Terra Metals Limited · ASX:TM1
Terra Metals — Investor Presentation (June 2019)
26 slides from Terra Metals's investor presentation, Jun 13, 2019
Slide 1: Investor Presentation: A New Low-Cost Coal Producer in the Illinois Basin
INVESTOR PRESENTATION A NEW LOW-COST COAL PRODUCER IN THE ILLINOIS BASIN JUNE 2019 NASDAQ:PNRL ASX:PNL
Slide 2: Paringa Resources Highlights
PARINGA RESOURCES HIGHLIGHTS PRODUCTION MARKETS Successfully transitioned to A new entrant to the favourable mining and selling coal Illinois Basin market CONTRACTS COSTS ~60% of first 5 yrs production At the low end of the regional pre-sold cost curve 1
Slide 3: Paringa Resources Overview: A New Illinois Basin Operation
PARINGA RESOURCES OVERVIEW A NEW ILLINOIS BASIN OPERATION • Poplar Grove in operation; pathway to 2.7 Mtpa run-rate by year end 2020 • Large reserve and resource base at Poplar Grove underpins a 25+ year mine life • Simple mining, consistent coal seams & fixed price contracts ensure low risk cashflo
Slide 4: A Deep Value Investment Opportunity
PARINGA RESOURCES OVERVIEW A DEEP VALUE INVESTMENT OPPORTUNITY • Successfully transitioned to mining and selling coal • A new entrant to the favourable Illinois Basin market • There has been a decrease in supply of coal in the Illinois Basin • Spare capacity in the Illinois Basin is the lowest among
Slide 5: Attractive Western Kentucky Location Near Customers' Power Plants
PARINGA RESOURCES OVERVIEW ATTRACTIVE WESTERN KENTUCKY LOCATION NEAR CUSTOMERS’ POWER PLANTS AEP Buck Creek mining complex LG&E LG&E LG&E BREC BREC 4
Slide 6: Coal Handling and Processing Plant
PARINGA RESOURCES Coal handling OVERVIEW plant and processing 5
Slide 7: Poplar Grove: Ramping Up to 2.7 Mtpa
POPLAR GROVE: OPERATIONS RAMPING UP TO 2.7 Mtpa COAL LOADING ON THE GREEN RIVER • Began selling coal to LG&E in April 2019 • Targeting 1.8 Mtpa run-rate and free cash flow as a 2 mining unit operation before year end 2019 • Refinanced balance sheet with Tribeca Global Resources in April, providing f
Slide 8: Poplar Grove and Cypress: Growth to 6.6 Mtpa
POPLAR GROVE AND CYPRESS: GROWTH TO 6.6 Mtpa STRONG PRODUCTION PROFILE AND GROWTH OPTIONALITY • Production pathway to 2.7 Mtpa run-rate by year end 2020 / 2.8 Mtpa run-rate in 2021 • Growth optionality at Cypress, potentially funded through cash flow TARGETED PRODUCTION PROFILE & GROWTH OPTIONALITY
Slide 9: Poplar Grove Financials
POPLAR GROVE FINANCIALS PROJECTED HIGH EBITDA MARGINS & SIGNIFICANT FREE CASH FLOW Year ending December 31, US$M 2020 2021 2022 2023 Total marketable production (million tons) 2.2 2.7 2.8 2.8 Total revenue 87.8 117.0 122.5 128.4 EBITDA 15.9 28.6 32.0 37.1 Margin % 18% 24% 26% 29% Development capital
Slide 10: Financial Information
FINANCIAL INFORMATION CAPITAL STRUCTURE 1,2 Shares on Issue 461,251,181 NEW TERM LOAN FACILITY FUNDING RAMP-UP Unlisted Options 42,188,888 Performance Rights 16,395,000 • Tribeca Global Resources backing Paringa’s Market Capitalisation @ A$0.11, US$35.5m ramp-up AUD:USD 0.70 Cash (post-debt financin
Slide 11: Poplar Grove: Operations Update June 2019
POPLAR GROVE: OPERATIONS OPERATIONS UPDATE: JUNE 2019 • The 1st mining unit operation is underway and the continuous miners in Unit 1 are performing as expected • Unit 1 has completed the majority of bottom development, with commissioning of the ventilation overcasts, necessary to operate 2 continuo
Slide 12: Poplar Grove: Operations (cont.)
POPLAR GROVE: OPERATIONS (cont.) OPERATIONS UPDATE: JUNE 2019 • All underground and surface mobile equipment necessary for Unit 2 operations is onsite, and Paringa is in the process of hiring Unit 2 hourly employees • Productivity measured in ft. / unit shift has increased and continues to ramp towa
Slide 13: Simple & Well Understood Room and Pillar Operations
POPLAR GROVE: OPERATIONS SIMPLE & WELL UNDERSTOOD ROOM AND PILLAR OPERATIONS • Room and pillar mining is an efficient, low cost method widely employed in the ILB • Poplar Grove operates continuous miner super-sections (“mining units”) • Each mining unit consists of 2 continuous miners and other anci
Slide 14: Poplar Grove: Coal Sales Contracts
POPLAR GROVE: COAL SALES CONTRACTS 100% OF 2019 AND ~60% OF FIRST 5 YEARS PRODUCTION PRE-SOLD • Fixed price contracts executed with major local utilities; LG&E, AEP and Big Rivers • 100% of 2019 and ~60% of first 5 years production pre-sold • Future sales contract negotiations focused on delivery fr
Slide 15: Poplar Grove: Cost Position
POPLAR GROVE: COST POSITION POSITIONED AT THE LOW END OF THE COST CURVE • Simple, low cost room-and-pillar mine operations & well understood processing techniques • Skilled, non-union workforce in a mining friendly jurisdiction with low cost power & utilities • Geological advantages lead to higher p
Slide 16: Cypress Mine Overview
CYPRESS MINE OVERVIEW OPPORTUNITY FOR RAPID FUTURE DEVELOPMENT • The adjacent 3.8 Mtpa Cypress project is fully permitted and shovel ready • Development options for the low cost operation are currently being assessed PROXIMITY TO EXISTING INFRASTRUCTURE CYPRESS PROJECT SUMMARY 1 Metric Value Annual
Slide 17: Illinois Basin: Supply
ILLINOIS BASIN: SUPPLY UNDERINVESTMENT IN NEW MINES HAS LED TO A DECLINE IN SUPPLY • 2018 spare capacity in the ILB was the least among all major U.S. coal basins • The number of mines in the ILB has not yet responded to shrinking spare capacity • Net underinvestment is a significant factor in curre
Slide 18: Illinois Basin: Pricing Outlook
ILLINOIS BASIN: PRICING OUTLOOK POSITIVE ILLINOIS BASIN THERMAL COAL PRICE OUTLOOK ILLINOIS BASIN COAL PRICE - LTM (US$/t) • The spot price of coal in the ILB rose 11,500 btu, 2.5# SO2, rail 11,000 btu, >6# SO2 rail nearly 20% over the last twelve 50 11,800 btu, 5# SO2, rail 10,500 btu, 5# S02 barge
Slide 19: Illinois Basin: Customer Overview
ILLINOIS BASIN: CUSTOMER OVERVIEW CONSOLIDATION IN THE ILB HAS LED UTILITIES TO SEEK OUT NEW SUPPLIERS • Fixed price and volume sales contracts with regulated, CURRENT CUSTOMERS investment grade counterparties operating large coal facilities with the latest SOx & NOx emissions controls • Customers w
Slide 20: Illinois Basin: A Consolidated Market
ILLINOIS BASIN: A CONSOLIDATED MARKET INDEPENDENT COAL SUPPLY TO A HIGHLY CONSOLIDATED MARKET • In Paringa’s sub-region of western KY, >80% of coal is supplied by Alliance & Murray • Consolidation in the regionally isolated market has led to stable historical pricing • Local utilities are incentivis
Slide 21: Paringa Resources: Balance Sheet
PARINGA RESOURCES: BALANCE SHEET BALANCE SHEET STRENGTH THROUGH REFINANCED DEBT FACILITY • US$56.0M term loan facility from Tribeca Global Resources Credit completed in May • Tranche 1 US$40.0M funding drawn, to ramp up to 2 units / targeting 1.8 Mtpa by late 2019 • Tranche 2 US$16.0M undrawn, to ra
Slide 22: Board
BOARD DEEP CORPORATE AND OPERATING EXPERIENCE Highly respected resource executive with extensive finance, commercial and capital markets experience Ian Middlemas Portfolio of dozens of natural resource and commodities projects with revenues ranging from $50 to $500 million Chairman Current Cha
Slide 23: Disclaimers
DISCLAIMERS Cautionary Statements and Important Information This presentation does not constitute or form part of any offer to sell, or solicitation of any offer to buy, any securities in the United States or any other country. This presentation may not form the basis of any contract or commitment w
Slide 24: Material Assumptions
MATERIAL ASSUMPTIONS Assumptions Poplar Grove Cypress Maximum Accuracy Variation +/- 10% +/- 10% Minimum LOM 25 years 18 years Mining Method Underground / room-and-pillar Underground / room-and-pillar Modelled Seam Thickness 3.7 feet (WK 9), 4.2 feet (WK 11) 3.7 feet (WK 9) Average Mining Height 4.5
Slide 25: Coal Resources and Reserves
COAL RESOURCES AND RESERVES Coal Resources (inclusive of Coal Reserves) - Buck Creek Complex Category Coal Resource (Mt) Calorific Value* (Btu/lb) Ash* (%) Yield* (%) Measured 103.6 11,963 8.6 91.1 Indicated 228.6 11,963 8.6 91.1 Inferred 0.7 11,963 8.6 91.1 Total 332.9 11,963 8.6 91.1 * Coal qualit
Slide 26: Paringa Resources Limited
Paringa Resources Limited | NASDAQ : PNRL | ASX : PNL T: +61 8 9322 6322 | F: +61 8 9322 6558 E: info@paringaresources.com | www.paringaresources.com Mine office: 373 Whobry Road, Rumsey KY 42371, UNITED STATES New York office: 28 West 44th Street, Suite 810, New York NY 10036, UNITED STATES Registe