Slide 1: Capital Raising
For personal use only CAPITAL RAISING 15 September 2017 1 www.mitchellservices.com.au
Slide 2: Disclaimer
DISCLAIMER This investor presentation has been prepared by Mitchell Services Limited (“the Company”). Information in this presentation is of a general nature and does not purport to be complete, nor does it For personal use only contain all of the information which would be required in a prospectus
Slide 3: Overview & Executive Summary
For personal use only OVERVIEW & EXECUTIVE SUMMARY 3 www.mitchellservices.com.au
Slide 4: Executive Summary
EXECUTIVE SUMMARY For personal use only • Mitchell Services Limited (“Mitchell Services”) is seeking to raise approximately $8.79m to fund preparation and mobilisation of unutilised rigs and associated equipment, procurement of consumables and recruitment of personnel to fulfil current and expected
Slide 5: Where Are We in the Cycle?
WHERE ARE WE IN THE CYCLE? ABS 8412.0 Mineral and Petroleum Exploration, Australia. Released 4 September 2017 for June 2017 Quarter. For personal use only June quarter mineral exploration 2017 spend is 23.5% higher than June quarter 2016 spend 5 www.mitchellservices.com.au
Slide 6: Impact of Increased Utilisation on Revenue
IMPACT OF INCREASED UTILISATION ON REVENUE For personal use only $40.30m • At less than 30% annual rig utilisation, $32.97m Mitchell Services was EBITDA positive $25.17m Expected • We expect to be at Average Operating operating rig greater than 60% rig Rig Count count in the utilisation in the near
Slide 7: Business Overview
For personal use only BUSINESS OVERVIEW 7 www.mitchellservices.com.au
Slide 8: Mitchell Services Market Profile
MITCHELL SERVICES MARKET PROFILE For personal use only ASX Information Board of Directors ASX Stock Symbol: MSV Executive Chairman – Nathan Mitchell Shares Issued: 1,476,414,072 Non-Executive Director – Peter Miller Share Price (at 12/9/2017): A$0.037 Non-Executive Director – Robert Douglas Market C
Slide 9: 2017 Results Overview
2017 RESULTS OVERVIEW For personal use only 8,357 shifts in FY2017 Total recordable injury 200+ frequency rate improved by ↑ 28% from FY2016 7.8% experienced employees from FY2016 Total revenue of $40.30m 330% increase 22% Major project wins increase geographical diversity and in EBITDA to ↑ materia
Slide 10: Revenue by Client Type
REVENUE BY CLIENT TYPE For personal use only Tier 1 Revenue* $40.30m Other Revenue $32.97m VALUE OF TIER 1 • Large / multinational mining and $25.17m energy companies 92.5% • Very high safety and business 87.5% system requirements $15.02m 64.6% • Generally brownfield work for 36.7% existing mini
Slide 11: Growth Opportunity
For personal use only GROWTH OPPORTUNITY 11 www.mitchellservices.com.au
Slide 12: Leverage in an Improving Market
LEVERAGE IN AN IMPROVING MARKET For personal use only STAGE 1: UTILISATION INCREASES • More rigs start working (This is happening) Gross Margin STAGE 2: PRODUCTIVITY IMPROVES AS UTILISED RIGS WORK MORE SHIFTS • Seasonality impact reduces as rigs work through the wet season (This is starting to happe
Slide 13: Business Development
BUSINESS DEVELOPMENT For personal use only Improving market will lead to further increases in rig utilisation • Highly focused on lead generation • Request for tender, proposals and tender activity has doubled to over $200m since March 2016 • Continue to win multi rig, multi year contracts with Tier
Slide 14: Majority of $200M+ Pipeline Is Surface Drilling
MAJORITY OF $200M+ PIPELINE IS SURFACE DRILLING For personal use only Pipeline by Pipeline by Pipeline by Drilling Type Commodity State 2% 8% 23% 36% 49% 52% 28% 92% 1% 6% 3% QLD NSW SA Surface Underground Base Metals Iron Ore Coal VIC WA NT 14 www.mitchellservices.com.au
Slide 15: Offer Structure
For personal use only OFFER STRUCTURE 15 www.mitchellservices.com.au
Slide 16: Equity Offer Overview
EQUITY OFFER OVERVIEW The capital raising consists of the following components For personal use only • A placement of 74,000,000 million shares at $0.034 per share to raise approximately $2.52m (“Placement Offer”) • A 1 for 8 non-renounceable rights issue to existing shareholders located in Australi
Slide 17: Financial Position
FINANCIAL POSITION For personal use only 31 Jul 17* Capital Raise^ Post-Raise $000’s $000’s $000’s Current assets 12,064 8,300 20,364 Property, plant and equipment 29,838 0 29,838 Other non-current assets 16 0 16 Total assets 41,918 8,300 50,218 Current liabilities 14,316 0 14,316 Non-current liabil
Slide 18: Debt Profile Overview
DEBT PROFILE OVERVIEW For personal use only Principal Debt Maturity 10 Millions 8 Shareholder Loans • Originated in 2015 as a funding mechanism 6 for the Nitro asset acquisition 4 • Interest at 10% pa, payable monthly in cash 2 • Matures July 2020 • Secured by all ex-Nitro assets - FY 2018 FY 2019 F
Slide 19: Offer Timetable
OFFER TIMETABLE For personal use only Activity Date Announcement of Placement & Entitlement Offer Friday, 15 September 2017 Ex date for Entitlement Offer Tuesday, 19 September 2017 Record date for Entitlement Offer Wednesday, 20 September 2017 INDICATIVE Placement Offer shares settle Wednesday, 20 S
Slide 20: Summary
SUMMARY For personal use only • Mitchell Services vision is to be Australia’s leading provider of drilling services to the global exploration, mining and energy industries. • Significant increase in rig utilisation to circa 43 rigs during 1H2018 from an average of 22 in FY17. • $200+ million tender
Slide 21: Appendix
APPENDIX For personal use only • Appendix 1 – Capital Structure • Appendix 2 – Board and Management • Appendix 3 – Where are we in the cycle? • Appendix 4 – Types of Drilling • Appendix 5 – Investment Risks 21 www.mitchellservices.com.au
Slide 22: Appendix – Capital Structure
APPENDIX 1 – CAPITAL STRUCTURE For personal use only Current shares on issue 1,476,414,072 Placement shares 74,000,000 Expanded share capital 1,550,414,072 Rights issue ratio 1 for 8 Rights issue shares 184,551,759 New shares on issue post Capital Raising 1,734,965,831 22 www.mitchellservices.com.au
Slide 23: Appendix – Board and Management
APPENDIX 2 - BOARD AND MANAGEMENT For personal use only NATHAN MITCHELL – Executive Chairman ANDREW ELF (B.Com, FCPA, MBA, GAICD) – Chief Executive Officer During his tenure as CEO for Mitchell Drilling Contractors the company doubled in Mr. Elf has over 15 years finance, commercial and operation ex
Slide 24: Appendix – Where Are We in the Cycle?
APPENDIX 3 – WHERE ARE WE IN THE CYCLE? For personal use only Significant increase in global drilling activity in base metals 24 www.mitchellservices.com.au
Slide 25: Appendix – Types of Drilling
APPENDIX 4 – TYPES OF DRILLING For personal use only Types of Drilling MSV Recognised as experts Activity: Medium to High -Activity is primarily focused on production SURFACE DRILLING Competition: High in this market sector and leading provider of COAL CAPEX: Comment: Medium to High Work volumes con
Slide 26: Appendix – Investment Risks
APPENDIX 5 – INVESTMENT RISKS For personal use only Seasonal conditions and business interruptions Levels depend on a number of factors outside the control of the Company, including, but not The Company has exposure to a number of natural events such as cyclones, persistent rainfall, limited to, con
Slide 27: Appendix – Investment Risks (Cont.)
APPENDIX 5 – INVESTMENT RISKS (CONT.) Changing customer preferences regarding contractual arrangements Reputation For personal use only The majority of the Company’s contracts for the provision of services are negotiated on a The Company’s ability to retain and source new customers is heavily depend
Slide 28: Appendix – Investment Risks (Cont.)
APPENDIX 5 – INVESTMENT RISKS (CONT.) For personal use only Entry of new competitors General risks The entry of additional competitors in the drilling services sector could result in reduced operating Other than the specific risks identified above, the price at which the Company’s shares trade on ma