Eastern Cape Coalfield Development: an opportunity for local industry

1. Eastern Cape Coalfield Development: an opportunity for local industry 22nd September 2010

2. Disclaimer • This document is the sole responsibility of Strategic Natural Resources plc (“Company”).  The information contained in this document has not been verified by Allenby Capital, the Company’s Nominated Adviser, nor does this presentation purport to be all-inclusive or to contain all the information that an investor may desire to have in evaluating whether or not to make an investment in the Company. • This document (including its contents) is confidential and, if permitted by applicable law, may be distributed outside the United Kingdom to professions or institutions whose ordinary business involves them in engaging in investment activities.  It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. • This document is being supplied to you solely for your information and may not be copied, reproduced, further distributed to any other person or published, in whole or in part, for any purpose. The information in this document does not constitute, or form part of, any offer to sell or issue, or any solicitation of an offer to purchase or subscribe for any shares in the Company nor shall this document, or any part of it, or the fact of its distribution, form the basis of, or be relied on, in connection with any contract. • No representation or warranty, express or implied, is made or given by or on behalf of the Company or its Directors or HB Corporate or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document and no responsibility or liability is accepted for any such information or opinions.  Notwithstanding this, nothing in this paragraph shall exclude liability for any such representation or warranty made fraudulently. • The distribution of this document in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions.  Any such distribution could result in a violation of the law of such jurisdictions.  Neither this document nor any copy of it may be taken or transmitted into the United States, Canada, Japan and the Republic of Ireland or distributed to the United States, Canada, Japan or the Republic of Ireland or to any national, citizen or resident thereof or any corporation, partnership or other entity created or organised under the laws thereof.

3. Presentation Overview Background & Overview An Alternative, Energy Efficient, Steam Solution Conclusions & Contacts

4. Company structure • Major Shareholders • Coal of Africa plc – 19.6% • SCCP (RSA Elitheni founder) – 15% • ERIG – 9% • Apollo Nominees Limited – 7.2% • Credit Suisse Group AG – 7.2% • Pershing Nominees Limited – 4.9% • Caldwell Management AG – 3.1% • Jeremy Peter Metcalfe (Director) – 3% • Richard Henry Ringrose Latham (Chairman) – 3% • Advaita Energy Ventures – 3% • JO Hambro – 2.8% Strategic Natural Resources PLC Local BEE 74% shareholding 26% shareholding Community Beneficial Interest 3% Elitheni Coal (Pty) Ltd 4

5. Where is the ‘Elitheni’ operation? Indwe -approx. Mine Location Sphere of commercial advantage

6. Our prospecting and mining footprint dominates the Eastern Cape Coalfield with over 1800km2 of rights area. 4 3 4 Ph 5 1&2 4

7. Current Mining Rights Area: Technical Summary • 150 million tonne resource • 45.6Mt measured, 45.5Mt indicated and 59.2 inferred • Seam averages 1.46m thick for measured resource. Typical Coal Specifications

8. Presentation Overview Background & Overview An Alternative, Energy Efficient, Steam Solution Conclusions & Contacts

9. A Collaborative Opportunity • There are over 1000 boilers according to government reports, that exist in the Eastern & Western Cape, being a combination of coal, oil, diesel, paraffin and electrode boilers. • Oil, diesel and paraffin remain the most expensive fuel source for boilers and where electrode boilers on the basis of cheaper electricity have historically been comparatively competitive, the cost of running an electrode boiler has increased dramatically over the past two years based on Eskom tariffs, and is set to increase further given NERSA agreed to tariff increases. • The coal used in coal fired boilers travels from Witbank / Mpumalanga coalfields and lands at an expensive price given the travel distance as well as the fact that coal miners are seeking export parity pricing from mines in Witbank. This adds to the volatility of the coal price. • The Eastern & Western Cape has an abundance of coal on its doorstep (in some cases over 1000km closer than coal from Witbank) yet this coal, being anthracitic in nature, does not burn easily in conventional chain grate boilers. • Elitheni realised the dilemma of customers being forced to use expensive fuels sources without an alternative and have spent the past 18 months developing an alternative.

10. A boiler solution for the Eastern Cape Coal • In 2009, Elitheni purchased combustion equipment used in the UK in order to trial the technology, measured success was achieved in combustion efficiencies but the mechanics of de-ashing presented a problem. • As a result, Elitheni’s holding company (SNR) set up ACE (Allied Coal Engineering) as a collaboration between coal handling experts, boiler makers and combustion engineers. The experience in the boiler and combustion industry spans more than 25 years, with boilers being designed and built for Sasol, SAB and Spoornet. • The team took on the challenge of developing smaller units for Eastern Cape coal combustion and to research the most optimal solution for larger industrial steam units. • A collaboration with various vendors and steam supply experts resulted and the ACE CCU was born for smaller industrial clients, with Fluidised Bed Combustion modelled for larger industrial steam users. • Through collaboration with the Steam Team and Synergy Steam, Elitheni is able to cost effectively deliver Fluidised Bed Combustion solutions to any client of >4T of steam / hr. Collaborative Partnerships

11. Commercial Opportunity • Given that Elitheni control the fuel source, it is able to offer both a flexible and competitive solution to clients. • Subject to the location of the client in the Eastern & Western Cape as well as the current fuel source being used, Elitheni can offer clients a saving of between 10-20% on the cost of the fuel to produce their steam, this typically comprises between 80-95% of the cost of the steam production. • This saving would include the cost of Elitheni financing a new boiler technology. • Elitheni can offer flexible commercial arrangements for the client: • A fully inclusive option including supply of coal, labour and the boiler, charging the client per tonne of steam supplied; • A partially inclusive option, supplying the client with the coal and the boiler; • A fuel only option where the client finances the boiler and Elitheni supplies the coal only. • The implications of such a commercial opportunity represent significant future savings as illustrated by the following slide.

12. A growing opportunity • Given the volatility in the cost of oil, diesel, paraffin and electricity and the difficulty in obtaining fixed long term contracts on coal, the prices of these fuel sources varies enormously, often increasing more than 25% in a single year. Historically, increases of 15% have been the norm. • The graph below shows a typical scenario for a client in the Eastern Cape, currently paying ZAR1000 per tonne for delivered coal. Taking into account efficiencies of the new boiler technology as well as current and predicted increases of both the Witbank and the Eastern Cape Coal, the client would realise significant savings.

13. Presentation Overview • Background & Overview • An Alternative, Energy Efficient, Steam Solution • The technological ‘know how’ • FBC a guaranteed solution • Conclusions & Contacts

14. How this is possible • The principles of Fluidised Bed Combustion (FBC), are well established and the technology, now in existence for the past 50 years has been proven in many places globally. • South Africa with a traditional abundance of higher grade coal, has not needed FBC until today. • The Eastern & Western Cape in particular represent a unique advantage for FBC boilers, given the abundance of the Eastern Cape coal. • The Eastern Cape coal is a slightly higher ash anthracitic coal, however, it has many advantages: • Very Low Sulphur aids low SOX emissions. • Very low volatiles results in a ‘smokeless’ fuel. • These factors compliment the well documented advantages of FBC, some of these are listed below: • SOX, NOX & particulate emissions, compliant with Air Quality Act and World Health Organisation. • Ash is of a fine form, no clinkers, making it manageable and useful in cement and brick making. • The FBC boilers are very tolerant, they can combust a range of coal quality, unlike other systems that tend to respond poorly to varying qualities of coal, which results in huge inefficiencies in other systems. • An example of the designs and an overview of the FBC process follows.

15. Presentation Overview • Background & Overview • An Alternative, Energy Efficient, Steam Solution • The technological ‘know how’ • FBC a guaranteed solution • Conclusions & Contacts

16. The Mechanics of FBC

17. The process of FBC *Coalmax is a division of Thermax, the largest boiler manufacturer globally

18. The features of FBC (Fluidised Bed Combustion) • Temperature of the bed is uniform, resulting in a complete combustion of fuel • Homogenous mixing of fuel and air results in low excess air requirement for combustion. Improves efficiency of combustion and reduces power requirement • Combustor bed can be controlled since the bed behaves like a liquid which can be drained at one point • The bed retains a very high amount of heat, acting like a thermal fly wheel and can release heat instantly in peak demand • No generation of NOx since the bed combusts below 900 Deg C • High turbulent inbed facilitates quick start up and shut down

19. Features of the ACE CCU, prototype design • Process of combustion occurs on an ‘airbed’ similar to FBC; • Heat is transferred to both radiant and convective surface to generate steam; • Ash is disposed of mechanically based on residence time allowed for in burner. • Although still in development stage, represents viable alternative for smaller user.

20. Moving Forward • The general fuel price remains volatile and will continue to have a significant effect on diesel, oil and paraffin burning. It will also have a significant bearing on the cost of delivered coal. • Eskom pricing will continue to increase given the rising cost of necessary expansion programmes. • Given the development of the Eastern Cape coalfield and the advancements Elitheni and partners have made in development of a technical steam solution, there is now an alternative fuel and technology source that can be installed at no capital cost to a client in the E&W Cape, with guaranteed savings. • Elitheni is able to provide proposals on technical steam solutions, capable of being installed in 8-12 months. • The Elitheni solution will result in clean coal technology capable of combustion well within the most stringent of environmental requirements. • Elitheni is able to offer a turnkey solution, including building of the coal handling system (if not in place), the ash removal system and even the boiler house all within specified requirements, using mine contractors who have installed the same set of competitive solutions for the mine.

21. Conclusion & Contact Information • For more information please visit us at: • Our office in South Africa is located at: • 130 Cape Rd, Millpark, Port Elizabeth, 6001 • Switchboard: +27 41 374 0842 • Contact David Nel (CEO); Mazizi Msutu (Director, Stakeholder Mgt & Sustainable Development) • www.elitheni.co.za • Our London office is based in • 5th FloorPrince Consort House27-29 Albert EmbankmentLondon SE1 7TJ • Tel: +44 (0) 20 7793 5616Fax: +44 (0) 20 7793 7654 • Contact David Nel (CEO); Jeremy Metcalfe (Communications Director) • www.snrplc.co.uk Page 21