White Energy Company Limited (ASX : WEC) Other OTC: WECFY (ADR) - - PowerPoint PPT Presentation

White Energy Company Limited

(ASX : WEC)

Other OTC: WECFY (ADR)

Company Profile

March 2008

Except for the historical information contained herein, the matters discussed in this presentation contain forward-looking statements, including statements, containing the words “planned”, “expects”, “believes”, “strategy”, “opportunity”, “anticipates”, and similar words. Such forward-looking statements are subject to known and unknown risks, uncertainties, or other factors that may cause the company’s actual results to be materially different from historical results or any results expressed or implied by such forward-looking statements. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date hereof. In addition where comparisons are made between White Energy Company and other companies, we have made best efforts to properly interpret publicly made information by these companies but cannot be certain that such comparisons are completely accurate.

Forward Looking Statements

White Energy’s BCB process upgrades low value coals by reducing the moisture and compacting into dense, physically and chemically stable lumps that can be handled, transported and utilized like normal coal. White Energy’s Coal Upgrading

• Listed: Australian Securities Exchange (ASX: WEC).
• Other OTC: ADR Program (WECFY).
• Business Description: Commercialization of Coal Upgrading Technology.
• Shares outstanding: 126,926,022 fully paid ordinary shares.
• Options Outstanding: 42,220,735
• Recent share price 29 February 2008:
• ASX: A$2.89 (US$2.69)
• Other OTC: US$13.00
• Equity market capitalization*: A$488M (US$455M).
• Available funds at 29 February 2008: A$55.4M (US$50.9M) plus US$25M remaining through a

converting note facility from BHP Billiton.

• Corporate headquarters: Sydney, Australia; offices in Indonesia, China and now in the US.
• Full-time personnel: 30.
• Public since: March 2005.
• Insider ownership: 34% of shares outstanding.

Company Snapshot

Notes: * Total fully diluted shares on issue if all options are exercised. Assumes all notes are not converted. If all notes are converted, then market capitalization would be A$526M (US$490M). Exchange Rate A$1.00 =US$0.9314.

Financial Snapshot

119,579 119,579 5,956 125,535 76,561 48,974 31 Dec 2007 61,415 77,469 Total Equity 61,415 77,469 Net Assets 4,411 8,423 Total Liabilities 65,826 85,892 Total Assets 59,126 67,482 Non Current Assets 6,700 18,411 Current Assets 30 June 2006 30 June 2007 (A$000’s)

Consolidated Balance Sheet

46,652 32,274 45,236 (10,369) (2,593) YTD 31 Dec 2007 6,564 15,072* Closing Cash & Cash Equivalents 3,615 8,508 Net Increase (decrease) in cash & equivalents 5,902 22,509 Net Cash (outflows) from Financing Activities (1,518) (12,700) Net Cash (outflows) from Investing Activities (769) (1,301) Net Cash (outflows) from Operating Activities FY2006 FY2007 (A$000’s)

Consolidated Statement of Cash Flows

Note: * Includes consolidation of Indonesian JV cash balance reported only in annual statutory accounts and not in quarterly reports

Global Market Drivers

• Rapidly growing coal demand - Global coal demand is expected to

grow significantly through 2030, particularly from the fast growing economies of China and India (IEA).

• New crude oil paradigm placing upward pressure on competitive

fuels - Rising crude oil pricing is increasing demand for cheaper, indigenous fossil fuels.

• Deliverability of high quality coals is declining - In both North America

and Asia, production of high thermal value / low emission coal is declining.

• Increasing global emphasis on emissions reductions - Across the

globe, emissions of CO2, SOx, NOx and Hg are coming under increased

• regulation. Coal is a vital resource option for meeting the world’s

sustainable energy needs.

Issues Facing the Coal Industry

• Combustion of coal releases CO2 and inefficient use

could have global climatic impact.

• Many traditionally utilized coals are major sources of

pollutants such as SO2 and NOx.

• The world has very large reserves of coal which are low

in pollutants such as sulphur and ash but are not exploited because of their low energy and transportation economics.

• In some regions such as the USA dust from coal

transportation and handling has become a major environmental, economic and logistical problem.

Coal is the lowest cost and most easily accessed energy source in the world, however there are several issues that reduces its attractiveness as an energy source into the future.

WEC - A Facilitator to Zero Emissions

Source: Adapted from World Coal Institute (2003) White’s Upgraded Coal

+

Efficiency Improvements Existing Power Plants

+ +

Advanced Technologies New Power Plants Zero Emissions

Coal upgraded by the White Coal technology can be used to supply each

• f the stages of the coal technology

lifecycle

• ffering

immediate CO2 emission reductions of up to 10%. Conventional sub-critical plants can achieve thermal efficiencies of up to 40%. Improving less efficient plants will reduce CO2 emissions by up to 22%. Improved efficiency sub-critical plants

• perate

throughout the world. Supercritical and ultra supercritical plants can achieve efficiencies of up to 45% and operate in Japan, USA, Europe, Russia, China, and Australia. Integrated gasification combined cycle and pressurized, fluidized bed combustion plants operating in the US, Europe and Japan achieve high efficiencies and reduced CO2

• emissions. Integrated gasification

fuel cells under development achieve even higher efficiencies. Carbon capture and storage can reduce emissions of C02 to near zero. Advanced technologies gasify coal by heating it to temperatures so high that it breaks down into a variety of petroleum products. CO2 is separated out and then sequestered by directing it into underground reservoirs where it will remain buried forever. When combined with advanced technologies, carbon capture and storage will facilitate the hydrogen fuel economy.

Research and Technology Enhancements

Act as an Enabling Technology Partner Today:

• Coal upgraded by White Coal Technology can supply each stage of the coal technology

lifecycle, offering significant environmental benefits.

• WEC will continue to improve its existing process, and will invest in developing its technology,

with an emphasis on coking coal applications.

Invest in Coal Technologies for the Future:

• White Energy will continue to develop and acquire synergistic technologies in coal upgrading

and emissions reductions, in response to the growing global market for coal and related end products.

• Developing a unique suite of coal upgrading and emissions reductions technologies will

enable White Energy to partner with a growing number of players in the coal value chain.

• White Energy will continue its drive toward achieving key player status in a zero emissions

world.

White Energy’s Strategy:

Coal Dust – A Major Problem in the USA

PRB Lost Loading Opportunities (YTD 4 Sept 2007)

970 275 90

100 200 300 400 500 600 700 800 900 1000 1100

Mine Railroad Utility

Increasing Coal Shipments: Rail Co

• Ave. PRB Coal Trains Per Day

Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07

• Problems caused by increased levels of track dust

include:

– Track surface disruption and increased maintenance costs. – Reduced train velocity on the high density PRB route. – Release of foul track ballast (requires higher ballast maintenance). – Reduces capacity.

• Due to increased economic and environmental

pressure, creating a solution to this problem is a crucial component of the American coal value chain.

• White Energy’s briquetting process significantly

reduces the level of coal dust prior to transport, increasing railway efficiency by reducing maintenance costs and increasing loading

• pportunities,

a significant advantage

• ver

competing technologies.

• Higher energy content: WEC increases heat the useable energy content by

between 30% and 200%, creating valuable power generation efficiencies.

• Mechanical process: a mechanical process that is designed to work at coal mines,

not a complex chemical process.

• Low upgrading costs: Favorable conversion economics allow the product to

compete with bituminous coals.

• Lower spontaneous combustion risk: Upgraded coal is physically and chemically

stable, and can be handled, stored and transported as normal coal.

• Lower transportation costs: Process reduces moisture, resulting in up to 30%

decrease in load volumes and concomitant transportation costs.

• Reduced greenhouse gas and pollutant emissions: More efficient burning results

in lower CO2, SO2, NOx and Hg emissions.

• Reduced levels of dust: Significantly reduces the quantity of dust when compared

with unprocessed sub-bituminous coal.

The White Energy Technology Benefits

• The White Coal Technology was originally developed

by a consortia led by the CSIRO, the pre-eminent Australian government sponsored research

• rganisation.
• Low value coal is crushed and rapidly dried to

remove water content and reduce dust levels.

• Compaction generates close bonding between the

dried coal particles without the need for expensive binding agents.

• As a result, high density, higher energy content

briquettes are formed.

• The process works on both fine and lump coal.
• Coal samples from China, the US, Australia,

Indonesia and South Africa have all been successfully processed with significant calorific value increases and effective stabilisation of the product for handling, storage and transportation purposes.

The White Energy Value Added Process

Impact of Upgrading

• n PRB Coal

11,345 BTU / lb GROSS CALORIFIC VALUE (as received basis) 0.4 Sulfur (%) 0.9 Nitrogen (%) 5.0 Hydrogen (%) 69.7 Carbon (%) ULTIMATE ANALYSIS (dried basis) 46.1 Fixed Carbon (%) 41.4 Volatile Matter (%) 6.1 Ash (%) 6.4 Total Moisture arb (%) PROXIMATE ANALYSIS (as received basis)

WEC Upgraded Coal Sample – 8,400 BTU/lb PRB coal which starts with 30% moisture

• Energy content increases from

8,400 BTU/lb to 11,345 BTU/lb

• No chemical change to the coal
• All other characteristics of the

coal stay virtually the same

Strong Power Plant Performance

Sub-bituminous coal upgraded by White Energy compares very favorably with higher priced bituminous coal

57.6 17.3 21.3 Ash Generation (Kg/MWh) 1404 169 223 SOx (mg/Nm3) 454 280 284 NOx (mg/Nm3) 36.1 36.3 34.1 Overall Efficiency (%) 5.9 5.7 6.4 Parasitic Load (%) 89.5 89.4 85.3 Boiler Efficiency (%) Australian Bituminous Coal 14% ash White Energy Upgraded Coal Sub-bituminous Coal Parameter

Source: BHP Billiton 2007

Compare

Asian Coal Outlook

• Global thermal coal import demand (seaborne plus land-

borne) is forecast to grow by 116Mt by 2015.

• Demand for thermal coal in Asia will grow by 77Mt

accounting for 66% of total growth.

• 41Mt or 55% of thermal coal demand growth in Asia is in

India and China.

• China predicts energy sector growth of 15% p.a. with

majority being coal based.

Strategy for the Year Ahead

• Asia

Initial Targets = Indonesia & China

Build earnings and cash flow: – Bayan Resources (Indonesia): commission the 1MTPA plant at the Tabang coal mine in Indonesia. – Adaro Group / Itochu Corporation (Indonesia): complete all pre-production work and commence construction of the 1MTPA plant at one of Adaro’s mines in East Kalimantan. – Datang International Power (China): conclude financial feasibility, agree holding structure issues and conclude JV to build ten 1MTPA White Coal technology plants at Datang’s sub-bituminous coal mine in Inner Mongolia, China.

North American Coal Outlook

• Use of sub-bituminous coal has grown rapidly as US power

utilities switch from local bituminous coals in part to avoid the need for costly flue gas desulphurization plants.

• Powder River Basin region is the largest sub-bituminous coal

producing region in the world, with an annual output > 350M tonnes

• The low sulphur Powder River Basin coals have very high

inherent moisture (20-25%) = substantially lower power generation and high transportation costs.

• WEC has tested coal from four mines located in the Powder

River Basin with excellent results

Strategy for the Year Ahead

• USA

Initial US Targets: Powder River Basin & Texas

Execute on US market entry strategy: – WEC is in the process of establishing operations in the US with a view to having a presence there very soon. – WEC is assessing potential US partnering

• pportunities with both coal and power utilities.

WEC expects to make progress on these initiatives in early 2008. – WEC will also explore the utilization of its technology to assist in the process of generating synthetic natural gas. – The relatively dust free nature of White Energy’s product significantly adds to WEC’s opportunity in the US. This particular characteristic appeals to US coal industry stakeholders including the railways, utilities and coal producers.

FY 2007 Highlights

• BHP Billiton appointed as WEC global marketing agent in exchange for $35M funding package,

and all relevant documentation has been executed (WEC has drawn down US$10M in funds).

• Joint venture with Bayan Resources finalized, construction of first Indonesian plant commenced.
• Second Indonesian joint venture announced with Adaro Group and Itochu Corporation.
• Final stage of China feasibility with Datang International Power Company Ltd. commenced.
• During FY07 the Company raised a significant amount of capital to fund its development program.

This included A$45 million raised in a convertible note issue completed in October 2007 led by Deephaven Capital Management.

• Secured grant from Australian Government of A$4.35M.
• American Depository Receipt program initiated.

Why Invest in White Energy?

• White

Energy has a technology that represents a first step in building a cleaner coal solution.

• White

Energy’s unique coal upgrading technology is commercially viable.

• White Energy has demonstrated the ability to

monetize significant value-add.

• White Energy has capable, incentivized

management.

• High-growth investment opportunity with

near term revenue generation.