SouthGobi Resources Ltd. · TSXV:SGQ
SouthGobi Resources — Investor Presentation (July 2010)
35 slides from SouthGobi Resources's investor presentation, July 2010
Slide 1: Investor Presentation
TSX: SGQ HKEx: 1878 INVESTOR PRESENTATION
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation includes certain “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove acc
Slide 3: Company Snapshot
a a MM - UEBHERR | ———— # COMPANY SNAPSHOT
Slide 4: Company snapshot: our assets
Company snapshot Our assets Asset location Overview Owns 100% of a suite of Mongolian export coall assets t A leading exporter and only publicly-listed Mongolian coal exposure in production Focus F on Ovoot O t Khural Kh l Basin B i – nearestt coal to China Ovoot Tolgoi open-pit mine in prod
Slide 5: Company snapshot: capitalization and shareholders
Company snapshot Capitalization and shareholders Capitalization summary Share price performance (last 12 months) 22.0 Share price (at June 25, 2010) C$12.50 20.0 C$ per US$1 1 04 1.04 Price (C$/share) 18.0 Share price US$12.02 16.0 Shares outstanding 183.8m 14.0 Market capitalization US$2,209m 12 0
Slide 6: Recent highlights
Recent highlights Coal sales: 1.33 million tonnes from Ovoot Tolgoi in 2009 and 0.9 million tonnes expected from Ovoot Tolgoi in the first half of 2010 Expansion: E i ― Commenced second fleet commissioning in December 2009 (1 x 34m3 Liebherr R996 shovel and 2 x 218 tonne Terex MT4400AC haul truc
Slide 7: Current developments: mining and production
Current developments Mining and production Mining and production Realignment of open-pit 0.4 8.0 Waste removal originally along strike (east- west) - reduced strip ratio and overburden al 68 6.8 aste (BCM) to Coa 0.36 Coal Mined (Mt) 0.3 5.8 6.0 movements in first year 0.2 0.22 4.0 December 2009
Slide 8: Current developments: marketing, sales and logistics
Current developments Marketing, sales and logistics Coal sales Marketing, sales and logistics 0.5 <0.01 Marketing and sales 0.03 0.4 ― Q1 Q average selling prices c. 23%% Coal Sales (Mt) 0.3 higher than 2009 full-year average 0.2 0.46 ― Q2 prices expected to be c. 20% 0.38 0.40 0.36 higher g than
Slide 9: Current developments: exploration
Current developments Exploration Exploration licences and locations with core targets for resource increases Status on key exploration targets (O (Ovoott Khural Kh l Basin) B i ) Drilling for 2010 commenced post-winter in March Approximately US$8.1m $ spent as at end of June (target c. US$20m to
Slide 10: Core Investment Highlights
2 CORE INVESTMENT HIGHLIGHTS
Slide 11: Strategically located – closest coal to China
1 Strategically located – closest coal to China Nearest coal production base to major coal consuming markets 11
Slide 12: Substantial and growing resources
2 Substantial and growing resources Track record increasing resources – finding cost US$0.16 / tonne Summary of resources by mine and deposit Historical resource growth track record 500 400 Inferred 184.0 99.3 76.9 45.4 405.6 Measured & Indicated 98.0 400 9.0 300 36.4 98.0 55.5 71.0 Resource ((Mt) M
Slide 13: Premium quality coals
3 Premium quality coals Hard and semi-soft metallurgical coals Simplified raw coal qualities Upgrading raw coals Ovoot Tolgoi (construction commenced) Type Specification % Deposit — US$25m estimated capex – completion early 7,173 kcal/kg 2011 e (raw) Coking Ash: 7.9% 15% — Dump hopper (300t),
Slide 14: Highly competitive cost structure
4 Highly competitive cost structure Ovoot Tolgoi has globally competitive low direct mining cash costs Low cost structure due to favourable geological condition – open-pit, and thick coal seams resulting in low ratio of waste to coal (low “stripping ratio”) 100 300 osts (US$/tonne) Ovoot Tolgoi’s po
Slide 15: In production with strong growth potential
5 In production with strong growth potential Raw coal output growth 15 12 9 (Mt) 6 8.0 3 1.3 01 0.1 0 (1) 2008A 2009A 2012F 2013F Ovoot Tolgoi (open-pit) Soumber (open-pit) Source: (1) Norwest Technical Report on Ovoot Tolgoi 15
Slide 16: Strategies and Investment Plans
3 STRATEGIES AND INVESTMENT PLANS
Slide 17: Major strategies
Major strategies Extract Full Value from Our Leading Position in the Ovoot Khural Basin Expanding production at Enhancing value of our 1 Ovoot Tolgoi g Mine products p 4 Advancing regional coal 2 projects – near-term Exploration 5 emphasis on Soumber Developing Ovoot Khural Continuing focus on 3 B i
Slide 18: Investment plans
Investment plans Investment plans 2010-2012 (US$m) Ovoot Tolgoi Mine 140 Development of Soumber 125 Coal handling facilities 105 Regional transportation infrastructure 150 Exploration 70 18
Slide 19: Appendices
UEBHERR | Appendices
Slide 20: Board of Directors and Senior Management
Appendix 1 Board of Directors and Senior Management Name and Position Background Directors Peter Meredith Chairman of the board since October 2009 Chairman and Deputy chairman of the board of Ivanhoe Mines since May 2006 Non-Executive Director Has 13 years experience in managerial and advisory
Slide 21: Board of Directors and Senior Management (cont'd)
Appendix 1 Board of Directors and Senior Management (cont’d) Name and Position Background Directors Edward Flood Director of SouthGobi since August 2003 Non-Executive Director Director of Ivanhoe Mines since 1994 Chairman of the board of TSX-V listed Western Lithium Canada Corp and Western Ura
Slide 22: Board of Directors and Senior Management (cont'd)
Appendix 1 Board of Directors and Senior Management (cont’d) Name and Position Background Directors Gordon Lancaster Appointed as a Director of SouthGobi in May 2010 Independent Non-Executive Director of TSX listed Ainsworth Lumber Co Ltd and TSX-V listed Realm Energy International Director Corp
Slide 23: Board of Directors and Senior Management (cont'd)
Appendix 1 Board of Directors and Senior Management (cont’d) Name and Position Background Executive Officers Gavin May Joined SouthGobi as COO in September 2009 Chief Operating Officer Previously the CEO and Managing Director of Gloucester Coal Ltd., an ASX-listed coal company and a director of
Slide 24: Board of Directors and Senior Management (cont'd)
Appendix 1 Board of Directors and Senior Management (cont’d) Name and Position Background Senior Management Tony Pearson Joined SouthGobi as Vice President of Corporate Development in February 2010 Vice President, Corporate Previously held senior positions with the Australian Securities & Invest
Slide 25: History and corporate structure
Appendix 2 History and corporate structure History and Milestones COMPANY (Prior to Acquisition of the Coal Assets) COMPANY 2002 2003 2004 2005 2006 Dec 31, 2008 Nov 19, 2009 Announced sale of metals CIC invested US$500m Feb 14, 2002 Dec 15, 2003 Apr 25, 2006 division to Ivanhoe. Transaction in form
Slide 26: History and corporate structure (cont'd)
Appendix 2 History and corporate structure (cont’d) Corporate Structure SouthGobi Resources Ltd. (British Columbia) 100% 100% 100% 100% Asia Gold International SGQ Coal Investment SouthGobi Resources (Hong SGQ Dayarcoal Mongolia Holding Company Ltd. Pte. Ltd. Kong) Ltd. Pte. Ltd. (BVI) (Singapore) (
Slide 27: Financials – balance sheet
Appendix 3 Financials – balance sheet As at As at (in US$m) Mar 31, 2010 (in US$m) Mar 31, 2010 Cash & Cash Equivalents 723 4 723.4 Accounts Payable 13 3 13.3 Accounts Receivable 18.2 Amounts Due under Credit Facilities 3.0 Short Term Investments 0.0 Current Portion of Convertible Debt 13.0 Inventor
Slide 28: Financials – income statement
Appendix 3 Financials – income statement For the three months (in US$m) ended Mar 31, 2010 Revenue 13 9 13.9 Cost of sales (12.7) Income from mine operations 1.2 Administration expenses (6 0) (6.0) Evaluation and exploration expenses (1.7) Operating loss from continuing operations (6.5) Finance cost
Slide 29: Key terms of CIC Debenture
Appendix 4 Key terms of CIC Debenture Terms Description Transaction US$500 million principal amount of senior debentures convertible into shares (US$485 million net of advisory fees) Maturity 30 years Interest Interest of 8.0% per annum — A cash coupon of 6.4% per annum; and — Additional inter
Slide 30: Key terms of CIC Debenture (cont'd)
Appendix 4 Key terms of CIC Debenture (cont’d) Terms Description CIC Conversion At any time after 12 months from closing at the Conversion Price Rights There are no lock-up arrangements on shares to be issued to CIC upon conversion. There are no early redemption rights granted to CIC SouthGobi E
Slide 31: Ovoot Tolgoi – Flagship producing mine
Appendix 5 Ovoot Tolgoi – Flagship producing mine Total NI 43-101 compliant proven and probable reserves of 114 Mt — Open-pit coal resources of 171 Mt (measured and indicated) and 13 Mt (inferred) The main coal seam, Seam #5 Main, has an average thickness of 53 m with maximum thickness of 157 m
Slide 32: Soumber – The next mine development
Appendix 5 Soumber – The next mine development Overview Location The next of many deposits regionally situated in the Ovoot Khural Basin,, located in the same trend of the Ovoot Tolgoi Complex Located 20 km east of Ovoot Tolgoi Mine — Operational synergies via sharing of common infrastructure
Slide 33: Mining process and fleet summary
Appendix 5 Mining process and fleet summary Mining process Mining fleet Quantity Equipment Model Size Topsoil removal 1 Hydraulic shovel Liebherr R996 34.0m3 (stockpiled for future Topsoil stockpile 1 Hydraulic shovel Liebherr R994 13.5m3 reclamation activities) 1 Hydraulic excavator Liebherr 974C 5
Slide 34: Fungibility and shares transfers between markets
Appendix 6 Fungibility and shares transfers between markets Transfer Steps Standard Express Document to be Submitted Comment Hong Kong to Canada Step 1: Hong Kong Registrar 10 Hong Kong business days 1 Hong Kong business day with Share certificates and Form Shares must be registered on (“HKR
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