Orica Limited · ASX:ORI
Orica — Investor Presentation (February 2024)
49 slides from Orica's investor presentation, Feb 21, 2024
Slide 1: Acquisition of Cyanco, Partly Funded by Equity Raising
ACQUISITION OF CYANCO, PARTLY FUNDED BY EQUITY RAISING 21 February 2024 Presenters Sanjeev Gandhi Managing Director & CEO Kim Kerr Chief Financial Officer Orica Yarwun, Gladstone NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA
Slide 2: Disclaimer
DISCLAIMER This investor presentation (Presentation) is dated 21 February 2024 and has been prepared by Orica Limited (ABN 24 004 145 868) (Orica). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation, you acknowledge and agree to the terms set ou
Slide 3: Disclaimer (Cont'd)
DISCLAIMER (CONT’D) Any investment decision should be made solely on the basis of your own enquiries. Before making an investment in Orica, you should consider whether such an investment is appropriate to your particular investment objectives, financial situation or needs. Orica is not licensed to p
Slide 4: Disclaimer (Cont'd)
DISCLAIMER (CONT’D) Investors should be aware that certain financial measures included in this Presentation are ‘non-IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC and also ‘non-GAAP financial measures’ within the meaning of
Slide 5: Disclaimer (Cont'd)
DISCLAIMER (CONT’D) Time All references to time in this Presentation are to Australian Eastern Daylight Time (AEDT), unless otherwise indicated. Disclaimer The lead manager and underwriter (Lead Manager) is acting as lead manager, bookrunner and underwriter to the Placement. A summary of the key ter
Slide 6: Disclaimer (Cont'd)
DISCLAIMER (CONT’D) Neither the Lead Manager, nor its or Orica’s respective advisers or any of their respective affiliates, related bodies corporate, directors, officers, partners, employees, agents or advisers have authorised, permitted or caused the issue, submission, dispatch or provision of this
Slide 7: Contents
CONTENTS 1. Transaction Summary 8 2. Strategic Rationale 12 3. Cyanco Overview 17 4. Equity Raising Overview 20 5. Appendices A. Key Risks 26 B. International Offer Restrictions 38 C. Glossary 44 D. Underwriting Agreement Summary 46 Fisherman’s Landing, Gladstone NOT FOR DISTRIBUTION OR RELEASE IN T
Slide 8: Transaction Summary
TRANSACTION SUMMARY Cyanide sparge system in Orica’s sparge operation, delivery system in Ghana Ghana NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 8
Slide 9: Combination of Cyanco and Orica Is Strategically Compelling
TRANSACTION SUMMARY COMBINATION OF CYANCO AND ORICA IS STRATEGICALLY COMPELLING, CREATING A LEADING GLOBAL MINING CHEMICALS BUSINESS Accelerates Creates a leading integrated Strong fundamentals: Attractive financial metrics Orica’s Mining Chemicals strategy global manufacturing and Stable, counter-c
Slide 10: Creating a Leading Global Mining Chemicals Business
TRANSACTION SUMMARY CREATING A LEADING GLOBAL MINING CHEMICALS BUSINESS • Orica (ASX: ORI) has entered into a binding agreement to acquire 100% of the common stock of Cyanco Intermediate 4 Corp. (Cyanco) (the Acquisition) for US$640 million (Consideration)1 on a cash-free, debt-free enterprise value
Slide 11: Creating a Leading Global Mining Chemicals Business (Cont'd)
TRANSACTION SUMMARY CREATING A LEADING GLOBAL MINING CHEMICALS BUSINESS (CONT’D) • Cyanco’s EBITDA margin of ~22% is accretive to Orica’s margins, with ~90% free cash flow conversion1 • The Cyanco Acquisition and Placement are expected to be mid single digits EPS accretive from the first full year o
Slide 12: Strategic Rationale
STRATEGIC RATIONALE NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 12
Slide 13: Cyanco Enhances and Accelerates Orica's Mining Chemicals Strategy and Growth Beyond Blasting
STRATEGIC RATIONALE CYANCO ENHANCES AND ACCELERATES ORICA’S MINING CHEMICALS STRATEGY AND GROWTH BEYOND BLASTING OUR PURPOSE HOW WE WHERE WE WILL WIN Sustainably mobilise WILL WIN Future-facing the earth’s resources commodities Quarries Construction OUR VISION Thermal and Metallurgical coal To be th
Slide 14: Creating a Truly Integrated Global Sodium Cyanide Network
STRATEGIC RATIONALE CREATING A TRULY INTEGRATED GLOBAL SODIUM CYANIDE NETWORK Operational Global mining focused NaCN Manufacturing leverage producer annual capacity (kTpa)1 More than doubling Leading global Orica’s existing supply chain capacity of NaCN capability Cadillac, Quebec Pro forma Strategi
Slide 15: Long-Term Industry Trends Driving Growing Demand for Sodium Cyanide
STRATEGIC RATIONALE LONG-TERM INDUSTRY TRENDS DRIVING GROWING DEMAND FOR SODIUM CYANIDE Global gold ore treated1,2 Global cyanide demand2 (2023 to 2028) (2023 to 2028) • NaCN is a specialised chemical required for gold mining, with no commercially viable kT p.a. MT p.a. substitute ~1% • Global deman
Slide 16: Increases Orica's Exposure to Attractive Segments
STRATEGIC RATIONALE INCREASES ORICA’S EXPOSURE TO ATTRACTIVE SEGMENTS Post Terra Insights acquisition FY2023 pro forma revenue1 5% 77% 14% 4% Grow Mining Chemicals vertical Post Terra Insights & Cyanco acquisition FY2023 pro 11% 72% 13% 4% forma revenue2 Mining Blasting - Mining Q&C Digital Solution
Slide 17: Cyanco Overview
CYANCO OVERVIEW Yarwun, Cyanco’sGladstone Winnemucca facility, Nevada NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 17
Slide 18: A Leading Manufacturer and Global Supplier of Sodium Cyanide
CYANCO OVERVIEW A LEADING MANUFACTURER AND GLOBAL SUPPLIER OF SODIUM CYANIDE • Cyanco is a leading manufacturer and distributor of NaCN, primarily serving Attractive financial profile1 major US gold mines as well as Canada, Latin America, and Africa EBITDA (US$m)1 Revenue by NaCN Type2 Revenue By Re
Slide 19: Strategically Located Manufacturing and Distribution Footprint
CYANCO OVERVIEW STRATEGICALLY LOCATED MANUFACTURING AND DISTRIBUTION FOOTPRINT WINNEMUCCA FACILITY, NEVADA ALVIN FACILITY, TEXAS Cadillac, Val-d’Or, Quebec Quebec Cheyenne, • Up to ~95kTpa production capacity for solution, with Winnemucca, • ~50kTpa production capacity of solid briquettes Wyoming th
Slide 20: Equity Raising Overview
EQUITY RAISING OVERVIEW Orica Oricasparge transfer Yarwun, station, Callao, Peru Gladstone NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 20
Slide 21: Institutional Placement and Share Purchase Plan
EQUITY RAISING OVERVIEW INSTITUTIONAL PLACEMENT AND SHARE PURCHASE PLAN Placement Size • Fully underwritten Institutional Placement (Placement) to raise A$400 million and Structure • Approximately 25.3 million new shares to be issued under the Placement (New Shares), equivalent to ~5.5% of total Ori
Slide 22: Sources and Uses
EQUITY RAISING OVERVIEW SOURCES AND USES1,2 Sources A$m Uses A$m Gross proceeds from Placement 400 Acquisition of Cyanco 985 Existing balance sheet cash and undrawn 623 Acquisition and Placement costs 38 debt facilities Total sources of funds 1,023 Total uses of funds 1,023 1. Excludes any impact of
Slide 23: Pro Forma Balance Sheet
EQUITY RAISING OVERVIEW PRO FORMA BALANCE SHEET Retaining a prudent balance sheet post the Acquisition and Placement, with gearing expected to be at the lower end of Orica’s target range of 30% to 40%1 Orica Terra Insights Placement Pro Forma Combined A$M2 Orica with Terra Insights Cyanco Acquisitio
Slide 24: Placement and Share Purchase Plan Timetable
EQUITY RAISING OVERVIEW PLACEMENT AND SHARE PURCHASE PLAN TIMETABLE Description Date Record date for SPP 7.00pm, Tuesday, 20 February 2024 Trading halt and announcement of Acquisition and Equity Raising Wednesday, 21 February 2024 Placement bookbuild Wednesday, 21 February 2024 Announcement of compl
Slide 25: Combination of Cyanco and Orica Is Strategically Compelling
TRANSACTION SUMMARY COMBINATION OF CYANCO AND ORICA IS STRATEGICALLY COMPELLING, CREATING A LEADING GLOBAL MINING CHEMICALS BUSINESS Accelerates Creates a leading integrated Strong fundamentals: Attractive financial metrics Orica’s Mining Chemicals strategy global manufacturing and Stable, counter-c
Slide 26: Appendix A: Key Risks
APPENDIX A: KEY RISKS NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 26
Slide 27: Key Risks
APPENDIX A KEY RISKS Overview This section discusses some of the key risks associated with any investment in Orica, which may affect the value of Orica shares. The risks set out below are not necessarily listed in order of importance and do not constitute an exhaustive list of all risks involved wit
Slide 28: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Completion of the acquisition of Cyanco is conditional on the satisfaction or waiver of customary conditions for an acquisition of this nature including: (i) the applicable waiting period (including any extensions of such waiting period) required under the Hart-Scott-Ro
Slide 29: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) The ability of Orica to achieve its stated objectives will depend on the performance by the parties of their obligations under the agreements for, and related to, the Acquisition. If any party The financial capacity defaults in the performance of their obligations, it m
Slide 30: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Risks Relating to Orica and Its Business While the risks set out in this section are stated to relate to Orica and its business, investors should consider that some or all of these risks will also apply to Cyanco and its business, which Orica will own following completi
Slide 31: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Orica is subject to a broad range of environmental laws, regulations and standards in each of the jurisdictions it operates, including those that impose limitations on the discharge of pollutants and contaminants to the air, ground, water bodies and public sewerage syst
Slide 32: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Orica is exposed to a range of risks presented by the evolving impacts of climate change on its business including the following: • Increased frequency and/or intensity of extreme weather events (e.g. cyclones, floods, bushfires, etc.) have the potential to disrupt Oric
Slide 33: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Any adverse change in Orica’s ability to procure raw materials (in particular gas, ammonia and ammonium nitrate) required to manufacture its products, a material increase in the cost of raw materials or any increase in indirect production input costs of such raw materia
Slide 34: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Orica’s operations may Orica has a number of manufacturing operations that supply key products globally. Plant operations may be interrupted, or the supply chain disrupted, for a sustained period due to a number of be impacted by reasons including machinery or plant def
Slide 35: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Orica relies on IT software and technology service providers to support its business operations, including its manufacturing operations. Orica also holds sensitive employee and customer data, Orica may including such individuals’ and entities’ financial data. Orica’s IT
Slide 36: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Orica’s competitive Orica operates in highly competitive industries and has a broad range of competitors across its global operations. In the past, competitors have undertaken actions which would reduce Orica’s position may market share or earnings. Competitors may unde
Slide 37: Key Risks (Cont'd)
APPENDIX A KEY RISKS (CONT’D) Orica may be unable to Orica utilises debt to partially fund its business operations and may need to access additional debt (or other) financing to grow its operations and Orica may not be able to refinance, refinance, repay or renew its repay or renew its debt faciliti
Slide 38: Appendix B: International Offer Restrictions
APPENDIX B: INTERNATIONAL OFFER RESTRICTIONS NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 38
Slide 39: International Offer Restrictions
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS This document does not constitute an offer of New Shares of Orica 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 offered or sold, in any country outside Au
Slide 40: International Offer Restrictions
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS Cayman Islands No offer or invitation to subscribe for New Shares may be made to the public in the Cayman Islands or in any manner that would constitute carrying on business in the Cayman Islands. European Union (excluding Austria) This document has not be
Slide 41: International Offer Restrictions
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS Japan The New Shares have not been, and will not be, registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption from the registration requirements ap
Slide 42: International Offer Restrictions
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS 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 document or mate
Slide 43: International Offer Restrictions
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Mar
Slide 44: Appendix C: Glossary
APPENDIX C: GLOSSARY Yarwun, Gladstone NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 44
Slide 45: Glossary of Terms
APPENDIX C GLOSSARY OF TERMS Term Definition Term Definition A$ Australian dollar IFRS International Financial Reporting Standard AAS Australian Accounting Standards kTpa Kilo Tonnes Per Annum ACN Acrylonitrile NaCN Sodium cyanide Acquisition Orica’s proposed acquisition of Cyanco Total interest bea
Slide 46: Appendix D: Underwriting Agreement Summary
APPENDIX D: UNDERWRITING AGREEMENT SUMMARY Cyanide sparge system in operation, Ghana NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OF AMERICA 46
Slide 47: Underwriting Agreement Summary
APPENDIX D UNDERWRITING AGREEMENT SUMMARY Orica has entered into an underwriting agreement with the Lead Manager in respect of the Placement (Underwriting Agreement). The Underwriting Agreement contains representations and warranties and indemnities in favour of the Lead Manager. Details of the fees
Slide 48: Underwriting Agreement Summary (Cont'd)
APPENDIX D UNDERWRITING AGREEMENT SUMMARY (CONT’D) b) any of the material obligations of the relevant parties under the share purchase agreement in relation to the Acquisition (Acquisition Agreement) are not capable of being performed in accordance with their terms (in the reasonable opinion of the
Slide 49: Underwriting Agreement Summary (Cont'd)
APPENDIX D UNDERWRITING AGREEMENT SUMMARY (CONT’D) j) ASX makes any official statement to Orica that: i. approval is refused or not granted (other than subject to customary conditions) to the quotation of all the New Shares on the ASX as from 10.00am on the Allotment Date, or if such approval is gra