Real Alpha Investing in the Resources Sector - GIC Mines & Money Presentation (March 2015)
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Transcript of Real Alpha Investing in the Resources Sector - GIC Mines & Money Presentation (March 2015)
Real Alpha Inves-ng In The Resources Sector
Brad Ridge CEO/Principal Partner Grid Investment Capital
GRID INVESTMENT CAPITAL
March 2015
Disclaimer: The contents herein are of a general nature only and neither represents, nor is intended to represent, any specific advice on any par:cular ma;er, individual or corporate objec:ves, financial situa:ons, or needs. Grid Investment Capital Pte Ltd does not provide legal, accoun:ng, financial, investment or taxa:on advice. Any persons receiving the contents herein should therefore seek advice based on their par:cular circumstances from independent legal, accoun:ng, investment, and tax advisors. Grid Investment Capital Pte Ltd makes no representa:ons or warran:es of any kind, express or implied as to the accuracy of the informa:on, content, materials or products enclosed. Neither Grid Investment Capital Pte Ltd, nor its affiliates, directors, officers, employees, agents, contractors, successors or assigns will be liable for any damages whatsoever arising out of, or in any way related to, the use of this content. This limita:on applies to direct, indirect, consequen:al, special, puni:ve, or other damages any third party may suffer, as well as damages for loss of profits, business interrup:on or the loss of data or informa:on. The contents enclosed is provided on a "as is" basis, and may contain errors, faults, and inaccuracies and may not be complete and/or current. You may u:lise the contents and electronically copy and print hard copies of parts of the enclosed solely for personal, non-‐commercial use. Any other use, including the reproduc:on, modifica:on, distribu:on, transmission, republica:on, display or performance, of the contents is strictly prohibited. Grid Investment Capital Pte Ltd is registered in Singapore (Company #201110078C) at 133 Cecil Street, #18-‐02 Singapore 069535.
GRID INVESTMENT CAPITAL
Singapore based Principal investor
Global co-‐investor partners
Investment Profile
Private Equity, Listed Markets Minimum 3-‐5x capital return, 2-‐3 yr. dura:ons Tangible compara:ve advantages Quan:fiable risk/return profile Liquid capital exit strategy
Sectors
Commodi:es, Infrastructure/Logis:cs Financial Market Services IT/Digital e-‐Commerce
Opportuni:es
Mul:ple Sources Direct approaches, brokers, funds, associates
GRID INVESTMENT CAPITAL
Conducive Time Zone
Favorable Business Environment
Principal Capital Investment Aggressive Return Targets Short-‐Med Term Dura-ons Pragma-c Risk Approach
Demonstrated Track Record
Elevated Deal Flow High Watermarks
Few Executed Investments
Diversified Knowledge Leading Global Experience
Dis-nct Compara-ve Advantage
GRID INVESTMENT CAPITAL
What Do We Think
About When Investing?
Despite GFC Reforms, The World
Is Still A Scary Place!
GRID INVESTMENT CAPITAL
GRID INVESTMENT CAPITAL
40% in 7 Years!
McKinsey
GRID INVESTMENT CAPITAL
McKinsey
GRID INVESTMENT CAPITAL
McKinsey
EU Failed fiscal management, failed banking
system
GRID INVESTMENT CAPITAL
JAPAN Govt sQmulus failure, fiscal blowout,
insurmountable debt, exported deflaQon
McKinsey
Macro Economic ObservaQons
Global debt levels higher than any point in history Unprecedented levels of global Govt debt Contrac:ng private debt -‐ less investment Low interest rate environment is here to stay
Unless the debt bubble bursts! China – Rising non transparent leverage EU – Deteriora:ng growth, failed banking system Japan – Expor:ng a debt/defla:on vortex Falling global GDP epidemic = Lower commodity prices
GRID INVESTMENT CAPITAL
Staples From Experience
Humans have short memories No one knows where prices are going Search for yield will drive increased risk
GIC Investment Focus
Macro risk exposure minimiza:on Search for compelling product/sector opportuni:es Demand, cost, margin, NPAT focus Unique, sustainable stories
GRID INVESTMENT CAPITAL
GRID INVESTMENT CAPITAL
GRID INVESTMENT CAPITAL
Rising Demand Falling Supply
Cheapest to Deliver High Margin
Clear Route to Market No Like-‐for-‐Like Global CompeQtor
GIC ini:al private equity investment -‐ Feb 2012 Publically listed -‐ Mid 2012 (ATU:ASX) 181m shares fully diluted, 50% management Market capitaliza:on circa A$260m ($1.45)
GRID INVESTMENT CAPITAL
Seed +1700% IPO +625%
Background
GRID INVESTMENT CAPITAL
Flagship ‘Groundhog’ Project
B.C. Canada
The Worlds largest UHG anthracite coal development project
GRID INVESTMENT CAPITAL
Flagship ‘Groundhog’ Project
B.C. Canada
MulQple Shallow Seams
GRID INVESTMENT CAPITAL
MulQple leases MulQple mines
800km2
GRID INVESTMENT CAPITAL
220km Road
MulQple routes to market
GRID INVESTMENT CAPITAL
Port Stewart
Stewart Bulk Terminals 3Mtpa port capacity secured non ‘take-‐or-‐
pay’ contract
Stewart World Port 5Mtpa port capacity under MOU
commencing 2016
Largest undeveloped HG-‐UHG anthracite deposit Groundhog 1.6Bt defined JORC resources >600Mt at Groundhog North (‘GHN’) alone Independent GHN supplementary PFS Oct 2014
38 Year mine life Shallow depth, mul:ple thick seams Amiable to open cut/underground
opera:ons 5.4Mtpa ROM produc:on 3.2Mtpa sales US$171M max capital drawdown Total opex costs $86t FOB incl. royal:es Fast tracked, staged, clear route to market
GRID INVESTMENT CAPITAL
Scale
Not any ‘ordinary’ coal asset HG anthracite <1% of known global coal reserves High carbon steel feed, graphite subs:tute, specialty uses:
GRID INVESTMENT CAPITAL
lump coke replacement sintering iron ore replacement blast furnace injec:on coal recarburisers in electric arc furnaces charge carbon filtra:on media and ac:vated carbon carbon cathodes, anodes, electrodes
lithium ion ba;ery anodes electrode paste synthe:c graphite replacement carbon feed for : -‐ calcium carbide, silicon, phosphorous, soda, sodium sulphide, plas:cs, urea
HG & UHG Anthracite Coal
GRID INVESTMENT CAPITAL
Blast Furnace Coke -‐ *$215 Foundry Coke -‐ *$420
*Resource Net Current Market Prices
Anthracite uses in steel industry
Supply/
GRID INVESTMENT CAPITAL
Resource Net, Wood Mackenzia
HG-‐UHG anthracite is not an oversupply story…. it’s a DEMAND story!
Increasing demand from blue chip customers, diminishing reliable long term supply
Supply and Demand
Falling produc:on, rising demand Vietnam exports: 19Mt 2010, 6.5Mt 2014, 2Mt est. 2015 (Currently 0) ‘Strategic Commodity’ status , export controls, surface reserve exhaus:on Ukraine/Russia – problema:c supply chains Absence of any long term, reliable, scalable seaborne supplier
GRID INVESTMENT CAPITAL
Supply and Demand
Most analysts and investors are ignorant of global UHG anthracite supply/demand dynamics Fail to recognise the global scale and geological/geographical uniqueness of Atrum’s Groundhog asset Fail to recognise the value customers place on long term, high grade contract supply
UHG anthracite markets in EU trading at over US$200/t, even within the current environment Investors fail to recogise the significance of Atrum’s recent announcements
GRID INVESTMENT CAPITAL
Supply and Demand
Signs off-‐take marke:ng MOUs with 3 of 7 major Japanese ‘Sogo shosha’ trading houses
Sogo shosha houses : Mitsubishi, Mitsui, Sumitomo, Itochu, Marubeni, Toyota, Sojitz Mul: product agreements leading to binding SSA and minority sell down in GHN to fund first mine in Groundhog coalfield
Signs off-‐take agreement MOU with large Japanese Steel conglomerate
‘Premium product pricing … minimum 20 year term’
Staged permixng approvals throughout 2015 Migra:on from developer to producer, maiden revenues in 2015 Small scale 100kt May 2015, escala:ng to 350kt over 12 months Full ML approval mid 2016
GRID INVESTMENT CAPITAL
Recent Announcements
GRID INVESTMENT CAPITAL
Groundhog Mul:-‐mine coalfield development Demonstrated customer demand
GHN Modeling Ini:al 3Mtpa sales GHN Minority GHN project sell down, i.e. 30% US$600M Capex, 50% debt funded Total OPEX costs circa US$85 FOB Min *US$50 margins = US$150M profit
= ATU US$100M equity share 7x mul:ple = US$700M MCap ATU Current MCap @ $1.45 = US$200M Implied GHN share price >A$5 Discounts mul:ple mine development
“This level of compe--on from major trading and strategic
par-es is rarely witnessed, and reflects the demand for high
grade/ultra high grade anthracite products …
Groundhog North is merely the -p of the iceberg”
AFR, March 3, 2015
GIC ValuaQon
* GHN supplementary PFS and current independent end user pricing indicates US$100 margins currently available
GRID INVESTMENT CAPITAL
Tellus Holdings Ltd – Public, unlisted company Incorporated 2009 NSW, Australia Ini:ally focused on developing Australian assets GIC introduc:on February 2013 4 months DD
Including independent ‘Big Brother’ confirma:on GIC ini:al private equity investment -‐ July 2013 94.5m shares on issue A$52M valua:on
GRID INVESTMENT CAPITAL
Background
Hole in the ground with 2 revenue streams 2nd revenue stream more lucra:ve than the 1st Not reinven:ng the wheel, impor:ng the model Globally proven, 100s of similar facili:es Operated for decades by billion $ companies
Worlds Best PracQce SoluQons
GRID INVESTMENT CAPITAL
Background
GRID INVESTMENT CAPITAL
Unique Business
GRID INVESTMENT CAPITAL
OperaQng Model
Simple
Safe
LucraQve
Proven
Stable geological environment – 500m years Impermeable nature of geologies
Unique ability to isolate solids/liquids/gas from the biosphere Safest place in the world to store/dispose of waste emissions Salt Creep – Self healing quali:es, safety case Long life assets – 100s years LOM Tier 1 customer demand High quality commodity assets Reliable long term supply
GRID INVESTMENT CAPITAL
Why Salt/Kaolin (Clay)?
Waste IS a commodity Waste IS a poten:al resource Australia possesses the highest waste emissions per capita of any country outside of the US Reported 60m tons waste annually Reported 6.5m tons ‘hazardous’ Regulators cite waste output is 3-‐10x official reported figures
Some target markets trading at A$1000-‐5000t Nowhere in the world is waste output falling in terms of volume or price Growing popula:on, urbaniza:on
GRID INVESTMENT CAPITAL
Why Waste?
Proven safety case -‐ global recogni:on
GRID INVESTMENT CAPITAL
“Rock salt is globally recognized to be a suitable host rock for permanent storage”
GRS Report for UNEP – Op-ons for Environmentally Sound Management of Surplus Mercury, 2011
“Wastes dumped and sealed in salt rock are permanently kept away from the biosphere, and no subsequent treatment is necessary” Underound Disposal of Hazardous Waste in Germany, A. Ozarslan, ISBN
975-‐395-‐417-‐4, 2001
The Perfect Storm?
Increased domes:c bans, fines, license removal
Interna:onal best prac:ce adop:on
GRID INVESTMENT CAPITAL
“…from September 2010 hazardous waste is banned from being disposed of to landfill in metropolitan Adelaide and
all regional and remote areas of South Australia”
South Australian EPA www.epa.sa.gov.au/environmental_info/waste/hazardous_waste
Controlling transboundary
movements of hazardous wastes and their disposal
www.basel.int
The Perfect Storm?
Permanent removal of corporate/Director liability (IAS 37) – real compara:ve advantage
GRID INVESTMENT CAPITAL
Underwriqen Liability Offsets
Insurance underwriQng
Facili:es insurable by AAA underwriters
Independent CerQficaQon
Australian legal and accoun:ng sign off Permanent removal of con:ngent liabili:es from corporate balance sheets and directors
PIC’s ‘Permanent Isola:on Cer:ficates’ to provide evidence and assurance to corporate auditors
Permanent Liability Removal
Only domes:c facili:es legally in posi:on to provide total waste liability offsets
The Perfect Storm?
GRID INVESTMENT CAPITAL
WA Govt Facility Built, operated by Tellus enviro team for >20 years Only Class V waste management team in Aust
Direct Experience
39
Experienced Board team Exp. mining/ regulatory team
Experienced waste management team
Shell, NSW Minerals Council VIC Haz Waste Consult. CommiRee
Ex BD Coffey Environmental, IBM
Head-‐AMP Capital Investors, CEO Tenix Infrast, DUET & Lend Lease Capital
Philip Garling Non Execu]ve Chairman
Duncan van der Merwe Group MD
Ron Sison NED
Noel Davis MD ClayVault WA
Robert Charter GM Sales/Marke]ng
Dr Nikki Williams NED
Mining (Gencor CSM Energy), waste & infrastructure (BOS, Nobles)
Ex FD Newalta, Canada’s largest salt cavern waste storage operator
Ex WA Environmental Regulator, Managed only Class V waste facility
Employee of EPMS, Project manager at WA Kaolin
Mark Shepherd Tellus RockVault NED
John Cook Tellus RockVault Chair Mike Ingram
Kaolin – Sandy Ridge PM Ex NSW Chief Mining Engineer, Ex MD Waste Service NSW
Ex MD Coffey WA, managed Australia’s only Class V waste facility
ü ü ü
Infrastructure development Salt and kaolin mining/sales Heavily regulated waste mgmt
Wiltshire Geological, Schlumberger, TerraSearch
Jaime Livesey Project Administrator /Snr Geologist
Steve Reece Chandler Technical Advisor
Employee of Golders -‐ managed UK salt / backfill mine for 15 years
Joanna Stewart Priestley Senior HSEC Manager
Employee of MoR MacDonald, Hyder, Parsons Brinkerhoff, PPK,
Natasha Alford HSEC Manager and Policy
Employee of MoR MacDonald, Hyder, Parsons Brinkerhoff, PPK,
GRID INVESTMENT CAPITAL
Management
ü ü ü
GRID INVESTMENT CAPITAL
Chandler Project
LocaQon 120km south Alice Springs, NT (Remote) Amadeus Basin – 5B ton inland sea forma:on Adjacent to exis:ng rail, connected na:onally
Geology Rocksalt forma:on -‐ Deep, vast, simple 750-‐1000m underground, 250m thick 500 million year stability
Grade 98% pure halite – high grade
Resource 309Mt defined JORC , DFS (FEL 3) 500 year mine life No fatal flaws
Pit to Port LogisQcs
Qube Bulk logis:cs partnership Road to Rail Exis:ng Rail to Darwin Port Warehouse/transfer sta:ons Direct port loading
Commodity Sales
Only reliable high grade salt supplier domes:cally Formal wri;en EOIs for mul:ples of annual produc:on (Japan traders, other major Asian end users)
Approvals Status
Awarded ‘Major Project Status’ recogniQon – NT Govt MLA lodged Imminent EIS lodgment Extensive community engagement
Project LocaQon
GRID INVESTMENT CAPITAL
Chandler Project
GRID INVESTMENT CAPITAL
Chandler Economics
Costs Fixed and Floa:ng OPEX/CAPEX/DEBT (174.0)
EBITDA (EBITDA/Rev Margin 49%) 173.9 Deprecia:on and Maintenance (21.5)
EBIT 152.3 Net Interest Expense (0.6)
EBT 151.8 Tax (46.7)
NPAT (NPAT/Rev Margin 30%) 105.1
Chandler Financials ($A) Ave Annual
Salt & Minerals (87.7% Ex 9.8% Do 2.5% Mi)
Tonnage 508k tpa Ave $/ton (Yr1 $56.1/t = Ex$25/t, D $296/t, M $150/t) $109.2/t Total Revenue $55.5 M
Storage & Isola:on (98% isola:on, 2% storage) Tonnage 233.5k tpa Ave $/ton $1,278.1/t Total Revenue (p.a.) $298.4 M
Total Revenue $353.9 M
Project Returns Mgt Case
IRR (Equity, post tax, nominal) 24.8%
NPV (Equity, 10% discount, post tax) $410.9M
DSCR Ave 1.76X
Project Sources and Uses of Funds A$M %
Sources Pre-‐development Equity 12.5 2.7% Development Equity 124.1 26.8% Storage pre-‐sales 95.3 20.6% Senior Debt 231.9 50.0%
Sources Total 463.8 100%
Uses Pre-‐Development CAPEX (FEL3 DFS) 10.0 2.2% Working capital 0.2 0.1% Direct CAPEX 270.2 28.3% Indirect CAPEX 146.1 31.5% DSRA/c ini:al funding 3.7 0.8% Construc:on term interest 25.7 5.5% Financing fees 7.7 1.7%
Uses Total 463.8 100%
GRID INVESTMENT CAPITAL
Project LocaQon Sandy Ridge Project
LocaQon
140km south-‐west of Kalgoorlie, WA (Remote) Adjacent to WA Govt. Mt Walton IWDF 20+ years opera:onal experience in adjacent facility
Geology
Kaolin forma:on – Shallow at surface, simple Con:nua:on of well known Mt Walten geology forma:on 30-‐40m thick, overburden 2-‐5m
Grade High grade suitable for ceramics, paints, specialty uses
Resource 41.3Mt defined JORC , DFS (FEL 3) 1475 year mine life No fatal flaws
Pit to Port LogisQcs
Qube Bulk logis:cs partnership Road to Rail Exis:ng Rail to Perth Port Warehouse/transfer sta:ons Direct port loading
Commodity Sales
High grade Kaolin in demand regionally Formal wri;en EOIs for full annual produc:on
Approvals Status
MLA lodged Imminent EIS lodgment Extensive community engagement Imminent Major Project Status expected based on government discussions and support and exis:ng experience next door
GRID INVESTMENT CAPITAL
Sandy Ridge Project
GRID INVESTMENT CAPITAL
Sandy Ridge Economics
Costs
Fixed and Floa:ng OPEX/CAPEX/DEBT (21.3) EBITDA (EBITDA/Rev Margin 56%) 27.6
Deprecia:on and Maintenance (3.4) EBIT 24.2
Net Interest Expense (0.2) EBT 24.1
Tax (7.6) NPAT (NPAT/Rev Margin 34%) 16.4
Uses Pre-‐Development CAPEX (FEL2 PFS) 5.1 8.2% Working Capital 0.2 0.4% Direct CAPEX 35.5 57.1% Indirect CAPEX 19.6 31.5% DSRA/c Ini:al Funding 0.5 0.8% Construc:on term interest 0.6 1.0% Financing 0.6 1.0%
Uses Total 62.2 100%
Returns Mgt Case
IRR (Equity, post tax, nominal) 48.1%
NPV (Equity, 10% discount, post tax) $99.6 M
DSCR Ave 2.54X
Sandy Ridge Financials ($A) Ave (25 yrs)
Kaolin (2 products 50% ceramic, 50% paint)
Tonnage 27.6k tpa Ave $/ton Yr 1 $293/t = 50% $270/t tableware and 50% $315/t paint
$530/t
Total Revenue (p.a.) $14.6 M Storage & Disposal (80% bulk low value, 20% CH overflow)
Tonnage 65.7kt pa Ave Price/ton 5 Yr 1 $303/t (80% $250/t bulk, 20% $515/t CH overflow)
$521.9/t
Total Revenue (p.a.) $34.3 M Total Revenue $48.9 M
Project Sources and Uses of Funds A$M %
Sources Pre-‐development Equity 5.1 8.2% Development Equity 13.0 20.9% Storage pre-‐sales 13.1 21.1% Senior Debt 31.0 49.8%
Sources Total 62.2 100%
GRID INVESTMENT CAPITAL
Community consulta:on
Suppor:ng jobs (WA TO’s)
Suppor:ng jobs (NT TO’s)
Customers (NT Gov. briefing) Community sponsorship
NT Gov. & Regulator (site visits) TO mee:ngs & site visits
Suppor:ng local business (20+)
Community Engagement
GRID INVESTMENT CAPITAL
Waste Acceptance Criteria CH SR
Liquids -‐ in barrels, line & bunded
Dry -‐ mul:ple lined and bagged
Nuclear waste (Defence, Energy)
Uranium mining waste
Infec:ous (Medical) Waste
Uncer:fied waste
Industry Waste Sources
Oil & Gas
Mining
Heavy Industry / Power Genera:on
Manufacturing
Agricultural
Government/SES
Best PracQce Systems
Cer:fied Management System
Strict acceptance criteria
Packaging and transport criteria
Safety case – man made engineering
Safety case – natural engineering (geology)
Insurance bonds, PICs
Tellus’ cerQficaQons and values
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Strict Acceptance/Monitoring
Advanced project JORC resource DFS-‐BFS status NT Govt ‘Major Project Status’ awarded to CH An:cipate WA Govt Major Project Status for SR Wri;en EOIs for mul:ples of annual salt/kaolin produc:on from large Asian trading houses Wri;en EOIs for uptake of total annual waste capacity from mul:na:onals/ASX100-‐200 firms Advanced discussions with Federal/State Govt divisions re waste capacity
GRID INVESTMENT CAPITAL
Progress
Pre development capital raise opportunity CH/SR pilot program comple:on -‐ April 2015 Binding take/pay agreements with off-‐takers Binding give/pay agreements with waste emi;ers ML and IES comple:on ECP & O&M consor:um appointment Investment grade construc:on financing Proceed to full construc:on phase No show stoppers
GRID INVESTMENT CAPITAL
Next Steps
GRID INVESTMENT CAPITAL
Tellus Holdings
Limited
Tellus Chandler Project
Tellus Sandy Ridge Project Tellus RockVault Tellus
InternaQonal
100% 100% 100%
50%
IncorporaQon Shares 1 Management Ownership
Shareholders Historic O&G Spend 2
Investment by Tellus
Debt
Public, unlisted, NSW (2009) 86 Million 33% 128 >$18.5M $7.7M Zero
Investors
100%
36.4M Shares
AU$20M
30%
(IWDF)
AU$ Equity % Price Pre $ Post $
$20M 36.4M shares 30% $0.55c $47M $67M
The Offer – Tellus Holdings Ltd
$10M $7M
AU$20M funding uses 1 Ordinary Equity fully diluted for ESP 2 Includes es:mated value of all open file data from historic oil and gas sector spend in the general project area – includes 19 holes (41,500m) and 15 lines seismic (145km) 3 Currency in Australian dollars
$3M
Predevelopment Opportunity
Circa $9m in Commitments March 15
GRID INVESTMENT CAPITAL
Corporate Funding Plans
Pre-‐Development Capital
Development Capital Total Capital
Sources A$M % A$M % A$M % Equity 20.0 100% 137.6 27% 157.6 30%
Debt 262.9 52% 262.9 50%
Cash flow 108.4 21% 108.4 20%
Total 20.0 100% 508.9 100% 528.9 100%
Uses A$M % A$M % A$M % Chandler pre-‐development (10.0) 50% (10.0) 2%
Chandler development (416.6) 82% (417) 79%
Chandler financing, interest & fees (37.2) 7% (37.2) 7% Total (463.8) 88% Sandy Ridge pre-‐development (5.0) 26% 0% (5) 1%
Sandy Ridge development (2.0) 10% (53.4) 10% (55.4) 10%
Sandy Ridge financing, interest & fees (1.7) 0% (1.7) 0%
Total (62.2) 12%
Corporate (Tellus overheads) (2.9) 14% -‐ (2.9) 1% Total (20.0) 100% (508.9) 100% (528.9) 100%
Fully Funded
Proven global duel revenue business model 1st commercial mover regionally
Leveraging million of dollars of O&G explora:on World class assets
Geologically/logis:cally unique, vast, stable Structurally simple, easy extrac:on/processing opera:ons High grade, long life resources, 100s years LOM
‘Major Project Status’ recogni:on Long term fundamental market growth trends Scalable export/imports -‐ No volume caps
GRID INVESTMENT CAPITAL
ComparaQve Advantage
Model recognized by regulators globally as ‘Worlds Best PracQce’ 20+yrs Govt kudos – Only Class V waste operator Socially responsible and sustainable investment Carbon capture, storage, abatement Solar power development Strong community support, social license No like-‐for-‐like compe:tor regionally
GRID INVESTMENT CAPITAL
ComparaQve Advantage
Regulatory environment driving strong uptake Price making ‘game changer’ in waste market Permanent removal of liabili:es via PIC offsets High mul:na:onal, blue chip, Govt demand Cash flows before mine project comple:on Sandy Ridge -‐ already fully self funded Wri;en EOIs from large Infrastructure funds, banks, asset managers to fund construc:on
GRID INVESTMENT CAPITAL
ComparaQve Advantage
This is an infrastructure asset a;rac:ng long term annuity style investors i.e. Pension funds Monopolis:c status Growing market High man-‐made/natural barriers to entry Independent financial modeling demonstrates high EBITDA and NPAT margins Conserva:ve Revenue, Capex, Opex outlook Significant rera:ng expected in 2015
GRID INVESTMENT CAPITAL
ComparaQve Advantage
Construc:on finance modeling targe:ng A$1.50 equity round è 170% upli~ from A$0.55 pre development round Significantly undervalued when measured against listed peers Mul:ple exit op:ons within 2 year :me frame -‐ IPO -‐ Trade sale -‐ Strategic sale
GRID INVESTMENT CAPITAL
ValuaQon
GRID INVESTMENT CAPITAL
March 2015 • Toxfree share price at March end 2015 • 1 Toxfree -‐ www.toxfree.com.au/upload_documents/presenta:ons/First%20Half%20FY15%20-‐%20Results%20Presenta:on.pdf • 2 Tellus -‐ Based on 25 year LOM independent financial assessment conducted by Corality
(TOX.ASX)
Listed peer group comparison – Toxfree
(TOX.ASX)
0%
10%
20%
30%
40%
50%
60%
EBITDA Margin EBIT Margin NPAT Margin Dividend Yield
Margins
GRID INVESTMENT CAPITAL
0
100
200
300
400
500
600
700
800
900
1000
0.00
1.00
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Market CapitalisaQon (AU
D million)
Share Price
MCap Share Price
March 2015
$9.41 : TOX equivalent P/E Ra:o
(1700% TR)
$4.23 : TOX equivalent
EBITDA margin (770% TR)
Secured assets, studies update,
approvals progress
NT – MPS, Studies update, approvals
progress
CH build complete, full year sales start
GRID INVESTMENT CAPITAL
FID, approvals, finance, start of SR build
SR build complete, full year sales start
We Are Here
Thank you
Brad Ridge CEO/Principal Partner Grid Investment Capital
GRID INVESTMENT CAPITAL
March 2015
Wood Mackenzie, Resource Net, Tellus Holdings Ltd, Atrum Coal Ltd, ASX, McKinsey, Basel Conven:on, UNEP, State EPAs, Corality, Toxfree Ltd, GRS, IBSN
*References: