IRC Limited (1029.HK) FY2017 Annual Results 27 March 2018 Disclaimer

CONFERENCE CALL 14h00 HK INVEST in us NUMBER: +852 2112 1888 deliver RESULTS PASSCODE: 4582527# CREATE values

Some statements contained in this presentation or in documents referred to in it are or may be forward-looking statements. Statements reflect the Company’s current views with respect to future events and are subject to risks, assumptions, uncertainties and other factors beyond the Company’s control that could cause actual results to differ from those expressed in such statements. Although the Company believes that such forward-looking statements, which speak only as of the date of this presentation, are reasonable, no assurance can be given that they will prove to be correct. Therefore, you should not place undue reliance on these statements. There can be no assurance that the results and events contemplated by the forward-looking statements contained in this presentation will, in fact, occur. The Company will not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation, except as required by law or by any appropriate regulatory authority. Nothing in this presentation or in documents referred to in it should be considered as a profit forecast. Past performance of the Company or its shares cannot be relied on as a guide to future performance. This presentation does not constitute, or form part of or contain any invitation or offer to any person to underwrite, subscribe for, otherwise acquire, or dispose of any shares in IRC Limited or advise persons to do so in any jurisdiction, nor shall it, or any part of it, form the basis of or be relied on in any connection with or act as an inducement to enter into any contract or commitment therefore. In particular, this presentation and the information contained herein are not an offer of securities for sale in the United States of America or the Republic of South Africa. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this presentation or on its completeness and no liability whatsoever is accepted for any loss howsoever arising from any use of this presentation or its contents or otherwise in connection therewith. The development and production plans and estimates set out herein represent the current views of the Company's management. The Company’s Board reviews the production estimates on an ongoing basis. All planning is subject to available funding and capital allocation decisions. This presentation is prepared in compliance with Hong Kong law and the courts of the Hong Kong Special Administrative Region of the People’s Republic of China will have exclusive jurisdiction over any disputes arising from or connected with this presentation.

All dollars refer to United States Dollars unless otherwise stated. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. All production and sales volume in this document refers to wet metric tonnes.

SLIDE 2 Table of Contents

Slide 1. FY2017 Results Snapshots…….. 4

2. K&S Recent Updates …………… 6

3. Financials ……….…..…….……... 8

4. Operations ….………..….……….. 15

5. Corporate ……..………………….. 23

SLIDE 3 1. FY2017 Results Snapshots

SLIDE 4 FY2017 Snapshots

Highlights in FY2017

Financials • Net profit of US$113.3 million (31 December 2016: Net loss of US$18.2 million) • Fivefold increase in revenue to US$109.3 million (31 December 2016: US$16.5 million) • Cash cost reduced by 12.0% to US$48.4 per tonne (31 December 2016: US$55.0 per tonne) • K&S generated an EBITDA of US$32.9 million (31 December 2016: N/A, as K&S was not in commercial production) • Impairment reversal of US$129.6 million following operational status and correction in market conditions

Operations • K&S’ 2017 production capacity at c.50%; currently at about 70% and increasing • Sales volume increased 6 times to 1,539,146 tonnes (31 December 2016: 219,352 tonnes) • Achieved selling price doubled to US$78 per tonne (31 December 2016: US$39 per tonne) • K&S’ customer base broadened and diversified • Care and maintenance process at Kuranakh satisfactory

SLIDE 5 2. K&S Recent Updates

SLIDE 6 K&S Ramp Up Progress

Iron ore YTD production & sales Progress since inception: Iron ore Year-to-date • Achieved an aggregated production of more than concentrate 2,000,000 tonnes of iron ore concentrate in Feb 2018

• Current steady capacity of about 70% (tonnes) 2017 2016 Changes

Production 1,563,066 188,111 731% Progress in FY2017:

▪ Successful loading test at 90% production capacity Sales 1,539,146 219,352 602%

▪ Ramp-up of Drying Unit progressing

▪ Despite issue at Drying Unit:

✓ IRC 2017 production reached 1,563,066 tonnes (increased more than 7 times)

✓ IRC 2017 sales achieved 1,539,146 tonnes (increased more than 6 times)

▪ Continue to be positive cash flow in FY17

SLIDE 7 3. Financials

SLIDE 8 Financials – Profit & Loss Account

US$ ‘000 FY2017 FY2016 Change Key Operating Data: Iron Ore Sales (tonnes) 1,539,146 219,352 601.7% K&S commissioning commercial production and contribution Iron Ore ASP (US$/dmt) 78 39 100.0% reflected in FY2017 Ilmenite Sales (tonnes) - 60,044 -100.0% Ilmenite ASP (US$/t) - 117 -100.0% Cash Cost (US$/t) 48.4 55.0 -12.0% Revenue 109,265 16,467 563.5% Increased to match with the Costs increased production and sales Site operating expenses & service costs (96,221) (24,795) 288.1% Successful cost control policy, General administration expenses (9,871) (10,397) -5.1% continue to reduce General Admin Cost Impairment reverse (recognize) 129,614 (47) N/A Due to improvements in iron ore JV Contributions - 47 -100.0% price and successful operation of K&S in FY17, impairment 132,787 (18,725) N/A charges partially reversed. FX & Other Gains 2,134 689 209.7% Net Financial Expenses (22,296) (776) >27 times K&S revenue commenced the recognition of financial expenses Profit/(Loss) Before Taxation 112,625 (18,812) N/A and reflected in 2017 P/L instead of capitalized. Tax & Non-Controlling Interests 629 586 7.3% Net Profit/(Loss) 113,254 (18,226) N/A

Underlying Results (Net Loss excl. impairment) (16,360) (18,179) -10.0%

EBITDA 19,925 (9,980) N/A SLIDE 9 Financials – Balance Sheet

31 Dec 31 Dec US$m Change 2017 2016 Assets Fixed and intangible assets, PP&E Prepayment 478.3 352.5 35.7% Impairment reversal Receivables, Inventories & Other Assets 57.0 47.0 21.3% Cash and deposits 11.0 33.3 -67.0% Liabilities Bank borrowings (223.0) (243.0) -8.2% ICBC loan for K&S construction Payables and other liabilities (71.9) (56.2) 27.9% Net assets 251.4 133.6 88.2% Equity Share capital 1,285.2 1,285.2 - Other reserves (1,033.8) (1,151.6) -10.2% 251.4 133.6 88.2%

Gearing* 45.8% 61.1% -15.3% Impairment reversal increased the equity, resulting in lower gearing * Net Debt / (Net Debt + Equity)

SLIDE 10 Financials – Cash Flow Cash Position at 31 December 2017

12 months ended 31 Dec US$ ‘000 2017 2016

Net cash generated from operations 21,718 1,006 Cash inflow from K&S mine

Interest paid (10,244) (10,150)

Facilitation fees for loan restructuring & other borrowings (4,000) -

Capital expenditure (6,784) (14,734) K&S construction completed

Net proceeds on issuance of shares - 25,292 Fund raised from Tiger Capital in FY2016 Repayment for bank borrowings, net (21,794) (29,806)

CNEEC compensation - 4,508

Other payments and adjustments, net (1,241) (1,060)

Net movement during the year (22,345) (24,944)

Cash and bank balances (incl. deposits)

— At 1 January 33,319 58,263

— At 31 December 10,974 33,319

SLIDE 11 Financial Resources & Liquidity Cash Position at 31 December 2017

Liquidity Profile: ▪ Cash and Deposit balances: US$11.0m ▪ Total debt outstanding: US$235m ✓ ICBC project loan: US$234m ✓ Trade finance: US$1.5m ✓ Undrawn loan facility: US$8.5m – as at 31Dec2017 ▪ Revolving working capital finance facility of up to US$10 million for K&S

In 2017: ▪ Obtained wavier from ICBC and Sinosure for relaxation of 2017 payment terms ✓ Waived principal payment of a total of US$42.5m in 2017 ✓ Smooth it over the five subsequent repayment instalments ✓ i.e. each five subsequent repayment installment increases by US$8.5m to US$29.75m

SLIDE 12 Benchmark Fe 62% CFR China VS. FX rates (USD:RUB) Iron ore price drop mitigated by the depreciation of Rouble Benchmark Fe 62% CFR China VS. FX rates (USD:RUB) Fe 62% (US$/t) FX (USD: RUB) 160 2017 62%Fe price slight decreased by 5% 85.0 Max: US$95/t, Min: US$53/t, Average: US$71/t 80.0

140 USD: RUB 58 75.0

70.0 120

USD: RUB (RHS) 65.0

100 60.0

55.0 80 50.0

60 45.0

40.0

40 Benchmark Fe 62% CFR China (LHS) 35.0 Fe 62% ($/t) US$73 30.0 20 25.0

0 20.0

Jul Jul Jul Jul

Jan Jan Jan Jan

Jun Jun Jun Jun

Oct Oct Oct Oct

Apr Apr Apr Apr

Feb Feb Sep Feb Sep Feb Sep Sep

Dec Dec Dec Dec

Aug Aug Aug Aug

Nov Nov Nov Nov

Mar Mar Mar Mar

May May May May 2014 2015 2016 2017 SLIDE 13 * Source: Bloomberg (as of 31 December 2017) Benchmark Platts 62%Fe VS. Platts 65%Fe Spot Price Price premium spread for 65%Fe enlarging

Fe (US$/t) K&S’ 65%Fe iron ore concentrate $120.00 Benefit from the increasing premium spread 65% vs 62% variance Iron ore Platts 65% $110.00 Iron ore Platts 62%

$100.00

$90.00

$80.00

$70.00

$60.00

$50.00

$40.00

$30.00

$20.00

$10.00

$- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2016 2017 2018

* Source: Platts (as of 19 January 2018) SLIDE 14 4. Operations

SLIDE 15 Map of IRC Assets Competitive Advantage: Geology, Geography, Infrastructure

Amur River Bridge

K&S

3-5 days 240km from K&S to Bridge

SLIDE 16 K&S statistics at a glance

Mining Moving Produce* c.26,000m3 c. t 30,000 Mtpa Rock mass/ Day Of Ore/ Day 3.2

Low Cash Cost EBITDA** c.US$260K US$40/t Operating Cash US$96M Profit/ Day** per annum

High Quality K&S 140 Wagons/ Day; 3-5days c.9,000t Fe Delivers to China/ 65% Proximity to China Day Fe concentrate * Based on wet metric tonne SLIDE 17 ** Assumptions: Achieved selling price at US$70/wmt; K&S at full capacity with the Amur River Bridge in operation and unit cash cost of US$40/t; USD/RUB exchange rate of 62 K&S – Commissioning 100% owned, In Process of Ramping Up for Full Capacity EAO Region, Russian Far East

✓ K&S capacity: process 11Mtpa of ore, produce 3.2Mtpa of 65% Fe iron ore concentrate

✓ Low cash cost: US$48.4/t in 2017 (US$40.0/t with Amur River bridge)

✓ Proximity to China: 240km from K&S to Chinese border (c. 3-5 days; less with the bridge)

Consistent, Reliable and Timely delivery by Trans-Siberian ✓ Amur River Railway Bridge

✓ Option for Capacity Increase up to 6.3Mtpa (K&S Phase II)

✓ K&S Geographical Advantage: benefit from China’s OBOR

Total Grade Capacity Life of Resources Base case – Mine Reserves 31% => 3.2mt 863 Mt Option to expand 20 years Conc 65% up to 6.3mt Commissioning of Reclaimer Unit in July 2016 – stockpile of Fe concentrates at Wet Concentrate Storage SLIDE 18 K&S – High Demand From North-East China Steel mills in North-East China want IRC Iron ore Strong Market Demand in NE China Customers in NE China benefit from lower transport and working DEMAND SUPPLY capital costs with IRC ▪ Insufficient Local Supply of ▪ K&S : high quality 65% Fe* Feedstock ▪ K&S is only ONE-TENTH of ▪ High Demand for 65%Fe North-eastern China plant ▪ NE China Steel Mills Capacity: demand c.20 mtpa ▪ IRC – ONLY supplier of 65% ▪ Translate to Fe demand: Fe in Russian Far East 20mt pig iron = 32mt Fe concentrates. Remarks*: 65% Fe has price premium of 12%-14% over 62% Fe

Potential Customers – Steel Mills in NE China

City Steel Mill Plant capacity*

Tonghua Shougang Tonggang 7Mtpa Jilin Jilin Jianlong Steel 5Mtpa Yichun Yichun Xilin Iron & Steel 4 Mtpa Shuangyashan Heilongjiang Jianlong Steel 2 Mtpa Ulanhot Wulanhaote Iron & Steel 1Mtpa Qiqihar Beiman Special Steel 0.7 Mtpa Total Capacity 19.7 Mtpa * Steel capacity as of June 2016 SLIDE 19 K&S Flowsheet

Open pit mining Load to coarse crusher Processing at coarse and fine crushing and screening plant

Load to wagons, ready to send to customers via railway Processed Fe concentrates stored at wet concentrates storage Processing at magnetic separator

SLIDE 20 Kuranakh – Care & Maintenance Ensure minimal costs going forward 100% owned, Amur Region, Russian Far East

✓ Care & maintenance, assessing re-opening and other options

✓ 5+ years good track record

✓ Quality Fe & TiO2 concentrates

✓ Fe: ≈1Mtpa; TiO2: ≈ 160,000tpa

✓ Limited cost going forward (e.g. license & minimal security China staff)

Total Grade Capacity Resources Resources 900kt 32% => Fe (62.5%) Concentrate 17 mt 160kt 62.5% TiO2 (48%)

Iron ore concentrate at Olekma plant at Kuranakh (before moving to Care & Maintenance) SLIDE 21 Exploration and Complementary Projects Strong Portfolio of Assets, Opportunities For Later Times

• Extensive portfolio diversified by geography, commodity and development stage • IRC owns valuable licenses for later development until market conditions improve • Garinskoye is in advanced development stage, others are in early exploration stage • SRP the vanadium joint venture, was reliant on concentrate from Kuranakh, as the latter was moved to care and maintenance, IRC is seeking alternative sources of materials as the feedstock.

Project Products/ Service Location

Garinskoye (100%) Iron ore concentrate Amur Region, Russian Far East

Kostenginskoye (K&S Resource Iron ore concentrate Jewish Autonomous Region, Russian Far East Base) (100%) Bolshoi Seym (100%) Ilmenite Amur Region, Russian Far East

SRP (Steel Slag Reprocessing Vanadium Pentoxide Heilongjiang, China Plant) (46% owned) Giproruda (70% owned) Technical mining research and St. Petersburg, Russia consultancy services

SLIDE 22 5. Corporate

SLIDE 23 Amur River Bridge / Tongjiang-Nizhneleninskoye Bridge Further US$ 5/t savings for K&S transportation cost

Amur River Bridge (Sino-Russian Railway Bridge) ✓ Encourage Sino-Russian economic activities ✓ Bridge length: 2.2km (Russia: 0.3km; China: 1.9km) ✓ Links Nizhneleninskoye (Russia) & Tongjiang (China) ✓ According to media, Chinese side of the bridge completed ✓ Russian side expected to be completed by 2018 For IRC Closer Distance, Cheaper Transport ✓ 2014 IRC sold bridge project for RUB174m ✓ K&S to border 240km Russian side has begun construction work ✓ Railway-tariff savings of up to US$5/t

*Photos source: IRC site visit SLIDE 24 Corporate Info A Trusted Reputation, Experienced Board Members and Management

Corporate Information Shareholding Structure

Board of Directors Petropavlovsk Other free (31.10%) float (43.07%)

Tiger Capital (10.96%)

General Nice (13.84%)

As of 31 December 2017

J Hambro R Woo J Smith S Murray CK Cheng CHAIR/NED INED INED INED NED D Kotlyarov Y Makarov D Bradshaw CF Li TF Ng CFO CEO DEP.CHAIR/ INED NED SINED

Co. Secretary: J Yuen SLIDE 25 Track Record Increasing Production | Diversification | Reducing Risk

K&S trial production, US$50m Open ramping up for commercial K&S Offer completed production US$238m commissioning K&S hot US$25m share placement GN/MM process began commissioning Garinskoye DSO Transaction process began Reserves increase opportunity identified K&S Optimisation Bolshoi Seym study to double minorities production IPO – listed on acquisition HKEx K&S construction commences Kuranakh first production ICBC Drawdown ICBC US$340m facility agreed

Proven track record of beating iron ore production targets

SLIDE 26 1029

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