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PT Borneo Lumbung Energi & Metal Tbk (“BORN”) Company Presentation

PT Borneo Lumbung Energi & Metal Tbk (“BORN”) Company Presentation. June 2012.

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PT Borneo Lumbung Energi & Metal Tbk (“BORN”) Company Presentation

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  1. PT Borneo Lumbung Energi & Metal Tbk (“BORN”)Company Presentation June 2012

  2. This presentation is prepared by PT Borneo Lumbung Energi & Metal Tbk (the “Company”) solely for the purpose of investor presentations and unless otherwise expressly authorized by the Company, shall not be used by any third party. The recipient of this presentation shall only use the information contained herein solely in the context of obtaining information about the Company and/or updating such information and not for any other purposes, commercial or otherwise. This presentation does not constitute or form part of any offer for sale or invitation, or solicitation of an offer, to subscribe for or purchase any securities and neither this presentation nor anything contained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever. The information set out herein is not and does not purport to be an appraisal or valuation of any of the securities, assets or businesses mentioned herein. You acknowledge that any assessment of the Company that may be made by you will be independent of this document and that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company. This presentation contains “forward-looking” statements that relate to future events which are, by their nature, subject to significant risks and uncertainties. All statements, other than statements of historical facts contained in this presentation, on the Company’s future financial position, strategy, plans, goals, and targets, future developments are forward-looking statements. The future events referred to in these forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we operate and are not a guarantee of future performance. Any reference to past performance should not be taken as an indication of future performance. The Company makes no representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario, nor any liability therefore (including direct, indirect or consequential loss or damage). You agree to keep the contents of this presentation strictly confidential. This presentation material is highly confidential, is being presented solely for your information and may not be copied, reproduced or redistributed to any other person in any manner. In particular, this presentation may not be taken or transmitted into the United States, Canada, Indonesia or Japan or distributed, directly or indirectly, in the United States, Canada, Indonesia or Japan. The Company does not intend to register any of its securities for offer or sale in the United States, or to conduct a public offering of securities in the United States. Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. The information contained in this document is as of 31 May 2012. Neither the delivery of this document nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since that date. By attending the meeting where this presentation is made, or by reading these presentation slides, you agree to be bound by the foregoing limitations. Disclaimer

  3. Agenda Overview of BORN 1 BORN’s results and plans 2 3 BORN’s Investment in BUMI Plc

  4. 1. Overview of BORN

  5. BORN is a holding company, with all of its coking coal operations conducted through PT Asmin Koalindo Tuhup (“AKT”) AKT holds a 3rd generation Coal Contract of Work (“CCoW”) with favourable terms PT Borneo Mining Services (“BMS”) owns mining equipment that it rents to AKT BORN listed on the Indonesian Stock Exchange on 26 November 2010 Produced more than 3mt of hard coking coal in 2011 Completed acquisition of 23.8% stake in BUMI Plc on 20 January 2012 (3) Introduction to BORN From a greenfield concession acquired in 2008, BORN developed AKT's CCOW into Indonesia's largest and most important coking coal producer Current Corporate Structure PT Republik Energi & Metal Public 70% 30% PT Borneo Lumbung Energi & Metal TBK Market Cap of US$1,453MM(1) 99.9% 99.9% 23.8% (3) PT ASMIN KOALINDO TUHUP (CCoW) PT BORNEO MINING SERVICES BUMI Plc Market Cap of US$2,866MM (2) Notes: • As of 16 May 2012 at current exchange rates • As of 12 February 2012 at an exchange rate of 1 USD to 0.63 GBP; total shares of 241.0mm including nonvoting shares of 60.4mm • 23.8% stake is held indirectly through two joint ventures with the Bakrie Group

  6. Experienced and Professional Management Team • Professional and diverse management team with extensive experience in world class firms • Deep expertise in all areas of mine development, engineering and operations Peter Rod AKT’s Head of Mining Operations Samin Tan Founder Alexander Ramlie President Director Ken Allan Marketing Director Eva Novita Finance Director Dave Alister Tonkin AKT’s Operations Director

  7. Borneo’s Vision Creating Long Term Value for Shareholders • To be a world class mining company with a diversified portfolio of high quality coal and metals assets with the following characteristics : • High margin products • Large resource base • Low production cost • Create value through developing greenfield assets • Drive value through aggressive production ramp ups, continuous productivity improvements, judicious use of available financing and capital, and strategic acquisitions Create long term value for the benefit of all shareholders and stakeholders

  8. History of BORN Within 3 years of Greenfield Acquisition, BORN Achieved Profitability Proven Track Record of Growing Reserves and Resources mt • Resources CAGR (1): 16.5% • Reserves CAGR (2): 32.1% Nov 2005 Apr 2007 Feb 2009 Sep 2011 Feb 2006 Jun 2010 • Future:Increase production capacity to 10.0 and 15.0 mtpa by end of 2013 and 2018,respectively • 31 May 1999, AKT signed the 3rd Generation CCoW • 2 Jan 2008, start of development and construction • Sep 2009, AKT commenced commercial production • 31 Dec 2009, increased production capacity to 2.4 mtpa at the Kohong block • Production capacity increased to 3.6mtpa in 2010 at the Kohong block • Sep 2011, reserves increased to 132 mt representing 90.4% growth from 70 mt in June 2010 Jan 07 Jan 08 Jan 10 Jan 12 1999 Jan 09 Jan 11 • 27 Oct 2007, BORN gained full management control of AKT • Nov 2010, listed on IDX and raised US$580MM • Jan 2012, completed 23.8% investment in BUMI Plc Notes: • CAGR calculated from 2005-2011 • CAGR calculated from 2007-2011

  9. The Concession Tremendous Production Upside and Long Reserve Life • Holds two coking coal deposits - Kohong and Telakon blocks, within 21,630 hectares of concession area • JORC compliant Reserves and Resources of 131.8 mt and 319.8 mt, respectively, • Equivalent to 28.6x (28.6 years) forecast production in 2012 of 4.4 million tonnes • CCoW production permitted until 2039 • Production share (“Royalty”) 13.5%

  10. BORN - Logistical Solutions Increase Self-sufficiency And Decrease Reliance On The Barito River Haul Road (112 km) • Alternative transportation route through Mahakam River a possible medium/long term solution • Haul road from mine to Melak port • 8,000 tonne barges can be operated all year round Mahakam River (355 km) Existing logistics - Haul Road (36 km) Existing logistics - Barito River (290 km) • ISP at Damparan, to AKT design, 1MT stockpile, 3,000tph unload, 4,000tph loading capacity • On-river transshipment capability from 4,000 to 8,000 tonne barges Existing logistics - Barito River (272 km) Taboneo anchorage

  11. 2. BORN’s results and plans

  12. Financial Highlights Note: * Net Debt after deducting preshipment facility of USD 345 Million

  13. Strong Operational and Financial Performance BORN Achieved One of the Highest Production, Revenue and Earnings Growth in Industry Production (FYE Dec) Revenue (FYE Dec) 000 tonnes Rp Bn 67% 121% 693.1 22.3 306.1 US$ Million EBITDA (FYE Dec) (2) Net Income (FYE Dec) Rp Bn % margin Rp Bn % margin 423% 139% 359.6 US$ Million (11.1) US$ Million 8.6 146.8 213.3 38.8 Notes: • EBITDA is operating profit plus depreciation and amortisationc

  14. Strong Operational and Financial Performance (Cont’d) Strong Operational and Financial Performance (Cont’d) Peer Leading EBITDA Margin BORN has the highest margin in Indonesia due to its superior coal product • BORN aims to be the industry leader in profit margin % Source: Bloomberg Estimates for FY11 Note: • BORN’s EBITDA Margins are net of royalty payments; it’s tax rate is amongst the lowest (~25%) and hence even on Net Margin basis it is superior to other Indonesian coal producers

  15. 2011 Snapshot # Update for 2011 : Ramp up to 5mt, done Additional mining ops staff Additional pits opened ISP now operational CHPP stockpile expanded Port stockpile expanded New camp mostly done New magazine, done New workshops mostly done Airstripfinished Haul road sealing ongoing New markets (Europe) Pinjam Pakai Production 3.28mt Sales 3.007mt ASP US$ 230/t Margin 47% EBITDA US$360m

  16. Operations Overview Key Operating Statistics And Future Ramp-Up Aggressively ramp up production Production as of FYE Dec ($ MM) (2) Long term production capacity target: 15.0 mtpa • Phase 2: From 5.0 mtpa to 10.0 mtpa -> 2H2012 – 2015 • Phase 3: From 10.0 mtpa to 15.0 mtpa -> 2014 – 2016 • Will be achieved through a combination of expanding current production at Kohong block, bringing Telakon into production and further exploration to expand reserves and resources at both blocks • Cash cost reduction program to be achieved through installation of IPCC system Notes: • First coal – September 2008; first commercial production – September 2009

  17. Q1 2012 Outstanding Debt Overview • Total debt outstanding: US$1 Billion • Standard Chartered Bank Acquisition Loan for Bumi Plc Investment PT Borneo Lumbung Energi (“BLE”) 99.99% 99.99% PT Asmin Koalindo Tuhup (“Tuhup”) PT Borneo Mining Services (“BMS”) Outstanding 3rd party loan US$27.5 million Outstanding 3rd party loan US$ 382.2 million • US$ 20.5 million JBIC from CIMB Niaga • US$ 4 million leasing from ANZ • US$ 1 million leasing from other various lease companies • US$ 345 million FGB Pre-shipment Loan • US$ 27.5 million leasing from ANZ • US$ 0.7 million leasing from Indomobil Finance Net Debt Maturities (2012E – 2016E) • (US$ in millions)

  18. Next steps Next ramp up – Second barge loader started ISP stockpile expansion Floating crane commitment DP’s on ramp up fleet paid Tugs/Barges ordered (7 new) Open new pits Add operational staff Switch to Noble ? New markets (Korea, India, domestic) Pinjam Pakai, licences Infrastructure expansion Caterpillar 6090 x 11 units Liebherr 996 x 14 units Buchyrus RH200 x 2 units Komatsu 830E x 30 units Komatsu HD1500 x 10 units Tugs/Barges x 25 units Cranes x 10 units Infrastructure (port, dumps, pits, people, roads, training center..)

  19. BORN Capex Program Up to 10 mtpa • (US$ in millions) Breakdown of 2012F-2013F Capex • (US$ in millions) • Excavators • Mine Camp & Workshop • Dump & Hauling Trucks • CHPP, ISP and Port Stockpile • Dozers,Graders & Supporting Equipment • Port Infrastructure expansion Additional mining equipment • Crusher, Conveyor, Fuel Tanks, Explsoives Magazine • Washing Plant & Power Station Estimated equipment purchase and infrastructure construction value at 31 March 2012

  20. Q1 2012 Operating Results * Life of Mine SR = 20:1

  21. The Future 2012 2013 2014 2015 2016 The Plan : Capacity 5mt 10mt 10mt 12mt 15mt Production 4.6mt 7mt 8mt 10mt 12.5mt Sales 4.6mt 7mt 8mt 10mt 12.5mt ASP $219/t $210/t $200/t $190/t $180/t Costs $115/t $115/t $110/t $100/t $80/t • Challenges: • World markets/prices • New customers • Indonesian regulations • HBA • DMO • Value Added • Law No 4 compliance • PP24 (divestment) • Managing ramp up • Staffing quality/levels • Coal quality • Competition • Environmental

  22. BORN’s Competitive Positioning Favorable Coking Coal Industry Outlook 1 Advantageous Terms of 3rd Generation CCoW 2 Premium Hard Coking Coal Product 3 Close Proximity to Largest and Fastest Growing Markets 4 Strong Operational and Financial Performance 5 Experienced Management Team 6

  23. Close Proximity to Largest and Fastest Growing Markets Significant cost and delivery time advantages to large end users in East Asia and India Japan South Korea China Taiwan India Indonesia Australian coking coal companies Source: Wood Mackenzie, Trade Data

  24. 9.0 9.0 9.0 9.0 8.0 8.0 12 7.5 7.0 6.5 6 0 Coal of Africa Riversdale Mechal BMA Wesfarmers Consol Energy Rio Tinto Teck Premium Hard Coking Coal Product Consistently Achieved ASP Similar To Australian Hard Coking Coal Tuhup Coal is considered a premium hard coking coal product with very high vitrinite content, which is rare More Favorable Less Favorable % adb Ash Sulphur % adb Volatile Matter % adb Caking Properties (Crucible Swelling Number or “CSN”) ddpm Fluidity 15,000 11,600 Source: AME

  25. Tuhup Coal Reputable Customers and Diversified Destinations • Glencore marketing agent up to July 2012 • Noble bought the Company’s production starting November 2011

  26. Japan India South Korea China Other SE Asia Americas Europe Other Australia USA Canada Russia China Indonesia Mozambique Other Favourable Coking Coal Industry Outlook Asia Continues To Drive Imports And Australia Remains Key Exporter Globally Traded Coking Coal Imports Globally Traded Coking Coal Exports mt mt 4.2% 5.7% Asia: 6.1% Australia: 7.1% 3.6% 4.4% Australia: 5.4% Asia: 6.6% Source: Wood Mackenzie Source: Wood Mackenzie

  27. Coking Coal Imports (Asia) mt CAGR: 7.2% CAGR: 8.0% Coking Coal Imports (SE Asia) mt CAGR: 84.3% Favourable Coking Coal Industry Outlook (Cont’d)(1) Fast Growing Demand in China and India Coking Coal Imports (China) mt Coking Coal Imports (India) mt CAGR: 12.7% Note: • % shown represents countries / regions’ imports as % of global imports

  28. Only Listed Hard Coking Coal Producer in Indonesia ACEH EAST KALIMANTAN 3 1 6 NORTH SUMATRA 2 10 5 5 2 3 10 11 WEST KALIMANTAN 1 7 9 RIAU 9 4 5 9 5 5 3 9 WEST SUMATRA 5 CENTRAL KALIMANTAN 10 8 6 JAMBI 4 4 7 SOUTH KALIMANTAN 3 2 SOUTH SUMATRA 8 2 10 BENGKULU 11 5 3 9 9 10 LAMPUNG Hard Coking Coal (Listed Entity) 11 Thermal Coal (Listed Entity) Source: Bloomberg, Company Fillings, Broker Reports Notes: • Market capitalization greater than US$400MM • As at 8 Feb 2012

  29. 3. BORN’s investment into Bumi Plc

  30. Transaction Overview BORN completed its 23.8% investment in BUMI Plc, one of the largest diversified coal and metals companies in the world, on 20 January 2012 Transaction • Investment of a 23.8% strategic interest in BUMI Plc • Post transaction, BORN, together with PT Bakrie & Brothers Tbk (“BNBR”) and Long Haul Holdings Limited (“LH”), owns a 47.6% economic interest and a 29.99% voting interest in BUMI Plc (1) TargetOverview • BUMI Plc (listed on the LSE with a current market capitalisation of US$2.9 bn) is a leading thermal coal player owning (2) : • 29% stake in PT BUMI Resources Tbk (“BUMI Resources”), the largest thermal coal producer in Indonesia, • 85% stake in PT Berau Coal Energy Tbk (“Berau”), the 5th largest thermal coal producer in Indonesia, • Interests in a diversified metals portfolio through BUMI Resources’ 87% ownership of its listed subsidiary PT BUMI Resources Minerals Tbk (“BRM”) Purchase Consideration • US$1.0 bn (valuing BUMI Plc at GBP10.91 per share at the date of the announcement) paid fully in cash (3) • Transaction is 100% funded through a US$1.0 bn amortizing senior debt facility provided by Standard Chartered Bank Corporate Governance • BORN has right to nominate professional management and directors to BUMI Plc’s board Notes • Voting interest calculated based on voting capital of 181 m shares • As of 8 February 2012 at an exchange rate of 1 USD to 0.63 GBP, including nonvoting shares for a total of 241.0mm shares • Price per share in GBP based on exchange rate of 1 USD to 0.62 GBP on 31 October 2011

  31. Transaction Structure And Governance Framework Strong New Governance Rights At All Levels • BORN will have active participation in the management of BUMI Plc and key underlying operating companies • BORN is well positioned to meaningfully realize value for all shareholders by virtue of its own impressive track record in Indonesia Transaction Structure BORN Sellers Sellers BORN 49.0% 51.0% 51.0% 49.0% (Comprised of voting ordinary shares) (Comprised of suspended voting ordinary shares) JV 1 JV 2 Others 25.1% (1) 52.4% (1) 22.5% (1) BUMI Plc Note • Stakes based on BUMI Plc’s total share capital of 241 million shares

  32. Overview of BUMI Plc Access to World Class Coal and Mineral Assets Current Corporate Structure (1) • Combined coal reserves of 3.3bn tonnes with combined production of 78mt in 2010 • 9M 2011 production of 62mt • Production expected to reach 140mt in 2014 • Significant potential for reserves expansion; only 70% of KPC’s concession area explored • Open cut mining with dedicated port facilities • All operations within 20km of coast • Diversified portfolio of first class metals PT Bukit Mutiara BORN & BNBR & LH Founders (2) Others 10% 48% 10% 32% BUMI PlcMarket Cap of US$2,866MM (3) 85% 29% BerauMarket Cap of US$1,612MM (4) BUMI ResourcesMarket Cap of US$5,359MM (4) • Largest thermal coal producer in Indonesia • Total coal reserves: 2,860mt (5) • Coal concession area: 188,007 ha • License Expiry Dates: 2018 - 2039 • 5th largest coal producer in Indonesia with FY11 production of 20mt • Total coal reserves: 467mt • Coal concession area: 118,400 ha • License Expiry Date: 2025 87% BUMI Resources MineralsMarket Cap of US$1,631MM (4) Source: BUMI Plc, BUMI Resources and Berau Filings • Diversified portfolio of first class metals assets in Indonesia and Africa Note • Based on total TSO of 241.0mm, including 60.4mm nonvoting shares • Nathaniel Rothschild holds 8.8% of total shares • As of 12 February 2012 at an exchange rate of 1 USD to 0.63 GBP, including nonvoting shares for a total of 241.0mm shares • As of 12 February 2012 at an exchange rate of 1 USD to 9,091 IDR • Includes KPC, Arutmin, Pendopo and FBS

  33. Transaction Objectives - Combination Transaction Objectives - BORN BORN Hard Coking Coal 2011 Expected Sales: 3.46 mt(1) Market Cap: US$1.7 bn(2) Diversification of Product Portfolio World Class Diversified Mining Company • Access to world class thermal coal and metal assets, with well established business models and strong cash flows • World’s largest sea-borne thermal coal producer • Well diversified product portfolio across hard coking coal, high grade and low rank thermal coal • Valuable assets in the metals segment comprising of gold, copper, zinc, iron ore, lead BUMI Resources Thermal Coal 2011 Expected Sales: 83 mt(1) Market Cap: US$5.4 bn(2) BUMI Resource Minerals Gold, Copper, Zinc, Iron Ore Resources Market Cap: US$1.6 bn(2) Stake in a World Class Thermal Coal Asset Shareholder Value Creation • Investment into 1st and 5th largest thermal coal producers in Indonesia • Combined reserves and production of both companies stand at 3.3 bn tonnes and 85m(3) tonnes respectively • Systematic ramp-up, cost synergies, and acceleration of exploration, development and production of greenfield assets Berau Thermal Coal 2011 Expected Sales: 20mt Market Cap: US$1.6 bn(2) Access to the Growing Thermal Coal Market Global Indonesian Natural Resources Company BORN Hard Coking Coal High CV Thermal Coal Low CV Thermal Coal Non Coal assets Gold, Copper, Zinc, Iron Ore • Positions the combined group as the largest Indonesian mining company in the world in terms of production • Highly positive demand and price outlook for global thermal coal • Indonesian proximity to key markets and position as the world’s largest supplier of thermal coal Transaction Rationale World Class Internationally Diversified Mining Company Opportunity to acquire a well known high quality asset that is immediately earnings accretive Note • 2011 expected sales annualized from 2011 interim results • As of 12 February 2012 at an exchange rate of 1 USD to 9,091 IDR • Expected 2011 production

  34. Coking Coal Thermal Coal Iron Ore Copper & Gold Gold, Moly Transaction Rationale (Cont’d) Diversified Across Coal and Metals Berau Type: ProductionReserves: 467 mt Telakon Type: DevelopmentReserves: 26 mt Resources: 73 mt Kaltim Prima Coal Type: ProductionReserves: 1,422 mt Dairi Prima Minerals Type: DevelopmentReserves / Resources: 11 mt / 25 mtGrade: 11.5% Zn, 6.8% Pb Kohong Type: ProductionReserves: 105 mtResources: 247 mt BUMI Mauritania Mineral Inventory: 100 mtGrade: 60% Fe Gorontalo Minerals Type: ExplorationMineral Inventory: 125 mtGrade: 0.55 g/t Au, 0.75 Cu INDONESIA AFRICA Pendopo Type: ExplorationReserves: 687 mt Konblo BUMI (Liberia) Type: Exploration Fajar Bumi Sakti Type: ExplorationReserves: 282 mt Newmont Nusa Tenggara Type: ProductionReserve: 7.7 bn lbs copper, 7.7 mm oz goldGrade: 0.6% Cu, 0.5g/t Au (phase 6) Citra Palu Minerals Type: ExplorationMineral Inventory: 2.5 mt gold, 106 mt molyGrade: 7.5 g/t Au, 0.14% Moly Arutmin Type: ProductionReserves: 469 mt Diamond, Precious Metals Zinc, Lead Held by BUMI Plc and its subsidiaries Held by Borneo Lumbung Energy and its subsidiaries Producing assets

  35. US$0.014 US$0.016 Financial Impact On BORN BUMI Plc’s investment is immediately earnings accretive for BORN Source: Bloomberg, Company Presentations BORN Expected EPS Accretion for FY2012E and FY2013E(2) (US$MM) FY2012E FY2013E Net Income (3)(4)(5) 26.6% 13.1% 13.1% 26.6% EPS US$0.015 US$0.020 Notes: • EBITDA (2011E) equal to c.US$ 332 m based on Bloomberg mean estimate • EPS forecasts for BORN standalone based on mean of brokers’ consensus as indicated on Bloomberg the day prior to announcement of the transaction (31 Oct 2011). EPS forecasts for BUMI Plc based on mean of brokers’ consensus as indicated on Bloomberg on 10 Feb 2012 • BORN’s effective economic interest of 23.8% in BUMI Plc • All-in cost of c.7% p.a. for acquisition debt taken by BORN to finance the acquisition • Assumes no additional equity issuance

  36. Thank you Q’s ?

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