GROUP TRD TANZANIA

LIMITED

PROPOSAL TO INVEST IN KATEWAKA COAL MINE

LUDEWA-NJOMBE
December 2019
Table of Contents
1.0 INTRODUCTION...........................................................................................................................1

1.1 Proposed Production Capacity and machineries Fleet.................................................................1

1.2 Reduction of Production cost per unit and Proposal of Njombe stock pile..................................2

2.0 KNOWLEDGE SPILL OVER........................................................................................................3

2.1 Proposed Joint Company structure...............................................................................................3

2.2 Road Map/ schedule....................................................................................................................4

3.0 INVESTMENT PLAN....................................................................................................................4

3.1 Proposed capitalization and Cash flow projection.......................................................................4

4.0 APPENDICES...............................................................................................................................11

5.0 REFERENCES..............................................................................................................................15
 PROPOSAL TO DEVELOP AND OPERATE KATEWAKA COAL MINE

1.0 INTRODUCTION
With reference to the several meetings which we (TRD) have discussed with NDC team,
going through all exploration documents of Katewaka Coal mine you shared to us, and
having concluded the site visit which was done by Mr. Patrick Mwisua, which was lead by
NDC through Eng. Pascal Malisa, we would like to come up with following genuine
proposal, which will include restructuring, financing, developing and operating of the
Katewaka coal mine (100million tones), which will go together with solving the
infrastructure puzzle from Nkomang’ombe to Mawengi (81km).
Together with the development of the large scale coal mine production, TRD will set up a
coal gasification plant which will consume over 1 million tons of coal to produce industrial
chemicals and fertilizers.
To begin with, the company will supply coal to local cement manufacturing industries
,textiles industries, ceramic tiles companies, gypsum producing companies and others
using high energy boilers. Other markets will be South East Asian markets for power
plants, UAE power plant (Energy mix program) and small amount to local East African
markets.

1.1 Proposed Production Capacity and machineries Fleet

More than USD 80milion has being planned to be invested on the development of the coal
mine of the production capacity of 2.0 million tons to 3.0 million tons per annum in phases.

TRD will employ the use of both electrical and diesel powered heavy equipment such as:-
1. Surface miner Wirtgen 2500 for coal stripping, crushing and loading(Appendix I)
2. Wet coal washing plant 350TPH to reduce high percentage of Sulphur content for
coal exportation purposes,
3. One drilling rig for blast holes MD6200,
4. Two Cat 7495HF electric rope shovels of 62.7cbm bucket size for excavating and
loading, (Appendix II)
5. Two hydraulic excavators CAT350 (electric &diesel powered) ,
6. Two Track Dozers for site clearance, CAT D10T2. ( Diesel powered).Appendix III
 7. Six rigid Dump trucks CAT 777 & 775G (electric &diesel powered),Appendix IV
8. 50 Hauling dumper trucks of 50t capacity (Mack granite GU813 special for long
mountainous roads. ) are planned to be used to move coal from stock pile number
1(at mine) to Njombe stock pile (stock pile number 2).

Large scale mining has proven to be more beneficial to local communities than small scale
mining and also has a lesser environmental footprint.
The integration of operations together with availability of large funds will support a
sustainable development of the region, which will include the upgrading of Muhumbi to
Mawengi road of about 81Km and establishment of other social services such as healthcare
and schools.

1.2 Reduction of Production cost per unit and Proposal of Njombe stock pile
 Group TRD has proposed the use of hybrid (electrical & diesel powered) heavy
mining equipments for coal production, which will guarantee the lowest production
cost per ton of coal for over 20years of the production.

 Group TRD propose to build a SUBSTATION at Katewaka coal mine which will be
linked to 33kv transmission line (medium voltage) which is ready available at
Muhumbi (Katewaka) village (REA project). The substation will be used to power
and recharge the hybrid mining equipments which will be used in production. The
substation will have the capacity to recharge the equipments up to 6000volts in two
hours which can sustain the operation of 6hours to 8hours before being plugged in
again.

With a reduction of production cost per ton, the setting up of Njombe stockpile (selling
station) is viable, the hauling costs per ton from the first stockpile (at mine) to Njombe
stock pile is expected to range from USD15-20/ton. Hence the addition of this haulage
costs per ton to Njombe stock pile is only economical by the reduction of production cost
per ton at the mine in long run.
2.0 KNOWLEDGE SPILL OVER
Expatriates will be used at early stages of the development with a tendency to indigenize a
considerable part of the workforce on later stages of the project. This will facilitate
knowledge spill over/transfer of know-how. TRD shall develop educational / trainee
schemes that will envisage contracts conclusion with educational institutions of Tanzania
to provide target education in professions demanded by the company.

2.1 Proposed Joint Company structure

1. TRD suggests the incorporation of joint company (JVC) with NDC, in which TRD
will be overall controller of the Business, from Mine Development, infrastructures
upgrading to coal marketing and selling.
2. Commission on ton of sold coal. NDC to get a sum of USD 2 $ or 4% per ton of sold
coal will apply when market price changes below USD45$, or above USD55$ per
ton). From first year of sales.
3. Sovereignty equity of 16% on profit in the joint venture company to be held by NDC
4. Equity shares of 84% to be held by TRD who will capitalise the JVC to its full
operation up to the 8th year (project break even) and then dilute its shares and
transfer 15% to NDC making it NDC 31%, TRD 69%. as per investment plan
attached here below.
5. JVC will pay all taxes to the government according to the laws and regulations of the
country without disturbing the commission per ton of coal sold. Which will be paid
monthly from JVC to NDC
6. NDC will be responsible to persuade/handle/arrange with other governmental
organisations like
i. TANESCO for the construction of 200MW-400MW coal fired power plant.
(TRD is also interested on financing and construction of the planed coal fired
power plant at Katewaka)
ii. TAZARA for the reasonable adjustment of transport rates they charge for
transporting coal from Makambako to Dar es Salaam port/stockpile, special
price for coal transportation will be appreciated.
 iii. To arrange with Tanzania port Authority for Dar es salaam port or Mtwara
port, the port stock pile space in Dar es salaam, and arrangement for Coal load
dock at the port (to be discussed with TRD )
iv. NDC to be responsible with all communications with the rest of other
government authorities, who are stake holders of the project i.e. NEMC, TRA,
TANROAD, Nkomang’ombe village, Ludewa district, Njombe Region etc.
v. NDC to provide land for stock piling station in Njombe and Dar es Salaam and
Mtwara.

2.2 Road Map/ schedule

1. TRD is ready to finalise with NDC on the JVC agreement basing on the above
structure or much better option if available.
2. Incorporating of a Joint venture coal mining company to execute the Katewaka coal
mine project
3. Formation of the board of directors of the JV company
4. NDC to transfer the ML to a JV company ready for execution
5. Project take off at the beginning of 2020.
6. To carry on the exploration of other PL which were not explored, for the aim of
consolidating potential neighbour coal assets into our JV company.,which will
increase the scale of economies to make the JVC a new and a long run coal player in
southern Sahara region.

3.0 INVESTMENT PLAN

3.1 Proposed capitalization and Cash flow projection
To successfully establish and operate the enterprise, the proposed capitalization is
$83,568,546.14 which is composed of the initial capital and a one year working capital.
From economic analysis done basing on the risk factors and market analysis, the 15%
discount rate was employed in calculation of discounted cash flows and determination of
internal rate of return (IRR) from Cash flow projections for the first 10years of operations.
The cash flow projections show that, after eight years of operations the company will have
covered its invested capital provided no significant changes in economic and market
factors.
 The projected cash flow analysis is as shown below:

CASH FLOW PROJECTION

Details Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Coal production: Sold 1,200 1,500 1,620 2,025 1,680 2,10 2,175 2,100 2,25 2,250.
tonne(000 t) - .00 .00 .00 .00 .00 0.00 .00 .00 0.00 00
Price per tone( US$55/t) 45 45 45 45 45 45 45 4 45.
- .00 .00 .00 .00 .00 .00 .00 5.00 00
45.00
Sales Revenue 54,000 67,500 72,900 91,125 75,600 94,5 97,875 94,500 101,2 101,250.
- .00 .00 .00 .00 .00 00.00 .00 .00 50.00 00
OPERATING($000) -
- - - - - - - - - -
Less: Site Operating -
Cost - - - - - - - - - -
Mine, Load, & Haul Coal -
(ROM) - - - - - - - - - -
Surface Miner OpEx-Fuel 1,194 1,194 1,612 1,612 1,672 1,67 1,732 1,791 1,79 1,791.
&Maintenance(US$0.5973/t p) - .60 .60 .71 .71 .44 2.44 .17 .90 1.90 90
Electric rope   2,780 2,580 3,753 3,753 3,892 3,89 4,031 4,170 4,17 4,170.
shovels($1.39/tonne) .00 .00 .00 .00 .00 2.00 .00 .00 0.00 00
Diesel & Petrol(Minor vehicles) 84.00 84 84 84 84 84 84 84 8 84.
.00 .00 .00 .00 .00 84.00 .00 .00 4.00 00
Truck Fuel(US$ 0.5290/tonne) 1,058 1,058 1,428 1,428 1,481 1,48 1,534 1,587 1,58 1,587.
- .00 .00 .30 .30 .20 1.20 .10 .00 7.00 00
Truck 477. 477. 644. 644. 668. 6 692. 716. 71 716.4
Maintenance(US$0.2388/tonne) - 60 60 76 76 64 68.64 52 40 6.40 0
Truck Tires(US$0.1270/tonne) 254. 254. 342. 342. 355. 3 368. 381. 38 381.0
- 00 00 90 90 60 55.60 30 00 1.00 0
Washing Plant-operation & 14,000 14,000 18,900 18,900 19,600 19,6 20,300 21,000 21,00 21,000.
Maintenance( US$7/tonne) - .00 .00 .00 .00 .00 00.00 .00 .00 0.00 00
Royalties -
- - - - - - - - - -
Industrial Minerals 3% Royalty 1,620 2,025 2,187 2,733 2,268 2,83 2,936 2,835 3,03 3,037.
- .00 .00 .00 .75 .00 5.00 .25 .00 7.50 50
Commission to NDC(4% on 2,160 2,700 2,916 3,645 3,024 3,78 3,915 3,780 4,05 4,050.
sold coal) - .00 .00 .00 .00 .00 0.00 .00 .00 0.00 00
Drill & Blast -
Overburden/Interburden - - - - - - - - - -
Overburden( US$ 0.6592/C.M) 461. 461. 622. 622. 646. 6 669. 692. 69 692.1
- 44 44 94 94 02 46.02 09 16 2.16 6
Interburden( US$ 0.2774/C.M) 38 38 52 52 54 56 58 5 58.
- .84 .84 .43 .43 .37 .31 .25 8.25 25
54.37
Strip -
Overburden/Interburden - - - - - - - - - -
Excavator Fuel( US$ 332. 332. 448. 448. 464. 4 481. 498. 49 498.0
0.3953/C.M) - 05 05 27 27 87 64.87 48 08 8.08 8
Excavator Maintenance, Lube, 189. 189. 189. 256. 265. 2 275. 284. 28 284.6
UC(US$ 0.2259/C.M) - 76 76 76 17 66 65.66 15 63 4.63 3
Truck Fuel(US$ 1.0262/C.M) 1,311 1,311 1,163 1,163 1,206 1,20 1,249 1,293 1,29 1,293.
- .41 .41 .71 .71 .81 6.81 .91 .01 3.01 01
Truck Maintenance(US$ 471. 471. 636. 636. 659. 6 683. 707. 70 707.1
0.5612/C.M) - 41 41 40 40 97 59.97 54 11 7.11 1
Truck Tires(US$ 0.2983/C.M) 250. 250. 338. 338. 350. 3 363. 375. 37 375.8
- 57 57 27 27 80 50.80 33 86 5.86 6
Labor -
- - - - - - - - - -
Fixed,gross Salaried 708. 708. 708. 708. 708. 7 708. 708. 70 708.3
373.08 36 36 36 36 36 08.36 36 36 8.36 6
Hourly/wages(30% of fixed 11 212. 212. 212. 212. 212. 2 212. 212. 21 212.5
gross salaried) 1.92 51 51 51 51 51 12.51 51 51 2.51 1
Reclamation -
- - - - - - - - - -
Reclamation unit 15 15 15 15 1 15.
cost(US$0.5/ha) - - - - .00 .00 .00 .00 5.00 00
15.00
Water treatment 8.0 24 40 44 48 52 60 64 6 72.
chemicals(0.4/hectre 0 .00 .00 .00 .00 .00 .00 .00 8.00 00
56.00
unreclaimed)
Reclamation Dozer Fuel -
- - - - - - - - - -
Reclamation Dozer Maint., -
Lube, UC - - - - - - - - - -
Permitting/Licenses -
- - - - - - - - - -
Application -
23.00 - - - - - - - - -
Annual Rents( $ per sq.km/yr) 345. 345. 345. 345. 345. 3 345. 345. 34 345.0
- 00 00 00 00 00 45.00 00 00 5.00 0
Taxes -
- - - - - - - - - -
Road & Fuel Tax (Maximum 200. 200. 200. 200. 200. 2 200. 200. 20 200.0
US$200k) 100.00 00 00 00 00 00 00.00 00 00 0.00 0
Payroll Tax (6% on Gross 55 55 55 55 55 55 55 5 55.
Wages) 29.10 .25 .25 .25 .25 .25 .25 .25 5.25 25
55.25
  -
- - - - - - - - - -
Advertising & promotion 60 60 60 60 60 60 60 6 60.
55.00 .00 .00 .00 .00 .00 .00 .00 0.00 00
60.00
Insurance(worker' 4. 4. 4. 4. 4. 4. 4. 4.6
compensation,casuality 1% 2.99 60 60 60 60 60 4.60 60 60 4.60 0
Basic pay)
Stationaries,Electricity,Telepone 40 40 40 40 40 40 40 4 40.
bills, internet 36.00 .00 .00 .00 .00 .00 .00 .00 0.00 00
40.00
Medical insurance for staffs(3% 8.9 13 13 13 13 13 13 13 1 13.
of basic salary) 7 .80 .80 .80 .80 .80 .80 .80 3.80 80
13.80
Travelling expenses 115. 115. 115. 100. 100. 1 100. 100. 10 100.0
115.00 00 00 00 00 00 00.00 00 00 0.00 0
Consultation fee 144. 100. 100. 100. 100. 1 100. 100. 10 100.0
144.00 00 00 00 00 00 00.00 00 00 0.00 0
OSHA 4.5 4. 4. 4. 4. 4. 4. 4. 4.5
5 55 55 55 55 55 4.55 55 55 4.55 5
Roads (per C.M. OB/IB) 500. 500. 675. 675. 700. 7 725. 750. 75 750.0
US$0.25/T - 00 00 00 00 00 00.00 00 00 0.00 0
Clearing & Grubbing Unit 36 60 84 108. 132. 1 180. 204. 22 252.0
Cost(US$ 0.6/ha) 12.00 .00 .00 .00 00 00 56.00 00 00 8.00 0
Periodic gravelling of road 899. 899.1
81km (US$11.1/km) 899.10 - - - - 10 - - - - 0
Heavy grading 81km(US 30 30 30 30 30 30 30 3 30.
$0.375/km) - .38 .38 .38 .38 .38 30.38 .38 .38 0.38 38
Light grading ($0.16 per km) 15 155. 155. 155. 155. 155. 1 155. 155. 15 155.5
5.52 52 52 52 52 52 55.52 52 52 5.52 2
Transportation of coal( $7/t OR 8,399 10,499 11,339 14,174 11,759 14,7 15,224 14,699 15,74 15,749.
$0.019337/t-km)-362Km - .99 .99 .99 .99 .99 00.22 .99 .99 9.99 99
Sub Total 37,732 40,573 49,508 53,713 52,282 55,6 57,607 58,017 59,56 60,494.
2,162.23 .62 .62 .40 .56 .43 74.55 .09 .35 7.85 95
OpEX Contingency (10%) 3,773 4,057 4,950 5,371 5,228 5,56 5,760 5,801 5,95 6,049.
216.22 .26 .36 .84 .36 .24 7.46 .71 .74 6.79 50
Depreciation & Amortization 6,038 6,038 6,038 6,038 6,038 5,865 5, 4,364 4,364 4,36 4,364.
.52 .52 .52 .52 .52 .52 865.52 .52 .52 4.52 52
Total Cost 8,41 47,544 50,669 60,497 65,123 63,376 67, 67,732 68,183 69,88 70,908.
6.97 .40 .50 .76 .44 .19 107.53 .32 .61 9.16 97
                       

Operating Profit (8,416 6,455 16,830 12,402 26,001 12,223 27, 30,142 26,316 31,36 30,341.
.97) .60 .50 .24 .56 .81 392.47 .68 .39 0.84 03
Less: Tax(30%)-US$(000) 1,936 5,049 3,720 7,800 3,667 8, 9,042 7,894 9,40 9,102.
- .68 .15 .67 .47 .14 217.74 .81 .92 8.25 31
Net Profit (8,416 4,518 11,781 8,681 18,201 8,556 19, 21,099 18,421 21,95 21,238.
.97) .92 .35 .57 .09 .67 174.73 .88 .48 2.59 72
Add back Depreciation& 6,038 6,038 6,038 6,038 6,038 5,865 5, 4,364 4,364 4,36 4,364.
Amortization .52 .52 .52 .52 .52 .52 865.52 .52 .52 4.52 52
Operating Cash flow 10,557 17,819 14,720 24,239 14,422 25,04 25,464 22,785 26,31 25,603.
(2,378.45) .43 .87 .09 .61 .18 0.25 .40 .99 7.11 24
Less:                      
CAPITAL EXPENDITURE($000)                      

Equipment shop 2,000 -

.00 - - - - - - - - -
Mine office 40 -
.00 - - - - - - - - -
Substation (medium volt to 8,000 -
High volt .00 - - - - - - - - -
Staff Housing 50 -
0.00 - - - - - - - - -
Chemical Laboratory 50 - - - - - - - - - -
0.00
Albution Unit (Bath House) 17 - - - - - - - - - -
.00
Dispensary (Infirmary) 21 - - - - - - - - - -
.00
Worker colonies 20 - - - - - - - - - -
0.00
Canteen 29 - - - - - - - - - -
.00
Scale-house (incl. guard & 50 - - - - - - - - - -
security) 0.00
Fuel Depot 50 - - - - - - - - - -
0.00
Transfer of licenses to JV 1 - - - - - - - - - -
company .00
Expenses for permits, account 3 - - - - - - - - - -
& other software .30
Purchase &installation of CCTVs 5 - - - - - - - - - -
.00
Purchase for furniture & 30 - - - - - - - - - -
gadgets(computers, printers .00
etc)
Launching a website 0 - - - - - - - - - -
.60
Electrical equipment 1 - - - - - - - - - -
&installation .00
VAT -Electrical equipment 0 - - - - - - - - - -
(18%) .18
The cost for facility remodeling 20 - - - - - - - - - -
.00
Surface Miner Wirtgen 2500SM 15,00 - - - - - - - - - -
0.00
Electric rope shovels 5,000                    
.00
Explosive Magazine 25 - - - - - - - - - -
 0.00
1 MW Diesel Generator, 3PH, 1,000 - - - - - - - - - -
50Hz .00
Wet coal washing plant #1 + 4,800 - - - - - - - - - -
Erection .00
Dozer 4,400 - - - - - - - - - -
.00
Crane-2015Terex RT555 58                    
0.00
Excavators 2,800 - - - - - - - - - -
.00
Motor-Grader 58 - - - - - - - - - -
1.00
Fuel & Lube Truck 22 - - - - - - - - - -
0.00
Fleet Trucks 11,50 - - - - - - - - - -
0.00
Water bowsers 13 - - - - - - - - - -
0.00
Wheel loader 2,400 - - - - - - - - - -
.00
Maintenance Svc Truck 30 - - - - - - - - - -
0.00
Field Movement Vehicle 42 - - - - - - - - - -
5.00
Trash/pit pumps 24                    
0.00
Light plants 20 - - - - - - - - - -
0.00
Mast Drill 98 - - - - - - - - - -
1.00
Compact roller 22 - - - - - - - - - -
5.00
Dumper Truck 7,200 - - - - - - - - - -
.00
Sub total 70,60 - - - - - - - - - -
0.08
CapEx Contingency (15%) 10,59 - - - - - - - - - -
0.01
Total capital expenditure 81,19 - - - - - - - - - -
0.09
Net Cash Flow 10,557 17,819 14,720 24,239 14,422 25,04 25,464 22,785 26,31
(83,568.55) .43 .87 .09 .61 .18 0.25 .40 .99 7.11 25,603.24
Discount Factor (15%) 1 0. 0. 0. 0. 0. 0. 0. 0.2
.00 87 76 66 57 50 0.43 38 33 0.28 5
Discounted Cash flow(US 9,180 13,474 9,678 13,859 7,170 10,82 9,573 7,448 7,4 6,328.
$000) (83,568.55) .38 .38 .70 .08 .37 5.59 .01 .78 80.96 73
Net Present Value (US 11,45                    
$000) 1.43
IRR 18%                    

EBITDA(US$ 000) 16,830. 23,391 37,411 23,317 38,82 40,267 36,482 41,68 40,755.
(2,162.23) 16,267.3 50 .60 .44 .57 5.45 .91 .65 2.15 05
8
Group TRD through its management Mr. Jiwoon Han (Chief Director) and Mr. Patrick Mwisua
(Director and Advisor –African Investments) have strong believe that this proposal will be
accepted and will lead our two organisation to the final discussion and formulation of our dear
JVC for the immediate execution of the project.

4.0 APPENDICES
Appendix I: SURFACE MINER 2500 SM
Appendix II: ELECTRIC ROPE SHOVELS 7495HF
Appendix III:DOZER CAT D10T2
Appendix IV: DUMPER TRUCKS 775G

5.0 REFERENCES
 CAT equipment manufacture industry.
 Groff, B. D., & Rowe, H. (2016). Resource and Reserve Statement for the Katewaka Coal
Deposit - Ludewa District - Tanzania; JORC Compliant Report. Lexington, KY: RESPEC.
 Honaker, R. Q., & Luttrell, G. H. (2007). Development of an Advanced Deshaling Technology
to Improve the Energy Efficiency of Coal Handling, Processing, and Utilization Operations.
Washington D.C.: U.S. Department of Energy.
 Intra Energy (Tanzania) Limited. (2017, April 24). TANCOAL. Retrieved from TANCOAL:
http://www.ietl.co.tz
 Mulhall, L. (2017, January 3). Tancoal sustains record sales. World Coal.
Group TRD LTD

Jiwoon Han ( Lucas Han )

Chief Director Group TRD
Gyeonggi-do, Siheung-ro 67, Bucheon-si, South Korea 14614
Email; [email protected]/[email protected]/[email protected]
Tel; +821099115977

_____________________________

Patrick Mwisua
Director of Africa Investment –Group TRD
& Tanzanian representative.
Gyeonggi-do, Siheung-ro, Bucheon-si, South Korea 14614
Email; [email protected],
Tel+ 255757745065

_______________________________