33 slides from Bathurst Resources's shareholder meeting presentation, Dec 2, 2020
Slide 1: Bathurst Resources Limited
BATHURST RESOURCES LIMITED New Zealand’s leading coal group ASX: BRL
Slide 2: Disclosure
DISCLOSURE General information This document is authorised for release by Richard Tacon, Bathurst Resources Limited’s (“Bathurst”) CEO, on the 2 December 2020. Bathurst’s address is Level 12, 1 Willeston Street, Wellington 6011, New Zealand. General disclaimer This presentation contains forward-look
Slide 3: Our Board Members
OUR BOARD MEMBERS Toko Kapea Richard Tacon Peter Westerhuis Russell Middleton Non-executive CEO and Executive Non-executive CFO and Executive Chairman Director Director is a Director • With Bathurst since 2013. • With Bathurst since 2012. • With Bathurst since 2015. • With Bathurst since 2015. • Wel
Slide 4: Proven Record
PROVEN RECORD We have the capability to select, manage and improve projects. EXISTING NEW ZEALAND BUSINESS CANADIAN JV AGREEMENT Two operating domestic mines. Coking coal project. 400kt production per annum. Exploration phase. Thermal coal for processing For export market. heat. 2016 2017 2018 NOW J
Slide 5: Business Snapshot
BUSINESS SNAPSHOT Maramarua EXPLORATION EXPORT SALES Canterbury Takitimu PRODUCTION & DOMESTIC SALES Commercial in Confidence 5
Slide 6: New Zealand Operations
NEW ZEALAND OPERATIONS Domestic Export1 North Island1 South Island Corporate offices Maramarua (Stockton) domestic domestic Mine in care & maintenance Sales FY21 1.0Mt 0.70Mt 0.34Mt Distribution centre Rotowaro Open cut Open cut Open cut Export Type Market Steelmaking Processing heat Processing heat
Slide 7: Sales Profile
SALES PROFILE 2.5 Coal sales1 (Mt) 2.0 1.5 1.0 0.5 0.0 FY18 FY19 FY20 FY21E Domestic Export Export product mix Export sales by country FY21E Total sales by product use 14% 25% 23% 24% 41% 7% 25% 69% 45% 27% Australia India Steelmaking Electricity PHCC SHCC SSCC Japan South Korea Process heat 1On a 1
Slide 8: Consistent Performance
CONSISTENT PERFORMANCE Our domestic segment provides a stable base from which to navigate variable export pricing. Revenue1 by product use ($m) NZD EBITDA $m Consolidated EBITDA NZD $m NZD APR $ 120 250 400 100 200 300 80 150 200 60 100 40 100 50 20 - 0 0 FY18 FY19 FY20 FY21E FY18 FY19 FY20 FY21E Pr
Slide 9: Financials and Operations
FINANCIALS AND OPERATIONS BATHURST CONSOLIDATED CASH FLOWS SOUTH ISLAND DOMESTIC Item (NZ $m) (65% basis) FY18 FY19 FY20 FY21E Metric (100% basis) FY18 FY19 FY20 FY21E Revenue 237.1 285.1 232.7 199.3 Sales (kt) 370 396 345 343 Cash operating costs (143.4) (178.5) (155.9) (137.2) Average sales price1
Slide 10: FY20 v FY19 EBITDA
FY20 v FY19 EBITDA • Export earnings impacted by softer export coal prices, and volume adjustments and increased fixed costs from the COVID-19 pandemic. • A rise in costs at Rotowaro from mechanical issues which increased repairs and plant hire costs were the cause of the marginal decrease for the N
Slide 11: EBITDA Generation When Pricing Recovers
EBITDA GENERATION WHEN PRICING RECOVERS MARGIN V HCC BENCHMARK1 USD$/t 220 199 205 Forecast group consolidated EBITDA for FY21 is NZD 200 $62m. This assumes $38m Maramarua from domestic (including 180 151 corporate overheads) and 160 150 150 $24m from export. 140 124 Rotowaro 120 100 Domestic ea
Slide 12: 3 Year Consolidated Cash Flows
3 YEAR CONSOLIDATED CASH FLOWS Cash flows FY18 – FY20 • +$249.6m coal sales net of supplier payments OPERATING • -$37.5m tax payments +$132.2m • -$79.9m capitalised stripping and mine development • -$25.9m deferred consideration (≈ $1m per year from FY22) INVESTING • -$16.3m Crown Mountain JV invest
Slide 13: Capital Overview
CAPITAL OVERVIEW 5-year market cap performance ($m)1 300 Successful bid in joint venture BT Mining. 250 200 High court announces judgment against 150 Bathurst on LMCH claim. 100 COVID-19 pandemic and Court of Appeal 50 judgment against Bathurst on LMCH - claim. April 2016 June 2016 April 2017 June 2
Slide 14: Capital Overview Cont'd
CAPITAL OVERVIEW CONT’D 4.0c 1,873 73% 24.7 10.61 SHARE MILLION TOP 20 MILLION MILLION PRICE SHARES HOLDINGS CASH DEBT AU at 27 Shares on issue Top 20 Consolidated BT Consolidated BT November 2020. 1,710m plus shareholders hold Mining and Mining and Bathurst convertible 73% of equity on Bathurst, Re
Slide 15: Climate Change Risk
CLIMATE CHANGE RISK Focus on metallurgical coal There is no alternative to coal as a metallurgical input in the steel making process. A global spotlight on climate change is bringing increased focus on mineral extraction activities such as mining coal, and raises a specific set of Explore ways to
Slide 16: Export Strategy & Markets
EXPORT STRATEGY & MARKETS Value in use focus Coal marketed on a value in use basis to maximise value, based on long China standing relationships. Korea and Product and market diversification India Japan Diversified geographic markets, end products, pricing structures and logistic routes a core focus
Slide 17: Coking Coal Outlook
COKING COAL OUTLOOK COVID-19 brings recession, but economic recovery is expected China continues to be the most influential coal price determinant Uncertainty around Chinese import restrictions and seaborne coal quotas will continue to limit any upside in coal price out towards the end of this calen
Slide 18: Domestic Strategy & Markets
DOMESTIC STRATEGY & MARKETS Life of mine plans are matched against committed sales volumes; new areas are only explored when there is a strategic partnership in place. SHARED India GOALS Our domestic coal sales are used for both steel making and processing heat, meaning we are less exposed to legisl
Slide 19: South Island Operations
SOUTH ISLAND OPERATIONS Ngakawau rail load out facility • 2.2Mtpa load out facility. • A 2.5km aerial ropeway with buckets that carry 1.6t coal to the facility. • Kiwirail operate the trains. Stockton • 16 – 20 trains a week, 1.5kt per train. Lyttleton Port • Export shipments leave for Asia Pacific
Slide 20: North Island Operations
NORTH ISLAND OPERATIONS Coal sold for domestic steel making is Legend sold to New Zealand’s sole producer of Mines flat rolled steel products (650kt pa). Key customers – transport by truck Key customers – transport by train Train tracks Coal sold for energy generation is used for peak loading of ele
Slide 21: LMCH Litigation Update
LMCH LITIGATION UPDATE1 First performance What happens if we Change of control Maramarua payment USD $40m are unsuccessful? allegation Rotowaro LMCH initiated litigation in We have consistent cashflows from In May 2020 LMCH issued a notice of December 2016 for payment of the coal sales. We remained
Slide 22: Our Contribution to New Zealand
OUR CONTRIBUTION TO NEW ZEALAND 631 $66m $18m FTE across paid to paid to North and employees government South islands 90% $185m 1 category people in paid to New winner in the regional Zealand Minerals Sector areas suppliers Awards “Our domestic business was considered an essential service and able t
Slide 23: Positioned for Growth
POSITIONED FOR GROWTH Forecast production tonnes (Mt) (100% basis) Assumptions Planned 7.0 extension projects per slide 24 on 6.0 existing operations come New online. 5.0 projects1 4.0 Stockton and domestic mines continue at current production levels. 3.0 Buller Coal project - M&I resources3 C
Slide 24: Projects Pipeline
PROJECTS PIPELINE1 Two projects will require significant capital infrastructure outlay; the Buller Project and the Crown Mountain Canadian joint venture project. Conceptual/ scoping Prefeasibility Rotowaro North Definitive feasibility Stockton organic growth Execution A18 coal fines project Buller P
Slide 25: Buller Growth Project
BULLER GROWTH PROJECT A 100 percent owned project that is currently on care and maintenance. Able to unlock material synergies for the project through the ability to use Stockton infrastructure assets. Mature mining Positive NPV and Coking coal. Bankable 100% equity region on West value added to 41.
Slide 26: Canadian Growth Project
CANADIAN GROWTH PROJECT Crown Mountain - a joint venture with Jameson Resources Limited. Total investment to achieve 50:50 ownership CAD $121.5m. Mature mining FOB cash cost Hard coking coal. BFS complete. CAD $14.1m to region in British USD $93/tonne. 90.2Mt resource Environmental date for a 22.2%
Slide 27: Crown Mountain Timeline
CROWN MOUNTAIN TIMELINE CY 2018 CY 2019 CY 2020 CY 2021 CY 2022 CY 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Baseline & pre-application Environmental 1 workflows Application, preparation and submittal Regulatory review Exploration and coal quality 2 Feasibility stu
Slide 28: Questions?
QUESTIONS? Thank you for attending the AGM. Please ensure you submit any questions before you log-off. Commercial in Confidence 28
Slide 29: Appendix A: LMCH Legal Overview
APPENDIX A: LMCH LEGAL OVERVIEW Overview of LMCH Litigation: • LMCH Agreement • Bathurst signed a Sale and Purchase Agreement (“SPA”) with L&M Coal Holdings Limited (“LMCH”) on the 10th of June 2010 (with accompanying Royalty Deed and Deed of Guarantee and Security) for the purchase of the sharehold
Slide 30: LMCH Level Overview (Cont'd)
LMCH LEVEL OVERVIEW (CONT’D) • What happens if we are unsuccessful? • Bathurst has proven, consistent cashflows from various coal sales sources. This is shown to be particularly strong during the COVID-19 induced disruptions in FY20 where 50% of BRL’s business continued as essential to the NZ econom
Slide 31: Appendix B: Resources
APPENDIX B: RESOURCES ownership Measured Indicated resource resource resource resource Bathurst Inferred 2020 2020 2020 2020 Total Area Escarpment (1) 100% 3.4 2.2 1.1 6.7 Cascade (1) 100% 0.5 0.6 0.3 1.4 Deep Creek (1 & 3) 100% 6.2 3.1 1.6 10.9 Coalbrookdale (1) 100% 0.0 3.4 4.7 8.1 Whareatea West
Slide 32: Appendix C: Marketable Reserve Tonnes
APPENDIX C: MARKETABLE RESERVE TONNES Proved (Mt) Probable (Mt) Total (Mt) Product coal area Bathurst ownership 2020 2020 2020 Escarpment Domestic (A, E & H) 100% 0.2 0.1 0.3 Escarpment Export (A, E & H) 100% 1.9 0.4 2.3 Whareatea West (A, E & H) 100% 0.0 9.9 9.9 Stockton (B, D, J & L) 65% 0.4 5.0 5
Slide 33: Competent Persons Statements
COMPETENT PERSONS STATEMENTS The information on this report that relates to mineral resources for Deep Creek and the mineral reserves for Escarpment Export and Whareatea West is based on information compiled by Sue Bonham-Carter, who is a full time employee of Golder Associates (NZ) Ltd and is a Cha