International Coal — Howard Weil Energy Conference 2010
35 slides from International Coal's conference presentation, Mar 22, 2010
Slide 1: Howard Weil Energy Conference
Howard Weil Energy Conference March 22, 2010 Ben Hatfield President & Chief Executive Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements n Statements in this presentation that are not historical facts are forward-looking statements within the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995 and may involve a number of risks and uncertainties. We have used the words “anticipate
Slide 3: ICG Highlights
ICG Highlights n Product and basin diversification n Excellent reserve position, majority of which is owned Attractive Asset Portfolio n Attractive cost position n Underground-focused growth strategy n Metallurgical sales expected to more than double in 2010 to 2.4 million tons Positioned to Capital
Slide 4: ICG Highlights
ICG Highlights n Product and basin diversification n Excellent reserve position, majority of which is owned Attractive Asset Portfolio n Attractive cost position n Underground-focused growth strategy n Metallurgical sales expected to more than double in 2010 to 2.4 million tons Positioned to Capital
Slide 5: 13 active mining complexes across Central and Northern Appalachia and Illinois Basin
n 13 active mining complexes - 8 in Central Appalachia, 4 in Northern By Basin1 Appalachia and 1 in Illinois Basin 26% NAPP n Less reliant on any single mine for a significant portion of total production n Additional benefits of diversification in labor markets and transportation 58% CAPP Vindex MD
Slide 6: Excellent Reserve Position
Excellent Reserve Position n ICG owns a larger portion of % Ownership of Total Reserves its reserves than nearly all other public producers – Reduces royalty costs n ICG controls 1.1 billion tons Geographic Distribution of high-quality reserves that Reserves by Type of Reserves are primarily high-BT
Slide 7: Attractive Competitive Position
Attractive Competitive Position Appalachian Cash Cost / ton 1,2 Appalachian Cash Margin / ton 1 Notes: 1 Data represents 4Q09 reported cash costs and margins 7 2 Cash costs exclude DD&A expenses
Slide 8: Shift Towards Underground Mitigates Regulatory Concerns
Shift Towards Underground Mitigates Regulatory Concerns n Nearly all ICG growth is projected to be new or Production by Mining Method expanding underground mining operations (rather than surface mines) – Incremental deep mine growth totaling 1.7 million tpy by 2011 is planned at Illinois, Vindex, Be
Slide 9: ICG Highlights
ICG Highlights n Product and basin diversification n Excellent reserve position, majority of which is owned Attractive Asset Portfolio n Attractive cost position n Underground-focused growth strategy n Metallurgical sales expected to more than double in 2010 to 2.4 million tons Positioned to Capital
Slide 10: Metallurgical Coal Market Rebounding
Metallurgical Coal Market Rebounding Seaborne Hard China Net Importer of Coal Coking Coal Prices n Metallurgical spot prices have already 2005 - Current Spot Chinese Coal Net Imports / (Exports) rebounded substantially from 2009 levels Net Imports n China met imports continue to drive market demand
Slide 11: Metallurgical Portfolio Expanding Rapidly
Metallurgical Portfolio Expanding Rapidly Metallurgical Sales Growth Key drivers of met growth: n Projected production increase at met mines during 2009-2011 of nearly 700K tons/year – Added third section at Beckley (LV) – Higher productivity at Sentinel (HV) – New low volatile met Bismark mine in d
Slide 12: Thermal Coal Market Showing Signs of Strength
Thermal Coal Market Showing Signs of Strength Thermal Coal Environment n Expect 2010 to be a rebalancing year for coal supply/demand n Cold weather globally has led to favorable burn, accelerating thermal coal inventory drawdown n Presents upside for ICG to capitalize on a rising price environment 2
Slide 13: Favorable Sales Position
Favorable Sales Position Committed Tonnage1 Committed and not priced Projected Sales 16.7 - 17.3 16.5 - 18.0 (tons in millions) Average Selling Price $63.00-$64.50 $65.00-$70.00 Metallurgical Uncommitted 1.0 2.6 (tons in millions) Note: 1 Management estimate as of February 26, 2010 13
Slide 14: ICG Highlights
ICG Highlights n Product and basin diversification n Excellent reserve position, majority of which is owned Attractive Asset Portfolio n Attractive cost position n Underground-focused growth strategy n Metallurgical sales expected to more than double in 2010 to 2.4 million tons Positioned to Capital
Slide 15: Significant Idle Production Capacity Available
Significant Idle Production Capacity Available n Nearly 3 million tons annual production capacity can be promptly activated to take advantage of strengthening market – 2.15 million tpy held in "hot-idle" status requiring only moderate equipment investment for re-start – Another 0.75 million tpy prod
Slide 16: Tygart Represents World Class Production Opportunity
Tygart Represents World Class Production Opportunity n Tygart #1 will be the first of 3 or more mining complexes planned for ICG’s 186 million ton Hillman property in Northern West Virginia – High Btu, low- to medium-sulfur thermal and high volatile met quality coal – Anticipating low costs due to l
Slide 17: Growing Metallurgical Production
Growing Metallurgical Production Metallurgical as Percent of Total Tons Sold 1 1 Note: Thermal Met 1 Management estimate as of February 26, 2010 17
Slide 18: ICG Highlights
ICG Highlights n Product and basin diversification n Excellent reserve position, majority of which is owned Attractive Asset Portfolio n Attractive cost position n Underground-focused growth strategy n Metallurgical sales expected to more than double in 2010 to 2.4 million tons Positioned to Capital
Slide 19: Focused Execution Has Driven Strong Margin Growth
Focused Execution Has Driven Strong Margin Tons Sold Growth… Coal Sales Revenue Per Ton Cost of Coal Sales Revenue Per Ton Margin Per Ton Source: Company filings 19
Slide 20: Resulting in Record EBITDA Generation
…Resulting in Record EBITDA Generation Coal Sales Revenue Adjusted EBITDA1 GAAP Capital Expenditures Adjusted EBITDA - Cash CapEx Source: Company filings Note: 1 EBITDA is a non-GAAP measure and reconciliations provided at end of presentation 20
Slide 21: Updated Guidance Summary
Updated Guidance Summary (Management Estimate as of February 26, 2010 ) 21
Slide 22: Lowest Legacy Liabilities Among Peer Group
Lowest Legacy Liabilities Among Peer Group Total Legacy Liabilities1 ICG Legacy Liabilities Reclamation 53% Employee Benefits 47% Note: 1 Company Annual Reports as of December 31, 2009 (Cloud Peak as of 9/30/09); legacy liabilities include accrued workers’ compensation liabilities, liabilities under
Slide 23: Capital Restructuring
Capital Restructuring n New ABL credit facility – Increased borrowing capacity to $125 million – Eliminated ongoing financial maintenance convents – Capacity may be increased to $200 million n Common Stock offering – Raised $109 million through the sale of 24.4 million shares n Convertible Senior No
Slide 24: New Capital Structure
New Capital Structure n New ABL increases revolver size from $100 million to $125 million Notes: 1 Assumes existing convertible tendered at price of 121.00 2 Assumes existing senior notes tendered at price of 107.25 3 Includes original issue discount on new senior secured notes of $1.4 million 4 Adj
Slide 25: Substantially Extends Maturity Profile
Substantially Extends Maturity Profile 9/30/09 Maturity Profile Convertible $225mm Bond $175mm Revolver $100mm Pro Forma 12/31/09 Maturity Profile Bond $200mm Revolver Convertible $125mm $115mm 25
Slide 26: ICG Highlights
ICG Highlights n Product and basin diversification n Excellent reserve position, majority of which is owned Attractive Asset Portfolio n Attractive cost position n Underground-focused growth strategy n Metallurgical sales expected to more than double in 2010 to 2.4 million tons Positioned to Capital
Slide 27: Thank You!
Thank You! 27
Slide 28: Appendices
Appendices 28
Slide 29: Summary of Active Mining Operations
Summary of Active Mining Operations 12/31/2009 Mine Mining Total Reserves Annual Capacity 2009 Production Coal Mine Site Type Method (tonsin millions) (tonsin millions) (tons in millions) Quality CAPP Kentucky East Kentucky Ss MTR, TSL, CTR 16 13 09 Utility Flint Ridge UG R&P 23.4 15 08 Utility Haza
Slide 30: Peer Group Cost and Margin Comparisons
Peer Group Cost and Margin Comparisons 30
Slide 31: Peer Group Cost Per Ton Appalachian Production (2007-2009)
Peer Group Cost Per Ton Appalachian Production (2007-2009) 31
Slide 32: Peer Group Cost Per Ton Illinois Basin Production (2007-2009)
Peer Group Cost Per Ton Illinois Basin Production (2007-2009) 32
Slide 33: Peer Group Margin Comparison
Peer Group Margin Comparison Margin Per Ton in Dollars (2007-2009) Note: Margin comparison reflects Eastern US production only. 33
Slide 34: Non-GAAP Measures
Non-GAAP Measures n Adjusted EBITDA is a non-GAAP financial measure used by management to gauge operating performance. We define Adjusted EBITDA as net income or loss attributable to International Coal Group, Inc. before deducting interest, income taxes, depreciation, depletion, amortization, loss o
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