Helen Stehbens Executive General Manager External Affairs and Strategy Central Highlands Development Corporation Business Breakfast 15 February 2013 GVK Hancock Coal Projects Update
Important notice - Disclaimer IMPORTANT: The information in this document has been provided to you for information only by Hancock Coal and the GVK Group (GVK) and is subject to change without notice. Nothing contained in this document constitutes investment, legal, tax or other advice. The information in this document does not take into account your investment objectives, financial situation or particular needs. Before making an investment decision, you should consider, with or without the assistance of professional securities adviser, whether an investment in Hancock Coal and GVK is appropriate in the light of your particular investment needs, objectives and financial circumstances. Nothing in this document should be considered a solicitation, offer or invitation to buy, subscribe for or sell any security in any place in which, or to any person to whom, it would be unlawful to make such an offer or invitation. The distribution of this document outside India may be restricted by law. Persons who come into possession of this document who are not in India should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. Neither this document nor any copy hereof may be transmitted in the US or distributed, directly or indirectly, in the US or to any US person including (1) any US resident, (2) any partnership or corporation or other entity organised or incorporated under the laws of the US or any state thereof, (3) any trust of which any trustee is a US person, or (4) and agency or branch of a foreign entity located in the US. By accepting this document you agree to be bound by these limitations. Hancock Coal and GVK have prepared this document based on information available to it. Although reasonable care has been taken to ensure that the facts stated and opinions given in this document are fair and accurate, the information provided in this document has not been independently verified. Accordingly, no representation or warranty, express or implied is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. To the fullest extent permitted by law, none of Hancock Coal, GVK, directors, employees or agents or any other persons accepts any liability for any loss whatsoever arising from any use of this document or its contents, or otherwise arising in connection therewith. 2
Introduction to Parent Companies Overview GVK s assets are predominately in energy, airports and transportation Revenues are derived primarily from O&M fees, incentives for operating the businesses of subsidiaries, and secondly from the interest income earned out of managing surplus funds through superior financial planning GVK employs over 8,000 people plus another 18,000 staff for its not for profit EMRI business Hancock Prospecting Pty Ltd is a diversified Australian energy and resources company, with a strong record of pioneering the economic development of regional Australia In the 1970s, resource exploration commenced in the Galilee Basin, which was considered to be uneconomic due to the lack of associated infrastructure on Australia s east coast. Now, some 30 years later, with more developed rail and port infrastructure coupled with the global demand for coal fired power, there is an exciting opportunity for this area of regional Queensland Power Airports Transport Oil & Gas Mining Urban Hotels Eight Power Projects Gas, Hydro & Thermal 5,106 MW of Power India s Largest Private Airport Operator Mumbai International Airport 30m pax Bangalore International Airport 12m pax India s First 6 Lane Expressway Over 550km of roads under construction / development with plans for Mass Rapid Transit Greenfield port planned (Gujarat 7 deepwater oil & gas blocks in partnership with BHP Billiton Alpha and associated port and rail infrastructure Kevin s Corner and Alpha West deposits Two mines in India Two large-scale integrated developments in urban environments Airport City (Mumbai) and GVK One (Hyderabad) 6 world-class properties and one under construction Total room base of over 1,000 Bioscience Provides a broad spectrum of across the R&D value chain in chemistry, biology and informatics; Source: Factset, Factiva, company presentations 3
Project Overview Alpha Coal (GVK 79%) Kevin s Corner (100%) Alpha West (GVK 79%) GVK Railway (100%) GVK Port (100%) Expected to be the first thermal coal project to commence mining in the Galilee Basin It will rank as one of the largest thermal coal operations in the world and represents the next generation of independent thermal coal supply Up to 32Mtpa export grade thermal coal Also expected to rank as one of the largest thermal coal mines in the world Up to 30Mtpa export grade thermal coal mine Large underground mine west of Alpha 16-24Mtpa export grade thermal coal mine The first standard gauge, heavy haul railway in Queensland Designed to replicate the efficiencies of the Western Australian iron ore industry 495km, standard gauge, stand alone rail link from Galilee Basin to Abbot Point 25,000t haul per train Dedicated terminal at Abbot Point Queensland s most northern coal port 1.82Bt resource 1.2Bt reserves 4.3Bt resource 1.8Bt resource 60Mtpa initial capacity Scalable to 120Mtpa plus Awarded Preferred Developer for T3 Framework Agreement agreed Open cut mining, 30 years plus mine life First coal 2016 Ramp up from 2016 to 2019 Open cut & underground mining 30 year mine life Underground mining 30 year plus mine life First privately owned railway in Queensland Offshore berth option most likely High grade thermal coal for export markets, mainly suitable for the premium North Asian utility market FOB - US$54.8 57.5/tonne (Real) High grade thermal coal for export markets First coal by Q2 2017 Ramp up from 2017 to 2020 High grade thermal coal for export markets Pre feasibility drilling has commenced Mining targeted for 2018 EIS approved by State and Federal governments Rail corridor selected by State government Ability for up to 70Mtpa subject to more efficient use of stockpile area and berth configuration 2 x dedicated ship berths DFS and BFS completed EIS and EPBC approved Native Title negotiated ECI contractors short listed LOIs for 43Mtpa received EIS and SEIS submitted BFS completed Mining lease expected to be issued by Q1 2013 Native Title negotiated Concept study completed BFS expected by 2014 Leverage Alpha related studies and approvals Rail corridor approved Third Party Haulage Native Title negotiated State significant project Land acquisition starting Port approval by Federal government The Galilee Basin assets comprise a large scale, high quality thermal coal resource with integrated rail and port infrastructure located in Australia s next major coal basin 4
Reasons why GVK invested in this Project 5
Global Cost Curve (2021) The Alpha Coal project is expected to sit on the first quartile of the global thermal coal cost curve (2021). It is expected to be amongst the most cost efficient mines in Australia Note: Global seaborne supply is forecast to be ~1.4Bt in 2021 6
Project Location The thermal coal projects comprise Alpha Coal Project, Kevin s Corner and Alpha West. Alpha is expected to be the first thermal coal project developed in the Galilee Basin. Represents the next generation of independent energy supply. 7
GVK Coal Test Pit Successful Test Pit First and only exporter of coal from the Galilee basin to date. 125k ROM mined Coal burning tests undertaken in Korean and Chinese coal fired power stations (2011/12) Validation of geotech parameters and ground water assumptions C and D seam washing yields greater than forecast (~84%) Excellent burn results and coal quality parameters as good or better than projected in the BFS Significant de-risking of the project Depth 16m 43m 52m 8
Mine Status Milestones achieved Expected to be the first thermal coal project to commence mining in the Galilee Basin It will rank as one of the largest thermal coal operations in the world and represents the next generation of independent thermal coal supply Alpha Coal Project first coal by Q3 2016 Kevin s Corner first coal by Q2 2017 Alpha Coal Project DFS and BFS completed EIS and EPBC approved Native Title negotiated ECI contractors short listed LOIs for 43Mtpa received Kevin s Corner EIS and SEIS submitted Kevin s Corner BFS completed Mining lease expected to be issued soon 9
Railway Overview Asset description The railway will comprise initially a new single track, non-electrified, standard gauge, heavy-haul 495 km (mainline) railway Connects the Alpha and Kevin s Corner mines with the Hancock Port Terminal at Abbot Point Initial capacity of 60Mtpa and scalable to 120Mtpa. Duplicated to beyond 250Mtpa 1 in 320 ruling grade (loaded trains) Designed to replicate the efficiencies of the iron ore industry in Western Australia Standard gauge may generate costs savings of ~40% over narrow gauge Rail Rate Unit Standard gauge 1,435 mm 4ft 8.5in No of Wagon per Train 240 Train Length 3,866 m Wagon Payload 106 t Wagon Gross Weight 130 t Axle Load 32.5 t Payload per Train (approx) 25 kt No of Locos per train 3 Rail Length 495 km Train Travel Time (loaded) 10 hrs Train Travel Time (empty) 8.5 hrs No of Passing Loops (@30Mtpa) 5 No of Passing Loops (@60Mtpa) 9 Loco capacity 4,400 hp 3,236 kw No of Trains (@30Mtpa) 4 sets No of Trains (@60Mtpa) 8 sets 10
Railway - Status Milestones Achieved Technical Design has been completed for a 60Mtpa from both a construction and operation perspective. Focus is on earthworks and geotechnical (completed by June 2012) which will be undertaken in the Early Contractor Involvement phase (which precedes the final EPC bid in February 2013) and Financial Close. Advanced Approvals The Co-ordinator General s Report was issued on 29 May 2012. which was subsequently ratified by the Federal Government. This is a major approval milestone for the rail. The rail corridor alignment was endorsed as the preferred South to North corridor by the Queensland State Government on 6 June 2012. The Mine & Rail were also granted approval under the EPBC Act by the Federal Government on 23 August 2012. Rail Corridor Land More than two thirds of the rail corridor (by chainage) has commercial arrangements/agreements in place. Construction - Two contract consortia short listed. Infrastructure Operators Shortlisted we have an established short list for above and below rail operators. Operational modeling - has been completed and includes modeling for short listed third party rail haulage customers. RIM accreditation has been granted under the Transport (Rail Safety) Act 2010 (Qld). Rollingstock Locomotive and coal wagon sourcing being progressed. McKinsey we have retained McKinsey to review opex and capex savings across the construction and operation of the railway. Third party access - GVK Hancock and QCoal entered into a Memorandum of Understanding for approximately 20Mtpa to be hauled on the rail infrastructure 11
Port - Stockpile Position Abbot Point Proposed stockpile position T3 12
Port - Features Overview Proposed offshore terminal Dual high capacity (9,500 tph) train unload stations in a common vault Approximately 2Mt of stockyard capacity representing 3.3% of annual throughput Hancock Coal Infrastructure Pty Ltd has been appointed preferred developer of the Port Terminal Key features of the development include: Two rail receival dump stations located in a single common concrete vault and building, situated on the proposed rail loop corridor Two inloading conveyor streams running in parallel, consisting of four inloading conveyors per stream, feeding coal to the stockyard A single stockyard consisting of four stockpile rows arranged either side of two parallel machine bunds (two rows per bund) Two machine bunds, each supporting two stacker/reclaimer machines Two outloading conveyor streams running in parallel, consisting of five outloading conveyors, surge bin, sample plant and shiploader on each stream One common piled jetty structure, two piled wharf structures to support the offshore outloading conveyors, shiploaders and access roadways and multiple, piled berthing and mooring dolphins Civil infrastructure, including stockyard drains, sediment ponds, stormwater return dam and dredge spoil disposal bunds 13
Port - Status Milestones Technical Design ongoing work has been undertaken and ability to increase port throughput has been confirmed Framework Agreement this agreement which sets out the relationship governing the arrangements between NQBP agreed and executed Advanced Approvals significant work undertaken with regard to cumulative impact studies and dredging approvals. Infrastructure Operators Shortlisted we have established a short list for port operators Port Capacity for Third Party Rail Customers a number of the potential rail customers are seeking access to port capacity. EPBC Act T3 approval received 10 October 2012 Construction Contract Samsung and Smithbridge Joint Venture announced 17 October 2012 14
Construction Processes Project to be delivered through fixed cost, fixed time EPC contracts with large global builders with requisite expertise and experience Process started in November 2011 with contractors commencing for Phase 2 ECI phase Parties short listed All shortlisted EPC documentation to be finalised in 2013 PHASE 1 PHASE 2 PHASE 3 BIDDER BIDDER BIDDER BIDDER Contractor BIDDER BIDDER BIDDER GMAX Bids, Clarifications & ECI Deed Executed ECI Deed, Design, Scope Definition, Deliverable, Schedules & T&Cs EPC Proposal with Lump Sum Price, Executable Draft Contract Award & EPC Contract Execution 15
Procurement And Contracts - Work Packages Mobile Fleet Rail Operators Excavators Services Agreements: Major service agreements for the Contractor Operated Facilities Port Operators Mining Services Agreements Procurement & Contract Work Packages Draglines Large Excavators Major Capital Purchases Major Commodity Purchases Fuel Tyres Rail Loco s and Wagons Ancillary Gear Mine Opportunities www.gateway.icn.org.au/project/653/hancock-coal-mine-opportunities Railway Opportunities www.gateway.icn.org.au/project/654/hancock-coal-railway-opportunities Port Opportunities www.gateway.icn.org.au/project/655/hancock-coal-port-opportunities 16
Coal to the World (Marketing) 17
Global Seaborne Thermal Coal Demand World thermal demand will more than triple in volume, mainly fuelled by the insatiable demand of China and India, reaching 2.1 Bt by 2030. This represents an increase of 1.4 Bt over 2011 s expected 728 Mt or effectively two Alpha projects per annum. Growth is primarily concentrated in the Pacific basin. Global thermal seaborne import coal demand by country and by rank, China, India, all others (Mt) 18
GVK Hancock s Community Federal Maranoa Bruce Scott MP Dawson George Christensen MP State Gregory Vaughan Johnson MP Burdekin Rosemary Menkens MP Local Isaac Regional Council Cr Anne Baker (Mayor) Central Highlands Regional Council Cr Peter Maguire (Mayor) Barcaldine Regional Council Cr Rob Chandler (Mayor) Whitsunday Regional Council Cr Jennifer Whitney (Mayor) Bowen / Whitsundays As a Council we have worked with GVK/ Hancock for many years. We have watched this company tick off their approvals one by one. We have worked with them on community consultation, road openings, road works, test pits, land tenure, airports and the social aspects of the process. We support their mining development lease, their railway and their port loading facilities. Cr Rob Chandler 19
Hancock s Community Focus Alpha Community Support Program Enterprise Whitsundays Partnership Program Regional Indigenous Employment Program These community support programs cover the areas of: Education and Training Environment Arts and Culture Health and Safety Community / Charity Sports Regional Indigenous Employment Program constructing a walking path Alpha Swim Club Sponsored by GVK Hancock Coal Proud sponsor of the Longreach School Of Distant Education Recipe Book Winners of the 2012 Hancock Prospecting and GVK Christmas Lights Competition 20
Where to now? Construction Operations Approvals Dredging 3,000,000m3 total with up to 700,000m3 for the GVK Hancock T3 portion Dredge material relocation was decided through a MCA (Multi Criteria Analysis) process with regulators T3 CIA report is in its final stages (end of Feb 2013 with JEMF development to follow) Mining Lease Railway Haulage Alignment Water and Power Exports Employment 21
Project Partners The following Project partnering processes are well advanced ECI Process Infrastructure Operators Contractors for Phase 2 shortlisted Aligned with ECA financing Final EPC contract to be finalised Port signed 17 October 2012 CHPP, MIU, Rail, Port underway Started in September 2011 Operators shortlisted after a extensive review of technical and safety related parameters Term sheets for Operations & Maintenance and for investment provided Preferred operators to be announced Mine Customers Rail & Port Infrastructure Customers Started in 2009 Over 42Mtpa of customer arrangements Excludes potential investors that are offtake Final bankable offtake agreements being signed Started in September 2011 Stapled opportunity of rail and port Keen interest from very advanced & developing customers representing up to 207 Mtpa of coal capacity Discussions on Tariff and Haulage Agreement ongoing Key terms, including tariff and take or pay volumes to be finalised 22
Timetable 2009 2010 2011 2012 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 13 14 15 16 Order of magnitude Pre-Feasibility Studies Bankable Feasibility Studies ECI/FEED Finance Enviro / govt approvals Tier 1 Enviro / govt approvals Tier 2 Financial close Construction Marketing First coal Letters of Intent Offtake Contracts Project first shipments Financial close is expected to occur by 30 June 2013 Project managed process Statutory process Milestone 23
Questions? Thank you 24