Westmoreland Coal Company Investor Presentation Second Quarter 2014 - PowerPoint PPT Presentation

Westmoreland Coal Company Investor Presentation Second Quarter 2014 westmoreland.com | NASDAQ:WLB

Disclaimer Forward Looking Statements This document contains “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make about our anticipated 2014 year end EBITDA and coal sales, the ability to optimize the Canadian assets by taking advantage of synergies and economies of scale, the possibility of a corporate re-rating, the availability of additional acquisition opportunities and that the acquisition is expected to be accretive in 2014. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward- looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements. They are statements neither of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include political, economic, business, competitive, market, weather and regulatory conditions and the following: Changes in our post-retirement medical benefit and pension obligations and the impact of the recently enacted healthcare legislation;  The impact of the recently enacted healthcare legislation and its effect on our employee health benefit costs;  Our potential inability to expand or continue current coal operations due to limitations in obtaining bonding capacity for new mining permits, and/or increases in our  mining costs as a result of increased bonding expenses; Our substantial level of indebtedness and potential inability to maintain compliance with debt covenant requirements;  The potential inability of our subsidiaries to pay dividends to us due to restrictions in our debt arrangements, reductions in planned coal deliveries or other business  factors; The effect of Environmental Protection Agency inquiries and regulations on the operations of the power plants we provide coal to;  The effect of prolonged maintenance or unplanned outages at our operations or those of our major power generating customers;  Future legislation and changes in regulations, governmental policies and taxes, including those aimed at reducing emissions of elements such as mercury, sulfur  dioxides, nitrogen oxides, particulate matter or greenhouse gases; Our expansion into international operations as a result of the acquisition of the Canadian assets, which exposes us to risks relating to exchange rates and exchange  controls, general economic and political conditions, costs associated with compliance with governmental regulations in multiple jurisdictions, tax-related risks and export or import requirements for, or restrictions related to, our products; Our efforts to effectively integrate the Canadian operations with our existing business and our ability to manage our expanded operations following the acquisition;  Our ability to realize growth opportunities and cost synergies as a result of the addition of the Canadian operations; and  Other factors that are described in “Risk Factors” in our 2013 Form 10-K and any subsequent quarterly filing on Form 10-Q.  Westmoreland Coal Company 1

Company Highlights Overview Financial Position Net Leverage (1) 3.4x  North American energy company operating 13 (ratio) EV/LTM EBITDA (2) surface coal mines and two coal-fired power 5.4x (ratio) generating units  Well-positioned to deliver shareholder value: Current Debt Rating  Leading market position as a low-cost fuel provider Rating Agency Corporate Bonds  An operating model unique to the industry S&P B- B-  Generating consistent cash flows Moody's Caa1 Caa1  Strong management capable of integrating acquisitions  Award-winning safety and environmental performance, winning state and national awards 2013 Accomplishments 2014 Targets Coal Sales Adj. EBITDA (3) Coal Sales Adj. EBITDA (mm tons) ($ millions) (mm tons) ($ millions) 25 $116 25 - 28 $112 $120 - U.S. million tons million Canada 13 - 16 $52 - $62 (8 months) 38 - 44 $164 $182 - Achieved record revenue and EBITDA Total 1. Net debt calculated as: (gross debt less cash and cash equivalents and debt service reserves) / Adj. EBITDA. 2. LTM EBITDA based on pro forma 31-Dec-13. Contribution from Canadian operations converted from US$ to C$ at average 2013 exchange rate and re-converted to US$ at 1.10 C$ per US$. 3. Includes $2.9 million of Sherritt acquisition costs. Westmoreland Coal Company 2

Transformative Acquisition Completed in April Doubles Westmoreland’s production, creating the 6 th largest North American coal producer (1)  Significantly Combined reserves of 1.3 billion tons and ~2.1 billion tons of additional resources to be proven  Increases Scale Enhances sustainability of long mine lives and supports long-term cash flows  Complementary to core surface mining, mine-mouth model  Highly Operations strategically located adjacent to customer generating facilities  Complementary to Operate under long-term cost-protected contracts  Existing Operations Safe and environmentally responsible operations  Asset diversification into Canada, one of the world’s most favorable mining jurisdictions  Enhances Provides entry point into the export market and strategic access to port facilities  Asset Portfolio Adds existing highly skilled workforce and management teams  The acquisition is expected to be accretive to cash flow beginning in 2014  Opportunities identified to further optimize the mining operations based on Westmoreland’s experience, Financially  synergies and economies of scale Accretive Pro forma 2013 revenue of ~$1.3 billion (2) with combined Adjusted EBITDA of $231 million (2)  1. Based on 2013 production volumes. 2. Contribution from Canadian operations converted from US$ to C$ at average 2013 exchange rate and re-converted to US$ at 1.10 C$ per US$. Westmoreland Coal Company 3

Operations Profile 13 surface operations Strategically located to minimize  coal transport High-quality, stable customer base  Coal Valley Genesee Adjacent customer facilities provide  Paintearth fuel cost advantage Sheerness Bienfait Poplar River Boundary Dam Savage Rosebud Beulah Absaloka 2 power generating units Kemmerer Headquarters Roanoke Valley Track record of operating at high Power Facility  (ROVA) capacity factors Next generation environmental controls  for clean operation Jewett Awarded Carolina Star, North  Carolina’s highest recognition for workplace safety Coal – U.S. Coal – Canada Power Westmoreland Coal Company 4

Building a Diversified North American Coal Leader Westmoreland Coal Company 2013 Pro Forma Coal Sales 25 26 51 (Mst) $675 $610 Revenue $1,285 (US$ mm) Adj. EBITDA $116 $115 $231 (US$ mm) No. of Operating Mines 6 7 13 Reserves (1) 514 736 1,250 (Mst) Total Resources (1) 1,200 2,108 3,308 (Mst) (Inclusive of Reserves) Source: Company filings Note: Figures as of 31-Dec-13; Contribution from Canadian operations converted from US$ to C$ at average 2013 exchange rate and re-converted to US$ at 1.10 C$ per US$ 1. Reserves and resources as of 31-Dec-13. Westmoreland Coal Company 5

Westmoreland Investment Highlights Simple mining methods and mine-mouth model  Unique and  Mines adjacent to customer facilities provide fuel cost advantage  Predictable High quality, stable customer base under cost-protected contracts  Operating Model Superior safety and environmental record   6 th largest coal producer in North America  Significant Scale Geographic and regulatory diversification  and Diversification Significant reserve and resource base   Coal is the primary fuel for power generation in markets served  Operates in Favorable Power plant customers are base load generators with high utilization  Coal Markets Useful lives of customer plants extend well into the future   Experienced management team with a proven record operating a mine-mouth model Proven  Management Team Successful acquisition and integration of the Kemmerer mine from Chevron in 2012  Delevering through strong free cash flow generation   Opportunity to further optimize the newly acquired mining operations  Positioned for Growth Equity re-rating and potential for opportunistic acquisitions  Strategic port access and opportunity to participate in export market recovery  Westmoreland Coal Company 6