Valia Mining Project

VALIA MINING PROJECT, SOUTH GUJARAT Introduction: At the behest of Government of Gujarat, Neyveli Lignite Corporation has decided to develop the lignite deposits of Valia area in Bharuch and Surat Districts in Gujarat for an integrated mine-Gum-power projects. As per the MQU signed between NLC and Government of Gujarat on 28-07-2006, NLC proposes to develop Valia block in two phases. Initially, the First Phase is to develop a mine with capacity of 8 Million tonnes to be linked with 1000 MW Power Plant and to add additional capacity of mine 4 million tonnes to be linked with 500 MW Power Plant in Phase-Il. For the above purpose, E, F, G & C, D and part of B blocks of Valia and Mangrol areas will be allocated to NLC. For 1000MW project in first phase, a total of about 200 MT mineable resources is required for 25 years. Accordingly, mining is prioritized in Block - E,D & C and part of Block-B (upto River Bagha) having about 230 MT of mineable reserves followed by Block F&G having about 80 MT of mineable reserves. Location: The proposed area is an extension of the existing Vastan lignite mine area being mined by Gujarat Industries Power Company Limited (GIPCL. A total of about 44 Sq. kms is roughly bounded by Bagha river in the South, Valia-Netrang road in the north, Kim river in the west and lignite development boundary in the East. The proposed area is about 60 Kms. from Surat. This area falls in both Surat and Bharuch District. The entire area is extending over a strike length of 20 to 22 Kms in North East — South West direction dipping towards west. The width of the deposit varies from 2 to 4 kms. (Plan) Geology: The area is occupied by subsurface Eocene group of rocks of Tertiary age, Deccan Trap forms the basement of this formation. The Stratigraphic sequence established for the area is as follows:

Age

Formation

Lithology

Recent Upper Eocene

Alluvium Amaravati

Lower Eocene

Cambay shale

Palaeocene to Creataceous

UNCONFORMITY Up Deccan Trap

Soils and Sub-soils Nummulitic time stones, yellow clay, Sandstone, Conglomeratic bands etc Variegated clays, Grey and dark, Grey Clays, Lignite, Side rite Basalt and Rhyolites.

Vastan-Mangrol-Valia lignite block is a part of the Cambay megabasin extending from Gujarat to Barmer District of Rajasthan. Generally, significant lignite deposits are associated with thick tertiary sedimentaries deposited in the paleo-depressions of Deccan traps. Deccan traps, which are exposed in the East of Vastan village, form the basal configuration for the overlying sub-surface sedimentanes including lignite. The general trend of contact between trap and the overlying sedimentaries is in NE-SW direction. Dip is North West at 2 to 5 degrees. Lignite is of Lower Eocene age. The overburden thickness in the area ranges from 30 to 60m in the North side and 60 to 80 m in the southern side. The lignite in the area generally occurs as 3 horizons. The cumulative thickness of lignite ranges from 6 to 8 metres in Mangrol and 8 to 11 metres in Valia area. Overburden and interburden consist, in varying thickness, of alluvium, black cotton soil, Kankar, grey clay, variegated clay, nummilitic limestone, calcareous sandstone, brown calcareous clay, bentonitic clay. Predominance in the Vastan mining area is argillaceous with the variegated clay and greenish grey clays. The grey clays are plastic and expansive when wet and on drying crack up. Geological Structure: On the basis of depth of intersection of lignite seams and tendency of seam splitting, suggest the area has undergone structural disturbances. MECL interpreted 5 faults in this area — Fl-Fl to F5-F5 with throws ranging from 15 to 50 meters, which will not affect the mining operations.

Lignite Reserves: For the purpose of development and applying Mining lease in the ValiaMangrol area, Gujarat Industries Power Company Limited (GIPCL) has divided the area into number of sub-blocks as A, B, C, D, E, F and G. GIPCL is at present mining lignite from A block which has been designated as Vastan Mine. GIPCL has also proposed to develop the Block-B (South) in future, which is having reserves of about 35 MT of mineable reserves. The details in respect of other sub-blocks where NLC has proposed to develop mines are given below: Lignite Quality: The average values determined from results of proximate analysis on “As received basis” as per Commissionerate of Geology & Mining , Government of Gujarat (CGMIG) are as follows: Moisture 51% Ash 5.75% Volatile Matter 24.86% Fixed Carbon 18.39% Gross Calorific Value 2890 K.cal./Kg. Sulphur Around 1 to 2 % (Air dried) Though the sulphur indicated by CGM/G is high, it may be due to analysis Air-dried samples. As per GIPCL report, sulphur content is much lesser (less than 1%). Valia Lignite Mining Project Background Government of Gujarat has been planning to set up lignite based Power Projects utilizing lignite deposits available in Gujarat to meet the growing power demand in the State and was looking for potential promoter for taking up these projects. In this process, GoG had invited NLC to set up lignite based power project in Gujarat. NLC had shown interest to implement integrated mine cum Thermal power project utilizing the lignite deposits available in South Gujarat as NLC has got long standing experience in both mining cum power sector and adequate financial resource. Government of Gujarat (GoG) has assured to provide basic infrastructural facilities and shown interest to absorb maximum power generated from this project. In a meeting held on 01.12.2004 at Gandhinagar, with Govt of Gujarat, it was agreed between GoG

and NLC for developing a 500MW to 1000MW power project in two stages in South Gujarat independently or jointly with a State organization of GoG. In this regard, an Expression Of Interest (EOl) was prepared and it was approved by NLC Board and MOC, vide Ir. no.43011 /67/2004/NLC/CPAM dt. 10.01.2005. Subsequently a meeting was held on 15.10.2005 at Gahdhinagar with Hon’ble Chief Minister and other senior officials and discussed various issues on lignite block allocation, water source, site for power plant, implementation time schedule and power allocation. Further, a meeting was held at Neyveli on 07.02.2006 between NLC and GoG, wherein it was decided to implement a 1000 MW lignite based power plant initially and 8.0 MTPA lignite mine in South Gujarat jointly with GoG / the company (ies) nominated by GoG and planned for additional 500 MW subject to the availability of lignite reserves and NLC agreed for the same. Further, the points discussed in the earlier meeting including formation of Joint Venture Company were frozen and decided to enter into a Memorandum of Understanding (MOU) between NLC and GoG for the implementation of the project The Board of Directors of NLC at the meeting held on 25th May, 2006 accorded approval for the draft MOU to be entered with G0G and the same was approved by MOC on 06.07.06. The MOU was signed in presence of Chief Minister of Gujarat on 28.07.06 at Chennal. PROJECT DETAILS The project proposal is to build, own and operate lignite mine of capacity 8.0 MTPA and 1000 MW power project in the first phase with addition of another 500 MW in the second phase subject to the availability of additional lignite reserve in South Gujarat Region and increase the mining capacity suitably. To implement this proposal a Joint Venture Company will be formed within six months from the date of signing of MOU (28.07.2006) with the Govt. of Gujarat (GoG) /company(ies) nominated by Govt. of Gujarat with equity participation of NLC as 74 to 89% and that of Govt. of Gujarat as 26 to 11 %. G0G has agreed to allocate lignite blocks of Valia, E, F, G blocks in Baruch District and C & D blocks in Surat district bounded by Bagha river & Motomia Mangrol Village on the South, Valia — Netrang road on the North, Kim river on the West and lignite development

boundary on the East and Block B to the extent required. These blocks are expected to host about 310 MT Lignite resources which could meet the requirement of 1000 MW power project for the life of the plant. Mining lease, which are in favour of GIPCL/GMDC to be transferred to NLC and for fresh lease to be applied wherever mining lease has not been applied. Action has been taken to engage MECL for carrying out Geological exploration and this will be completed in six months period for the blocks, which is required for first phase of mining plan. GIPCL is at present operating Vastan lignit mine of 1.5 MT per annum capacity to feed 2 x 125 MW units. This mine of 42 MT is being mined since year 2000. GIPCL has obtained mining lease to the northern side of existing mine over an area of 2080h which has mineable reserve of 84MT. this reserve has been planned to be used by GIPCL for feeding to one unit of 250MW (+20% addl. Capacity) which is adjacent to the existing Power Plant. GIPCL is offering the balance 86 MT of lignite from this block to NLC. GIPCL has applied for mining lease for valia block which has minabe reserve of I 7OMT and Govt, Gujarat has agreed to offer the same to NLC. The valia block has been explored on a 1000 mtr grid except in a small area where detailed exploration has been done a 250 mtr grid space. In order to increase the confidence level detailed exploration is to be done on closed space drilling. NLC has awarded exploration contract to MECL and the work will be taken up as soon as advance action proposal is approved by MOC. The fuel requirement is estimated to be about 300MT with CV of 2800 Kcal/KG and Sp. Consumption of 0.975 kg/kwhr at 80 PLF for life span of 35- 40 years to feed 1000MW Power project. Govt of Gujarat has agreed to allocate lignite blocks - Valia Blocks-E, F, G and C & D blocks and block B to the extent required. Power Plant: It is proposed to develop a mine and to set up the power plant preferably near mine mouth. In this regard, G0G has identified five locations and NLC on inspection has freezed three locations viz locations C,D & E near Valia town for locating the NLC has estimated about 800h of land for establishing the power plant and its infrastructure which includes ash dyke. power plant and any one site will be chosen based on the suitability. Joint inspection with GIPCL to the above site is to be made and suitable site to be firmed up. The necessity of soil investigation study is to be studied. NLC has estimated about 800h of land for establishing the power plant and its infrastructure which includes ash dyke.

Water Requirement: The requirement of water is estimated to be about 5000 m3/hr and it is proposed to take water at Bhodan/Kakrapar weir from Tapi River or from Rudh regulator of Narmada River based on the detailed tech-economic study. Based on the site selection, water intake point and water corridor to be finalized. The water requirement for the power plant is estimated to be about 5000 Cu. M/hr. GIPCL has engaged M/s C.C.Patel, to study about the water carrier system. The company has surveyed the area and suggested the following 5 options: • Location of 2 x 1000 Mw power plant near Nani Naroli plant & water supply from Bodhan, Tapi river ( estimated cost Rs. 25 crores) • Location of 2 x 1000 MW plant near’Nani Naroli & water supply from in- take at village Rudh on left bank of river Narmadha. (estimated cost Rs. 93 crores) • Location of 2 x 1000 MW plant near valia & entire 30 MGD water requirement from new in-take at village Rudh on left bank of river Narmadha. (estimated cost Rs. 83 crores) • Location of 2 x 1000 MW plant near valia & using surplus infrastructure facility avilabe at Bodhan to draw additional 10 MGD from Bhodan and 20 MGD from new in-take at village Rudh on left bank of river Narmadha ( estimated cost Rs. 83 crores). • Location of 2 x 1000 MW plant near valia & drawl of entire 30 MGD water requirement from new in-take at village from Kakarapar weir pond on right bank of river Tapi. (estimated cost Rs. 118 crores) After appropriate decision on the location of the power plant is decided, detailed survey of the water carrier has to made to fix the water carrier system. Construction water. The source of water for construction purpose either by sinking bore well or from near by water source (GIPCL power plantl Narmadha river / Tapii river.) is to firmed up. Approach roads. Based on the selection of mining boundary and power plant location, the approach roads to be provided / strengthened / diverted.

Construction Power: Regarding the requirement of construction power supply, GoG has agreed to provide power supply from the nearest sub station. The nearst sub station to be identified and the power drawl scheme to be decided. The power requirement is about 5MVA and one no 5 MVA transformer will be provided. Time schedule It is proposed to implement the project with the following time schedule: Preparation of various reports, getting various clearances and GOt sanction, Award of contract for main plant package Construction and synchronization of the first unit Total

18 months from date of signing of MOU 06 months from GOl sanction 36 months from LOA 60 months from date of signing of MOU

Investment With regard to project cost of the power plant, it would be between Rs.4.5 to 5.OCrores per MW of installation and total investment required for the power plant would be around Rs.4500 5000Crores. If Mega power project status is obtained, the project cost would be about Rs.4500Crores. With regard to mining of about 8.OMTPA, the project cost would be about Rs.l000Crores and the entire overburden and lignite mining operations is proposed to be outsourced. Mining lease will be obtained from the appropriate authority. NLC Board has approved the Advance Action Plan for Rs.6.2oCrores in the meeting held on 09.06.2006 and MOC has been requested to approve the same for taking up pre-project sanction activities. Approval of MOC is awaited. As soon as AAP is approved, action will be taken to implement the same. FORMATION OF JOINT VENTURE COMPANY: Subject to investment and other approvals, as may be required, of the appropriate Governments/ the Board of Directors of NLC &

Company I (ies) nominated by Govt. of Gujarat, a Joint Venture Agreement (JVA) on mutually agreed terms and Memorandum of Association (MOA) & Articles of Association (AOA) prepared in tine with the provisions of the JVA is proposed to be signed by between NLC and GoG I company (ies) nominated by GoG to form the Joint Venture Company (JVC). JVC is proposed to be formed and incorporated under the Companies Act, 1956 as an integrated Company involving mining and generation of power for the establishment, operation and maintenance of the integrated Project in South Gujarat. NLC and GoG, have proposed to have the initial authorized paid-up equity capital of the JVC at the time of incorporation as Rs.5.OCrores and subsequently enhance the authorized paid-up equity capital through a detailed planning process. The proposed equity share holding pattern between NLC arid GoG I Company (ies) nominated by G0G is as under: a) Neyveli Lignite Corporation Limited - 74% to 89% and b) GoG / Company (ies) nominated by Govt. of Gujarat - 26% to 11%. Valia Lignite Mining Project — Present status and action Programme The action taken by NLC is as below. 1. A Geologist from NLC has been deputed to Gujarat to collect the available geological exploration details and hydro geological study carried out by GMDC and GIPCL. Action has been taken to engage M/s.MECL for carrying out Geological exploration and this will be completed in six months period for the blocks, which is required for first phase of mining plan. 2. NLC has addressed CMPDI to furnish the budgetary offer to carry out feasibility report for mine. 3. A tender was floated for carrying out feasibility report for thermal power plant. Five bids were received. After techno commercial review, the price cover will be opened shortly. 4. Limited tender enquiry was floated for carrying out EIA!EMP study for both thermal and mine. The bids received are under scrutiny. After techno commercial review, the price cover will be opened shortly.