Post on 01-May-2018
Centennial CoalUBS Australian Resources & Energy Conference
Robert Dougall, Chief Financial OfficerTuesday 17 June 2008F
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Disclaimer:
This presentation is prepared in accordance with Australian market practice.
The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Centennial Coal Company Limited.
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Who Are We ?
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> Established in 1989, listing on ASX in 1994
> Operator of 12 mines, largely underground – all in NSW
> Australia’s largest independent coal producer
> JORC (Note) Compliant Resources & Reserves (100% basis) at 30 Jun 07 of:- Total Resource - 2.4 billion tonnes- Marketable Reserve - 0.4 billion tonnes
> Major supplier to the NSW Electricity Industry, supplying 46% of its coal needs
> Growing export exposure as rebalancing of sales mix gathers pace over the next few years –targeting 50:50
> Exports through Port Kembla and Newcastle
> Customers include power stations in Japan, Korea, Taiwan and Europe and steel mills in Japan
> Market Capitalisation of A$1.7bn + and ranked around 120 in the S&P / ASX 200
Who Are We ?
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Note: Reference to JORC Statement is per 2007 Annual Report, page 18For
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March 2008 Quarterly Update
Another Strong Quarter
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March 2008 - Another Strong QuarterMarch 2008 Quarter (compared to December 2007 Quarter):
> Equity ROM production 4.1 million tonnes 25%
> Equity Saleable production 3.6 million tonnes 17%
> Equity Sales 3.3 million tonnes 11%
March 2008 YTD (compared on a like-for-like basis with pcp):
> Equity ROM production 12.5 million tonnes 3%
> Equity Saleable production 11.3 million tonnes 3%
> Equity Sales 11.3 million tonnes 4%
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March 2008 - Mine Highlights
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• Angus Place – on track for a record year
• Springvale – move to 24/7 operating basis confirmed
• Clarence’s low sulphur coal in strong demand, commanding premium prices
• Newstan – record quarter and considering further short-term export opportunities
• Mandalong – on track for 4.7million tonnes and a record year
• Awaba – mine life extended by a further year, with production to be directed to export marketsF
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Key Financials – Jul to Dec ‘07
> PBT – Continuing operations A$ 22.7m (pcp -$22.1m)
> Significant items * A$ 322.4m
> Profit/(loss) after tax and minority interests A$ 239.5m
> Capital return - $1.88 per share paid 29 January 2008
> 4 cent fully franked Interim Dividend (ex-date) 25 June 2008
> Debt reduced and refinanced – 4 year facility
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* Sale of Anvil Hill & Austral Coal For
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Debt Refinanced
Unsecured senior debt with negative pledge
3 Australian and 4 Overseas banks
18 December 2011 (4 years)
$175 million Term loan$150 million Revolving credit facility$135 million Guarantee and LC facility
A$460 million Transaction Size
Maturity
Participants
Structure
Structure
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US Private Placement repaid/Bank facilities restructured
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Gearing
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050
100150200250300350400450500550600650700750
Jun 04 Jun 05 Jun 06 Jun 07 Dec 07 Apr-08
A$m
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20
30
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60
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100%
Net debt Net debt/equity (%) Net debt/Net debt + equity (%)
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Operations Update
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Centennial’s Operations
Berrima
Scone
Rylstone
Mudgee
Muswellbrook
Singleton
Maitland
Newcastle
Lithgow
Gosford
SYDNEYKatoomba
Berrima WollongongPort Kembla
KiamaMoss Vale12
Charbon
Angus Place
Springvale
Clarence
NewstanAwabaMyunaMandalong
ManneringIvanhoe
Lamberts Gully
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Western Operations
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Angus Place/SpringvaleAngus Place
> Continuing high levels of production being achieved
> Heading for a record year
> New longwall equipment on site, installation at scheduled June LW changeover
> Angus Place East - Exploration drilling programme
Springvale
> Completed 1st LW move for 18 months during the half
> Optimisation plan underway to increase export tonnes
> Sustainable 24/7 operation implemented
> Lamberts Gully opencut life extended
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Angus Place – New Equipment / Wider Walls from mid-2008Springvale – Optimise Export Production
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Clarence/Charbon
Clarence
> First half of year on development
> Extensive low cost extraction areas now available > 1 year
> Feasibility into new technology to increase productivity completed, with contract negotiations underway
Charbon
> Production in line with expectations
> Examining underground potential for additional production
> Opencut extension underway
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Clarence – New Mining Areas
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Clarence – FCT Project
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Joy Flexible Conveyor Train
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Northern Operations
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Mandalong
> Record production YTD
> Heading for a record year
> On track to average 5 mtpa, with export expansion plan
> Newstan development equipment and crews transferred
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Mandalong – Breaking Records
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Newstan – Record Quarter
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Possible additional extraction of longwall coal (LW24B & LW25)For
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◄ Myuna – Expanding ProductionFassifern seam performing wellWallarah seam underway
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▲ Mannering – Record Quarter and HalfNew contract will extend life
▼ Awaba – Export productionMine life extended to 2010
Northern Operations
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Expanding Export Capacity
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> Centennial intends to capitalise on the current strong export markets by maximising exports from current operations where possible
> Medium term objective to increase proportion of export and market-priced sales> Priority of installing export infrastructure at long life longwall mines
CEY Export Sales (FY08-FY09)
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2.0
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5.0
6.0
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FY08(H1) FY08(H2) FY08 (Total) FY09 (Total)
Tonn
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Managed Basis Equity Basis
Note: Figures are for continuing operations & exclude Tahmoor
Centennial – Short-term Export Growth Profile
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Mandalong – Southern Extension
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> Allows for extended mine life at an average 5 mtpa production rate
> 102 million tonnes of reserves
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Mandalong Coal Transport – Haul Road
• Consent approved
• Completing detail designs
• Allows export via Newstan washery and rail loop
• New rail loop option under investigation
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Mandalong Export – Rail Option
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Awaba East Project> Potential major new longwall mine> Large resources of thermal and semi-soft coking coal> Concept complete, pre-feasibility underway> Existing exploration data internally reviewed and geological model updated> Exploration drilling programme commenced to further refine the reserve area> Mining options being considered
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Indicative timeline
FY08 FY09 FY10 FY11 FY12 FY13 FY14
Newstan complete
Concept Study
Approvals
Prefeasibility
Feasibilty
Development
LW Operating
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Awaba East Area – Mine Layout
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> Upgrade of Lidsdale Siding export facility to take Springvale exports to 2mtpa and beyond (to support Springvale expansion) and with capacity to export 3mt per annum from Lithgow-based operations
> Charbon extended mine life - concept report completed - commencing pre-feasibility stage
> Neubeck open-cut project feasibility study
> Airly underground mine being developed
Western Region Export Capacity
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> Approved mining lease
> Updated feasibility and coal transport options study in progress
> Potential +1.5 mtpa mine
> Export thermal coal via PKCT
Airly Mine
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Airly Mine Layout
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RailLoadingBin
Possible
Northern Turnout
PRO
POSE
D
RAIL
LOOP
Product Stockpile
Conveyor
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Looking Ahead
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FY08/FY09 – Strong Earnings Outlook, Low Risk
The majority of exports are through Port Kembla (rather than Port of Newcastle)No port congestionNo demurrage
Port
Export prices for JFY09 currently being finalised High degree of confidence of significant uplift in prices
Export Prices
Rail contracts are in place for the required capacityLess rail congestion on rail track to Port Kembla
Rail
~ 50% in export volume, with FY09 exports representing ~ 30% of total equity sales Short term production growth not reliant on “blue sky” projects (avoids development and start-up risk)
No weather disruptions – all the operations are in NSW
Production
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Centennial Market Mix
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> As Centennial’s domestic contracts expire over time, additional coal will be available for exports.
> In addition, new internal projects provide further growth in exports
Note: Figures are shown on a managed basis (rather than equity)
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4.0
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2009 2013 2014 2015 2009 2013 2014 2015
RO
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Domestic Export/Uncontracted Projects
Domestic Export
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Note: Figures shown are on a managed basis (rather than equity)
Centennial Growth Profile
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Marketing flexibility: By 2012/13, CEY production can be evenly split between domestic and export
CEY Indicative Growth Profile
Current - Domestic
Current - Uncontracted/Export
New Projects
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5.0
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15.0
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25.0
30.0
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
Prod
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Closure of Newstan during 2009 corresponds with a drop off in
domestic contracts
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Outlook> Centennial remains Australia’s largest independent coal producer
> Conservative gearing of less than 30%, with comfortable interest/debt service cover ratios
> Focus on existing portfolio of strongly performing assets
> Organic growth from expansions at Springvale / Angus Place and Mandalong
> Well advanced “brownfield” projects at Airly / Neubecks / Awaba East
> Significant resource and reserve base
> Increasing production and exports with record prices
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