Keweenaw Land Association, Ltd. · OTC:KEWL
Keweenaw Land Association — Shareholder Meeting (May 2015)
25 slides from Keweenaw Land Association's shareholder meeting presentation, May 4, 2015
Slide 1: 2015 Annual Shareholders Meeting
KEWEENAW ------ LAND ASSOCIATION, LIMITED ------ 2015 Annual Shareholders Meeting May 4, 2015 5/5/2015
Slide 2: Forward looking statements Safe Harbor
Forward looking statements Safe Harbor This presentation contains forward-looking statements. These forward-looking statements are subject to a number of risks and should not be relied upon as predictions of future events or promises of a given course of action. A number of factors such as land use,
Slide 3: Board of Directors
Board of Directors David Ayer – Chairman John E. Earhart Brian D. Glodowski – President/CEO Donald J. Hoffman Marjorie E. Nesbitt Frederick J. Weyerhauser 5/5/2015 3
Slide 4: Management, Administrative and Forestry staff
Management, Administrative and Forestry staff Management Administrative Forest Operations Log Sales Brian Glodowski Paula Aijala Mark Sherman Tom Moon President/CEO Administrative Assistant Operations Manager Log Sales Representative Jim Simmons Julie Wiemeri Dan Taavola Art Norden Controller Senior
Slide 5: Corporate Overview
Corporate Overview Major supplier of logs and pulpwood in the Lake States region • 168,000 acres of fee timberland • 402,000 acres severed and attached mineral rights • Annual harvest of over 75,000 cords per year • Forest Stewardship Council (FSC) certified for over 20 years Principle Business
Slide 6: Ownership concentrated in western UP MI, Northern WI
Ownership concentrated in western UP MI, Northern WI In progress Ironwood Log Yard Ownership concentrated in the western UP and northern Wisconsin 5/5/2015 6
Slide 7: Ownership concentrated in western UP MI, Northern WI
Ownership concentrated in western UP MI, Northern WI Strong regional forest products industry provides 5/5/2015stable market for our products 7
Slide 8: 2014 Financial Highlights (EBITDA)
2014 Financial Highlights (EBITDA) Profitability 2014 2013 2012 Log Sales – (in Millions) $9.88 $8.34 $9.67 Timber Operations Income (in Millions) 1.96 1.25 1.73 Other Income 0.62 0.96 0.84 EBITDA 1.90 1.44 1.96 Net Income 0.86 0.71 1.04 Harvest Volume (cd-eq) 75,363 71,244 82,493 Timber Operation
Slide 9: Positive stock performance over the long-term
Positive stock performance over the long-term KEWL S&P 500 10% 9.87% Keweenaw has outperformed the 9% S&P 500 index over past 20 years 8% 7% 7.12% 6% 5.88% 5% 4% 3.54% 3% 2% 1% 0% 10 Year 20 Year 5/5/2015 9
Slide 10: Success of operations aligned with our log marketing strategy
Success of operations aligned with our log marketing strategy Focus on long-term supplier relationships • Over 30 veneer, sawlog and pulpwood customers • Consistent supplier in all market conditions • Provide sale quantities that matters • Represent up to 25% of our customer’s log purchases Log
Slide 11: Expanding margins by increasing prices and containing costs
Expanding margins by increasing prices and containing costs Gross Margin Per Cord Equivalent 2014 2013 2012 Log Sales $131 $117 $117 Cost of Sales 85 79 80 Gross Margin $46 $38 $37 5/5/2015 11
Slide 12: Improving timberlands through strategic acquisitions and divestitures
Improving timberlands through strategic acquisitions and divestitures 2014 Accomplishments Added 1,316 acres of timberland at an acquisition cost of $790 per acre Sold 617 acres of HBU properties at an average price of $1,388 per acre Utilize “like-kind exchange” where feasible 5/5/2015 12
Slide 13: Leveraging our expertise to generate additional income
Leveraging our expertise to generate additional income Provide log scaling and inventory services to existing customers – Fee based service – Utilizing existing infrastructure and yard operations Actively purchasing open market timber – Increases revenues and market share – Harvested 5,700 cd eq
Slide 14: Significant acreage of higher and better use (HBU) properties
Significant acreage of higher and better use (HBU) properties 14,350 acres under commercial, aggregate, mineral or recreation leases 26 developed property lots 8 miles of lake frontage which includes Lake Superior and Lake Gogebic 30 miles of major river frontage 5/5/2015 14
Slide 15: Potential for mineral development
Potential for mineral development 402,000 acres of mineral rights in Michigan Currently two active mining and mineral exploration leases – Copperwood (formerly Orvana) – Highland Resources Several areas of known mineralization – Copper – Iron Michigan is a favorable mining district – Establi
Slide 16: Subsurface ownership across wide range of mineral features
Subsurface ownership across wide range of mineral features Copperwood White Pine Groveland 5/5/2015 16
Slide 17: Significant environmental review and permitting process
Significant environmental review and permitting process Michigan Department of Environmental Quality (DEQ) Office of Oil, Gas, Air Quality Division Water Resources Division and Minerals Part 31: Part 55: Part 632: Part 303: Part 315: Water Resource Protection, Air Discharge Nonferrous Metallic Minin
Slide 18: Basic economic terms for Copperwood lease
Basic economic terms for Copperwood lease Primary lease area - 680.87 acres 20-year lease agreement Annual rental with escalation clause - currently $40,000 per year Sliding scale Net Smelter Royalty (NSR) upon commencement of production – 2% NSR if Copper Benchmark Price < $2.00 per lbs – 4
Slide 19: Relatively long time frame for bringing mine into production
Relatively long time frame for bringing mine into production Year Activity 1956 Lease by USMR in Western Syncline, first drilling campaign, discovery of Copperwood 1957-58 Additional drilling, sinking of 71 meter vertical exploration , 635 meters of exploration drifts 1959 Activities cease, BCR term
Slide 20: Realization of mineral assets dependent upon many risk factors
Realization of mineral assets dependent upon many risk factors beyond the mineral owners control Long time frames from exploration to mine development – Exploration – Feasibility studies (metallurgical and operational) – Permitting (local governments, MDEQ, EPA) – Capital requirements Significan
Slide 21: Keweenaw's Strategic Plan
Keweenaw’s Strategic Plan Manage timberlands sustainably – Maximize the value of what we harvest today – Increase the value of the standing timber inventory for future harvest Add production timberlands – Strategic acquisitions (blocking, access, growth rates) – Divest of non-core and lower qual
Slide 22: Improved sales realization from forest management activities
Improved sales realization from forest management activities At the operational level: – Concentrate on removing lower quality, slower growing trees – Subsequent harvests show improvement in product mix Additional gains as we move towards a higher percentage of managed stands Summary of grade mi
Slide 23: Additional improvements in overall asset value
Additional improvements in overall asset value Moving from 19% sawtimber to 35% sawtimber results in an increase of $600 per acre in added value to standing hardwood inventory 1st cut stand - 19% sawtimber 3rd cut stand - 35% sawtimber Assumes 2014 sales realization and average standing hardwood inv
Slide 24: Committed to improving shareholder value
Committed to improving shareholder value Improving the quality and volume of timber through active forest management Acquiring productive timberlands while divesting of non-strategic properties Direct marketing of logs allows us to maximize value in all market conditions Effective utilizatio
Slide 25: Contact
KEWEENAW ------ LAND ASSOCIATION, LIMITED ------ If you have questions or wish to contact us regarding this presentation material, please call or email us at: Toll Free – 877-539-3362 Email – Investors@keweenaw.com David Ayer – Chairman Brian D. Glodowski – President/CEO Keweenaw Land Association, L
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