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Kangaroo Resources Limited

Rapidly Growing Coal Production | May 2010

ASX Code: KRL


Disclaimer This presentation includes “forward-looking statements” as that term within the meaning of securities laws of applicable jurisdictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that are in some cases beyond Kangaroo Resources Limited’s control. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this presentation, including, without limitation, those regarding Kangaroo Resources Limited’s future expectations. Readers can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “risk,” “should,” “will” or “would” and other similar expressions. Risks, uncertainties and other factors may cause Kangaroo Resources Limited’s actual results, performance, production or achievements to differ materially from those expressed or implied by the forward-looking statements (and from past results, performance or achievements). These factors include, but are not limited to, the failure to complete and commission the mine facilities, processing plant and related infrastructure in the time frame and within estimated costs currently planned; variations in global demand and price for coal and base metal materials; fluctuations in exchange rates between the U.S. Dollar, the Indonesian Rupiah and the Australian dollar; failure to recover the resource and reserve estimates of the Project; the failure of Kangaroo Resources Limited’s suppliers, service providers and partners to fulfil their obligations under construction, supply and other agreements; unforeseen geological, physical or meteorological conditions, natural disasters or cyclones; changes in the regulatory environment, industrial disputes, labour shortages, political and other factors; the inability to obtain additional financing, if required, on commercially suitable terms; and global and regional economic conditions. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information. The information concerning production targets in this announcement are not intended to be forecasts. They are internally generated goals set by the board of directors of KRL. The ability of the company to achieve these targets will be largely determined by the company’s ability to secure adequate funding, implement mining plans, resolve logistical issues associated with mining and enter into off take arrangements with reputable third parties. The information concerning production targets in this announcement are not intended to be forecasts. They are internally generated goals set by the board of directors of KRL. The ability of the company to achieve these targets will be largely determined by the company’s ability to secure adequate funding, implement mining plans, resolve logistical issues associated with mining and enter into off take arrangements with reputable third parties. # The exploration results set out in this ASX announcement are based on the reports of South Gobi Energy Resources Ltd, having been reviewed by the Company’s Competent Person (Mr Jerko Zuvela). KRL has access to these reports under permission from South Gobi Energy Resources Ltd. It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information above relating to the exploration target should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource. The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves has been compiled by Mr Jerko Zuvela who is a Member of The Australian Institute of Mining and Metallurgy. Mr Zuvela has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves (the JORC Code).” Mr Zuvela consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Front Cover: Pakar Coal Project


Kangaroo Resources Limited

Indonesian Focused Coal Producer • 8 East Kalimantan coal projects • World class coal region with established local infrastructure (barging, ports, power plants) • KRL has 2 projects that have been settled, 6 subject to shareholder approval at EGM • Producing coal mines • Coking coal and thermal coal • KRL has two operating mines currently producing at a rate of up to 0.5Mtpa • Ramping up to 1-2Mtpa by end 2010CY, targeting production of up to +10Mtpa from 2013 • Strong Indonesian relationships and partners

Mamahak Project - Stockpile facility with conveyer

Mamahak Project - Coal stockpile at port facility

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Indonesian Coal Industry • Indonesia is the world’s 2nd largest coal exporter

Total of which

Steam

Coking

Australia

244Mt

112Mt

132Mt

Indonesia

202Mt

171Mt

31Mt

Russia

100Mt

85Mt

15Mt

Colombia

67Mt

67Mt

-

South Africa

67Mt

66Mt

1Mt

PR China

54Mt

51Mt

3Mt

USA

53Mt

24Mt

29Mt

• The potential is enormous ~60-90Bt of coal resources in Indonesia. Current mineable reserves of ~7Bt • Coal quality & market proximity gives Indonesia a competitive edge • Country risk is diminishing – Now over 257 general mining & support projects registered & over 93 PT companies with project approvals • KRL has significant local Indonesian relationships to secure world-class projects

Mamahak Project - Opperations truck in mining area

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Source: World Coal Institute

Top Coal Exporters (2007 e)


Kangaroo Resources Limited

Corporate Overview Shareholdings

Capital Structure Shares currently on issue

3% 5%

776,176,265 1

Shares to be issued to project vendors Share Base

300,000,000

8% 36%

1,076,176,265 28%

Share Price (At 24/05/2010) Market Capitalisation

$0.155 $166,807,321

Cash at bank (current)

21%

$1,000,000

Debt

$0

Enterprise Value

$165,807,321

Institutions South Gobi Res Board & Management

Options currently on issue

2

20,375,000

Shares to be issued Indonesian Vendors

Current JORC resources (coking coal)

10,200,000

Current JORC resources (thermal coal)

248,000,000

1. Shares to be issued to vendors (subject to shareholder approval) of Kubah Indah, Jawana & Borami, MBK & BP Projects as per ASX announcement released on 14th May 2010.

Other Shareholders

Escrowed shares = 330m (44% existing shares). Escrowed until December 2010

2. Option exercise prices range from $0.05 to $0.40 with expiry dates of Nov 2010 to Sept 2012.

Share Price Performance

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Directors and Management Peter Richards Non-Executive Chairman Internationally experienced executive. Recently CEO of Dyno Nobel Limited. Previous experience with BP and Wesfarmers. NonExecutive Director of Bradken and NSL Consolidated.

Mark O’Keeffe Managing Director Perth based business executive. Strong Indonesian relationships and networks. Active interests in the mining sector and was responsible for introducing the Indonesia coal projects to KRL. Previous experience in establishing and operating businesses in the retail, services, real estate industries.

Faldi Ismail Director Accounting background specialising in tax and corporate restructuring. Skills in mergers and acquisitions, capital raisings and investment banking experience. Currently a director of Coventry Resources Limited.

Trevor Butcher Director Jakarta based executive with significant Indonesian business networks, Indonesian language skills and understands local customs and culture. Five years experience working in the Indonesian mining industry.

Mike Ralston Chief Financial Officer 12 years experience as a CFO internationally and has been CFO of several ASX listed mining companies over the past 5 years. Experience in the Indonesian coal market with Fireside Resources for 12 months.

Jerko Zuvela Chief Geologist Over 14 years resources experience in Australia and internationally, directly involved in the Indonesian coal sector during the past 4 years, during which time he has worked for Strike Resources as General Manager – Operations, and Fireside Resources as Chief Geologist.

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Kangaroo Resources Limited

Long Standing & Solid Indonesian Relationships • Strong relationships with key Indonesian partners • Key executives: Robert Wachjo (CEO - KRL Indonesia) and Ilham A. Habibie • Access to quality pipeline of new coal assets • Indonesian partners have significant equity ownership of KRL • Developed and manage Indonesian coal projects and coal marketing – primarily Pakar Project • ASEAMCO • Independent international geological and mining engineering consultancy with Indonesian presence and coal expertise • Tax Advisors – PWC (Indonesia) • Legal Advisors – Blake Dawson (Indonesia)

Project Ownership Structure Under current Indonesian mining law KRL can’t take a direct interest in the projects only rights to project production and/or revenue. Indonesian Stock Exchange listing will enable KRL to take direct project interests.

Current Structure • Contractual agreements in place for all Projects with Indonesian Partners (Project Vendors) • Mining Rights to deliver value via charging fees • Exchangeable bonds for cash injected into projects – converts to equity (security) • Only option available under existing Indonesian Mining Laws as at 2009 • Comfort in Indonesian Partners (Project Vendors) being major shareholders in KRL

Proposed Structure • Move to full legal tenure with equity position in each KRL Project • KRL targeting >95% stake in Indonesian Public listed company, which allows KRL full legal tenure via PLC. • Process underway in Indonesia, likely completion mid-2010 • Gives KRL complete equity control over all projects, plus ability to deliver value via dividends (tax efficient) • KRL has the support of Indonesian Partners in this exercise •

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East Kalimantan Project Locations Coking Coal Projects

KUBAH INDAH PROJECT (KRL 100%) •

Target resource of 100-140Mt coking coal (7,500-8,500 kcal/kg)

Production targeted for 2012

Historical data, +5,000m drilling conducted

Infrastructure requirement (~$100m)

JAWANA & BORAMI PROJECTS (KRL 100% each)

MAMAHAK PROJECT (KRL 85%)

Target resource of 20-40Mt coking coal (~7,500 kcal/kg)

10.2Mt JORC Resource (~7,500 kcal/kg)

Operational synergies with Mamahak Project

Commenced mining operations in Feb 2010

Combined 30,000Ha concession acreage

Extensive infrastructure on site

Low infrastructure requirement

30,000 tonne coal stockpile ready for delivery

Target ramp up to 60,000 tonnes/ month production

It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information above relating to the exploration target should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.

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Kangaroo Resources Limited

East Kalimantan Project Locations Thermal Coal Projects

GPK PROJECT (KRL 84.82%) •

248Mt JORC Resource (5,245 kcal/kg)

Operations commenced Dec 2009

Potential for 3-5Mtpa operation direct selling to Indonesian utility PLN under contract

Located 15km from Mahakam River

TANUR JAYA PROJECT (KRL 49%)

MBK / BP PROJECTS (KRL 100% each)

Preliminary mineable target of 75100Mt of thermal coal (5,000-5,400 kcal/kg)

Exploration target of up to 20-30Mt of high quality thermal coal (6,800-7,200 kcal/kg)

Estimated exploration target of additional 50Mt of thermal coal (5,200-5,600 kcal/kg)

Strategic/niche production opportunity

Targeting up to 0.25Mtpa coal production in 2011

Located ~20km from Mahakam River

Low infrastructure requirement

Production to commence in 2010

Potential for 4-5Mtpa operation by 2012 direct selling to Indonesian utility PLN under contract

It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information above relating to the exploration target should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.

9


Project Pipeline

GPK Project

Production

Mamahak Project

Low rank thermal coal

Semi-soft coking & thermal coal

Mining licence

Mining licence

Current production rate of 0.2Mtpa

Current production rate of 0.25Mtpa

Targeting 2Mtpa by 2011, ramping up to 4Mtpa by 2012

Targeting 1Mtpa by 2011

JORC resource 10.2Mt

JORC resource 248Mt

Target resource 25-40Mt

TJ Project 1

Project Development •

Low rank thermal coal

Production commencing 2H 2010

Targeting 0.5Mtpa by 2010, ramping up to 4Mtpa by 2012

Target resource 100-150Mt

KI Project 1

Resource Development •

Kubah Indah Project

Exploration licences

Coking coal

Targeting 1Mtpa by 2012, ramping up to 2Mtpa by 2013

Target resource 100-140Mt

MBK & BP Projects 1

Exploration

JA & BO Projects 1

High quality thermal

Jawana & Borami Projects

MBK exploration licence

Semi-soft coking coal

BP mining licence Targeting 0.25Mtpa by 2011, ramping up to 0.5Mtpa by 2012

30,000Ha acreage

Targeting 0.5Mtpa by 2012, ramping up to 1Mtpa iby 2013

Target resource 20-30Mt

Target resource 20-40Mt

Thermal Coal

Coking Coal

1. KRL has entered into agreements that will, subject to certain conditions (such as completing due diligence), give it rights to production and/or revenue from the above projects as represented in the above.  As it stands, due to Indonesia’s new Mining Law not being effected, KRL is not able to currently take a direct interest in the projects

10


Kangaroo Resources Limited

Mamahak Project – in Production • Potential for high margin, long life coking coal project • Acquired 85% interest in the Mamahak Coking Coal Project • 4 Concessions with option for additional 5 concessions • Mining commenced in Feb 2010 • Currently producing at rate of up to 0.25Mtpa • Production to increase up to 1Mtpa by 2011 • JORC resource of 10.2Mt (~7,500 kcal/kg) • 95% of surface area underexplored • Targeting resource of up to 25 - 40Mt

Mamahak Project – Stockpile area

Mamahak Project – Port facility and stockpile area with conveyor and barge

GPK Project – in Production • Long life thermal coal project with off-take contracts in place • Project interest of 84.82% • Located 15km from Mahakam River • 248Mt JORC resource (5,245 kcal/kg) • Operations commenced in Dec 2009 • Currently producing at rate of up to 0.2Mtpa • Targeting production of up to 4Mtpa from 2012 • Barge directly to power stations • Off-take sales to PLN

GPK Project – barge delivery

PLN power station in East Kalimantan

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Tanur Jaya Project (TJ) - Development • Significant potential to develop a major project with a large thermal coal resource close to existing infrastructure • KRL earning into 49% interest (subject to agreed terms and conditions) • Project sits within Indonesian partner’s Pakar Project • Infrastructure in place to support a 20Mtpa operation • Preliminary minable target of 75Mt - 100Mt thermal coal • Additional resource target of 50Mt – 75Mt thermal coal • Thick seams up to 20m with shallow dips (5%-15%) • Mining operations targeted to commence in 2H 2010 • Targeting production of up to 4Mtpa from 2012 • Off-take agreement with PLN

Tanur Jaya Project – Infrastructure at Pakar Project

Kubah Indah Project (KI) – Resource Development • Potential for a large scale coking coal project • KRL earning into 100% interest (subject to shareholder approval) • Exploration licenses, 100km from Mahakam River • +5,000m of historical drilling, 7 main coal seams identified • Targeting a potential resource of 100Mt-140Mt • Targeting commencement of mining in 2012 • Production target of up to 2Mtpa from 2013 • Capex estimate ~$100m

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Kangaroo Resources Limited

MBK and BP Projects - Exploration • KRL earning into 100% interest (subject to shareholder approval) • Exploration concession, ~20km from Mahakam River • Targeting 20Mt-30Mt of high quality thermal coal • Exploration programme planned • Targeting JORC resource by end 2010 • Mining targeted to commence in 2011 • Production target of 0.5Mtpa from 2012

Mahakam River with coal barge transport

Jawana (J) and Borami (BO) Projects - Exploration • KRL earning into 100% interest (subject to shareholder approval) in both coal projects • Coking and thermal coal • Exploration concession, located adjacent to Mahakam River • Contiguous with Mamahak Project & associated infrastructure • Targeting 20Mt - 40Mt resource •

Targeting JORC resource by end 2010

• Mining targeted to commence in 2012 • Production target of 1Mtpa from 2013

Mamahak Project – Operations in progress

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Summary Production Growth Targets

14.00

Targeted production in Mtpa

12.00 MBK / BP

10.00

Tanur Jaya (JI)

8.00

GPK

6.00

Jawana & Borami (J&BO) Kubah Indah (KI) Mamahak

4.00 2.00 0.00 2010

2011

2012

2013

2014

Targeted Milestones for 2010 • Up to three producing mines – coking and thermal coal • Continue to build management and strengthen Board • Obtain shareholder approval at EGM and complete project acquisitions • Ramping up to 1-2Mtpa coal production • Continue to assess further opportunities to acquire coal projects in Indonesia • Project targets: • Mamahak • Complete production ramp up to 60,000tpm and then up to 1Mtpa from 2011 • Increase JORC resource in wider Mamahak region • Kubah Indah • Exploration license grant • Develop & increase JORC resource • Jawana & Borami • Drill to JORC resource to add tonnages to Mamahak region by end 2010 • MBK & BP • Drill to JORC resource for production in 2011 • Tanur Jaya • JORC reserve completion 2H 2010 • GPK • Complete production ramp up to 500ktpa in 2010 and then up to 2Mtpa in 2011 • Infill resource drilling to delineate mine design and mine plan

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Kangaroo Resources Limited

Appendices


Why Coal? • Long term shift in industrialization for a third of the world’s population will increase global energy consumption by 50% before 2030 • Previous recessions have interrupted demand growth, but it comes back quickly • China is emerging as a significant net importer of coal (Chinese imports forecast to increase by 70% in CY09 to ~40Mt) • Indian coal imports forecast to increase by 12% in CY09 • Emerging market demand expected to grow strongly. Asian growth will underpin demand combined with lower levels of Chinese exports

35

Best years to come 30

India

Millions of people

25

China 20 15 10 0

Combined Chinese and Indian urbanisation rates per year

16

2045 - 2050

2040 - 2045

2035 - 2040

2030 - 2035

2025 - 2030

2020 - 2025

2015 - 2020

2010 - 2015

2005 - 2010

2000 - 2005

1995 - 2000

1990 - 1995

1985 - 1990

1980 - 1985

1975 - 1980

1965 - 1970

1960 - 1965

1955 -1960

1950 - 55

0


Kangaroo Resources Limited

Existing Project Portfolio Summary

PROJECT

JORC RESOURCE

TARGET RESOURCE

Inferred Resource

Indicated Resource

Measured Resource

0.16Mt

3.16Mt

6.90Mt

Preliminary Mineable*

COAL QUALITY

TOTAL

Target#

10.22Mt

25-40Mt

COKING COAL

MAMAHAK

KUBAH INDAH

100-140Mt

JAWANA & BORAMI

20-40Mt

Coking Coal: ~7,500 kcal/kg (adb) Coking Coal: 7,500 – 8,500 kcal/kg (adb) Coking Coal: ~7,500 kcal/kg (adb)

THERMAL COAL

GPK

107Mt

141Mt

TANUR JAYA

75-100Mt

248Mt

250-300Mt

75-100Mt

125-150Mt

MBK/BP

TOTAL

20-30Mt

107Mt

144Mt

6.9Mt

75-100Mt

333-358Mt

Thermal Coal: ~5,245 kcal/kg (adb) Thermal Coal: 5,000 – 5,400 kcal/kg (adb) Thermal Coal: 6,800-7,200 kcal/kg (adb)

540-700Mt

* JORC reserve statement is currently being compiled by PT Runge Indonesia commissioned by PT IBU. # It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information above relating to the exploration target should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource

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Projects – Coal Quality

PROJECT

COAL QUALITY

COKING COAL MAMAHAK

Coking Coal Quality: ~7,500 kcal/kg (adb) Low Total Moisture, Moderate sulphur Low Ash

KUBAH INDAH

Coking Coal Quality 7,500 – 8,500 kcal/kg (adb) Total Moisture 4.6 – 5.7% (adb) Inherent Moisture 1.0 – 1.7% (adb) Ash 2.4 – 12.7% (adb) Fixed Carbon 70 – 80 % (adb) Sulphur 0.49 – 0.83% (adb)

JAWANA & BORAMI

Coking Coal Quality: ~7,500 kcal/kg (adb) No drilling to date but coal quality expected to be similar to adjacent Mamahak Project

THERMAL COAL GPK

Thermal Coal Quality: 5,245 kcal/kg (adb) Total Moisture 39.6% (ar) Total sulphur 0.18% Ash 4.9%

TANUR JAYA

Thermal Coal Quality: 5,000 – 5,400 kcal/kg (adb) Total Moisture 38.4% (ar) Total sulphur 0.14% Ash 4.8%

MBK/BP

Thermal Coal: 6,800-7,200 kcal/kg (adb) Total Moisture 7.4% (ar) Total sulphur 2.55% Ash 6.29%

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Kangaroo Resources Limited

Project Production Targets

PROJECT

START-UP PRODUCTION TARGETS

ANNUAL PRODUCTION TARGETS

STRIP RATIO

DATE

PRODUCTION

2010

2011

2012

2013, & Thereafter

February 2010

Up to 30,000t/ month

Up to 0.25Mtpa

Up to 1Mtpa

Up to 1.5Mtpa

Up to 2Mtpa

~12 : 1

KUBAH INDAH

2012

-

-

-

Up to 1Mtpa

Up to 2Mtpa

~12 : 1

JAWANA & BORAMI

2012

-

-

-

Up to 0.5Mtpa

Up to 1Mtpa

~12 : 1

GPK

December 2009

Up to 15,000t/ month

Up to 0.5Mtpa

Up to 2Mtpa

Up to 4Mtpa

Up to 4Mtpa

~4 : 1

TANUR JAYA

Late 2010

Up to 50,000t/ month

Up to 0.5Mtpa

Up to 2Mtpa

Up to 4Mtpa

Up to 4Mtpa

~4 : 1

2011

Up to 20,000t/ month

-

Up to 0.25Mtpa

Up to 0.5Mtpa

Up to 0.5Mtpa

~8 : 1

COKING COAL

MAMAHAK

THERMAL COAL

MBK/BP

DISCLAIMER: The information concerning production targets in this announcement are not intended to be forecasts. They are internally generated goals set by the board of directors of KRL. The ability of the company to achieve these targets will be largely determined by the company’s ability to secure adequate funding, implement mining plans, resolve logistical issues associated with mining and enter into off take arrangements with reputable third parties.

Back Cover: Mamahak Project - Operations in progress

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Perth Office

Jakarta Office

Suite 3, Level 3

Kantor Taman A9 Unit C8-C10

1292 Hay Street, West Perth,

Jl. Mega Kuningan Lot 8.9/9

Western Australia, 6005

Jakarta 12950, Indonesia

T

+61 8 6102 6990

T

+62 21 5793 3425

F

+61 8 6102 6993

F

+62 21 5793 3424

www.kangarooresources.com


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