INVESTOR PRESENTATION
June 2014
Disclaimer Disclaimer This presentation is strictly confidential and is solely for your information and may not be reproduced, retransmitted, further distributed to any other person or published, in whole or in part, for any purpose. By receiving the information in such presentation, you agree to be bound by the following terms. This presentation is not and does not constitute or form part of and should not be construed as any offer or invitation to sell or issue or any solicitation or recommendation to purchase or subscribe for, any securities in any jurisdiction and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto. Investors should not subscribe for or purchase any securities referred to in this presentation except on the basis of the information in a final offer document issued in respect of such securities. This presentation has been prepared by Geo Energy Resources Limited (“Geo Energy” and together with its subsidiaries, the “Geo Energy Group”) and has not been independently verified by Geo Energy or the Geo Energy Group. No representations or warranties, express or implied, are made by Geo Energy, the Geo Energy Group or any of their respective members, directors, officers, employees, agents, affiliates, advisers or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions presented or contained in this presentation. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the financial or trading positions or prospects of Geo Energy or the Geo Energy Group. None of Geo Energy or the Geo Energy Group nor any of their respective members, directors, officers, employees, agents, affiliates, advisers or representatives, accept any liability whatsoever in negligence or otherwise for any loss howsoever arising from any information or opinions presented or contained in this presentation or otherwise arising in connection with this presentation. The information and opinions presented or contained in this presentation are provided as at the date of this presentation and are subject to change without notice and the accuracy of the information is not guaranteed. No person is under any obligation to update or keep current the information contained herein and nothing in this document shall, under any circumstance, constitute a continuing representation or give rise to any implication that there has not been and will not be any change affecting the Geo Energy Group. Past performance of the Geo Energy Group is not necessarily indicative of the future or likely performance of Geo Energy Group. This presentation may contain forward-looking statements. Forward-looking statements are subject to risk factors associated with the Geo Energy Group's business, many of which are beyond the control of the Company and may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. This presentation is only addressed to and directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication may relate is only available to, and any invitation, offer, or agreement to engage in such investment activity will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. This presentation may not be used or relied upon by any other party, or for any other purpose. No offering of securities of Geo Energy or the Geo Energy Group will be registered in the United States of America (the “United States”) under the U.S. Securities Act of 1933, as amended (“Securities Act”) and any such securities may not be offered, sold, resold, delivered or distributed, directly or indirectly, in the United States except pursuant to an exemption from, or transaction not subject to, the registration requirements of the Securities Act.
Neither this presentation nor any copy of such presentation may be taken or transmitted into the United States, its territories or possessions or distributed, directly or indirectly, in the United States or to any “U.S. Person” as that term is defined in the Securities Act. This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone and the internet. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. The information presented here is not an offer for sale within the United States of any equity shares or any other securities of Geo Energy or the Geo Energy Group. This presentation has not been and will not be registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”). Accordingly, this presentation is only addressed to and directed at persons who are (i) institutional investors under Section 274 of the SFA, or (ii) relevant persons pursuant to Section 275(1), or any persons pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA. By receiving this presentation, you are deemed to have represented and agreed that you and any customers you represent (1) are either an institutional investor as defined under Section 4A(1) of the SFA, a relevant person as defined under Section 275(2) of the SFA or a person referred to in Section 275(1A) of the SFA, and (2) agree to be bound by the limitations and restrictions described in the SFA. The distribution of this presentation in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions. This presentation was prepared exclusively for the parties presently being invited for the purposes of discussion. Neither this presentation nor any of its content may be used without the prior written consent of Geo Energy.
1
Table of contents 1.
Group Overview
2.
Our Business
3.
Operational and Financial Highlights
4.
Business Strategies and Competitive Strengths
5.
Coal Industry Overview
Appendix
2
1. Group Overview
Group overview Business snapshot
Financial snapshot
Geo Energy Resources Limited (“Company” or “Geo Energy”) is a coal mining company that has assets based in Indonesia
Geo Energy listed in Singapore since 2012
Coal mine owner cum operator and contractor
Produced more than 5 million tonnes of coal since 2008
Owner of the Bumi Enggang Khatulistiwa (“BEK”) coal concession in East Kalimantan
Market capitalization (as at 17 June 2014): S$ 354.3 million
FY2013 Enterprise value : US$299.3 million
JORC coal proved and probable reserves: 11.1 million tonnes
JORC coal measured, indicated and inferred resources in addition to reserves: 29.7 million tonnes
FY2013 EBITDA = US$30.5 million
FY2013 BEK coal production = 1,490,713 tonnes
Key shareholders (as at 6 June 2014) Name
Mine owner cum operator
Mine contractor
Number of shares
%
Master Resources(1)
462,326,287
40.0%
Dhamma Surya
101,810,704
8.8%
Charles Antonny Melati
91,395,406
7.9%
Huang She Thong
29,825,620
2.6%
1,700,000
0.1%
469,992,874
40.6%
1,157,050,891
100.0%
James Beeland Rogers Jr Others Total
Source: Bloomberg and company information. (1) Master Resources is a company incorporated in the British Virgin Islands. The shareholders are Charles Antonny Melati (19.6%), Dhamma Surya (24.0%), Huang She Thong (12.6%), Richard Kennedy Melati (12.5%), Ng See Yong (12.5%), Yanto Melati (12.6%) and Darmin (6.0%).
4
Corporate structure Geo Energy Resources Limited (“GER”)
99.0% (1)
100%
PT Geo Energy Coalindo (“GEC”)
Geo Coal International Pte. Ltd. (“GCI”)
Investment holding/Indonesia Rental of equipment Mining/Indonesia Coal trading/Indonesia
99.99%(2)
PT Mitra Riau Pratama (“MRP”)
99.0% (3)
PT Mitra Nasional Pratama (“MNP”)
99.9%(4)
99.9%(6)
PT Sumber Bara Jaya (“SBJ”)
PT Geo Mineral Trading (“GMT”)
Dormant/Singapore
99.98%(5)
PT Bumi Enggang Khatulistiwa (“BEK”) Note: Indonesian law requires that there be a minimum of two shareholders for a company incorporated in Indonesia. (1) The remaining 1.0% is held by PT Libra Melati Investment, a company incorporated in Republic of Indonesia. (2) The remaining 0.01% is held by the Group’s Executive Chairman, Charles Antonny Melati (3) The remaining 1.0% is held by the Group’s Executive Officer, Richard Kennedy Melati (4) The remaining 0.1% is held by the Group’s Executive Officer, Richard Kennedy Melati (5) The remaining 0.02% is held by the Group’s Executive Officer, Richard Kennedy Melati (6) The remaining 0.1% is held by the Group’s Executive Officer, Richard Kennedy Melati
5
Key milestones for Geo Energy
•
•
The Group was established by Charles Antonny Melati, together with other founders
•
To facilitate the Group’s business operations, MRP was incorporated for the purpose of acquiring and owning mining equipment and vehicles
2008
The Company was incorporated in the Republic of Singapore under the Companies Act (Chapter 50) of Singapore as a private company limited by shares, under the name “Geo Energy Resources Pte Ltd”
•
Commenced land clearing operations at the BEK Concession Area, followed by overburden removal and coal extraction in February 2012
•
On the 5 October 2012, the Group converted to a public listed company and changed its name to “Geo Energy Resources Limited”
2012
2010
2009
2011
2013
•
The Group acquired its own coal crushing facilities
•
•
•
Completed a coal cooperation contract with CV Intan Karya Mandiri which commenced in 2008, with a total production of approximately 326,000 tonnes
Entered into two mining services and Coal Sales and Purchase agreements (“CSPA”) with Parisma Jaya Abadi (“ PJA”) and Bumi Jaya Prima Etam (“ BJPE”)
•
For the year ending 31 December 2013, the Group has produced 1,490,713 tonnes of coal from its BEK mine, approximately 54.7% higher than in FY2012
The Group acquired BEK which holds the BEK Mining Concession to the BEK Concession Area of 4,570 hectares located at the Kutai Barat Regency, East Kalimantan
6
2. Our Business
Integrated operations across coal mining value chain Land clearing and overburden removal
Topsoil, waste material and overburden are removed by excavators, bulldozers and dump trucks The overburden removed is transported to the designated dumping areas and is usually subsequently used in the Group's land reclamation and rehabilitation activities
Coal excavation
Using excavators, the coal is extracted and loaded onto dump trucks for haulage
Coal mines generally operate on a system of two work shifts of 10 hours per day throughout the year
Coal haulage
Coal is transported by dump trucks to the barge loading port which is generally located within close proximity of coal mining sites Close proximity reduces transportation costs while increasing operational efficiency
Crushing and loading
Coal is off-loaded from the dump trucks onto a conveyor belt which feeds it into the crusher where it is crushed according to specifications determined by customers The Group owns the jetty, crushing and loading facilities at BEK’s mine thus giving it flexibility and control over its operations
Reclamation and rehabilitation
Coal sales
The credit term granted to coal sales customers are up to 30 days
New delivery terms (FOB Mother Vessel) commenced in 2013 with typical delivery cycle of 90 days
On an on-going basis, the Group reclaims land by depositing the overburden onto mined out areas
Rehabilitation of the reclaimed land is carried out by the spreading of topsoil on the surface of the overburden deposited and the planting of native plants
Geo Energy has a vertically integrated coal mining and contracting operation that is well suited to optimise efficiency of its operations Source: Company website and information.
8
Strong track record of operations Location
Site Area
Period of Operations
Calorific Value (GAR) (Kcal/Kg)
Coal Produced (Tonnes)
Banjar Regency, South Kalimantan
156 ha
Oct 2008 – Jul 2009
>3,800
326,000
Kutai Kartanegara Regency, East Kalimantan
100 ha
Aug 2009 – Jun 2010
>5,500
218,000
Kutai Kartanegara Regency, East Kalimantan
195 ha
Nov 2009 – Sep 2012
>5,500
549,000
Samarinda City, East Kalimantan
192 ha
July 2010 – Sep 2012
>5,500
1,100,000
Paser Regency, East Kalimantan
94 ha
Dec 2010 – May 2011
>3,500
87,000
Kutai Kartanegara Regency, East Kalimantan
98 ha
June 2011 – Mar 2012
>5,500
344,000
Note: The above track records were carried out under coal cooperation contracts (“CCC”) arrangement prior to September 2012.
9
BEK mine concession
4,570 ha in Kutai Barat Regency, East Kalimantan 6 year mine life based on 11.1 million tonnes of reserves 29.7 million tonnes of resources in addition to reserves Approximately 2,454,000 tonnes of coal produced as at 31 Dec 2013 Calorific value in excess of 3,400 kcal/kg GAR Commenced coal extraction in February 2012 Concession period of up to 20 years, commencing April 2011, extendable for two 10-year periods at Group’s option thereafter upon compliance with prevailing laws and regulation Distance to barging port is 5 km
10
Mine contracting services
PJA (01) Entered into Mining Services Agreement and Coal Sales and Purchase Agreement for Block I and II Overburden removal and coal hauling services
BJPE (02) Entered into Mining Services Agreement and Coal Sales and Purchase Agreement for Block I, II and III Overburden removal and coal hauling services
11
3. Operational and Financial Highlights
Geo Energy’s operational highlights Coal production and coal purchased from off-take agreements (in thousands of tonnes)
603
964 1,491 853
787
65
593
78
232 FY2010
FY2011
FY2012 Coal Cooperation Contracts
FY2013 BEK
4Q13
1Q14
Coal purchased from off-take agreements
Coal sales and trading volume
Overburden removal (in BCM thousands)
(in thousands of tonnes)
579 4,154
7,963 945
13,945 1261
8,707
8,029
6,486
763 1,134 1,303
FY2010
FY2011
FY2012
Coal Cooperation Contracts
FY2013 BEK
4Q13
Mining Services
910 645
3,108 1Q14
187
76
192 FY2010
FY2011 FY2012 Coal Cooperation Contracts
FY2013 4Q13 BEK Coal Trading
Source: Company filings. Note: Coal Cooperation Contracts – Group is required to pay the mine owner fee payments which were based on the tonnage of coal produced; Mining Services contracts – Group provides expertise through land clearing, overburden removal and coal haulage and at the same time is allocated a fixed amount of coal produced from the concession sites for sales and trading.
42 1Q14
13
Geo Energy’s financial highlights Revenue and average selling price
Total debt, cash and debt/net assets
73.4
65.1
1.03x
64.0 46.5
1.00x
51.2
42.6
108.6
69.1
69.2
0.05x
27.3
50.1 23.8 FY2010
FY2011
FY2012
Revenue (US$'m)
0.19x
0.19x
78.8
FY2013
4Q13
16.6
4.2
1Q14
FY2011
Average selling price (US$/tonnes)(1)
23.5
17.8
FY2012
10.7
FY2013
Cash (US$m)
Group gross profit and gross profit margin
23.2
6.4
Debt (US$m)
0.50x
0.00x
1Q14 (2)
Debt/Net asset (x)
EBITDA and margin
46.1 37.9
48.5%
38.5 39.1%
40.0%
28.1 28.1% 36.3
FY2011
FY2012 Group Gross Profit
Source: Note:
12.7 8.4
19.0
FY2010
38.3
30.5
26.7
FY2013
19.6
2.0
2.1
4Q13
1Q14
17.8%
30.5
27.7
4.8% 1.1
FY2010
Gross Profit Margin (%)
Company filings. (1) Average selling price is computed using revenue from coal sales and coal trading divided by total coal volume sold and traded (2) Debt includes outstanding bank borrowing and finance leases
FY2011
FY2012 EBITDA (US$m)
FY2013
4Q13
2.9 1Q14
Margin (%)
14
Geo Energy’s financial highlights (cont’d) Income statement
Balance sheet (in US$ million)
(in US$ million) 2011
2012
2013
4Q13
1Q14
69.2
78.8
108.6
23.8
16.6
Cost of sales
(42.6)
(42.5)
(78.0)
(21.8)
(14.5)
Gross profit
26.6
36.3
30.5
2.0
2.1
Revenue
Other income
0.3
0.4
1.4
0.3
1.3
General and adminstrative expenses
(5.2)
(6.3)
(8.6)
(2.3)
(2.2)
Other expenses
(0.5)
(2.3)
(3.5)
(0.8)
(0*)
Finance costs
(1.9)
(1.5)
(2.5)
(0.6)
(0.6)
Profit before income tax
19.3
26.5
17.3
(1.4)
0.7
Income tax expense
(4.8)
(7.4)
(4.3)
0.5
(0.6)
Profit for the year Profit attributable to owners of company
14.5
19.2
13.0
(0.9)
0.1
14.3
18.9
12.6
(0.9)
0.1
0.1
0.2
0.4
0*
0*
27.7 40.0% 21.0%
38.2 48.5% 24.4%
30.5 28.1% 12.0%
1.1 4.8% n.m
2.9 17.8% 0.5%
Non-controlling interest EBITDA EBITDA margin Net income margin Source: Company filings. Notes: * Amount less than US$100k. • : n.m: Not meaningful
2011
2012
2013
1Q14
Cash and cash equivalents
4.2
69.1
17.8
10.7
Trade and other receivables
0.5
4.1
25.5
31.5
Other current assets
3.5
5.2
41.4
41.8
Non-current assets
82.6
76.6
76.8
80.5
Total Assets
90.8
155.1
161.5
164.4
Current liabilities
28.3
19.0
21.8
21.7
Non-current liabilities
35.9
12.3
17.4
16.2
Total Liabilities
64.2
31.3
39.2
37.9
Shareholder's Equity Finance leases Total bank borrowings
26.6 11.2 1.0
123.7 5.6 0.8
122.3 22.7 0.5
126.5 20.5 3.0
Tangible Net Worth (“TNW”)
28.5
125.7
124.0
128.8
Ratios Secured borrowing/Total assets Total borrowings/TNW
0.13 1.71
0.04 0.16
0.14 0.20
0.14 0.20
15
Geo Energy’s customer distribution Customer distribution channels
FY2013 revenue breakdown by geography (in US$ million)
7.2 (6.6%)
Geo Energy Resources
1.6
23.5 (21.6%) Coal Traders and Export Companies (Coal Sales)
Other Mine Owners (Mine Contracting Services) 76.3 (70.2%)
Power plants, cement factories and other industrial users
Indonesia
Singapore
India
Others
FY2013 Top 5 customers based on coal sales and trading amount Top 5 customers based on coal sales and trading amount
Amount (US$ in thousands)
% of total (amount)
PT Commodities & Energy Resources
14,829
19.1%
Peabody Coal Trade Asia Private Ltd
13,758
17.7%
PT Union Perkasa Lestari
10,556
13.6%
PT Bara Abadi
9,704
12.5%
Pan Century Global Exports
6,351
8.2%
Others
22,494
29.0%
Total
77,692
100.0%
Source: Company information.
16
4. Business Strategies and Competitive Strengths
1 Key strategies
•
•
1
2
3
Acquisition of new mine concessions
Acquisitions and coal mining arrangements
Acquisition of additional mining equipment
Group is constantly on the lookout for business expansion opportunities which may include acquisitions, joint ventures and/or strategic alliances to expand its business operations and increase coal production levels Group actively source for acquisition of other mining concessions that will complement its current BEK coal
•
Group also intends to source for suitable acquisitions or enter into suitable coal mining arrangements with other third party sources in order to gain access to new concession areas
•
•
Group has acquired additional heavy duty and large capacity mining equipment and machinery, including heavy duty excavators, dump trucks and bulldozers A larger and enhanced fleet of mining equipment and machinery would facilitate the intended increase in production capacity of the Group’s mining operations at the BEK Concession Area and better support the operations of the new mining service contracts
4
Broadening customer base regionally •
Expand network of customers and establish direct sales channels
•
Establish trading arm in Singapore and leverage on it to reach out to critical mass of international coal trading companies
18
2 Competitive strengths 1
2 Integrated operations across coal mining value chain
6
One of the more competitive coal mining companies in Indonesia
3 Experienced management with proven operational track record and cordial relationship with
Strong growth from expanded coal mining portfolio
local authorities
4
5 Comprehensive fleet of mining equipment
Increasing coal sales volume ramp-up whilst maintaining low cost structure
19
3 In the pipeline Overview of mining concession • PT Sungai Danau Jaya (“SDJ”) is domiciled in the district of Angsana, Tanah Bumbu regent, of South Kalimantan Province.
• The concession is located near PT . Borneo Indobara, a subsidiary of PT Golden Energy Mines. • SDJ is estimated to have 22 million tonnes of reserves. • The coal deposit at the SDJ’s Permit Areas is expected to be thermal coal with calorific value of approximately 4,100 kcal/kg (GAR). • Distance of hauling from run-of-mine to jetty is approximately 13km.
PT Sungai Danau Jaya • Location: Angsana, Tanah Bumbu Regent, South Kalimantan • 2 IUP- 194.9 ha and 41.2 ha • Strip Ratio: 1:3 – estimated 22 million tonnes • Estimated average calorific value : 4,100 kcal/kg
On 18 June 2014, Geo has entered into a CSPA for the acquisition of a shareholding interest in Borneo International Resources Pte Ltd, from Optimum Source Limited (vendor), which pursuant to conditional subscription agreements will have effective interest of approximately 92.0% of SDJ. 20
4 Increasing coal sales volume ramp-up whilst maintaining low cost structure Coal sales volume and cash cost
37
40 29 20 3,000
1,840 1,590
763
FY2010
910
FY2011
FY2012
FY2013
Coal sales volume ('000 tons)
Cash cost (US$/t)
FY2014E (Target)
Geo Energy is on track to ramp-up sales volumes organically with upside from inorganic growth
Source: Company filings and information.
21
5 Comprehensive fleet of mining equipment HE Type
Brand
Model
Articulated
CAT Volvo Volvo CAT CAT CAT CAT CAT Komatsu Komatsu CAT Nissan CAT CAT CAT CAT Komatsu Komatsu Komatsu Hitachi CAT CAT CAT Scania Hino Hino CAT Hino Hino CAT
740 A40E A40F D6R/XL D7G D8R D9R D10T D85E-SS-2 D375A-5 773E CWB45ALDN 320 D 330 DL 336 DL 345 DL PC300 PC400L8E-8 PC1250 ZX870H-5G 120 H 14 M 160 K P420CB FM260 JD FM260 TI 966 H FM320 JD FM260 TI CS-533E
Bulldozer
HD Truck Dump Truck Excavator
Grader
Hauling Truck Dump Truck Wheel Loader Support Compact
TOTAL as of Dec 2013
Units 3 13 21 6 2 4 1 2 2 7 62 9 2 13 4 13 2 4 2 2 14 41 6 1
236
Geo Energy has embarked on a fleet renewal and expansion program in FY2013. As at 31 December 2013, we have 236 units of mining equipment, an increase of 50 units from FY2012 and 89 units from FY2010. Source: Company website and information.
22
6 Experienced management with proven operational track record and cordial relationship with local authorities
Overview of key management Mr. Charles Antonny Melati Executive Chairman Mr. Melati is one of the founders of the Group and oversees the overall strategic direction and expansion plans for the growth and development of the Group Extensive commercial contacts within the Indonesian coal mining industry players; good relationships with the relevant regulatory authorities
Mr. Dhamma Surya CEO
Mr. Surya is one of the founders of the Group and is responsible for the overall business and general management of the Group Responsible for day-to-day ground operations at Group’s coal mining sites; conversant with the Group’s coal mining operations
Relationship with local government and communities
Developed cordial working relationships with regulatory authorities and the local communities in Kalimantan
Working closely with the regulatory authorities by providing regular reports to update them on the activities of the Group's mining operations
Engages, supports and provides employment for the local villages and regional community located near its mining areas
Regular meetings with representatives of each village to discuss the progress and implementation of the Group's community assistance programs (such as donations to mosques and upgrading of roads)
Supports various local businesses by engaging them as suppliers
Mr. Huang She Thong Executive Director
Mr. Huang is one of the founders of the Group and oversees the business developments and sales targets of the Group Hands-on management of coal mining operations; extensive participation in coal mining seminars and conferences
Mr. James Beeland Rogers Jr Non-Executive Director
Mr. Rogers joined the Group in December 2012 Renowned international investor with active interests and extensive knowledge in the mining and energy industries
Mr. Mark Zhou Chief Investment Officer
Mr. Zhou joined the Group in January 2013 Responsible for overseeing the Group’s investment activities such as mergers and acquisitions, fund raising activities and investor relations
Experienced management with proven operational track record and cordial relationship with local government and communities Source: Company website and information.
23
7 Securities Investors Association (Singapore) (“SIAS”) Awards 2013
Awarded Runner-up for Most Transparent Company Award under two categories, namely (i) Chemical & Resources; and (ii) New Issues
Source: Company website and information.
24
8 CSR Activities
Source: Company website and information.
25
5. Coal Industry Overview
Indonesian coal industry Indonesia thermal coal export
Indonesia thermal coal export as percentage of total export
(in millions of tonnes)
(in millions of tonnes)
Indonesia coal export
319.1
876.0
341.0
288.0
641.1
672.4
737.3
784.0
233.2 199.7
2008
2009
2010
2011
Other coal export
2012
60.9%
59.3%
61.1%
68.9%
65.3%
34.7%
39.1%
40.7%
38.9%
31.1% 2008
2009
2010
2011
2012
While there has been a slowdown in the growth of coal exports, Indonesia is still the top coal exporting country and export volume has grown from 199.7 million tonnes per annum in 2008 to 341.0 million tonnes per annum in 2012. This represents a 5-year CAGR of 14.3%.
Over the last 5 years, the proportion of Indonesian coal export compared to the global coal export volume has been steadily increasing every year except for 2012. This shows the importance of Indonesia as a dominant supplier of coal to the rest of the world.
“The mining sector continues to make a significant contribution to the Indonesian economy... Taken as a whole, the mining industry in Indonesia contributes approximately 5-6% of the total Indonesian 2011 and 2012 GDP, and more than 17% of export revenues.”
“In 2011 and 2012, the government issued several new mining sector regulations… Despite this, existing operators are continuing operations… This may be due to anticipation that there will be a moderate improvement in the regulatory framework for the mining sector over the medium to long term; or indeed an expectation that global commodity prices will return to previous highs…”
PwC 2013
PwC 2013
Great potential for Geo Energy to ride on positive macro-environment in the coal sector Source: PwC research report mineIndonesia 2013 dated May 2013.
27
Indonesian coal industry (cont’d) 5-year coal price performance
Indonesian Coal Price Reference (HBA) 140 130 120
USD/tonnes
110 100 90 80 70 60 50
Source: Indonesians coal Index – published price by Indonesian’s government
28
Coal long term outlook Long term outlook of coal industry
World coal production, 2010 – 2040 (billion tonnes)
• U.S. Energy Information Administration (“EIA”) estimates that global coal production will increase 9% between 2010 and 2015 with majority of incremental capacity and related demand will be located in Asia. • Indonesia accounted for approximately 71% of total coal production in the other non-OECD Asia region in 2010, up from 52% in 2000. • Throughout the projection period, Indonesian continues to dominate non-OECD Asia, according to the EIA.
Source: U.S. Energy Information Administration: International Energy Outlook 2013
29
Market developments
Foreign investment regulation (2012) - Foreign investors to divest at least 51% of their ownership in Indonesian mining assets after 10 years from production date
New mining regulation (2012) - Mine owners are required to carry out coal production and sale activities Government investments in mining (2012) - Indonesia’s government has a master plan to turn East Kalimantan into a major mining and mineral processing hub through US$73 billion worth of investments
Geo Energy has transformed into a full-fledged mining contractor with mining services capabilities, and well suited to comply with the new mining regulations in Indonesia 30
Appendix
Mining equipment Dec-10
Dec-11
Dec-12
Dec-13
Mar-14
11
13
13
37
37
Compact
1
1
1
1
1
Bulldozer
19
21
23
17
17
Dump Truck
53
76
76
62
62
7
7
Articulated
HD Truck Excavator
35
39
40
47
47
3
4
5
4
4
Hauling Truck
22
22
22
55
55
Wheel Loader
3
3
6
6
6
147
179
186
236
236
Grader
Total
Source: Company website and information.
32
Company pictures - Operations
33
Company pictures – Machinery fleet
34
Company pictures – Mine Site
35
Q&A
