Terra Metals Limited · ASX:TM1
Terra Metals — Investor Presentation (September 2019)
31 slides from Terra Metals's investor presentation, Sep 18, 2019
Slide 1: Capital Raising Presentation
CAPITAL RAISING PRESENTATION 18 SEPTEMBER 2019 NASDAQ:PNRL ASX:PNL Not for release to U.S. wire services or distribution in the United States
Slide 2: Important Notice & Disclaimer
IMPORTANT NOTICE & DISCLAIMER Not an Offer This presentation may not form the basis of any contract or commitment whatsoever with any person. Distribution of this presentation may be restricted by applicable law. This presentation has been prepared by Paringa Resources Limited (“Paringa” or the "Com
Slide 3: Entitlement Offer and Proposed Royalty Financing to Fund Mine Ramp-Up
ENTITLEMENT OFFER AND PROPOSED ROYALTY FINANCING TO FUND MINE RAMP-UP TO POSITIVE CASHFLOW • US$5.6M 1 entitlement offer + proposed US$9.0M royalty financing to fund ramp-up to free cash flow • Mine ramp-up slower than expected – actions have been taken to address this o Led to a funding gap and pro
Slide 4: Equity Raising Overview
EQUITY RAISING OVERVIEW Paringa Resources Limited (“Paringa” or the “Company”) (ASX: PNL) has announced an accelerated pro rata non- renounceable entitlement offer of up to 115.3 million fully paid ordinary shares (“New Shares”) on the basis of 1 New Share for every 4 shares held by eligible investo
Slide 5: Equity Raising Timetable
EQUITY RAISING TIMETABLE Key Event Time / Date 1 (AWST) Trading Halt and Announcement of Equity Raising Wednesday, 18 September 2019 Institutional Entitlement Offer Opens Wednesday, 18 September 2019 Institutional Entitlement Offer Closes Thursday, 19 September 2019 Announcement of outcome under Ins
Slide 6: Projected Road Map to Positive Cash Flow
PROJECTED ROAD MAP TO POSITIVE CASH FLOW 1,2 50 CAPITAL RAISING 45 40 35 30 USD (M) 25 +ve cash flow 20 15 10 $8.3 $5.4 5 0 Capex Cash (31 Jan) Cash (1 Sept) Revenue Interest, WC & other Opex Cash - Royalty Cash - Equity 1. Monthly operating projections developed in conjunction with Stantec Consulti
Slide 7: Ramp-Up Delays and Solutions
RAMP-UP DELAYS AND SOLUTIONS MINE RAMP-UP SLOWER THAN EXPECTED LEADING TO FUNDING GAP • September: Appointed Jim Middleton, Operations Executive, formerly Director of Glencore’s underground coal operations Delays Action taken Paleo channel / water ingress slowed early stage Mining has progressed bey
Slide 8: Royalty Financing & Term Loan Amendment Term Sheet
ROYALTY FINANCING & TERM LOAN AMENDMENT TERM SHEET Proposed Royalty Financing – Key Terms Provider • Tribeca Global Resources Credit Pty Ltd and/or the other lenders under the existing Term Facility Agreement • 2.0% of gross revenue from all coal leases (current and future) within the Buck Creek Min
Slide 9: Royalty Financing & Term Loan Amendment Term Sheet
ROYALTY FINANCING & TERM LOAN AMENDMENT TERM SHEET Proposed Tribeca Term Loan Amendment - Key Terms Tranche 2 commitment • Tranche 2 of Tribeca Term Loan will be resized from US$16 million to US$10 million 1 • Tranche 2 to fund capital expansion of the 3rd mining unit at the Poplar Grove Mine, subje
Slide 10: Sources and Uses
SOURCES AND USES Sources of Funds USD M Equity Capital Raising 1 5.6 Tribeca Royalty Financing 2 9.0 Cash balance (1 Sept. 2019) 5.4 Total 20.0 Use of Funds 3 USD M 1 Capex 5.7 Working capital 5.8 Interest & transaction costs 3.5 Minimum cash balance 5.0 Total 20.0 1. Assumes FX Rate of AUD:USD 0.69
Slide 11: Financial Projections
FINANCIAL PROJECTIONS 1 BUSINESS MODEL INTACT – SIGNIFICANT FREE CASH FLOW Year ending December 31, US$M 2020 2021 2022 2023 Total marketable production (million tons) 1.8 2.5 2.5 2.8 Total revenue 74.3 105.6 111.5 130.2 EBITDA 10.1 18.8 22.7 36.3 Margin % 14% 18% 20% 28% Development capital 2 7.4 3
Slide 12: Pro-Forma Capital Structure
PRO-FORMA CAPITAL STRUCTURE Capital Structure 1 Current Shares on Issue 461.3 million Entitlement Offer @ A$0.07 per share 115.3 million (assuming fully subscribed) Pro-Forma Shares on Issue 576.6 million Current options on issue 42.2 million Pro-Forma Options on issue 2 77.2 million Performance rig
Slide 13: Operation Summary
OPERATION SUMMARY SIMPLE 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 ancillary equipment TYPICAL D
Slide 14: Key Production Milestones
KEY PRODUCTION MILESTONES RAMP-UP PROGRESSION AND EXPANSION TO 3RD MINING UNIT Positive cash flow Unit 3 Unit 3 construction production Unit 2 full run rate Unit 1 full run rate Unit 3 construction Q3 Q4 Q1 Q2 Q3 Q4 2021 2022 2023 2019 2019 2020 2020 2020 2020 2.5mtpa Tranche 2 Equity raise1 $19M fu
Slide 15: Illinois Basin: A Consolidated Market
ILLINOIS BASIN: A CONSOLIDATED MARKET INDEPENDENT COAL SUPPLIER TO A HIGHLY CONSOLIDATED MARKET • In Paringa’s sub-region of western Kentucky, except for Paringa, >95% of coal is produced by Alliance Resource Partners (“Alliance”) & Murray Energy (“Murray”) • Local utilities are eager to contract wi
Slide 16: Coal Sales Contracts
COAL SALES CONTRACTS 100% OF 2019 AND ~50% OF 5 YEARS PRODUCTION PRE-SOLD • Fixed price contracts executed with major local utilities; LG&E and AEP • 100% of 2019 and ~50% of first 5 year production pre-sold • Future sales contract negotiations focused on delivery from 2020 onwards LG&E TRIMBLE COUN
Slide 17: Paringa Resources Overview
PARINGA RESOURCES OVERVIEW VALUE INVESTMENT OPPORTUNITY • Fixed price contracts locked-in, covering ~50% of the first 5 years of production • 100% of 2019 and 75% of 2020 production under contract • ~50% of next 5-years production is under contract • High certainty for near term cash flow, upside ex
Slide 18: Key Risks
KEY RISKS 1.1 Introduction There are a number of factors, both specific to the Company and of a general nature, which may, either individually or in combination, affect the future operation, exploration, development and financial performance and/or financial position of the Company, its prospects, a
Slide 19: Key Risks (cont.)
KEY RISKS (cont.) The Company may be adversely affected by fluctuations in foreign exchange rates The Company operates in the USA where the Company’s capital expenditure and ongoing expenditure and sales contracts are denominated in United States Dollars. The Company currently does not engage in any
Slide 20: Key Risks (cont.)
KEY RISKS (cont.) Agreements for sales or off-take The Company has entered into a coal sales agreement with LG&E & KU for the physical delivery of some or all of its expected coal from its projects. A third coal sales agreement with Big Rivers Electric Corporation was terminated on 17 July 2019. The
Slide 21: Key Risks (cont.)
KEY RISKS (cont.) Environment The operations and proposed activities of the Company are subject to State and Federal laws in the United States, regulations and permits concerning the environment. If such laws are breached or modified, the Company could be required to cease its operations and/or incu
Slide 22: Key Risks (cont.)
KEY RISKS (cont.) The Company relies on key personnel The Company is dependent on a number of key management personnel, including the services of certain key employees and consultants. The Company’s ability to manage its development and mining activities will depend in large part on the ability to r
Slide 23: Key Risks (cont.)
KEY RISKS (cont.) Economic downturns and disruptions in the global financial Economic downturns and disruptions in the global financial markets have from time to time resulted in, among other things, extreme volatility in securities prices, severely diminished liquidity and credit availability, rati
Slide 24: Key Risks (cont.)
KEY RISKS (cont.) Fluctuations in transportation costs and the availability or reliability of transportation The Company expects that transportation costs will represent a significant portion of the total cost of coal for its customers and, as a result, the cost of transportation will be a critical
Slide 25: Key Risks (cont.)
KEY RISKS (cont.) 1.3 General investment risks Price of Shares The Shares are subject to general market risks applicable to all securities listed on a stock exchange. This may result in fluctuations in the Share price that are not explained by the performance of the Company. The price at which Share
Slide 26: Key Risks (cont.)
KEY RISKS (cont.) General economic and financial market conditions The operating and financial performance of the Company is influenced by a variety of general domestic and global economic and business conditions that are outside the control of the Company. There is a risk that prolonged deteriorati
Slide 27: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS This document does not constitute an offer of new ordinary shares of Paringa in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country except to
Slide 28: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the New
Slide 29: Mineral Resources and Ore Reserves
MINERAL RESOURCES AND ORE RESERVES Coal Resources (inclusive of Coal Reserves) - Buck Creek Complex Category Coal Resource (Mt) Calorific Value* (Btu/lb) Ash* (%) Yield* (%) Measured 103.0 11,945 8.52 90.9 Indicated 227.3 11,945 8.52 90.9 Inferred - - - - Total 330.3 11,945 8.52 90.9 * Coal quality
Slide 30: Material Assumptions
MATERIAL ASSUMPTIONS Assumptions Poplar Grove Maximum Accuracy Variation +/- 10% Minimum LOM 25 years Mining Method Underground / room-and-pillar Modelled Seam Thickness 3.8 feet Average Mining Height 4.6 feet Total Work Days per Year 255 Productivity Rate (feet advance per unit shift at steady stat
Slide 31: Paringa Resources Limited
Paringa Resources Limited | ASX : PNL | NASDAQ : PNRL 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
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