PT. BAYAN RESOURCES Tbk....1 Overview 2Q19 The 2Q19 was overall a better quarter after a challenging...

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1

Overview

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2Q19

The 2Q19 was overall a better quarter after a challenging first quarter as Tabang’s water levels returned to normal and excess inventory was barged.

As barging improved so did sales volumes which increased 43% quarter on quarter.

Overall

ASP dropped in the 2Q19 which was reflective of the overall drop in market prices. With cash costs remaining flat our profit margins dropped although margins remain healthy and one of the strongest in the Indonesian coal sector.

2

Bayan’s Financial and Operational Performance

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Financial Performance

(In Million USD)

Revenue 1,676.7 429.1 493.2 837.1 858.6

Gross Profit 846.9 249.7 194.5 456.1 347.9

EBITDA 736.4 222.2 146.2 403.4 273.3

Net Profit After Tax 524.3 160.0 99.8 287.7 186.7

Financial Ratios

Gross Profit Margin (%) 50.5% 58.2% 39.4% 54.5% 40.5%

EBITDA Margin (%) 43.9% 51.8% 29.7% 48.2% 31.8%

Net Profit Margin (%) 31.3% 37.3% 20.2% 34.4% 21.7%

Net Debt to EBITDA (x) Net Cash Net Cash Net Cash Net Cash Net Cash

Operational Statistics

Overburden Removal (MBCM) 137.5 31.6 40.5 61.0 78.6

Strip Ratio (x) - based on production volume 4.8 3.8 4.8 4.1 4.9

Coal Production (MT) 28.9 8.4 8.5 14.8 16.0

Sales Volume (MT) 28.3 7.6 10.5 14.3 17.8

2018 2Q18 1H192Q19 1H18

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One of the Quickest Growing Coal Producers

Bayan is one of the top five coal producers by volume in Indonesia with a view to moving into the top 3 within the next few years.

2018 completed the initial phase of infrastructure to allow Bayan to continue to be one of the fastest growing producers in Indonesia.

2019 results show the continued growth.

Source: Company Filings, Company Data

2016 - 2018 CAGR (Production)

71.7

54.2

16.1

3.1 1.3

-1.9 -7.1 -20

0

20

40

60

80

Bayan GEMS PTBA Indika Adaro Bumi ITMG

%

Source: Company Fillings. Company Data

19.7

13.8

8.3 7.5 5.8 5.7

0

5

10

15

20

25

BUMI Adaro Kideco Bayan ITMG PTBA

Mil

lio

n T

on

ne

s

1Q19 Production

4

One of the Lowest Cost Producers in Indonesia

1Q19 Strip Ratio

Global Cost Competitive Positioning

Source: Wood Mackenzie, Company Data

3.2 4.3 4.5

5.0 5.9

7.8

13.2

0

2

4

6

8

10

12

14

Tabang PTBA Adaro Bayan Kideco Bumi ITMG


Seaborne Export Supply (MT)

Tabang is independently rated as one of the worlds lowest cost energy-adjusted producers.

Tabang has large reserves and a very low Life of Mine (LOM) stripping ratio and has recently increased its reserves by 62% to 911 million MT.

Combined with the other mining concessions the average stripping ratio of the Group is not anticipated to exceed a maximum of 5:1.

Tabang

Q1 Q2 Q3 Q4

5

And One of the Highest Margin Producers in Indonesia


Source: Company Filings, EBITDA estimated using Company Data

1Q19 EBITDA Margin (%)

1Q19 Gross and Net Profit Margin (%)

42.0

33.3 31.3

20.7 18.1 19.6

23.8 21.6

15.6

8.6 7.0 9.9

0

5

10

15

20

25

30

35

40

45

Bayan PTBA Adaro ITMG BUMI Indika

Gross Profit Margin Net Profit Margin

Over the last couple of years Bayan has transformed itself into one of top three highest margin producers in Indonesia.

This is due to the ramp up of its world class Tabang coal complex, which is anticipated to continue to grow and produce industry leading margins.

Net profit margins are anticipated to continue to outperform the industry norms due to the low cost base, low royalty rates and lower corporate tax than first Gen CCOW’s.

38.2 34.8

32.4

18.6 15.9

9.9

0

10

20

30

40

50

Adaro Bayan PTBA Indika ITMG BUMI

6

Net Debt / EBITDA

x

5.8x

2.6x

0.1x 0 0 0

0

2

4

6

8

2015 2016 2017 2018 1Q19 2Q19

2.7x 3.7x 0.0x

16.8x

71.5x 87.4x

0

50

100

150

200

250

2015 2016 2017 2018 1Q19 2Q19

EBITDA / Net Interest Expense

x

The Group moved from a net debt to net cash position by the end of 1Q18.

The Group now has the financial strength to continue with the next phase of expansion of Tabang.

Targeted leverage of less than 3x EBITDA throughout the commodity cycle.

Bayan has been assigned independent credit ratings of BB-, Ba3 and B+ by Fitch, Moody’s and S&P, respectively in 2018.

Deleveraged the Group

7

Low Cost Incremental Growth

Able to continue expansion using existing infrastructure at Senyiur whilst infrastructure for the next phase is ongoing.

New coal haul road and barge loading facility targeted to be constructed and brought into operations in 2023 which will add additional capacity of 30+ million MT.

Total Budgeted capex in the region of USD 400 million for the Group, of which USD 270 million is expansionary capex tied to the Tabang Project in the next five years.

9 13

23

50

65 71

85

96 98

110

130

159 161

175

207

218

0

50

100

150

200

250

30+

55+

Today Upside

…Unlocking tangible capacity

upside at ~US$9/ton

discretionary growth Capex

Tabang Capacity Growth

Capex Intensity by Country (1)

Source: Wood Mackenzie

Notes

(1) Based on 2012 real dollars

(2) US$270m Capex divided by an incremental 30+ Mtpa production / sales capacity

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2Q 2019

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Overburden Removal

Coal Production

Weighted Average Strip Ratio

Average Cash Costs

Coal Sales

Average Selling Price

Committed & Contracted Sales

EBITDA

Debt and Cash Position

Capital Expenditure

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Overburden Removal (OB)

(in million BCM) 2Q19B 2Q19

Teguh Sinarabadi / Firman

Ketaun Perkasa 11.1 9.6

Perkasa Inakakerta 2.4 2.5

Wahana Baratama Mining 6.3 5.1

Tabang Concessions 20.4 21.9

Gunungbayan Pratamacoal 1.9 1.4

Total 42.0 40.5

2Q19 overburden removal increased by 28.5% over same period last year due to the significant growth of Tabang

(million BCM)

Note : B stands for Budget Figure

31.6

42.0 40.5

0

10

20

30

40

50

2Q18 1Q19 2Q19B 2Q19

38.1

Lower than Budgeted overburden in 2Q19 due to: Lower OB at TSA/FKP due to

higher rain hours than forecast. Lower OB at WBM due to Arutmin

slowing down OB operation in boundary area.

Two (2) fleets of equipment swapped from overburden removal to coal extraction.

Higher overburden than 1Q19 due to increase in Tabang due to additional one (1) fleet of overburden equipment being mobilised to site and dozer push recommencing part way through the quarter.

Increase in 2Q19 compared to 2Q18 due to continued expansion of operations at Tabang.

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Coal Production

8.4 8.1 8.5

0

2

4

6

8

10

2Q18 1Q19 2Q19B 2Q19

7.5


(in million MT) 2Q19B 2Q19

Teguh Sinarabadi/ Firman

Ketaun Perkasa 0.8 0.8



Tabang Conssesions 6.5 6.9


Total 8.1 8.5

Coal production exceed Budgeted levels by 5%

(million MT)

2Q19 coal production was higher than Budgeted and 1Q19 due to two (2) additional fleets utilized for coal extraction at Tabang (swapped from OB production) to increase coal production and reduce input inventory as barging improved.

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Weighted Average Stripping Ratio (SR)

2Q19B 2Q19

Teguh Sinarabadi / Firman

Ketaun Perkasa13.3 12.6



Tabang Concessions 3.1 3.2


Total 5.2 4.8

Weighted Average SR (:1)

3.8

5.2 4.8

0

1

2

3

4

5

6

2Q18 1Q19 2Q19B 2Q19

5.0


Lower stripping ratio comparing to the Budget and 1Q19

2Q19 weighted average stripping ratio was lower than the Budget and 1Q19 mainly due to:

Lower SR at TSA/FKP as we continue to mine in the low SR area whilst the Budget anticipated to mine at the high SR area in June.

Lower SR at WBM due to changes in the mining sequence.

12

Average Cash Costs

27.0

33.2 33.2

0

10

20

30

40

2Q18 1Q19 2Q19B 2Q19

33.3


Average Cash Costs include Royalty, Barging and SGA

2Q19 cash costs were in line with the Budget and 1Q19

2Q19 Cash Costs were US$ 33.2/MT principally in line with the Budget despite:

Accrual of DMO quota expense in 2Q19.

Partially offset with lower overburden removal costs due to lower average SR.

2Q19 cash costs were in line with 1Q19 despite:

Lower overburden costs due to lower average SR than 1Q19.

Lower barging costs due to higher water level and no transshipment to CTB in 2Q19.

Partially offset with accrual of DMO quota expense in 2Q19.

Cash Cost per Expense - 2Q19

Coal

Hauling

13%

Barging

12%

Royalty

10%

Selling

Expense

3%

GA expense

1%

Overburden

and Mining

42%

Employee

Cost

5%

Other

Production

Cost 6%

Coal

Purchase

8%

13

Coal Sales (by volume)

7.6

9.5 10.5

0

2

4

6

8

10

12

2Q18 1Q18 1Q19B 2Q19

7.3

(million MT)


2Q19 sales volume increased 38.2% compared to same period last year

Higher 2Q19 coal sales volumes of 10.5 million MT was due to a higher water levels which improved barging at Senyiur.

Monthly barging at Tabang:

1Q19: 5.6 million MT.

2Q19: 8.0 million MT.

Tabang decreased inventory over the 2Q19 due to higher water levels which allowed barging of the excess inventory which accumulated over the 1Q19.

Average Senyiur Water Levels

-

2

4

6

8

10

12

1 2 3 4 5 6 7 8 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

Mete

r

Jan-19 Feb-19 Mar-19

Apr-19 May-19 Jun-19

14

Coal Sales (by volume) (continued)

Geographic Distribution (YTD 2Q19) – by Volume

Per Region Per Country

PLN continues to be fully-supplied and currently has a zoning policy therefore our domestic sales have decreased.

The Company is focusing on continuing to build its long term contracts to Indonesian and other South East Asian IPP’s

2019

Fixed Price

Floating Price

32.7 million MT

70%

30%

Committed and Contracted Sales for 2019 As at 30 June 2019 the Group had committed and contracted sales volumes of approximately 32.7 million MT for 2019 with an average CV of 4,605 GAR kcal/kg.

2019 Fixed Price element at US$ 45.0/ MT with an average CV of 4,576 GAR kcal/kg.

North

Asia

26%

South

East Asia

32%

South

Asia

32%

Europe

1%

Domestic 9%

India 31%

China

11%

Malaysia

13%

Philipines

17%

Korea

11%

Indonesia

9%

Others

8%

15

Average Selling Price (ASP)

55.3

47.2 47.0

0

10

20

30

40

50

60

70

2Q18 1Q19 2Q19B 2Q19

50.1

2Q19 ASP of US$ 47.0/MT was in line with the Budget


(U

S$

/ M

T)

ASP includes coal and non-coal sales *

2Q19 ASP of US$ 47.0/MT was slightly below the Budget due to the main coal indexes being lower than Budgeted.

The continued drop in the Newcastle index has resulted in a drop in ASP quarter on quarter.

Significant drop in Newcastle benchmark index which reduced our ASP for our WBM and TSA/FKP coal as well as our index linked Tabang sales.

16

EBITDA

222.2

137.4 146.3

0

50

100

150

200

250

2Q18 1Q19 2Q19B 2Q19

127.0

1Q19 EBITDA Margin (%) Competitors Table

One of the best EBITDA margin’s in Indonesia

2Q19 EBITDA was higher than Budgeted and 1Q19 due to the higher sales volumes partially offset by lower ASP

The 2Q19 EBITDA margin of 29.7% marginally lower than the Budget of 30.4%.

EBITDA margin of 34.8% represents one of the best margins in the Indonesian coal sector.


Source: Company Filings, EBITDA estimated using Company Data

38.2 34.8

32.4

18.6 15.9

9.9

0

10

20

30

40

50

Adaro Bayan PTBA Indika ITMG BUMI

17

130.0

100.0

210.0

261.8

332.6

423.1

0

50

100

150

200

250

300

350

400

450

4Q18 1Q19 2Q19

Debt Cash and Restricted Cash

Debt and Cash Position

Strong net cash position

(in

mil

lio

n U

S$

)

Signed new Permata Loan for USD 50 million Working Capital facility for additional liquidity.

During 2Q19 the Group drewdown loans totalling USD 110 million.

The Group continued to generate excess cash throughout 2Q19.

The Group became net cash positive from the end of 1Q18 and is anticipated to remain so for 2019.

18

Capital Expenditure

Capital expenditure is under Budget for this quarter and anticipated to remain so for the full year

In

Mil

lio

n U

SD

YTD Capex was USD 31.9 million, which was significantly below the Budget as the spend on the new coal haul road has not yet fully commenced as permits are still in process.

Major ongoing projects are:

Expansion at Tabang including:

• Senyiur jetty expansion.

• Partial asphalting of current coal haul road.

• Construction of Coal Pad – 3

• KM32-36 transshipment facility

• Additional support equipment & facilities.

Underpass at Melak.

Expansion at BCT.

48.3

28.5

11.1

20.8

0

10

20

30

40

50

60

Q1 Q2

Budget Actual

19

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PT Perkasa Inakakerta PIK

PT Teguh Sinarabadi TSA

PT Firman Ketaun Perkasa FKP

PT Wahana Baratama Mining WBM

PT Brian Anjat Sentosa BAS

PT Bara Tabang BT

PT Fajar Sakti Prima FSP

PT Dermaga Energi DE

PT Tanur Jaya TJ

PT Tiwa Abadi TA

PT Silau Kencana SK

PT Orkida Makmur OM

PT Sumber Api SA

PT Bara Sejati BS

PT Apira Utama AU

PT Cahaya Alam CA

PT Mamahak Coal Mining MCM

PT Bara Karsa Lestari BKL

PT Mahakam Energi Lestari MEL

PT Mahakam Bara Energi MBE

Mamahak

Tabang

South

Pakar

Pakar

Appendix

20

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Appendix

Kangaroo Resources Limited KRL

PT Dermaga Perkasapratama DPP

PT Indonesia Pratama IP

PT Muji Lines Muji

PT Bayan Energy BE

PT Metalindo Prosestama MP

PT Sumber Aset Utama SAU

PT Karsa Optima Jaya KOJ

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Disclaimer

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This presentation contains forward-looking statements based on assumptions and forecasts made by PT. Bayan Resources Tbk management. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and speak only as of the date they are made. We undertake no obligation to update any of them in light of new information or future events. These forward-looking statements involve inherent risks and are subject to a number of uncertainties, including trends in demand and prices for coal generally and for our products in particular, the success of our mining activities, both alone and with our partners, the changes in coal industry regulation, the availability of funds for planned expansion efforts, as well as other factors. We caution you that these and a number of other known and unknown risks, uncertainties and other factors could cause actual future results or outcomes to differ materially from those expressed in any forward-looking statement.

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Thank You

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PT. BAYAN RESOURCES Tbk....1 Overview 2Q19 The 2Q19 was overall a better quarter after a challenging...

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