Slide 1: Creating a leading global metallurgical coal producer
Creating a leading global metallurgical coal producer Investor Presentation 3 March 2022 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Information
Important Information This presentation is dated 3 March 2022 and has been prepared by Stanmore Resources Limited (Stanmore or Company). This presentation has been prepared in connection with Stanmore’s proposed acquisition of an 80% interest in BHP Mitsui Coal Pty ltd (BMC) by acquiring all of the
Slide 3: Important Information
Important Information Although due care and attention has been used in the preparation of forward-looking statements, such statements, opinions and estimates represent the Company's current views with respect to future events and are necessarily based on assumptions and contingencies that are inhere
Slide 4: Important Information
Important Information Ore reserves and mineral resources reporting This presentation contains estimates of Stanmore's Ore Reserves and Mineral Resources, as well as statements about BMC's Mineral Resources and Ore Reserves. The information in this presentation that relates to the Ore Reserves and Mi
Slide 5: Glossary
Glossary ASX Australian Securities Exchange The Australasian Code for Reporting of Exploration Results, Mineral Resources JORC Code and Ore Reserves BHP BHP Minerals Pty Ltd JV Joint venture BMC BHP Mitsui Coal Pty Ltd kt Kilo tonnes Poitrel and South Walker Creek operating mines, Wards Well develop
Slide 6: Table of Contents
Table of Contents 1. Introduction 7 2. The BMC Acquisition 15 3. Equity Raising Overview 20 4. Investment Highlights 25 5. Financial Information 34 6. Material Contracts 39 7. Appendices 42 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 6
Slide 7: Introduction
01 Introduction NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 8: Stanmore ASX Snapshot
Stanmore ASX Snapshot Stanmore on track to become a leading Australian supplier of metallurgical coals to global markets Overview Stanmore current ownership (%) • Australian incorporated public company listed on the ASX in 2009 5.5 • Supportive major shareholder: Golden Energy and Resources Limited
Slide 9: Overview of Stanmore
Overview of Stanmore Stanmore on track to become a leading Australian supplier of metallurgical coals to global markets • Definitive agreement with BHP to acquire its 80% interest in BMC (8 Nov 21), which owns the South Walker Creek and Poitrel operating mines and the Wards Well underground developm
Slide 10: Business Update
Business Update 2021 was a transitional year for Stanmore, ending with the successful transition to Isaac Downs and the transformational agreement to acquire an 80% interest in BMC GEAR Completes acquisition of Start of Isaac Downs Exploration Bulk Sample Isaac Downs mining lease BMC Acquisition 75%
Slide 11: Investment highlights
Investment highlights SCALE VALUE ASSETS & PEOPLE US$508m BMC 2H CY21 ….. EBITDA2 Stanmore will become one of the largest global Focused on capturing value from three de- High quality, long life, well capitalised assets producers of metallurgical coal1 risked cash generating operating assets backed
Slide 12: Experienced board and management team
Experienced board and management team Stanmore is led and managed by an experienced board and management team BOARD Dwi Suseno Jimmy Lim Mark Trevan Richard Majlinder Chairman Director Director Director Mr Dwi Suseno is the Executive Director and Group Mr Lim has over 17 years of experience in finan
Slide 13: New Vision, Mission Statements and Company Values
New Vision, Mission Statements and Company Values Stanmore’s Vision To be a leading resources company in Australia, creating value to our stakeholders through sustainable development Mission Statements Company Values Genuine care for our people, their safety, the environment and the We are commi
Slide 14: Overview of Golden Energy and Resources
Overview of Golden Energy and Resources Supportive major shareholder – an established and successful mining investment house Overview Group Corporate Structure - Summary 3 • Singapore listed investment company with investments including mining of coal through GEMS and Stanmore, and gold through JV c
Slide 15: The BMC Acquisition
02 The BMC Acquisition NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 16: Overview of BMC
Overview of BMC BMC is an established business which has been in continuous operation for decades Asset Overview Asset Location North Queensland South • Open-cut coal mine located approximately 35km west of Nebo in the Export Terminal Walker northern region of the Bowen Basin Creek • Produces high q
Slide 17: Transaction summary
Transaction summary Stanmore has signed a definitive share purchase agreement with BHP to acquire BHP’s 80% interest in BMC Transaction Summary Transaction Structure • Stanmore has signed a definitive share purchase agreement with BHP Minerals Pty Ltd (“BHP”) to acquire BHP’s 80% interest in BMC thr
Slide 18: Acquisition funding
Acquisition funding The Acquisition is fully funded by a combination of committed debt and equity • The Transaction is intended to be funded through a combination of: Acquisition Uses of Funds US$m Funding – A new US$625 million senior acquisition debt facility with a consortium of lenders; Transact
Slide 19: Integration plan
Integration plan Significant work has been undertaken to ensure day 1 operational readiness for the BMC assets BMC Integration Stanmore Operating Model for Integrated Business • Acquiring fully functioning site operations with existing contracts and workforce and • Stanmore’s simple, lean and agile
Slide 20: Equity Raising Overview
03 Equity Raising Overview NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 21: Equity Raising Overview
Equity Raising Overview Entitlement Offer • Approximately A$694 million (~US$506 million) partially underwritten pro-rata accelerated renounceable entitlement offer • Approximately A$694 million (~US$506 million) underwritten or committed in total – GEAR via Golden Investments has committed to subsc
Slide 22: Key Dates
Key Dates Event Date1 Announcement of Entitlement Offer 3 March 2022 Institutional offer open 3 March 2022 Institutional offer closes 4 March 2022 Announcement of results of institutional offer (after market close) 4 March 2022 Trading resumes on an ex-rights basis (Entitlement trading on ASX begins
Slide 23: Premium Coking Coal Product
Premium Coking Coal Product ~100% coking coal production, significantly higher achieved pricing Coking coal sales | Dec H21 (%) Achieved price | Dec H21 (US$/t) 99% 80% 203 151 147 12% SMR (pro forma) Coronado Whitehaven SMR (pro forma) Coronado Whitehaven Stanmore’s coking coal sales of ~100% is su
Slide 24: The offer price implies a forward EV / EBITDA multiple of 1.8x
The offer price implies a forward EV / EBITDA multiple of 1.8x Stanmore is competitive on an EV/EBITDA basis, giving rise to strong valuation upside, based on consensus EV / CY2022 EBITDA (x) 1, 2, 3, 4, 5 EV / EBITDA | Dec H21 pro-forma (x) 3, 4, 5 3.3 2.6 2.2 2.3 1.8 1.8 2,3 3 SMR Guidance @ US$25
Slide 25: Investment Highlights
04 Investment Highlights NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 26: Scale
1 Scale Stanmore will become one of the largest global producers of metallurgical coal Top 15 seaborne metallurgical coal exporters 2022 (operator basis) 70 60 50 2022F Production, Mtpa 40 Stanmore guidance for 2H CY2022 is 5.9 – 6.5 saleable production. (see page 37) 30 20 10 - Jellinbah A-Property
Slide 27: Shareholder Value
2 Shareholder Value Stanmore is committed to capturing value from three de-risked cash generating operating assets Stanmore Capital Management Update Stanmore Dividend Policy • Disciplined capital outlays planned in the first 5 years of BMC 1 ownership Stanmore will target distributing 50% of availa
Slide 28: Assets and people
3 Assets and people The combined Stanmore and BMC portfolio will comprise three high quality, well capitalised assets backed by an equipment rich business and experienced people Post Acquisition Stanmore and BMC Assets, Infrastructure and People 3 3 13.55Mtpa ~600 1 Direct Employees CHPP Plants Drag
Slide 29: World class product
4 World class product Stanmore produces a range of world class metallurgical coal products Stanmore Product End Markets 1 EUROPE KOREA JAPAN INDIA S.E ASIA SOUTH AMERICA Isaac Downs and BMC coals BMC Product Highlights Benchmark PCI at South Well established coals with Overlap with Stanmore’s Index
Slide 30: World class product
4 World class product Stanmore post acquisition sales breakdown and product overview Product Overview SMR Pro Forma Expected Sales Breakdown (100% Basis) 1 Stanmore Isaac • Balanced exposure between Downs – JSM long term benchmark; and – market relativity to PLV 4% • Majority of sales performed with
Slide 31: World class product
4 World class product Strong market outlook for metallurgical coal, including PCI Historical benchmark prices (US$/t, nominal) Supply and demand outlook 500 • Record metallurgical coal prices – Tight supply due to various supply issues in Australia, Russia, US, 450 Mozambique, Canada and Mongolia ov
Slide 32: Synergies
5 Synergies The Transaction will unlock potential operational synergies for Stanmore Source Description Potential Value Contribution Coal Blending and Opportunity for blending of the various products in the enlarged portfolio to maximise value 1 Marketing in use and achieve a higher overall weighted
Slide 33: ESG Commitment
6 ESG Commitment Stanmore is committed to operate in an environmentally and socially responsible manner STANMORE ESTABLISHED STANMORE GREEN TO DEVELOP AND EXECUTE HEALTH AND SAFETY IS A CORE VALUE AT STANMORE INITIATIVES TO REDUCE ITS CARBON FOOTPRINT 1 • Stanmore is committed to providing a culture
Slide 34: Financial Information
05 Financial Information NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 35: BMC Performance Update
BMC Performance Update1, 2 Strong 1H FY22 performance driven by higher coal prices and overperformance at South Walker Creek Commentary Saleable Production (Mt) • Improved 1H FY22 financial performance driven by significant increase in coal prices during the period 4.7 4.4 • South Walker Creek – Inc
Slide 36: BMC historical operating & financial performance
BMC historical operating & financial performance1 Saleable Production (Mt) – 100% Basis Revenue (US$m) – 100% Basis 315 10.3 9.7 9.5 8.7 203 205 6.0 6.2 5.4 143 4.9 4.7 1,363 1,446 122 952 827 971 813 778 3.0 519 422 641 3.7 4.1 4.1 3.9 1.7 550 619 452 356 311 FY18 FY19 FY20 FY21 1H FY22 FY18 FY19 F
Slide 37: Stanmore Pro Forma guidance
Latest estimates Stanmore guidance for key performance metrics 9 2 months to 30 Jun 6 months ending 31 20222, 3, 4, 6, 8 Dec 20222, 3, 4, 6, 8 Complex Saleable Production Mt 0.4 1.2 - 1.3 Plains Isaac FOB Cash Cost ex. Royalties US$/t 63 – 70 Saleable Production Mt 0.7 1.9 – 2.1 Poitrel (100% basis)
Slide 38: Pro forma post acquisition balance sheet
Pro forma post acquisition balance sheet Stanmore expects to delever quickly post Acquisition if the current coal price environment persists Pro Forma Stanmore Post Acquisition Balance Sheet and Credit Metrics US$m1 SMR as at 31 December 2021 Acquisition Adjustment Pro Forma at Completion4 Net Debt2
Slide 39: Material Contracts
06 Material Contracts NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 40: Material Contracts with regards to the Acquisition
Material Contracts with regards to the Acquisition Below is a summary of the key terms of the material contracts with regards to the Acquisition. Share Purchase • The SPA sets out the terms on which Stanmore SMC Holdings Pty Ltd, a wholly-owned subsidiary of Stanmore, agreed to acquire 100% of the s
Slide 41: Material Contracts with regards to the operation of BMC
Material Contracts with regards to the operation of BMC Below is a summary of the key terms of the agreements identified by Stanmore as material to the operation of BMC. BMC’s articles of • BMC is an incorporated joint venture, 80% owned by Dampier Coal and 20% owned by Mitsui. Stanmore will acquire
Slide 42: A Reserves and Resources
APPENDIX: A Reserves and Resources STRICTLY PRIVATE AND CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 43: BMC reserves and resources
BMC reserves and resources JORC Coal Resources as at 30 June 2021 Reserves Marketable Reserves Proved (Mt) Probable (Mt) Total (Mt) Total Mt % Ash % VM % Sulphur South Walker Creek 87 36 123 98 9.2 13.5 0.29 Poitrel 24 24 48 39 8.1 23.1 0.31 Total 111 60 171 137 JORC Coal Resources as at 30 June 202
Slide 44: Stanmore reserves and resources
Stanmore reserves and resources1 Stanmore Mineral Resources as at end December 2021 Stanmore Mineral Reserves as at end December 2021 Measured Indicated Inferred Total Proved Probable Total Isaac Plains Complex 71.8 43.2 48 163 Isaac Plains Complex 33.8 8.8 42.5 Surat Basin Complex 18.1 387.0 511 91
Slide 45: B International Offer Restrictions
APPENDIX: B International Offer Restrictions STRICTLY PRIVATE AND CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 46: International offer restrictions
International offer restrictions New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The Entitlements and the New Shares in the entitlement offer are not being offered to the p
Slide 47: International offer restrictions
International offer restrictions Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong
Slide 48: International offer restrictions
International offer restrictions Switzerland The offering of the Entitlements and the New Shares in Switzerland is exempt from requirement to prepare and publish a prospectus under the Swiss Financial Services Act ("FinSA") because such offering is made to professional clients within the meaning of
Slide 49: International offer restrictions
International offer restrictions Canada This document constitutes an offering of Entitlements and New Shares only in the Provinces of British Columbia, Ontario and Quebec (the "Provinces") and to those persons to whom they may be lawfully distributed in the Provinces, and only by persons permitted t
Slide 50: International offer restrictions
International offer restrictions Canada (continued) These rights are in addition to and not in derogation from any other right the purchaser may have. Certain Canadian income tax considerations. Prospective purchasers of the Entitlements and the New Shares should consult their own tax adviser with r
Slide 51: C Risks
APPENDIX: C Risks STRICTLY PRIVATE AND CONFIDENTIAL NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 52: Risk Factors
Risk Factors Stanmore is subject to a variety of risk factors. There are specific risks which relate directly to the Acquisition, Stanmore’s business and the Entitlement Offer as well as risks of a more general nature, many of which are largely beyond the control of Stanmore, its directors and manag
Slide 53: Risk Factors
Risk Factors 1.4 Major Shareholder Support There may be relatively few or many potential buyers of Stanmore shares on ASX at any time. This GEAR, Stanmore’s largest shareholder, has provided a binding commitment letter in support of the may increase the volatility of the market price of the shares a
Slide 54: Risk Factors
Risk Factors 3.2 Regulatory and Land Access risk provision. Stanmore’s operations and projects are subject to State and Federal laws and regulations regarding mining, environmental protection, land access and native title. These laws and regulations regulate 3.4 Joint ventures, contracts and agents
Slide 55: Risk Factors
Risk Factors 3.6 Operating risks no guarantee that the project will be successfully brought into production as assumed or within the The operations of Stanmore may be affected by various factors, including operational and technical estimated parameters in the study (e.g. operational costs and commod
Slide 56: Risk Factors
Risk Factors 3.10 Coal prices and coal demand risk (continued) 3.12 Labour market risks Metallurgical coal has been a volatile commodity over the past ten years. The metallurgical coal The ability of Stanmore to achieve its objectives depends on the hiring and retention of a number of industry faces
Slide 57: Risk Factors
Risk Factors 3.14 Financial covenants 3.16 Technological change The Group is subject to various financial covenants in relation to its banking facilities. These The Group’s performance is subject to the risk of technological developments which may impact covenants may, for example, require one or mo
Slide 58: Risk Factors
Risk Factors 3.19 Litigation port capacity could materially and adversely affect our cost structures and financial performance. Like all companies in the resources sector, the Group is exposed to the risks of litigation (either as the complainant or as the defendant), which may have a material adver
Slide 59: Risk Factors
Risk Factors 3.24 Customer contracts fiscal, monetary and regulatory policies), both domestically and internationally, under which Stanmore may obtain a material portion of its revenue from certain large off-takers. Stanmore’s Stanmore operates may adversely impact the fundamentals of Stanmore's tar