Groundhog Anthracite Project

Transcription

1 The world s largest high grade anthracite deposit Groundhog Anthracite Project Low Cost Established mining jurisdiction Infrastructure solution Ultra-High Grade Anthracite June 2014

2 IMPORTANT INFORMATION Important Information This presentation has been prepared and issued by Atrum Coal NL ("the Company") to inform interested parties about the Company and its progress. The material contained in this presentation sets out general background information on the Company and its activities. It does not constitute or contain an offer or invitation to subscribe for or purchase any securities in the Company nor does it constitute an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for or purchase securities in the Company will be entered into on the basis of this presentation. The information supplied is in summary form and does not purport to be complete. The Company, its directors, officers, employees, agents, affiliates and advisers have not verified the accuracy or completeness of the information, statements and opinions contained in this presentation. Accordingly, to the maximum extent permitted by law, the Company makes no representation and gives no assurance, guarantee or warranty, express or implied, as to, and takes no responsibility and assumes no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission from, any information, statement or opinion contained in this presentation. You should neither act nor refrain from acting in reliance on this presentation material. This overview of the Company does not purport to contain all information that its recipients may require in order to make an informed assessment of the Company's prospects. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy, and completeness of the information, statements and opinions contained in this presentation and when making any decision in relation to this presentation or the Company. The information in this presentation does not take into account the objectives, financial situations or needs of any particular individual. you should consider seeking independent professional advice based on your own objectives. To the extent permitted by law the Company, its directors, officers, employees, agents, affiliates and advisers exclude any and all liability (including, without limitation, in respect of direct, indirect or consequential loss or damage or loss or damage arising out of negligence) arising as a result of the use of anything contained in or omitted from this presentation. All statements, other than statements of historical fact, included in the presentation, including without limitation, statements regarding forecast cash flows, future expansion plans and development objectives of the Company are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, they involve subjective judgement, assumptions and analysis and are subject to significant risks, uncertainties and other factors, many of which are outside the control or, and are unknown to the Company. Accordingly, there can be no assurance that such statements or expectations will prove to be accurate and actual results and future events may differ materially from those anticipated or described in this presentation. Historic information is not an indication or representation about the future activities of the Company. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any information contained in this presentation reflect any change in expectations, events, conditions or circumstances on which that information is based. This presentation is provided on a strictly private and confidential basis, to be used solely by the recipient. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of the Company. In accepting this presentation, the recipient agrees that it is provided solely for its use in connection with providing background information on the Company and that it is not used for any other purpose. Competent Person Statement Exploration Results The information in this document that relates to Exploration Results is based on information compiled by Brad Van Den Bussche B.Sc P.Geo, who is a Member of a Recognised Overseas Professional Organisation (ROPO) included in a list promulgated by the ASX from time to time, being the Canadian Institute of Mining and Metallurgy. Mr Van Den Bussche has read and understands the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition). Mr Van Den Bussche is a Competent Person as defined by the JORC Code, 2012 Edition, having five years experience that is relevant to the style of mineralisation and type of deposit described in this document, and to the activity for which I am accepting responsibility. Mr Van Den Bussche is Chief Technical Officer of Atrum Coal NL and has sufficient experience which is relevant to the style of mineralisation and type of deposit and mineralisation under consideration and to the activity which they are undertaking. Mr Van Den Bussche consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Coal Resources The coal resources documented in this report were estimated in accordance with the guidelines set out in the JORC Code, They are based on information compiled and reviewed by Mr Nick Gordon, who is a Member of the Australasian Institute of Mining and Metallurgy and is a full-time employee of Gordon Geotechniques Pty Ltd. With more than 28 years of experience in open cut and underground coal mining, Mr Gordon has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Neither Mr Gordon nor Gordon Geotechniques Pty Ltd have any material interest or entitlement, direct or indirect, in the securities of Atrum or any companies associated with Atrum. Fees for the preparation of this report are on a time and materials basis. Mr Gordon recently visited the Groundhog project area on 21st March 2014 whilst exploration personnel were preparing for the next drilling program. Two days were also spent with Atrum geological personnel in Victoria, British Columbia evaluating the geological, coal quality and geotechnical information relevant to the Groundhog project area. Mr Gordon consents to the inclusion in the report of the matters based on the information, in the form and context in which it appears. 2

3 EXECUTIVE SUMMARY Focused ultra high grade anthracite developer and producer Developing largest known high grade anthracite deposit on the planet Operating in British Columbia, Canada GROUNDHOG ANTHRACITE PROJECT 100%) CAPITAL STRUCTURE Shares on issue undiluted Share price (30/06/14) Cash at Bank (30/06/14) Partly paid shares $0.20 outstanding Performance rights Options Shares on issue fully diluted Market capitalisation fully diluted JORC resources 162 million $1.71 $10.5 million 2.8 million 5 million 6 million 175 million $300 million 1.57Bt 1.57Bt 569Mt Measured & Indicated SHAREHOLDERS FULLY DILUTED PERFORMANCE (ASX:ATU) BOARD & MANAGEMENT (52%) HNWs & INSTITUTIONS (48%) 3

4 ORGANISATIONAL STRUCTURE BOARD AUSTRALIA JAMES CHISHOLM CHAIRMAN > Founder, Engineering, M&A RUSSELL MORAN EXECUTIVE DIRECTOR > Founder, Exploration, M&A KEY MANAGEMENT AUSTRALIA PETER DOYLE VP MAR KETING AND BUSINESS DEVELOPMENT > 20 years experience in international coal marketing and operations > Deep understanding of high grade anthracite markets DR ERIC LILFORD MANAGING DIRECTOR > Mining Engineering, Investment Banking > Ex-Head of Mining at Deloitte Touche Tohmatsu GINO D ANNA EXECUTIVE DIRECTOR > Founder, Corporate finance, ASX compliance BEN SMITH VP OPERATIONS > 15 years experience coal mine operations and safety > Consulting experience with majors including Posco, Anglo American, BMA, Idemitsu and Yancoal CAMERON VORIAS NON EXECUTIVE DIRECTOR VINCE MARTIN MINING / EQUIPMENT SPECIALIST > 30 years experience in coal > 25 years experience taking projects from conception through construction to production > Managed the introduction of new technology and mining equipment into the Australian coal industry > Managing Director and CEO of Sojitz Coal Mining Pty Ltd > Former COO of Peabody Energy Australia, QCoal Pty Ltd and previously General Manager of New Hope Coal and Excel Coal ROBERT MITCHELL VP INFRASTRUCTURE AND LOGISITCS > Ex Rio Tinto Rail Division responsible for project procurement, management and feasibility > Significant port and rail operating experience CANADA SHANE UREN VP ENVIRONMENTAL / PERMITTING > Biologist and Civil Engineer with 15+ years experience in permitting and environmental assessment > Previous track record in driving mine EA s, hydroelectric EA s and Port EA s including Stewart Bulk Terminal BRAD VAN DEN BUSSCHE VP EXPLORATION > Geologist with 25 years experience in coal industry > Held positions with Gulf Canada Resources and Norwest Resources. GLENN COLLICK VP COMMUNITY RELATIONS > 25 years experience in the natural resources sector > Responsible for managing relationships with First Nations, Environment Canada and Ministry of Energy and Mines GREG BELL PROJECT MANAGER > 30 years experience with project development and coal focus > Chemical engineer 4

5 WHAT IS ANTHRACITE? Low High Groundhog is host to ultra high ranking anthracite coals 5

6 PREMIUM ANTHRACITE COALS METALLURGICAL APPLICATIONS Anthracite as Input / Replacement Carbon Substituted Potential Substitution (%) Sinter plant fuel Coke breeze 70 (typically <50) Pellet plant fuel Coke breeze 100 Coking Coal Suitable bituminous coals ULV PCI Other HV and LV coals 100 Direct Blast Furnace charge Electric Arc Furnace carbon additive Coke Coke / Petroleum Coke 100 LOWER EMISSIONS FALLING SUPPLY RISING DEMAND 6

7 ANTHRACITE COALS COMPARATIVE PRICING US$/t > Low Rank Coal Peat / Bog Lignite Sub-Bituminous Bituminous Thermal Coal SSCC Targeting high value product range HCC Anthracite Low Grade SG ("average") ULV PCI ("premium ULV") HG (fines --> lumps) UHG (fines --> lumps) Specialty Indicative pricing for Atrum s target product suite 7

8 ANTHRACITE MARKET SUPPLY SHORTAGE DEMAND/SUPPLY MISMATCH Groundhog Project 8

9 WHAT DOES THIS MEAN? REAL VALUE TO STEEL PRODUCERS ANTHRACITE REPLACEMENT OF COKE IN BLAST FURNACE > 554kg coke is required to produce 1,000kg of steel > At $200/t for lump anthracite and a 10% BF substitution rate -> saves $7.90/t steel production > Global steel production in 2013 = 1,607Mt = cost saving of $9bn per annum > Average steel mill producing 2Mtpa of steel will save around $16m > Annual market of 45Mt of high grade anthracite > Current HG and UHG Anthracite supply is restrained at less than 10Mtpa with limited expansion opportunities > Atrum will look to satisfy the 35Mtpa shortfall in supply Environmental Benefits of Anthracite Green Carbon > Anthracite is significantly cleaner than coking coal in its natural state and burns smokeless > No coke ovens are required if anthracite replaces coke in blast furnace = lower emissions > Anthracite lower in Nox and Sox than many HCC s Anthracite is a greener smokeless carbon source Groundhog Project Atrum can save the average steel mill more than $16 million per year Atrum can guarantee security of supply for decades 9

10 WORLD ANTHRACITE PRODUCTION CHINA / VIETNAM / KOREA Groundhog Project Growing Asian demand and constrained seaborne supply 10

11 CANADA EXPORT ADVANTAGE HIGHLIGHTS > Second largest metallurgical coal exporter > Low sovereign risk > Favourable regulatory environment > Extensive and regulated infrastructure; extensive railway cheap power deep water sea ports with cape size capacity high quality road network > Comparable shipping distance to Asia when compared to that of the east coast of Australia 11

12 PROJECT LOCATION 1.57Bt JORC Inferred Location of Groundhog Anthracite Project 12

13 GROUNDHOG COAL RESOURCE HIGHLIGHTS > 38,369 hectares (100% owned) > 26 granted Coal Licences and 11 Coal Licence Applications > Multi seam deposit, 26 major seams identified GROUNDHOG RESOURCE ENVELOPE JORC CATEGORY Measured & Indicated Inferred Total RESOURCE 569Mt 998Mt 1,567Mt JORC RESOURCE BREAKDOWN BY DEPTH (Mt) < 50m 154 Groundhog Project < 100m 415 < 200m 993 < 300m 1,420 Unrestricted 1,567 Shallow deposit with 415Mt occurring at less than 100m depth 13

14 GROUNDHOG COAL QUALITY HIGHLIGHTS > Testing confirms ultra high grade anthracite for steel industry > Samples are being prepared for trial testing by customers INDICATIVE SPECIFICATIONS UHG ANTHRACITE Property Value Inherent Moisture (air dried) < 2% Ash (air dried) 10-12% Volatile Matter (air dried) 4-5% Fixed Carbon (air dried) 82% - 95% THERMAL Sulphur (air dried) HARD COKING % THERMAL / PCI HGI THERMAL / PCI Gross CV (kcal/kg) THERMAL / PCI7,200-8,000 Expected anthracite qualities at Groundhog Exceptionally high ranking anthracite PQ drill core from 2013 Groundhog program 14

15 GROUNDHOG COAL RESOURCE PFS AREA ANTHRACITE RESOURCES NORTH WEST PFS AREA > PFS covers less than 5% of Groundhog > PFS area contains an estimated total resource of 305Mt of in situ anthracite with 128Mt of this resource contained in the main target seams, the #40 and #70 seams > The resources contained in the north-west zone, according to JORC 2012 classification and category are outlined in the table below: Depth (m) Measured (Mt) Indicated (Mt) Inferred (Mt) Total (Mt) Open Cut Mining < Underground Mining > Total by JORC Category > A total of 87.4Mt ROM anthracite has been estimated to be contained in the north-west zone, of which 75Mt has been modelled and reflected in the ROM production schedule 15

16 GROUNDHOG COMPARABLE IN SIZE TO HUNTER VALLEY HIGHLIGHTS > PFS study area covers ~5% of total lease area. > There remains significant upside opportunity, with the resource remaining open in each direction Groundhog hosts potential to become a multi-mine mine operation equivalent to some of Australia s major coal basins Groundhog Project Atrum s Groundhog tenements overlaying Hunter Valley Coalfield 16

17 GROUNDHOG PRE-FEASIBILITY STUDY HIGHLIGHTS PRE-FEASIBILITY STUDY METRICS RESULTS LOM ROM Production PFS Area Life of Mine PFS Area ROM Production Rate (Peak) 75Mt 16 years 5.4Mtpa LOM Yield (average) 60% Product Mix: Lumps / Fines 52% / 48% LOM OPEX (US$/t FOB) Average Weighted Anthracite Sales Price (UHG Lumps and UHG Fines) Pre-Production CAPEX Atrum US$87/t US$192/t US$10M HIGHLIGHTS > Initial underground room and pillar, accessed via adit/decline > Average Annual Pre-tax Cashflow of US$207 million > Payback from start of operations estimated at <3yrs > Model transition from BOOT and Contractor to Owner-Operator > Opportunity to transition from trucking operation to rail operation > Expanded production possibilities 3Mtpa 10Mtpa 10Mtpa beyond Ramp-up Production CAPEX Atrum Infrastructure Capital - AIL Post-tax NPV (8.0% nominal discount rate) US$67M US$99M A$1.3Bn IRR (Post-tax, nominal) 51% PFS exceeded expectations, generating in excess of $3Bn in Pre-tax Cashflow over LOM 17

18 GROUNDHOG PFS PRODUCTION SCHEDULE PFS PRODUCTION SCHEDULE NORTH WEST AREA > Peak 5.4Mtpa ROM production -> 3.4Mtpa of product anthracite after washing 18

19 GROUNDHOG PROJECT NPV SENSITIVITIES > The financial modelling indicates that when incorporating a nominal discount rate of 8%, the Groundhog project has a pre-tax NPV of approximately $2.1 billion and a pre-tax IRR of 67.5%. The post-tax NPV and IRR is A$1.3 billion and 51.3% respectively FX +/-10% 988 1,647 Price +/- 10% 959 1,611 Washing Yield +/-10% 1,000 1,570 Discount Rate (6%,10%) 1,038 1,601 Opex +/-10% 1,113 1,456 Capex +30% 1, ,100 1,300 1,500 1,700 Project NPV A$M > PFS currently being revised in favour of potentially reducing CAPEX, increasing production rates and lowering OPEX Pre-tax NPV 8 of $2.1 billion with 68% IRR 19

20 INITIAL PORTAL DEVELOPMENT 20

21 DRIFT CONSTRUCTION SEQUENCE 21

22 PORTAL AREA DETAILS 22

23 GROUNDHOG MINE 3D RENDER 23

24 GROUNDHOG MINE 3D RENDER 24

25 GROUNDHOG MINE 3D RENDER 25

26 GROUNDHOG MILESTONES TO PRODUCTION Q Logistics Chain Trenching Bulk Sample Drilling continues Environmental baseline studies continuing Work is underway to prepare 100t sample for trial load and wash Q Bulk Sample Prep Test Wash complete Marketing sample prep Road Access Approval for Bulk Sample Construction Cut & Cover Complete Portal access & initial site surface infrastructure H Bulk Sample Road Header Completes primary development Driveage of roadways to enable transition into small scale mining ROM coal processed in 3rd party CHPP H Small Scale Mine Permit, and Construction of Surface Facilities Mini-CHPP & Truck Load-out Water / Electrical Reticulation Construction of larger man camp Installation of first continuous miner ROM coal processed on-site H Small Scale Mine Complete; EIS Complete; Mining Licence Application lodged Continuous miner operations continue panel development Small scale mining continues pending full scale approvals H ML Granted; Commercial Production Begins Additional continuous miners installed Preparation for mini-wall installation Optimal transport route complete Marketing samples & 20kt ROM 80kt ROM 200kt ROM 250kt ROM 2.5Mtpa ROM ramping to 5.5Mtpa ROM 26

27 GROUNDHOG INFRASTRUCTURE ROAD & RAIL PORT POWER WATER > Multiple routes by road to Port of Stewart (150km direct distance) provides trucking option > 30km of rail easement with an upgrade required to link to existing rail > Direct rail link to Ridley Coal Terminal at Port of Prince Rupert or Vancouver Metro > Signed Port Agreements with Stewart Bulk Terminal > Attractive port handling charges on non take or pay terms for 1.5Mtpa > Further MOU with second loading option at Stewart World Port for a further 5Mtpa > Ability to ultimately connect to NTL for power requirements at the project location > Diesel gensets preferred in initial stages of production Clear path to production > Local tributaries and creeks are in close proximity for year round water supply 27

28 PORT CAPACITY SECURED HIGHLIGHTS > 1.5 Mtpa port allocation on non take or pay terms with handymax and panamax capacity > Further 5Mtpa port allocation MOU signed with Stewart World Port Port of Stewart Stewart is ready for the opportunities presented by the clean, environmentally friendly mining industry. Mining is an important part of our economy and we look forward to working with Atrum to unlock the economic potential of the region. Galina Durant, Mayor of Stewart Stewart Bulk Terminal 28

29 CONTACT Dr Eric Lilford Managing Director M E eric@atrumcoal.com Russell Moran Executive Director M E russell@atrumcoal.com Gino D Anna Executive Director M E gino@atrumcoal.com James Chisholm Chairman M E james@atrumcoal.com Nathan Ryan Investor Relations M E nathan@atrumcoal.com 29