Opportunities for further exploration and investment in Mozambican coal Graham Mascall CEO Ncondezi Coal Company

Transcription

1 Opportunities for further exploration and investment in Mozambican coal Graham Mascall CEO Ncondezi Coal Company Coaltrans Mozambique 28 September, 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. 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 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 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 or, as appropriate, the 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 placeundue 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 Mozambique is an Attractive Environment for Investment Political and economical stability 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 Established and transparent licence granting process Straight forward transition from exploration to mining licences Vale - Moatise Riversdale - Benga Kenmare Resources - Moma Realistic/attractive fiscal regime No BEE equivalent requirements 3

4 Zambezi Coal Basin Considered to be One of the Largest Undeveloped Coal Basins in the World Ncondezi Project Moatize Project Benga Project Significant coal exploration and development work already underway Vale Moatize US$1.3 billion Riversdale/Tata Steel Benga US$260 million Ncondezi US$52 million Others: Riversdale Zambezi Project, Jindal Songa Project 4

5 +3.5Bt tonnes of Global Thermal & Coking Coal Demand Growth Forecast by 2030 Global Coal Demand Growth Forecast (Mt) Additional Seaborne Coal Demand (Mtpa) ,210 Other Pacific 40 Atlantic 45 India Taiwan 12.5 South Korea 30 Japan 25 China Total growth in global coal demand = 3.8Bt Total additional seaborne coal demand 2015E = 378Mtpa 90% of long term coal demand expected to come from Asia, particularly India and China India and China to account for c.60% of growth in seaborne demand between 2009 and 2015 Mozambican coal expected to be competitive with those of Australia, South Africa, Indonesia, Colombia Source: Peabody, JPMorgan Cazenove Equity Research 5

6 Mozambique Strategically Positioned to Supply Growth Markets for Seaborne Coal Mozambique competitively positioned for exports into India, China, and Brazil Strategic investments in Mozambican are already being made: India Tata Steel, Coal India and Jindal Steel & Power China WISCO and China Communications Construction Company Brazil Vale and CSN Others to follow? 6

7 Infrastructure Upgrades Ongoing 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 Riversdale of 5Mtpa from H New coal terminal at Beira with expanded rail network for between 18-24Mtpa expected to be announced by Mozambican Government soon Connect Nacala railway line and port to Moatize Natural deep water port with potential capacity of +40Mtpa Requires c.200kms of new railway line to connect to Moatize US$1.6Bn upgrade announced by Vale and Mozambican Government in November 2009 First coal exports from H Barge down the Zambezi and trans ship from Chinde Technical and environmental studies currently being done by Riversdale Large potential but dependent on results from environmental studies Sena line refurbishment Port of Beira Port of Nacala Zambezi river 7

8 Potential for Developing New Projects? Mozambique has 6 coal basins for exploration and development: 1. Zambezi Basin located in Tete Province, the basin includes the Moatize-Minjova Basin where the majority of exploration work has been carried out to date 2. Lunhu Maniamba Basin 3. Luagua Basin 4. Luchimua Basin 5. Chemba Basin 6. Espunggabera Basin Majority of coal licences are at a very early stage of development Opportunities for JVs, consolidation and strategic investors still exist Only three coal exploration licences have been converted to mining licences to date: Benga Riversdale/Tata Steal JV Moatize Vale Minas Moatize Beacon Hill Resources Mozambican Ministry of Mineral Resources is being proactive in cancelling licences where there is inactivity and re-tendering 8

9 Corporate Profile and Shareholder Structure Overview Ncondezi Coal Company Shareholder Structure Listed on AIM Market of the London Stock Exchange on June 10 th, 2010 US$52m gross proceeds raised Shares in issue 119 million Market capitalisation of 160m (approx. US$250m) 1 Free Float 24% Management EBT 5% Strata Ltd 46% Net cash of US$49m as at June 30 th, As at September 23 rd, 2010 Dos Santos Family 10% Minorities 15% Ncondezi Coal Company Holding Structure 100% 1 Additional Licences (Licences 1314L & 1315L) Ncondezi Project (Licences 804L & 805L) 100% 1 100% 1 Licences 100% held indirectly through 100% owned subsidiaries in Mozambique and Mauritius 9

10 Challenges and Rewards Plans to Export 10mt of Thermal Coal from Mozambique Ncondezi is an AIM listed coal exploration and development company with 4 licences in the Tete province of Mozambique 1.8Bt JORC coal resource classified in February 2010 Scoping Study completed in April 2010 confirmed economically viable 10Mtpa export thermal project and coking coal potential DFS work programme officially started on September 1, 2010 and is planned for completion by mid

11 Ncondezi Project Strategically Located in the Moatize- Minjova Basin and Close to Existing Infrastructure Ncondezi Project Extensive licence area covering 38,700 ha. Equivalent to 35kms by 11kms Moatize Town Sena Railway Represents larger licence area then Moatize or Benga and Zambeze projects combined Moatize project Tete Town 10kms to Sena Railway and c.40kms from provincial capital Tete 11

12 Overview of the Ncondezi Project Significant coal resource has been classified Drilling to date limited to 200m depth Aeroborne magnetics confirm that there are large areas currently undrilled but underlain with Karoo outcrop Large additional potential exists on currently undrilled blocks Only 3 of the 7 blocks drilled Block Measured Mt JORC classification and tonnages Measured Indicated & Indicated Mt Mt Inferred Mt Total Mt Total ,809 Source: SRK (May 2010) Note: In situ resources tonnages have been adjusted for a 30% geological loss factor. Numbers are rounded Previously drilled areas Results from 3 core holes gave indications of coking potential in the licence blocks More work being undertaken to confirm coking potential Improvements in test-work and tightening of sampling procedures will help to better understand coking potential Aeroborne magnetics 12

13 Scoping Study Key Results Open pit mining operation producing 10Mtpa of export thermal coal identified 24% ash, 6,000kcal/kg GAR export thermal product (post washing) Estimated capital cost of US$376m Average life of mine cash costs of US$48.6/t, including 10% contingency and prestripping Assumes contract mining Cash costs at mine gate of US$27.2/t Transport costs of US$17/t 37 year LOM with low average strip ratio of 1.3 Mining schedule based on two open pits in the South and West blocks Ramp up Yr Mtpa product Yr 3-6 Mtpa product Yr 5-10 Mtpa product 2 year mine construction period Initial coal production expected H Ncondezi Project conceptual pits 3D model of South Block pit Note: Figures assume no geological loss is applied 13

14 DFS Work Programme Initiated 1 September, 2010 Work Programme over the next 18 months will provide further detailed information on the Ncondezi Project required to complete a DFS by June 2012 Work Programme budget of US$47.2m over two years +US$40m dedicated to exploration work US$15m budgeted for exploration and technical work in 2010 All major Work Programme contractors now appointed TWP Projects appointed as project manager of the DFS Environmental Resources Management and Impacto appointed to conduct Environmental and Social Impact Assessments study on the Ncondezi Project McElroy Bryan Geological Services appointed as exploration consultants Resource drilling on the Ncondezi Project to identify coal potential on all blocks Total drilling on 804L & 805L of 64,000m budgeted Focus on coal quality data Target yield increases and coking coal potential Additional coking coal test work on cored holes that display coking characteristics First of the 2010 percussion holes being drilled on the Ncondezi project 14

15 Environmental and Social Responsibility Environment and Social Policy in place Full time Community Liaison Officer appointed in Tete Environmental Social Economic baseline study commenced in September 2010 ESIA to be completed in 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 15

16 Additional Licences 1314L and 1315L Source: SRK (May 2010) Licence 1315L Licence 1315L Located 320km North West of Tete on north shore of Cahora Basa Lake. Total area of 17,080 hectares Licence 1314L Licence 1314L Located 130km south west of Tete on the border with Zimbabwe Total area of 17,380 hectares 16

17 Strategy Target completion of BFS and ESIA by H year construction phase - target first production in late 2014 Upgrade and increase resource at Ncondezi Project Maximise transition of resources from Inferred to Measured & Indicated Yield optimisation on saleable product Assess and maximise coking coal potential Assess other value creating options Offtake agreement Corporate opportunities Infrastructure participation Target to be next coal exporter after Vale and Riversdale 17

18 Summary Attractive Resource Base with Significant Upside Potential Ncondezi Project JORC compliant resource of 1.8Bnt Fast track to DFS and project development Scoping Study supports 10Mtpa export thermal coal project with coking coal potential Well Positioned to Serve Growth Market Largest undeveloped coal region in the world Access to key growth markets Infrastructure revitalisation underway Supportive government with track record of world-class projects 18

19 Thank You 19