Hillgrove Resources Limited · ASX:HGO
Hillgrove Resources — Investor Presentation (May 2015)
34 slides from Hillgrove Resources's investor presentation, May 25, 2015
Slide 1: Company Update and Equity Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only COMPANY UPDATE AND EQUITY RAISING STEVE McCLARE IIIII CEO & MANAGING DIRECTOR DESIGNATE RUSSELL MIDDLETON IIIII CHIEF FINANCIAL OFFICER 25 MAY 2015
Slide 2: Agenda
For personal use only Introduction 3 Debt Restructure 9 Equity Raising Overview 15 Company Update 21 Important Notices on Key Risks and Foreign Selling Restrictions 26 2
Slide 3: Introduction
For personal use only INTRODUCTION
Slide 4: Summary
SUMMARY For personal use only Hillgrove has today announced: A restructure and refinance of Hillgrove’s debt facilities, designed to better match debt repayments to the revised LOM plan and provide flexibility for Hillgrove to pursue initiatives to extend Kanmantoo mine life. Initial deferral and th
Slide 5: Strategy – Enhancing Shareholder Value
STRATEGY – ENHANCING SHAREHOLDER VALUE For personal use only THREE PILLARS FOR ENHANCING SHAREHOLDER VALUE KANMANTOO REGIONAL CAPITAL MINE GROWTH MANAGEMENT Productivity and cost Enabling the focus to maximise free Company to maximise cash flow generation shareholder value Targeted regional through
Slide 6: Enhancing Shareholder Value – Kanmantoo
ENHANCING SHAREHOLDER VALUE – KANMANTOO For personal use only Productivity and cost improvements have enabled enhanced economic outcomes from the existing resource which provides the potential for a larger ultimate pit. A two year life extension was granted by the SA Government in July 2014. To faci
Slide 7: Key Challenges
KEY CHALLENGES For personal use only Cash reserves have not built as planned over last 6 months: Underperformance of Nugent orebody has impacted operation cashflow; Giant Pit cutback accelerated, funded from cash reserves. Existing debt facility repayment obligations mismatched to free cashflow prof
Slide 8: Key Initiatives
KEY INITIATIVES For personal use only Continue to manage copper price through an active hedging program. Continuously drive unit costs lower through ongoing productivity and cost reduction initiatives, including: re-evaluation of all input costs; working with major contractors to continue productivi
Slide 9: Debt Restructure
For personal use only DEBT RESTRUCTURE
Slide 10: Funding Secured to Repay Debt and Pursue Key Initiatives
FUNDING SECURED TO REPAY DEBT AND PURSUE KEY INITIATIVES For personal use only Executed Agreements provide: Pre-export Facility of US$14 million, to refinance existing A$15 million project finance and mezzanine facilities; potential to expand Pre-export Facility to US$20 million, subject to various
Slide 11: Pre-Export Facility – Key Terms
PRE-EXPORT FACILITY – KEY TERMS For personal use only Lender: Ventures Australia LLC (a subsidiary of Freepoint Commodities LLC). Facility: Tranche A (US$14 million), which is subject to meeting the conditions to financial close. Tranche B (US$6 million), which is subject to, among other conditions:
Slide 12: Performance Bond Facility & Hedging
INVESTMENT HIGHLIGHTS – PERFORMANCE BOND FACILITY & HEDGING For personal use only Lender: Macquarie Bank Limited (MBL) providing performance bonds and hedging. Commitment: until 30 March 2017: A$20 million; from 31 March 2017 until 29 June 2017: A$10 million; from 30 June 2017 until 29 September 201
Slide 13: Common Terms
INVESTMENT HIGHLIGHTS – COMMON TERMS For personal use only Financial close conditions precedent include: delivery of security documents; copper hedging is in place (or being conducted concurrently); repayment of existing debt; required liquidity balances are met; amendment and restatement of offtake
Slide 14: Common Terms
INVESTMENT HIGHLIGHTS – COMMON TERMS For personal use only Dividend restrictions: subject to lender approval; compliance with financial undertakings; distributions in a financial year do not exceed 50% of net profit after tax of the guarantor group; minimum cash account balances met; cash backing fo
Slide 15: Equity Raising Overview
For personal use only EQUITY RAISING OVERVIEW
Slide 16: Rights Issue Overview
RIGHTS ISSUE OVERVIEW For personal use only Structure A 3 for 11 fully underwritten non-renounceable rights issue in order to raise A$10 million. Approximately 40.3 million shares to be issued. Offer Rights issue will be priced at A$0.25 per share, which represents: 25.4% discount to last close of A
Slide 17: Sources and Uses Table (May 2015 to April 2016)
SOURCES AND USES TABLE (MAY 2015 TO APRIL 20161) For personal use only Purpose of Capital Raising Sources (A$M) Uses (A$M) Restricted Cash $ 5.0 Restricted Cash $ 8.0 Available Cash $ 1.0 Repayment of Debt $15.0 Freepoint Debt and PP Deferral $21.3 Exploration $ 5.0 Rights Issue $10.0 Giant Cutback
Slide 18: Balance Sheet Extract
BALANCE SHEET EXTRACT For personal use only Audited Pro Forma Debt and Pro Forma Post A$’000 31 Dec 2014 31 Mar 2015 Equity Raise Equity Raise Current Assets 48,236 47,899 8,500 56,399 Cash and Receivables 13,866 12,579 7,200 19,779 Inventories 32,664 33,592 33,592 Financial Instruments 1,477 1,477
Slide 19: Rights Issue Timetable
RIGHTS ISSUE TIMETABLE For personal use only EVENT DATE Announcement of the Offer Monday, 25 May 2015 Shares traded on an ex basis Wednesday, 27 May 2015 Record date for Offer Friday, 29 May 2015, 7.00pm (AEST) Despatch of Offer Booklet / Offer Opens Wednesday, 3 June 2015 Close of Offer Monday, 15
Slide 20: Rationale for Supporting the Offer
RATIONALE FOR SUPPORTING THE OFFER For personal use only Provides balance sheet flexibility and funding certainty throughout the important Giant Pit cutback program. Enables evaluation and drilling for extension of Kanmantoo mine life, including second Giant Pit cutback on existing resource, and imm
Slide 21: For personal use only
For personal use only COMPANY UPDATE
Slide 22: Enhancing Shareholder Value – Kanmantoo
ENHANCING SHAREHOLDER VALUE – KANMANTOO For personal use only Additional resource and exploration target range drilling around the existing mine has commenced, along with broader exploration lease work. Further work is also underway on: Potential additional Giant Pit cutback giving extended mine lif
Slide 23: Enhancing Shareholder Value – Kanmantoo
ENHANCING SHAREHOLDER VALUE – KANMANTOO For personal use only Lower costs potentially allow a second cutback on the Giant Pit with existing resource. Current Confirmatory Mined Optimisation Surface Current Giant Pit Design Optimisation Options with Reduced Costs Section Line Model Legend > 0.6% Cu 0
Slide 24: Strong Hedge Book for Medium Term Revenue Certainty
STRONG HEDGE BOOK FOR MEDIUM TERM REVENUE CERTAINTY For personal use only Hillgrove Resources Hedge Book (A$/mt) 9,000 8,000 7,000 6,000 Jul-12 Jul-13 Jul-14 Jul-15 Nov-11 Jan-12 Mar-12 May-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Se
Slide 25: Indonesian Assets
INDONESIAN ASSETS For personal use only Bird’s Head (porphyry copper/molybdenum) and Sumba (epithermal gold/porphyry copper) are advanced greenfields projects with historical databases and 4,000-5,000m initial drill programs completed by Hillgrove. Full socialisation with local communities undertake
Slide 26: Important Notices
For personal use only IMPORTANT NOTICES
Slide 27: Risk Factors
RISK FACTORS The business activities of Hillgrove are subject to risks, which include those which apply generally to investments in equity markets, and those which apply specifically to For personal use only Hillgrove's business and the present stage of Hillgrove's operations. Some of the specific r
Slide 28: Risk Factors (continued)
RISK FACTORS (CONTINUED) Significant cash flows may not materialise from the project within the expected timeframe; For personal use only A significant operational failure requiring unplanned capital expenditure or a level of required capital expenditure which is higher or is needed sooner than anti
Slide 29: Risk Factors (continued)
RISK FACTORS (CONTINUED) Government For personal use only Government approvals and permits are currently required and may in the future be required in connection with the operations of Hillgrove. To the extent such approvals are required and not obtained, Hillgrove may be curtailed or prohibited fro
Slide 30: Risk Factors (continued)
RISK FACTORS (CONTINUED) For personal use only Environmental risks Hillgrove's operations are subject to extensive Federal, State and local environmental laws and regulations. These laws and regulations set various standards regulating certain aspects of health and environmental quality and provide
Slide 31: Risk Factors (continued)
RISK FACTORS (CONTINUED) Production estimates For personal use only Actual future production may vary materially from targets and projections of future production for a variety of reasons. There is greater risk that actual production will vary from estimates of production made for properties under e
Slide 32: Foreign Selling Restrictions
FOREIGN SELLING RESTRICTIONS For personal use only This document and the Placement do not constitute an offer of new ordinary shares in Hillgrove (“New Shares”) in any jurisdiction in which it would be unlawful to do so. New Shares may not be offered or sold in any country outside Australia except t
Slide 33: Statement
STATEMENT For personal use only No representation or warranty is or will be made by any person (including Hillgrove Resources Limited ACN 004 297 116 (“Hillgrove”, “HGO”, or the “Company”) and its officers, directors, employees, advisers and agents) in relation to the accuracy or completeness of all
Slide 34: Competent Person Statements
COMPETENT PERSON STATEMENTS For personal use only Kanmantoo Global Mineral Resource Estimate at End February 2013 ABOUT HILLGROVE JORC 2012 Tonnage Cu Au Ag Classification (Mt) (%) (g/t) (g/t) Hillgrove is an Australian mining company listed on Measured 2.63 0.88 0.10 1.95 the Australian Securities
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