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ForbesCoal Investor Presentation July 2011

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  • 1. TSX: FMC July 2011 EMERGING SOUTHERN AFRICAN COAL COMPANY Investor Presentation A Forbes & Manhattan Group Company
  • 2. Disclaimer TSX: FMCThis presentation contains forward-looking statements under Canadian securities legislation. Forward-looking statements include, but are not limited to, statementswith respect to the development potential and timetable of the Magdelena and Aviemore projects; the Company’s ability to raise additional funds as necessary;the future price of coal; the estimation of mineral resources; conclusions of economic evaluations (including scoping studies); the realization of mineral resourceestimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures;success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks.Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”,“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases orstatements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements arebased on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost ofmining at the Company’s projects are based on assumptions underlying mineral resource estimates and the realization of such estimates; results of previous miningactivities at the projects, and detailed research and analysis completed by independent consultants and management of the Company; research and estimatesregarding the timing of delivery for long-lead items; knowledge regarding certain factors described in the technical report filed under the profile of the Companyon SEDAR. Capital and operating cost estimates are based on results of previous mining activities, research of the Company and independent consultants.Production estimates are based on mine plans and production schedules, which have been developed by the Company’s personnel and independentconsultants. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity,performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements, including but notlimited to risks related to: timing and availability of external financing on acceptable terms; unexpected events and delays during construction, expansion andstart-up; variations in ore grade and recovery rates; receipt and revocation of government approvals; actual results of exploration and mining activities; changesin project parameters as plans continue to be refined; future prices of coal; failure of plant, equipment or processes to operate as anticipated; accidents, labourdisputes and other risks of the mining industry. Although management of the Company has attempted to identify important factors that could cause actual resultsto differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated orintended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from thoseanticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake toupdate any forward-looking statements except in accordance with applicable securities laws.Investors are advised that National Instrument NI 43-101 of the Canadian Securities Administrators (“NI 43-101”) requires that each category of mineral reserves andmineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Johan Odendaal,B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc. (Min. Eng.), a director of Minxcon and an independent Qualified Person, as defined in National Instrument 43-101 hasreviewed and approved the scientific and technical information contained in this presentation.Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred ResourcesThe information presented uses the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such terms arerecognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineralresources” 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 aninferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis offeasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will everbe converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or iseconomically or legally mineable. 2
  • 3. Company Overview TSX: FMC Forbes & Manhattan Coal Corp.’s (“Forbes Coal” or the “Company”) vision is to build a high quality bituminous and anthracite coal company with potential capacity in excess of 10 million tonnes (“M t”) per year Company Summary Headquarters: Toronto, Ontario Total coal resource 51.7 million tonnes Bituminous1 (NI 43-101): (measured and indicated) 35.7 million tonnes Anthracite1 (measured and indicated) 15.1 million tonnes Anthracite1 (inferred) Number of 2 (Magdalena Historical annual ‘run-rate’ 550,000 saleable tonnes mines: and Aviemore) production: Mine location: Kwa-zulu, Natal, 2-3 year target production: 900,000 saleable tonnes South Africa Bituminous - Magdalena 340,000 saleable tonnes Anthracite - Aviemore Production capacity: 1.5 million saleable tonnes1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the 3 Company on SEDAR at www.sedar.com.
  • 4. Investment Highlights TSX: FMC Strategic assets in one of the best developed coal markets in the world Substantial resource base of high quality bituminous and anthracite coal Ability to TRIPLE production from historic levels using existing infrastructure and capacity In-place infrastructure to reach export corridors and growing domestic market Substantial upside through organic production growth and opportunistic acquisitions Coal-focused management team sponsored by Forbes & Manhattan 4
  • 5. Experienced Management Team TSX: FMC Stephan Theron, B.Comm, CGA │President and Chief Executive Officer Extensive management, project finance and equity analysis experience in the mining, energy and infrastructure sectors Previous capital and project experience includes Weir PLC and AMEC PLC Former sector head materials and energy with a specific focus on South African coal market Malcolm Campbell ,Pr. Eng. (Mining) │Chief Operating Officer Fourth generation coal miner with 25 years industry experience Professional Certified Mining Engineer Skilled in operational management, turnaround strategies and business development Spent 20 years with Anglo Coal; held a variety of positions including Regional Manager for New Business Development and Strategy Johan Louw, Pr. Eng. │Vice President, African Operations Capital project specialist with over 15 years experience in the Southern African mining and energy sectors Former project manager for Weir PLC and KBR Inc. Former senior plant metallurgist for Anglo Coal covering numerous export focused coal mines Kuda Muchenje, │VP Exploration & Development Seasoned exploration geologist with over 15 years experience in the generation of exploration targets and management of exploration and evaluation programs Former Country Manager(Mozambique)for Rio Tinto Deb Battiston, CGA │Chief Financial Officer Financial specialist with over 20 years experience in the mining sector Bob Bentley, │Mining Manager Former Mine Inspector in Kwa-Zulu, Natal Over 30 years of mining management experience 5
  • 6. Directors TSX: FMC Stan Bharti, P.Eng. │ Executive ChairmanBusiness consultant and a professional mining engineer with more than 25 years experiencePresident of Forbes & Manhattan, Inc., a private merchant bank operating in Canada, the U.S. andWestern Europe, since July 2001 Stephan Theron, B.Comm, CGA , │ President and CEO David Stein, MSc., CFA │ DirectorOver nine years of asset evaluation, research and corporate finance experiencePresident and Director of Aberdeen International (seed investor in Forbes Coal) Grant Davey, P. Eng. │ DirectorMining Engineer with close to 20 years experience in coal, platinum and gold mining industryPreviously held senior operational management roles for Anglo American in South Africa & Australia David Gower, P. Geo. │ DirectorProfessional Geologist and the former Global Head of Nickel Exploration for Falconbridge Ryan Bennett, M.Mining Eng. │ DirectorMasters degree in Mining Engineering from the Colorado School of MinesExtensive technical mining project analyses experienceSenior Partner of Resource Capital Fund, major shareholder in Forbes Coal 6
  • 7. Progress to Date TSX: FMC Closed CDN$42 million capital raise at $4.55/share Released fiscal 2011 full year results: FMCCompleted NI43-101 produced 648,000 saleable tonnes Technical Report Forbes Coal increased ownership in Slater (combined) and $16.5 million EBITDA (for 12 Coal to 76.75% months ended February 28, 2011 at Slater April 2010 Coal properties) Completed RTO within 60 days, began March 2011 May 2011 trading on the Toronto Stock Exchange under the symbol “FMC” September 2010 April 2011 June 2011 June/July 2010 December 2010 Signed three year offtake First fiscal quarter 2012 Aviemore anthracite agreement with leading production increased of Increased export capacity at mine reopened energy trading company for 45% and export sales Navitrade Terminal at Richards Bay at full capacity 1.75 million tonnes of thermal increased 61% coal Closed CDN$36 million Magdalena upgraded mining operations; private placement at increased saleable production capacity by Reported January and $2.80/share 330,000 tonnes per annum February 2011 production increases of 28% 7
  • 8. Coal Markets Overview TSX: FMC Thermal Metallurgical • Aviemore one of four listed metallurgical (anthracite) coal • Thermal (bituminous) coal sold producers in South Africa directly to independent industrial companies in South Africa • Cost-effective replacement for coking Domestic • Thermal coal sold at circa US$80 coal/coke per tonne vs low quality coal sold • Applications include iron ore to Eskom priced at US$20 - 30 per pelletizing, PCI for blast furnaces, tonne calcining for electrode manufacturing, ferroalloys and power generation • Demands increasing from emerging • Demand driven by the metal refining Asian markets, especially India and industry China • Asia dominates demand for anthracite • Indian government expecting coal domestic coal shortfall of approx. 112 o 83% of global imports; 95% of million tonnes for year ended March expected export demand Export 2012; 35% increase from previous forecasts growth • Pricing highly correlated with PCl coal • South African coal exports to India prices increased 161% 2008 – 2009 • Australian coal producers starting to • China imported165 million tonnes of settle PCl contracts at a record US$275 coal in 2010, up 31% from prior year per tonne FOB for April –June quarter 1Source: Company reports1. McCloskey Coal Report, March 22, 2 011 8
  • 9. Established Mining Region TSX: FMCSource: Company reports 9
  • 10. TSX: FMCCompany Outlook 10
  • 11. 2010 – 2015 Mine Plan TSX: FMC• Increasing production: saleable production is expected to grow at a CAGR of 22% from 2010 to 2015 – Driven by expansion of production from the Magdalena and Aviemore underground mines Saleable Production1(000 t) 1,423 1,061 648 505 2010FY 2011FY 2012FY 2013FY Bituminous Anthracite 1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com. 11
  • 12. Organic Growth Opportunities TSX: FMCRamp up at Magdalena• Double production• FY2011 CAPEX: $9.7 million• Estimated FY2012 CAPEX: $12.4 millionIncrease wash plant recovery rates• Improve from current level of 60% to 70%• Investigate product upgrade potential• FY2011 CAPEX: $1.5 million• Estimated FY2012 CAPEX: $1.2 millionAviemore anthracite operations• Ramp-up saleable production to 500,000 tonnes/year (represents US$20.0M in incremental EBITDA based on current forecasted price)• FY2011 CAPEX: $0.16 million• Estimated FY2012 CAPEX: $3.7 millionSource: Company reports, all figures in CDN $ unless otherwise indicated 12
  • 13. Positioned for Multi-Year Export Growth TSX: FMCSECURED ADDITIONAL EXPORT CAPACITY AT RICHARD’S BAYMilestone agreement inked on December 7th increases exportcapacity incrementally from 197,000 by 960,000 tonnes per annumfor a total export capacity of 1,157,000 tonnes in 2013.SIGNIFICANT OFFTAKE AGREEMENT PROVIDES STEADYCASH FLOWThree year offtake agreement reached with global energy tradingcompany for 1.75 million tonnes (total) of thermal coalCash flow from offtake agreement to fund continued ramping up ofproduction at the two operating mines 13
  • 14. External Growth Opportunities TSX: FMC Target consolidation in area • 6 mining operators estimated in the region • 2 acquisition opportunities currently identified in Kwa-Zulu, Natal, South Africa • Substantial enhanced upside by improving acquired business operating practices • Increased export allocation and marketing advantage • Synergy in product base and cost savings with central management teamSource: Company reports 14
  • 15. Mining Resource TSX: FMC• Recently completed NI 43 – 101 technical report calls for +20 year weighted life of mine (“LOM”) NI 43 – 101 Global Resource1 Measured Indicated Inferred MI & I Magdalena – bituminous 51.7 - - 51.7 Aviemore – anthracite 1.6 34.1 15.1 50.81. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. 15
  • 16. Magdalena Bituminous Coal Operations TSX: FMC 16
  • 17. Magdalena Bituminous Coal Operations TSX: FMC Magdalena Operations and Site Layout Asset SummaryLocation: • Dundee, Kwa-Zulu, NatalCoal Type: • BituminousResource1: • 51.7 million tonnes (measured and indicated)Acres: • 4,557Average BTU: • 12,250 BTU/lb • 6,800 kcal/kgAsh: • 15.0%Volatility: • 16.7%Saleable • 2011FY2: 556,000 tonnesProduction: • 2012FY2: 900,000 tonnes (estimated)Mine Life1: • Approximately +20 yearsInfrastructure: • Wash plant, processing plant and siding1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com. 172. Fiscal year-end February 28
  • 18. Magdalena Bituminous Coal Production Profile TSX: FMC• Ramp-up on schedule• New continuous miner arrived in December (further increase saleable production capacity by close to 30,000 tonnes per month) Magdalena Saleable Bituminous Coal Production1 (000 t)/February 28 year-end 1,003 900 556 449 485 347 326 299 2006 2007 2008 2009 2010 2011 2012E 2013E Magdalena - open pit Magdalena - underground1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com. 18
  • 19. Aviemore Anthracite Coal Operations TSX: FMC 19
  • 20. Aviemore Anthracite Coal Operations TSX: FMC Asset Summary Aviemore OperationsLocation: • Dundee, Kwa-Zulu, NatalCoal Type: • AnthraciteResource1: • 35.7 million tonnes (measured and indicated) • 15.1 million tonnes (inferred)Acres: • 13,818Average BTU: • 12,800 BTU/lb • 7,100 kcal/kgAsh: • 13.7%Volatility: • 7.9%Saleable • 2011FY2: 92,000 tonnesProduction: • 2012FY2: 161,000 tonnes (estimated)Mine Life1: • Approximately +20 yearsInfrastructure: • Wash plant, processing plant and siding 1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com. 20 2. Fiscal year-end February 28
  • 21. Aviemore Anthracite Coal Production Profile TSX: FMC• Annual production capacity expected to hit 500,000 tonnes of saleable coal per annum in FY2014 Aviemore Anthracite Coal Saleable Production1 (000 t)/February 28 year-end 420 161 102 92 59 62 61 20 2006 2007 2008 2009 2010 2011 2012E 2013E1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com. 21
  • 22. Capitalization and Share Performance TSX: FMC Share Performance Major ShareholdersCompany Ticker TSX: FMC • Forbes & Manhattan andClosing Price (July 5, 2011) C$3.39 ManagementTrading Range C$2.50 – C$5.01(since September 27, 2010)Basic Shares Outstanding1 34.8 million • Resource Capital FundFD Shares Outstanding2 39.5 million • RBC Global Asset ManagementMarket Capitalization (Basic) C$118 millionMarket Capitalization (FD) C$134 million • Chilton Resource Fund1 Includes 2,700,000 performance warrants that convert intocommon shares upon the company reaching certainoperating targets2 Includes 3,445,300 options with a weighted averageexercise price of C$5.35 per share, 763,887 broker warrantsconvertible into common shares at an exercise price ofC$2.80 per share and expiring on January 23, 2012 and480,000 broker warrants convertible into common shares atan exercise price of C$4.55 per share and expiring onFebruary 22, 2013. 22
  • 23. Comparable Trading Analysis TSX: FMC• Forbes Coal Comparable Trading Analysis trades at a Market Cap EV EV / EBITDA P/CFPS significant Company U.S. Coal Producers (US$M) (US$M) 2011E 2012E 2011E 2012E discount to Alliance Resource Partners LP $2,560 $2,946 5.1x 4.7x 6.1x 5.4x Alpha Natural Resources Inc.1 comparable coal Arch Coal2 $11,339 $4,487 $13,283 $9,228 6.4x 6.7x 5.0x 4.9x 8.0x 4.7x 5.5x 3.2x producers on an Cloud Peak Energy Inc. Consol Energy, Inc. $1,205 $11,389 $1,455 $14,622 4.3x 8.2x 3.9x 6.3x 4.7x 9.2x 4.4x 7.2x EV/EBITDA and International Coal Group3 $2,252 $2,399 7.3x 4.8x 9.8x 7.6x $720 $1,058 3.8x 4.1x na na P/CF basis James River Coal Co. Natural Resource Partners LP $3,762 $4,460 15.2x 13.3x 13.3x 13.5x Oxford Resource Partners, LP $535 $647 8.8x 6.6x 13.2x 9.4x Patriot Coal Corporation $1,977 $2,170 6.2x 3.5x 8.1x 4.1x Peabody Energy Corp. $16,030 $16,492 6.7x 5.4x 9.2x 7.1x Rhino Resource Partners LP $612 $642 7.2x 5.6x 7.0x 6.1x Xinergy Ltd. $225 $297 5.6x 2.4x 8.9x 3.3x U.S. Coal Producers Average (excluding high and low) 6.6x 5.0x 8.4x 6.0x African Coal Producers Coal of Africa Limited $678 $680 5.6x 2.8x 12.3x NA Exxaro Resources $8,194 $8,523 7.3x 5.8x 6.5x 5.0x Keaton Energy $75 $37 NA NA NA NA Optimum Coal $1,103 $1,006 3.8x 3.2x 4.2x 3.5x Petmin Limited $244 $214 4.3x 3.2x NA 0.0x Riversdale Mining4 $3,290 $2,765 40.5x 16.0x 45.0x 23.1x African Coal Producers Average (excluding high and low) 5.7x 4.1x 9.4x 4.3x Other Coal Producers Cline Mining $549 $526 7.0x 2.0x 7.6x 2.6x Coal & Allied Industries $10,034 $9,757 7.7x 7.1x 9.6x 8.8x Gloucester Coal5 $1,861 $1,940 9.4x 6.9x 8.9x 7.2x Grande Cache Coal $801 $851 5.5x 4.1x 5.3x 3.7x MacArthur Coal $3,633 $3,152 7.8x 5.6x 10.9x 8.5x Walter Energy6 $7,447 $9,953 5.8x 5.8x 6.9x 5.2x Other Coal Producers Average (exluding high and low) 7.1x 5.6x 8.3x 6.1x Overall Average (excluding high and low) 6.9x 5.2x 8.5x 6.1x Note: As of June 3, 2011 Forbes Coal (C$)6 $113 $128 2.7x 1.6x 2.2x 1.6x 1. Pro forma acquisition of Massey Energy Inc. Forbes Coal - Discount to Comparables (61%) (69%) (74%) (74%) 2. Pro forma acquisition of International Coal Group 3. International Coal Group is shown prior to announcement of acquisition by Arch Coal announced on May 2, 2011 4. Note: Riversdale Mining is shown pre-announcement of offer by Rio Tinto on December 6, 2010 5. Note: Gloucester Coal is shown pro forma A$585 million acquisition of Donaldson Coal and A$30 million (with contingent share payments) acquisition of Monash Group 6. Forbes Coal’s operating forecast are based on Canaccord Genuity Research estimates Source: Consensus estimates and company reports 23
  • 24. Summary TSX: FMC Currently producing high quality bituminous and anthracite coal Plans to organically TRIPLE production from historic levels to 1.5 million saleable tonnes per annum in two to four years Export capacity at Richards Bay Coal Terminal to increase incrementally to 1,157,000 tonnes per annum by 2013 Offtake agreement with global energy trading company provides cash to fund ramp up at two operating mines Growing demand for coal from emerging markets Looking at potential acquisition opportunities in the region Strong balance sheet and coal-focused management team 24
  • 25. TSX: FMCAppendix 25
  • 26. South Africa – Overview TSX: FMC• South Africa is the most attractive country in Africa which to do business according to Ernst Richard’s Bay Port & Young 2011 Africa Attractiveness Survey World’s Largest Coal Terminal• Modern infrastructure system supporting distribution of commodities for both domestic and export markets – Extensive rail network (10th longest in the world) – Majority of electricity generated via coal fired power stations – Richard’s Bay port in South Africa is the world’s largest bulk coal terminal • 91 million tonne capacity • Coal railed from approximately 49 mines• Long history in resource development – World’s largest PGM & ferrochrome producer – Significant coal, iron ore and manganese resources 26
  • 27. Historical Coal Prices TSX: FMC• South African thermal coal (Richard’s Bay terminal) and coking coal prices have increased significantly over the last several months• The recovery to 2008 levels have been driven by increased demand, particularly from China and India, and higher cost supply from key producing nations such as Russia and the U.S. Historical South African Thermal Coal and PCI Coal Prices $350 $300 $250(US$ /tonne) $200 $150 $100 $50 $0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Mar-07 May-07 Sep-07 Nov-07 Mar-08 May-08 Sep-08 Nov-08 Mar-09 May-09 Sep-09 Nov-09 Mar-10 May-10 Sep-10 May-11 Nov-10 Mar-11 Richards Bay Thermal Coal Spot Price McCloskey/Xinhua Infolinks Coking Coal Price Source: Bloomberg 27
  • 28. Thermal Coal Global Overview TSX: FMC• Significant upside potential to export prices Global Thermal Demand and Supply Forecast• A tightening of the global seaborne market in late 2010 provided the initial base for thermal coal to rise• Robust import demand from India• Growing imports into China due to increasing demand and production curtailments• Slowing export supply growth from Indonesia as more coal is diverted for domestic use• Short-term supply constraints caused by flooding in Australia• Australia is the second-largest exporter of bituminous coal• Wood Mackenzie stated that prices could exceed 2008 highs Source GTIS, Macquarie Research, February 2011 28
  • 29. Thermal Coal Global Overview TSX: FMC • Global thermal trade flows show India and China as major global importers of thermal coal • South Africa exported an estimated 23 million tonnes of thermal coal to India in 2010 29
  • 30. Thermal Coal Global Overview TSX: FMC • India will be relying heavily on coal fired power plants in the near future 30
  • 31. Thermal Coal Global Overview TSX: FMC • As a result of reliance on thermal power generation, Indian thermal exports are expected to rise significantlySource GTIS, Macquarie Research, February 2011 31
  • 32. Thermal Coal Global Overview TSX: FMC • Chinese thermal coal imports have been robust; this trend is expected to continue into the near future 32
  • 33. Metallurgical Coal Global Overview TSX: FMC• The coking coal market was fundamentally tight prior to the Global Thermal Demand and Supply Forecast Queensland, Australia floods, which have added considerable fuel to the fire• Current situation highlights the lack of geographical diversity to supply side portfolio, leaving it prone to shocks• Market deficit likely to prevail, keeping price at decent premium to cost support• Requirement for projects in high geopolitical and infrastructure risk regions will keep long-term prices elevated Source GTIS, Macquarie Research, February 2011 33
  • 34. Metallurgical Coal Global Overview TSX: FMC Many metallurgical coal basins exist, however there is a challenge in bringing new projects onlineSource GTIS, Macquarie Research, February 2011 34
  • 35. Metallurgical Coal Global Overview TSX: FMC • Supply growth in 2011 is set to be much lower than in 2010, while key regions increase demand 35
  • 36. Metallurgical Coal Global Overview TSX: FMC • Global anthracite coal demand driven by the metal refining industry – Cost-effective replacement for coking coal/coke • Emerging markets consuming the most steel • China is the world largest steel producer – Accounts for 44% of global steel production – Expected to sustain steel consumption growth of 6%-8% annually • China accounts for 52% of the world’s coking coal consumption – Imports more than half of coking coal consumed from export markets Increasing steel production and consumption drives demand for anthracite coalGlobal steel consumption: Macquarie Commodities Research February 2011 36
  • 37. TSX: FMC July 2011 CONTACT INFORMATIONStephan Theron Sabina SrubiskiPresident & CEO Investor Relations ManagerForbes & Manhattan Coal Corp. Forbes & Manhattan Coal Corp.Tel: + 1 416 861 5912 Tel: + 1 416 309 2957info@forbescoal.com ssrubiski@forbescoal.comwww.forbescoal.com www.forbescoal.com 65 Queen Street West, Suite 815 P.O. Box 71, Toronto, Ontario, Canada, M5H 2M5 37

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