Terracom Limited · ASX:TER
Terracom — Guildford Coal — Investor Presentation (October 2014)
41 slides from Terracom's investor presentation, Oct 3, 2014
Slide 1: ASX Announcement Investor Presentation
Level 7, 490 Upper Edward Street Spring Hill QLD 4000 Telephone: 07 3005 1533 www.guildfordcoal.com.au 3 October 2014 ASX Announcement Investor Presentation Guildford Coal Limited (Guildford or the Company) (ASX: GUF) is pleased to release the following investor presentation. Guildford via its wholl
Slide 2: Mongolia's Newest Coal Producer – Investor Presentation October 2014
1. Company Mongolia’s NewestOverview Coal Producer Investor Presentation October 2014
Slide 3: Table of Contents
2 Table of Contents 1. Company Overview 2. Compelling Investment Highlights 3. Favorable Coking Coal Outlook 4. Mongolia Operations Appendix
Slide 4: 1. Company Overview
3 Draft 1. Company Overview
Slide 5: Corporate Snapshot
4 Corporate Snapshot Guildford Coal Ltd. [ASX : GUF] (“GUF”, “Guildford” or the “Company”) is Share Price (AUD) Vol ume (mm) an emerging coal producer and developer with a large portfolio of 0.18 10 production, development and exploration assets in the prime coal bearing regions of Mongolia and Qu
Slide 6: Strategically Located Assets in Mongolia and Australia
5 Strategically Located Assets in Mongolia and Australia Mongolia GUF has equity stakes in 10 tenements in Mongolia, spread over two project areas: South Gobi and Mid Gobi The BNU North Mine, located in the South Gobi area, is GUF’s primary current focus and is currently supporting an open-cut c
Slide 7: Disciplined, Focused Business Strategy in Mongolia
6 Disciplined, Focused Business Strategy in Mongolia Near-Term Medium-Term Long-Term Primary Production Consolidation Expansion, leveraging core Focus competencies of Growth Mongolian project development expertise and coal expertise Key Complete coal testing Explore sites for 2nd, 3rd
Slide 8: "First Coal on Road" Completed
7 “First Coal on Road” Completed On 25 August, 2014, the Company completed the inaugural shipment of coal on its proprietary haulage road, shipping 8,000 tonnes of BNU North coal to the Shivee Khuren / Ceke border crossing This shipment, part of an initial 20,000 tonne contract announced on 14 A
Slide 9: "First Coal on Road" Completed (cont'd)
8 “First Coal on Road” Completed (cont’d)
Slide 10: Operational Summary
9 Operational Summary Guildford is targeting operating cash flow positive production in 2015, it's first year as Mongolia‘s newest coal producer BNU North 2015 Operational Metrics Ceke Hard Coking Coal Price :US$/t 104-110 GUF Implied Blended Price at Ceke :US$/t 88-93 GUF Implied Blended Price at C
Slide 11: Strategic, Synergistic Acquisition Pending
10 Strategic, Synergistic Acquisition Pending In November 2013, GUF and Noble entered into an option agreement with respect to Noble’s wholly owned 12600 coal license in the South Gobi region of Mongolia Since then, the Company has engaged in thorough due diligence on the asset, which is almost
Slide 12: Future Optionality and Earnings, Leveraging Established Infrastructure
11 Future Optionality and Earnings, Leveraging Established Infrastructure
Slide 13: Strong Project Development Track Record
12 Strong Project Development Track Record… Despite the turmoil of protracted and contested elections in Mongolia, the Company has successfully built and commissioned a mine in ~3 years Terra Energy acquired a The South Gobi Mining License Equipment arrived at Box cut commenced in July 98km haul roa
Slide 14: Despite Negative Price and Market Sentiment
13 ...Despite negative price and market sentiment 2-Year Share Price Seaborne Hard Performance Coking Coal Price (Rebased to 1.0) US$/tonne 250 2.00 2.00 1.75 220 1.75 1.50 1.50 1.25 190 1.25 1.00 1.00 160 0.75 0.75 0.50 0.50 130 0.25 0.25 0.00 0.00 100 May-13 May-14 Sep-12 Sep-13 Sep-14 Mar-13 Mar-
Slide 15: Focused Path to Value Creation
14 Focused Path to Value Creation Commercial Further Leading “Pure Coking Coal Investment to Play” Coking Production Expand Large Coal Miner Imminent Resource Base Haulage Permit issued Continued Aim to become one of on 2 July 2014 by the drilling/exploration the largest listed coking Mongolia
Slide 16: Proposed Takeover Offer from SCL
15 Proposed Takeover Offer from SCL On September 25th, 2014, GUF has received an unsolicited offer from SCL to acquire 100% of the ordinary shares of GUF Summary Offer Terms SCL will offer to acquire all ordinary shares in GUF 1x SCL share for every 4.5x GUF ordinary shares Offer values each G
Slide 17: 2. Compelling Investment Highlights
16 2. Compelling Investment Highlights
Slide 18: Investment Highlights
17 Investment Highlights An Emerging Pure Play Mongolian Coking Coal Producer Large, Superior Quality Resource Base – Over 289Mt of coking and thermal coal in Mongolia – 1 poised to become one of the largest listed coking coal producers in Mongolia backed by one of the highest quality (<8% ash and 0
Slide 19: Large Resource Base
18 Large Resource Base JORC Reserve and Resource Estimate (Mt) Guildford Coal JORC Resources (Mt) Assets M easured Indicated Inferred Total C oal Type JORC C ode C om petent Person Report Date South Gobi - North 15 9 3 27 Coking 2012 Craig Williams 25-Jun-14 South Gobi - East1 - - 41 41 Coking/Therm
Slide 20: Superior Coal Quality … The Answer to Chinese Policy Changes
19 Superior Coal Quality … The Answer to Chinese Policy Changes New Chinese Regulations Increasingly Instringent Six government bodies, led by the National Reform Commission and Ministry of Environmental Protection, jointly issued the Interim Administrative Measures for Commercial Coal Quality, ef
Slide 21: Imminent Coal Production and Cash Flow Generation
20 Imminent Coal Production and Cash Flow Generation Road Approval of the haulage permit was obtained on 2 July 2014. This important milestone removed the final hurdle in allowing GUF’s coal to be exported to China, the largest coal market in the world Environmental Significant accomplishments h
Slide 22: Transformational Growth Profile Driven by Internal and External Catalysts
21 Transformational Growth Profile Driven by Internal and External Catalysts Transformational growth to be driven by significant production ramp-up and further resource expansion through exploration and acquisitions Production Ramp Up Target Exploration Areas Commercial production scheduled to com
Slide 23: Improving Regulatory Environment in Mongolia
22 Improving Regulatory Environment in Mongolia Foreign Investment Regulations On 19 April 2013, an Amendment to the Law on the Regulation of Foreign Investment Business Entities Operating in Sectors of Strategic Importance (SEFIL) was approved by the Mongolian Parliament New law removed the req
Slide 24: Highly Experienced Management Team
23 Highly Experienced Management Team… Management Team Peter Kane Peter is a Mining Engineer with 25 years experience in the mining industry throughout Australia and New Zealand. Recently, Peter held the CEO roles at both Group Boardwalk Resources and Aston Resources before being appointed COO – P
Slide 25: Supported by a Senior, Experienced Board of Directors
24 …Supported by a Senior, Experienced Board of Directors Board of Directors Alan Griffiths Alan Griffiths established and was the principal of the highly awarded Quantm Ltd in 2001, now the global category leader in optimised road and rail corridor and route alignment selection for road and rail
Slide 26: 3. Favorable Coking Coal Outlook
25 Draft 3. Favorable Coking Coal Outlook
Slide 27: Mongolia – A Critical Source of Coking Coal for China
26 Mongolia – A Critical Source of Coking Coal for China 10,000 Chinese Coking Coal Imports 9,000 10,000 8,000 9,000 7,000 8,000 7,000 6,000 Quantity 000’ Tonnes 6,000 5,000 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 -- -- Mar Qtr 2011 Jun QtrJun Mar Qtr 2011 2011 SepSep Qtr 2011 Qtr Qtr
Slide 28: Strong Chinese Coking Coal Demand
27 Strong Chinese Coking Coal Demand Chinese Coking Coal Imports CAGR Mt 80 7% 70 60 50 40 30 20 10 0 2012 2013 2014 2015 2016 2017 Source: China Coal Resources (CCR).
Slide 29: 4. Mongolia Operations
28 Draft 4. Mongolia Operations
Slide 30: Mongolian Operations Overview
29 Mongolian Operations Overview Mining Licenses granted over BNU and Hovguun Terra Energy’s BNU mine is at operational readiness, with mine camp, workshop, explosives magazine, mine office, international and Chinese standard lab, boxcut, ROM and initial customs bonding area all completed Mine
Slide 31: South Gobi Assets Strategically Located
30 South Gobi Assets Strategically Located Short-haul to China infrastructure Approximately 150km to Ceke Border Port Typical truck haul for coal operations Coal storage and rail loading available at Chinese border Border upgrade completed In May 2012 four dedicated inbound and four dedi
Slide 32: Strategically Located on Doorstep of China
31 Strategically Located on Doorstep of China Distance to China Market Ovoot Tolgoi 45 km GUF 150 km Ukhaa Khudag 240 km Tavan Tolgoi 245 km South Yakuta, Russia 4,650 km Bowen Basin, Australia 7,000 km Greenhills, Canada 10,000 km Central Appalachia, USA 19,900 km 0 5,000 10,000 15,000 20,000 25,00
Slide 33: South Gobi Update – BNU Mine
32 South Gobi Update – BNU Mine South Gobi Project is managed & operated by Terra Energy LLC, a 100% owned Guildford subsidiary Project includes a Mining License over the Baruun Noyon Uul (BNU) Mine (formerly Northern Pit) JORC resources for BNU Mine – 27Mt (Measured and Indicated 24Mt and Inf
Slide 34: Initial BNU Operational Plan in Place
33 Initial BNU Operational Plan in Place It is anticipated that the coal quality produced from the BNU Mine will be a high quality coking coal with minimal comparable competition within the immediate area and sales from the BNU Mine will be to steel plants and coke works in Central and Western Chi
Slide 35: Proven Logistics
34 Proven Logistics Likely that a majority of the coal produced from the BNU mine particularly in the early months will require washing in order to meet desired sales specifications Initially this washing must be undertaken at Ceke where a number of wash plants are available for contract washing
Slide 36: BNU Equipment Procured...
| BNU Equipment Procured... GUILDFORD COAL
Slide 37: …and Shipments Have Commenced
36 …and Shipments Have Commenced
Slide 38: Appendix
37 Draft Appendix
Slide 39: Easy Access to Multiple Chinese Customers
38 Easy Access to Multiple Chinese Customers Ceke Border Minegate Sales Urumqi Inner Mongolia Winsway Washplant Xinjiang Jilin, Hebei Hebei ~1,650km Bayi Steel Gansu Hohhot Jiuquan, Gansu Tianjin 1,900 km Ningxia Extending Point of Sales to Cement Plants Direct to End Users Shanxi Inner Mongolia JIS
Slide 40: Robust Chinese Coking Coal Demand Fundamentals
39 Robust Chinese Coking Coal Demand Fundamentals China has achieved robust industry performance despite headwinds China’s coking coal imports will continue to grow, bolstered by strong demand fundamentals and domestic supply challenges Steel Production Coke Production CAGR: CAGR: 7.8% 7.6% 476
Slide 41: Disclaimer
40 Disclaimer The information contained in this document (“Presentation”) has been prepared by Guildford Coal Limited (the “Company”). This Presentation does not constitute an offer or invitation to any person to subscribe for or apply for any securities in the Company. This Presentation contains su
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