January 2020
TSX-V
MOX
Morien by the Charts
Where Business Meets Mining
MOX Morien by the Charts Where Business Meets Mining January 2020 - - PowerPoint PPT Presentation
TSX-V MOX Morien by the Charts Where Business Meets Mining January 2020 Forward Looking Statements Some of the statements made by Mo Mori rien Re Resou ources Co Corp. (Morien) in this presentation may constitute
January 2020
TSX-V
Morien by the Charts
Where Business Meets Mining
w w w . m o r i e n r e s . c o m | T S X - V : M O X
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Forward Looking Statements
Some of the statements made by Mo Mori rien Re Resou
"forward-looking information" as defined under applicable securities laws. These statements reflect Morien's current expectations of future revenues and business prospects and opportunities and are based on information currently available to Morien. Morien cautions that actual performance will be affected by a number of factors, many of which are beyond its control, and that future events and results may vary substantially from what Morien currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include risks and uncertainties described in Morien’s annual information form filed with the Canadian Securities regulators on SEDAR (www.sedar.com). Morien cautions that its royalty revenue will be based on production by third party property owners and operators who will be responsible for determining the manner and timing for the properties forming part of Morien’s royalty portfolio. These third party owners and operators are also subject to risk factors that could cause actual results to differ materially from those predicted herein including: volatility in financial markets or general economic conditions; capital requirements and the need for additional financing; fluctuations in the rates of exchange for the currencies of Canada and the United States; prices for commodities including gold, coal and aggregate; unanticipated changes in production, mineral reserves and mineral resources, metallurgical recoveries and/or exploration results; changes in regulations and unpredictable political or economic developments; loss of key personnel; labour disputes; and ineffective title to mineral claims or property. There are other business risks and hazards associated with mineral exploration, development and mining. Although Morien believes that the forward-looking information contained herein is based on reasonable assumptions, readers cannot be assured that actual results will be consistent with such statements. Morien expressly disclaims any intention or obligation to update or revise any forward-looking information in this news release, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws. Unless otherwise indicated, all dollar values herein are in C$.
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Corporate Snapshot
41%
Retail
28%
High Net Worth Retail
(Holding > 1%)
16%
Board & Management
11%
The Cline Group
4%
Institutional
Donkin Coal Project Black Point Aggregate Project
MOX
TSX-V
52.9 mln
Shares o/s
55.6 mln
Shares f/d
$25 mln
Market cap
$3.5 mln
Working cap
nil
Debt
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John P. A. Budreski
markets and executive management experience
Banking for Scotia Capital. Formerly Vice Chairman of Cormark Securities Inc. and prior to that, President and CEO of Orion Securities Inc.
Corporation, Sandstorm Gold and NuLegacy Gold
Charles G. Pitcher
management and mining project development
Creek Coal in Pennsylvania, and former President & CEO
where he led the acquisition, development and startup of major coal projects in western Canada.
John P. Byrne
banking and corporate finance experience
Corporation of Canada Exploration Ltd., which helped finance Enerplus Energy Services Ltd. for which Mr. Byrne served as its Vice Chairman
with Levesque Beaubien Geoffrion (now NBF)
career includes having been chair and CEO of Scotia Bond Ltd., as well as being one of the founders of Keltic Savings Corporation Limited.
has served on boards of companies including Empire Company Ltd., Sobeys Inc., and DHX Media Ltd.
Business Hall of Fame in 2010
Board of Directors
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Morien’s Three Pillars
Donkin Coal Mine Royalty
§ 2% to 4% production royalty § Operation ramping up toward full production
Black Point Aggregate Project Royalty
§ Per-tonne production royalty (undisclosed) § Production decision in Q2 2020
Capital Allocation Strategy
§ Disciplined strategy to drive higher returns on invested capital § No debt Dividend NCIB Project Generation
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Morien’s Approach to Business
Maintain and grow the dividend commensurate with growth in royalty income; Grow its portfolio by acquiring additional long-life, cash- flowing royalties in the bulk commodity and industrial mineral sectors in North America; and Continue increasing individual shareholder value in Morien through its annual normal course issuer bid program.
1. 2. 3.
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Overhead Costs (G&A) Down 38%
$200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000
2013 2020
Corporate Overhead Costs (G&A)
2019
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Common Shares Down 13% Since 2015
50,000,000 52,500,000 55,000,000 57,500,000 60,000,000
2015 2020
Total Common Shares Outstanding
2019
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Management Ownership Up 10% Since 2013
0% 2% 4% 6% 8% 10% 12% 14% 16%
2013 2020
Management & Directors Ownership
2019
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Number of Shareholders Down by 58% Since 2013
1,000 1,500 2,000 2,500 3,000 3,500
2013 2019
Total Number of Shareholders
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$3,300,000 $810,000 $110,000 $940,000 $400,000 ($660,000) ($530,000) ($750,000) ($135,000) $3,485,000
1 / 1 / 2 1 9 D
k i n R
a l t y B l a c k P
n t … L a n d S a l e O p t i
P r
e e d s G & A D i v i d e n d s N C I B P r
e c t … 1 2 / 3 1 / 2 1 9
$0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000
Increase Decrease Total
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2019 Cash Flow Summary
(1) The reported 2019 Donkin royalty of $810k is an estimate only; Morien’s Q4-2019 Donkin royalty payment is not due until February 15, 2020
Working Capital
01/01/2019
Donkin Royalty 1 Asset Sale Dividends NCIB Project Generation Working Capital
12/31/2019
Option Proceeds Black Point Royalty Overhead Costs (G&A)
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Coal Markets – A Reality Check
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Global Seaborne Coal Trade Up 3% in 2018
930 1000 1119 1182 1216 1138 1142 1203 1240
2010 2011 2012 2013 2014 2015 2016 2017 2018
Total volume of coal traded on global seaborne market from 2010 to 2018
(in million metric tons)
Source: S&P Global Platts data (no distinction made between thermal and metallurgical coal)
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Why? … Growth in Global Energy Demand
Source: BP 2018 Energy Outlook
Driven by Increasing Prosperity and Improving Living Standards in Fast- Growing Emerging Economies
▸
Global Energy Consumption; 1970 to 2040
10 15 20
1970 1980 1990 2000 2010 2020 2030 2040
Bi Billion Tonnes (oil equiv.)
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Thermal Coal - A Dominant Energy Source
Source: BP 2018 Energy Outlook
It is currently not possible to decarbonize the power sector fast enough to offset the global growth in power demand
▸
10 15 20
1970 1980 1990 2000 2010 2020 2030 2040
Billion T Billion Tonnes (oil equiv
.)
Renewables Hydro Nuclear Coal Gas Oil
Power Generation Fuel Mix; 1970 to 2040 33% 28% 23% 21% 25% 28% 27% 30%
Global electricity demand grew 2.3% in 2018, the fastest pace in a decade
▸
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Renewable Energy
Renewable energy demand grew 14% per year over the last 5 years
▸
Renewables includes wind, solar, geothermal, biomass, and biofuels.
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Renewable Energy Put Into Perspective
… and now accounts for 4% of global energy consumption
▸
Renewables includes wind, solar, geothermal, biomass, and biofuels.
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Metallurgical Coal – Essential for Steel Construction
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(in Millions of Metric Tons)
1538 1560 1650 1669 1620 1627 1730 1809
2011 2012 2013 2014 2015 2016 2017 2018
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Rising Annual Global Steel Production
Every Ton of Steel Needs 0.7 Tons of Metallurgical Coal
▸
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Metallurgical Coal Demand
(1) Source: CRU and Wood Mackenzie
Projected to Grow by 41 Million Tonnes Through 2025 (1)
53 35 15 52 60 37 18 77 Europe South Korea Brazil India 2017 2025
Expected Global Metallurgical Coal Imports
(in Millions of Metric Tons)
▸
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The Donkin Mine
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Coal Resource Peer Comparison
15 16 36 60 165 174 204 265 272 316 388 484
50 100 150 200 250 300 350 400 450 500
T e c k
a r d i n a l R i v e r C
s a
c
t a T e c k
u i n t e t t e T e c k
i n e C r e e k T e c k
r e e n h i l l s W e s t m
e l a n d
l V a l l e y C
s
a r v e y T e c k
l k v i e w C
s
a i l e y C
s
n l
T e c k
d i n g R i v e r C l i n e
k i n
30+ Year Mine Life
Million tonnes
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Donkin Development Phase
Million saleable tonnes
0.00 0.50 1.00 1.50 2.00 2.50 3.00
2017 2018 2019 Year 1 Year 2 Year 3 Year 4 Year 25 Donkin Saleable Production Highly Productive Retreat Mining Phase (25+ Years)
1 (1) Includes an assumption on Donkin’s Q4-2019 production; Morien’s Q4-2019 Donkin royalty is not due until February 15th.
Development Phase
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Donkin Production Phase (Retreat Mining)
Million saleable tonnes
0.00 0.50 1.00 1.50 2.00 2.50 3.00
2017 2018 2019 Year 1 Year 2 Year 3 Year 4 Year 30 Donkin Saleable Production Highly Productive Retreat Mining Phase (30 Years) Development Phase
1 (1) Includes an assumption on Q4-2019 production; Morien’s Q4-2019 Donkin royalty is not due until February 15th.
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Donkin Royalty Set to Materially Increase
(1) Q4-2019 royalty not yet received; estimate only (2) Estimated royalties are pre-tax
Received Annual Royalties 1 Forecast Annual Royalties 2
$80/t
Coal price ($CAD)
$100/t $120/t
2017 2018 Assumes 3.0 mln Saleable Tonnes
$0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0
$0.1 mln $6.5 mln $8.0 mln $9.5 mln $0.9 mln $11.0 mln
$140/t (1)
20191
$0.8 mln
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Prospective Dividend
$0 $2 $4 $6 $8 $10 $12
3 Mt @ $80/t 3 Mt @ $100/t 3 Mt @ $120/t 3 Mt @ $140/t
Donkin Royalty Revenue Free Cash Flow Anticipated Dividend Payout Range $0.04 - $0.05
per share
$0.05 - $0.07
per share
$0.07 - $0.09
per share
$0.08 - $0.11
per share
CAD $000,000
Donkin Annual Clean Saleable Production (Tonnes) and Coal Price Assumptions
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Current Dividend Yield – Peer Comparison
0.7% 0.8% 0.9% 1.1% 1.1% 1.2% 1.3% 1.8% 2.3%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
M a v e r i x M e t a l s A b i t i b i R
a l t i e s M e t a l l a R
a l t y F r a n c
e v a d a R
a l G
d O s i s k
a l t i e s W h e a t
P r e c i
s A l t i u s M i n e r a l s M
i e n R e s
r c e s
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Dividend Calculator (Morien Website)
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Price to NAV Royalty Peer Company Valuation
1. Source: Company filings 2. Peers: Altius, Franco-Nevada, Labrador Iron Ore Royalty, Maverix Metals, Osisko, Royal Gold, Sandstorm 3. NAV is post tax, and assumes a 10% discount rate for Donkin and 20% for Black Point
0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x
Peer Median Morien Upper end ($140/t coal price) Morien Lower end ($80/t coal price)
1.4x 0.25x 0.40x
P/NAV
Morien’s NAV is post-tax and assumes a 10% discount rate for the Donkin royalty and 20% for the Black Point royalty
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MOX - Own it for These Reasons
MOX - Donkin advancing toward high productivity retreat mining phase MOX - Significant valuation multiple expansion and re-rate potential MOX - Quarterly dividend levered to Donkin production and coal price MOX - Coal demand will remain robust MOX - Long life royalties MOX - Focused on accretive acquisitions on long-life royalties in N.America MOX - Continued share buy backs MOX - Annual Donkin royalty could be one-half of market cap in 18-months
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31
1701 Hollis St, Suite 800 Halifax, N.S. Canada, B3J 3M8 Tel: 902-466-7255
Joh John P . A. Bu Budreski
Executive Chairman
Daw Dawson Br Brisco
President & CEO
Sus Susanne nne Wi Willett
CFO
TSX-V: MOX
www.MorienRes.com info@morienres.com