MC Mining Ltd · ASX:MCM
MC Mining — Coal of Africa — H1 FY2015 Earnings Presentation
32 slides from MC Mining's earnings presentation, Mar 13, 2015
Slide 1: Interim results for six months ended 31 December 2014
Interim results for six months ended 31 December 2014 David Brown, Chief Executive Officer Michael Meeser, Chief Financial Officer Friday 13 March 2015
Slide 2: Disclaimer
Disclaimer T HESE PRESENTAT ION MATERIALS (T HE “PRESENT AT ION MATERIALS”) ARE FOR INFORMAT ION PURPOSES ONLY AND DO NOT CONST IT UT E AN OFFER OR INVIT AT ION T O SUBSCRIBE FOR OR PURCHASE ANY SECURIT IES, AND NEIT HER T HE PRESENT AT ION MATERIALS NOR ANYT HING CONT AINED T HEREIN NOR T HE FACT O
Slide 3: Disclaimer continued
Disclaimer continued T he Presentation Materials are being issued on a strictly private and confidential basis and solely to and directed at, in the case of recipients in South Africa, persons who are sophisticated investors who fall within the ambit of section 96(1)(a) of the South African Companie
Slide 4: Agenda
Agenda Introduction David Brown Operational and project review David Brown Financial review Michael Meeser Outlook and conclusion David Brown 4
Slide 5: Introduction: David Brown, Chief Executive Officer
Introduction: David Brown, Chief Executive Officer 5
Slide 6: Repositioned CoAL – turnaround strategy update
Repositioned CoAL – turnaround strategy update 1. Attaining strategic investor Done 2. Reduction in overhead structure Done 3. Product quality confirmation at Vele Done Significant 4. Non-core asset disposal progress Secure BEE funding for Makhado and obtain regulatory 5. 2015 strategy approvals 6
Slide 7: CoAL Strategy
CoAL Strategy Vision to responsibly produce in excess of 6.7 million tonnes per annum of saleable product by 2019/2020 Vele Makhado Short term Medium term GSP Long term “brownfields” “greenfields” (1.2 Mtpa) (5.5 Mtpa) “greenfields” Advantages Key Risks A Major Hard Coking Coal Resource in South Afr
Slide 8: Continued execution
Continued execution Investec short-term Settled Debt facility Marketing relationship Settled, take or pay obligations Logistics and take or pay Legal EnviCoal Settled Equity Share placement Final tranche April 2015 Sold Woestalleen, Opgoedenhoop and Holfontein Assets Non-core assets Mooiplaats s
Slide 9: Mooiplaats sale
Mooiplaats sale Mooiplaats options Sale is R250 million Operate as cash generator Blackspear SPA still Engaged with various If not CoAL considering operating Mooiplaatsas an Eskom-only valid, funding period parties currently sold product mine extended to April 2014 – performing then Discussion regar
Slide 10: Coking coal market trends and pricing
Coking coal market trends and pricing Iron prices are at all-time low, expected to remain low for 12-18 months Metallurgical coal prices for hard and semi-soft coking coal are being severely pressured by excess supply and weakening demand in China Weaker import demand reflects ready availabili
Slide 11: Price expectation – LoM thermal coal
Price expectation – LoM thermal coal Coal price forecast - long-term Coal type 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Thermal 65.39 65.39 67.00 72.00 79.70 79.70 79.70 82.30 82.30 82.30 82.30 82.30 82.30 82.30 82.30 82.30 82.30 82.30 Source: SA Coal
Slide 12: Price expectation – LoM met coal
Price expectation – LoM met coal Coal price forecast - long-term Coal type 2 016 2 017 2 018 2 019 2 020 2 021 2 022 2 023 2 024 2 025 2 026 2 027 2 028 2 029 2 030 2 031 2 032 2 033 HCC 140.3 143.0 150.5 183.8 176.2 173.8 172.5 175.3 180.7 181.3 185.8 190.8 200.0 203.0 206.0 210.0 213.0 215.0 SSCC
Slide 13: Project review: David Brown, Chief Executive Officer
Project review: David Brown, Chief Executive Officer 13
Slide 14: CoAL projects
CoAL projects EVALUATION DEVELOPMENT NON-CORE Vele: short-term Mooiplaats Chapudi Makhado – medium-term Mopane Generaal Future Primary current focus Sale/operate NOMR applications Vele: NOMR received made Makhado: NOMR applications made 14
Slide 15: CoAL project development – location
CoAL project development – location 15
Slide 16: Projects
Projects Generaal Project Mopane Project Chapudi Project Makhado NOMRA 16
Slide 17: Limpopo province
Limpopo province Limpopo is the fifth largest province in South Africa Population of approximately 5.5 million Economy driven by mining, tourism and agriculture A contribution of over 7% of RSA’s GDP Local government and municipality supportive of the mining sector and the project evidence
Slide 18: CoAL project development – resource
CoAL project development – resource Abridged summary of JORC-compliant JORC-compliant resources JORC-compliant reserv es resources and reserv e statement – (measured, indicated and inferred)1,2 (prov en and probable)2 31 May 2012 Strike length Strike length drilled to date to be drilled Gross Mineab
Slide 19: Vele: short-term 'brownfields'
Vele: short-term ‘brownfields’ Project parameters 795.7Mt GTIS and 362.5Mt MTIS of shallow dip coal Granted 30-year NOMR in March 2010 over 8,662ha with a life-of-mine (LoM) in excess of 50 years Extensive exploration with over 350 boreholes drilled to obtain further coal quality information
Slide 20: Vele: short-term 'brownfields', cont'd
Vele: short-term ‘brownfields, cont’d Deliverable and strategy Complete all regulatory matters by end of June 2015 (water use license amendment) Board to review post June 2015 once all regulatory approvals received 20
Slide 21: Vele regulatory status
Vele regulatory status Authorisation Issuing authority Purpose Duration Status Limpopo economic Environmental Environmental development, authorisation to Authorisation received 16 January Life of mine authorisation environment and undertake mining 2015 tourism activities Authorisation to mine Life o
Slide 22: Makhado: medium-term 'brownfields'
Makhado: medium-term ‘brownfields’ CoAL has completed a Class II definitive feasibility study (DFS) on its flagship Makhado Project (Makhado) Minable tonnes in-situ (MTIS) of 344.8 million tonnes net present value (NPV) of R6.79 billion (US$697m) at an 8% discount rate (real) Producing 12.6 mi
Slide 23: Makhado: medium term 'brownfields', cont'd
Makhado: medium term ‘brownfields’, cont’d Makhado Project empowered Company recently completed the empowerment structures with the sale of a 26% interest in the Project to local communities and group of entrepreneur’s Sale is subject to the BEE shareholders securing the necessary funding for th
Slide 24: Makhado regulatory status
Makhado regulatory status Significant progress made with all key authorisations Authorisation Issuing authority Purpose Duration Status Limpopo economic Environmental Environmental development, authorisation to Life of mine Received August 2013 authorisation environment and undertake mining tourism
Slide 25: GSP: long-term 'greenfields'
GSP: long-term ‘greenfields’ Highlights Consolidation of tenements and ore bodies to improve mine planning optionality, flexibility and economies of scale Significant resource base of coking and thermal coal products Access to domestic and export markets using existing rail capacity High pot
Slide 26: Financial review: Michael Meeser, Chief Financial Officer
Financial review: Michael Meeser, Chief Financial Officer 26
Slide 27: Cashflow H1 FY2015
Cashflow H1 FY2015 Repayment of Grindrod settlement, Envicoal settlement, Investec working capital facility and Rio Tinto H1 H1 FY2015 FY2014 $’000 $’000 Opening balance 2,099 29,938 Operational losses (5,923) (21,765) Settlement of Grindrod (10,000) - Settlement of Envicoal (2,515) - Decrease in re
Slide 28: Financial performance H1 FY2015
Financial performance H1 FY2015 H1 2015 H1 2014 $’000 $,000 Group loss for the period (continuing and discontinued operations) (827) (46,296) Less: non-cash items (continuing and discontinued operations) 13,475 (30,050) - Impairment - (16,453) - Depreciation and amortisation (790) (682) - Unrealised
Slide 29: Financial position H1 FY2015
Financial position H1 FY2015 DEC 2014 JUN 2014 $’000 $’000 Assets Non-current assets 281,371 316,311 Current assets 22,265 5,057 Assets held for sale 21,300 23,030 Total assets 324,936 344,398 Liabilities Non-current liabilities 7,113 4,643 - Deferred consideration - - - Other 7,113 4,643 Current li
Slide 30: The way forward: David Brown, Chief Executive Officer
The way forward: David Brown, Chief Executive Officer 30
Slide 31: Key deliverables to unlock intrinsic value
Key deliverables to unlock intrinsic value Equity Raise completed Disposal of Mooiplaats completed or operate 2015 Makhado regulatory approval (NOMR and IWUL) Makhado BEE structure funded Vele regulatory approvals received for plant modification Subject to Board review Vele Plant modific
Slide 32: Questions?
OA COAL of AFRICA LIMITED Questions? www.coalofafrica.com