An alternative coal developer in 2012 & producer in 2013 · Richards Bay Dry dock capacity being...

ASX: UNV

An alternative coal developer in 2012 & producer in 2013

Anthony Ward Head of Commercial & Corporate Affairs May 2012

www.universalcoal.com

Disclaimer Not an Offer for Securities This document has been created by Universal Coal plc (the Company) solely for use at the investor presentations to be made by the Company and does not constitute nor does it contain an offer or invitation to buy or subscribe for securities in the Company or an inducement to make an offer or invitation with respect to those securities. By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. Relevant Law & Relevant Persons The distribution of this document in jurisdictions outside of Australia may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, all such restrictions. Information is a synopsis only This document only contains a synopsis of information on the Company and accordingly no reliance may be placed for any purpose whatsoever on the sufficiency or completeness of such information and to do so could potentially expose you to a significant risk of losing all of the property invested by you or incurred by you of additional liability. The information presented in this document is subject to change without notice. Currency references Financial amounts in this document are expressed in Australian dollars, South African Rand or A$. USD or US$ shall mean the lawful currency of the United States of America. Forward looking Statements This document contains ‘forward looking statements’ which involve subjective judgment and analysis and are subject to significant uncertainties, risks, and contingencies, many of which are outside the control of, and are unknown to the Company. In particular, these forward looking statements are made only as of the date of this document, they assume the success of the Company’s business strategies, and are subject to business, competitive and economic uncertainties and risks. No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including the Company). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based. Given these uncertainties, recipients are cautioned to not place undue reliance on such forward looking statements. Subject to any continuing obligations under applicable law or any relevant listing rules of the ASX, the Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in this document to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in this document shall under any circumstances create an implication that there has been no change in the affairs of the Company since the date of this Presentation. Disclaimer Although reasonable care has been taken to ensure that the facts stated in this document are accurate and that the opinions expressed are fair and reasonable, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document and no reliance should be placed on such information or opinions. None of the Company, or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss, however arising, from any use of such information or opinions (save in respect of fraud). No reliance should be placed on the information and no representation or warranty (express or implied) is made by the Company or Pursuit, or any of their respective directors or employees or any other person, and save in respect of fraud, no liability whatsoever is accepted by such person in relation thereto. Competent Person Statement The information in this report that relates to Exploration Results, Minerals Resources or Ore Reserves relating to the Kangala, Roodekop, Brakfontein, Berenice-Soutpansberg and Somerville-Tuli Projects is based on information reviewed and compiled by Mr Jaco Malan, who is a registered natural scientist and a member of the South African Council for Natural Scientific Professions. Mr Malan is employed by Universal Coal plc and has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Coal Resources and Ore Reserves. Mr Malan consents to the inclusion in this report of this information in the form and context in which it appears. Reporting on Exploration Results The update have been compiled in accordance with the JORC Code, the recommendations and guidelines set out in the revised 2007 South African Code for The Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code) and the rules and guidelines relating to the independent expert’s reports set by ASIC and ASX.


Background

Universal Coal is a UK based Plc company, with primary operations in South Africa and ASX listed

Developer of thermal and coking coal assets in South Africa

First mine to commence in 2013 with 100% ROM product already sold

ASX IPO in December 2010, trading with the code UNV

Circa 10% of company shares owned by management demonstrating significant commitment to company’s delivery on strategy

Top 10 Shareholders account for 35% of the shares on issue

Major Shareholders include Maple Leaf International Holdings, JP Morgan Nominees, Bell

Potter Nominees, Cogent Nominees, Geoff Tarrant


Share Overview Seen retail sell down in past 2 weeks to

52 week low (online traders)

Broker & Institutional positions have held and in some cases grown

Shares on issue 209.5m / 161m listed CDIs

Options on issue 26.9m 52 week high A$0.445 52 week low A$0.16 30 day VWAP A$0.2205 Close Price A$0.18 CDI Market capitalisation A$ 30 million Cash A$ 5.1 million

2015

294Mt thermal coal resources

1.64Bt coking coal resources 10-15Mtpa ROM production

+ In 2013

Revenue stream


New strategic funding

An A$12m converting note facility secured with one of the world’s largest private financial institutions Susquehanna International Group LLP

Initial note facility of A$7m to be drawn down May 2012

Facility structured to ensure no dilution to shareholders today

Priced at a premium to market (minimum close price of $0.2336 – with a premium of 10%

Must be fully converted by maturity (7 years)

No conversion for first 7 months from drawdown, then capped conversion thereafter

Interest rate of 9.5%, can be paid in shares at company election for first 18 months

Broker Coverage

“We believe that UNV is trading at a significant discount to our NPV of A$1.06/sh and represents a compelling investment opportunity”

“Share price catalysts include:

(1) Completion of the revised Feasibility study, off- take arrangements and debt funding for Kangala

(2) Finalise Berenice/Cygnus scoping study

(3) Completion of the Feasibility study for Roodekop”

^Source: BBY research 11 April 2012

BBY Research: April 2012

Rating^ Strong Buy

Target Price^ A$1.06

NPV^ A$1.06


Substantial assets

Substantial ‘split risk’ coal resources of 1.93 billion tonnes (JORC compliant)

Coking coal projects with: • resources of 1.64 billion tonnes • +25,000ha under various prospecting licenses

Thermal coal projects with: • resources of 294 million tonnes • 1 mining right and another five applications at various stages • 1 near developmental project, 2 at various stages of feasibility

Demonstrable coal growth: • Two acquisitions totalling 136Mt to date • drilling added 1.3 billion tonnes to date since IPO • Additional acquisition being finalised • Organic growth through applications and drilling underway


Where we are


South African coal sector Mature coal mining culture

major and junior miners producing around 240Mtpa large number of contractors with capacity

Strong domestic demand

Eskom consumption 125Mtpa (2008) domestic non-power sector (10Mtpa 2008) Sasol coal to liquids (41Mtpa 2008) Independent Power Producers (IPP’s)

Strong export and domestic demand demand from India, Korea and China robust price environment

Good infrastructure four good export port facilities good rail network


South African coal sector

Good Existing and expanding port infrastructure port capacity (RBCT capacity increased 91Mt pa) Richards Bay Dry dock capacity being expanded by Grinrod to

~10mtpa Durban Harbor being optimized Maputo Matola Terminal being expanded to 20Mtpa following the

Vitol Transaction by Grinrod

Expanding Supporting infrastructure rail capacity on the 66Mtpa RBC line being upgraded to over

80Mtpa by 2014 by diverting sundry traffic) alternative rail access to Maputo and Durban being expanded on

Universal Coal assets quality coal assets, located within reach of rail network to ports Coking Assets

• rail network under-utilised • coking coal 30km from rail

siding link to Maputo (680km) for coking and SA power station (200-400km)

Thermal Assets • all thermal projects between 5-14km from a rail siding link

to port


What we have: resource summary (JORC) Project Measured

Mt Indicated

Mt Inferred

Mt Total

Mt Coking coal Berenice-Cygnus 7.9 394.5 922.0 1,324.4 Somerville-Donkin 316.4 316.4

Coking coal total 7.9 394.5 1,238.4 1,640.8 Thermal coal Kangala (domestic) 48.7 4.4 70.9 124.0

Roodekop (export) 67.2 15.6 - 82.8

Brakfontein (export) 70.5 15.0 2.2 87.7

Thermal coal total 186.4 35.0 73.1 294.5 Total resources 194.3 429.5 1,311.5 1,935.3


What we are doing: Kangala Developing our first operation to be a DOMESTIC

thermal coal mine - cash generator with long term Eskom contract Completed optimisation of bankable feasibility

study Announced Term Sheet & MOU with ESKOM Life-of-mine low-cost eight year open-pit

operation (>$15/t Opex; 1.8:1 strip ratio LOM) Current 35Mt measured resource included in first

pit (Kangala) with • Additional 89Mt measured, indicated and

inferred resources drilled • Additional drilling completed, to increase

resource/reserve base and life-of-mine beyond current 8 years– to be completed by April 2012

Development schedule Late 2012 Mining right and environmental licence issued Granting of water license imminent (H1 2012)


What we are doing: Berenice-Cygnus Phase 2 drilling commenced (~100 holes) - targeting a measured resource over 560Mt

potential open pit operation (3:1 strip ratio) DRA scoping study - Soft coking coal with high fluidity and good swell index with 10-

15Mtpa ROM potential Seeking markets and partners for coking and thermal coal Infrastructure: 30km from rail siding with access to Maputo port (680km)

F FF

NORTH SOUTH

Universal Coal - Berenice Project; N-S Cross Section (farm Berenice)

0 460 920 1380m

0

100

250m

115.14m85.06m

271.59m209.45m

61.91m7˚3˚

2˚

LegendSandstone

Fault F

BE548_002

27.26m

40.97m

53.45m

Sub-Zone “A” : 3.12mSub-Zone “B” : 4.29m

Sub-zone “C” : 0.91m 90.48m

Upper Zone

Main Zone


What we are doing - Other Developing our export thermal coal assets – an

exciting cash generator: Roodekop (export and low phosphorus coal)

• 82Mt measured and indicated resources • feasibility study near completion H1 2012 • mine development planned for H2 2013,

subject to licencing • mining and environmental licenses

application submitted

Brakfontein (export coal) • 87 measured and indicated resources • feasibility study commenced H1 2012 –

synergies with Kangala (shared infrastructure)

• mine development planned for 2013 • mining license application submitted, EIA

underway


Investment case Indentifying markets for the company’s initial mines which are not susceptive to current market conditions (securing off take

arrangements before production)

Split risk coal asset strategy, thermal (global power demand) and coking coal

South Africa alternative to Australia and other coal production markets

Funded to continue the multi year development of the company’s other assets

Significant coking coal (40% ownership, option to 74%) and thermal resources totaling 1.93 billion tonnes (JORC compliant)

Additional exploration potential and acquisition opportunities

Existing rail infrastructure with access to ports

Growing broker and institutional support on the back of sustained program delivery and ahead of near term production


The nationalisation debate debated!

It is not ANC or government policy

ANC-commissioned study into nationalization re-confirmed that it is not a viable option

National Union of Mineworkers (NUM) against nationalization

Communities and state better served by thriving, job-creating vibrant mining sector

“Nationalisation of the country's mines was neither government policy nor that of the ruling party” Susan Shabangu, Mineral Resources Minister London, November 2011


Thank you Contact details

Anthony Ward Head of Commercial & Corporate Affairs Universal Coal plc Email: [email protected] Phone: +612 8116 8701

Registered office One America Square, Crosswall London, EC3N 2SG Phone: +44 (0) 207 264 4444 Facsimile: +44 (0) 207 264 4440

An alternative coal developer in 2012 & producer in 2013 · Richards Bay Dry dock capacity being...

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