Slide 1: Investor Presentation September 2020
Investor Presentation September 2020 For personal use only “Restructure complete – TerraCom is now well on the way to becoming a substantial, growing, profitable and diversified commodities bulk producer” www.terracomresources.com 1
Slide 2: Disclaimer: Important Notice
DISCLAIMER For personal use only IMPORTANT NOTICE This non-deal investor roadshow presentation (Presentation) has been prepared to provide prospective investors (Recipients) with information about TerraCom Limited ACN 143 533 537 (TerraCom) and its business of being a resource explorer with a large
Slide 3: Important Notice (Continued)
DISCLAIMER For personal use only IMPORTANT NOTICE (CONTINUED) Nothing in this document should be construed as authorising the distribution of this Presentation outside of the Commonwealth of Australia. The law in or from certain jurisdictions may restrict the distribution or possession of this Prese
Slide 4: Contents
For personal use only 01 Company Overview 5 CONTENTS 02 03 Corporate Strategy Corporate Structure 9 13 04 Current Operations 19 05 Commodity Diversification 33 06 Refinancing 42 07 Financial Analysis 48 08 Appendices 52 www.terracomresources.com 4
Slide 5: Company Overview
For personal use only COMPANY OVERVIEW 5
Slide 6: Company Overview
COMPANY OVERVIEW For personal use only Country Diversification ASX listed coal producer with operations in Australia and South Africa ASX : TER (as at 30 June 2020 unless stated) Market Capitalisation (A$ million) 101.0 (as at 15 September 2020) Shares on Issue (million) 753.6 Options and Warrants o
Slide 7: Company Trading Analysis
COMPANY TRADING ANALYSIS For personal use only 0.45 19.9% interest Market Cap acquired in (After Universal Universal Coal plc 0.40 Coal plc Acquisition) -- 754m shares on 0.35 issue at $0.150 per share = $113m 0.30 Control achieved -- 0.25 Market Cap 77% shares owned in (Before Universal Universal C
Slide 8: FY20 Highlights
FY20 HIGHLIGHTS For personal use only EARNINGS #^ MAIDEN DIVIDEND DECLARED • $79.6m Underlying EBITDA • Interim Dividend of 1c per share declared and paid in November 2019. COAL SALES # MAJOR ACQUISITIONS • Record Coal Sales 9.98Mt, up 11% • Acquired 100% of Universal Coal plc COAL PRODUCTION # • Re
Slide 9: Corporate Strategy
For personal use only CORPORATE STRATEGY 9
Slide 10: Strategic Outlook
STRATEGIC OUTLOOK For personal use only • Consolidate and grow existing thermal coal Significant Growth Platform producing assets within South Africa an Australia 1 1 Maximise production and and Commodity Diversification • Diversify commodity base with a focus on bulk resultant revenue commodities s
Slide 11: Global Footprint
GLOBAL FOOTPRINT For personal use only AUSTRALIA - Blair Athol (t coal) - Springsure - Northern Galilee - Moorlands * GUINEA * - FAR (bauxite) SOUTH AFRICA - Somalu (bauxite) - Kangala (t coal) - Toubal (bauxite) - NCC (t coal) - NBC (t coal) - Ubuntu (t coal) LEGEND - Eloff (t coal) Current Operati
Slide 12: Growth Platform
GROWTH PLATFORM For personal use only NOW INITIATIVE FUTURE • Australia • Australia Regions Guinea Regions • South Africa • South Africa • Guinea Bulk Eloff Coal Bulk • 16Mt Thermal Coal Commodities • 14Mt Thermal Coal Commodities* FAR Bauxite • 18Mt Bauxite • 4Mt Export Thermal Coal • 3Mt Export Th
Slide 13: Corporate Structure
For personal use only CORPORATE STRUCTURE 13
Slide 14: Current Operations & Project Structure
CURRENT OPERATIONS & PROJECT STRUCTURE For personal use only TerraCom Limited (ASX: TER) Australia South Africa OPERATIONS PROJECTS OPERATIONS PROJECTS Blair Athol Northern Galilee Kangala & Eloff Colliery Arnot South Project Springsure New Clydesdale Colliery Berenice Project North Block Complex Cy
Slide 15: Group Corporate Structure
GROUP CORPORATE STRUCTURE For personal use only Board of Directors Wal King Chairman Craig Ransley Executive Deputy Chairman Matthew Hunter Non-Executive Director Shane Kyriakou Non-Executive Director Glen Lewis Non-Executive Director Craig Lyons Non-Executive Director Chief Executive Officer Danny
Slide 16: Board of Directors
BOARD OF DIRECTORS For personal use only Wal King - Chairman, Independent Director Craig Ransley - Deputy Chairman, Executive Director • Wal holds a Bachelor and Masters in Engineering and Engineering Science • Mr. Ransley is a qualified Fitter and Machinist (Trade Qualified) and has a and an Honora
Slide 17: Executive Management Team – TerraCom Group
EXECUTIVE MANAGEMENT TEAM – TERRACOM GROUP For personal use only Danny McCarthy - Chief Executive Officer Celeste van Tonder - Chief Financial Officer • Danny McCarthy is a highly experienced mining executive having held • Celeste van Tonder is a Chartered Accountant with over 10 years of senior rol
Slide 18: Executive Management Team – South Africa
EXECUTIVE MANAGEMENT TEAM – SOUTH AFRICA For personal use only Shammy Luvhengo – Chief Executive Officer Tony Weber – Chief Operating Officer • Shammy Luvhengo a mining executive and qualified mining Geologist • Tony Weber, co-founder of Universal Coal, is a mining engineer with with more than 20 ye
Slide 19: Current Operations
For personal use only CURRENT OPERATIONS 19
Slide 20: Operations Overview
OPERATIONS OVERVIEW For personal use only Operations Commodity Production Life of Mine Comment Australia LoM extension to +25 years (in Up to 10 years at current addition to Blair Athol LoM) with Blair Athol 1,2 Thermal Coal 2.4 Mtpa ROM operational run rate adjacent Moorlands lease (not owned by Te
Slide 21: Operational Performance
OPERATIONAL PERFORMANCE For personal use only Assuming Universal-owned for the entire financial year: ROM Production 3.0Mt or 26% year on year increase Coal Sales 1.0Mt or 11% year on year increase MANAGED TONNES EQUITY TONNES August 2020 YTD ROM Tonnes Coal Sales ROM Tonnes Coal Sales Annualised Co
Slide 22: Commodity Composition & Sales Profile
COMMODITY COMPOSITION & SALES PROFILE For personal use only Current Commodity Composition Current Sales Profile 30% 70% 100% Projected Commodity Composition Projected Sales Profile Thermal Coal Export Thermal Coal Domestic Thermal Coal 40% 40% 40% 60% 20% Thermal Coal Bauxite Export Thermal Coal Dom
Slide 23: Australian Business Unit
For personal use only AUSTRALIAN BUSINESS UNIT Blair Athol Mine Clermont, Central Queensland Two Thermal Coal Projects 23
Slide 24: Blair Athol – Transformed Cost Base
BLAIR ATHOL – TRANSFORMED COST BASE For personal use only • Decisive operations restructure and re-basing Blair Athol costs to maximise returns • Owner operator of all major mining and mining services related activities • Delivering profitable operations through long run coal price cycles Run of Min
Slide 25: Blair Athol – Transformed Cost Base
BLAIR ATHOL – TRANSFORMED COST BASE For personal use only 1. Takeover of CHPP Operations 2. Takeover of Fuel Supply 17.5% Reduction Achieved 1. Rationalisation of workforce 2. Optimisation of production profile 3. Transitioned to Owner Operator i. Statutory management ii. Mining operations iii. Coal
Slide 26: Key Infrastructure
KEY INFRASTRUCTURE For personal use only INFRASTRUCTURE • Power • Water • Workshops and service bays • Secure stores • Administration buildings • Safety and training centre • Train loadout facility ACCOMMODATION • 40 Houses • 42 Single Persons Quarters www.terracomresources.com 26
Slide 27: Key Equipment
KEY EQUIPMENT For personal use only EQUIPMENT • BE1370 Dragline • 400T and 360T Hydraulic Excavators • 180T Rear Dump Trucks • D11 Dozer Fleet • Wheel loaders (WA500 to WA900 size) • Ancillary equipment (graders, watercarts) • 330 wmt per hour DMC / spirals plant • Bypass crushing and screening equi
Slide 28: Risk Mitigation
RISK MITIGATION For personal use only The Group’s ISR Policy includes business interruption cover for Blair Athol, details as follows: • Declared Values o Section 1: Material loss or damage $248M o Section 2: Consequential loss $165M • Limit of liability $150M per occurrence (combined Sections 1 and
Slide 29: Universal Coal plc
For personal use only UNIVERSAL COAL PLC Four Operating Coal Mines Two Thermal Coal Projects One Coking Coal Project 29
Slide 30: South Africa Operations and Projects
SOUTH AFRICA OPERATIONS AND PROJECTS For personal use only * * Not currently owned by TerraCom www.terracomresources.com 30
Slide 31: South Africa Operations and Projects
SOUTH AFRICA OPERATIONS AND PROJECTS For personal use only www.terracomresources.com 31
Slide 32: Universal Coal – Proven Performance
UNIVERSAL COAL – PROVEN PERFORMANCE For personal use only • Strong cash flow generation underwritten by South Africa’s largest power producer. • Strong history of shareholder returns, distributing approximately A$44m over the last 4 years. • Strong year on year sales growth and strong annuity cash m
Slide 33: Commodity Diversification: Anglo African Minerals plc
For personal use only COMMODITY DIVERSIFICATION ANGLO AFRICAN MINERALS (AAM) plc 33
Slide 34: Global Bauxite Economic Reserves
GLOBAL BAUXITE ECONOMIC RESERVES For personal use only Guinea is home to at least 27% of the world’s known bauxite reserves, more than any other country. OTHERS CHINA 20% GUINEA GUINEA 27% VIETNAM JAMAICA INDIA INDIA GUYANA 3% INDONESIA INDONESIA BRAZIL 4% JAMAICA AUSTRALIA 7% AUSTRALIA VIETNAM 22%
Slide 35: Anglo African Minerals plc Resources Table
ANGLO AFRICAN MINERALS PLC For personal use only Resources Table 6 FAR Somalu Toubal Alumina 39.9% 44.1% 42.6% Silica 4.8% 1.6% 3.2% Measured 26.0 222.0 209.0 Indicated 11.0 236.0 317.0 Inferred 36.0 70.0 339.0 Total 73.0 528.0 865.0 Total Expenditure to $14.0 $28.0 $15.0 date US$ and Metric Tonnes
Slide 36: Forward Africa Resources (FAR)
FORWARD AFRICA RESOURCES “FAR” For personal use only Total Mineral Resource 6 73.0 million metric tonnes Laden barge transit ▹ Measured 26.0 million metric tonnes Ballast barge transit ▹ Indicated 11.0 million metric tonnes ▹ Inferred 36.0 million metric tonnes ✓ A Feasibility Study and Environmenta
Slide 37: Timeline to First Shipment – Months
TIMELINE TO FIRST SHIPMENT – 13 MONTHS For personal use only www.terracomresources.com 37
Slide 38: Financials: Market, Capex, Opex
FINANCIALS For personal use only MARKET – Current • The graph illustrates both CIF and FOB prices and indicates that CIF - Guinea to China have fluctuated between US$50 to $45 p/t over the last 6 months. • Alufer Mining’s Bel Air project in Guinea, which is the nearest competitor to FAR with compara
Slide 39: Ore Body Overview
ORE BODY OVERVIEW For personal use only ▪ The deposits sit on flat topped plateaus with moderately steep sides. ▪ Minimal overburden consisting of an iron cap of around 1m in thickness. ▪ The deposit ore thickness on these plateaus can vary up to approximately 12m. ▪ Extremely low strip ratio. ▪ Exp
Slide 40: Basic Port Design
BASIC PORT DESIGN For personal use only Optional general cargo port. Secured simple design with river crane. Port operations. Local generator set for power. Barges Barge berth - simple pylon construction Stockpile and storage of potentially up to 300,000mt. Rotary stacking stockpile machines, with a
Slide 41: Transfer from Barge to OGV
TRANSFER FROM BARGE TO OGV For personal use only Floating crane most likely Transhipping solution. Proven with Winning operations. Soon to be used with loading at GAC/EGA and Ashapura 1 crane for 2mtpa and 2 cranes to be used for 5mtpa Load circa 20,000mt per day directly from barge to OGV Other sol
Slide 42: Refinancing
For personal use only REFINANCING 42
Slide 43: Advisors
ADVISORS For personal use only Christian Baylis is a highly regarded Australian-based manager with broad experience across global fixed income and derivatives strategies, having worked previously at UBS Asset Management and the Reserve Bank of Australia. Christian managed in excess of $8 billion Ass
Slide 44: Indicative Key Terms
INDICATIVE KEY TERMS For personal use only KEY TERMS Subscription Amount A$220 million Face Value of each Note $1.00 per Note Number of Notes 220,000,000 fully transferable and to be listed on the ASX^ Floating rate calculated quarterly on the 1st day of each quarter at BBSW plus margin of 800bps Co
Slide 45: Indicative Key Terms (Continued)
INDICATIVE KEY TERMS (CONTINUED) For personal use only KEY TERMS Guarantors Each wholly owned subsidiary of the Borrower First ranking senior security over all assets and undertakings of the Borrower and Guarantors other Ranking than Permitted Indebtedness General Security Agreement over all the ass
Slide 46: Benefits and Use of Funds
BENEFITS AND USE OF FUNDS For personal use only BENEFITS ✓ Improved Balance Sheet. ✓ Significant reduction in interest charges which will represent real cash cost savings for TerraCom shareholders. ✓ Flexible and efficient platform catering for future funding needs and cash surpluses. ✓ Well over 4
Slide 47: TerraCom Group Debt Profile (as at June 2020)
TERRACOM GROUP DEBT PROFILE (AS AT 30 JUNE 2020) For personal use only Amount Interest Rate Facility Key Terms / Comments (A$m) (%) • Maturity date is 30 June 2021. Existing Euroclear Bonds $215.0 12.5 • Propose that this facility will be settled on successful refinance. • Ends May 2023. 1-month BBS
Slide 48: Financial Analysis
For personal use only FINANCIAL ANALYSIS 48
Slide 49: Pro-Forma Position – Income Statement
PRO-FORMA POSITION – INCOME STATEMENT For personal use only Universal Coal Gain on Universal Coal Blair Athol plc Takeover Acquisition of Refinance 2020FY 2020FY plc - Prior to Owner Operator Transaction Universal Coal Benefits (Pro Forma) 1 April 2020 Costs plc #039;000 #039;000 #039;000 #039;000 $’000 #039;000 $
Slide 50: Pro-Forma Position – Balance Sheet Extract
PRO-FORMA POSITION – BALANCE SHEET EXTRACT ^ For personal use only * * The refinance will improve the Company’s balance sheet. Borrowings will shift from being a current liability to a non-current * liability. ^ Extract from the FY2020 Preliminary Financial Report released to the ASX on 1 September
Slide 51: 2021 Production and Sales
2021 PRODUCTION AND SALES For personal use only ROM PRODUCTION COST PER TONNE FY2020 FY2021 FY2020 FY2021 Project Comment Actual Range Actual Range Australia 49 AUD - FOR 35 AUD - FOR Blair Athol 1,2 3.0 2.4 76 AUD - FOB 59 AUD - FOB Owner operator from 31 July 2020 South Africa Universal Coal – His
Slide 52: Appendices
For personal use only APPENDICES 52
Slide 53: Financial Performance
FINANCIAL PERFORMANCE For personal use only FY2020 FY2019 Group Profit and Loss $M $M EBITDA $4.5 $96.9 Adjustments: Add: BA Transition write-offs. $14.5 - Add: UNV generated EBITDA during July 2019 to March 2020. $61.0 - Add: Transaction costs (TER + UNV costs). $9.7 - Less: Gain on acquisition. ($
Slide 54: Resources and Reserves Statement
RESOURCES AND RESERVES STATEMENT For personal use only RESERVES RESOURCES RESERVES RESOURCES Attributable to Attributable to Proved Probable Total Measured Indicated Inferred Total TerraCom TerraCom Tenement Mt Mt Mt Mt Mt Mt Mt Mt Mt AUSTRALIA 15.3 12.1 27.4 30.2 238.6 1,903.0 2,171.8 27.4 2,171.8
Slide 55: References
REFERENCES For personal use only 1 – Refer to ASX Announcement on 30 September 2019 for further information and clarification on the Blair Athol JORC Resource. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original an
Slide 56: Thank You
For personal use only THANK YOU 56