For personal use only

Transcription

1 Heemskirk Consolidated Limited Annual General Meeting Chief Executive Officer s Presentation 23 February 2017

2 2 Important Notice & Disclaimer The information contained in this presentation is current as at February All statements are based upon the Company s best information as at February This presentation includes forward-looking statements regarding future events and the future financial performance of Heemskirk Consolidated Limited ( HSK or Heemskirk ). All forward looking statements are based on the beliefs of Heemskirk management. These statements reflect Heemskirk s current views with respect to future events and are subject to various risks, uncertainties and assumptions. Heemskirk makes no representation or gives any assurance that these statements will prove to be accurate as future circumstances or events may differ from those which have been anticipated by the company. No representation or warranty, express or implied, is given to the accuracy of the information or opinions contained in this document and no liability is accepted by Heemskirk or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This presentation is being supplied to you, in whole or in part, for information purposes only and not for any other purpose. This presentation and the information contained in it does not constitute a prospectus and does not form any part of an offer of, or invitation to apply for, securities in any jurisdiction. Potential investors should not rely solely on the information contained herein prior to making any investment decision. Investors should seek independent advice from a properly qualified advisor, giving due regard to their own personal circumstances, prior to forming any investment decision. * All currencies in Australian dollars unless stated otherwise.

3 3 In this presentation... Moberly Silica Project Where and what Mine lease & freehold plant site Logistics (rail & highway) Joint Ore Reseves Committee (JORC) Frac sand Construction update Expansion Case Market & Industry

4 4 Moberly Silica Project where and what

5 5 Location - Golden, British Columbia Moberly Calgary Located in British Columbia adjacent to the regional town of Golden

6 6 The Moberly Silica Project A granted mining lease Freehold plant site strategically located on both the Canadian Pacific Rail mainline and the Trans Canada Highway Long-life JORC resource Project is designed to deliver API quality frac sand Applications in oils & gas, cement and glass industries

7 Moberly Project Stage One Estimated construction completion: 30 June 2017 Staged commissioning to commence: Q Nameplate production: Q3 300,000tpa Recoveries in sand product size range 30 to 140 mesh: 70%* Producing an API/ISO specification frac sand product In situ JORC Resource - easily satisfies a 35-year mine plan Permits are in place * Based on lab scale testing 7

8 8 Layout - Moberly Plant Site On site rail spur 2. Load out truck and rail 3. Existing building/store 4. Existing Silica Flour Plant 5. Office & Mine dry 6. ROM pad 7. Finished product silos 8. Frac Sand plant 9. Waste/Fines stockpile 10.Primary crusher and feed 11.Trans Canada Highway 12.Canadian Pacific Rail - mainline 13.Blaeberry River

9 9 Moberly Plant, Mine and Mine Haul Road Please use below URL for video presentation ining_noblast.mp4?dl=0

10 10 Construction February 2017

11 Moberly Significant Resource Moberly JORC Resource* 37.5 million tonnes with estimated 70% frac sand recovery Dry tonnes Measured^ 12.5 million 70% 30 mesh to 140 mesh frac sand # Indicated^ 25.0 million 30 mesh to 140 mesh frac sand # Total Measured + Indicated^ 37.5 million 30 mesh to 140 mesh frac sand # ^ Mineral Resources for frac sand include that proportion modified to produce Ore Reserves of frac sand # Recoveries estimated from test work to date 300,000 tpa frac sand would suggest +60 years of mine life if complete conversion to reserves, expanded pit engineering and permitting was achieved If production was expanded, 600,000 tpa frac sand would suggest +30 years of mine life again, with hurdles achieved * See Reserves and Resources announced on 23 November The information in this presentation that relates to the Moberly Resource estimate is extracted from the report entitled Heemskirk Mineral Resources and Ore Reserves 30 September 2016 which was based on information compiled by Malcolm Ward, BSc (Hons), MSc (Queens) who is a Fellow of the Australasian Institute of Mining and Metallurgy released to the market on 23 November 2016 and available on the Company s website ( ). The Company it is not aware of any new information or data that materially affects the information included in this market announcement, and in the case of estimates of Mineral Resources and Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person s findings are presented have not been materially modified from the original market announcement. 11

12 12 Frac sand Used in oil and gas industry A proppant used in the hydraulic fracturing process Applications for other silica-based industries Frac sand particles under electron microscope Moberly product of high quality API/ISO specification

13 13 Moberly Project Construction Update Mine haul road upgrade construction completed Roadway was widened to accommodate two-way truck traffic and new runaway lanes Main process building cladding and roof work near completion Major equipment procurement complete All specified equipment on site has been rough set Motor Control Centre Room complete and equipment installation commenced Septic system installed BC Hydro Power Smart program approval Onsite rail completed up to the 25m boundary, with Canadian Pacific Railway ( CP ). Awaiting CP installation of new rail-switch and construction of mainline work from the 25m boundary.

14 Moberly Project Finance Package Stage One Debt financier Taurus Funding Stage One US$25m Exchange rate US$/C$ 1.37* Currently US$15m drawn down Utilisation request for further US$5m submitted and expected by the end of February 2017 * Based on hedging rates in place for US$25m 14

15 The Expansion Case Stage Two High level review undertaken to increase production capacity from 300,000 Mtpa to 600,000 Mtpa Capital cost to double plant capacity estimated at C$18m^ and includes: Mine road extension 15% for permitting & fees 15% buffer for contingency costs Next steps: Commission feasibility study detailed design & costings, permitting and market demand Taurus facility includes US$15m for expansion* * Contingent upon various conditions including approval from Taurus, completion of detailed technical evaluation and design, permitting, demonstration of full project funding and committed off-take arrangements ^ Cost estimates provided in the report are high-level estimates provided without a detailed design / scope of work, nor cost-consultant / contractor involvement, and represent only order-of-magnitude opinion of probable costs. Significant deviations in final project costs can only be realised after a scope of work is designed, contractors provide competitive quotations, and the project is complete such that hidden or latent defects are found and included. 15

16 16 Western Canada Oil & Gas Industry

17 17 Where to North American frac sands market As U.S. onshore operators hone their skills to extract more oil and natural gas from onshore basins, sand intensity should fuel an unprecedented growth in proppant (sand) demand. Raymond James & Associates (RJ&A) (RJ&A - US$500Bn North American financial and investment banking services firm, quoted in Natural Gas Intelligence Share Daily publication, 24 January 2017)

18 18 WCSB - Oil & Gas Locations Moberly

19 19 Fracturing Trends ~80% of wells drilled horizontally are utilising multi-stage fracturing Proppant intensity continues to increase (~6000MT Montney well) Lateral sections continue to lengthen (~2700m) Frac density / stages per well continue to grow (92 stage record in Montney in 2016)

20 20 Proppant Demand Headwaters MB Presentation North American Frac Sand Exhibition & Conference April 2016

21 21 US Rig Count & Proppant Demand

22 22 Sand Industry Forecast Sand Industry Demand - Robust Projections EMES Investor Presentation November 2016

23 23 Moberly & Frac Sand Market Outlook in the WCSB The Moberly Stage One Project is estimated to represent slightly less than 10% of regional consumption Mount Moberly White Frac Sand meets all API parameters and it meets customer technical approvals within the Western Canada Sedimentary Basin (WCSB) region Consumer demand remains strong

24 Fracturing site with sand handling equipment 2,204mt mobile frac sand storage and delivery system Photo: Business Wire 24

25 25 Closing comments Projections forecast sand demand increasing Project completion on revised schedule for 30 June 2017 First revenue now expected to be received in August 2017 (originally expected May 2017) Market opportunity is positive

26 Heemskirk Consolidated Limited Annual General Meeting Chairman s Presentation 23 February 2017

27 27 Important Notice & Disclaimer The information contained in this presentation is current as at February All statements are based upon the Company s best information as at February This presentation includes forward-looking statements regarding future events and the future financial performance of Heemskirk Consolidated Limited ( HSK or Heemskirk ). All forward looking statements are based on the beliefs of Heemskirk management. These statements reflect Heemskirk s current views with respect to future events and are subject to various risks, uncertainties and assumptions. Heemskirk makes no representation or gives any assurance that these statements will prove to be accurate as future circumstances or events may differ from those which have been anticipated by the company. No representation or warranty, express or implied, is given to the accuracy of the information or opinions contained in this document and no liability is accepted by Heemskirk or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This presentation is being supplied to you, in whole or in part, for information purposes only and not for any other purpose. This presentation and the information contained in it does not constitute a prospectus and does not form any part of an offer of, or invitation to apply for, securities in any jurisdiction. Potential investors should not rely solely on the information contained herein prior to making any investment decision. Investors should seek independent advice from a properly qualified advisor, giving due regard to their own personal circumstances, prior to forming any investment decision. * All currencies in Australian dollars unless stated otherwise.

28 28 In this presentation... Heemskirk Metrics Business Risks and Opportunities Takeover Proposal Working Capital

29 29 Heemskirk Metrics Capital Structure ASX listed: HSK Shares on issue*: 562m Market cap $44m Major Shareholders First Samuel 34.6% Taurus 32.8% Board of Directors Garry Cameron, Non-Executive Chairman John Taylor, Non-Executive Director Peter McKenna, Non-Executive Director * Fully paid ordinary shares

30 30 Business Risks and Opportunities Project Risk Any future capital expenditure or schedule slippages Construction completion (scheduled for 30 June 2017) Capital costs currently US$26.9m Market and Industry Risks and Opportunities Product demand Market price fluctuations External factors fluctuations in oil and gas prices

31 Takeover Proposal 22 Dec 2016 Indicative, non-binding, conditional takeover proposal received from Taurus Resources No.2 BV (Taurus); a major shareholder Off-market takeover offer, via new private limited Company in Canada (a subsidiary of Taurus): Cash: A$0.075 per share; or Scrip: in the Bidder* (issued on a 1-for-1 basis) Jan 2017 Heemskirk appointed Independent Expert, BDO Corporate Finance (East Coast) Pty Ltd (BDO) to assess the Taurus proposal Independent Technical Expert, CSA Global Pty Ltd (CSA Global) appointed to review the Moberly Project and assist BDO in valuing Heemskirk * Bidder is Northern Silica Corporation, a new private limited company in Canada that is a subsidiary of Taurus 31

32 32 Takeover Proposal cont. 13 Feb 2017 Heemskirk Board enters into Takeover Implementation Agreement with Taurus & recommends shareholders elect the cash alternative, in the absence of a superior offer and provided that the Independent Expert determines the Proposal is fair and reasonable No recommendation made in respect of the scrip alternative

33 33 Working Capital & Bridging Facility

34 34 Working capital Revised estimated construction completion now 30 June 2017 Repayments of principal and interest at fixed dates: Interest from August 2017 Principal from November 2017 Debt Services Reserve Account funding US$3m (A$4m*) required to be set aside from November 2017 Additional short term funding A$5m-A$10m required includes buffer for contingencies Bridging facility of up to C$10m with Taurus available once the Offer becomes unconditional * Spot rate USD/AUD 1:1.31 as at 22 February 2017

35 35 Bridging Facility Key Terms Available for draw down once the Taurus offer becomes unconditional Up to C$10 million, able to be drawn in C$2.5 million minimum tranches Maturity date of 31 March 2018 Bullet repayment at the Maturity Date, with no penalty for early repayment Unsecured facility Interest rate of 12.5% p.a. on drawn funds, to be repaid in Bidder shares (not cash) Fees payable to Taurus in Bidder shares (not cash) comprising: 2% arrangement fee on the total facility size; and 2% p.a. commitment line fee on undrawn funds

36 36 Bridging Facility Key Terms cont. Repayment intended to be via a new equity issue by the Bidder - key terms: Issue price of C$0.075 per share; All Bidder shareholders may participate in the equity raising on a pro-rata basis to their shareholdings in the Bidder The Bridging Facility is subject to legal documentation, certain conditions precedent, representations and warranties

37 37 Closing comments Bidder s Statement Expected to be dispatched to shareholders mid March 2017 Target s Statement Anticipated to be dispatched to shareholders at the end of March 2017 Independent Expert s Report will be included Shareholders are not required to take any action at this time await transaction documentation

38 Heemskirk Consolidated Limited Annual General Meeting 23 February 2017