Straits Asia Resources Limited

Transcription

1 Straits Asia Resources Limited Strategic Outlook September 2009

2 Table of Contents 1 Sebuku 2 Jembayan 3 The Market for Straits Asia Coal 4 Straits Asia s Financials and Funding the High Growth Targets 5 Resources and Reserves 6 Outlook IMPORTANT NOTICE Nothing in this presentation constitutes an offer of securities for sale. This presentation contains certain forward looking statements and forward-looking financial information. Such statements and financial information are based on certain assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Straits Asia Resources Limited (Straits Asia) to be materially different from those forecast. The inclusion of such statements and information should not be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that forecast results will or are likely to be achieved. This presentation is for information purposes only and does not constitute or form part of an offer, solicitation or invitation of any offer, to buy or subscribe for any securities, nor should it or any part of it form the basis of, or be relied in any connection with, any contract or commitment whatsoever. This presentation has not been filed, lodged, registered or approved in any jurisdiction. 2

3 Part 1 Sebuku

4 Beyond The Cagar Alam Re-zoning changes the area from protected forest to production forest Remaining approvals are normal for Straits Asia s mine operations Key remaining approvals: Feasibility Plan Environmental Pinjam pakai Estimated up to 9 months from August 2009 Update reserve statement Drilling Production

5 Sebuku s History and Targets Sebuku Production History and Target (Mt) Sebuku Cash Costs History and Target ($/t) ~28* T 2010 T Decline in 2009 reflects boundary constraints Access to reserve (from the re-zoning) in the coming months will allow significant ramp up in production 2009 rise reflects boundary constraints 2010 costs expected to reduce Longer-term strip ratio to be confirmed *Subject to mine plan, PAMA mining contract etc. Sebuku s medium term production target is 8Mtpa (onland mining) 5

6 Sebuku Coal Mine Advancing to 8Mt Annual Production Next events: Drilling Form the mine plan for the area Mining contractor PAMA: New contract / upgrades fleet Reserves Announce resource, reserves Mining permits ~9 months: involves forestry and mines ministries and local mayor Production Target start is for end Q1/Q Payment to Northern Leases Vendors US$111m over 12 months Infrastructure is in place for 8Mtpa For Northern areas, lengthening of the haul road under review Longer term infrastructure plans dependent on reserve base 6

7 Sebuku: Beyond 8mt The Western Leases are the offshore areas of the Sebuku concession 296 million tonnes of resource confirmed Water depth is 3 to 5 metres Technical challenges to mining are limited Main challenges will be permits, community Planning has begun (see below) Proposed Eastern Port Development Possible Infrastructure for the Western Leases Eastern port: Direct vessel loading / lower haul distance 5Mtpa washplant - increases nominal ROM by 10Mtpa Conveyors - reduce diesel use Own-operated haul fleet Feasibility, costs etc all currently under evaluation

8 Part 2 Jembayan

9 Jembayan Coal Mine Continuing Record Production T 2010 T H production set new records Strip ratio of 11:1 Cash costs of ~US$40/t for 2009 Jembayan mine has doubled its installed capacity to 11Mtpa, beginning from H PAMA is adding mining equipment to ramp up production Reserve upgrades expected by end

10 Jembayan: Beyond 11Mtpa Capacity upgrade to 14Mtpa with ~US$10m investment possible, but mine plan dependent Reviewing strategic acquisitions Eastern corridor and port will be reviewed based on reserve base. Cost reduction and shorter haul distances 10

11 Part 3 The Market for Straits Asia s Coal

12 Straits Asia s Market Position Straits Asia focuses on seaborne thermal coal Market is estimated at over 600Mtpa worldwide; 300Mtpa in Asia Competitive advantage: Low cost producer High grade product Long-term relationships with major power producers Sebuku Coal is a recognized brand Jembayan coal is being introduced to new markets 12

13 Sales Mix and New Targets Average Selling Price (US$/t) 2009 Sales Mix by Country T *2010 negotiations underway Less than 3mt sold Key markets that Straits Asia will grow into include: India - a growing market for Jembayan coal Japan, Europe - ready to take up the higher grade Sebuku coal China - a prospective market for increased volumes of Indonesian coal Even with a production target of 20Mtpa, Straits Asia s production will constitute less than 10% of the Asian market, leaving substantial room for growth 13

14 Part 4 Straits Asia s Financials and Funding the High Growth Targets

15 Strong Shareholder Register 60% Global Institutions Retail Investors PTT Asia Pacific Mining Pty Ltd 47.6% 6.8% 45.6% Madagascar coal interest Brunei coal interest Salt project 15

16 Strong Capital Position The current debt facility can be paid down in full by May 2010 from internal cash flow. Discussions are being held on terming out the facility US$111m progress payments to Northern Leases vendors Existing and committed (funded) infrastructure in place with 19Mtpa nominal capacity Minimal investment of ~US$10m will raise nominal capacity to 22Mtpa Funding for longer term growth being reviewed 16

17 2009 H1 Financial Results Key Financial Data US$000 s Q Q Change H H Change Coal sales revenue % % Marine engineering revenue (11%) (19%) Total Revenue % % Coal cost of sales (6%) % Marine engineering cost of sales % (0%) Cost of sales (3%) % Gross profit % % Mark to market of warrants (14.3) - (14.5) - Profit after tax (43%) % EBITDA (0%) % Decrease in earnings in Q2 caused by: Warrant expenses of $14.33 million (non cash exceptional) Equipment write downs of $ 2.9 million (non cash exceptional) Tax provision of $22 million (51% of PBT) (exceptionally high) 17

18 Balance Sheet Balance Sheet Key Data US$m Jun-09 Mar-09 Dec-08 Net assets Total borrowings Gearing 41.5% 41.8% 44.0% Cash and restricted cash Summary Return on assets of 13% (annualised) Return on capital 25% (annualised) Return on equity 29% (annualised) Borrowings Overview Term and Revolving Facilities Agreement US$300 million (Term loan: US$250m + US$50m revolving facility) Average pre-tax cost (as at 31 March 2009) 5.60% Maturity Date May 2010 US$94 million repayments in 2009 commenced from August; US$125 million bullet due May 2010 Repayments fully funded from internal cash flow Discussions are being held on terming out the facility 18

19 Cash Flow US$m Q Q H H Operating cash inflows Payments for plant and equipment, exploration (19.8) (5.2) (47.7) (12.6) Net cash flows from financing (129.1) (4.7) (130.7) (4.8) Net increase/(decrease) in cash (125.0) 57.0 (111.6) 58.5 Cash at beginning of period Cash at the end of period Lower operating cashflows QoQ mainly on higher corporate income taxes paid. Payments for plant and equipment comprise capital expenditure at the Sebuku and Jembayan coal mines to expand installed capacity to 19 million tonnes per annum and a new coal transhipment barge Payment of $45 million in aggregate on final dividends for 2008 and interim dividends for Q Restricted cash shown as outflow $65.8 million as at end of period. Of this $40.8 million is held in escrow as a portion of the loan principal is repayable in August 2009 and the balance as security for letters of credit Repayment of $20 million of the Facility B revolving credit with Standard Chartered Bank 19

20 Part 5 Resources and Reserves

21 Reserves (JORC at ) Reserves Resources 122 Mt 641 Mt 58 Mt 162 Mt Jembayan Reserves and Resources Based on ~33% of the total concession area Intensive drilling will continue for another 9 months Sebuku Reserves and Resources Concession is being drilled to confirm higher reserve base Onland northern area has not been drilled to depth Western Leases still being explored 21

22 Straits Asia Resources Mining for Asia s Growth Thank You

23 Snapshot numbers Coal production (mt) $M US cents H H Earnings per share