Bowen Coking Coal Ltd · ASX:BCB
Bowen Coking Coal — Merger or Acquisition (August 2021)
47 slides from Bowen Coking Coal's merger presentation, Aug 4, 2021
Slide 1: Transformational Acquisition and Equity Capital Raising
Transformational Acquisition and Equity Capital Raising 4 August 2021
Slide 2: Important Notice – Disclaimer
IMPORTANT NOTICE – DISCLAIMER Cautionary Statement Listing Rule 5.23 and 5.19.2 Statements This presentation has been prepared by Bowen Coking Coal Limited (BCB, ASX:BCB or Bowen). This document contains The statements in this presentation concerning Mineral Resource Estimates at Cooroorah Project a
Slide 3: Table of Contents
TABLE OF CONTENTS 1 Transaction Overview Page 4 2 Transaction Highlights Page 8 3 Overview of the Acquisition Assets Page 13 4 Bowen Coking Coal Update Page 26 5 Equity Capital Raising Page 39 6 Key Risks Page 44 3
Slide 4: Transaction Overview
1 | Transaction Overview
Slide 5: Acquisition of Burton Mine and Lenton Project
ACQUISITION OF BURTON MINE AND LENTON PROJECT Transformational acquisition that transitions BCB into a near-term coal producer in the Bowen Basin Transaction Highlights Enlarged BCB Portfolio – Radical Enhancement 1 Hillalong Lenton Acquires long-life & high-quality coal mines for low upfront cost O
Slide 6: Transaction Detail
TRANSACTION DETAIL BCB will acquire long-life, high quality and near production coal assets for low upfront cost • Bowen Coking Coal Limited (‘BCB’ or the ‘Company’) has agreed to acquire 100% of the shares in New Lenton Coal Pty Ltd (which currently owns a 90% interest in the Lenton Joint Venture -
Slide 7: Transaction Detail
TRANSACTION DETAIL The acquisition will be primarily funded with a combination of cash and new equity • The Lenton JV owns the New Lenton Project (‘Lenton’) and the Burton Mine (‘Burton’), located in the Northern Bowen Basin • Burton Mine is an open-cut coal mine with accompanying infrastructure cur
Slide 8: Transaction Highlights
2 | Transaction Highlights
Slide 9: Consistent with M&A Strategy – Strong Strategic Fit
CONSISTENT WITH M&A STRATEGY – STRONG STRATEGIC FIT The acquisition of the Lenton JV is consistent with BCB strategy and an exceptionally strong fit COMMODITY ✓ Quality coking coal with secondary thermal coal BOWEN COKING COAL ✓ Northern Bowen Basin – tier 1 mining jurisdiction for coking coal LOCAT
Slide 10: Materially Enhances BCB's Portfolio
MATERIALLY ENHANCES BCB’s PORTFOLIO Lenton JV adds significant resource, infrastructure and production capacity to the existing BCB portfolio Enlarged and Enhanced Portfolio Location 1 Burton | 90% Open cut coal mine currently in care and maintenance – produces coking and thermal coals from the Rang
Slide 11: Creation of a >5Mtpa Near-Term, Multi-Mine Coal Producer
CREATION OF A >5MTPA NEAR-TERM, MULTI-MINE COAL PRODUCER BCB production forecast Key Production Targets Burton Complex Particulars Burton / Lenton Broadmeadow East Isaac River Total Life of Mine 9 – 11 years 5 – 7 years 4 – 5 years n.a. Production (ROM) 3.5 – 4.5Mtpa 0.8 – 1.1Mtpa 0.4 – 0.6Mtpa 4.7
Slide 12: Transformational Acquisition for BCB
TRANSFORMATIONAL ACQUISITION FOR BCB The Lenton JV immediately transforms BCB into a significant near-term coal producer in the Bowen Basin STATUS QUO POST TRANSFORMATIONAL ACQUISITION BM East Hillalong Isaac River Cooroorah Burton Lenton Infrastructure • Projects | Broadmeadow East, Hillalong, Isaa
Slide 13: Overview of the Acquisition Assets
3 | Overview of the Acquisition Assets
Slide 14: Lenton JV (90%)
LENTON JV (90%) Established Bowen Basin asset with a proven operating history & ~A$300m 1 of infrastructure • NLJV owns the New Lenton Project and the Burton Mine (on C&M). Ownership comprises 90% BCB and 10% Formosa Plastics Burton Mine Location Overview • Large open pit mine & infrastructure acqui
Slide 15: Asset Location
ASSET LOCATION Opportunity to integrate Broadmeadow East (and potentially Hillalong) with the acquired assets Advanced Projects Site Map • Undeveloped open pit resource Lenton • Located on the north-west corner of the Burton ML70109 • Will utilise recommissioned Burton infrastructure • The unmined a
Slide 16: Development Strategy
DEVELOPMENT STRATEGY Current development plan anticipates first production at Burton in 12–18 months from completion Indicative Development and Operating Plan1 Northern Bowen Basin 1• Completion of the acquisition from New Hope; 2• Refurbish the existing CHPP and infrastructure; • Obtaining key appr
Slide 17: History
HISTORY The Burton Mine produced quality coals for an uninterrupted period of 18+ years Lenton JV Overview • The Lenton JV was formed in 2011 between NHC (90%) and Formosa (10%) over the Lenton Project, located ~150km from Mackay in Queensland • In 2017, the Lenton JV acquired the Burton leases and
Slide 18: Mining Method
MINING METHOD Simple open-pit coal mining in a low risk, prospective region that BCB and its personnel know well Mining Strategy and Pit Sequence Ellensfield North Image • Truck and shovel, terrace mining method with augering in later years • BCB plans to employ a different mining strategy relative
Slide 19: Infrastructure
INFRASTRUCTURE BCB is acquiring established infrastructure with a replacement value of ~A$300M 1 Infrastructure Overview Infrastructure Images Map – CHPP to TLO • The majority of the Burton infrastructure was Mallawa TLO Kerlong Village established during the original 1996 – 1998 Lenton construction
Slide 20: CHPP
CHPP Acquiring established processing, conveying, transportation and waste disposal infrastructure CHPP Processing Steps Waste Disposal 1• Coal will be dumped into the CHPP feed hopper with the remainder • Course rejects and tailings will be combined in a sump and pumped temporarily placed on the RO
Slide 21: Approvals
APPROVALS Burton and Lenton are almost fully permitted and development ready Permit Status Lenton JV Permits • Burton − Fully approved Mining Lease and Environmental Authority approvals for the Ellensfield, Plumtree and Isaac Pits − Residual Void Plan | ~12 months required to submit the residual voi
Slide 22: Geology
GEOLOGY Northern Bowen Basin is highly prospective for coal due to its seam stratigraphy and structure Overview Coal Measures – Cross Section • The deposits target the Leichhardt and Vermont seams in the Rangal Coal Measures for hard coking coal with secondary thermal coal – similar to Hillalong and
Slide 23: Strip Ratios
STRIP RATIOS Most zones within the identified pits have low strip ratios that are less than 8x Strip Ratios by Zone Low average ROM Lenton BC_2 Pit Isaac Pit strip ratio of around 7.1 bcm / ROM tonne Lenton BC_1 Pit (including auger tonnes) Lenton A_1 Pit Ellensfield South Pit Plumtree North Pit 23
Slide 24: Lenton JV – Significant Resource and Reserve Base
LENTON JV – SIGNIFICANT RESOURCE AND RESERVE BASE Xenith estimates total JORC resources of ~204Mt and total JORC reserves of ~30Mt Mineral Resource Estimate | Mt 1, 2, 3 Mineral Reserve Estimate | Mt 1, 2, 4 Mineral Reserve Estimate Seam Measured Indicated M&I Inferred MI&I Seam Proved Probable Tota
Slide 25: Coal Quality
COAL QUALITY BCB expects high quality coking coal production Overview Indicative Coal Quality – Summary • BCB will target Low Vol HCC product Coking Coal Thermal Coal • Favourable coking coal properties include: Ash 7.8% – 8.6% Ash1 15.5% – 17.5% − Burton-produced coking coal quality Volatile Matter
Slide 26: Bowen Coking Coal Update
4 | Bowen Coking Coal Update
Slide 27: Summary
SUMMARY BCB is the next independent, multi-mine coking coal producer in the Bowen Basin 1 We are securing the mines and 4 We have the people infrastructure BCB team is made up of senior executives with extensive Coking coal portfolio located in world class Bowen Basin development experience in the c
Slide 28: Project Pipeline
PROJECT PIPELINE Transaction positions Bowen as the next independent, multi-mine coking coal producer in the Bowen Basin Project Status Development / Care & Exploration Production Maintenance Hillalong Currently in recommissioning status, expected to be Burton (C&M) operational within 12 months post
Slide 29: Indicative Development Timetable – Next 24 Months
INDICATIVE DEVELOPMENT TIMETABLE – NEXT 24 MONTHS Indicative Timetable to Full Production Potential BME and Isaac River production BME to operate through third through Burton party BME approvals infrastructure infrastructure H2 2021 H1 2022 H2 2022 2023 Commence Isaac River Burton Commence approvals
Slide 30: Board of Directors
BOARD OF DIRECTORS Our team has successfully opened 11 coal mines and operated more than 25 coal mines worldwide Nick Jorss Gerhard Redelinghuys Matt Latimore Neville Sneddon Blair Sergeant Executive Chairman Managing Director / CEO Non-Exec Director Non-Exec Director Non-Exec Director Mr Jorss was
Slide 31: Corporate Snapshot – Pre-Acquisition and Equity Raising
CORPORATE SNAPSHOT – PRE-ACQUISITION AND EQUITY RAISING BCB has an enterprise value of approximately $80 million, pre-announcement of the Equity Raising Key Items Register Composition Share Price 1 Market Capitalisation 1 $0.085 $83.2m 52 week high 8.5c, low 4.2c 36.5% 34.2% Shares on Issue 1, 3 Ent
Slide 32: Corporate Snapshot
CORPORATE SNAPSHOT 34% of BCB is currently held by directors of BCB and related entities Share Price History (A$/share)1 Top 5 Shareholders2 0.08 Shareholder Shares | M % Held M Resources and Matt Latimore 156.3 16.0% 0.07 Cape Coal and Gerhard Redelinghuys 117.5 12.0% St Lucia Resources and Nick Jo
Slide 33: Broadmeadow East Project
BROADMEADOW EAST PROJECT Commentary Site Map • Broadmeadow East Project is BCB’s most advanced opencut coking coal on a granted mining lease and executed land access agreement • The mine is located in a premier mining region with close proximity to core mining infrastructure • Current access is for
Slide 34: Isaac River Project
ISAAC RIVER PROJECT Commentary Site Map • The Isaac River Project is a Stage 1 opencut project being fast-tracked towards development • It is located in a premier mining region along strike of BMA’s Daunia mine and close proximity to existing infrastructure − JORC Resource estimate of 8.7Mt1, consis
Slide 35: Hillalong Project
HILLALONG PROJECT Commentary Site Map • The Hillalong Project is a high quality coking coal project close to Hail Creek Mine in the Bowen Basin targeting open cut coking coal resources • A farm-in agreement was entered into with Japanese major Sumitomo Corporation to spend up to A$7.5m to earn 20% −
Slide 36: Coal Marketing Joint Venture
COAL MARKETING JOINT VENTURE Market Co will market all of the coal that BCB produces, including from Lenton and Burton Marketing Joint Venture Overview 50:50 Joint Venture between BCB and • Market Co engaged M Resources to operate and administer M Resources (Market Co) to market all the JV under the
Slide 37: Growth & Rebalance: Offsets Trade Flow to China
GROWTH & REBALANCE: OFFSETS TRADE FLOW TO CHINA Chinese Imports of Metallurgical Coal Australian Exports of Metallurgical Coal Commentary 80 200 • Seaborne market has rebalanced from mid-2021, and forecast to 60 150 remain so for duration of 2021 due to: 40 100 − Steel production recovery ex- China
Slide 38: Coal and Steel Price and Margin Recovery
COAL AND STEEL PRICE AND MARGIN RECOVERY Coal and Steel Prices (US$/t or Basket of Steel Prices indexed to 01 July 2017) Commentary 350 Reduction in Chinese steel exports, in conjunction with demand recovery 300 from COVID impacts – drove steel market tighter from Q3 2020 250 200 Strong existing sal
Slide 39: Equity Capital Raising
5 | Equity Capital Raising
Slide 40: Transaction Funding
TRANSACTION FUNDING • BCB has entered into an agreement to acquire New Hope’s interest in the Lenton JV: − A$20m upfront payment (of which up to A$10m can be in Bowen shares at Bowen’s election)1 Purchase Price − Up to A$7.5m in milestone payments associated with production ramp-up and time-based pa
Slide 41: Equity Raising Overview
EQUITY RAISING OVERVIEW • A$15.4M underwritten equity raising, consisting of: − Placement: − A$10.0M in an institutional share placement to Petra Capital, sole lead manager and sole bookrunner; of which A$7M will be subscribed for by Ilwella Pty Ltd, an investment entity of the Flannery Family Offic
Slide 42: Equity Raising Indicative Timetable
EQUITY RAISING INDICATIVE TIMETABLE Trading Halt 2/08/2021 − Announce Placement and rights issue − Include copy of Offer Booklet in announcement − Announce Acquisition − Cleansing Notice (for rights issue and placement) 4/08/2021 − Appendix 3B for placement and rights issue − Securities quoted on a
Slide 43: Pro Forma Shares on Issue
PRO FORMA SHARES ON ISSUE Pro Forma Shares on Issue Post Acquisition and Equity Raising Shares | M1 A$ / S Current Shares on Issue 978.5 $0.085 Current Unquoted Securities (Performance Shares and Options) 23.4 Current Shares Outstanding (Fully Diluted Basis) 1,001.9 Institutional Placement 149.3 $0.
Slide 44: Key Risks
6 | Key Risks
Slide 45: Key Risks
KEY RISKS Below is a summary of some of the key risk factors to which BCB is exposed • Exploration and development are high risk undertakings with no assurances that exploration of mining tenements will result in discovery or commercial exploitation of economic reserves Exploration, development, • M
Slide 46: Key Risks (Cont'd)
KEY RISKS (CONT’D) Below is a summary of some of the key risk factors to which BCB is exposed • Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which BCB is or may become a party Joint ventures, • Directors are unable to predict the r
Slide 47: General Investment Risks
GENERAL INVESTMENT RISKS Below is a summary of some of the general risks that may affect an investment in BCB • Prices at which securities trade may fluctuate in response to various factors unrelated or disproportionate to operating Securities investments and share market performance of companies co
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