Regent Pacific Group Limited · HKEX:575
Regent Pacific — Merger or Acquisition (October 2007)
38 slides from Regent Pacific's merger presentation, Oct 22, 2007
Slide 1: CCEC Investment
CCEC Investment October 2007
Slide 2: Section I-IV Agenda
Section I Transaction Summary Section II Transaction Rationale Section III Overview of CCEC Section IV Overview of Regent Pacific Group 1
Slide 3: Disclaimer
Disclaimer The information contained in this presentation has been prepared using the information available to Regent Pacific Group Limited (“Regent”) at the time of preparation and may not include all relevant information regarding Regent, Yunnan Simao Shanshui Copper Company Limited (“Yunnan Simao
Slide 4: Disclaimer (con't)
Disclaimer (con’t) investments and complete proposed mining projects; uncertainties related to the accuracy of estimates of mineral reserves and mineral reserves and mineral resources and Regent’s, Yunnan Simao’s and CCEC’s estimates of future production and future total cash costs of production; un
Slide 5: Section I Transaction Summary
Section I Transaction Summary 4
Slide 6: Transaction Summary
Transaction Summary • 14 September 2007 Announcement Date • Regent Pacific Group Limited (“Regent”, 575.HK) Acquirer • Goal of 100% ownership of CCEC • 56.20% has contractually committed to sell to Regent (1) Target • 1,525,296,711 new Regent Shares (equivalent to US$209M(2)) to Consideration all ex
Slide 7: Regent Before and After Transaction
Regent Before and After Transaction Pre-Transaction Regent Fully Diluted Shares Outstanding 2,707,313,875 Current Share Price (HK$) (1) 1.54 Fully Diluted Market Capitalization (US$) (2) 534,520,944 CCEC Shares Outstanding 263,242 Implied Valuation at Issue Price (US$) (3) 198,950,959 Post-Transacti
Slide 8: Post-Transaction Shareholding Structure
Post-Transaction Shareholding Structure Post-Transaction (fully diluted) (1) Regent Existing Public CCEC Directors Shareholders (2) Shareholders 16.82% 48.91% 34.26% 100% Regent Pacific CCEC Group 40% 90.5% 100% To acquire Option to acquire 100% 100% Ji Ri Ga Lang Dapingzhang Yinzishan ACIL Project
Slide 9: Pre/Post-Transaction Shareholding Structure of Regent
Pre/Post-Transaction Shareholding Structure of Regent Pre-transaction Post-transaction Pre-transaction Post-transaction (Basic) (Basic) (Fully diluted) (Fully diluted) Shares Held Percentage Shares Held Percentage Shares Held Percentage Shares Held Percentage Regent 483,352,672 23.71% 483,352,672 13
Slide 10: Section II Transaction Rationale
Section II Transaction Rationale 9
Slide 11: Attractive Industry Fundamentals in China
Attractive Industry Fundamentals in China China is the World’s Largest Coal China Continues to Lead Strong Coal Consuming Country Demand Growth 2006 World Coal Consumption (Million tonnes oil equivalent ) China US % CAGR: 13.7 38.6% 18.4% 1,191 1,096 978 India 853 7.7% 712 Other 35.3% 2002 2003 2004
Slide 12: CCEC's Growth Strategies Fit Into Our Development Goal
CCEC’s Growth Strategies Fit Into Our Development Goal • Focus on acquiring projects which can generate immediate cash flow • Various stage of negotiation on a number of acquisition targets with approximately 15Bt of coal in total • Focus on high-quality, low capital coal operations • Focus on regio
Slide 13: CCEC – Fundamentals of China's Coal Market
CCEC – Fundamentals of China’s Coal Market • China is the World’s largest coal consuming country • China has extensive coal reserves (3rd largest in the world at 114.5Bt) • Favorable industry and regulatory environment • Increasing coal industry consolidation (encourages acquisition of small - mediu
Slide 14: CCEC – Opportunities
CCEC – Opportunities Unique opportunity for coal in China • Near term railway bottlenecks likely to keep coastal supply tight • Strong contract settlement imply coal cycle is just taking off • Contract prices have seen the largest increase in past 2 years • Domestic coal prices predicted to match in
Slide 15: Senior Management Team Adds Great Value
Senior Management Team Adds Great Value by Providing Rich Industry Experience • Stephen Dattels – Former Executive VP Corporate Finance & Director of Barrick Gold Corporation – Extensive track record of managing successful mining projects Financing Financing – A financier and founder of many success
Slide 16: CCEC – Management Team (cont'd)
CCEC – Management Team (cont’d) • Rick Lu – Canadian-Chinese with strong financial and management background – Has been based full time in Beijing since 2001 – Initially involved in managing an established iron-ore, steel and commodity company and later specialised in the acquisition of iron ore and
Slide 17: Foreseeable Strong Pipeline in Coal Industry Supports Our Future Expansion
Foreseeable Strong Pipeline in Coal Industry Supports Our Future Expansion Xinjiang: Shanxi: Inner Mongolia: • One of the seven key areas for • Owns largest coal reserve in • 2005 coal production of 163Mt coal chemical development in China China • 2005 coal production is 511Mt • 2005 coal production
Slide 18: The Unique Acquisition Opportunity Will Accelerate Our Growth
The Unique Acquisition Opportunity Will Accelerate Our Growth By acquiring CCEC, Regent will be able to Catch Catch the the Strengthen Strengthen the the Diversify Diversify Upward Upward Swing Swing Expertise Expertise of of Business Business Risk Risk of of Coal Coal Industry Industry Management M
Slide 19: Section III Overview of CCEC
Section III Overview of CCEC 18
Slide 20: Overview of CCEC
Overview of CCEC • CCEC is an investment holding company • Engaged in seeking investment opportunities in businesses that are engaged in the full life-cycle of exploration, extraction and sale of thermal coal and coking coal and in addition the operation of coke and chemical works in the PRC • CCEC
Slide 21: ACIL Project
ACIL Project • ACIL is engaged in investing in coking and chemical projects in China – Project I – a 1.05Mt coking-chemical plant + 80Kt methanol – Project II (1) – a 2.24Mt coking-chemical plant + 209Kt methanol – Project III (1) – a 500Kt synthetic ammonia plant • Founded by Sing Wang together wit
Slide 22: ACIL Project – Business & Products
ACIL Project – Business & Products Products Project 1 Project 2 Project 3 Coke 1.05Mt 2.24Mt - Coal Tar 30,000t 97,500t - Crude Benzene 9,000t 85,000t - Ammonium Sulfate 8,000t 16,000t - Methanol 80,000t 209,000t - Synthetic Ammonia - - 500,000t Production In full production Construction work to Con
Slide 23: Ji Ri Ga Lang Project
Ji Ri Ga Lang Project Asset Location Business Overview • Exploration license valid till 9 June 2009, covers 132.23 sq kms • Preliminary mine design completed • Initial production level set at 3Mt per annum • Contractor operation assumed, however option of owner-operated equipment is being evaluated
Slide 24: Yuke Project
Yuke Project Asset Location Business Overview • Yuke Project includes Yuke Coal Option Agreement and Yuke Exploration Option Agreement • Estimate of coal resources under four exploration licenses to be acquired by Yuke Coal: 653Mt (prepared in accordance with the Chinese resource classification sche
Slide 25: Section IV Overview of Regent Pacific Group
Section IV Overview of Regent Pacific Group 24
Slide 26: Regent – Early Stage Producer with Growth
Regent – Early Stage Producer with Growth Share Price and Market Capitalisation Shares: 2,707M (fully diluted) Market Cap Share Price (Fully diluted, HK$ MM) (HK$) Turnover *: 26,033,658 Shares/day $4,800 $2.10 $4,600 $2.00 (3 months average) $4,400 $1.90 $4,200 22 October 2007 $1.80 $4,000 HK$4,169
Slide 27: Regent – Management Team
Regent – Management Team Jamie Gibson (CEO) Direct Investment Specialist (Ex-Clifford Chance, KPMG and PWC (formerly Coopers)) Clara Cheung (CFO) Ex-Deloitte Touche Tohmatsu Mark Eichorn (Plant Manager) Former General Superintendent of Metallurgy at PT Freeport Indonesia. Freeport is the world’s lar
Slide 28: Regent – Quality Asset with China Focus
Regent – Quality Asset with China Focus 40% Owner of the Dapingzhang JV • JV in operation since April 06 • Cash flow positive since operation Dapingzhang JV hosts current resources of 325,000t Cu + 230,000t Zn + Au-Ag-Pb • Two open pits (Dapingzhang and Dawaz) • LOM Average Annual production of 83,0
Slide 29: Dapingzhang JV – VMS Deposit with Significant Upside
Dapingzhang JV – VMS Deposit with Significant Upside • 40% equity interest via Sino- foreign JV Company • 20 year operating term • World class VMS system • Excellent potential for becoming a VMS camp • Developed infrastructure • Operational improvements ongoing • Expansion of production under design
Slide 30: Dapingzhang Mine – Potential to Add Significant Resources and Extend Mine Life
Dapingzhang Mine – Potential to Add Significant Resources and Extend Mine Life 29
Slide 31: Dapingzhang Mine – Mill Infrastructure
Dapingzhang Mine – Mill Infrastructure No.3 Mill Plant No.2 Mill Plant 500 tpd 500 tpd Tailings Dam Capacity 16M tonnes No.4 Mill Plant 2,000 tpd New Zinc Circuit - Now complete 30
Slide 32: Dapingzhang Mine – Ore Reserves
Dapingzhang Mine – Ore Reserves Ore Reserves as at 31 March 2007 15.57Mt - Cu average grade 1.17% and Zn average grade of 1.09% Reserves Grade Deposit Classification Ore Type tonnes Copper Zinc Gold Silver Lead Millions (%) (%) (g/t) (g/t) (%) Dapingzhang Pit Probable Massive 8.37 1.72 1.53 0.47 17.
Slide 33: Dapingzhang Mine – Mineral Resources
Dapingzhang Mine – Mineral Resources Mineral Resource Statement as at March 2007 Indicated Resources Inferred Resources Deposit Ore Type Tones Cooper Zinc Gold Silver lead Tones Cooper Zinc Gold Silver lead (Mt) (% Cu) (%Zn) (Au g/t) (Ag g/t) (% Pb) (Mt) (% Cu) (%Zn) (Au g/t) (Ag g/t) (% Pb) Dapingz
Slide 34: Dapingzhang Mine – Copper and Zinc Operation in China
Dapingzhang Mine – Copper and Zinc Operation in China COPPER OPERATION ZINC OPERATION Mining: Open Pit Open Pit Processing: Conventional flotation Conventional flotation Product: Copper concentrate with Zinc concentrate gold & silver credits Forecast Metal Sold 2007: 3,500t/a 20,000t/a Forecast Meta
Slide 35: Dapingzhang Mine
Dapingzhang Mine • Life of mine to 2015 but current drilling is showing great potential to extend well beyond 2015 • Open cut mining operation • Contract mining • Mining well ahead of schedule – over 140,000 tonnes of Zinc rich (>5%) Dawaz ore on ROM 34
Slide 36: Regent's Land Bank
Regent’s Land Bank REGENT JV’s LAND HOLDINGS ARE: Location / Name Licence Regent Effective Ownership (%) Area Km2 Type Dapinghzhang JV Exploration 40 16.22 Exploration 40 31.25 Exploration 40 36.02 Exploration 40 7.532 Exploration 40 3.84 Mining 40 2.751 Sub-total 97.613 Yinzishan JV Exploration 90.
Slide 37: Positive Outlook Prevails on Copper and Zinc
Positive Outlook Prevails on Copper and Zinc COPPER ZINC DEMAND DEMAND China is the biggest driver – ongoing strong Chinese imports China driven – experiencing strong demand for Zinc European demand remains solid Concentrate in China US demand stronger than expected World demand strong Global demand
Slide 38: Dapingzhang JV Company vs. Regent – 2007 Financial Year Results
Dapingzhang JV Company vs. Regent – 2007 Financial Year Results Dapingzhang Regent • Net Profit of US$10.43M • Net Profit of US$0.58M • Shareholders equity of US$63.20M • EPS of US$0.0004 per share • Cash balance of US$3.48M • Shareholders equity of US$20.09M, 53% increase from March 2006 • No hedgi
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