Wescoal Investor Presentation February 2016
Important notice This document has been prepared by Wescoal Holdings Limited (the “Company”) . For the purposes of this notice, the presentation that follows (the “Presentation”) shall mean and include the slides that follow, the oral presentation of the slides by the Company, any question-and-answer session that follows that oral presentation, hard copies of this document and any materials distributed at, or in connection with, that presentation. By attending the meeting at which the Presentation is made, or by reading the Presentation slides, you will be deemed to have (i) agreed to all of the following restrictions and made the following undertakings and (ii) acknowledged that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the Presentation. The Presentation is has been furnished to you solely for your information and may not be reproduced, redistributed or disclosed in any way, in whole or in part, directly or indirectly, to any other person without the prior written consent of the Company. Your obligations as set out in this notice will continue in respect of the information contained in the Presentation until such time as, and then only to the extent that, any such information is made available to the public. The Company may not be making the information contained herein public, except to the extent required by law or regulation. If this is not acceptable to you, you should not receive the information contained in the Presentation. The information contained in the Presentation, including market information from third parties, has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed, on the fairness, accuracy, completeness or correctness of the information or opinions expressed herein. The information and opinions contained in this Presentation do not purport to be comprehensive, are provided as at the date of the document and are subject to change without notice. The Company is not under any obligation to update or keep current the information contained in the Presentation. The Company, its subsidiaries, or any of their respective affiliates, directors, officers, employees, agents, Exchange Sponsors, Singular Systems or any other person shall have no liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of the Presentation or its contents or otherwise arising in connection with the Presentation. Singular Systems is acting for the Company in connection with the Presentation and will not be responsible to anyone other than the Company for providing the protections afforded to clients. Statements in the Presentation, including those regarding the possible or assumed future or other performance of the Company or its industry or other trend projections, constitute forward-looking statements. By their nature, forward-looking statements involve known and un-known risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statements.
Busin iness Overv rview • Established in June 2005 the company listed on the JSE on 20 July 2005. • Wescoal [ WSL ] is listed on the JSE main board: Basic Resources: Mining, subsector: Coal. • In 2014 acquired the Wescoal Processing Plant near Middleburg/Mpumalanga which has a 200Kt/m throughput capacity. • In July 2015, the flagship asset Elandspruit Colliery produced, processed and delivered first coal. • The main business of the Group is the mining, processing, sale and supply of coal. • Coal is mined, sourced and supplied to clients in local industry including power generation, manufacturing and petro-chemicals sectors through two primary divisions, namely Mining and Trading. • The key strategic thrust is to be a leading junior coal miner with a sustainable resource base and a coal trading operation • Wescoal promotes sustainable growth in mining, competitiveness and environmental enhancement.
Strategic In Intent • To focus on the domestic coal mining market and transform Wescoal into a majority- black-owned business supplying Eskom and other customers cost effectively • Wescoal is steadfast in its strategic development plan with Elandspruit Colliery at the forefront • The challenging environment, specifically in the local coal sector, presents opportunities for corporate activity. • Consolidation in the junior coal sector is likely and Wescoal sees itself as a significant participant in this process. • To deliver financial growth • To take the lead in coal production by junior miners with a goal of 8 mtpa • Safety remains a top priority and • To develop quality relationships with customers and our broader stakeholder base
Strategic Priorities • Strategic organic priorities include, bedding down the Elandspruit Colliery before embarking on additional major projects. • Future projects considered conservatively and with care. • The last phase of the Elandspruit Colliery includes initiatives to reduce operational risk by optimising and upgrading water management and road network systems. • Inorganic growth opportunities available. • Augmenting the Intibane and Khanyisa Collieries resource bases and others on potentially creating a new mining complex. • Debottlenecking projects at the processing plant will ultimately increase the throughput capacity of the plant and reduce operating costs.
Structure and background WESCOAL HOLDINGS Khanyisa Colliery > 80 Years of operational experience in SA Functioning operations Intibane Colliery Elandspruit Colliery (Flagship) Gauteng, Eastern Cape, Kwazulu Trading operations Natal, Western Cape Processing plant 20km from Elandspruit Logistics network covering 6 Depots countrywide Annualised production ~2m tons of coal southern Africa. Trading division enhances Wescoal profile, provides exciting Near-term production 4m tons of coal in 2016 embedded options and generates steady cash flows target Note: Trading division includes operation previously traded as Chandler Mining division is the major source of growth and well Coal and the acquired distribution business of MacPhail in 2013 and positioned to become a significant local producer fully integrated in 2015.
Segmental contributions (as at interims 30 September 2015) Revenue Operational EBITDA 27% 31% 69% 73% Mining Trading Mining Trading
Revenue Revenue (R’000) 1 800 000 1 600 000 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 1 147 444 1 674 372 630 751 676 927 758 100 200 000 0 2012 2013 2014 2015 1H '16 8
Operating Profit Operating profit (R’000) 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 25 959 27 170 45 168 45 540 17 869 5 000 0 2012 2013 2014 2015 1H '16 9
Cash Generated From Operations 140 000 120 000 100 000 R’000 80 000 60 000 40 000 129 092 38 492 47 134 94 905 20 000 12 533 0 2012 2013 2014 2015 1H '16 Performance • Free cash utilised to increase mining asset base • No dividend declared during interim reporting period 10
Headline Earnings Per Share HEPS for the full year 18 16 14 12 10 Cps 8 HEPS for the half-year 6 4 2 11,4 12,2 15,2 15,4 5,1 0 2012 2013 2014 2015 1H '16 Note: As reported at interim results October 2015, EPS attributable to the month of September 2015 was 2,50 cps, mainly on the back of the Elandspruit Eskom contract. 11
Mining Division Update – Bu Buck cking th the 2015 tr trend Elandspruit Colliery • Mining right contains 5 potentially mineable coal seams, which occur from suboutcrop to a maximum depth of 70m below surface, near horizontal in formation and devoid of geological complexities such as faulting or dolerite intrusions. • Reserves of 34-million tons + and a LOM 12 to 15 years. • Provides feed for the Wescoal processing plant 20 km away successfully launched in 2015. Performance • Annualised monthly production of 2 million tons of RoM a year. • Annual ‘near - term’ target of Group of 4 million tons of RoM a year. • Contractor performing according to expectation • Eskom contract discussions advancing • Improved LTIF “ Elandspruit has proven its flagship qualities in 2015, performing above the 2015 mining industry average in an overall challenging business climate including eroding values, pricing pressures and labour disruptions. The mine will continue to focus on supplying Eskom and last year bucked the local industry trend, where there have been very few such developments. ” - Waheed Sulaiman.
Recommend
More recommend
