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RESOURCE INDUSTRY NETWORK PRESENTATION 2 AUGUST 2019 1 - - PowerPoint PPT Presentation

RESOURCE INDUSTRY NETWORK PRESENTATION 2 AUGUST 2019 1 Important information This document has been prepared by Stanmore and needs and seek appropriate advice, earnings and estimates are provided as a Coal Limited (Stanmore Coal) for


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SLIDE 1

RESOURCE INDUSTRY NETWORK PRESENTATION

2 AUGUST 2019

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SLIDE 2

Important information

This document has been prepared by Stanmore Coal Limited (“Stanmore Coal”) for the purpose

  • f providing a company and technical overview

to interested analysts/investors. None of Stanmore Coal, nor any of its related bodies corporate, their respective directors, partners, employees or advisers or any other person (“Relevant Parties”) makes any representations

  • r warranty to, or takes responsibility for, the

accuracy, reliability or completeness of the information contained in this document, to the recipient of this document (“Recipient”), and nothing contained in it is, or may be relied upon as, a promise or representation, whether as to the past or future. The information in this document does not purport to be complete nor does it contain all the information that would be required in a disclosure statement or prospectus prepared in accordance with the Corporations Act 2001 (Commonwealth). It should be read in conjunction with Stanmore’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. This document is not a recommendation to acquire Stanmore Coal shares and has been prepared without taking into account the

  • bjectives, financial situation or needs of
  • individuals. Before making an investment

decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial, legal and taxation advice appropriate to their jurisdiction. Except to the extent prohibited by law, the Relevant Parties disclaim all liability that may otherwise arise due to any of this information being inaccurate or

  • incomplete. By obtaining this document, the

Recipient releases the Relevant Parties from liability to the Recipient for any loss or damage that it may suffer or incur arising directly or indirectly out of or in connection with any use of

  • r reliance on any of this information, whether

such liability arises in contract, tort (including negligence) or otherwise. This document contains certain “forward-looking statements”. The words “forecast”, “estimate”, “like”, “anticipate”, “project”, “opinion”, “should”, “could”, “may”, “target” and other similar expressions are intended to identify forward looking statements. Indications of, and guidance

  • n, future earnings and financial position and

performance are also forward-looking

  • statements. You are cautioned not to place

undue reliance on forward looking statements. Although due care and attention has been used in the preparation of forward looking statements, such statements, opinions and estimates are based on assumptions and contingencies that are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Recipients of the document must make their own independent investigations, consideration and

  • evaluation. By accepting this document, the

Recipient agrees that if it proceeds further with its investigations, consideration or evaluation of investing in the company it will make and rely solely upon its own investigations and inquiries and will not in any way rely upon this document. This document is not and should not be considered to form any offer or an invitation to acquire Stanmore Coal shares or any other financial products, and neither this document nor any of its contents will form the basis of any contract or commitment. In particular, this document does not constitute any part of any

  • ffer to sell, or the solicitation of an offer to buy,

any securities in the United States or to, or for the account or benefit of any “US person” as defined in Regulation S under the US Securities Act of 1993 (“Securities Act”). Stanmore Coal shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration.

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Stanmore Coal Overview - Certainty

3 Independent Australian coal company Positionedpredominantly in metallurgical coal with a track record of delivery Isaac Plains Complex expansion operationalwith demonstrated performance Validation that the company can source, develop, operate and rehabilitate coal resources Isaac Plains Complex represents thecompany’s platformasset Certainty in near-term growth underpinned by existing capacity and low capital incremental growth options delivering competitive cost structures and long mine lives The ‘combined effect’ driving certainty in delivering returns to shareholders The combination of the operating performance, a disciplined investment pipeline and the foundation of a fully prepared company drives focus on costs / margin / cash generation

SHARE OWNERSHIP ASX CODE SHARE PRICE

252,827,518

SHARES

SMR

MARKET CAP

A$1.421 $360m1

  • 1. AS AT 30 JUNE ‘19

Golden Energy & Resources Corporate Institutions Employees and Directors Private & Other 3

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SLIDE 4

Overview of Stanmore Logistics

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WIGGINS ISLAND COAL EXPORT TERMINAL ABBOT POINT DALRYMPLE BAY COAL TERMINAL MACKAY ROCKHAMPTON GLADSTONE WANDOAN BOWEN MOURA BLACKWATER

TENNYSON THE RANGE LILYVALE MACKENZIE BELVIEW

MDL135/137

MORANBAH

EPC2157 EPC1687 EPC1168 EPC2081 EPC1186 EPC1114 EPC1580

EMERALD

EPC1276

TAROOM

CLIFFORD

EPC1274 EPC1112 EPC2030

ISAAC PLAINS COMPLEX

THIS MAP

TOWNSVILLE ROCKHAMPTON BRISBANE

Industry Rail paths SMR rail path Projects/tenements Operating asset

RAIL

Logistics to port matching IPC Infrastructure

  • 177km to Dalrymple Bay Coal Terminal
  • SMR 2.4 Mt contracted

PORT

Path to Market Secured

  • 85 Mt capacity multi user port
  • SMR 2.4Mt contracted
  • 2 x 1.2Mt capacity tranches with a 5 and 10

year term and ‘evergreen’ rights

Operations and Projects

Foundations in Metallurgical Coal

  • Isaac Plains Complex (IPC) operational with a

capacity of 3.5Mt ROM (approx. 2.5Mt product)

  • IPC Marketable Reserves of 37Mt

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SLIDE 5

Isaac PlainsComplex

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Operations

  • Isaac Plains operational in 2016 at

1.2Mt rate

  • Expansion to Isaac Plains East

completed 2018 taking production to 2.4Mt product FY19

Region

  • Multi–operational region
  • Incremental capacity increases available
  • SMR track record of sourcing, development,
  • perating and rehabilitating

Development / Projects

  • Isaac Downs acquired in 2018. Consenting and

approvals underway

  • Currently majority semi-soft coking coal; migrating

into semi-hard coking coal

  • Isaac Plains South in exploration phase

Infrastructure / Equipment

  • 100% owned CHPP/Rail Loop and

infrastructure areas with 3.5Mt ROM capacity

  • Mining operations contracted

ROM 4km ISAACRIVER N Legend Drainage Major roads Minor roads Railway Stanmore ML Stanmore MDL Stanmore EPC

ISAACPLAINS MINE ISAACPLAINS EASTMINE ISAACPLAINS SOUTH ISAAC DOWNS

EPC728 EPC755 EPC755 ML 70342 ML 700019 ML 700018 ML 700017 ML 700016 MDL 137

ISAAC PLAINS COMPLEX

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SLIDE 6

Overview – Stanmore Customer Base

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EUROPE CHINA JAPAN KOREA S.EASIA INDIA Coking Thermal

Diverse Blue Chip Customer Base Leveraged to metallurgical coal

  • Approximately 50% contracted into

Japan / Korea

  • Valuable market / customer

diversity expanding into Europe and India

  • Thermal by-product

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SLIDE 7

Certainty instrategy

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OPERATINGPERFORMANCEIN WHAT COUNTS

Isaac Plains Complex

2.0Mt 2.4Mt

Saleable Production

Regional Coal Hub

2.4Mt 5.0Mt

Saleable Production

Emerging Integrated Coal Company

THE COMBINED EFFECT

Source ROM coal with discipline

  • CHPP to full capacity of 3.5Mt ROM
  • 2 Stage cost structure
  • Ramp-up / ramp-down capability
  • Strip Ratio /Cost Structure /Coal Quality
  • Matched logistics

Maximise the ‘combined effect’

  • Multiple sources to upstream

increased CHPP feed capacity up to potentially 7Mt ROM

  • Capital ‘light’ expansion on existing

footprint giving superior IRR’s in the current climate

Equipment performance Engineered

  • perations

Operations leadership

2019 - 2020 2021 - 2022

Fully prepared company

  • Multiple hubs forcing a combined

effect

  • Benchmark performance for each $
  • r piece of equipment deployed
  • Positioned for growth at any point in

the cycle

PROJECT / INVESTMENT PIPELINE – SOURCE ROM COAL PIPELINE WITH DISCIPLINE COAL QUALITY | COST STRUCTURE | STRIPRATIO

Margin Focused

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SLIDE 8

Outlook

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From creating certainty in outcomes and returns to sourcing further ROM coal and preparing the company for the next stage

  • During the FY2019 March quarter, Stanmore achieved US$132/t for coking coal, being a 15% premium to

the SSCC spot price over the same period

  • Metallurgical coal pricing has remained very well supported
  • A combination of lower global investment in projects, continued strong Chinese steel output and

metallurgical coal and coke production rationalisation has held pricing up

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 50 100 150 200 250 300 350 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 Share price ($) US$/tonne

Share Price

Hard Coking Coal SMR share price 50 100 150 200 250 300 350 Jan-2015 Jan-2016 Jan-2017 Jan-2018 Jan-2019 US$/tonne

Coal Type Price

Hard Coking Coal Semi-soft Coking Coal Thermal Coal

Semi-soft Benchmark Summary (US$/t, Financial Year) Q1-19 Q2-19 Q3-19 Q4-19 Forward looking 137 130 131 126.5 Index based (backward looking) 129 136 130 TBA

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SLIDE 9

Contractor Approach

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PRINCIPAL CONTRACT OVERVIEW

▪ Stanmore’s contracting arrangement means that the payment for all site services is between Stanmore and Golding (including those performed by sub-contractors of Golding) ▪ Golding has been appointed the Coal Mine Operator and then appoints the SSE. The site is operated under the Golding SHMS ▪ Golding is paid on a basis which requires the contractor to assume certain efficiency and operational risks to execute the agreed mine plan ▪ Blast rates ($/bcm) ▪ Overburden rates ($/bcm). Golding operate and maintain Stanmore’s dragline (and Cat6060 excavator) as part of their

  • verburden operations

▪ Coal mining rate ($/bcm) covering mining and transport to the CHPP utilising Golding mining fleet ▪ Processing rate ($/feed t) covering operation and maintenance of the CHPP and TLO ▪ The contract provides Stanmore with various protections in order for Stanmore to manage certain fixed costs that are necessary to run the mine which include incentives and penalties to encourage maximisation of coal recovery ▪ Stanmore maintain responsibility for Major Maintenance and Environmental Compliance

Stanmore IP Coal Owner Golding Head Contractor

Golding Mining Operation Action DB Drill & Blast Golding CHPP Operation

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FY19 Highlights

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FULL-YEAR PRODUCTION

lifted from 1.1 Mt in FY18 to 2.4Mt product coal in FY19 – increase of 112%

FY19 INTERIM DIVIDEND

  • f 3 cps payed in April 2019 following a

maiden dividend of 2 cps paid in November 2018

ADDITIONAL PORT CAPCITY to

2.4Mt secured forming a major foundation for flexible growth to full CHPP capacity

FULL-YEAR EBITDA (underlying)

guidance ~$155m (subject to audit)

ISAAC DOWNS Maiden JORC Coal

Reserve (24.4Mt) and updated JORC Coal Resource (33.0Mt)

DEVELOPMENT of Isaac

Plains East completed with dragline relocated

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Isaac Downs - Project ExecutionTimeline

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Site Assets

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MINING EQUIPMENT ▪ Golding is contracted to perform all mining activities

  • n site, provide most of the mining fleet and operate

and maintain Stanmore supplied assets (e.g. Dragline, Cat6060 Excavator & CHPP) ▪ Golding is also responsible for subcontracting additional services (e.g. drill/blast, planned maintenance)

Equipment Item Make/Model Provider Number Dragline (Cat) BE1370 Stanmore 1 Excavator – O/B 600t Cat 6060 Stanmore 1 Excavator – O/B 500t Hitachi EX5500 Golding 1 Excavator – O/B and Coal 350t Hitachi EX3600 Golding 1 Excavator – Coal 250t Komatsu PC3000 Golding 1 Excavator – Services 120t Hitachi EX1200 Golding 2 Truck – Overburden 220t Cat 793F Golding 5 Truck – Overburden 220t Cat 793C Golding 4 Truck – Overburden 190t Komatsu 730E Golding 8 Truck – O/B and Coal 160t Hitachi EH3500 Golding 5 Truck – Rejects and Topsoil 85t Cat 777 Golding 5 Drill – O/B 270mm Atlas Copco Action D&B 2 Dozer Cat D11 Golding 7 Dozer Cat D10 Golding 4 Grader 16H and 16M Golding 4 Water Truck 85,000l Cat 777 Golding 3 Loader Cat 992 Golding 1 Loader Cat 988 Golding 1

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Mine Plan

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Safety Environment and Community Performance

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Flood Protection Safety

  • Leadership focus on fatal risks and critical controls
  • ‘Engineered’ Workplace Environment
  • Individual accountability

Rehabilitation and Monitoring

Environment

  • Proactive management of impacts
  • Significant flood protection measures
  • Progressive rehabilitation integrated into operations

Community

  • Contribute to community programs
  • Proactive engagement

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Rehabilitation FY19

15 Each Month Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 TOTAL Budget % Completed Disturbed

14.64 2.72 65.5 25.04 25.9 29.87 51.09 23.35 10.83 53.3 16.46 318.7

Recontoured

11.71 25.84 15.36 6.35 20.65 12.74 6.41 13.77 22.86 14.49 150.18 146 103%

Topsoiled

6.04 37.23 1.24 2.01 1.43 12.05 4 64

Re-Seeded

20 41 19 16 96

Seeded

8 40 49 8 4 109 146 75%

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S1 and N1S Levees

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Operational Performance

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Operational Performance

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Operational Performance

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Operational Performance

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MAJOR MAINTENANCE

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Dragline Shutdowns

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March 2020 - 28 days March 2021 - 8 days March 2022 - 45 days

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Dragline Shutdown - 2020

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Drag Replace Drag Drum Line bore to suit alignment of new drum Replace #1 gearing Replace #2 gearing Replace Bull Gear Replace 2 Drag Motors Hoist Inspections only Swing Replace #1 gearing Replace #2 gearing Propel Inspections only Crack repairs to shoes Fairlead Overhaul fairlead sheaves Structure NDT testing to update Crack Register Boom crack repairs Mast crack repairs A Frame crack repairs Tub crack repairs Revolving frame crack repairs Suspension Do not lower Boom Replace boom intermediate sheaves Repair/Replace IBS lugs Review boom monitoring system Boom Repairs to Lower IBS lugs and general crack repairs

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Dragline Shutdown - 2022

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Drag Inspections only Hoist Replace gearing Line bore Swing Replace swing rack Replace upper rails Requires tub to be pulled out of machine Propel Major overhaul Structure NDT testing Boom crack repairs Mast crack repairs A Frame crack repairs Tub crack repairs Revolving frame crack repairs Suspension Lower Boom Replace suspension ropes Overhaul Boom point sheaves Overhaul sister towers Centre Pintle Bush Change out while tub is out Fairleads Overhaul

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CHPP Shutdown

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  • Major Shutdowns will be held in August 2019 and March 2020. Budget

estimates have been developed and the detailed scope of work is currently being undertaken.

  • A Component Level Risk Assessment (CLRA) and critical spares list has been

reviewed and rated according to the risk to the business.

  • A structural audit has been undertaken.
  • A 3D scan of the plant has been undertaken.
  • CHPP Improvement Project to drive overall Isaac Plains productivity in future

years.

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ISAAC DOWNS

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Works Packages – Isaac Downs

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  • Peak Downs Highway Underpass
  • Levee Bank for Flood Protection
  • Water Management Structures, Pumps and Pipes
  • Workshop and Administration
  • Powerline Extension
  • Coal Haul Road
  • Mine Access Road
  • Cat6060 Excavator Relocation
  • Dragline Relocation
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BUSINESS IMPROVEMENT

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Tailings Disposal

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Water Management

Previous

30 Evaporation fan pad Release dam 1 (RD1) Release dam 2 (RD2) S2 sediment dam (S2SD) (fill point dam) Billy's Gully Smoky Creek S3 Pit (main water storage) S1 evaporation pond Raw water dam (turkeys nest) Source: Burdekin pipeline (purchased) Source: Catchment runoff Source: S3 pump transfer Source: S3 Pit Source: Catchment runoff, Northern pits pump transfer Source: Catchment runoff, Northern pits pump transfer

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Water Management

In Progress

31 Release dam 1 (RD1) Release dam 2 (RD2) S2 sediment dam (S2SD) (fill point dam) Billy's Gully Smoky Creek S3 Pit backfilled Raw water dam (turkeys nest) Source: Burdekin pipeline (purchased) Source: Catchment runoff Source: N1S pump transfer Source: Catchment runoff Process Pond N1S Pit (main water storage) Source: Catchment runoff, Southern pits pump transfer S1 Pit backfilled

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New Dragline Bucket

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Raw Water – MCC Installation

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Water Monitoring Stations

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Swipe Card Access and Recording

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Fauna Protection

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Mine Access Road – Billys Gully Upgrade

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Mine Access Road – Smoky Creek Upgrade

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Haul Road – Smoky Creek Upgrade

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Drainage Control

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Backfilling Pit S3

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Backfilling Pit S1

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Underground Power – IPE Haul Road

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Desilting/Repurposing Release Dam 2

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Community Initiatives

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  • Contract signed with Isaac Regional Council regarding sale of raw water
  • Living local initiative
  • On-line community grant application system
  • Mental health/literacy numeracy