TERRACOM LIMITED — AGM Information 2019

Nov 18, 2019

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TerraCom Limited
Blair Athol Mine Access Road
Clermont ,Queensland, 4721
+61 7 4983 2038
ASX ANNOUNCEMENT
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19 November 2019

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Annual General Meeting Chairman’s Address

TerraCom Limited ( TerraCom or Company ) is pleased to provide shareholders with the following Chairman’s Address to be given at the Company’s Annual General Meeting this morning.

A presentation by the Chairman, Mr Wal King AO.

Address to Shareholders

The 2019 Financial Year has been the most successful year to date in the Company’s ten year history. The success has been driven by superb operating and financial performance by the Company’s flagship Blair Athol Coal Mine in Central Queensland, Australia.

From an overall Company perspective, key highlights for the year include:

• i. Increase in ROM Production by 35% year on year with current levels at 3.4Mt ii. 3.0Mt Coal sales for FY2019, representting a 59% increase year on year

• iii. $338 million in Revenue from Operations, which signficiantly boosted Operating EBIDTA for the financial year to $94 million, an increase of 246% year on year.

A number of new milestones were achieved throughout the year, from both an individual mine site and overall Company perspective.

• March 2019 was the most impressive quarter for the Company with the following milestones achieved:

• (i) Total Saleable Production reached a high at 820,230 tonnes, up 12% or 88,940 tonnes from the previous high recorded in June 2018.

• (ii) Total Coal Sales reached 826,714 tonnes, up 27% or 177,494 tonnes from the previous high also reached in June 2018.

• In addition, Total ROM Production for the Company reached a record high in June 2019 This recorded high of 1,037,115 tonnes beat the previous high by 21,645 tonnes previosuly set in June 2018.

• The Company’s Blair Athol mine in Queensland received exceptional results during the September 2018 quarter with the following milestones achieved:

• (i) Blair Athol Saleable Production reached a high at 598,413 tonnes, up 36% or 157,801 tonnes from the previous high recorded in June 2018.

• (ii) Blair Athol Total Coal Sales reached 613,558 tonnes, up 50% or 203,865 tonnes from the previous high set in the March 2018 Quarter.

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• In addition, Blair Athol recorded its highest ever Total ROM Production in June 2019. Total ROM production for the June quarter hit 794,542 tonnes, which was 10% or 69,750 tonnes more than the previous record set in June 2018.

As well as achieving significant production milestones at the Blair Athol mine, the Company also successfully updated the JORC Reserve and Resource during the year:

• Blair Athol JORC Resource – increase in JORC Measured Resource to 31.5 Mt (increase 9.6Mt or 44%) and JORC Indicated Resources to 11.6 Mt (increase of 2.6 Mt of 29%)

• Blair Athol JORC Reserve – after taking into account mining depletion of 2.3 Mt since September 2017, the JORC Reserves has been upgraded from 15.6 Mt to 28.7 Mt.

The Company also continued its commitment to rehabilitation activities at the Blair Athol Mine, undertaking mulching of the historical tailings dam and advancing face rehabilitation. This rehabilitation further reduced the Company’s financial assurance issued by the Queensland Department of Science in July 2019 by approximately $700k.

With respect to the Company’s Mongolia operations, mining progressed with 738,041 tonnes of Run of Mine Coking Coal being sold from the mine during the year. As previously announced, the Company plans to divest Mongolia via 100% demerger (subject to shareholder approval) or a divestment of at least 51%. To assist with these efforts, a number of actions were undertaken throughout the year to restructure the Mongolia business.

The 2019 Financial Year was a transformational year for TerraCom and has allowed the Company to focus on organic growth and strategic acquisitions. Since the end of the Financial Year, the Company has achieved a number of key corporate activities and actions, namely:

Maiden Dividend

• The Company declared an interim maiden dividend of 1 cent per fully paid ordinary share held on 23 October 2019.

• The dividend was unfranked and paid to shareholders on 13 November 2019.

• The Board has adopted a dividend policy to pay a minimum dividend of 1 cent per fully paid ordinary share per 6 month reporting period.

Debt Re-finance

• The Company announced on 4 October 2019 that it had executed a binding term sheet with an Underwriter for the establishment of a $72 million rehabilitation bonding facility for its flagship Blair Athol Mine.

• The rehabilitation bonding facility requires a cash backing of $45 million – thereby released $27 million of restricted cash from the Company’s balance sheet.

• The Company expects the insurance bond to be issued (including cash release) in November 2019.

Substantial Interest in Universal Coal Plc

• Initially announced in October 2019, the Company has now formally acquired 19.995% of the issued capital of Universal Coal Plc.

• The acquisition of the substantial interest in Universal aligns with the Company’s ongoing corporate strategy by enabling the Company to enter into an emerging market, yet at the same time reducing the Company’s sovereign risk profile with new investments in South Africa.

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Whilst FY2019 was a historical year for the Company, FY2020 has already seen tremendous results from both a financial and operational perspective and the Board looks forward to the year ahead.

In closing, I would like to thank my Board colleagues for their efforts and commitment during the year. I would also like to thank the management and staff of the Company for their hard work in producing excellent financial and operational results and also thank them for their work in preparing for this meeting. Finally, I would like to thank you, the shareholders, for your continued support and for your attendance today.

Presentation end

For further information, contact:

Megan Etcell Company Secretary P +61 7 4983 2038 E info@terracomresources.com

About TerraCom Limited

TerraCom Limited ( ASX: TER ) is an emerging company originating as a resource explorer with a large portfolio of operating assets in Mongolia and Queensland, Australia. We are currently enacting a growth strategy towards delivering a Mid-Tier diversified operating and trading business and have a global focus on the development of a high yielding diversified asset portfolio for its investors. To learn more, please visit www.terracomresources.com.

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