Becoming Colombia s Leading Independent Coal Producer June 2013

Transcription

1 Becoming Colombia s Leading Independent Coal Producer June 2013 TSXV: PAK

2 Disclaimer Forward Looking Statement This presentation contains certain forward-looking statements and forward-looking information under applicable Canadian securities laws concerning the business, operations and financial performance and condition of Pacific Coal, S.A. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to business plans and strategies of Pacific Coal; information with respect to the proposed subscription receipt financing of Pacific Coal; estimated production of the various projects of Pacific Coal; the benefits of the acquisitions and the development potential of properties of Pacific Coal; the future price of coal; estimates regarding mineralization and exploration results; the ability of Pacific Coal to achieve mining success consistent with management s expectations; and expected levels of royalty rates, operating costs, and other costs and expenses. Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forwardlooking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to the Corporation and its shareholders. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as anticipate, believe, could, estimate, expect, forecast, guidance, intend, may, plan, predict, project, should, target, vision, will, or similar words suggesting future outcomes or language suggesting an outlook. Forward looking statements are based on the opinions and estimates of management at the date the statements are made, as well as a number of assumptions made by, and information currently available to, the Corporation concerning, among other things, Pacific Coal s ability to successfully complete the proposed subscription receipt financing; anticipated geological, operational and financial performance, business prospects, strategies, regulatory developments, future commodity prices, future production levels of the Corporation s assets, the ability to obtain financing on acceptable terms, the timely receipt of any required approvals and that there will be no significant events occurring outside of Pacific Coal s normal course of business. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating coal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of equipment or processes to operate as anticipated, and acquisitions not being integrated successfully or such integration proving more difficult, time consuming or costly than expected. Although Pacific Coal has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. Pacific Coal undertakes no obligation to update forward-looking statements if circumstances or management s estimates or opinions should change except as required by applicable securities laws. This presentation uses the terms measured, indicated, and/or inferred mineral resources. United States investors are advised that while such terms are recognized by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. Unites States investors are cautioned not to assume that all or any part of mineral resources will ever be converted into mineral reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. 1

3 Vision Explore, expand and develop existing producing assets to increase efficiencies, reserves and production, while securing infrastructure capacity to capture all aspects of the value chain Seek opportunities to secure access to markets and ensure commercial flexibility Fostering a culture of civic responsibility to the environment Pacific Coal is on track to produce 1.6 Mt of thermal coal in 2013 The Company has a compelling portfolio of high quality producing assets: La Caypa (thermal coal) Cerro Largo (thermal coal) Jam (coke) Cerro Largo Mine 2

4 Strategy Vertical integration to secure market access in value-added product streams RAW MATERIAL PRODUCTION (UPSTREAM) La Caypa thermal coal Cerro Largo thermal coal Jam hard coking coal La Tigra asphaltite 100% ownership and control of La Caypa, Cerro Largo and La Tigra Company owns 92% of Jam, and exercises controls over 100% RETAIL/MARKETING (DOWNSTREAM) 1. Marketing of thermal coal (Local market and exports) 2. Marketing of coke Power Generation Business PAK, Pacific Power Generation Corp. (PPG), and Proeléctrica signed on January 31, 2013, an MOU for the construction of a 150 MW power generation plant. The MOU calls for thermal coal to be used from the Cerro Largo mine from 2016 onwards. Port Services The Company is exploring the potential of shipping liquids through the Las Flores port, a service the Company has noted is in high demand in Colombia 3

5 Asset Summary Diverse Portfolio of High Quality Coal Assets 1 Asset Type Stage La Caypa Open pit steam coal mine with underground potential Producing 2013 Production* 1,013 Kt (Coal) Puerto Brisa Port of Santa Marta Las Flores Port Cerro Largo Open pit steam coal mine Producing 612 Kt (Coal) 4 3 Jam Underground coking coal mine upgrading to coke Producing (Re-start) 42 kt (Coke) Medellin Cali Bogota 3 4 La Tigra Asphaltite Exploration - 5 Las Flores Port Port concession for potential of shipping liquids Evaluation - (*) Source: Management estimates

6 Executive Management Strong and Experienced Team Total Employees = 274 Includes Own Operation in Cerrolargo Executive Chairman (Acting CEO) Hernán Martinez Colombian Minister of Mines (Jul 06 to Aug 10), President of International Colombia Resources Corporation (Operator of The Cerrejón Coal Project), President of Atunec S.A., President and CEO of Exxon Mobil Colombia S.A., and Manager of Corporate Planning for Esso Colombiana S.A. Member of board of directors of CB Gold Inc., and previously, director of Interconexion Electrica S.A. ESP, ISAGEN Energia Productiva, council President and Representative of the President of Colombia at the National Hydrocarbons Agency. Mr. Martinez is also a director of Gran Colombia Gold Corp. and Pacific Rubiales Energy Corp. COO Luigi Salemi Executive VP Ricardo Plata Legal VP Maria F. Vasquez CFO Patricia Herrera Served as Chief Operating Officer of the Company since October 1, Prior to this he was an advisor and consultant to various mining companies from June 2009 to September He has also previously served as Mine Manager of International Colombia Resources Corporation (Operator of The Cerrejón Coal Project ) Executive Vice-President of the Company since October 1, Mr. Plata was Director of Fundesarrollo (Private Think tank that carries out economic and social studies and monitoring of public policies (Jul 2009 to Sep 2012). Prior to this he was the Administrative Vice-President of Supertiendas y Droguerias Olympica (second largest retail chain of Colombia) from April 2005 to March Mr Plata served also as Public Affairs Manager and Marketing Manager of International Colombia Resources Corporation ( ). Company s Legal Vice-President since November 02, From 2008 to 2010 provided legal consultancies to Carbones Colombianos del Cerrejón S.A. From June 2007 to August 2008 worked as Procurement Coordinator in Prodeco S.A. Prior to this she served as legal adviser at the firm García, Ramos and Lourduy (January May 2007). Company s Chief Financial Officer since June 25, Founder of her own financial consultant firm Estudios y Consulorias SA since April Served as manager of financial and regulatory studies of Promigas S.A E.S.P ( ). Advisor of the Colombian Ministry of Mines (1996 to 1997). 5

7 Annual Production (thousands of tonnes) Thermal Coal Production Profile Note: Cerrolargo s production is based on Pro-electrica requirement. 6

8 La Caypa Mine Significant Thermal Coal Production High quality steam coal production with attractive expansion and underground potential Location: Guajira Department, Colombia Adjacent to Carbones del Cerrejón mine, largest coal mine in South America Resource estimate: 47.0 Mt of measured resource (1) 17.8 Mt of indicated resource (1) Area: 300 hectares Average BTU: 12,264 (1) Average Sulphur: 0.69% (1) Operations: One open-pit mine currently operating South pit expansion in development with expected start-up in 2013 and potential production of additional 1.0 Mtpa Underground mine development in Production 892,363 t (4) 2013 production t (4) (Forecast) Projected Costs (2) : US$85/t (4) Avg Contract Price: US$100/t in long-term contracts. Infrastructure: Secured allocation at Santa Marta (250 km) Expected additional capacity at Puerto Brisa, mid-2013, reducing freight costs by 40%-50% Strip ratio 2012: 7,01:1 Operational stripping ratio Total stripping ratio 8.8:1 (3) LA CAYPA COAL CHARACTERISTICS (1) (1) Year Moisture % Ash % Sulphur % CV Btu/lb ,265 RESERVES & RESOURCES (1) LA CAYPA - (Inclusive of Additional Resources) Surface (Mt) Underground (Mt) Measured Indicated (1) Source: Report titled NI Compliant Technical Report, La Caypa Mine, Department of Guajira, Colombia prepared by SRK Consulting and dated November 1, 2010 (2) Includes transportation, port, and administrative costs (3) Includes South Pit development at La Caypa (4) Average Management Estimation 7

9 La Caypa Mine Operations Increasing production and improving strip ratios 2012 La Caypa production was 892,363 tonnes Strike of operator s workers (Jan-Feb 2012) Change of the operator (Dec 2012) 2013 La Caypa production expectation are 1 Million tonnes (1) Source: Management estimates * Does not include South Pit total waste (tonnes) estimated for 2012: 1,582,740 8

10 La Caypa Mine South Pit Expansion to Extend Mine Life Extension of existing open pit to south of highwall with same premium coal characteristics as the primary pit with a similar CV Btu/lb Straightforward integration into existing mining operations Expected production start-up in first quarter of 2014 South pit measured and indicated resources of 7.7 Mt (1) South pit development to be concurrent with existing mining operations SECTOR +400 (1) Report titled NI Compliant Technical Report, La Caypa Mine, Department of Guajira, Colombia prepared by SRK Consulting and dated November 1,

11 La Caypa Mine Underground Mine Underground potential to drive resource expansion and continued growth in production (1) Mine planning underway based on 16 coal seams showing consistent thicknesses suitable for underground mining (average thickness ranging from 2.3 metres to 6.8 metres) Measured and indicated resource of 53.6 Mt (1) Potential thermal coal production to increase Mtpa expected to commence in first quarter of 2014 Existing pit provides underground access point with three contemplated levels to depth of 240 metres from pit bottom Studies underway to determine optimum mining method and design; potential to become the largest underground coal operation in Colombia EXISTING OPEN PIT ELEVATION: 0 Level 1 Cradle ELEVATION: -150 Level 1 ELEVATION: -300 Level 2 (1) Source: Report titled NI Compliant Technical Report, La Caypa Mine, Department of Guajira, Colombia prepared by SRK Consulting and dated November 1, 2010 and management projections 10

12 Cerro Largo La Divisa Acquisition of Significant Coal Production Contains high volatile bituminous type B coal with high calorific values and low sulphur Location: Cesar Department, Colombia in the La Jagua de Ibirico coalfield Adjacent to licences owned by Drummond and Vale. Glencore is currently operating an open-pit mine on the adjacent La Jagua sector Resource estimate: 11.6 Mt 21.2 Mt inferred (1) Area: 488 hectares Average BTU: 12,128 (1) Average Sulphur: 0.77% (1) Operations: Open-pit mine currently operating Projected Costs (2) : US$74/t, own operation with leasing equipment 2012 Production 375,719 t 2013E Production 611,486 t (3) (Forecast) Infrastructure: Secured allocation at Santa Marta (250 km) Expected additional capacity at Puerto Brisa in the first half of 2014, reducing freight costs by 30%-40% Strip ratio 2012: 19.52:1 (2012) Long-term mine plan has been implemented (1) Source: Report titled Independent Technical Report, Cerro Largo Mine prepared by SRK Consulting and dated February 2011 (2) Includes transportation, port, and administrative costs (3) Management Estimate 11

13 Stripping Ratio: Waste / Coal production Cerro Largo Increasing production and improving strip ratio 2012 Cerro Largo production was 375,719 thousand tonnes The Company has set production targets for 2013 for Cerro Largo at 0.6 million tonnes The Company took over operation of the mine as of April 2013 Source: Management estimates 12

14 Jam Coking Coal and Upgraded Coke Production Coke production facility and underground coking coal Location: Samaca Municipality, in Department of Boyaca 3,000 small HCC producers in the area Resource estimate: 2.8 Mt in situ (1) Area: 52 hectares Average BTU: 13,800 with coking properties (1) Average Sulphur: 0.92% (1) Operations: Underground coking coal Upgrading coking coal to coke Management has been focused on processing third party purchased materials for use in the production of coke until international prices increase. Management has been contacted by potential strategic partners interested in acquiring the coke at the mine mouth, eliminating freight costs for PAK. Management continues with its plan to develop the underground coking coal project in (1) Source: Report titled SRK Technical Report Written To Be Compliant With NI On Contract 7241, Boyaca, Colombia prepared by SRK Consulting and dated August

15 Regional Infrastructure Proximity to Infrastructure Supporting Growth Significant port and road infrastructure in place to support existing regional coal production Panama Cartagena Cartagena Port Colombia Port of Santa Marta Las Flores Port Barranquilla Puerto Bolivar Puerto Brisa La Caypa Cerro Largo Venezuela La Tigra Jam Contract services in stockpiling and shipping capacity at the Port of Santa Marta until July 2014 Production trucked 250 km by paved highway to Santa Marta at a cost of approximately US$20-$23 per tonne from La Caypa and 280 km from Cerro Largo at a cost of approximately US$23-US$24 per tonne Expected capacity at Puerto Brisa provides an alternative port location closer to both La Caypa and Cerro Largo with potential to reduce freight costs by 40%-50% and by 30%-40%, respectively o Puerto Brisa construction expected to be completed by Q4 2013, providing an additional 35 Mt of specialized coal shipping capacity Legend River Transport Coal Mine Coal/Asphaltite Project Road Ports 14

16 Port of Las Flores Investing in Long-Term Port Access Port concession for potential of shipping liquids Pacific Coal acquired a port concession situated on the Magdalena River near the Port of Barranquilla (approximately 5km from the Caribbean Sea) to be used for shipping liquids and exporting coke, specialized coals and bulk commodity products. This project has undergone a strategic reorientation resulting in a plan to expand the environmental license to include a fuel permit in order to facilitate the transport of liquids. 15

17 La Tigra Asphaltite Profile Asphaltites are species of bitumen, dark-colored, comparatively hard and non-volatile solids, composed principally of hydrocarbons. As of today, in the La Tigra area there is evidence of the presence of two different types of asphaltite: Grahamite and Gilsonite. Management expects a significant resource at La Tigra to be confirmed with a National Instrument compliant report physical evidence on outcrops, oil seeps and 3 mines already in production in the area lead to optimistic forecasts on the existence of important asphaltite reserves. Location of La Tigra: 80 km from Barrancabermeja Area: 5,700 hectares This property has two mining titles GKI-114 with Has. and title IIS with 1,401 Has. both of which are in exploration stage. PAK engaged in a MOU with La Tigra LLC. They are assessing our information as a result of the exploration campaign. La Tigra LLC is interested in jointly exploiting the mining titles for gilsonite and asphaltite, and should present an offer to jointly exploit the titles. Operations: Geophysical, metalotelluric, and gravimetric studies are in progress; results expected Q Based on the results, the Company will determine an adequate course of action for the property. La Tigra outcrop Infrastructure: 70 km from Bucaramanga with paved roads between Bucaramanga and San Alberto 80 km from Barrancabermeja, the centre for petroleum refining and a port on the Magdalena River 16

18 Pacific Coal Health, Safety, Environment, and Community La Caypa mine named as an example of environmental best practice by SGS at the 8 th Annual International Mining Congress Health and Safety Mission: Achieve Health and Safety goals through stewardship, integrity, and empowerment The Company seeks to continuously reduce the number of workplace and operational safety incidents, with the ultimate goal of achieving the lowest accident frequency rates in the industry The Company strives for eco-friendly operations wherever possible, by forming strategic alliances with environmental corporations The Company seeks to work with partners with high health and safety policies and standards The Company encourages its employees to participate actively in safety initiatives and prevention programs All of our employees take part in our community health programs as both volunteers and patrons The Company maintains weekly updates of its safety performance indicators Community Mission: Maximize shareholder value while fostering a corporate environment of responsible citizenship and respecting the interests of our stakeholders and members of the communities in which we operate The Company aligns its initiatives with the needs and activities of local governments, to contribute to the nation s progress The Company works closely with non-profit organizations to maximize its community efforts The Company ensures responsible operations by minimizing, wherever possible, its impact on the environment 17

19 Common Shares and others 18

20 Pacific Coal Summary Strategically located, high-quality projects in a world-class jurisdiction with significant growth potential High-grade material of which global supply is permanently depleting and thus carrying premiums High-quality coal characteristics high BTU, low moisture, low ash, low sulphur Access to international markets via ports improving efficiencies and cost reductions Opportunities to develop projects to access growth markets such as coking coal and colloidal fuels 19

21 APPENDIX 20

22 Colombia A World-Class Coal District LA GUAJIRA DEPARTMENT La Tigra Jam Cerrejon (BHP/Xstrata/Anglo) La Caypa Colombia is one of the top ten largest producers of coal in the world and the fourth largest exporter of coal. El Descanso (Drummond) El Hatillo (Vale) La Francia (Goldman Sachs) Cerro Largo Pribbenow (Drummond) CESAR DEPARTMENT Calenturitas (Glencore) La Jagua (Glencore) Coal is the third main export from Colombia, after coffee and petroleum. Colombia has one of the largest proven coal reserves in the world, with over 7 billion tonnes of recoverable reserves and 17 billion tonnes of potential reserves Total Colombian coal production reached a record level of 89.2 Mt in 2012, increasing by 4% over Source: Ingeominas Colombian Institute of Geology and Mining; Energy Information Administration; Reuters; Intierra 21

23 Colombia A World-Class Coal District Colombian Coal Production (Mt) DMTU Thermal Coal Price (FOB Puerto Bolivar) $200 $180 $160 $140 Average contract price in 2012: $100 $120 $100 $80 $60 $40 $20 $- CAPP Coal Futures FOB Puerto Bolivar Source: BP Statistical Review of World Energy and Bloomberg *Economist Intelligence Unit 22