Cienaga, May 12th, 2016

Drummond would like to inform that during this week of collective bargaining negotiations with Sintradrummond, Agretritrenes, Sintramienergética and Sintramineros, there were offers and counter-offers regarding benefits applicable to all the workers and the union charters.

Accordingly, after discussing them at length, and taking into account the crisis caused by the prices in the international coal market that obligates companies to take measures to withstand it, the Company presented an integral offer that provides a definitive solution to the collective bargaining. It takes into account many of the concerns conveyed by the workers and the unions´ negotiating teams, which can be summarized as follows:

• Term of the collective bargaining agreements: 3 years
• Signing bonus: TEN MILLION PESOS ($10,000,000) subject to the signing of the collective bargaining agreements without a strike
• Wage increase:
  • 1st year: 7%
  • 2^nd year: CPI of 2016 + 0.23
  • 3rd year: CPI of 2017 + 0.50%
• Extra-legal bonuses: Remain the same (amount increases as a result of the wage increase)
• Health Coverage Policy:
  • Miscellaneous Expenses: They will be increased by 6.77% as of the next renewal policy in October of 2016.
  • A reduction from 20 to 17 hours per week so that workers´ children of ages 18 thru 27 attending university can continue to be covered by the policy.
  • A commission is created between the Company and two representatives from each union organization, in order to follow up on the services provided by the policy.
• All benefits recognized to workers in kind remain the same.
• All benefits recognized to workers in cash are updated for the 1st year: 6,77%; for the 2nd and 3rd year they will be increased by the CPI for 2016 and 2017, respectively

• Education Allowance:
• In addition to adjustment of the value mentioned in the previous point, the allowances will be increased as follows:
  • Special Allowances – Letter c): They will be increased by 2 for a total of 30 payments
  • University scholarships – Letter d): They will be increased by 7 for a total of up to 35 scholarships
• Housing Revolving Fund:
• The current housing revolving fund remains the same, and for the program we are including:
  • The value of the loan is increased up to $55.000.000.
  • There is an increase in the value assigned to expenses related to mortgage structuring and liberation of up to $1.200.000, given to the workers for said purpose.
  • The payment period is increased to 9 years.
  • In the cases where payment capability doesn´t allow for access to the full amount, for each worker who requests it there will be a calculation of the loan he or she will be able to get, so long as it is equal to or above $35.000.000.

In case a contract is terminated, unless it is legally justified, the employee with a housing loan will keep the benefit of the agreed upon interest rate in the convention´s negotiation for an additional six months, so long as he or she complies with the payment obligations of the loan.

In terms of the conventions and the award, meaning, the benefits for the union organizations themselves, the Company made offers to each of them separately.

Drummond Ltd. fully believes this is a serious and attractive offer for the workers and the union organizations that represent them, which would allow us to continue to work so we can live through this crisis period of the international coal market. This is why we hope to be signing the new collective agreements that will govern the contracts the workers will benefit from during this upcoming weekend.

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FOR MORE INFORMATION

Pablo Urrutia – Mobile 57 (318) 735-7445, Tel. 57 (1) 587-1000 Ext. 5809

Margarita Saade – Mobile 57 (316) 312-4180, Tel. 57 (5) 571-9300 Ext. 8581

Wilma Calderón – Mobile 57 (310) 287-6085, Tel. 57 (1) 611-5014