Terracom Limited · ASX:TER
Terracom — Investor Presentation (May 2019)
52 slides from Terracom's investor presentation, May 10, 2019
Slide 1: Investor Presentation May 2019
For personal use only INVESTOR PRESENTATION MAY 2019 1 Not for distribution or release in the United States
Slide 2: Disclaimer
DISCLAIMER For personal use only The information contained in this document (“Presentation”) has been prepared by TerraCom Limited (the “Company”) in relation to its capital raising proposal, including the non-renounceable pro-rata rights issue ("Entitlement Offer"), as described in its ASX announce
Slide 3: Disclaimer
DISCLAIMER For personal use only This Presentation may include certain statements that may be deemed ‘forward-looking statements’. All statements in this Presentation that address future activities or events are forward-looking statements. Although the Company believes the expectations expressed in
Slide 4: Table of Contents
TABLE OF CONTENTS For personal use only 1 Overview 2 Financials 3 Project Updates 4 Summary Photo: David Biggs CEO & Ian Bucknell CFO 3 4 Not for distribution or release in the United States
Slide 5: Overview
For personal use only OVERVIEW Not for distribution or release in the United States
Slide 6: Strategy – Unlocking Value
STRATEGY – UNLOCKING VALUE FOCUSED ON BECOMING A MID-TIER COAL PRODUCER For personal use only 1 Maximise • BA – increase from 2.5 to 3Mtpa1 production and • BNU – increase from 1.5 to 3Mtpa2 revenue • Reduce debt 2 • Near term brownfield and greenfield Focus on expansion opportunities development •
Slide 7: Overview – Pre Transaction
OVERVIEW – PRE TRANSACTION 2 Regions For personal use only Capital Structure ASX listed coal producer with operations in Australia and Mongolia Shares on Issue (m) 406 Share Price on 3 May 2019 (ASX: TER) 0.555 Cash Generating $ Capitalising on strong coal market targeting 6.0Mtpa generating strong
Slide 8: Refinancing Summary
REFINANCING SUMMARY For personal use only œ A$63* million to be utilized for repayment of existing debt Fully underwritten A$35 million entitlement offer at A$0.58 per share; and US$20 million convertible bond with a conversion price A$0.696 (20% premium to underwritten rights issue price) œ Fun
Slide 9: Refinancing Summary
REFINANCING SUMMARY For personal use only œ The Company is currently in advanced negotiations in relation to the refinancing of its Euroclear Listed Bond: Indicative Key terms – Debt Refinance: Principal – US$100 million Interest Cost – LIBOR plus margin of 350-450 bps payable quarterly œ Follow
Slide 10: Entitlement Offer
ENTITLEMENT OFFER For personal use only œ Fully underwritten A$35 million 3 for 20 non-renounceable entitlement offer of 60.9 million shares at A$0.58 per share œ Offer price A$0.58 per share œ 6% discount to 15 day VWAP* œ 10% discount to the 30 trading day VWAP* œ Petra Capital appointed as lead m
Slide 11: Capital Structure Post
CAPITAL STRUCTURE POST For personal use only Existing Shares on Issue: 406.2 million New Entitlement Offer Shares to be Issued: 60.9 million* Total Shares on Issue (post Entitlement Offer): 467.2 million Convertible Bond Shares^: 41.1 million Total 508.2 million Detachable warrants: 12.6 million Opt
Slide 12: Pro Forma Debt
PRO FORMA DEBT For personal use only Assuming Convertible Note Converted to Equity: US$m Pro-forma US$m Euroclear Listed Bond* 145.2 100.0 Mobile Equipment Facility 0.6 0.6 State Bank of India 10.1 10.1 Non Interesting Bearing Loan 3.0 3.0 Total 158.9 113.7 Assuming Convertible Bond Still Outstandin
Slide 13: Convertible Bond
CONVERTIBLE BOND STRUCTURE For personal use only Principal: US$ 20 million Lender: OCP Asia Issuer: TerraCom Limited Conversion Price: A$0.696 per share Total Issuable Shares*: 41,050,903 fully paid ordinary shares Interest Coupon: 9.95% per annum payable quarterly in arrears Maturity Date: Later of
Slide 14: Fully Underwritten Rights Issue Timetable
FULLY UNDERWRITTEN RIGHTS ISSUE TIMETABLE For personal use only Detail Date Record Date: 7:00pm, Wednesday, 15 May 2019 Opening Date: Monday, 20 May 2019 Despatch Date: Monday, 20 May 2019 Closing Date: 5:00pm, Wednesday, 29 May 2019 Shortfall Notification Date: Monday, 3 June 2019 Issue Date: Wedne
Slide 15: Key Risks
KEY RISKS For personal use only Notice: There are a number of risks, both specific to TerraCom and of a general nature, which may, either individually or in combination, affect the future operational and financial performance of TerraCom, and the industries in which TerraCom operates. The following
Slide 16: Key Risks (cont.)
KEY RISKS CONT. For personal use only Mongolia TerraCom’s BNU Mine is located in Mongolia. Whilst Mongolia is, at present, a stable democracy, in recent history it has experienced greater economic, social and political volatility than developed Western countries and there is therefore a higher degre
Slide 17: Key Risks (cont.)
KEY RISKS CONT. For personal use only Mineral Resource and Ore Reserve estimates Mineral Resource and Ore Reserve estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new informa
Slide 18: Key Risks (cont.)
KEY RISKS CONT. For personal use only General risks General The value of TerraCom shares and prices at which they trade in the market are affected by a number of general factors which are beyond the control of TerraCom and its directors. Factors such as inflation, currency fluctuation, interest rate
Slide 19: Key Risks (cont.)
KEY RISKS CONT. For personal use only Liquidity risk There can be no guarantee that there will always be an active market for TerraCom’s shares or that the price of TerraCom shares will increase. There may be relatively few buyers or sellers of shares on the ASX at any given time. This may affect th
Slide 20: Financials
For personal use only FINANCIALS Not for distribution or release in the United States
Slide 21: FY19 – H1 Highlights
FY19 – H1 HIGHLIGHTS FINANCIAL & OPERATING PERFORMANCE For personal use only 2019 Financial Year – H1 2019 Financial Year – H1 Financial Highlights Operation Highlights • Group EBITDA $52.6m • Production 1.4Mt – 1.2Mt BA, • Blair Athol (BA) $61m 0.2Mt BNU • Baruun Noyon Uul (BNU) • Sales 1.5Mt –
Slide 22: FY19 – H1 Highlights: Financial & Operating Performance
FY19 – H1 HIGHLIGHTS FINANCIAL & OPERATING PERFORMANCE For personal use only H1 FY19 H1 FY18 Change H1 FY19 H2 FY18 Change Production ROM Production (Mt) 1.4 0.9 65% 1.4 1.6 -11% Saleable Production (Mt) 1.4 0.8 67% 1.4 1.4 1% Coal Sales (Mt) 1.5 0.6 134% 1.5 1.3 16% Financial Revenue 171.9 45.2 280
Slide 23: Coal Quality and Sales
COAL QUALITY AND SALES STRONG COAL BRANDS SOLD INTO ESTABLISHED MARKETS For personal use only Australia - Blair Athol Thermal Coal • Strong brand history with an estimated 250 million tonnes of BA Thermal Coal sold into Asian Markets • High Energy, Low Ash, Low sulfur coal with low trace element a
Slide 24: Project Updates
For personal use only PROJECT UPDATES Not for distribution or release in the United States
Slide 25: Queensland – Blair Athol (BA)
For personal use only Queensland Blair Athol (BA) Not for distribution or release in the United States 25
Slide 26: Operational Performance – Blair Athol Mine
OPERATIONAL PERFORMANCE BLAIR ATHOL MINE IN AUSTRALIA For personal use only May August August October October April 2017 2017 2017 2017 2017 2018 Completion First Coal First First First Coal BA TLO of the Sale Mined Dragline Product Trucked to Completed and First Swing Coal Third Party
Slide 27: Significant Achievements – Blair Athol Mine
SIGNIFICANT ACHIEVEMENTS BLAIR ATHOL MINE IN AUSTRALIA For personal use only Recommissioned BA Mine • World class infrastructure capable of supporting 12Mtpa • Ramped up to in excess of 2.5Mtpa annualised production rate within 12 months of taking ownership • Re-established BA strong coal brand in
Slide 28: Rail Load-Out Facility (BA)
AUSTRALIA RAIL LOAD-OUT FACILITY (BA) For personal use only Existing Rail Line Connecting into Main Goonyella Line to DBCT BA Rail Load Out BA Coal Mine 18 Not for distribution or release in the United States
Slide 29: Operational Performance – Blair Athol Mine
OPERATIONAL PERFORMANCE BLAIR ATHOL MINE IN AUSTRALIA For personal use only Delivery of Plan resulting in rapid ramp up of Production ... July to January to June July to January to June July to Detail December 2016 2017 December 2017 2018 December 2018 Run of Mine (tonnes) 441,996 1,132,924 1,193,17
Slide 30: Contractor Engagements
CONTRACTOR ENGAGEMENTS BLAIR ATHOL MINE IN AUSTRALIA For personal use only Link Mining Services o Principal Contractor o Statutory Positions (Coal Mine Operator, SSE, OCE, etc) o Overburden Removal (including Drill & Blast, and Dragline) o Mining of ROM Coal o Washing and Crushing of ROM Coal To
Slide 31: Resource and Reserves
RESOURCE AND RESERVES JORC 2012 For personal use only Resource 3 Mt 50 50 Measured 31.5 45 45 Indicated 11.6 40 40 Inferred 1.9 35 35 Total 45.0 30 30 Note – after mining depletion of 2.2Mt, updated 6 December 20183. 25 25 Reserve 4 Mt 20 20 Proved 16.6 15 15 10 10 Probable 12.1 16.6 5 5 Total 28.7
Slide 32: Thermal Coal Product Specification
THERMAL COAL PRODUCT PRODUCT SPECIFICATION For personal use only 32 Not for distribution or release in the United States
Slide 33: Environment: Significant Rehabilitation Work Completed in BA
ENVIRONMENT SIGNIFICANT REHABILITATION WORK COMPLETED IN BA For personal use only Significant progress of rehabilitation activities in BA • The capping of the old tailings storage facility completed ahead of schedule as part of the mining operations process. • The completion of the rehabilitation
Slide 34: Mongolia – Baruun Noyon Uul (BNU)
For personal use only Mongolia Baruun Noyon Uul (BNU) Not for distribution or release in the United States 34
Slide 35: South Gobi Project
SOUTH GOBI PROJECT NOYON BASIN – MULTIPLE MINING AND EXPLORATION LICENCES For personal use only The South Gobi Project comprises contiguous South Gobi Project JORC Resources6 mining and exploration licenses covering 696 Measured Indicated Inferred Total sq km in the Noyon Coal Basin North 15 Mt 9
Slide 36: South Gobi Project – Regional Mining Licence Layout
SOUTH GOBI PROJECT REGIONAL MINING LICENCE LAYOUT For personal use only 36 Not for distribution or release in the United States
Slide 37: South Gobi Project – Delivery of Implementation Plan
SOUTH GOBI PROJECT DELIVERY OF IMPLEMENTATION PLAN2 For personal use only Operating Cost Rationalisation: Delivery of Coal Plan2: Have engaged the Number 1 The border crossing that is utilised to transport our Mining Equipment and Services coal from Mongolia to China has opened up Contractor
Slide 38: South Gobi Project – Delivery of Implementation Plan
SOUTH GOBI PROJECT DELIVERY OF IMPLEMENTATION PLAN2 For personal use only 38 Not for distribution or release in the United States
Slide 39: Other Projects
For personal use only Other Projects Not for distribution or release in the United States 39
Slide 40: Queensland Expansion
QUEENSLAND EXPANSION ORGANIC GROWTH FROM STRATEGICALLY LOCATED ASSETS For personal use only Zone 1 – Northern Galilee Hub Zone 2 – Central Bowen Hub * Zone 3 – Central Western Hub The BA acquisition revalues TerraCom’s Australian portfolio through providing a hub for their development across major c
Slide 41: Queensland Expansion – Large Resource with Expansion Potential
QUEENSLAND EXPANSION LARGE RESOURCE WITH SIGNIFICANT EXPANSION POTENTIAL For personal use only Australian JORC Resource Table (excluding Blair Athol)5 JORC 2004 Resources (Mt) Potential coal Independent Tenement Measured Indicated Inferred Total type geologist Northern Galilee Project - 133 1,076 1,
Slide 42: Queensland Expansion – Northern Galilee Project
QUEENSLAND EXPANSION NORTHERN GALILEE PROJECT For personal use only * 32 Not for distribution or release in the United States
Slide 43: Queensland Expansion – Springsure Project
QUEENSLAND EXPANSION SPRINGSURE PROJECT For personal use only * 33 Not for distribution or release in the United States
Slide 44: Board of Directors
BOARD OF DIRECTORS For personal use only Wal King Hon. Craig Wallace Philip Forrest Tsogt Togoo Chairman Deputy Chairman Independent Independent Independent Director Independent Director Non-Executive Director Non-Executive Director • Wal holds a Bachelor and Masters • Hon. Craig Wallace served as t
Slide 45: Executive Management Team
EXECUTIVE MANAGEMENT TEAM For personal use only Danny McCarthy Nathan Boom Shaun Lucas Sam Bowles CEO CFO & Company Secretary Australian Business Unit Head Mongolia Business Unit Head • Mr McCarthy is a highly experienced • Nathan Boom holds a Bachelor of • Shaun Lucas has held operational, • Since
Slide 46: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS For personal use only 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 o
Slide 47: International Offer Restrictions (cont.)
INTERNATIONAL OFFER RESTRICTIONS CONT. For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other
Slide 48: International Offer Restrictions (cont.)
INTERNATIONAL OFFER RESTRICTIONS CONT. For personal use only United Kingdom Neither the information in this document nor any other document relating to the Offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section
Slide 49: Key Terms of Underwriting Agreement
KEY TERMS OF UNDERWRITING AGREEMENT For personal use only The Entitlement Offer is fully underwritten on the terms and conditions set out in an underwriting agreement executed by TerraCom and Petra Capital Pty Limited (the Underwriter) (Underwriting Agreement). Bonython Coal No 1 Pty Ltd, Mistlake P
Slide 50: Key Terms of Underwriting Agreement (cont.)
KEY TERMS OF UNDERWRITING AGREEMENT CONT. For personal use only • a certificate required to be given by TerraCom (certifying TerraCom's compliance with its obligations under the Underwriting Agreement, that no termination events have occurred, and that the representations and warranties are true and
Slide 51: References
REFERENCES 1 – Refer to ASX Announcement on 20 March 2019 for further information and clarification on the Blair Athol production forecast. The material assumptions For personal use only underpinning the Blair Athol production target in this ASX Announcement continues to apply and has not materially
Slide 52: Thank You
For personal use only THANK YOU Not for distribution or release in the United States