Ncondezi Coal Company Investor Presentation Africa Mining Congress, January January, Ncondezi Coal Company All Rights Reserved

Transcription

1 Ncondezi Coal Company Investor Presentation Africa Mining Congress, January 2012 January, Ncondezi Coal Company All Rights Reserved

2 Disclaimer Important Notice 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 Overview of Ncondezi Coal Company Description Share price (GBp) Shares Market cap. Ncondezi is an AIM listed coal exploration and development company with 4 licences in the Tete province of Mozambique 121m 74m (US$110m) Net cash c.$30m as at January 2012 Main project Ncondezi Project licences 804L & 805L (100% owned) Exploration status Completing DFS 2 by Q JORC coal resource 1,661Mt 3 Mining method Open pit Target first production Q / Q Target production Up to 10Mtpa saleable product Target coal product Export thermal coal c.6,300 kcal/kg AD, sulphurc.1%, c.22% ash Name Graham Mascall Nigel Walls Manish Kotecha Hanno Pengilly Dwight Jefferys David Eshmade Richard Stuart Estevão Pale Colin Harris Mark Trevan Nigel Sutherland Name Ncondezi Management & Board Position CEO COO CFO Corporate Development Chief Geologist Country Manager Non-Executive Chairman Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Ncondezi Coal Company Shareholder Structure Top Institutional shareholders Holding Henderson 7.0% Investec 6.2% Free Float 49% Strata Ltd 45% Potential metallurgical product to be further confirmed 1 As at January 25, Definitive Feasibility Study 3 As at December 21, 2011 Spearpoint 5.9% Evergreen 5.0% JPMorgan 1.5% M&G 1.5% Management EBT 6% 3

4 Key Milestones Timetable Completed Extension of Ncondezi Project licences Feb 2010 Maiden JORC classification Feb 2010 Scoping Study completed Apr 2010 IPO (US$52m) Jun 2010 Placing of US$36.5m Jan % strategic Chinese partner investment Jan 2011 Completion of DFS drilling Sep 2011 Completion of OoM 1 greenfield rail and port study Sep 2011 Completion of Phase I power study Dec 2011 Completion of Phase I coal gasification study Dec 2011 Upcoming Additional resource updates Q Update on coking coal potential Q Coal gasification burn tests completion Q Completion of Phase II power study Q DFS completion Q ESIA 2 completion Sep 2012 Begin project financing discussions H Mining licence application H Initiate mine construction H First coal production H Interim resource update Dec 2011 Infrastructure agreement signed with Rio Tinto Jan Order of Magnitude 2 Environmental and Social Impact Assessment study 4

5 Mozambique is an Attractive Environment for Investment Political and economical stability One of Africa s fastest growing economies Politically stable since the end of civil war in 1992 Considered successful example of post-conflict reconciliation President re-elected in elections in October 2009 Key mining sector ministers reappointed for further 5 years High inflows of Foreign Direct Investment Strong commercial links with South Africa as its main trading partner Attractive mining environment Strong resource development and investment track record BHP Mozal US$2 billion Kenmare Moma US$500 million Sasol Gas Pipeline US$1.2 billion Vale Moatize Project US$1.3 billion Rio/Tata Steel Benga Project US$516 million Established and transparent licence granting process Straight forward transition from exploration to mining licences Realistic/attractive fiscal regime 5

6 Export Coal Production (Mtpa) Mozambican Coal Story Heating Up Large scale projects being developed in Mozambique Coal development concentrated in the Tete Province Potential to export over 70Mtpa of coking and thermal coal by 2020 Significant mining, power and steel companies already committed to developing projects Coal development driving major transport infrastructure expansion for additional coal capacity Existing capacity only 5Mtpa Vale approved US$4.4Bn expansion on Nacala corridor Rio Tinto leading development of new transport corridor Coal potential motivating considerable consolidation of coal projects in the region Rio Tinto completed US$4.2bn Riversdale acquisition in 2011 Revuboe next? Potential for up to US$20bn to be invested in the region in the 10 years leading up to 2020 Company Coal Projects in Mozambiqe Project Target production (Mtpa) First coal Estimated Capex Vale Moatize ,950 Rio Tinto + Tata Steel Benga Rio Tinto Zambeze + Tete East n/a Jindaal Songa c Nippon + Posco Revuboe /2016 n/a Ncondezi Ncondezi ENRC Estima n/a 2015 n/a Beacon Hill Minas Moatize n/a Note: based on company and public information 1 Capex for c.3mtpa phase I operation Mozambican Coal Projects Production Ramp Up Beacon Hill Revuboe Ncondezi Rio-Tete East Rio-Zambeze Rio-Benga Vale - Moatize II Vale - Moatize I 0 Note: Excludes production projections for companies where there is limited publicly available information, including: Jindal, ENRC, Coal India, Essar, ETA Star, etc. 6

7 Ncondezi Project Ideally Located Close to Existing Projects and Rail Infrastructure 7

8 Ncondezi Project 6 Discreet Coal Blocks Identified 805L 804L River Block North East Block West Block North Block Central Block South Block East Block 8

9 Mozambique Well Positioned for Global Markets 9

10 Ncondezi Project - DFS Timetable Summary Q to Q3 2012: Mine, plant and cost optimisation Q3 2012: Completion of DFS Q4 2011: Coal washability test work complete Sep-2010: Initiation of DFS Work Programme Q to Q1 2012: Resource update Sep-2011:DFS drilling complete 10

11 Ncondezi Project - DFS Programme Update Drilling complete Over 306 new holes have been drilled (+52,000m of drilling) Closer spaced drilling from 1km down to 350m grid 4,700 samples sent to laboratories for wash tests Updated resource model in progress South, North and Central blocks complete East, West and River blocks expected in Q Optimisation programmes initiated Main optimisation programmes are: Wash plant Mine design Cost Targeting completion in Q DFS study target completion end Q Target to confirm viability of large scale open pit export thermal coal mine Fully funded to complete study 11

12 Ncondezi Project Latest JORC Coal Resources Resource update announced on 12 December, of 6 coal blocks updated South, North and Central blocks Total updated resource of 1.7Bt Results suggest final updated resource will be larger than maiden 1.8Bt resource classified in Feb 2010 Coal zones occur at or near surface on all three coal blocks More than 1.4Bt occurs at depths of less than 250m below surface Average coal zone thicknesses of between 26m to 86m Updated South Block resource 42% larger than maiden JORC coal resource 41% increase in measured and indicated coal resources to 605Mt Coal zones identified at surface and extend beyond 300m 810Mt occur at depths of less than 250m below surface Potential products An export thermal coal with c.20% ash. A domestic thermal coal product consisting of a high to low volatile matter and +30% ash Currently investigating domestic and international market for low volatile coals for gasification Updated Ncondezi Project JORC Coal Resource Total Tonnes In-Situ Resources (Mt) Block Volatile Matter Indicated Inferred Total South Block High Low Low + High North Block High Low Low + High Central Block High Total High ,085 Notes: Low Low + High ,661 TTIS = Total Tonnes In-Situ coal resource (GTIS resources with geological loss factors applied) Indicated resources are defined within areas where the spacing of boreholes with raw coal quality data is approximately 500 metres. Extrapolation of these areas is limited to approximately 250 metres Inferred resources are defined within areas where the spacing of boreholes with raw coal quality data is approximately 2,000 metres. Extrapolation of these areas is limited to approximately 1,000 metres "Low Volatile" coals have been devolatilised by igneous intrusions. Studies by Ncondezi indicate that these coals may be economic South Blocks - TTIS were estimated from the GTIS tonnages by applying a Geological Loss of 10% to Indicated resources and 15% to Inferred resources 12

13 Mozambican Thermal Coal Potential Mozambican thermal coals characterised by high CV and ash contents Market for Mozambican spec thermal coals is growing Modern power stations have capacity to burn coals with a wider range of heat and ash characteristics Most new power stations built in the growing economies of Asia China s entry into the seaborne market has increased demand and eroded the discount to traditional coals from SA and Australia Growth being driven by increasing coal demand from China and India where there is also an emphasis on lowering generation costs and diversify coal supplies Australia now exporting coals with ash content between 18-28% and reducing calorific values down to 5,300kcal/kg (NAR) IHS McCloskey launched Australian 5,500kc NAR FOB marker in Dec 2011 following significant increases in trading South Africa exporting coals with up to 30% ash and 5,300-5,400kcal/kg (NAR) mainly geared towards India Potential Mozambique Export Thermal Products Ncondezi Target Vale Riversdale Project Ncondezi Project Moatize Benga CV GAR (kcal/kg) c.6,000 <6,000 6,000 Ash % ad c Sulphur % c.1.0 N/A 0.6 Total Moisture % ar c Seaborne Thermal Product Benchmarks FOB Product Richards Bay Newcastle Kalimantan Country South Africa Australia Indonesia CV GAR (kcal/kg) 6,300 6,300 4,100 5,900 Ash % ad Sulphur % Total Moisture % ar McCloskey Newcastle FOB markers - monthly av. 5,500kcal (NAR) 6,000kcal (NAR) Diff as 6,000kcal (NAR) Date US$ US$ % Apr May Jun Jul Aug Sep Oct Nov Source: IHS McCloskey Dec

14 Coking Coal Update and Strategy Work completed to date 2 LD scout holes drilled in Q LD hole 5001 identified coal with reasonable swells and rogas (see table opposite) South and East block models currently being investigated completion end Q Resource model will highlight areas of potential for coking coal Areas that demonstrate good potential for coking coal will be followed up with a detailed LD drill programme Timing likely to be after resource model has been completed Q Metallurgical test results from LD holes would be expected in Q Results will confirm potential 14

15 Existing Transport Corridors Update Sena railway to Port of Beira Coal export options Sena line recently refurbished between Moatize and Port of Beira Berth 8 being refurbished for initial production from Vale and Rio Tinto of 5Mtpa starting H New coal terminal at Beira with expanded rail network for between 18-24Mtpa planned by Mozambican Government Distance to port Beira Nacala Chinde 575km c.885km 400km Connect Nacala railway line and port to Moatize Natural deep water port with potential capacity of +30Mtpa Requires c.200km of new railway line to connect to Moatize US$4.4Bn upgrade announced by Vale in November 2011 to increase capacity to 18Mtpa Vale and Malawian Government sign agreement for new rail through Malawi in April 2011 Target completion in 2014 Barge down the Zambezi and trans ship from Chinde Technical studies show that barging is feasible Initial capacity of 3Mtpa ramping up to 20Mtpa EIA completed in Q found that barging coal will cause no significant environmental damage Studies being lead by Rio Tinto 15

16 Potential for Middlings and Low Volatile Coal Products Being Investigated Production of export thermal product results in lower grade coal by-product or middlings which could be suited to several value accretive processes Fuel for coal fired power plant Coal gasification - to produce diesel fuel, methanol, glycol, hydrogen and or fertilisers CESUL Power Project Burn tests being undertaken at LURGI Tests evaluate relevant coal properties for coal gasification process Expected completion in Q A prefeasibility study on power production using coal middlings from the Ncondezi Project was completed in November 2011 Phase I power plant of 650MW Discussions with local power utility already underway for reserved capacity on new 6,000MW CESUL power line from Tete to South Africa via Maputo Ncondezi is undertaking a definitive feasibility study on a 3,200MW coal fired power plant Report due in Q

17 Environmental and Social Responsibility Environment, Social, Health and Safety responsibilities are integral to the way we do business Environmental Management Plan approved by Ministry of Environmental Affairs in Jan 2009 Applies to all 4 exploration licences Socio-economic baseline study completed Dec 2010 Full time Community Liaison Officer appointed in Tete ESIA to be completed in Sep 2012 Important part of the DFS and standalone requirement for mining licence application ESIA work to be carried out by independent local and international consultants Sustainable projects budgeted for 2011 include: Provision of water bore holes A rural health post Bicycle ambulance programme Bursaries for four students to attend university abroad 17

18 Key Highlights Demand for thermal coal remains robust Mozambique geographically positioned to service growth markets in Asia Sizeable resource identified with additional potential Fully funded to complete DFS on Ncondezi Project Target completion of DFS in Q Coking coal potential to be assessed in Q Infrastructure agreement signed with Rio Tinto Access to 10Mtpa of capacity No additional funds required Assess other value creating options Corporate opportunities Power/Coal gasification 18

19 Contact Details General enquiries: Ncondezi Servces (UK) Ltd Tel: +44 (0) Fax: +44 (0)