Presentation Transcript

1. INDONESIAN COAL OPPORTUNITY

   January, 2014 Corporate Presentation
2. FORWARD LOOKING STATEMENTS This document contains certain statements that may be deemed “forward-looking statements”. All statements in this document, other than statements of historical fact, that address events or developments that the Company expects to occur, are forward looking statements. Forward-looking statements in this document include statements regarding the timing and nature of future acquisitions, exploration programs and mining operations which are dependent on projections which will need to be confirmed. In addition, areas of exploration potential are identified which will require substantial drilling to determine whether or not they contain mineralization which warrants further expenditures. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, inability to obtain required shareholder or regulatory approvals, and general economic, market or business conditions and changes in governmental regulations. Forward looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made. Except as required by applicable securities laws, the Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change. The description of mineralized zones is not intended to imply that any economically mineable estimate of resources exist on the Company’s properties . No regulatory compliant resource calculation has been prepared for any of the Company’s properties. There is no certainty that the targets will be achieved or that the economics of any project will be realized. Stated goals, targets and intentions related to reserves and production are not representations as to the existence of mineable resources or the existence of necessary licenses and permits to conduct mining operations. Technical information in this presentation has been reviewed by Mr. Andre Talaska, a Professional Geologist and a senior officer of Challenger’s subsidiary, PT Bestindo Energy. He is a Qualified Person under NI 43-101. These statements are based on a number of assumptions, including, among others, assumptions regarding general business and economic conditions, and the ability of management to find and secure new resource properties in a timely manner, the delineation of sufficient and mineable resources, securing of necessary licenses and permits and the completion of agreements for the purchase of mining properties or mining rights. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause results to differ materially.
3. CHALLENGER STRATEGY Secure joint venture partners to assist in current and new project development Generate cash flow to fund further project acquisition and development Create shareholder value through cash flow and earnings Capitalize on multitude of high quality production and development opportunities leveraging owned mining and production infrastructure
4. BUSINESS DEVELOPMENT Resource Development and Mining Development and Permitting Acquisition Strong deal flow and due diligence capability 100% ownership or exclusive mining rights and risk reduced deal structures Multiple new properties under due diligence review Barito Project development with JV Partner or sale with retained royalty Joint venture Tabang Project New project due diligence ongoing Continuous permitting and development programs for advancement of properties to production stage
5. Challenger’s team is made up of experienced coal exploration and development and mining professionals Members of the team were instrumental in the successful development of Red Hill Energy’s 1.5 Billion tons of producing thermal coal Local, experienced Indonesian coal focused geological, technical and operations team Successful track record in public mining company management THE TEAM RanjeetSundher– Director, CEO, President Mr. Sundher has over 15 years experience in the global resource sector, in 2001 he co- founded Red Hill Energy and was instrumental in growing the Company’s assets to include over 1.5 billion tons of thermal coal in Asia. Mr. Sundher has extensive experience in project acquisition, corporate financing and project development. Garry Clark – Director, GeologyMr. Clark is the Executive Director of the Ontario Prospectors Association (OPA). He brings to Challenger extensive experience in managing large scale exploration and development programs internationally, including Asia. Darold H. Parken – Executive Director , CFO Mr. Parken has practiced corporate securities law and natural resource law for over 30 years. He has extensive public company management experience and a wide range of experience in the areas of corporate finance, mergers and acquisitions. INDONESIA: Andre Talaska – Technical Advisor & Country Representative/GeologyMr. Talaska has over 25 years experience in in project identification, open pit and underground mining, and management of geological teams in the production and exploration environment in both Australia and Asia. ShakirJuffry– Business Development/Engineering, Independent ConsultantMr. Juffry is a Chemical Engineer and Extractive Metallurgist by background training and experience with over 20 years of experience in the Indonesian coal and minerals exploration field. Toto Suarto Sajali– Operation & Development Manager Mr. Toto is a Mining Engineer with over 15 years experience in Indonesian coal project assessment, development and operations.
6. PROJECT EVOLUTION
7. INVESTMENT DRIVERS – VALUE CREATION – CASH FLOW Asia Established markets, rapidly growing demand for low CV/low sulphur coal both domestically and regionally Well located relative to key markets in India, South Korea and China Mature mining environment Indonesia now largest exporter of thermal coal and continues to grow Projects Proven potential in Central and East Kalimantan Attractive upside potential versus risk profile Supportive regional government Advanced permitting stage Staged development – low capital entry and approach to progressively de-risk project Near-term cash flow Logistics Excellent river transport logistics Existing infrastructure Unobstructed access to land
8. INVESTMENT HIGHLIGHTS Coal is an ideal investment commodity, supported by strong fundamentals and requiring low levels of investment (for open pit projects such as the Barito and Tabang Projects) Ideal time to enter (low price environment) Challenger’s experience in all aspects of coal project development Large pipeline of assets, exploration/production license and brownfields to ensure long term plan and higher valuations Realistic fundraising, low enough to ensure acquisition, development and production without excessive dilution from additional fundraising Realistic approach, with stress-tested forecasts not speculating on price increases Long term, aggressive strategy
9. INVESTMENT CASE – VALUE CREATION – CASH FLOW Thermal Coal is a necessity for high growth countries such as India, China, Taiwan and Korea but also for the rapidly growing Indonesian economy and volumes are expected to continue rising A compilation of smaller size assets with existing logistics infrastructure and in close geographic proximity to each other as well as to a jetty/coal terminal, offers an alternative approach to the “traditional” coal asset development by the dominant local and foreign owned giants Challenger has the properties, the people and the experience to successfully execute its plans.
10. INDONESIA: THE WORLD’S SIXTH LARGEST ECONOMY BY 2030 – DOMESTIC DEMAND Indonesia is the world’s fourth most populous country after China, India and the US with a population of 237.6 million in 2010, that is expected to grow to 273 million in 2020 and 315 million in 2030. In addition to creating a large domestic market, a large population also provides Indonesia with ample labor. Indonesia could become the world’s sixth-largest economy by 2030, supported by urbanization, income growth and commodities. It is highly expected that Indonesia will eventually join the likes of China, India and Brazil as one of the world’s largest economies. Indonesia’s economic progress since the 1997-98 Asian financial crisis has often been overshadowed by the rise of China and India. However, given its track record in recent years and the large size of its population, Indonesia deserves a prominent place on the radar screen of international corporations and investors. It is currently the largest ASEAN economy and a G20 member, and according to Standard Chartered Research its importance will continue to rise in the years ahead Indonesia’s economic progress is likely to benefit a large number of sectors. Analysts anticipate that 2 million Indonesians will move from rural to urban areas each year. The size of the middle class, defined as those with daily incomes of USD 2-20, is likely to rise to 244 million in 2030 from 131million in 2010. This implies a surge in demand for consumer products, moving beyond daily necessities to more leisure products and services and of course energy consumption Source: Standard Chartered Research
11. COAL MARKET - CHINA
12. COAL MARKET - CHINA
13. COAL MARKET - INDIA
14. INDONESIA’S COMPETITIVE ADVANTAGE IS THE GEOGRAPHIC PROXIMITY TO MAJOR BUYERS Compared to all other major coal exporters, Indonesia’s geology and location make it the lowest cost exporter for China, Eastern India, South East Asia, Korea and Japan, the world’s largest importers of coal and other minerals. Indonesia’s low cost of operations and favorable geography act as mitigation factors against falling prices, while mining operations in other countries with unfavorable logistics and higher mining costs will start counting losses or shut down Source: AME, Bloomberg, Standard Chartered Research
15. BARITO COAL PROJECT High Quality Thermal coal (5,500 – 6,300 GAR) Exclusive mining and marketing rights for life of mine over 2,000 hectares ( 20 year Production Licenses Issued). Project is comprised of 2 Production Licenses, KEM and ABBR-HAAS 100 percent owned mining and production infrastructure to be acquired (13km haul road, pit, stockpile land and loading jetty) Excellent project economics with low capex and project risk Plan to joint venture project or outright sale with royalty retention to capitalize on value created without further capital expenditure
16. CORPORATE ORGANIZATION
17. BARITO PROJECT LOCATION KALIMANTAN ISLAND PROJECT LOCATION
18. BARITO PROJECT LOCATION
19. ADJACENT CONCESSIONS
20. CROPLINE OF BARITO PROJECT
21. BARITO PROJECT DRILLING LOCATION MAP
22. BARITO PROJECT SCOPING
23. BARITO PROJECT GEOLOGY MAP
24. BARITO PROJECT OUTCROP AND TEST PIT SAMPLING
25. BARITO PROJECT INFRASTRUCTURE & LOGISTICS Project Haul Road Stockpile and Jetty Tug and Barge (3500 tons)
26. BARITO PROJECT REGIONAL INFRASTRUCTURE & LOGISTICS Solid Black Gold Jetty Gautama Jetty Thiess Jetty Sinar Alam Jetty
27. MAJOR MINING PROJECTS IN THE BARITO BASIN
28. STAGED BARITO PROJECT DEVELOPMENT Stage 1 Stage 2 Stage 3 Completed Production/Operating Agreements on KEM/HASS Licenses Commenced mine planning Topographical survey Drilling Initiated forestry permitting Complete infrastructure purchase Complete stockpile land purchase Complete forestry permitting Complete mine plan drilling Mine design and production planning Post reclamation bond Mobilize mining contractor Commence mining operations * Project development plans are dependent on capital availability through Challenger debt or equity capitalization or through joint venture/sale transactions.
29. TABANG PROJECT 4 early-stage properties (one IUP Exploration Permit and 3 under IUP Exploration Permit application) Initial mapping, sampling and reconnaissance drilling complete Direct access to river transport Coal quality in the range of GVC (GAR) 4,200 – 5,500 Potential to leverage common infrastructure (haul roads and jetty) Potential ability to expedite production within a minimum time frame in a staged production increase scenario Currently seeking joint venture/partnership opportunities
30. TABANG PROJECT LOCATION & MINE LAYOUT
31. TABANG PROJECT PROPERTIES ATRP (2,960 Ha) 100% ownership under CSPA IUP Exploration Permit issued IUP Operation Production Permit (Mining Permit in process) BatuAyau and UjohBilang geological formations 59 outcrops, 63 test pits, 105 drill holes (3,026 m) 7 flat dipping seams (up to 2 m thickness) LIDAR Survey completed for mine planning Coal quality: PELANGI (2,650 Ha) 100% ownership under CSPA Not yet permitted Balikpapan (upper - middle) geological formation 30 outcrops discovered to date Flat dipping seams ( up to 6 m thickness) Coal quality:
32. TABANG PROJECT PROPERTIES INHUWA PURBA(5,000Ha) Not yet permitted Balikpapan (middle – lower) geological formation Preliminary reconnaissance only Typical seam thickness (up to 4.0 m) Coal quality: CBM (2,540 Ha) Not yet permitted Balikpapan (middle – lower) geological formation Preliminary reconnaissance only Typical seam thickness (up to 4.0 m) Coal quality:
33. CORPORATE INFORMATIONwww.challengerdeep.ca Head Office: Suite 202, 615 – 15th Avenue S.W. Calgary, AB T2R 0R4 Canada T: (1) 403.537-0067 Executive Office: 10 Anson Road #21-12 International Plaza Singapore, 079903 T: +65.6220.7745 F: +65.6220.6493 Common Shares: 39,348,541 Shares Fully Diluted 56,596,280 Warrants Outstanding: 2,990,246 at $0.90 expiring February 28, 2014 197,600 at $0.165 expiring November 26, 2014 2,784,534 at $0.40 expiring May 10, 2014 9,316,667 at $0.25 expiring April 19, 2018 Indonesian Operations Office: Wisma Yakif 3rd Floor Jl. Warung Buncit Raya No. 99 Jakarta, 12740 Indonesia T: +62 21 79192961 F :  +62 21 79192963
34. SUMMARY Focus on near-term cash flow through production and marketing agreements Creation of value through cash flow and earnings Strong coal market metrics Solid project economics CONTACT: RanjeetSundher, President & CEO +65-9752-5082 sundher@gmail.com www.challengerdeep.ca