Indonesian Coal Production and Exploration

Transcription

1 Indonesian Coal Production and Exploration Investor Presentation May 2012

2 Disclaimer Certain statements contained in this presentation, including information as to the future financial or operating performance of Orpheus Energy Limited ( Orpheus or OEG ) and Orpheus Energy Group Pty Ltd ( OEGPL ) and its projects, are forward looking statements. Such forward looking statements may include, among other things, statements regarding targets, estimates and assumptions in respect of mineral reserves and mineral resources and anticipated grades and recovery rates, production and prices, operating costs and results, capital expenditures, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions; are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Orpheus/OEGPL, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies; and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward looking statements. Orpheus/OEGPL disclaims any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise. The words believe, expect, anticipate, indicate, contemplate, target, plan, intends, continue, budget, estimate, may, will, schedule and similar expressions identify forward looking statements. All forward looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward looking statements due to the inherent uncertainty therein. Competent Person s Statement: The following statements apply in respect of the information in this announcement that relates to mineral resources, exploration results and exploration targets. The information is based on, and accurately reflects information compiled by Wes Harder, who is a Member of the Australasian Institute of Mining and Metallurgy. Wes Harder is a Director of Orpheus Energy Limited and is a Geologist who has sufficient experience which is relevant to the style of coal mineralisation and type of deposit under discussion and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Wes Harder consents to the inclusion in the report of the material, based on his information, in the form and context in which it appears. * JORC- Exploration Target It is common practice for a company to comment and discuss its exploration in terms of target and size type. The information in this presentation relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. The potential quantity and grade is conceptual nature, there has been insufficient work completed to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource. 1 Indonesian Coal Production and Exploration Investor Presentation May 2012

3 Investment Highlights Orpheus Energy Limited ( OEG ) is a coal producer focusing on coal production and exploration in Indonesia. Quality portfolio of production and near-term production assets - proximity to infrastructure Strong Indonesian JV partner, PT Mega Coal International - brings future Indonesian coal projects and infrastructure opportunities Experienced board and management team in Australia and Indonesia Attractive multi project potential economic returns with low capex and opex OEG not affected by the recent legislative changes by the Indonesian government concerning foreign ownership 2 Indonesian Coal Production and Exploration Investor Presentation May 2012

4 Corporate Overview ASX Ticker OEG Substantial Holders Shares on issue ~115M Options ~17M Coalworks 33.3% Board and Management 10.5% Share price $0.13 Paul Fillion 7.2% Market capitalisation* ~$18m Cash $3.0m (March 2012) * Fully diluted basis 3 Indonesian Coal Production and Exploration Investor Presentation May 2012

5 Orpheus Directors Wayne Mitchell AASA, AAIM (Chairman) Mr Mitchell is a qualified accountant with over 30 years extensive senior management experience in the natural resources sector, both in Australia and in South East Asia. David Smith B Econ, Dip Mgmt - Executive MBA (Executive Director) Mr Smith was previously an investment banker for 15 years, where he advised and raised capital in a range of industries, and particularly for emerging coal and iron ore companies. He was most recently Head of Corporate Finance at BBY Limited and prior to that, he worked at Ord Minnett and then JPMorgan Chase. Wesley Harder BSc. Dip SIA. MAusIMM.(Director, Exploration Manager) Mr. Harder is a former coal analyst with Jackson Ltd stockbrokers. He has also worked as a field exploration geologist for fifteen years in Australia and its near neighbours. Tony King B Sc. BA. (Non-Executive Director) Mr King is a professional Metallurgist and qualified geologist with over 20 years operational and technical experience within the resource industry. He has also been involved in design and construction of coal washing plants and has participated in a wide variety of resource projects. 4 Indonesian Coal Production and Exploration Investor Presentation May 2012

6 Experienced Management Team David Oastler Bcom. CA. - Chief Financial Officer David is a Chartered Accountant with over 25 years experience with various SMEs, listed and private company groups as well as services to various governmental agencies. Nathan Bartrop LLB, B Com, ACIS Company Secretary Mr Bartrop is a Chartered Secretary. He previously was Assistant Company Secretary at Mirabela Nickel Limited, and prior to that, he worked at ASX for 2 years as a Listings Adviser. Mr Bartrop also has previous experience in litigation and dispute resolution. Rudi Hasan Putra Senior Geologist, Jakarta Office Mr Putra has a Bachelor Degree in Geological Engineering, Faculty of Mineral Technology, Trisakti University, Jakarta. Mr. Hasan has more than 15 years experience in the Indonesian Mining Industry. Mr. Hasan worked from 1994 to 2011 as Geologist for various mining companies in Indonesia. Mr. Putra joined OEG in June Hamzah Sidik Mining Engineer, Jakarta Office Mr. Sidik has a Diploma in Mining Engineering from Politeknik Muara Teweh, East Kalimantan. Mr. Sidik worked from 2005 until 2011 for various mining companies in Indonesia. Mr. Sidik joined OEG in April Ardiansyah Ahmad Situmorang Accountant, Jakarta Office Mr. Situmorang has studied Economics and Business Administration in Jakarta. He worked from 2004 to 2009 for the Singapore International School, Jakarta, as Finance and Accounting Supervisor. From 2010 to October 2011 he worked for Putera Sampoerna Foundation as an Accountant. 5 Indonesian Coal Production and Exploration Investor Presentation May 2012

7 Why Indonesia? Indonesia is a key player riding on the strong and growing export coal market China s Coal Imports ( ) India s Coal Imports ( ) Indonesia and Australia remain the key players in the export coal market. Indonesia has been the fastest growing exporter, overtaking Australia as the largest supplier to the global seaborne market in China plans to add 1TW new coal-fired power plants by the end of 2020, triple the size of its total capacity from the current 650GW. Demand visibility from India is also strong as with plans to add 100GW of power plants over the next five years. India is even more relevant to Indonesia s exports since its imports the bulk of its total coal from Indonesia. The Indonesian coal sector has risen 12% in Q to outperform the Jakarta Composite Index. Source: Bloombergy, CIMB 6 Indonesian Coal Production and Exploration Investor Presentation May 2012

8 Why Indonesia? Attractive Valuation Compared to Australian Coal Companies Indonesian coal producers are priced at a significant discount to their Australian peers. Source: Bloomberg, 8 May 2012 Better Operating Margin compared to Australian coal companies Due to lower cost of production, Indonesian coal companies have better operating margins compared to their Australian peers. The lower cost of production will provide additional buffer against coal price fluctuation, more so in view of the current volatile market condition. Source: Bloomberg, 8 May Indonesian Coal Production and Exploration Investor Presentation May 2012

9 Growth Strategy NEAR TERM OBJECTIVES Ramp up production at Kintap ADK Project to 50,000t per month To move the B26/B34 project back into production Acquire near term coal production assets MEDIUM TERM OBJECTIVES Develop near term production assets Consolidate mining at B26/B34 project steady production rate of 30,000t per month Increase production over portfolio of assets Supported by strong local partner in PT Mega Coal 8 Indonesian Coal Production and Exploration Investor Presentation May 2012

10 PT Mega Coal International Founded in 2005, and is a privately-held coal mining company with an extensive local network and mining experience. Key Management: Ir Nugroho Suksmanto (Chairman & CEO) and Mike Rhodes (President-Director). A joint venture partner in the Oorja Coal Mine in East Kalimantan, which has been in operation for 3 years and according to PT Mega Coal International produces 80,000 tonnes per month. Holder of a number of exploration & mining concessions in Kalimantan. Strategic Alliance with Orpheus for exploration & development of further concessions and infrastructure assets in Indonesia. 9 Indonesian Coal Production and Exploration Investor Presentation May 2012

11 Orpheus Projects ORPHEUS ENERGY LIMITED Kintap ADK Project South Kalimantan B26 Project East Kalimantan B34 Project East Kalimantan Papua Project Papua 50% 51% 51% 51% Currently producing Targeting 50,000t per month production Existing infrastructure Exploration program ongoing Expected to recommence production shortly Targeting 30,000t 40,000t per month production Port allocation ~27km away Located ~60km west of B26 Exploration target of 5-10Mt* Drilling program planned for Q to establish a JORC resource Move B34 into production in late 2012 Highly prospective greenfield exploration Located within 40km of the coast Exploration & drilling program to commence in Q2, Indonesian Coal Production and Exploration Investor Presentation May 2012

12 Kintap ADK Project In March 2012, Orpheus secured a 50% interest in Orpheus s JV partner PT Mega Coal s ADK operating coal mine located in South Kalimantan, Indonesia The joint venture provides that OEG will earn 50% of net profits of ADK s coal mine operations. Minimum A$15 per tonne cash profit margin targeted In April 2012, Orpheus shipped approximately 28,000 tonnes of ADK thermal coal Existing infrastructure in place port allocation secured via two separate ports PCMU and SSDK - ~15km away loaded onto barges for shipment Exploration programme ongoing with JORC resource drilling underway Coal mined from the ADK mine to date has an average calorific value of 5400 Kcal/Kg (ADB), and is low in ash (6%) and sulphur (0.4%). 11 Indonesian Coal Production and Exploration Investor Presentation May 2012

13 Kintap ADK Production and Loading 12 Indonesian Coal Production and Exploration Investor Presentation May 2012

14 B26 Project B26/B34 project comprises two areas, B26 and B34. B26 is located in East Kalimantan, ~100km from Balikpapan and has a total exploration target of 2.8Mt to 4.5Mt* of high grade thermal coal with some coking coal potential (current JORC Resource of 1.13Mt). Port allocation, ~27km away, has been secured. Haul road improvements to facilitate streamlined truck movements are almost completed. Part of B26 has already had trial mining in 2011 and the next stage mine plan has been developed by Minarco Mine Consult: 4 potential mine pits for up to 246,000 tonnes Target production rate of 30,000 tonnes per month Target SSCC / thermal coal split of 15% / 85% Target strip ratio of 15:1 45 o of overall highwall slope, to generate the pit shells, situated to the north and south of the previously trial mined area. Sales offtake agreement currently being negotiated to reflect current prices. Mining contractor about to be appointed and PRODUCTION IS EXPECTED TO RECOMMENCE Q Indonesian Coal Production and Exploration Investor Presentation May 2012

15 B34 Project B34 is located ~60km west of B26 and it is ultimately planned to be mined using the same road/port infrastructure. B34 has an exploration target of 5-10 Mt of coal and target calorific value of 7200 to 8100 Kcal/kg*. Drilling program is planned for Q to establish a JORC resource. B34 has had historical geological mapping and reported the following high quality coal samples: B3: low ash (1.5%); low total moisture (8.3% ar); energy content of 7,123Kcal/kg. B4: low ash (1.9%); low total moisture (6.5% ar); energy content of 7,235Kcal/kg. Following conversion of B34 Exploration KPs into Exploitation IUPs, scheduled for Q4 2012, mining from B34 is planned to double OEG s total production out of the area. 14 Indonesian Coal Production and Exploration Investor Presentation May 2012

16 Papua Project Highly prospective greenfield exploration area located within 40km of the coast in Papua. Coal outcrops throughout the tenement area Field Exploration and drilling program to commence in Q Indonesian Coal Production and Exploration Investor Presentation May 2012

17 Additional Indonesian Projects Orpheus has progressed plans to expand the Strategic Alliance with PT Mega Coal with an ongoing acquisition program underway. A number of projects have been identified for possible acquisition located in the Kintap area of South Kalimantan. All have good infrastructure including good proximity to barge loaders or appropriate port sites and transport options. The framework has been developed to allow completion of the following activities: Technical review of each project; Memorandum of Understanding with each owner; Term Sheet for Orpheus Participation; and Completion of legal due diligence. 16 Indonesian Coal Production and Exploration Investor Presentation May 2012

18 Australian Projects Hodgson Vale Project is located in SE Queensland in proximity to other producing coal mines Past drilling shows coal measures exist in the EPC with medium grade export quality coal potential Drilling is planned later in 2012 to explore for coal in the southern zone of EPC 1145 Ashford Past drilling shows potential for chemical grade Ground Calcium Carbonate (GCC) Orpheus proposes to outline zones of high quality limestone suitable for GCC Exploration target of Mt* of high quality ground calcium carbonate (with target white rating index of 89-91%) Drilling is planned in Q to delineate a JORC resource Wingen Project lies just north of Unimin s operating bentonite mine. Past work shows potential for high quality bentonite Orpheus s joint venture partner has previously located outcropping bentonite on EL7142 Existing granted EL7124 has been extended by ELA 3657 A drilling program is scheduled to commence in Q to delineate a JORC resource 17 Indonesian Coal Production and Exploration Investor Presentation May 2012

19 Investment Highlights Orpheus Energy Limited ( OEG ) is a coal producer focusing on coal production and exploration in Indonesia. Quality portfolio of production and near-term production assets - proximity to infrastructure Strong Indonesian JV partner, PT Mega Coal International - brings future Indonesian coal projects and infrastructure opportunities Experienced board and management team in Australia and Indonesia Attractive multi project potential economic returns with low capex and opex OEG not affected by the recent legislative changes by the Indonesian government concerning foreign ownership 18 Indonesian Coal Production and Exploration Investor Presentation May 2012

20 Appendices 19 Indonesian Coal Production and Exploration Investor Presentation May 2012

21 Summary of B26 Coal Quality Resource Category Summary of the B26 Coal Resource by JORC Classification Block 2 Indicated Block 2 Inferred 20 Indonesian Coal Production and Exploration Investor Presentation May 2012 Total Density Average Thickness ~ m ~ m ~ m Tonnes (million) Total Moisture (ar)% Ash (adb)% Volatile Matter (adb)% Fixed Carbon (adb)% Total Sulphur (adb)% Gross Calorific Value (adb)% 6,520 7,080 6,600 B26 Coal Exploration Target by Tenement License Target (Mt) Comment Block Not inclusive of the JORC resource of 1.13 Mt Block Awaiting 2012 coal drilling results. Total B26. Average CV range 5,950 to 7,100 kcal/kg (adb).

22 Coal Production in Block 2 21 Indonesian Coal Production and Exploration Investor Presentation May 2012

23 B2 Coal Quality No Laboratory Client Mass Sample Block 2 Stockpile and Pit Coal Quality Assays Grab Samples Sampl e Air Drying Residual Total Moisture in the Analysis Received Loss Moisture Moisture sample Ash Volatile Fixed Total Calorific Calorific Relative Crucibl e Matter Carbon Sulphur Value Value Density Swelling ID No. ID Kcal/g Kcal/g HGI No. 1 KT.00744/11 2 KT.00744/11 3 KT.00745/11 SP No.1 SP No.2 SP No.3 (gr) % % % % % % % % ar adb ar Adb Adb Adb Adb Adb Daf 2, , , KT.13449/10 Pit 1 28, KT.13450/10 Pit 2 28, KT.00242/11 Pit 3 5, KT.00243/11 Pit 4 7, KT.00244/11 SP No.2 3, Total (Source: Ravensgate, March 2011) 22 Indonesian Coal Production and Exploration Investor Presentation May 2012

24 B6 Coal Quality No Coal Quality Sample Assays for Block 6 Laboratory Client Mass Air Drying Residual Total Moisture in the Ash Volatile Fixed Total Calorific Calorific Relative Crucible Analysis Sample Sample Received Loss Moisture Moisture Matter Carbon Sulphur Value Value Density Swelling sample ID No. ID % Kcal/g Kcal/g HGI No. % % % adb % % % % (gr) ar adb ar Adb Adb Adb Adb db Daf 1 KT.9013/07 BBA19-S1 4, KT.9014/07 BBA19-S2 4, KT.11650/07 KP6-25 C S1 4 KT.11651/07 KP6-25 C S2 7, , KT.11652/07 6 KT.11653/07 7 KT.15963/07 8 KT.15964/07 9 KT.15965/07 10 KT.15966/07 KP6-17 C - S1 KP6-17 C - S2 KP6-01 AC (S1&S2) KP6-07 AC (S1&S2) KP6-25 AC S1 KP6-27 C (S1&S2) 1, , , KT.15967/ Total (Source: Ravensgate, March 2011) 23 Indonesian Coal Production and Exploration Investor Presentation May 2012

25 Enquiry and Contact Australia Level 5 44 Miller Street NORTH SYDNEY NSW 2060 Orpheus Energy Limited (ASX Code: OEG) Indonesia Menara Anugrah Lt. 27, Kantor Taman E.3.3, Kawasan Mega Kuningan, Jakarta Phone Fax Phone: Fax Wayne Mitchell Executive Chairman David Smith Executive Director info@orpheusenergy.com.au 24 Indonesian Coal Production and Exploration Investor Presentation May 2012