SouthGobi Resources Ltd. · TSXV:SGQ
SouthGobi Resources — Q2 2013 Earnings Presentation
16 slides from SouthGobi Resources's earnings presentation, Aug 13, 2013
Slide 1: Second Quarter 2013 Results
Second Quarter 2013 Results August 13, 2013 Second Quarter Results Presentation AUGUST 2013 | 1
Slide 2: Cautionary statement
Cautionary statement Forward-looking statements This presentation includes certain “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements that involve various risks and uncertainties. There can be no assurances that such statements will
Slide 3: Ross Tromans, Chief Executive Officer
SouthGobi Resources Ross Tromans Chief Executive Officer Second Quarter Results Presentation AUGUST 2013 | 3
Slide 4: Second quarter 2013 highlights
Second quarter 2013 highlights • 613 days without lost time injury as at August 12, 2013 – Building on these encouraging results, safety remains a core value and a priority for SouthGobi • Market conditions continue to be challenging – 170,000 tonnes of coal produced in second quarter – Company has
Slide 5: Coal market conditions continue to be challenging
Coal market conditions continue to be challenging Chinese coking coal prices Mongolian share of Chinese coking coal imports Percent of total coking coal imports Rmb/tonne 1,600 22% 31% 32% 38% 42% Baotou primary coking 1,200 23% 37% 26% 800 66% Wuhai washed 1/3 coking 41% 400 45% 32% 36% Ceke 1/3 co
Slide 6: Adapting the business to current market conditions
Adapting the business to current market conditions • Continue to actively engage customers and seek new sales contracts • Withdrawing 2013 guidance of 3.2 million tonnes of semi-soft coking coal production due to uncertain market conditions • Production of washed coal product delayed to 2014 unless
Slide 7: Mongolian landscape
Mongolian landscape • Continuity in the political environment as incumbent President re-elected • Amendment of foreign investment law of Mongolia seen as positive • Royalty regime dialogue continues with goal of moving to a more equitable process for setting reference prices Royalty Reference Price
Slide 8: Update on SouthGobi's mining and exploration licenses
Update on SouthGobi’s mining and exploration licenses The Company holds 3 mining licenses and 4 exploration licenses Mining licenses 2 exploration licenses are no longer held by SouthGobi Project area License № Ovoot Tolgoi 12726A - 9442X (Ganzagt): Cancelled and Tsagaan Tolgoi 15041A transferred to
Slide 9: Bertrand Troiano, Chief Financial Officer
SouthGobi Resources Bertrand Troiano Chief Financial Officer Second Quarter Results Presentation AUGUST 2013 | 9
Slide 10: Second quarter 2013 financial results impacted by weakness in China's coal markets
Second quarter 2013 financial results impacted by continuous weakness in China’s coal markets • $31.2 million operating loss in Q2 2013 vs. $23 million operating loss in Q1 2013 and $27.2 million operating loss in Q2 2012 • Revenues of $0.4 million in Q2 2013 vs. $3.3 million in Q1 2013 and $8.4 mil
Slide 11: Cost discipline
Cost discipline Evaluation / Exploration Expenditures Capital Expenditures (cash basis) Capital Commitments 3.0 In $million In $million In $million 60 50 2.5 48.3 2.1 50 40 36.3 2.0 40 30 1.5 30 1.0 20 14.5 20 13.2 0.3 7.5 10 0.5 0.2 10 0.4 0.0 0 0 2Q 2012 1Q 2013 2Q 2013 2Q 2012 1Q 2013 2Q 2013 30-
Slide 12: Relentless focus on cash
Relentless focus on cash Significant reduction in cash outlay quarter on quarter Prudent cash and capital management Cash and short-term money market investments ($ million) • Continuous focus on free cash flow – Sales and collection 100.00 $91.6 -56.8 – Reducing inventory 90.00 – Drawing down on pr
Slide 13: Ross Tromans, Chief Executive Officer
SouthGobi Resources Ross Tromans Chief Executive Officer Second Quarter Results Presentation AUGUST 2013 | 13
Slide 14: Outlook
Outlook Outlook • Rate of production in second half of 2013 expected to increase: – Contracted tonnages with Winsway – Two small spot market sales concluded and discussions with other potential customers ongoing • Focused on adapting to current demand dynamics and updating mine plans to optimize cas
Slide 15: SouthGobi's 2013 objectives are unchanged
SouthGobi’s 2013 objectives are unchanged Resume Production at Adding value to product mix Ovoot Tolgoi Implement profitable utilization of Continue operations at a wet washing facility once market sustainable level demands returns Resume Production Product Development Continue to develop regional R
Slide 16: Q & A
Q&A Second Quarter Results Presentation AUGUST 2013 | 16