COALWORKS LIMITED ANNUAL GENERAL MEETING CHAIRMAN S ADDRESS

Transcription

1 COALWORKS Limited 19 November 2009 Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney NSW 2000 Via: COALWORKS LIMITED 2009 ANNUAL GENERAL MEETING CHAIRMAN S ADDRESS

2 Chairman s Address Good morning ladies and gentlemen and welcome to our 2009 Annual General Meeting. I am Wayne Mitchell and I will chair our meeting today. A quorum is present and I declare the meeting open. The global financial crisis has affected all sectors, not the least resources; however, Coalworks has remained focused on our strategy of developing our resources and building the asset backing of the company. Our corporate objective is to accumulate large coal inventories and rapidly bring them into production and profit. We aim to become a coal industry leader through superior performance and innovation and with the highest standards of integrity. Much of what has been done over the past year has positioned Coalworks well for the tough operating conditions all sectors are now experiencing and will continue to experience in the year ahead. I am very pleased to report that in the last year the Coalworks team has achieved a number of important milestones: Coal Inventory Accumulation Oaklands The year has seen considerable development, particularly at our flagship project, Oaklands, where most of our efforts and expenditures occurred. One year ago, our inferred JORC resource was 280Mt coal and now it is 822Mt 121Mt measured (25 years of conservative mine life), 572Mt indicated, and 129mt inferred. This is just short of a threefold increase since the company listed. New acquisition (Vickery South) Last month, we received formal notice that we had acquired the Vickery South soft coking and thermal coal project, located in the Gunnedah basin just south of Whitehaven s Canyon coal mine. We are confident about the potential of this new acquisition. A resource of 50 to 70 Mt of coking/thermal coal is targeted which we believe has the potential to produce a high export quality coal of more than 2 million TPA, for an estimated mine life of 14 years. Bankable feasibility study Our Bankable feasibility study (BFS) is underway with Minarco-MineConsult as our appointed BFS study Manager, supported by an expert study team, including Geos Mining, RW Corkery & Associates, Pennington Scott and In Site Geology. Our BFS study in its current form is expected to be complete in 2010.

3 Coal Products and Markets Following the global financial crisis and rise in the Australian dollar, export coal margins have come under pressure. Accordingly, as part of our BFS program, we developed a robust coal product slate for Oaklands to strengthen the Oaklands Economic Model. The coal product slate includes: 1. Export coal 2. Briquettes 3. Gasoline and/or methanol 4. Power Export coal and briquettes Regarding export coal and briquettes, we see the Asian region as our prime target for the export of our sub bituminous coal. For example, both India and China will post 6-8% growth this year while Japan and Taiwan are expected to have strong growth in energy demand, some of which will be met by coal-fired power stations. We have commenced offtake negotiations targeting long term agreements specifically in India, where customers have power plants due for commissioning in late 2012 through At that time, Coal India, one of the world s largest coal producing companies, has projected the estimated domestic supply shortfall from domestic mines in India to be 150Mt, possibly 200Mt, around the same time as Oaklands is scheduled to produce coal. Overall, India plans to generate an additional 180,000 MW of power in the next 7 years. China already produces 70% of its electricity from coal, and with the ever increasing electricity demand its dependence on coal will continue to grow, providing continued sale and JV opportunities for Australian producers. A combination of rising electricity demand to support economic growth and ongoing urbanization, domestic supply factors and government policies are expected to result in continued growth in China s imports of thermal coal over the medium term. China s imports of thermal coal are projected to increase at an average annual rate of 12 per cent a year to 65 million tons in According to an ABARE report, Thermal Coal Outlook to , Coal is expected to remain an important source of new electricity generation capacity in developing Asia because of its low cost, reliability of supply and wide geographic spread of producers. We are on target to commence mining coal at Oaklands within 2013 and have every confidence we can secure Offtake Agreements for the final Oaklands Product Slate, supported by market expectations of firmer coal prices in 2010 onwards.

4 CTL (clean coal processing) In line with positive economic growth, oil consumption such as that of China and Middle East is also expected to increase, underpinned by the continued use of oil as an energy source for heavy industries. Our coal quality is ideal for gasification. Therefore, at the same time as developing an export market, we are evaluating a CTL option at mine mouth with the intention of producing export quality liquids, such as gasoline or methanol, as value added products to achieve wider market coverage and highest profitability. We believe the continued demand will keep gasoline as a premium product with strong prices and potential and therefore an important target for the Oaklands product slate. Power plant at Oaklands Concurrently with our CTL investigations, we are in discussions with the NSW Government to seek approval for an onsite or nearby power plant, using the latest in clean coal technologies. Discussions with potential turnkey partners are underway. Power demand is forecast to grow in New South Wales with electricity price increases predicted as a result of the impact of the proposed emissions trading scheme scheduled for introduction by the Australian Government. Hodgson Vale: Coal Over the year, Hodgson Vale resource targets were reviewed and drilling results were compiled. Two main zones have been targeted for future drilling. A number of field visits were made by senior management and discussions have been held with representatives from Queensland Railways and the Port of Brisbane. Ashford: Limestone A drilling program was completed and a review of the potential quality required to produce Ground Calcium Carbonate (GCC) was undertaken. Industrial mineral consultants advised us that the grades obtained were sufficient to achieve brightness specifications for selected GCC products. Offtake agreements for GCC products are now being targeted. Corporate Governance The board is committed to achieving the highest standards of corporate governance and social responsibility and has adopted a framework that meets the ASX principles of Good Corporate Governance. We will continue to focus on business fundamentals, backed by sound financial and capital management. We are managing resources prudently, including our cash availability.

5 I want to thank my board and colleagues for their support and input. Each of our directors and management has made substantial and diligent contributions to the board s work and the development of the company. This year, Tony Teng retires by rotation and offers himself for re-election. Tony has been a valued member of our board, and company secretary over the past three years, and, subject to your vote, we look forward to his continuing contribution. And finally, I want to thank our shareholders for their continuing support of the company. We believe that we have a robust, sound Coalworks business model and the potential to be an emerging leader in the Australian coal industry. We look forward to sharing our progress with you. Wayne Mitchell Chairman Coalworks Limited