OM Holdings Limited An Integrated Manganese Producer ASX Code: OMH

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1 OM Holdings Limited An Integrated Manganese Producer ASX Code: OMH Website: Bootu Creek Manganese Visit 7-9 November 2005

2 Disclaimer This presentation may contain forward looking statements that are subject to risk factors associated with commodities businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Page 2

3 Agenda Background Strategy People Capital Structure Financial Performance Markets Integrated Manganese Business Financials Summary Page 3

4 Strategy Build an integrated manganese business Add value at Bootu Creek Manganese Exploration Expansion option Service the rapidly growing Chinese steel market Qinzhou expansion Leverage off marketing networks Maintain prudent financial position Page 4

5 People Executive Experienced, international team Low Ngee Tong (Chief Executive Officer) Seetoh Kwok Weng (Operations Director) Heng Siow Kwee (Finance Director) Trevor Tennant Paul Chapman Non-Executive Yeo Wee Kiong (Chairman) Bill Mackenzie Julie Wolseley Page 5

6 Capital Structure Issued Capital Listed ordinary Unlisted options (post ESOP) Major Shareholders Institutions Strategic partners Board/Management Top 20 Shareholders Market Capitalisation 116.3m 4.0m 120.3m 30% 5% 33% ~75% $140m Page 6

7 Financial Performance Track record of growth Revenue Net Profit After Tax Dividends A$ Millions Year A$ Millions Year A$ Cents Per Share Year Dec Half June Half Outstanding Half Year Revenue $151m, NPAT $6.7m Contributions from all operations Page 7

8 China... The continuing positive impact of China % of total 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% China's Share of World Usage Copper Aluminium Zinc Nickel Steel Iron Ore (Trade) China has gone from 7 10% of world demand for the main base metals in 1993 to 20 25% of world demand in 2003 Even allowing for a slowdown from current growth rates, China is likely to account for 30%+ of world demand by 2010 Source: Macquarie Bank Research Sept 2005 Page 8

9 Steel Production...Production cuts elsewhere offsetting booming Chinese growth Monthly Crude steel prodution (annualised) Rest of world China mt (SAAR) mt SAAR 90% of Mn consumed in steelmaking 4 th most widely used metal behind iron, aluminium and copper Source: Macquarie Bank Research Sept 2005 Page 9

10 Chinese Steel Markets Reasons to be optimistic about steel prices in the medium term: Chinese government determined that China will not be a major exporter in medium term Industry capacity utilisation likely to remain higher than in past 95% plus Supply side more disciplined (in part due to concentration) and production cuts have come through much quicker Page 10

11 Chinese Steel & Manganese...Manganese imports into China expected to increase 450 6, ,000 Steel Production (Millions Tonnes) ,000 3,000 2,000 Mn Ore Imports (000's Tonnes) , Steel Production Year Mn Ore Imports 0 Sources: Tex Report, CRU, Metal Bulletin, OMH internal forecast Page 11

12 Manganese Ore Pricing US$ per Mn Unit Actual Avg Forecast Long Term Period Current FOB Price Level Source: Macquarie Bank Research Sept 2005 Page 12

13 Agenda Background Integrated Manganese Business Bootu Creek Manganese Qinzhou Ferro-Alloy Smelter Singapore Marketing & Logistics Financials Summary Page 13

14 Value Chain Third Party Mines 400kt Mn Adding value from mine to market Chinese Ferro-Alloy Smelters 340kt Mn 350kt Mn Bootu Creek Manganese 410kt Mn Singapore Marketing & Logistics Asian Steel Market 70kt Mn 50kt Mn 75% 25% Qinzhou Ferro- Alloy Smelter 60kt Ferro Alloy OMH GEMCO Page 14

15 Bootu Creek Manganese Overview Project Development Exploration Expansion Option Acquisition from GEMCO Page 15

16 Major Milestones Nov Sep Oct Sep Sep Aug Nov Acquisition from Scriven Exploration agreement with NLC First drill hole JV with GEMCO (25%) 26,000m drilling completed Feasibility completed Regulatory approvals, site access Page 16

17 Flow Sheet Open Pits -Shekuma -Go Go -Chugga -Tourag Processing Plant Road Haulage Muckaty Rail Siding ~60 kms ~800 kms Darwin Port Chinese Ferro Alloy Smelters Page 17

18 Construction Timetable % Cost Forecast Total Activity Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Complete To Date Cost Cost A$'000's A$000's A$000's Site Earthworks 96% Accomodation 100% 3, ,532 Haul Road 99% 11, ,080 Mine Offices/Lab 90% Communications 89% Water Supply 100% Rail Facilities 79% Port Facilities 83% 1, ,493 Processing Facility 39% 8,816 13,848 22,664 Mine Development 75% 3,095 1,025 4,120 Contingency 0% - 1,000 1,000 Note: All amounts are 100%, Current OMH share is 75% 64% 28,651 16,301 44,952 Page 18

19 Process Plant Main critical path item Major components in place Drum plant pre-commissioned December 2005 Delays in structural steel from China Mobile crushing circuit Interim solution First production March / April 2006 Full rates within one month Page 19

20 Production/Logistics Annualised rates: ,000 tpa Product mix: lump 75%, fines 25% Grade ~45%, Phos at 0.04% Road haulage 2 triples, 5-6 round trips per day Rail haulage 46 rail wagons on rental, train every 2 days Shipping 2 ships per 25,000 tonnes each Page 20

21 Major Contracts Mining Processing Road Haulage Rail Haulage Stockpile & Ship Loading Site Services Macmahon Macmahon Mitchell Freightlink CFCLA Patricks Darwin Port Authority ESS SGS Prime Schedule of Rates Labour / Plant Hire Rail haulage Rail wagon rental Train unloading, stockpile, shiploading Port facilities Catering Laboratory Power Page 21

22 Resources & Reserves Resources 11.1m 28% Mn Long life project Reserves Proved 1.35m 34% Mn Probable 4.26m 24% Mn Life of Mine 5 years based on reserve 7 years expected with upcoming high wall drilling Further extensions via resource conversion/exploration Note: All amounts are 100%, Current OMH share is 75% Page 22

23 Exploration Significant exploration program 2 exploration geologists required $2m/20,000m commencing April 2006 Almost double existing drilling Objectives Double resource / reserve base / life of mine Create expansion option Note: All amounts are 100%, Current OMH share is 75% Significant potential to add value Page 23

24 Exploration Movie of regional geology and infrastructure Page 24

25 Expansion Option 1 million tonne pa expansion Market conditions Expanded resource base Action required 1 digger / 2 trucks Larger drum or new module Additional accommodation Road, rail & port expand capacity Increased production Medium term option Incremental cost Page 25

26 GEMCO Acquisition Acquisition of GEMCO s 25% JV interest Consideration of US$15.32m payable US$10.0m on settlement US$2.66m by 31 December 2006 US$2.66m by 31 December 2007 Agreement in principle Detailed documentation to follow Funding Equity placement A$20m Subject to shareholder approval Building on the strategy Page 26

27 Qinzhou Ferro-Alloy Smelter Overview Operations Competitive advantage Growth Page 27

28 Flow Sheet Furnace Key Inputs 16.5 MVA Product Mix Coke Silica SiMn Mn Ore Furnace Flux 16.5 MVA HcFeMn Mn Slag Lime McFeMn Electric power Furnace 3.5 MVA SiMn/HcFeMn product mix variable depending upon best margin SiMn/HcFeMn 45k tpa, 15k tpa Page 28

29 Operations Capacity 60,000 tpa ferro alloy 2005 production ramp up Expect ~25,000 t Impacted by Ramp up Major maintenance Power availabilty (hydro down due to drought) Steady state performance expected in 2006 Page 29

30 Freight Differentials Significant competitive advantage Ferro Alloy From To South Korea US$/t To Japan US$/t To Shanghai US$/t North China 25 N/A 19 South West China Qinzhou Page 30

31 Growth Planned capacity end ,000 tpa ferro alloy Shanghai Shenjia joint venture Shanghai Shenjia funds expansion, earns 30% BCM input to increase to 150,000 tpa Mn ore Strategic stake in Longli/Lang Fang plus Qinzhou ferro-alloy businesses 1 million tpa Mn ore 500,000 tpa ferro alloy Page 31

32 New Value Chain Adding value from mine to market Third Party Mines Chinese Ferro-Alloy Smelters 400kt Mn 400kt Mn 250kt Mn Bootu Creek Manganese 550kt Mn Singapore Marketing & Logistics Asian Steel Market 150kt Mn 150kt Mn 100% Qinzhou Ferro- Alloy Smelter 150kt Ferro Alloy 70% 30% OMH OMH SS Page 32

33 Singapore Marketing & Logistics Overview Operations Page 33

34 Objectives Create an integrated manganese business k Mn ore production 400k Mn ore trading Supply Qinzhou and partners Supply ~ 20% of China s Mn ore Capture margins Logistics, marketing, distribution Market other products Iron ore, chromite Page 34

35 Operations Services provided Shipping Logistics Trade finance Market analysis / advice Marketing network Head office - Singapore Two branches - Southern & Northern China Door to door distribution centre Beijing/Tianjin Agents India, Japan & Korea Favourable tax regime Page 35

36 Agenda Background Integrated Manganese Business Financials Physicals Cost Structure Project Finance Summary Page 36

37 Physicals Actual Actual Actual Forecast Forecast Unit Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 BOOTU CREEK MANGANESE PROJECT Mining - Waste 000's BCMs ,140 4,250 - Ore 000's Tonnes ,200 1,200 - Grade % 0% 0% 23% 27% 26% Manganese Product - Lump 000's Tonnes Fines 000's Tonnes Grade % 0% 0% 0% 45% 45% QINZHOU FERRO-ALLOY SMELTER Ferro Alloy 000's Tonnes TRADING Manganese Ore 000's Tonnes Chrome Ore 000's Tonnes Manganese Alloys 000's Tonnes Chrome Alloys 000's Tonnes Page 37

38 Cost Structure - BCM Cash Operating Costs Royalties 7% Administration & Sundry 10% Port Facilities & Loading 7% Mining 32% Rail Haulage 24% Processing 15% Road Haulage 5% Sustaining capital <$1m pa Page 38

39 EBITDA EBITDA US$2.50 Mn US$2.75 Mn Manganese Price +/- US$0.10 Exchange Rate +/- 1 cent Diesel Fuel +/- 10 cents $22m pa $30m pa $3.4m pa $1.1m pa $1.2m pa Page 39

40 Project Finance Approved by CBA Development Facility Outstanding Balance Limited recourse to OMH $20m $13m development $7m ongoing working capital A$ Millions Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Hedging requirements 6 Months Ended 40% net US$ exposure Minimum 12 months cover in place Page 40

41 Balance Sheet 25% interest in Territory Iron OMH retains iron ore marketing rights Debt Limited recourse facility Bootu Creek Manganese Well capitalised post GEMCO acquisition Page 41

42 Agenda Background Integrated Manganese Business Financials Summary Page 42

43 Summary Clear, focused strategy Experienced, international team Track record of strategic growth Downstream value adding Qinzhou Ferro-Alloy Smelter Singapore Marketing & Logistics Bootu Creek Manganese Management plan in place for project delivery GEMCO acquisition Significant growth potential Page 43

44 OM Holdings Limited An Integrated Manganese Producer ASX Code: OMH Website: Bootu Creek Manganese Visit 7-9 November 2005