A7 - Batsalani Investments

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  • 1. BATSALANI JUNIOR MINING: BLACK OWNED JUNIOR MINING INVESTMENT COMPANY Toronto: 4 March 2008 Farouk Abrahams Chief Executive: Batsalani Junior Mining
  • 2. BATSALANI JUNIOR MINING GROWTH OPPORTUNITIES IN MINING IN SOUTH AFRICA Batsalani is a Setswana word meaning PARTNERSHIP, a philosophy our team shares with our associated strategic alliances, investors, partners, lenders, BEE consortia and portfolio investee companies www.batsalani.co.za
  • 3. AGENDA
    • GROUP
      • Background
      • Existing Investments
      • Executive Summary
      • Pipeline
      • Smokey Hills PGM Project
      • Investment Model
      • Exit Strategies
      • Conclusion
  • 4. THE GROUP
    • Batsalani is a black owned investment company owner managed by experienced entrepreunial investment bankers.
    • Independent with a sound proven track record in its focus areas and was founded by the late Frank Molobi, Farouk Abrahams (CE) and Ibrahim Khan (Chair).
    • Batsalani aims to identify, source and secure a portfolio of assets that provides a consistent and sustainable cash flow.
    • Our vision is to leverage Funding, Strategic industry insight, Relationships, and Transaction execution capabilities to unlock value in our portfolio companies.
    • Batsalani focuses on the following sectors:
    TELECOMMS-MEDIA-TECHNOLOGY MINING & RESOURCES PROPERTY Services and procurement Mining Assets “ Incl. Junior Mines” Beneficiation
  • 6. Existing Investments Name of Company Nature of Transaction Business Mining: The Group is part of consortium who has a 21.45% stake in the Smokey Hills PGM project in the Limpopo Province. PGM producer TMT: The Group was awarded a portion of Welkom Yizani and Phuthuma Nathi BEE schemes launched by Naspers late in 2006 & early 2007 Naspers is a multinational media company with principal operations in electronic media and print media Property: The Group is part of the Buhlobo Consortium who has direct stake in Vukile Property. Vukile is a property Loan stock company listed on the JSE. Sanlam Life is the major shareholder. TMT: The Group has a 30,95% stake in rapidly growing SA based multinational telecoms company with offices in Johannesburg, London, Brussels, Geneva, and several African countries Largest Independent African Operator = 25% Market Share. Voice & data management & routing to & from 34 African countries primarily using satellite Networks. GTV – a pan African pay – TV satellite delivered service TMT: The Group has a 40% stake in this UK based company which operates in the prepaid airtime and electronic product market A UK based mobile prepaid transaction or airtime electronic pin-based distributor
  • 8. Market Opportunity
      • Mineral and Petroleum Resources Development Act (MPRDA) 2002
      • Prospecting rights applied for between May 2004 and October 2007 totaled:
        • 7 547 received
        • 5 948 accepted
        • 2 789 granted
        • 2 033 issued
      • Mining permits applied for between May 2004 and October 2007 totalled:
        • 3 840 received
        • 3 255 accepted
        • 1 318 issued
      • The natural consequence of the MPRDA and related legislation over the last 3 years resulted in conclusion of over US$ 10 billion BEE deals
      • Creation of black owned mining companies – Anooraq, BSC Resources
      • Creation of Partnership/JV’s – Platinum Australia, GVM Metals, Homeland Corp
    Factors such as structurally higher demand in terms of “Chindia effect”, the weakening US$ and consolidation in supply, remain positive factors South Africa is the world’s richest and most diverse repository of mineral commodities. Globally, largest producer of gold, vermiculite, platinum and chromium. Major deposits of antimony, coal, iron ore, manganese, nickel, phosphates, tin, uranium, diamonds, copper and vanadium Source: SAMDA
  • 9. South Africa’s Exploration Expenditure 2003-2006 Source: SAMI Report – 2006-2007 Dominant targets for recent exploration activity in South Africa: PGM’s, Diamonds, Gold, Uranium and Coal
  • 10. South Africa’s Role in World Mineral Production Nickel Number = World Ranking Source: Data from SAMI Report – 2006-2007 Coal Platinum group metals Vanadium Ferro-chromium Vermiculite Chrome ore Manganese ore Gold Fe-Mn/Fe-Si-Mn Uranium Lead Copper Silver Zinc Iron Ore Aluminium Silicon metal Antimony
  • 11. The Listed Junior/Mid Tier Mining Companies New BEE regulations (2002) have added some life into the industry by attracting smaller mining players to join the fray. With the major players focusing on cross-acquisition, it is the smaller miners that are now expected to revive the industry. Source: Business Monitor International Source: Nedcor Securities, as at 15/2/08 Sector Exposure By Market Capitalisation
  • 12. Why Junior/Mid Tier Mining Isn’t What It Used To Be? The junior mining space in South Africa has increased massively in value Source: Data from NedSec Junior Mining and Exploration Index and I-Net Bridge
  • 14. Executive Summary
    • The opportunity to benefit from investing into mining projects in South Africa.
    • Via a black owned investment company managed by an experienced team of technical and financial entrepreneurs/professionals
      • Intend on partnering with junior/mid-tier mining operators which have a successful track-record in both green and brown fields projects and/or
      • Or do some early stage development i.e. take it up the value curve and/or
      • Use different mineral hubs for consolidation in the industry
    • Strong pipe line in Commodities – PGM, coal, nickel and base metals
    • To generate capital appreciation, with a view to extracting long term growth from profitable portfolio investments in the junior mining sector
    • We are not:
      • Operational company such PLA or BSC Resources
      • Nor private equity or asset management company in the strict sense
    • We are development company - combination
  • 15. Pipeline
    • Black owned and managed investment firm
    • Strong and experienced financial and technical team
    • Has established key relationships with all stakeholders in the industry
    In discussion with junior to jointly developed PR granted Iron Ore project Batsalani will commence with early stage development PR imminent Coal project BEE partner to junior Prospecting Right imminent PGM project BEE partner to PLA Mining right granted Platinum Australia’s Smokey Hills PGM project MOU signed with company that has several PR granted, pending and new Status Project and/or Partner Level of participation Various commodities Either partner or commence with early stage development
  • 16. PLA Smokey Hills PGM Project
    • Located on the eastern limb of the Bushveld Complex in the Limpopo Province
    • PLA commenced a resource definition drilling program on the project in July 2005
    • Mining Right issued & construction commenced in November 2007
    • Open Pit Mining started in January 2008
    • Commissioning in June 2008
    1,530 677 1,296 677 US$/oz 4E Basket price +500 100 +500 140 US$ Million Cashflow (Pre Tax) 140% 40% 800% 70% IRR (Pre Tax) 240 270 225 225 US$/oz 4E Cash Costs 14 14 14 14 US$ Million Ongoing Capex 49 46 40 40 US$ Million Capital Feb 08 3 Base 1 July 06 2 Base 1 Feb 2008 BFS
  • 17. Investment Model Source: NAMF Annual Report
    • 3 C’s
      • Counterparty
      • Country
      • Commodity
    • Leverage own capital using favourable developmental funding for BEE deals
    • Cost curve analysis
  • 18. Exit Strategies
    • Following results from early stage development either trade sale to and/or partner with a junior mining/mid tier company
    • Management Buy Out (“MBO”)
    • Leveraged Buy Out (“LBO”), possibly coupled with a share buy back
    • Initial Public Offering (“IPO”)
    • Acquisition by major mining company
    • Hold
  • 19. Concluding Remarks
    • Global demand for commodities
    • South Africa “response” to this global demand
    • Batsalani Junior Mining:
      • Black owned investment company
      • Structured multi-disciplinary management team – highly experienced in mining and finance
      • Strong existing relationships with key players in the industry
      • Strong pipeline of deal flow at advanced stages
    • Interested parties as investors, assets or relationship with potential sources of junior mines are invited to meet with management to discuss possibilities
  • 20. Contact details South Africa – Johannesburg Physical Location: 222 Rivonia Road Morningside Close Block A, 1 st Floor Morningside 21496 Postal Address: P O Box 781809 Sandton 2146 Telephone: +27 (0) 11 656 6816/7 Fax: +27 (0) 11 656 6804 Farouk Abrahams Tel: +27 (0) 11 656 6816/7 [email_address] Website: www.batsalani.co.za
    • The information presented is derived and compiled largely from sources in the public domain that have not been independently verified. It has been prepared with all reasonable care and is not known by Batsalani Junior Mining to be misleading in whole or in part. The information obtained from these sources is believed to be reliable but no representation or warranty, express or implied, is made or given by or on behalf of Batsalani Junior Mining, its directors, officers, employees or advisers or any other person as to the accuracy or completeness of the information or opinions herein, and no liability is accepted for any such information or opinions. Any forward looking information in this presentation has been compiled on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as recommendation or forecast by BJM. Nothing in this presentation shall be construed as a solicitation to buy or sell and security or product, or to engage in or refrain from engaging in any transaction. BJM, its directors, officers, employees or advisers or any other person do not accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this information and/or further communication in relation to this presentation. BJM accepts no obligation to correct or update the information or opinions in it. The contents of this presentation may not be copied, reproduced in whole or in part without the prior written consent of BJM