Yancoal Australia Ltd. · ASX:YAL
Yancoal Australia — Debt Investor Presentation (November 2014)
45 slides from Yancoal Australia's debt investor presentation, Nov 28, 2014
Slide 1: Subordinated Capital Notes offering
Yancoal Australia Ltd For personal use only Subordinated Capital Notes offering November 2014 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Yancoal Australia Limited (Yancoal) and Yancoal SCN Limited (Issuer) in relation to the offer of Yancoal SCN Limited subordinated capital For personal use only notes (SCNs) (Offer). The Offer will be made in or accompanied by a copy of the Prospectus
Slide 3: Today's agenda
Today’s agenda For personal use only 1. Transaction summary 2. Business overview 3. Financial overview 4. Coal market outlook 5. Priority growth projects 6. Details of the Offer 7. Key dates and contacts Appendix A: JORC Resources and Reserves Appendix B: Growth Strategy 3
Slide 4: 1. Transaction Summary
For personal use only 1. Transaction Summary 4
Slide 5: Overview
Overview For personal use only Yancoal Australia Limited (“Yancoal”) is committed to generating value for shareholders as it continues to build a business positioned for future growth To manage its way through the current coal market downturn Yancoal needs to pro-actively strengthen its balance
Slide 6: Overview cont'd
Overview cont’d… For personal use only Conditional on the offer proceeding, Yanzhou has committed to provide additional financial support to Yancoal in the form of: up to A$1.4 billion under a committed financing facility which will rank below the SCNs, for use by Yancoal for general corporate p
Slide 7: Rationale for the Offer
Rationale for the Offer For personal use only Yancoal had senior debt outstanding at 30 June 2014 of US$2.839 billion under Bank of China facilities and US$1.916 billion owing to Yanzhou these debts rank pari passu with each other and both count towards covenant calculations It is unlikely Yan
Slide 8: Key Protections for Investors in SCNs
Key Protections for Investors in SCNs For personal use only By subscribing for SCNs, Shareholders and potential new investors will have the opportunity to: acquire Yancoal Ordinary Shares on a fixed price basis (US$0.10 per share) though the exercise of conversion rights; or hold the SCNs for
Slide 9: Summary pro-forma balance sheet & gearing
Summary pro-forma balance sheet & gearing For personal use only Pro forma Pro forma 30-Jun-14 30-Jun-14 Net debt at 30 June 2014 was A$4,410.8m (US$2.3bn (US$1.8bn A$m 30-Jun-14 proceeds) proceeds) Assuming Offer proceeds of US$2.3bn, Yancoal’s pro- Cash 365.3 779.1 249.7 forma Financial Indebte
Slide 10: 2. Business Overview
For personal use only 2. Business Overview 10
Slide 11: About Yancoal
About Yancoal For personal use only Yancoal is an Australian-based coal producer with interests in seven operating mines located in New South Wales (NSW) and Queensland (QLD), Australia Yancoal’s principal activity is the production of metallurgical and thermal coal for export for use in the ste
Slide 12: Yancoal asset summary
Yancoal asset summary Yancoal operates 7 mines and 1 exploration project in NSW and QLD. Coal is exported through For personal use only several coal terminals in both states Yarrabee Operating & Development Middlemount Operating & Development 100% owned ~50% owned Open cut Open cut Metallurgical Coa
Slide 13: Yancoal asset summary cont'd
Yancoal asset summary cont’d… For personal use only Yancoal produces a variety of different coal products. These coal products have various characteristics such as calorific value/thermal content, moisture content, sulphur content and ash content. The prices received for Yancoal's coal products re
Slide 14: 3. Financial Overview
For personal use only 3. Financial Overview 14
Slide 15: 1H 2014 Operational and Financial Commentary
1H 2014 Operational and Financial Commentary For personal use only Yancoal announced a loss after income tax of A$192.7 million from revenue of A$654.6 million for the half-year ended 30 June 2014. Operating EBIT was a loss of A$126.6 million. Losses were mostly attributable to the impacts of th
Slide 16: Operational Scorecard
Operational Scorecard For personal use only Record low prices for both Metallurgical and Thermal Seaborne Exports have continued to weigh on Yancoal’s performance in 2014 Difficult mining conditions at Ashton Underground mine and the incident at Austar have contributed to less than expected prod
Slide 17: Yancoal's forecast production
Yancoal’s forecast production For personal use only Yancoal currently has two well established growth projects: Moolarben Stage 2 Open Cut Expansion (OC4); and Moolarben Stage 2 Underground Development. The highest priority of these projects is the Moolarben Stage 2 Open Cut Expansion, which
Slide 18: 4. Coal Market Outlook
For personal use only 4. Coal Market Outlook 18
Slide 19: Coal Market Overview – Recent Developments
Coal Market Overview – Recent Developments For personal use only Macro Drivers Impact on Australian Coal Market Australian Supply Coal prices have continued to fall over the last Export volumes have increased by 5% in 2014 12 months, by as much as 30% for some Growth projects have been delayed
Slide 20: Coal Market Overview – Long-term Fundamentals
Coal Market Overview – Long-term Fundamentals Australia’s role in seaborne coal exports is forecast to increase over the next decade before For personal use only moderating in significance in the 2030s. 1,200 Thermal Coal (LHS) Metallurgical Coal (LHS) 45% Australian Seaborne World Seaborne Coal 844
Slide 21: Coal Market Overview – Market Rebalancing
Coal Market Overview – Market Rebalancing For personal use only Seaborne thermal markets are expected to rebalance after 2020 as demand growth, capacity exhaustion and the need for a satisfactory return on capital lift prices Sufficient supply of metallurgical coal exists to keep the market well
Slide 22: 5. Yancoal's Priority Growth Projects
For personal use only 5. Yancoal’s Priority Growth Projects 22
Slide 23: Priority Growth Projects – OC & UG Overview
Priority Growth Projects – OC & UG Overview For personal use only Yancoal’s development plan in the medium-term is focused on delivering the open cut and underground expansions at its tier 1 asset, Moolarben Moolarben Reserves and Resources and The first priority is the development of the Stage 2
Slide 24: Priority Growth Projects – OC Overview
Priority Growth Projects – OC Overview For personal use only Moolarben Project Layout Forecast Open Cut Expansion Coal Quality Coal type 18.0% Ash 25.0% Ash Inherent moisture (% adb) 2.5 2.5 Ash content (% adb) 18.0 26.0 Volatile matter (% adb) 29 28 Fixed carbon (% adb) 50.5 45.0 Sulphur content (%
Slide 25: Priority Growth Projects – UG Overview
Priority Growth Projects – UG Overview For personal use only Proposed Moolarben UG1 Layout UG1 will be the first in the sequence of underground mines at Moolarben Mining for UG1 is currently scheduled to commence from the OC1 Highwall access in 2018, with longwall production commencing in 2019
Slide 26: 6. Details of the Offer
For personal use only 6. Details of the Offer 26
Slide 27: SCN summary terms
SCN summary terms For personal use only Issuer Yancoal SCN Limited (ACN 602 841 556), a wholly owned subsidiary of Yancoal Instrument Fully paid, subordinated, perpetual, convertible, unsecured notes Pro rata, renounceable rights offer of 2.32112 SCNs for every 100 Yancoal ordinary shares Ya
Slide 28: SCN summary terms cont'd
SCN summary terms cont’d… For personal use only Perpetual (no fixed maturity date) unless converted or redeemed (holders can also be Maturity date offered resale) Fixed rate distributions, payable semi-annually in arrears unless deferred Initial distribution rate of 7.00% per annum, resettable
Slide 29: SCN summary terms cont'd
SCN summary terms cont’d… For personal use only Holder right to Convert to 1,000 Yancoal Ordinary Shares at any time after the first 40 days until 30 years after the Issue Date (until Redeemed) including upon receipt of a Redemption Conversion or Resale Notice from the Issuer (conversion price ful
Slide 30: Support and Commitment from Yanzhou
Support and Commitment from Yanzhou For personal use only Distribution support Up to US$807 million in additional funding under a committed facility ranking equally with facility the SCNs, for the purpose of paying distributions on the SCNs during the first five years Up to A$1.4 billion in addi
Slide 31: 7. Key Dates and Contacts
For personal use only 7. Key Dates and Contacts 31
Slide 32: Key dates
Key dates For personal use only Lodgement of Prospectus with ASIC 24 November 2014 Entitlements trading begins 26 November 2014 Record date to determine entitlements to the SCNs 7.00pm, 28 November 2014 Prospectus with personalised application form dispatched to Yancoal shareholders 2 December 2014
Slide 33: Key Offer contacts
Key Offer contacts For personal use only Yancoal James Rickards General Manager Investor Relations and Corporate Affairs +61 2 8583 5922 +61 419 731 371 james.rickards@yancoal.com.au Deutsche Bank AG, Sydney Branch Hamish Whitehead Managing Director Equity Capital Markets +61 2 8258 2644 +61 420 964
Slide 34: Appendix A: JORC Resources & Reserves
For personal use only Appendix A: JORC Resources & Reserves 34
Slide 35: Appendix A: Resources and Reserves
Appendix A: Resources and Reserves For personal use only Details of JORC Resources and Reserves, forecast ROM Production and Competent Persons Statements which follow are extracted from the Prospectus for Subordinated Capital Notes of Yancoal SCN Limited dated 24 November 2014. Resources and Reserve
Slide 36: Appendix A: Resources and Reserves cont'd
Appendix A: Resources and Reserves cont’d… For personal use only JORC 2004 The information in this Prospectus that relates to: Resources for the Moolarben, Yarrabee, Gloucester, Donaldson and Monash projects; and Reserves for the Moolarben, Yarrabee, Gloucester, Donaldson and Middlemount project
Slide 37: Appendix A: Resources and Reserves cont'd
Appendix A: Resources and Reserves cont’d… For personal use only All of the Resource and Reserve figures presented are reported in 100% terms (unless otherwise stated). All of the Resource estimates (unless otherwise stated) are inclusive of Resources that have been converted to Reserves (i.e. Resou
Slide 38: Appendix A: Resources and Reserves cont'd
Appendix A: Resources and Reserves cont’d… For personal use only Reserves1 Recoverable Reserves Marketable Reserves Saleabl ROM e Product Product Com ion ion Proved Probable Total Proved Probable Total pete From Owners Total Total JORC Report From Project Coal Type Reserve Reserve Reserves at Reserv
Slide 39: Competent Persons
Appendix A: Resources and Reserves cont’d… For personal use only Competent Persons Competent Person Project Report Type CP # Title Company (CP) Moolarben Resource Jon Barber 1 Principal Consultant Jon Barber Mining Consultants Reserve Jon Barber 1 Principal Consultant Jon Barber Mining Consultants A
Slide 40: Appendix B: Growth Strategy
For personal use only Appendix B: Growth Strategy 40
Slide 41: Appendix B: Growth Strategy
Appendix B: Growth Strategy For personal use only Yancoal currently has two well established organic growth projects: Moolarben Stage 2 Open Cut Expansion (OC 4); and Moolarben Stage 2 underground development. Yancoal’s current forecast assumes approval for the Moolarben Stage 2 Expansion in the
Slide 42: Appendix B: Growth Strategy cont'd
Appendix B: Growth Strategy cont’d… For personal use only ROM Production (Equity Basis, including Middlemount)1 30 27 27 25 23 21 20 Mt (ROM) 10 0 CY2014 CY2015 CY2016 CY2017 CY2018 Moolarben Yarrabee Austar Ashton Stratford & Duralie Donaldson Middlemount 1. Notes: Data shown for year ending 31 Dec
Slide 43: Appendix B: Growth Strategy cont'd
Appendix B: Growth Strategy cont’d… For personal use only Yancoal’s forecast ROM production is based on Reserve estimates (proved ore reserves and probable ore reserves) and Resource estimates (measured mineral resource) in compliance with JORC 2004 or JORC 2012 from operating mine sites only and as
Slide 44: Appendix B: Growth Strategy cont'd
Appendix B: Growth Strategy cont’d… For personal use only Yancoal Forecast Saleable Production (Equity Basis, including Middlemount)1 30 20 20 20 17 18 Mt (Saleable) 16 10 0 CY2014 CY2015 CY2016 CY2017 CY2018 Moolarben Yarrabee Austar Ashton Stratford & Duralie Donaldson Middlemount 1. Notes: Data s
Slide 45: Appendix B: Growth Strategy cont'd
Appendix B: Growth Strategy cont’d… For personal use only The chart below shows YAL’s forecast capital expenditure profile on an equity basis (excluding Middlemount)1. The Moolarben Stage 2 open cut expansion represents the majority of forecast capital expenditure during 2014-2016, with capital expe
Yancoal Australia — Debt Investor Presentation (November 2014) on 6ix