Bci Minerals Ltd · ASX:BCI
Bci Minerals — Investor Presentation (November 2021)
57 slides from Bci Minerals's investor presentation, Nov 18, 2021
Slide 1: Mardie Salt & Potash Project: $360M Capital Raising to Drive Development
Mardie Salt & Potash Project Pilbara Western Australia $360M Capital Raising to Drive Development 18 November 2021 ASX:BCI www.bciminerals.com.au
Slide 2: Important Notices
Important Notices Not for release to US wire services or distribution in the United States. The following notice and disclaimer apply to this presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any informatio
Slide 3: Important Notices (continued)
Important Notices (continued) Past performance Past performance metrics and figures (including past share price performance of BCI), as well as pro forma financial information, included in this Presentation are given for illustrative purposes only and should not be relied upon as (and is not) an ind
Slide 4: Important Notices (continued)
Important Notices (continued) Risks An investment in BCI is subject to investment and other known and unknown risks, some of which are beyond the control of BCI. For further information please refer to slides 48-53 (inclusive) Disclaimer Canaccord Genuity (Australia) Limited is the underwriter, lead
Slide 5: Corporate Structure
Corporate Structure Strong Balance Sheet and Supportive Shareholders Capital Structure Pre-raise Board of Directors2 Shares on Issue 599.96M Brian O’Donnell Non-Executive Chairman Share Price (10-day VWAP at 16 Nov-2021) $0.481 Alwyn Vorster Managing Director 6-month liquidity (16 Nov-2021) $60.2M M
Slide 6: Mardie Highlights
Mardie Highlights Multi-generational and sustainable opportunity with annuity style income Pilbara coast is a proven production region for high-quality, consistent salt with five existing solar evaporation salt projects, owned by Rio Tinto and major Japanese companies, operating here for up to 50
Slide 7: Equity Raise Structure
Equity Raise Structure $360 million capital raising represents last piece of $1.2 billion funding package BCI has secured $740M of project finance debt (62% of funding requirement) BCI to contribute $460M of equity before debt drawdown in 1H 2023 Successful $360M equity raise plus BCI cash and
Slide 8: Funding for Development and Ramp-up
Funding for Development and Ramp-up Up to $360M of new equity and Convertible Notes to be issued1 Forms part of BCI’s $460M total equity contribution to the Mardie Project, subject to shareholder approvals Additional to the recently secured $740M of Mardie Project debt2 $740M BCI Minerals 38% Up
Slide 9: Transaction Overview
Transaction Overview Key Funding Terms Offer Size and The Company is conducting a capital raising of up to $360 million (before expenses), comprising: Structure A share placement of up to 558,139,535 fully paid ordinary shares ('New Shares') at an issue price of $0.43 per New Share to raise up to
Slide 10: Transaction Overview
Transaction Overview Key Funding Terms Share Purchase The SPP has been underwritten by Canaccord up to $20 million, subject to shareholder approval. Plan AustralianSuper has committed to sub-underwrite the full underwritten amount of $20 million, subject to shareholder approval. Under the SPP,
Slide 11: Indicative Equity Timeline
Indicative Equity Timeline Placement and Share Purchase Plan Event Date Trading Halt Wednesday, 17 November 2021 SPP record date 5pm WST Wednesday, 17 November 2021 Announcement of equity raising and Placement bookbuild Thursday, 18 November 2021 Notice of Extraordinary General Meeting released Thur
Slide 12: Salt and Potash Markets
BCI Minteots Salt and Potash Markets
Slide 13: Salt Demand Closely Correlated with GDP
Salt Demand Closely Correlated with GDP Salt end uses cover all key sectors of the economy ~335Mtpa global market; 160Mtpa Asian Market >10,000 direct and indirect uses across many market segments Strong correlation (r=0.97) between salt demand and Asian GDP Asia Salt Consumption vs Asia GDP (
Slide 14: Positive Salt Market Outlook
Positive Salt Market Outlook Strong demand growth in Asia and insufficient new supply CONTESTABLE1 ASIAN MARKET DEMAND/SUPPLY; 2020-2030 (Mtpa) Strong Asian salt demand; supply 29 105 constraints in India & China 21 95 10 Demand in Mardie’s contestable market projected to grow by >35% 76 74 in n
Slide 15: Salt Market Strategy
Salt Market Strategy Strong customer interest - MOUs to be converted to offtake contracts Typically 2-year contracts and price settlements with individual customers – no official published benchmark 16 non-binding MOUs and 1 non-binding termsheet signed across target markets covering >100% of fi
Slide 16: SOP – High Quality Potassium Fertiliser
SOP – High Quality Potassium Fertiliser Growth market driven by demand for high quality fruits and vegetables ~70Mtpa global potash market of which ~65Mtpa is muriate of potash (MOP) and ~6.5Mtpa sulphate of SOP BENEFITS IN PLANTS potash (SOP) Encourages strong Improves Growth SOP is a premium f
Slide 17: SOP Market Strategy
SOP Market Strategy MOUs to be converted to offtake contracts over next 18-months Buyers include compound and bulk fertiliser producers and distributors SOP TARGET MARKETS (140KTPA) China Japan Oceania USA SE Asia Other Asia Typically 2-5-year tonnage contracts with 1-2-year pricing – European p
Slide 18: Salt and SOP Price Strength
Salt and SOP Price Strength Salt and SOP Prices driven by strong demand and limited new supply SALT Australian Imported Salt into China1,2 15-year pricing from ~US$35/t to ~US$75/t 65 delivered1 in Asia 55 Delivered salt price in China has increased by US$/t, CFR ~30% in the first half of 20211
Slide 19: Mardie Salt & Potash Project
Mardie Salt & Potash Project 19
Slide 20: Mardie Project Design
Mardie Project Design Largest salt project in Australia – fully integrated with port SITE CONDITIONS PROJECT LAYOUT >100km2 clay soils – ideal pond floor High net evaporation rates (~10mm/day) PRODUCTION 9 evaporation ponds 42 salt and 20 SOP crystallisers Salt wash plant - 5.35Mtpa >99.5%
Slide 21: Positive Stakeholder & Approval Progress
Positive Stakeholder & Approval Progress Native title agreements in place; Approvals and tenure advanced GOVERNMENT NAIF loan of $490M approved1 – largest in WA EFA loan of $110M approved1 Efficient WA Government facilitation across agencies ENVIRONMENT EPA positive referral to WA Environmen
Slide 22: Sustainability Focus
Sustainability Focus Inexhaustible resources, natural energy and waste minimization 1. Inexhaustible seawater feedstock; no resource depletion – 100+ year project life; No landscape scarring, mine pits, waste dumps or large-scale dewatering 2. 99% of energy derived from solar and wind – Renewable st
Slide 23: Strong Financial Metrics
Strong Financial Metrics Annuity-style cash flow >60 years1 with material upside FINANCIALS2 Pre-tax, NPV7 Sensitivity Analysis (A$M, Real) NPV7: A$1,561M Discount Rate: 7% +/- 1% EBITDA: A$256Mpa (Salt ~72%; SOP ~28%) Exchange Rate: IRR: 15.5% AUD/USD (0.70): +/- 10% 60-year Cumulative Cash
Slide 24: Capital Cost Estimate
Capital Cost Estimate Estimates de-risked through independent reviews and value engineering Estimates re-confirmed as AACE1 Class 3 with A$M A$M Area Description an accuracy range of ±10-15%. Real Nominal Salt2 282.5 294.4 Project capital cost estimate $954M ($ real) - SOP3 119.9 127.4 applied f
Slide 25: Contracting Strategy
Contracting Strategy 60%+ of Capital Cost to be delivered via fixed price contracting model1 NORTHERN EMBANKMENT TRIAL Experienced BCI owner’s team assembled2 Engenium engaged as integrated Project Management Contractor (PMC) service provider Pond wall construction trial successfully completed
Slide 26: Mardie Will Have an Integrated Port Facility
Mardie Will Have an Integrated Port Facility Marine structure is single largest contract Marine structure package value >$180M Contract award targeted for Q4 20211 Design, procurement and port access (causeway and road) construction scheduled to commence Q1 20221 Jetty construction scheduled
Slide 27: Operating Cost Estimates
Operating Cost Estimates Estimates de-risked through independent reviews and value engineering AACE1 Class 3 estimate with an accuracy range of ±10-15% SALT OPEX ESTIMATES ($ real) Estimates recognise equipment and labour cost increases during 1.8 FY21 Cash costs (Ex-works) Base Case All In Su
Slide 28: Salt Cost Curve – Contestable Market
Salt Cost Curve – Contestable Market Mardie will be a low-cost supplier of salt into contestable1 Asian market 60 Mardie Salt 50 Only Mexican solar salt and Chinese rock salt the marginal cost suppliers Chinese Rock 3rd Tier to most Asian markets Other Mardie with Chile 40 CIF eq. Cost (US$/t) SOP
Slide 29: SOP Cost Curve
SOP Cost Curve1 Mardie is expected to be the lowest cost supplier of SOP globally 500 Mardie SOP Only Marginal cost is USA Primary 400 ~US$350/t FOB/ex works China Tier 2 Secondary Europe 1 Primary MARGINAL COST Middle East 2 Secondary The majority of high Middle East 1 Secondary Other East Asia
Slide 30: Final Investment Decision Made
Final Investment Decision Made Followed significant project de-risking over several years Definitive Feasibility Study (DFS) July 20201; Optimised Feasibility Study (OFS) April 20212 Confirmation from independent expert reviews that Project development strategies, operating plans, revenue and co
Slide 31: Indicative Project Schedule
Indicative Project Schedule 2021 2022 2023 2024 2025 2026 Q1 | Q2 | Q3 | Q4 Q1 | Q2 | Q3 | Q4 Q1 | Q2 | Q3 | Q4 Q1 | Q2 | Q3 | Q4 H1 | H2 H1 | H2 Early Works; Approvals1 OFFTAKE CONTRACTS NEGOTIATED Funding EQUITY CONTRIBUTION DEBT PERIOD PONDS FID2 CRYSTALLISERS GROW SALT INVENTORY MAIN CONSTRUCTIO
Slide 32: Equity Funding For Main Construction
Equity Funding For Main Construction 32
Slide 33: Construction Funding Sources and Uses
Construction Funding Sources and Uses1 $460M equity contribution required prior to first drawdown of project debt $460M to cover financing costs and significantly advance: Jetty – Accommodation village – Primary seawater intake structure and pumps – Evaporation ponds construction – Crystalliser co
Slide 34: Funding Provided By Iron Valley Royalty
Funding Provided By Iron Valley Royalty Royalty payments provide funding support for Mardie construction Quarterly royalty earnings from operating agreement with IRON VALLEY MINE Mineral Resources Ltd (ASX: MIN) Iron Valley royalty earnings forecast to provide additional funding to first Project
Slide 35: BCI’s Other Assets
BCI’s Other Assets BCI’s strengthening salt and potash portfolio and further iron ore upside OTHER SALT AND POTASH INTERESTS BCI to become a ~7% shareholder in HFR and a ~15% shareholder in AMN1, subject to shareholder approval – HFR owns the 100% of the Muga Potash and Salt Project in northern Sp
Slide 36: Pro Forma Balance Sheet
Pro Forma Balance Sheet Assumptions Placement proceeds of approximately $256.2M 30 Sep-21 Net 30 Sep-21 Pro Forma Balance Sheet after expenses of approximately $3.8M Unaudited Proceeds Pro-forma $M $M $M Convertible Note Series 1 value of $29.1M reflects Cash 87.4 256.21 343.6 market value of AM
Slide 37: AustralianSuper Convertible Notes
AustralianSuper Convertible Notes Convertible notes provide BCI with funding optionality Series 2 & 3 Convertible Notes provide BCI with up to $100M cash Subject to shareholder approval and conditions to drawdown and issue including BCI and AustralianSuper agreeing to any additional conditions t
Slide 38: Mardie will become a Tier 1 Project
Mardie will become a Tier 1 Project Large scale, low cost and long operating life STRONG STAKEHOLDER LARGE SCALE, 3. QUALITY ROBUST MARKETS; 5. LOWSTRONG COST; 2. SUSTAINABLE SUSTAINABLE 4. LOW COST STRONG CASHFLOWS SUPPORT MULTI-GENERATIONAL PRODUCTS QUALITY PRODUCTS CASHFLOWS Strong support from
Slide 39: Why Invest in BCI?
Why Invest in BCI? Significant Mardie upside potential CURRENT VALUATION MARDIE POTENTIAL Low enterprise value of Salt & SOP growth markets ~$183M (pre-raise) 1 Tier 1 – sustainable, large ~$106M cash (pre-raise)1; scale, low cost & long life no debt ~$250M/annum EBITDA for 100 years2 1As
Slide 40: Appendices
= BCI minees's Appendices
Slide 41: Mardie Production Process
Mardie Production Process1 99% Sun and Wind Energy 4. Salt Wash Plant 5. Salt Stockpiles C. SOP Storage Shed 7. Transhipper 6. 2.4km (12,000t) Jetty B. SOP Process Plant 8. Ocean Going Vessel A. KTMS2 (up to Capesize) Crystallisers (5km2) 9. Export 3b. Secondary Salt Crystallisers (6km2) 3a. Primary
Slide 42: BCI Board of Directors
BCI Board of Directors Brian O’Donnell Alwyn Vorster Michael Blakiston NON-EXECUTIVE CHAIRMAN MANAGING DIRECTOR NON-EXECUTIVE DIRECTOR Banking and investment background Geology, Mineral Economics, MBA Legal and mining business background Director, Finance and Investments - Kumba; Rio Tinto
Slide 43: BCI Executive Team / Key Project Personnel
BCI Executive Team / Key Project Personnel Alwyn Vorster Sam Bennett Stephanie Majteles MANAGING DIRECTOR PROJECT DIRECTOR GENERAL COUNSEL/JOINT COMPANY SECRETARY Geology, Mining and MBA degrees Civil engineering degree Law degree Kumba; Rio Tinto; Iron Ore Holdings Fortescue; Roy Hill; WS
Slide 44: Potential Impact on Voting Power
Potential Impact on Voting Power The impact of passing Resolutions on AustralianSuper and Wroxby’s maximum voting power in the Company in various scenarios. The table below assumes that all Convertible Notes are fully drawn and converted at their maturity, all interest and fees are capitalised to
Slide 45: Underwriting Agreement: Key Terms
Underwriting Agreement: Key Terms Overview Canaccord Genuity (Australia) Limited (ABN 19 075 071 466) ('Underwriter') is appointed as the exclusive underwriter, bookrunner and lead manager to the Placement and SPP (together, the 'Offer'). The Company has entered in an underwriting agreement with the
Slide 46: Underwriting Agreement: Key Terms
Underwriting Agreement: Key Terms • (Contravention of constitution or Act): a contravention by a member of the Group of any provision of its constitution, the Corporations Act, the Listing Rules or any other applicable legislation or any policy or requirement of ASIC or ASX; • (Adverse change): an e
Slide 47: Placement Agreement: Key Terms
Placement Agreement: Key Terms Overview Company has entered into a Placement Agreement ('Placement Agreement') with AustralianSuper. Under the terms of the Placement Agreement, AustralianSuper has agreed to subscribe for, up to 174,418,605 New Shares at an issue price of $0.43 per New Share to raise
Slide 48: Key Risks (1)
Key Risks (1) Development of the Mardie Salt and Potash Project The Company’s ability to successfully develop and commercialise the Mardie Salt and SOP project ('Mardie' or 'Project') may be affected by numerous factors including but not limited to: macro-economic conditions, obtaining required appr
Slide 49: Key Risks (2)
Key Risks (2) Offtake Risk There is no certainty that BCI will be able to enter into binding offtake agreements in a timely manner, with acceptable parties, for sufficient volumes or on reasonable terms to satisfy the debt funding requirements. Offtake contracts could be entered into at a lower pric
Slide 50: Key Risks (3)
Key Risks (3) Control risk Upon completion of the Placement and SPP (assuming full subscription and shareholder approvals), the number of Shares in the Company will increase from 599,957,864 to approximately 1,204,609,027. Further, if the Series 1, 2 and 3 Convertible Notes are converted to shares,
Slide 51: Key Risks (4)
Key Risks (4) Climate Change Risk There are a number of climate-related factors that may affect the proposed operations and financial position of the Company. The climate change risks particularly attributable to the Company include the risk of increased frequency of severe weather events which may
Slide 52: Key Risks (5)
Key Risks (5) Data Security Risk It is possible that the Company’s procedures and systems may not stop or detect cyberattacks, data theft and hacking. Cyber security breaches may result in business interruption and loss of commercially sensitive data, which could have an adverse impact on the Compan
Slide 53: Key Risks (6)
Key Risks (6) Securities Investments and Share Market Conditions Generally There are risks associated with any securities investment. The prices at which the securities trade may fluctuate in response to a number of factors. Furthermore, the stock market, and in particular the market for exploration
Slide 54: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company 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
Slide 55: International Offer Restrictions
International Offer Restrictions Indonesia A registration statement with respect to the New Shares has not been, and will not be, filed with Otoritas Jasa Keuangan in the Republic of Indonesia. Therefore, the New Shares may not be offered or sold to the public in Indonesia. Neither this document nor
Slide 56: 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 on any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material rela
Slide 57: Contact details
T +61 8 6311 3400 Level 1, 1 Altona St GPO Box 2811 E info@bciminerals.com.au West Perth West Perth W www.bciminerals.com.au WA 6005 WA 6872