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INVESTOR PRESENTATION
TSX: SGQ HKEx: 1878
OCTOBER 2010
2
Disclaimer
Forward-looking statements
This presentation includes certain “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove accurate, and actual results and future events could differ materially from those anticipated in such statements. Such information contained herein represents management’s best judgment as of the date hereof based on information currently available. The company does not assume the obligation to update any forward-looking statement.
Qualified Persons
The technical information in this presentation is derived from SouthGobi’s news releases, each of which has been reviewed by one or more qualified persons (QPs), as defined by NI 43-101. Copies of the releases naming the QPs are available at Sedar or www.southgobi.com.
1 COMPANY SNAPSHOT
4
Company snapshotCapitalization and shareholders
Share price performance (last 12 months)Capitalization summary
Share price (at October 4, 2010) C$10.65
C$ per US$1 1.02
Share price US$10.44
Shares outstanding 184.2m
Market capitalization US$1,923m
Cash* (at June 30, 2010) US$744m
Convertible debt (at June 30, 2010) US$250m
Enterprise value US$1,429m
* Cash includes money market investments
Key shareholders
� On an “as converted” basis assuming full conversion of the CIC debenture, Ivanhoe will remain as the majority shareholder with approx. 50.3% ownership, followed by CIC with approx. 23.8% ownership and the balance of 25.9% being the public float (total shares outstanding: approx. 209.3m)
Total shares outstanding = 184.2m
57.2% - 105.3m shares 29.5% - 54.3m shares
Other Public Float
13.3% - 24.6m shares
5
Company snapshotExtracting full value from the Ovoot Khural Basin
� Permian-age coal bearing basin only 40 km from China
� Coal identified over 150 km strike length
� Land equivalent to prime hard coking coal region of Bowen Basin in Australia (largest seaborne coking coal exporting region today)
� Rail infrastructure and coal loader constructed by Chinese to access
Importance of the Ovoot Khural BasinOur Assets
Mongolia
China
� Substantially covered by SouthGobi’s exclusive mining and exploration licences
� 89% of SouthGobi's resources located there
� Operating infrastructure in place
SouthGobi’s leadership in the Ovoot Khural Basin
2 CORE INVESTMENT HIGHLIGHTS
7
Core investment highlights
Strategically located – closest coal to China
Substantial and growing resources
Premium quality coals
Highly competitive cost structure
In production with strong growth potential
1
2
3
4
5
8
Western Inner Mongolia
Gansu
Hami, Xinjiang(619 km to Jiayuguan)
Ovoot Tolgoi Mine (492 km to Jiayuguan)
Strategically located – closest coal to ChinaNearest coal production base to major coal consumin g markets
Source: Shanxi Fenwei Energy Consulting
Average Selling Price (US$)
Coal type 2009 Actual YTD 2010
Premium coal 27 – 32 40 – 47
Thermal coal 20 – 24 25
Distribution of coal resources in China
1
New rail completed to access Ovoot Khural
Existing Railway
Coal Seam Basin
Provincial Boundary
National Boundary
Legend
0 160 km
Source: Shanxi Fenwei Energy Consulting
Strategies to increase relative ASPs
� Benefit of improved transportation links
� Elimination of third-party trading margin
� Processing coal for enhanced product mix
*
9
Substantial and growing resourcesTrack record increasing resources – finding cost US$ 0.16 / tonne
Historical resource growth track recordSummary of resources by mine and deposit
307.6
171.0
13.0
98.036.4
21.4
78.8
9.0
55.5
20.5
0
100
200
300
400
500
Ovoot TolgoiMine
Ovoot TolgoiUnderground
Deposit
SoumberDeposit
TsagaanTolgoi
Deposit
Total
Res
ourc
e (M
t)
Inferred
Measured & Indicated
Ovoot Tolgoi Complex
Ovoot Khural Basin
Ovoot Tolgoi Mine resource incorporates 114.1Mt of Proven and
Probable Reserves
166.0202.4 221.3
307.6
65.8
74.871.0
98.0
0
100
200
300
400
2005 2006 2007 2008 2009
Res
ourc
e (M
t)
Inferred
Measured & Indicated
Note:SouthGobi’s resources are prepared in accordance with the Canadian NI 43-101 resource estimation standard – the table above summarizes those resources disclosed publicly in individual NI 43-101 compliant tables
� Total exploration costs of approximately US$63.9m from Jan 2005 to Dec 2009
� Equates to US$0.16/tonne resources discovered
2
184.0 99.3 76.9 45.4 405.6
10
� Drilling for 2010 commenced post-winter in March
� Approximately US$8.1m spent as at end of June (target c. US$20m total for 2010)
� 64,050m3 of trenching already undertaken
� Over 64,000 meters of drilling done
� Drilling commenced in fields surrounding Soumber and at SW target (6km south-west of Ovoot Tolgoi)
� Additional drilling at Sunrise Pit area on Ovoot Tolgoi license
Exploration licences and locations with core target s for resource increases
Status on key exploration targets(Ovoot Khural Basin)
2 Substantial and growing resourcesExploration outlook
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Premium quality coalsCoking coal and an overall product mix superior to peers
Type Specification % Deposit
Coking
Coal
� 7,173 kcal/kg
� Ash: 7.9%
� CSN (FSI): 5.5
15%
Premium
Coal
� 6,369 kcal/kg
� Ash: 14.9%
� CSN (FSI): 3.0
41%
Thermal
Coal
� 5,360 kcal/kg
� Ash: 26.0%44%
3
Premium hard coking� Ro Max of 1.3 – 1.5%
� VM <19%
Ovo
ot T
olgo
i Min
e (r
aw)
Sou
mbe
r
Semi-soft coking coals
� Ovoot Tolgoi basic coal handling facility (construction commenced)
― US$25m estimated capex – completion early 2011
― Removes large lumpy ash and sizes coal to <50mm consistent product
― 6 million tonne per year capacity on single day shift basis (hours extendable)
― c. 90% processing yield
― Second stage to be considered after further testing
� Soumber wash plant (testing and design)
― US$80 million estimated capex
― Likely full flotation or alternative process
Upgrading raw coalsSimplified coal product qualities
12
Ovo
ot T
olgo
i
0
20
40
60
80
100
0 10 20 30 40 50
Cumulative Production (million tonnes)
FO
B C
ash
Cos
ts (
US
$/to
nne)
Ovo
ot T
olgo
i
0
20
40
60
80
100
0 50 100 150 200 250 300 350 400 450 500
Cumulative Production (million tonnes)
FO
B C
ash
Cos
ts (
US
$/to
nne)
Highly competitive cost structureOvoot Tolgoi has globally competitive low direct mi ning cash costs
Low cost structure due to favourable geological con dition – open-pit, and thick coal seams resulting in low ratio of waste to coal (low “strip ping ratio”)
Ovoot Tolgoi’s position on 2010F estimated semi-soft/PCI coking coal mine cash costs curve
(FOB equivalent basis) (1)
Ovoot Tolgoi’s position on 2010F estimated thermal coal mine cash cost
curve (FOB equivalent basis) (1)
Notes:
1. Based on independent report prepared by AME Consulting Pty Limited. Ovoot Tolgoi cost adjusted FOB equivalent assuming rail transportation to Qinhuangdao port in China and excludes washing and processing costs. AME assesses global mine cash costs for each coal type and then places such mines from lowest cost to highest along the horizontal axis on a cumulative production basis
2. Based on December 31, 2009 Financial Statements for SouthGobi and Macquarie Research Equities report dated March 10, 2009 for others
0
50
100
150
200
250
300
OvootTolgoi
(open-pit)2009A
Typicalsmall
Chinesemine
TypicalShanxiSOE
Shenhua China Coal YanzhouD
irect
Min
ing
Cas
h C
osts
(R
MB
/tonn
e)
Direct mining cash costs for Ovoot Tolgoi vs. key Chinese coal companies (2)
4
13
Self imposed slow-down and suspension to deal with excess
inventories
Sunset pit realignment
5
Fleet 1994 shovel
13m3
Ovoot Tolgoi coal and waste material mined (April 2 008 – September 2010)
In production with strong growth potentialSecond mining fleet now commissioned and more capac ity coming
Fleet 2996 shovel
34m3
Fleet 3996 shovel
34m3
Fleet 4996 shovel
34m3
3 STRATEGIES AND INVESTMENT PLANS
15
Major strategies
Expanding production at Ovoot Tolgoi Mine1
Extract Full Value from Our Leading Position in the Ovoo t Khural Basin
Advancing regional coal projects – near-term emphasis on Soumber
2
Developing Ovoot Khural Basin infrastructure3
Enhancing value of our products 4
Exploration 5
Continuing focus on operational excellence 6
16
Investment plans
Growth investment plans 2011 - 2012 (US$m)
� Ovoot Tolgoi Mine 60
� Development of Soumber 135
� Coal handling facilities 160
� Regional transportation infrastructure 150
� Exploration 40
Appendix – Selected Photos
18
Appendix Selected Photos
China – rail loading facility at Ceke borderMongolia – truck weighing bridge
Shivee Khuren-Ceke Mongolia-China border crossing China railway infrastructure only a few km from bor der
19
Appendix Selected Photos (cont’d)
Mining operations Exposed seam at the Ovoot Tolgoi Mine
Terex MT 4400AC haul truck Paved runway at the Ovoot Tolgoi airport
20
Appendix Selected Photos (cont’d)
Liebherr 994 shovel loading Terex haul truck
21
Appendix Selected Photos (cont’d)
New Liebherr 996 shovel (34 m 3 bucket– 2.5x size of 994 shovel)