Disclaimer
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
These presentation slides (‘the Slides’) do not comprise an admission document, listing particulars, a prospectus, disclosure statement or product disclosure statement under the Corporations Act 2001 (Cth) relating to Beacon Hill Resources Plc (‘the Company’) or any subsidiary of the Company. The Slides and accompanying verbal presentation is not investment advice or financial product advice. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities of the Company (‘the Securities’) and should not be relied on in connection with a decision to purchase or subscribe for any such Securities. The Slides and the accompanying verbal presentation do not constitute an offer, invitation or recommendation regarding any decision to sell or purchase Securities in the Company in any jurisdiction and does not and will not form part of any contract for the acquisition of Securities.
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CONTENTS
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1. Introduction 2. Minas Moatize Coal Mine 3. Logistics
4.1 Alternative Solutions 4.2 Ncala Line 4.3 SENA Line 4.3 Ports
4. Infrastructure: Power supply 5. Legal and fiscal framework 6. Marketing 7. Cash Cost 8. The Future 9. Conclusion
Strategic Focus Areas for Africa
• Infrastructure • Logistics • Skilled People
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
STRATEGIC CORRIDORS
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Trans-Kalahari
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Mozambique
• 23 million people • 2500km of coastline • On of the poorest countries in
the world • 8% GDP growth rate
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Minas Moatize Coal Project Tete Province, Mozambique (located in the highest coking coal yield area)
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(Anglo American)
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
MINING COMPANIES IN TETE
7 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
MINAS MOATIZE COAL MINE
8 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Geology in Tete Province
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Phase 2A 1.8Mtpa Process Plant and Lab
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Laboratory
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Coking Coal Properties in Tete “Tier 2 Hard Coking Coal”
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Positive
• High CSN (8-9)
• Very High CSR (60-64)
• Low CRI (22 -24)
Negative
• High Sulphur ( >0.8%)
• High Phosphorous (> 0.055%)
• Lower Fluidity
• Mozambique coke cell at a slight discount to HCC (+- 8%)
• “Making Coke is a blending game and there are some natural advantages to coke manufacturers sourcing Chipanga Coking Coal. It is Ideal for making good quality coke” – Dr D Ojha from Global Coke, India
Notes: CSN – Coke Strength Reactivity CSR – Crucible Swelling Number CRI - Coke Reactivity Index
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Production (steady state)
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Run of Mine 2.8 Mtpa
Saleable Products per annum
588 000 tons of Coking Coal
627 000 tons per annum of export Thermal (5400 Kcal)
On mine cash cost
US$ 22 / saleable ton Strip ratio 0.55 BCM: ton
FOB cash cost in Beira (all-in)
US$108 /saleable ton
Capital US$ 22.9 mil for 2014
Life of Mine 15.4 years
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Sena Rolling Stock- Grindrod Loco’s New rolling stock to be delivered to the Company in Q1 2014
Five ‘new’ Grindrod RL30SCC-3
Power 2 461 kW gross (3 300 hp)
Power 2 240 kW traction (3000 hp)
Traction effort - continuous 300 kN @ 18km/h
Total mass 108 tonnes
Axle load 18 tonnes
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Specifications
On-board Computers
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Sena Rolling Stock – TE Wagons New rolling stock to be delivered to the Company in Q1 2014
90 new Gondola-type coal wagons fitted with the patented Sheffield bogey system
Tare mass 20,4 tonnes
Payload 61,6 tonnes
Wagon length over couplers 13,2 m
Axle load 20 tonnes
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Specifications
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Carbomoc Coal Loading Site CCLS a joint development between MML and JSPL
Land jointly owned by MML and Jindal
JPSL overseeing and carrying out construction of the works
Development to allow for storing, loading and transporting of coal
Three storage areas - JSPL Sites 1 & 2, MML Site
Rail lines to handle 42 wagons consists
Weighbridge to be provided
T e r m s a n d c o n d i t i o n s o f C o -Development agreed between parties
MML to pay $1,8 m (incl. tax) for 1/3 of throughput capacity – practical capacity of facility seen as ±2,7Mtpa.
15 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Warehouse Nr. 4 Off-loading Site Layout Development on CFM land
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Rail line for 42 wagons with take-off from warehouse spur wagons that will not affect main line operations
Coal to be off-loaded from rail wagons, loaded onto road trucks and taken to a 40 000 tonne stockpile area on land be-longing to the port
From there the coal will be loaded onto skips and taken to the quay side for loading onto vessels
Construction of new port community road.
Costs ($) 8.5 million
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Indicative MML Process Cost US$ 108 / ton FOB Beira (2.8 Mtpa)
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Laboratory
16%
7%
12%
30%
22%
13% Mining Cost
Process Cost
Transport
Rail
Port
Other
64%
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
ALTERNATIVE LOGISTIC SOLUTIONS
18 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Barging down of the Zambezi
Dredging data:
• Approximately 180km (from the total 540km) will require dredging
• Capital dredging estimated volume : 19 million m3
• Maintenance dredging: 25% of capital dredging per year
• Dredging will effect 7.1 to 11.7 % of the active channel
• The Zambezi is a very dynamic river: main channel is known to shift over time and the flood episodes can quickly modify the position of the navigable channel
• After capital dredging you will need permanent maintenance dredging
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Coal slurry Pipeline
Features of a proposed Coal Slurry Pipeline (ARUP)
• Use fresh water from Zambezi river or sea water from the ocean
• Closing loop system, minimise water loss • Particle size of at least 4 to 7 mm for fresh water transport
and up to 50mm for seawater (dense medium) transport • Pipeline slurry of 50 to 60% solid by weight • One main pump station and one booster pump station to
overcome friction • Dual pipeline principle can be followed large pipeline for coal slurry , small pipe line for water return • 70% of water recycled
• Capital Cost per km : US$ 9. 2 million • Operational cost: Assume 35 MW power Fixed Cost (pa) US$ 30 Million Variable Cost (per ton) US$ 0.5 • Expected Transportation tariff : US$ 20/ton
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
CFM Plan to increase the SENA capacity
5Mtpa 2013
20Mtpa 2017
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6.5 Mtpa
12 Mtpa ($100 mil funding)
Vale 4 Mtpa Rio Tinto 2 Mtpa Minas Moatize 0.5 Mtpa
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Macuse Project
Mozambique reappraises rail costs
• Mozambique’s transport ministry lifted the estimated cost of a railway and port project to boost coal exports to $5bn, almost twice as much as its initial projection, Reuters reports.
• The Mozambique government chose Bangkok-based Italian-Thai Development as preferred developer to:
• construct the 525km rail line from Tete province to Macuse in Mozambique’s Zambezia province and
• a port able to handle 25mtpa of coal.
• The project was initially penciled in at $3bn but the figure has been revised.
• The total value of both contracts is estimated at $5bn, with the construction planned for 2016,” Ministry of Transport spokesman Verlopes
23 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Hauling the coal from Tete to Beira • Distance 570km
• Road in some areas in poor condition
• Not sustainable option in the long term
• Cost $58 / ton
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
NACALA LINE
25 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
NACALA CORRIDOR
Length : 912 Km
Capex: $ 4.4 Billion
$3.4 Billion Railway $1.0 Billion Port Terminal
26 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Motaize-Nacala Railway Line:
• 230km Greenfield • 670km upgrade of existing
• 237 km through Malawi & 675 km in Moz
Moatize-Nacala Railway Line
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Moatize-Nacala Railway Line
Existing line: • Rehabilitation / strengthening of substructure • Replacement of superstructure
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
• 33 bridges rehabilitated and or strengthened • 65 new bridges
Moatize-Nacala Railway Line
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
SENA LINE
30 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
SENA LINE 570km
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
THE WAY FORWARD ON THE SENA LINE
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Technical • Minimise the speed constraints on the line ( especially
section that flooded early 2013)
• Break up critical sections with by-pass loops
• Once a homogeneous system is in place increase the length of the by-pass loop.
• Introduce on-board computers with Telecom system
Funding • Creative funding options with private investors
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Rail Allocation BHR receives 0.5 Mt Sena Rail Line Allocation in 2013 MML has entered into an Interim Rail Access
Agreement with Portos e Caminhos de Ferro de Moçambique (‘CFM’) on the Sena Rail Line for an allocation of 0.5 Mtpa commencing in April 2013 (7.7% of line capacity)
MML will pay CFM a monthly line access fee
The Interim Rail Access Agreement automatically renews itself each year until MML and CFM enter into a long term take or pay agreement for a minimum term of 10 years
It is the Company’s intention to use the Sena Line capacity to commence exports of coking coal
Increases to 1.5mtpa in 3 years
33 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
PORTS
34 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Berth with 20m draft Cape Size vessels Installed capacity 18 Mtpa (Opportunity to expand)
NACALA PORT
CIA
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Port of Beira
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QUAY 11A &B 2014/15
Maximum 20 Mtpa capacity
Draft only 9m
Only Handymax Ships ( max 33 000t )
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Port of Beira (Cornelder)
MINAS MOATIZE LAYDOWN AREA
QUAY 9 (2MTPA CAPACITY)
BHR IS USING QUAY 9
VALE / RIO FACILITY
QUAY 8 (6MTPA CAPACITY)
VALE / RIO ARE USING
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QUAY 11A &B 2014/15
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
BEIRA QUAY 13
TERMINAL 13
PORT OF BEIRA
39 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
QUAY 13 – PROPOSED LAYOUT
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Transhipment solution
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
INFRATRUCTURE: POWER SUPPLY
42 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Power Supply Projects
EDM/SASOL 160 MW
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
LEGAL AND FISCAL FRAMEWORK
44 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
Gabriel Muthisse
Structure of Government Departments
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
MINING CONTRACT
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Government Participation: The initial phase of the Mining Contract allows the Government a 5% stake in MML which aligns Governments interests with that of the company.
The signing of this contract represents a milestone in the process of stabilising the BHR subsidiary by providing following advantages:
• Security of tenure through this 25 years contract and a predictable long term legal frame work of investment.
• Fiscal incentives and exemption from custom duties.
• Ability to employ sufficient skilled foreign professionals required to implement planned development and if required hire international contractors for the term of the contract. (Ex-pats : 30% project , 20% operations 5yrs , 10% steady state )
• Training and Employment Programme : Challenge is the Skills shortage
• Community development programme: MML needs to spend $1 mil in next 5 years and $4mil over life of mine
BEE (SA)
SOCIAL AND LABOUR PLAN / EMP / H & S Strategy
School next to Minas Moatize in Tete
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
MARKETING
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Mozambique Coking Coal – an opportunity
• Latest forecast 10Mt (coking exports) by 2020 • Major potential: Brazil and India (making up nearly 50% of the
global coking coal growth) • India’s steel output up 6% (April – Sept 2013) • Brazil steel output around 40 Mt in 2014
Source: Argus – Coal Trans Maputo
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Mozambique Thermal Coal
• India chronically short of power, 25% of populations has no access to power
• Indian domestic coal reserves in the North East and new power capacity being built in the South and West, will be better serviced by imported coal
• Indian domestic coal production has increased at CAGR 4% since 2008
• Indian coal imports have increased at CAGR 21% over the same period
• Ultra Mega Power Projects (UMPP) in the Government 11th five year plan (2007-2012) envisages the creation of an additional 62 000 MW generating capacity, not just coal. Each UMMP will have a capacity of
+- 10 Mt/a copal
Source: World bank, World Coal Institute, Coal Issues Portal, Salva Report on India’s Thermal Coal Imports and Hatch
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
CASH COSTS
51 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
MML Process Breakdown (FOB all-in $108/t)
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$20 /t 0r 18%
Quay 13 Transhipping
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Plant Phase 2B and
50.00
70.00
90.00
110.00
130.00
150.00
170.00
190.00
210.00
Cost / USd / to
n
Business Costs Corporate Costs
Long Run Marginal Cost Curve BHR will be a Tier 1 FOB cash cost producer after CAPEX
Source: report from CRU London
TIER 1
Effect of no rail
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Rail Capacity on SENA line- A factor of where the Commodity Cycle is
Assumptions: 1) Mine ROM Capacity 2) 21% coking coal practical yield 3) 24% thermal coal practical yield “Why build Macuze if SENA goes up to 20Mtpa”
Bearish Commodity Cycle
Bullish Commodity Cycle
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
THE FUTURE
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High Road for Mozambique Coal
Coking Coal in Tete Province (short to medium term)
• SENA line capacity to 20 Mtpa ( outsource operator, CFM control)
• Development of Quay 13 in Beira
• Professional dredging company in Beira
• Tax regime to follow commodity cycle
• Mining Contract
• Skills Development
“Mozambique has got the potential to become a role model for Mining in AFRICA”
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Rovuma Hydrocarbon Basin
“If the Government manages the process wisely, Mozambique can become a second Qatar in the future”
“Rovuma has got major potential for LNG , GTL and Power. Why do the Grand INGA project in the Congo if there is all the gas reserves in Mozambique”
| BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014
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Contacts
Rowan Karstel CEO [email protected]
Justin Farr-Jones Chairman [email protected]
www.bhrplc.com [email protected]
59 | BEACON HILL RESOURCES | Heavy Haul Rail Africa | JHB |Presentation| March 2014