Investor Update Presentation November 2013

Transcription

1 Investor Update Presentation November 2013

2 DISCLAIMER This document, which is personal to the recipient, has been issued by Ncondezi Coal Company Limited (the Company ). This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. In particular, this document and the information contained herein does not constitute an offer of securities for sale in the United States. This document is being supplied to you solely for your information. The information in this document has been provided by the Company or obtained from publicly available sources. No reliance may be placed for any purposes whatsoever on the information or opinions contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of the Company s directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted by the Company or any of the Company s members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. Nothing in this document or in the documents referred to in it should be considered as a profit forecast. Past performance of the Company or its shares cannot be relied on as a guide to future performance. Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company s or, as appropriate, the Company s directors current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document. This document has been prepared in compliance with English law and English courts will have exclusive jurisdiction over any disputes arising from or connected with this document. 2

3 NCONDEZI ENERGY INVESTMENT HIGHLIGHTS Developing integrated 300MW 1 power plant & mine business in a growth region of Mozambique Supported by 100% owned +4Bt JORC coal resource (open pit, low strip mine) Scalable to 1800MW 25 year exclusive offtake with Mozambican national power utility EdM 2 Significant momentum in project development over last 7 months April Power Framework Agreement ( PFA ) with Mozambican government August Mine Concession granted October Power Purchase Agreement Heads of Terms ( PPA HoTs ) signed with EdM September/October ESIAs on Power Plant and Mine approved by Mozambican Government Clear pathway to unlocking value Accelerated timetable agreed with Government and EdM Binding Final Form Power Purchase Agreement targeted for Q ( FF PPA ) Co-developer to be brought in by end Q Financial Close targeted for Q Commissioning targeted to start H Compelling project economics/value prospect Target Equity IRR of 18-20% Expected Project NPV of >$200m at Financial Close Expected Total net equity cashflows of >$2bn over 25 years Experienced management team with track record of project delivery Current milestones being met on or ahead of schedule 3 1 Installed in units of 150MW 2 Electricidade de Mocambique

4 EXPERIENCED AFRICAN POWER TEAM LEVERAGING WORLD CLASS CONSULTANTS Paul Venter CEO Eddie Scholtz Mine Development Consultant Dr Estevão Pale Non-Executive Director Peter O Connor Non-Executive Director Christiaan Schutte Non-Executive Director Jacek Glowacki Non-Executive Director Technical Consultant EPC Selection Process Machiel Coetzee Power Evacuation Studies Maree Roos & Karl Lawrenze Project Commercial Advisors +39 years experience in Africa, Russia & Asia, mining, power generation & transport logistics Previously Director Prophecy Coal, Director of Gobi Coal & Energy, Managing Director Coal at EN+, Finance & Service Manager at Eskom +40 years experience in the mining industry, primarily in Africa and South America Previously Managing Director of BHP Billiton Energy Coal South Africa, COO Mining of CIC Energy, and GM at Optimum Colliery Ncondezi s representative on Liaison Committee with EdM & Government CEO of Companhia Mocambicana de Hidrocarbonetos, formerly National Director of Mines & Energy +20 years working for Eskom across Generation Transmission, and Capital Expansion divisions +20 years working for Eskom in Group Generation and Technology divisions Over 30 years of international experience in the power sector CEO and Chairman of the Board of Polenergia, a Polish Independent Power Producer part of Kulcyzk Group One of Germany s largest independent electricity producers, total installed capacity worldwide of 9,400MW Core activities are planning, construction & operation of large power plants Specialist transmission consultant with extensive SAPP & Mozambican experience Anointed transmission systems advisor to EdM and Eskom Energy market design and pricing specialists Advised on numerous energy projects across Africa and Asia Advised both the Mozambican and South African governments on energy policies and designs 4

5 COAL FIRED POWER GENERATION STRATEGIC TO MOZAMBIQUE Large gas discoveries Mozambique plans to have diversified generation mix Hydro, gas and coal all form part of Mozambique s energy strategy Power supply gap exists Gas generation limited to 600MW and only connected to southern grid Hydro long lead time commissioning (7 years) and requires substantial transmission upgrades Coal ideally suited to meet supply gap 1. Cahora Bassa 2. Mpanda Nqua 3. Lupata Hydro Scalable to meet available transmission capacity 150MW units Commissioning achievable within 3 years Long life of operation +25 years Moatize 5. Ncondezi 6. Benga 7. Sasol 8. Aggrekko 9. Kuvaninga Coal Gas Located close to power generation & transmission infrastructure hub in Tete Ncondezi - dedicated coal power generator for Mozambique Power is main focus not reliant on export coal development Source: Company Other potential coal generators believed to be focused on internal energy requirements 5

6 NCONDEZI POWER PLANT OVERVIEW 2x150MW Power Plant using standard technology Project Base Map EdM exclusive offtaker for 300MW under Heads of Terms Supplying Mozambican Northern Grid (c.85km away) Coal supply to come from Ncondezi Mine (c.2km conveyor) ESIA approved October 2013 Source: Company Concession Area Topography EPC selection processes initiated with binding bids due January 2014 Transmission evacuation route approved by EdM Source: Company 6

7 SIGNIFICANT PROGRESS MADE ON KEY COMMERCIAL AGREEMENTS FOR THE POWER PLANT Agreements Signed to Date Agreement Signing date Power Framework Agreement* April 2013 Mine Concession* August 2013 Power Purchase Agreement HoT* October 2013 Transmission Agreement HoT* October 2013 Coal Supply Agreement HoT* October 2013 Agreements to be Concluded Remain on Track Agreement Target date Power Plant Project Vehicle HoT* December 2013 MoU on Fiscal and Investment Incentives* December 2013 Power Framework Agreement Effective December 2013 Power Generation Concession Q Final Form Power Purchase Agreement Q * Required Conditions Precedent to make Power Framework Agreement Effective and initiate Power Generation Concession negotiations with Mozambican Government 7

8 POWER PURCHASE AGREEMENT - A BIG VALUE DRIVER The Final Form PPA will set out the binding terms for which EdM will purchase power from the Ncondezi Project Sets out revenues for life of power plant Main driver of expected project NPV at Financial Close of >$200m Final Form PPA supported by a number of key agreements on Fuel costs Capital cost Operating and maintenance costs Level of Government support Key tariff parameters 25 year term Payments calculated in US$ Monthly payments Index linked Target completion of Final Form PPA and key agreements Q Power Purchase Agreement signed at Financial Close target Q Bankability of Final Form PPA is expected to be supported by Political and Commercial risk insurance Government guarantee 8

9 EPC BINDING BIDS DUE Q Power plant to be built on turnkey basis EPC pre-selection process completed June 2013 Binding bid RFQ issued October 2013 Process being managed by German IPP, STEAG Binding bids expected January Preferred EPC will be selected based on: Cost (capex and opex) Construction period Financing package Equity contribution Process includes IPPs from around the world Source: Company 9

10 INDICATIVE POWER PLANT ECONOMICS Target equity IRR of 18-20% Estimated project NPV at Financial Close (Q4 2014) of >$200m Total net equity cash flow estimated to be >$2.0bn over 25 years of operation Target Debt/Equity: 70%/30% Majority of debt expected to be linked to EPC contract Balance of debt expected from DFI and Commercial Banks Key Target Financials Expected Annual Revenue >$200m Expected Average EBITDA margin >50% Estimated Project Financial Close >$200m Estimated Commissioning (Q4 2017) >$1.0bn Source: Company Equity funding requirement to be secured from: Co-developer/strategic IPP Developer premium EPC and O&M contracts Power Plant Economics to be confirmed Q EPC Binding Bids Received Final Form PPA 10

11 ROLE OF CO-DEVELOPER & STRATEGIC IPP Capital requirement to Financial Close of c.$15m Co-Developer/Strategic IPP expected to fund majority of development costs to Financial Close Co-Developer/Strategic IPP expected to bring significant additional benefits to the project Leverage off of internal expertise to reach Financial Close reducing development cost to Ncondezi Support equity capital requirement at Financial Close Co-developer would likely to convert funding into equity at Financial Close Targeting the selection of a preferred co-developer in Q Process initiated and being managed by KPMG 11

12 THE NCONDEZI COAL MINE WILL SUPPLY THE POWER PLANT Overview $54m spent to date +4Bt coal resource identified with sufficient resources to meet plant requirements Open pit, low strip ratio mine Contractor mining operation Targeting production of 1.3Mtpa coal product c.2.0mtpa ROM and +70% yields c.2km conveyor to power plant Technical Work DFS completed & approved Measured JORC coal resources Updated capex and opex due Q Permitting Mining Concession granted ESIA approved Commercial Agreements Coal Supply Agreement HoT agreed 25 year fuel supply Mine to ring-fence coal resources Funding Financing expected to be secured via100% bankable offtake agreement with power plant 12

13 NEXT STEPS Q Power Plant Project Vehicle HoT Power Framework Agreement Effective Mine Update Q EPC Binding Bids Bring in Co-developer Final Form Power Purchase Agreement Transmission RFQ Appoint Mandated Lead Arranger Q Transmission Binding Bids Q Signed Power Purchase Agreement Financial Close 13

14 SUMMARY 2x150MW integrated power plant with dedicated coal mine Final Form PPA targeted for Q Financial Close targeted for Q Compelling project economics Co-developer partner search initiated Strong regional demand backdrop and expansion potential 14

15 Hanno Pengilly Chief Development Officer OR Alex Buck Investor Relations Tel: +44 (0)

16 A DISTINGUISHED BOARD WITH STRONG POWER DEVELOPMENT EXPERIENCE Michael Haworth Non-Executive Chairman Senior Partner at Greenstone Resources, Director of Strata, NED of Zanaga Iron Ore Company, extensive investment banking experience at J.P Morgan in natural resources Peter O Connor Non-Executive Director +20 years working for Eskom across Capital Expansion Division, Generation Division & Transmission Division Christiaan Schutte Non-Executive Director +20 years working for Eskom in Group Technology Division & Generation Division Jacek Glowacki Non-Executive Director Over 30 years of international experience in the power sector CEO and Chairman of the Board of Polenergia, a Polish Independent Power Producer part of Kulcyzk Group Estevao Pale Non-Executive Director CEO of Companhia Mocambicana de Hidrocarbonetos (Mozambican natural gas company) and formerly National Director of Mines in Mozambique s Ministry of Mineral Resources and Energy Mark Trevan Non-Executive Director +30 years experience in mining, Managing Director of Caledon Resources Graham Mascall Non-Executive Director +35 years of experience in mining project management, business development & M&A Nigel Sutherland Non-Executive Director +35 years working in the resource sector 16

17 AN EXPERIENCED MANAGEMENT TEAM WITH A SOLID TRACK RECORD Paul Venter Director, CEO & COO +39 years experience in Africa, Russia & Asia, mining, power generation & transport logistics Previously Director Prophecy Coal, Director of Gobi Coal & Energy, Managing Director Coal at EN+, Finance & Service Manager at Eskom Manish Kotecha CFO +10 years experience in financial management for mining companies Francois du Plessis Legal Counsel >10yrs legal counsel experience in mining sector Hanno Pengilly Chief Development Officer Former investment banker, responsible for Corporate Development since 2010 David Eshmade Country Manager Project Manager on exploration/mining projects through out Africa, Ncondezi s Country Manager since 2010

18 NCONDEZI POWER PROJECT BENEFITS TO MOZAMBIQUE Security of supply - dedicated mine mouth power station Affordable source of electricity Proven and reliable technology Energy portfolio diversification - reduced exposure to hydro and gas Ideally sized and located - not reliant on large longer term transmission projects Scalability - potential to scale up to 1800MW meet future demand Increase in economic investment and national income Job creation and skills development Government revenues from taxes and levies 18

19 SUBSTANTIAL PROGRESS OVER PAST TWO YEARS Power DFS for 1,800MW power station completed September 2012 Power Power Framework Agreement signed with Department of Energy in April 2013 Power Purchase Agreement HoT signed with EdM in October 2013 Power evacuation route identified and approved by EdM Mine DFS for substantial 4.7Bt thermal coal resource completed December 2012 Mine Mine Framework Agreement signed with Ministry of Mines in May 2012 Mining Concession issued August 2013 Coal Supply Agreement HoT Power Plant ESIA approved October 2013 ESIA Mine ESIA approved September 2013 Interim Social Development Plan under implementation 19

20 MINE OVERVIEW CONCESSION MAP & RESOURCE BLOCKS Source: Company 20

21 MINE OVERVIEW RING FENCING OF REQUIRED RESOURCES Concession coal resource currently at +4Bt Previous Mine area Drill Spacing Mining Concession Issued August 2013 ESIA approved October 2013 Mining area identified in South Block to feed the 300 MW power station 810Mt mineable JORC resource 120Mt Measured coal resource sufficient to supply power plant for 25 years (ca. ROM 50 Mt) plus a 40% contingency (ca. ROM 20 Mt) Key for bankable CSA between mine and power plant Source: Company Updated Mine area Drill Spacing Source: Company 21