KONYA ILGIN

Konya Ilgın lignite field is located between the villages of Gölyaka, Tekeler, Misafirli, Yorozlar and Çavuşköy, 10 km north of Ilgın district of Konya province.

Konya Ilgın lignite field was discovered by drillings performed by the institute of Mineral Research and Exploration in the 1980s. The amount of lignite reserves within the field was confirmed with the drilling and reserve works performed by the North American Coal Company that holds the operating right of the field in those years, and studies were initiated to use reserves for the benefit of national economy.

After the field was taken over by Konya Ilgın Elektrik Üretim Sanayi ve Ticaret A.S., (“Konya Ilgın”, “Company”) in 2011, Company first began its drilling studies to confirm data on works carried out in previous years, and then continued its works to create a safe mining plan that is safe and sustainable in the field by examining geology and reserve status of the field. Within the scope of these studies, ground survey analysis at mine and power plant site, changes in the permits of land usage, dewatering of mine field, and acquisition of property rights were carried out and as of the end of 2018, expropriation studies and changes in the land permits of the power plant area have been significantly completed. Coal production activities have been started in the last quarter of 2019 with the completion of above-mentioned preliminary works in the mine field.

As of today, Konya Ilgın carries out a greenfield project to establish an integrated thermal power plant with supercritical fluid bed boiler technology that will have a planned installed capacity of 500 MW. Furthermore, Konya Ilgın has the operating rights of lignite coal mine fields located in Konya, Ilgın through its mining operation licenses (fields with license number 1247 and 2444) and royalty agreement (field with license number 1247). Konya Ilgın Project, which will provide that our domestic lignite resources are brought to the use of country economy in parallel with Strategy Certificate published by the Ministry of Energy and Natural Resources and contribute to security of supply and sustainability in energy production of the country, will also increase local employment within the region and participate to region economy.

According to the Coal Resource Estimation Report prepared in accordance with standards adopted by National Resources and Reserves Reporting Committee (“UMREK”) on 20 August 2024, it is estimated that 193,7 million tonnes of coal is located in the fields with licence numbers 2444 and 1247. The lower calorific value of the coal on original basis was determined as an average of 2,022 kcal/kg. As a result of the data obtained from the drilling carried out in the fields between 1997 and 2024 and the confirmation drilling carried out in 2024 within the scope of UMREK (2023) reporting, it has been concluded that the data obtained from the drilling has sufficient accuracy and precision and supports the “Measured” and/or “Indicated” resource classes that allow mineral reserve estimation in both quantity and quality. Within this framework, 104.2 million tonnes of total 193.7 million tonnes of coal resources are classified in the “Measured” and/or “Indicated” resources, of which 62.6 million tonnes are in the “Measured” resources and 41.6 million tonnes are in the “Indicated” resources, and 89.5 million tonnes are classified in the “Inferred” resources.

Konya Ilgın Thermal Power Plant Project is a greenfield investment project, the timing of which is affected by many factors such as the path of the Turkish Lira against the US Dollar, supply and demand of electricity in market, electricity prices and incentives provided to renewable energy resources and domestic resources. As of today, due to recent economic and sectoral developments observed in Turkish electricity market that are out of Company’s control, the construction of the thermal power plant has not commenced yet.

The Energy Market Regulation Authority (“EMRA”) has rejected the application of Konya Ilgın which includes the amendment of the electricity generation license dated 27 February 2013 with a term of 49 years by extending the completion time of the thermal power plant by an additional 66 months and cancelled the electricity generation license with its decision taken on October 27, 2022. Although the reasons submitted in our application for the extension of the completion time of the power plant due to economic and sectoral developments beyond the control of Park Elektrik and its subsidiary Konya Ilgın has not been treated as “Force majeure situations, and justifiable reasons not caused from the license holder”, within framework of the electricity market legislation, by EMRA, since such an assessment is considered not to be reasonable and in compliance with the relevant legislation, Park Elektrik and its subsidiary Konya Ilgın has started legal action against the decision. The investigation on the merits of the case is ongoing at the appellate procedure before the Council of State.

Konya Ilgın started to carry out a preliminary mining activity plan due to the fact that the construction of the power plant has not started yet and the construction period of power plant is approximately 3.5 years. Konya Ilgın aims to perform 47,8 million m3 of stripping activity and produce approximately 2,3 million tonnes of coal within the period of June 2019- December 2027. Due to the fact that it is not possible to store the coal for a long time in this pre-investment period (spontaneous combustion as a result of oxidation, etc.), Konya Ilgın started to generate income by selling coal during this transition period. The main mining activity plan which aims to produce approximately 3,5 million tonnes of coal per year during the 30-year operational period of power plant, will meet the fuel need of the thermal power plant. The duration of the preliminary mining activity plan can be extended based on the timing of power plant construction.