(0975.HK) ANNUAL RESULTS 2018 18 MARCH 2019 UHG mine, Umnugobi province, Mongolia.
Disclaimer FORWARD-LOOKING STATEMENTS We have included in this presentation forward-looking statements. All statements that are not historical facts, including statements about our intentions, beliefs, expectations or predictions for the future, are forward-looking statements. The reliance on any forward-looking statement involves risks and uncertainties, and although we believe the assumptions on which the forward-looking statements are based are reasonable, any or all of those assumptions could prove to be inaccurate and as a result, the forward-looking statements based on those assumptions could also be incorrect. We undertake no obligation to publicly update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise, except as required by applicable laws, rules and regulations. In light of these and other risks and uncertainties, the inclusion of forward-looking statements should not be regarded as representations by us that our plans and objectives will be achieved. All numbers in this presentation are approximate rounded values for particular items. 1 mmc.mn
Agenda COMPANY OVERVIEW OPERATING ENVIRONMENT BUSINESS OVERVIEW FINANCIAL OVERVIEW APPENDIX 2 mmc.mn
̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Company overview Mongolia’s Sole Fully Integrated Coal Mining Company HIGHLIGHTS KEY FINANCIALS World-class high quality and sizeable coal resources at Ukhaa Khudag (“ UHG “) USD mln FY 2017 17 FY 2018 18 and Baruun Naran (“ BN ”) mines Total pro-forma P&P Reserves: 499Mt 1 Cash 2 7.5 33.0 Total pro-forma M&I&I Resources: 1,062Mt 1 Senior Loan 2,3 31.2 23.7 Located ~245 km from the Chinese border with close proximity to end customers, well positioned to capitalize the high growth potential in Northern Senior Notes 2,3 412.5 412.5 China The leading and sole fully integrated coal mine in Mongolia, with established Total Assets 2 1,631.4 1,718.0 full set of captive infrastructure including coal handling and processing plant (“ CHPP ”), power plant, water facilities and transportation logistics Total Equity 2 770.9 817.3 Mature sales platform with direct sales to end users instead of traders Revenue 476.4 590.7 Well established long-term relationship with blue chip companies in China including Shenhua Inner Mongolia Coal and Coking Co., Ltd (later EBITDA 177.1 218.3 changed to “China Energy Coal and Coking Co., Ltd”), Baotou Iron & Steel, and etc. EBITDA Margin (%) 37.2% 37.0% Enhanced operational efficiency through a number of cost initiatives and best- in-class operational practices Total Debt 2 / Capital 36.5% 34.8% The first Mongolian company listed on the main board of an international stock exchange – the Hong Kong Stock Exchange (“ HKEx ”) Total Debt 2 / EBITDA 2.5x 2.0x The Company has “B - ”, Outlook Stable rating from S&P Notes: 1 Resources data as of 31 December 2018, reserves data as of 1 January 2019. 2 As of 31 December. 3 Shown and calculated from the face value of the senior loan and the senior notes. 3 mmc.mn
Company overview Corporate Key Milestones APR 2009 JUN 2011 AUG 2011 SEP 2011 FEB 2012 AUG 2013 AUG 2015 MAY 2017 10-year cooperation Constructed agreement on coal Stage 1 CHPP ~240km UHG-GS Stage 2 CHPP Stage 3 CHPP Tax stabilization 18MW power plant Mining operation sales with Baotou plant commenced paved road plant commenced plant commenced certificate is granted at UHG mine commenced at Iron & Steel Co., Ltd with operation (transferred to the bringing total bringing total to Energy Resources LLC commenced UHG mine to supply up capacity of 5Mtpa Government of capacity to 10Mtpa capacity to 15Mtpa for 24 years period to 5Mt of coal products Mongolia in 2014) 1 per annum OCT 2010 JUN 2011 SEP 2011 FEB 2012 MAR 2012 DEC 2014 MAY 2017 MAY 2018 10-year cooperation Debt restructuring • Senior notes agreement on coal sales with China Energy Issuance of USD412.5 mln Successful Rights • Successful listing at Acquisition of Water supply Mining operation USD600 mln 5-year Senior loan Coal and Coking Co., Ltd Issue of USD195 mln HKEx raising USD616 mln BN mine for senior notes. to supply up to 3Mt of facility operation at BN mine USD31.2 mln net proceeds • hard coking coal (“ HCC ”) IPO net proceeds USD569 mln commenced commenced First corporate bond Perpetual notes from Mongolia USD195 mln and 1Mt of semi-soft • coking coal (“ SSCC ”) per 1.03 bln new shares to creditors annum Notes: 1 Based on Built-Operate-Transfer arrangement with the government. 4 mmc.mn
̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Company overview Sustainable and Responsible Mining MMC became the first Mongolian mining company to introduce a comprehensive Global CSR Award 2013 - MMC won the Silver “Best Workplace Practice Award” international management systems such as ISO 9001:2015 Quality management at the Global CSR Summit and Awards 2013, which has attracted entries from systems, ISO 14001:2015 Environmental management systems and OHSAS more than 500 world leading corporations. 18001:2007 Occupational health and safety management systems in 2018 Global CSR Award 2012 - the Company was selected as a finalist for the “Best The continued effort to reduce the number of incidents and related frequency Community Program Award” with the leading corporations such as Procter & rates is the testament to the commitment of the Group’s management to the Gamble, Standard Chartered, Huawei, DHL and FedEx. concept of Zero Harm in terms of health, safety and environment. Since the Water Stewardship Award 2013 - the National Water Management Committee commencement of MMC’s public reporting, there were 2 semi-annual periods of of the Government of Mongolia awarded the Company’s water management zero Lost Time Injury being recorded. activities at UHG mine, which includes belt-press dewatering technologies. MMC is committed to supporting community development and local employment, Water Innovation Award 2018 – Awarded by the International Finance and invested in housing complex development together with social infrastructure Corporation after MMC’s multiple initiatives for rainwater harvesting and such as school and kindergarten open for employees and local community increasing water recycling rate in the Gobi region children. Today, about 50% of the staff are local residents. In addition, MMC implements various community development programs in the areas of health, Top 10 Enterprises in Mongolia (eight times during 2009-2018 period) – Awarded by the Mongolian National Chamber of Commerce and Industry education, cultural heritage preservation and local business development, such as providing interest-free loans to local small and medium businesses. National Quality Award 2018 – Awarded by the Government of Mongolia for successful introduction of the Integrated Management System into its MMC has established forest belt covering 15 ha area to combat desertification and operations for the first time in Mongolian mining industry 2.5 ha nursery field dedicated for mine reclamation activities. 5 mmc.mn
Agenda COMPANY OVERVIEW OPERATING ENVIRONMENT BUSINESS OVERVIEW FINANCIAL OVERVIEW APPENDIX 6 mmc.mn
Operating environment Mongolian Economy Outlook Remains Positive MONGOLIAN GDP GROWTH 1 MONGOLIAN INDUSTRIAL OUTPUT 7.9 9 20,000 6.9 15,657 5.3 12,933 6 15,000 MNT bln 6.3 5.1 9,927 2.4 9,338 8,681 5.2 1.2 5.0 % 4.9 3 10,000 11,231 9,386 7,067 6,397 5,857 5,000 0 3,382 2,626 2,313 2,060 1,999 (0.2) 861 861 921 921 1,044 0 629 629 764 764 (3) 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E Real GDP Growth IMF Estimate Mining and quarrying Manufacturing Electricity, water supply MONGOLIAN TOTAL FDI MONGOLIAN MINERALS EXPORT 73% 73% 71% 71% 4,000 10,000 83% 83% 87% 87% 64% 64% 63% 63% 80% 80% 79% 79% 57% 57% 71% 71% 3,000 7,500 2,469 6,070 2,284 USD mln USD mln 1,992 4,934 4,792 2,000 5,000 1,486 3,678 1,397 3,484 1,752 1,671 1,272 1,000 790 790 941 941 2,500 720 720 717 717 607 607 613 613 545 545 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Minerals Export Minerals Export % of Total Export Mining sector Other sectors % of Mining sector FDI Source: National Statistics Office of Mongolia, World Bank, IMF. Note: 1 2014-2018 GDP data form National Statistics Office of Mongolia, 2017E-2021E GDP forecast data from IMF. 7 mmc.mn
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