2 March 2010 Centennial Coal Half Year Results 1 Centennial Coal UBS Australasian Investor Briefings (December 2009 - Half Year Results) Bob Cameron, Managing Director/CEO and Tony Macko, General Manager: Corporate Affairs 4 & 5 March 2010 (Singapore and Hong Kong)
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Half Year to 31 Dec 09 UBS Australasian Investor · PDF file2 March 2010 Centennial Coal Half Year Results 1 Centennial Coal UBS Australasian Investor Briefings (December 2009 - Half
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2 March 2010
Centennial Coal Half Year Results 1
Centennial CoalUBS Australasian Investor Briefings(December 2009 - Half Year Results)
Bob Cameron, Managing Director/CEOandTony Macko, General Manager: Corporate Affairs
4 & 5 March 2010 (Singapore and Hong Kong)
2 March 2010
Centennial Coal Half Year Results 2
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Disclaimer ‐ SingaporeIn attending or viewing this presentation you agree to be bound by the following terms and conditions.
This presentation has been prepared by Centennial Coal Company Limited (the Company). This presentation may contain information (including information derived from publicly available sources) that has not been independently verified by the Company.
Any forward looking information in this presentation has been prepared on the basis of a number of current assumptions which mayultimately prove to be materially incorrect. Therefore actual results, outcomes and achievements may be materially greater or less than estimated. This presentation should not be relied upon as a forecast by the Company.
Neither the Company nor its directors, officers, employees or advisors make any representation or warranty and accordingly no reliance should be placed on the fairness, accuracy, completeness or reliability of the information contained in this presentation. To the maximum extent permitted by law, the Company its directors, officers, employees or advisors do not accept any liability for any errors, omissions or loss (including because of negligence or otherwise) arising, directly or indirectly, from any use of this presentation or information contained in this presentation.
This presentation is for information purposes only and does not constitute or form part of any offer for sale or issue for any securities or an offer or invitation to purchase or subscribe for any such securities.
This presentation and its contents must not be distributed or circulated to any person in Singapore other than an institutional investor pursuant to Section 274 of the Securities and Futures Act, Chapter 289 of Singapore.
This presentation and its contents must not be distributed, transmitted or viewed by any person in any jurisdiction where the distribution, transmission or viewing of this presentation would be unlawful under the securities or other laws of that or any other jurisdiction.
This presentation and its content is not intended to be relied upon as advice to investors or potential investors and does not take into account an individual investor’s investment objectives or financial situation. Investors or potential investors should consider their individual circumstances and consult professional advisors where appropriate.
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Disclaimer – Hong KongIn attending or viewing this presentation you agree to be bound by the following terms and conditions.
This presentation has been prepared by Centennial Coal Company Limited (the Company). This presentation may contain information (including information derived from publicly available sources) that has not been independently verified by the Company.
The information contained in this presentation is provided as at the date of this presentation and is subject to change without notice. There is no obligation to update, modify or amend this presentation or otherwise to notify recipients if any information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Any forward looking information in this presentation has been prepared on the basis of a number of current assumptions and expectations of future events which may ultimately prove to be materially incorrect or may not be realised. Therefore actual results, outcomes and achievements may be materially greater or less than estimated.
This presentation should not be relied upon as a forecast by the Company. The Company assumes no responsibility publicly to amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise.
Neither the Company nor any of its respective affiliates, directors, officers, employees, representatives or advisors make any representation or warranty and accordingly no reliance should be placed on the fairness, correctness, accuracy, completeness or reliability of the information contained in this presentation. To the maximum extent permitted by law, the Company, its respective affiliates, directors, officers, employees, representatives or advisors do not accept any liability for any errors, omissions or loss (including because of negligence or otherwise) arising, directly or indirectly, from any use of this presentation or information contained in this presentation.
This presentation is being communicated only to persons who have professional experience in matters relating to investments and to persons to whom it is lawful to communicate (all such persons being referred to as "relevant persons"). This presentation is only directed at relevant persons.
This presentation is for information purposes only, and may not be forwarded, reproduced or redistributed to any other person in whole or in part. This presentation does not constitute or form part of, and may not be used in connection with, any offer for sale or issue for any securities or an offer or invitation to purchase, acquire or subscribe for any such securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. This presentation and its contents must not be distributed, transmitted or viewed by any person in any jurisdiction where the distribution, transmission or viewing of this presentation would be unlawful under the securities or other laws of that or any other jurisdiction.
This presentation and its content is not intended to be relied upon as advice to investors or potential investors and does not take into account an individual investor’s investment objectives or financial situation. Investors or potential investors should make their own independent investigation and appraisal of the business and financial condition of the Company (including, but not limited to any tax, legal, accounting and economic considerations relevant to the Company), consider their own individual circumstances and consult professional advisors where appropriate.
2 March 2010
Centennial Coal Half Year Results 3
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Who Are We?
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Who Are We?Established in 1989, listing on ASX in 1994
Operator of 10 NSW mines, producing almost 20 million ROM tonnes per annum
Australia’s largest independent coal producer
Largest independent exporter of thermal coal
JORC * Compliant Resources & Reserves (100% basis) at 30 Jun 09 of:- Total Resource - 2.4 billion tonnes- Marketable Reserve - 0.4 billion tonnes
Major focus on OHS and Environmental performance
Major supplier to the NSW Electricity Industry
Growing export exposure with rebalancing of sales mix over the next few years; target 50:50 domestic / export
Exports through Port Kembla and Newcastle
Customers include power stations and industry in Japan, Korea, China, Taiwan and Europe
S&P / ASX 100 Company, with a market capitalisation of approximately A$1.4bn (100% free float)
2 March 2010
Centennial Coal Half Year Results 4
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Centennial’s Operations
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0
2
4
6
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10
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CEY MCC GCL NHC WHC RIV COK
Mt
Export Domestic
Largest “independent” producerComparative equity sales (excluding purchased coal) – FY2009
2 March 2010
Centennial Coal Half Year Results 5
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Dec 09 Half‐Year ‐ Key Financials
Sales revenue A$ 381.9m 13%
EBITDA A$ 77.8m 37%
NPAT A$ 31.1m 27%
Cash flow – From operations A$ 60.0m 20%– Capital expenditure A$ 147.2m 77%
Gearing 25.8%
Interim dividend (50% franked) 4 cents
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Dec 09 Half‐Year ‐ Key Points
Export sales tonnes 18% up on prior corresponding period (“pcp”)
"Resources include Inferred Resources and are based on reports prepared by the Competent Person in accordance with the JORC Code (2004 Edition). The Competent Person is Malcolm Ives, a full time employee of Centennial Coal Company Limited and a Member of the Australian Institute of Mining and Metallurgy, who consents to the inclusion of this material in the form and context in which it appears."
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Mandalong Export Infrastructure
Nearing completion
2 March 2010
Centennial Coal Half Year Results 12
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Western Operations
Angus PlaceRecord 2.1 million tonnes for the half-yearLW move commencing February 2010
SpringvaleProduction below expectations for the half-yearPoor geology and high water make at start of LW 414LW “step-around” in April
CharbonProduction in line with expectations for the half-yearLife extension project underway
Development application submittedEquipment procurement underway
ClarenceDuring December 2009 Quarter
New weekly record – 54,713 tonnesNew daily record – 12,268 tonnes
FCT on plan - full production May 2010
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Clarence FCT
Build and surface testing completeTraining underwayUnderground at Clarence March 2010Full production May 2010
2 March 2010
Centennial Coal Half Year Results 13
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Western Operations
78.6-OtherWestern total
Open-cutOpen-cut
CM (start-up)Open-cutCM/Open-cutCMLongwallLongwall/Open-cutMining method
* 100% basis "Resources include Inferred Resources and are based on reports prepared by the Competent Person in accordance with the JORC Code (2004 Edition). The Competent Person is Malcolm Ives, a full time employee of Centennial Coal Company Limited and a Member of the Australian Institute of Mining and Metallurgy, who consents to the inclusion of this material in the form and context in which it appears."
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Project Pipeline
2 March 2010
Centennial Coal Half Year Results 14
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First coal produced in December 2009Commissioning underwayRecruitment continues for additional production crewsCompletion – April 2010First Export Coal – 4th Qtr FY10
Airly Mine
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Airly Mine Construction– Nearing Completion
Top left: Rail Loading Bin
Bottom left: First Coal Production
Below: Mine Entries
2 March 2010
Centennial Coal Half Year Results 15
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Newstan Lochiel Project
Proposed 4mtpa ROM mine 25km from the Port of NewcastleSynergy with existing Newstan infrastructureLarge resource thermal & semi soft coking coalDrilled 40 holes, programme more than 65% completeMine layouts being assessed based on geological info from explorationPrefeasibility study due Q4 FY10
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Inglenook ProjectThree new western exploration licences granted 123 square kilometres (inc. existing EL) Synergy with Charbon and Airly infrastructureExploration plan being developedProject manager appointed
Exploration
Angus Place North East areaDrilling continuesLW layout options being assessed
2 March 2010
Centennial Coal Half Year Results 16
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Coal Markets
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Export – Thermal CoalIncreasing base-load Asian power requirements driving continued strength and growing demand for thermal coalChina anticipated to remain a net importer, with Australia and Indonesia to benefitTotal Chinese coal imports December 2009 were a record 16.4 million tonnesSignificant enquiries from Chinese power companies for supply in 2010Other South East Asian demand continues to grow inc. India, Korea, Vietnam, etcSupply remains tightCalendar-year thermal coal contract price for Japanese Power Utilities approximately US$85.00 Spot prices and GlobalCoal NEWC index above US$95.00 JFY 2010 contract price expected to increase Customers continue to focus on security of supply and reliable counter parties
2 March 2010
Centennial Coal Half Year Results 17
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China annual coal trade
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China monthly coal trade
2 March 2010
Centennial Coal Half Year Results 18
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Chinese Thermal Coal Imports
(Source: McCloskey)
0
2
4
6
8
10
12Ja
n-06
Feb-
06M
ar-0
6A
pr-0
6M
ay-0
6Ju
n-06
Jul-0
6A
ug-0
6S
ep-0
6O
ct-0
6N
ov-0
6D
ec-0
6Ja
n-07
Feb-
07M
ar-0
7A
pr-0
7M
ay-0
7Ju
n-07
Jul-0
7A
ug-0
7S
ep-0
7O
ct-0
7N
ov-0
7D
ec-0
7Ja
n-08
Feb-
08M
ar-0
8A
pr-0
8M
ay-0
8Ju
n-08
Jul-0
8A
ug-0
8S
ep-0
8O
ct-0
8N
ov-0
8D
ec-0
8Ja
n-09
Feb-
09M
ar-0
9A
pr-0
9M
ay-0
9Ju
n-09
Jul-0
9A
ug-0
9S
ep-0
9O
ct-0
9N
ov-0
9D
ec-0
9
Mill
ion
tonn
es
Other Australia
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Asian Electricity Output (% yoy)
(Source: CEI, METI, Korea National Statistical Office, Bloomberg, CBA)
2 March 2010
Centennial Coal Half Year Results 19
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Centennial’s Markets
Majority of exports under long-term contracts to quality end-usersCentennial’s “independence” and reliability valued by customersDemand remaining strong for Port Kembla shipments in 2010 –excess capacity availableExpansion of Centennial export infrastructure to increase marketing flexibility at both Western and Northern operationsPort and loader flexibility: PWCS, PKCT and NCIGStrong demand by domestic generators continues
Increasing export and re-priced domestic sales as existing long-term domestic contracts roll-offSupported by increasing export infrastructure
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2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
Year
Equ
ity S
ales
- m
tpa
Export & Re-priced Domestic Sales
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Key Investment Themes
Strong sector fundamentals
Growth – organic growth and new projects
Increasing access to export infrastructure, both internal (Airly and Mandalong Haul Road) and external (Newcastle ports solution –including PKCT, NCIG and PWCS expansion)
Margin expansion as domestic contract tonnage rolls-off and are:- exported- re-priced (export parity = export incentive price, less additional
export costs, adjusted for security of supply and lower risk)
As the largest “independent” thermal exporter, leveraged to higher export prices