Southgobi Resources Ltd. · TSXV:SGQ
Southgobi Resources — Investor Presentation (July 2009)
30 slides from Southgobi Resources's investor presentation, July 2009
Slide 1: Investor Presentation July 2009
July 2009 TSX V SGQ TSX.V: INVESTOR PRESENTATION
Slide 2: Forward-looking statements
Forward-looking statements This presentation includes certain “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove accurate and a
Slide 3: Overview
Overview Share price and capitalization Overview Share price performance (last 12 12-months) months) Pan-Asia Pan Asia premium coal development company Listed on TSX Venture Exchange (TSX-V) under symbol SGQ with US$1.6bn market capitalization p Acquired Mongolian coal assets from Ivanhoe Mine
Slide 4: Major shareholders
Major shareholders Major shareholders I Ivanhoe h MiMines 80 0% 80.0% DWS Investments 7.5% TD Asset Management 3.1% Fid lit IInvestments Fidelity t t 0 5% 0.5% Overview of Ivanhoe Mines (key shareholder) Canadian mining development company founded 15 years ago by Mr. Robert Friedland – listed on T
Slide 5: Unique location and strategic land package – Mongolia
Investment themes Unique location and strategic land package – Mongolia Sumber (advanced exploration) Ovoot Tolgoi (coal mine) Tsagaan Tolgoi (license application)
Slide 6: Unique location and strategic land package – Indonesia
Investment themes Unique location and strategic land package – Indonesia
Slide 7: Substantial and growing resources – just the start
Investment themes Substantial and growing resources – just the start Exposed coal – taken at Ovoot Tolgoi 23 May 2009
Slide 8: Substantial and growing resources – overview
Investment themes Substantial and growing resources – overview Asset Current 2009 target 2010 target Ovoot Tolgoi Measured & Indicated: 168.5mt (open-pit) Inferred: additional 25.3mt Ovoot Tolgoi Measured & Indicated: 16.5mt (underground) Inferred: additional 36.7mt Sumber (open-pit) Tsaagan Tolgoi
Slide 9: Substantial and growing resources – Mongolia exploration
Investment themes Substantial and growing resources – Mongolia exploration Ovoot Tolgoi Sumber Additional 12-months of 16km to east of Ovoot Tolgoi drilling (>20% of total drilling at site) First ‘alphabet’ extension along total 150km strike Engineering E i i open-pitit to t 300m 300 Envir
Slide 10: Premium coal quality
Investment themes Premium coal quality SouthGobi current product SouthGobi coal quality compared to internationally coall qualities liti li t d Chinese listed Chi peers >6,800kcal/kg Based on weighted average energy value of mineable coal Ash: 9% Coking 7,000 CSN: 4-9 6,500 6,370 Ovoot Tolgoi Premiu
Slide 11: Market opportunity – they're already lining up
Investment themes Market opportunity – they’re already lining up Trucks ‘as far as the eye can see’ – taken at Ovoot Tolgoi 17 June 2009
Slide 12: Market opportunity – nearest coal to growing Gansu
Investment themes Market opportunity – nearest coal to growing Gansu Hami, Xinjiang Hami (633km to Jiayuguan) Ovoot Tolgoi (495km to Jiayuguan) Primary target market: Gansu Secondary market: Western Inner Mongolia Wuhai, Inner Mongolia (967km to Jiayuguan) Source: Shanxi Fenwei Consulting
Slide 13: Market opportunity – more on Gansu
Investment themes Market opportunity – more on Gansu Gansu regional imports (2006–2020f) Drivers Gansu not well endowed for scalable and 70 59 million tonnes – economically mineable coal reserves roughly the size of 60 India’s total imports Major metal smelting and chemical today production cent
Slide 14: In production with sector leading growth – initial sales
Investment themes In production with sector leading growth – initial sales Ovoot Tolgoi daily coal sales 16,000 Border opening 11 hours per day 14,000 ousands off tonnes of ccoal 12,000 Border opens formally 10,000 for eight hours per day 8 000 8,000 Liebherr 994 shovel loading Terex truck 6,000 4,0
Slide 15: In production with sector leading growth – growth profile
Investment themes In production with sector leading growth – growth profile Historical and targeted production 25 20 n tonnes 15 2009-2015f target CAGR 85% million 10 5 0 2008 2009'F 2010'F 2015 Target g Ovoot Tolgoi (open-pit) Indonesia Sumber (open-pit) Ovoot Tolgoi (underground)
Slide 16: Competitive cost structure and margin
Investment themes Competitive cost structure and margin Cash mining cost for Ovoot Tolgoi vs. key China peers 250 200 150 MB/t RM 100 50 0 SouthGobi Ovoot Typical Typical China Coal Yanzhou Shenhua Q4 '08 g OP small China Tolgoi Shanxi LOM mine SOE average Source: SouthGobi data for SouthGobi and Ma
Slide 17: Key leadership and management
Key leadership and management Name / Title Commentary Robert Friedland y One of the mining industry's best-known international financiers, Mr. Friedland has been associated with resource development and Group founder technology ventures for 25 years and Exec. y Directed ected the t e assembly asse b
Slide 18: Appendix 1 Resources
Appendix 1 Resources
Slide 19: Summary of resources
Summary of resources Summary of resources Resources by category (million tonnes) Measured + Location Measured Indicated Indicated Inferred Mongolia Ovoot Tolgoi (open-pit) - West field 75.0 27.7 102.7 18.8 - South-East field 49.8 16.0 65.8 6.5 - Site total 124.8 43.7 168.5 25.3 Ovoot Tolgoi (undergr
Slide 20: Appendix 2 Selected photos
Appendix 2 Selected photos
Slide 21: Status of Mamahak
Status of Mamahak Facilities in place and coal uncovered Coal uncovered at South West pit Man camp Haul road Barge loader
Slide 22: Mongolia-China border
Mongolia-China border China has invested to access Mongolian coal Mongolia – truck weigh bridge Chi – railil loading China l di facility f ilit att Ceke C k border b d Mongolia – border and truck approaching (looking to buildings in China) China – railway infrastructure only a few km from border
Slide 23: Appendix 3 Changing dynamics for China's coal industry
Appendix 3 Changing dynamics for China’s coal industry
Slide 24: Background: Location of resources
Background: Location of resources Total resources are 1,160bn tonnes, 76% thermal coal Key provinces are Inner Mongolia and Shanxi with 25% and 23% of resources respectively Production is c. 2.7bn tonnes (2008) Inner Mongolia and Shanxi produce 441mtpa and 431mtpa respectively Industry owner
Slide 25: Background: Key historical dynamics
Background: Key historical dynamics It’s been growth at all costs Coal has gone from 67% of power generation in China in 2000 to 71% Coal increasing its share of use Blast furnace (using coking coal) remains the dominant steel making process Growth in thermal coal demand has averaged 9% on a c
Slide 26: Policy: National development
Policy: National development Committed to growth but its heading west rapidly Eastern China GDP per capita = US$4,789 FA investment growth = 12% Central China GDP per G pe capita cap ta = US$2,817 US$ ,8 FA investment growth = 16% Western China GDP per capita = US$2,499 FA investment growth = 37% Pr
Slide 27: Policy: Broader energy policy
Policy: Broader energy policy China is serious about changing energy use and source Elastic coefficient of power consumption (2000-2020f) New National Energy 1.8 Conservation Law (2008) Targets agreed for energy Elasticc coefficientt relative to GDP 1.6 saving in construction and transport p ind
Slide 28: Policy: Coal industry
Policy: Coal industry Other than logistics, the general demeanor is restrictive Fully funded mine safety administration Safety fees trebled since 2004 towards RMB30/t on Increased safety average today Elimination of unsafe small mines (70-100mtpa) Shanxi targets fatality rate of 0.3/1mtpa
Slide 29: Outlook: Demand
Outlook: Demand Demand growth to continue at lower but robust rates China’s coal demand by coal type (2009f – 2015f) Thermal coal demand 4,000 forecast to be 2.7bt in 2015f 3,500 Coking coal demand forecast at 0.9bt for 2015f 3,000 Growth G th rates t (CAGR) off c. 3.5% expected for both coal
Slide 30: Outlook: Demand – importers expected to be winners
Outlook: Demand Forecasters expect importers will be winners Chinese coal net imports by coal type (2009f – 2015f) Total gross thermal coal 25 imports expected to reach 50mtpa by 2015f – a 7.0% CAGR from 2009f 20 Total ggross cokingg coal imports expected to reach 15 18mtpa by 2015f – a 10.0% CA
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