investor update presentation november 2013 · 2020-01-30 · investor update presentation november...
TRANSCRIPT
Investor Update Presentation November 2013
DISCLAIMER
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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.
NCONDEZI ENERGY INVESTMENT HIGHLIGHTS Developing integrated 300MW1 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 EdM2
Significant momentum in project development over last 7 months – April 2013 - Power Framework Agreement (“PFA”) with Mozambican government
– August 2013 - Mine Concession granted
– October 2013 - Power Purchase Agreement Heads of Terms (“PPA HoTs”) signed with EdM
– September/October 2013 - 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 Q1 2014 (“FF PPA”)
– Co-developer to be brought in by end Q1 2014
– Financial Close targeted for Q4 2014
– Commissioning targeted to start H2 2017
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
EXPERIENCED AFRICAN POWER TEAM LEVERAGING WORLD CLASS CONSULTANTS
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Paul Venter CEO
+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
Eddie Scholtz Mine Development Consultant
+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
Dr Estevão Pale Non-Executive Director
Ncondezi’s representative on Liaison Committee with EdM & Government CEO of Companhia Mocambicana de Hidrocarbonetos, formerly National Director of Mines & Energy
Peter O’Connor Non-Executive Director +20 years working for Eskom across Generation Transmission, and Capital Expansion divisions
Christiaan Schutte Non-Executive Director +20 years working for Eskom in Group Generation and Technology divisions
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
Technical Consultant EPC Selection Process
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
Machiel Coetzee Power Evacuation Studies
Specialist transmission consultant with extensive SAPP & Mozambican experience Anointed transmission systems advisor to EdM and Eskom
Maree Roos & Karl Lawrenze Project Commercial Advisors
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
COAL FIRED POWER GENERATION STRATEGIC TO MOZAMBIQUE
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1. Cahora Bassa 2. Mpanda Nqua 3. Lupata
4. Moatize 5. Ncondezi 6. Benga 7. Sasol 8. Aggrekko 9. Kuvaninga
Hydro
Coal
Gas
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 Scalable to meet available transmission capacity – 150MW
units
Commissioning achievable within 3 years
Long life of operation – +25 years
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
Other potential coal generators believed to be focused on internal energy requirements
Large gas discoveries
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Source: Company
NCONDEZI POWER PLANT OVERVIEW 2x150MW Power Plant using standard technology
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
EPC selection processes initiated with binding bids due January 2014
Transmission evacuation route approved by EdM
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Project Base Map
Concession Area Topography
Source: Company
Source: Company
SIGNIFICANT PROGRESS MADE ON KEY COMMERCIAL AGREEMENTS FOR THE POWER PLANT
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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 Signed to Date
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 Q1 2014
Final Form Power Purchase Agreement Q1 2014
Agreements to be Concluded Remain on Track
* Required Conditions Precedent to make Power Framework Agreement Effective and initiate Power Generation Concession negotiations with Mozambican Government
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 >$200m
Final Form PPA supported by a number of key agreements on – Fuel costs – Capital cost – Operating and maintenance costs – Level of Government support
Target completion of Final Form PPA and key agreements Q1 2014 – Power Purchase Agreement signed at Financial Close – target Q4
2014
Bankability of Final Form PPA is expected to be supported by – Political and Commercial risk insurance – Government guarantee
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Key tariff parameters
25 year term
Payments calculated in US$
Monthly payments
Index linked
EPC BINDING BIDS DUE Q1 2014 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 2014
Preferred EPC will be selected based on: – Cost (capex and opex) – Construction period – Financing package – Equity contribution
Process includes IPPs from around the world
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Source: Company
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
Equity funding requirement to be secured from: – Co-developer/strategic IPP
– Developer premium
– EPC and O&M contracts
Power Plant Economics to be confirmed Q1 2014 – EPC Binding Bids Received
– Final Form PPA
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Expected Annual Revenue >$200m
Expected Average EBITDA margin >50%
Estimated Project NPV @ Financial Close >$200m
Estimated NPV @ Commissioning (Q4 2017) >$1.0bn
Key Target Financials
Source: Company
ROLE OF CO-DEVELOPER & STRATEGIC IPP
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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 Q1 2014 – Process initiated and being managed by KPMG
Technical Work
DFS completed & approved
Measured JORC coal resources
• Updated capex and opex due Q4 2013
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
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
THE NCONDEZI COAL MINE WILL SUPPLY THE POWER PLANT
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NEXT STEPS
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Q4 2013 Power Plant Project Vehicle HoT Power Framework Agreement Effective Mine Update
Q1 2014 EPC Binding Bids Bring in Co-developer Final Form Power Purchase Agreement Transmission RFQ Appoint Mandated Lead Arranger
Q2 2014 Transmission Binding Bids
Q4 2014 Signed Power Purchase Agreement Financial Close
SUMMARY
2x150MW integrated power plant with dedicated coal mine
Final Form PPA targeted for Q1 2014
Financial Close targeted for Q4 2014
Compelling project economics
Co-developer partner search initiated
Strong regional demand backdrop and expansion potential
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www.ncondezienergy.com
Hanno Pengilly Chief Development Officer OR Alex Buck Investor Relations Tel: +44 (0) 20 7183 5402
A DISTINGUISHED BOARD WITH STRONG POWER DEVELOPMENT EXPERIENCE
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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
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
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
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SUBSTANTIAL PROGRESS OVER PAST TWO YEARS
Power DFS for 1,800MW power station completed September 2012
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 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
Mine ESIA approved September 2013
Interim Social Development Plan under implementation
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Pow
er
Min
e ES
IA
MINE OVERVIEW – CONCESSION MAP & RESOURCE BLOCKS
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MINE OVERVIEW – RING FENCING OF REQUIRED RESOURCES
Concession coal resource currently at +4Bt
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
Previous Mine area Drill Spacing
Updated Mine area Drill Spacing
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Source: Company
Source: Company