2023 2024 2025 2026 2027 2028-2050

Open pit Underground

August 2018

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Processing Operations► One of the main coal quality characteristics is ash content that shows the

proportion of inorganic mineral residue after complete combustion of coal tothe total weight. The average ash content value of the site coals is in the rangefrom 17.12% to 27.54%, which indicates that it is impossible to use the ROMcoal for coking. In this regard, the coals of coking grades should bebeneficiated.

► The main coal reserves belong to a difficult and very difficult category ofbeneficiation. Given this fact, effective processing technology for the site coalsis a heavy medium processing of coarse and middle sizes, as well as gravityprocessing of coarse slurries. Coal processing flow sheet may also comprisefine-grained sludge flotation.

► As a result of the processing, a concentrate will be obtained that satisfies therequirements for coking (Ad<10%), as well as the middlings product which isused as power fuel. The predicted concentrate yield, based on the results ofexisting studies, will be in average at the level of 60%. Middlings predictedoutput is 10 - 12%.

► Specified commercial output will be determined at the subsequent stage ofproject development, taking into account the calculation of processingtechnology. On a current stage of a project development an expected averagevolume of concentrate K, Kzh production is 0.5 mln t per year in 2020-2024,1.3 mln t per year in 2025-2027 and 0.6 mln t from 2028 to 2050. A smallproportion of production will be accounted for mid-coal. Oxidized coals will beproduced in the first two years of the Project before commissioning of aprocessing plant and in the first years of a Mine construction (ROM coal). Thepredominant direction of oxidized coals is power fuel.

… and create beneficiation complex which will allow to produce 0.6-0.7 mln t. of high quality coking coal concentrateProject Development

Volume of ProductionSource: IMC Montan

Concentrate Yield on a Processing PlantSource: IMC Montan

49,75%

68,06%

54,39%

69,40%

59,40%

0%10%20%30%40%50%60%70%80%

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

Processing plant launches in 1Q 2020. Prior to that all mined coal is going to be sold as rough coal without processing

800929

1 547

890 821717

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

2046

2048

2050

th. t

K, Kzh Rough cocking coal Rough thermal coal Mid-coal

August 2018

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2017 2018 2019 20201Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

1Recovery of production at an open pit

Preparation of additional research work (seismic, topography, surveyor study of a site)Adjustment of the project aimed on extraction of remaining reserves with stripping ratio <5Preparation of the Technical Project and its approval by government bodiesObtaining mandatory permits and licensesPreparation of Mining plan for 2018 and its approvalPurchase of own drilling rig

2 Feasibility study of a project

Preparation of a 3D model for Lokuchakitskiy siteEstimation of reserves according to JORCThe calculation of the optimization of production at the Open pitPreparation of Scoping Study by IMC Montan.

3 Design of a processing plant

Design works for Processing plant for coal from open cast miningSite SelectionDevelopment study and engineering works for pouring of the foundation

4 Expansion of the resource base

Recalculation of reserves to increase production to 9.5 mln tProject adjustmentsDevelopment of a new technical projectReconciliation of reserves in Rosnedra

5State review of the Project. Start of construction

Approval of a project by GlavgosexpertizaObtaining a building permit by local authoritiesStart of construction of the main processing buildingPurchase of equipmentStart of construction of ground infrastructure facilities.

6 Participation in an auction for the neighboring site (15 mln t)

7 End of construction and launch of a processing plant

9 Fund raising Attraction of an equity investor. Negotiation with banks and other potential lenders

The Company has detailed plan for the implementation of its strategy …Project Development

3Q 2017 4Q 2017

4Q 2017 2Q 2018

4Q 2018

3Q 2018

1Q 2019

1Q 2019 2Q 2019

1Q 2020

2Q 2018 2Q 2019

1Q 20181Q 2019

2Q 2018

August 2018

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… and managed by professionals with a significant experience in coal mining businessProject Development

[1] Independently owned mining consulting company

Anatoliy Mitroshin § Co-founder of Kolmar group, rapidly developing coking coal producer;§ Has more than 20 years of experience in coal mining business;§ Shareholder in several coal enterprises.Founder, sponsor and entrepreneur

Arkadiy Ostrovskiy § Ex-member of the Board of Directors of Kolmar group;§ Has more than 12 years of experience in coal industry;§ Worked as Head of Investments and Deputy CFO at Kolmar group and held various senior positions at financial

departmentCEO

Alexander Civka § Descendent from renowned mining family, hereditary miner§ Has significant working experience in coal industry (more than 30 years);§ Worked at Kolmar group as mine director, technical directorTechnical Director

Sergey Sivirinov § Has more than 20 years of experience in coal mining business;§ Held executive positions at Yakutugol and Kolmar.Chief Engineer

Michael Johnson § President and CEO of Highcaste Group Ltd [1]

§ Michael has over 17 years of experience working in the mining industry (On Site and Consulting);§ Worked in Moscow as Operations Manager and Technical Director in CJSC Runge between 2011 and 2017 § Worked on numerous underground and opencut projects in Russia, Australia, Canada, China, Indonesia,

Mongolia and etc.

Advisor on production technology and geology

August 2018

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The Project is fully supplied by all required external infrastructure …Infrastructure

Local electric transmission line of 6kV voltage connected to the Project’s assets

High voltage electric transmission line of 110kV voltage

Power plant Nerungrinskaya of 630MWt total capacity <60% of current load

Railroad nearby the site adjacent to the Baikal-Amur Mainline - 400 km of reach

Federal automobile road M52

Airport accepting mid-size jets

Neryungri town of 70k population with coal mining infrastructure and educational institutions

Heated household/administrative facility

Coal storage and control facility

Operating mines:Mine DenisovskayaMine Inaglinskaya

Mine Denisovskaya

Dolguchan’s license area

Nerungri town

Mine Inaglinskaya

Lokuchakitskiy part

Necessary Transport Infrastructure and Utilities are readily available

Infrastructure is one of the main bottlenecks for development of coal deposits in Russia. Correspondinginvestment projects require substantial financial and administrative resources from investors, creditors,federal and local authorities to be allocated on infrastructure. Dolguchan is located in developed coal miningregion near two large coal enterprises, and has already have established adjacent infrastructure.

August 2018

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… connected with export harbors by railroads which are planned to increase capacity by 20% by 2020 …Infrastructure

► The transport strategy of Russian Railways assumes a significant increase in the crossing capacity of the Baikal-Amur and Trans-Siberian highways. In particular, thebranches of the railway lines on the approaches to the ports Vostochniy and Vanino are planned to increase aggregate carriage capacities by approximately 20% by2020. Successful implementation of the foregoing strategy without significant deviations will fully provide market participants with the necessary railway infrastructure.

Nerungri

Bamovskaya

Elga

Ulak

Noviy Ural

Chegdomyn

Komsomolsk

Volochaevka

Baikal-Amur Railway

Tynda

- railway stations

- seaports

11.4 - volume of cargo reloading through a branch in 2016, mln t

- carriage capacity of a branch in 2018, mln t11.4

[1] - Grodekovo railway station, ports: Vostochny, Nakhodka, Vladivostok, Posiet, Slavyanka

16.823.2 23.214.4

18.8 25.614.424.6 24.6

100.6100.6 124.7

9.5 25.1 26.2

26.437.1 43.3

91.199.6 120.0

43.3 - forecasted carriage capacity of a branch by 2020, mln t

Primorskyregion1

12.7 14.4 34.2

15.5 16.0 27.7

Trans-Siberian Railway

Cargo Railway Scheme in the Far East of RussiaSource: Program of the development of the eastern operating domain (RZhD)

August 2018

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… and has detailed plans of coal delivery to markets of Asia-Pacific region Infrastructure

Transportation of finished products is planned by rail to the port of "Vanino" in two stages:

1) transportation from the mine to the main railway line;2) transportation on the main railway line to the export harbor.

Local Logistics► Dolguchan is connected to the nearest station of the federal railway "Neryungri-cargo".

Embarkation of finished goods in wagons will be realized at the railway station "Pogruzochnaya" in the immediate vicinity to the mine “Lokuchakitskaya". In 2Q 2018 the Company has purchased property of Erchim-Than LLC, including railway stub track at “Pogruzochnaya” station (4 rail lines), what will allow loading of rail wagons there.

Railway transportation and transshipment► Arrangements with Russian Railways and ports on the volume of transportation is

settled monthly. The current tariff for the transportation of coal for Dolguchan is 1,725 RUB/t.

► Transshipment of a coal concentrate will be done in Vanino or (and) Vostochniy harbors with an expected tariff for transloading of 13 USD/t. As a rule, the tariff is well correlated with world coal prices.

► Due to expansion plans of the main harbor operators in Vanino and Vostochniy potential infrastructure restrictions on the export of coal to the Asia Pacific countries are highly unlikely.

Transportation to the Asia-Pacific region will take from 7 to 10 days, of which from 4 to 5 days will be attributed to railway transportation, and freight accounts 3 to 5 days.

Delivery route Cost

Railroad rates1. Dolguchan - Vostochniy 1,725 RUB/t

Ocean freight (Panamax)

2. Vostochniy – Japan 5.4 USD/t

3. Vostochniy – Korea 4.8 USD/t

4. Vostochniy - China 5.2 USD/t

Export Delivery Route to Asia-Pacific MarketsSource: company analysis

1

23

4

August 2018

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Reserves► The Company owns a license for the development of Lokuchakitskiy site and

also has a significant potential to expand its resource base by includingbordering areas in the license.

► As of March, 2018 IMC Montan conducted an independent estimation ofresource base according to JORC. The company’s coal reserves as of 1st

January 2018 amounted for 103 mln t of Measured & Indicated reserves (bymass of rock). According to Russian classification reserves amounted for 83mln t. The reserves were calculated separately from the seams and taking intoaccount the contamination by in-situ rock layers. The reserves arerepresented predominantly by coked coals of grades KZh, K (more than 95%).A small fraction is amounted for oxidized coals.

► The company is planning to expand its resource base and substitute depletingcapacities by carrying out additional exploration works and adding C3 and P1resources to mineable reserves. The north-westrern part of the Westernsection No. 2 has a significant potential for increasing the reserves.

► According to the agreement between stakeholders of Dolguchan and JSC“SUEK”[1], stakeholders of Dolguchan have a right to buy out 100% ofshareholder capital of JSC “Kabaktinskoye”, which owns a license №ЯКУ04382 ТР dated from 30.06.2015. Accomplishment of a buyout will furtherexpand resource base of the Company.

Geological features► Resources portfolio of Lokuchakitsky site (south-eastern part of

Chulmakanskoye deposit) is represented by K and KZh coals as well asoxidized coals of the D19, D15, D15n, D13, D11, K6n, K4 and K2 seams. Theresource base will be developed by open-pit mining on the first stage andunderground mining later (0.5 mln t and 0.7-1.0 mln t per yearcorrespondingly).

► At the licensed area ash content ranges widely from 4.54% to 49.91%, meanvalues – from 17.12% to 27.54%, which indicates that it is impossible to usethe ROM coal for coking. In this regard, the coals of coking grades should bebeneficiated. D19 is characterized by minimal ash content. The highest ashcontent (27.5% and 26.5%) is in the Kabaktinskaya suite seams.

Reserve base consists of 103 mln t of coking coal according to JORC and has an option to expand by adding adjacent areas

Reserves

Licensenumber Coalfield Inception

date Validity Issued to Purpose

YKU13240 TE

Chulmakans-koye coalfield 13.07.2005 01.07.2025 LLC

Dolguchan

Exploration and coal mining in the south-eastern part of Lokuchakitskyarea

License DescriptionSource: IMC Montan

Reserves of the Lokuchakitskiy Site according to JORC, mln tSource: IMC Montan

[1] – SUEK is a major Russian coal producer

Expected life of mine: 32 years

50,4

52,7

103,0

Measured Indicated

August 2018

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Coal Concentrate of Grade K and КZh

► The key marketable product of Dolguchan is coking coal concentrate of gradesK and KZh. It’s expected to have high demand for that type of coals both inlocal and export markets.

► Dolguchan will operate on D11 floor, Lokuchakitsky site of Chulmakan deposit.Currently, the D11 floor is developing by Kolmar at the adjacent DenisovskyGOK. In accordance with Wood Mackenzie Market Report, and with actualsales of Denisovsky K4 coals, these coals generally generates strong cokewhen coked alone in a conventional coke oven.

► Lokuchakitskiy site’s coals are characterized by a medium volatile content withhigh fluidity, good sinterability, low sulfur and phosphorus content, high vitrinitecontent. Competing types of coal are medium-volatile low-sulfur coalsproduced in Australia and China (in the Chinese market).

High quality coking coal owned by Company will be competitive both in Russian and international markets due to its characteristics

Quality of Coal Concentrate

Russian benchmarks Foreign benchmarksCoal Denisovsky K4 Yakutugol К9 Leer (HVA) Poitrel Gregory Peak Downs Moranbah NorthProducer Kolmar Mechel Arch BMA BMA BMA Anglo AmericanCountry Russia Russia USA Australia Australia Australia AustraliaTM (% ar) Moisture 5 6.6 7.5 12 8.5 9.5 10

Ash (% ad) Ash-content 10 10.7 7.2 8 7 10.5 8.5

VM (% ad) Volatile-matter content 24 17 31 24 33.5 20.5 23.3

TS (% ad) Total Sulphur 0.37 0.2 1 0.4 0.65 0.6 0.5

Phos (% ad) Phosphorous content 0.001 0.06 0.035 0.3 0.04

Y Plasticity index 27-30 37 37

Ro. Max Reflection of vitrinite 0.99 1.5 1.05 1.2 0.9 1.4 1.2

CSR Coke Strength Reactivity 44 66 50 55-60 74 69

Fluidity (ddpm) Fluidity 3,200 10 +30,000 300 7,500 400 1,400

Coal Brand ComparisonSource: Wood Mackenzie

► Coal concentrate will be sold at a discount of 5% in the early years. However,it has the same characteristics relative to Australian premium coking coal (LVHCC). Thus, there is a possibility that discount will be reduced to 0%.

Characteristics, by which Denisovsky coal surpasses competitors

Mid-Coal and Thermal Coal of Grade SS► A small share in the sales structure (less than 5% of revenue) is also taken

by high-ash thermal coal and mid-coal. These coals are going to be sold to local energy plants.

Comparable coal from adjacent Denisovsky project

August 2018

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Project team considers three scenarios for the Project development of which the baseline scenario will create the highest value for stakeholders

Financial Plan

Scenario UoM Option 1 Option 2 Option 3Option for development: OPEN PIT OPEN PIT + PROCESSING

PLANTOPEN PIT + PROCESSING PLANT +

MINEKey investment indicators

NPV mln USD (32.6) 133.6 349.2IRR % 6.5% 16.8% 16.4%PBP years 8.0 2.8 7.4External financing mln USD n/a 20.2 61.0

Key production indicators

Production capacity mln t 0.5 (mining) Up to 1.0 (mining and processing)Up to 0.8 (concentrate production)

Up to 2.0 (mining and processing)

Volume of mined reserves mln t 2.0 9.2 36.8

Life of Mine years 3 10 32

Production facilities - Processing plant “Lokuchakitskaya” Processing plant “Lokuchakitskaya”Mine “Lokuchakitskaya”

Financial indicatorsCapital expenditures(without VAT) mln USD - 34.1 338.2

Average revenue mln USD 67.5 100.9 138.4

Average EBITDA mln USD (7.1) 30.9 66.9

BASELINE SCENARIOCONSERVATIVE SCENARIO

August 2018

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Each scenario has its pros and cons as well as opportunities for developmentFinancial Plan

Scenario Option 1 Option 2 Option 3Option for development: OPEN PIT OPEN PIT + PROCESSING PLANT OPEN PIT + PROCESSING PLANT + MINE

Advantages

ü No capital expenditures. All works are done by subcontractors;

ü Minimal risks.

ü Low risks. Processing plant is the same as processing plant of Kolmar;

ü Life of mine is 10 years;ü The company already has established

adjacent infrastructure;ü Favorable EBITDA ≈ 30 mln USD per

annum.

ü Life of mine is 32 years;ü Status of a “large” coal mining company; ü The richest valuation of the business.

Disadvantages

û Life of mine is less than 3 years;û Poor profitability. Revenue will cover

only current costs.

û Capital expenditures of 34 mln USD (project + research works + construction of a processing plant).

û Capital expenditures of 338 mln USD;û Risks of underground mining operations;û Investments in infrastructure.

Opportunities for development

ü Expansion of resource base by including bordering areas in the license;

ü Sale of rough coal to Kolmar for processing with a premium to market prices. Life of mine will increase to5-6 years.

ü Expansion of resource base by including bordering areas in the license;

ü Purchase of own mining equipment will increase profitability per tone of mined coal by 5-10 USD;

ü Purchase of a huge bordering license and creation of “Kolmar-2”.

ü Attraction of the government grant for the development of infrastructure;

ü Creation of strategic partnership;ü IPO/ICO of the company;ü Purchase of a huge bordering license and

creation of “Kolmar-2”.

BASELINE SCENARIO

ü

û

CONSERVATIVE SCENARIO

August 2018

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Please feel free to contact us via phone or emailContacts

Arkadiy Ostrovskiy

CEO

Tel.: +7 (925) 762 0446

ostrovskiy@dolguchan.com info@dolguchan.com

Dolguchan LLCRussia, Republic of Sakha (Yakutia), Neryungri,

Karl Marx street, 8 / 2Tel.: +7 (411) 476 23 21; +7 (411) 476 23 24

E-mail: info@dolguchan.com

Contact persons