Beren mining llc


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Beren mining llc

  1. 1. MNT 130.5 billion Initial Public OfferingBEREN MINING JSC Mongolian Iron Ore Processing Company INVESTOR PRESENTATION March 2012
  2. 2. Forward Looking Statement Today’s presentation may include forward-looking statements. These statements represent the company’s belief regarding future events that, by their nature, are uncertain and outside of the company’s control. The company’s actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this publication. Any opinions or estimates herein reflect the judgment of the company at the date of the publication and are subject to change at anytime without notice. The statements in the presentation are current only as of its date, March 07, 2011.Beren Mining JSC, Mongolian Iron Ore Processing Company 2
  3. 3. The Company• Founded in 2005, Beren Mining is a domestic company that owns and operates: • Mining and exploration licenses for several iron ore deposits in central Mongolia • Iron ore concentrate plant with the capacity of producing 250k tons of iron ore concentrate per annum • Direct reduction plant with the capacity of producing 30k tons of direct reduced iron (DRI) per annum• The mining licenses for iron ore deposits include 14.9 million tons of reserves, and 69.7 million tons of resources, combined 84.5 million tons• The exploration licenses cover 16.2 thousand hectares of land• The beneficiation plant commenced production in 2007 and currently exports majority of its product to China besides supplying the direct reduction plant that commenced production in 2008.• 51% owned by Beren Group LLC and 49% owned by Sor Metal LLC, both local companiesBeren Mining JSC, Mongolian Iron Ore Processing Company 3
  4. 4. Assets – Mining Operation• The company started drilling in the Tamiryn Gol area since 2006, and explored 14.9 million tons of iron ore reserves in 4 main deposits, which have registered with the Mineral Resource Authority of Mongolia.• The iron content of the reserves range from 38% to 42%• It has also identified 69.7 million tons of prognostic resources in the area, which will be upgraded into reserve category Location: after more detailed studies. Tuvshruulekh Soum, Arkhangai Province Deposits:• Completed “Technical-economic -Tamiryn Gol (4.5 million tons of reserves, 40% proven) characterization” (feasibility study) - Uzliit (3.2 million tons of probable reserves) approved by the Ministry of Mineral - Khadat Tolgoi (4.1 million tons of probable reserves) Resources and Energy in 2011. - Tsenkher (3 million tons of probable reserves)• In 1970s, Russian geologists estimated prognostic resources of the Tamiryn Gol area to be up to 250 million tons of iron ore after complete survey. Beren Mining JSC Mongolian Iron Ore Processing Company 4
  5. 5. The Assets• Tamiryn Gol and Khadat Tolgoi deposits have completed feasibility study approved by the authority body• Tamiryn Gol deposit is currently being mined Ulziit• The company has budgeted 15.6 billion MNT (US$11.6 million) for License: 11619A further exploration until 2022 mainly based on Tsenkher and Ulziit deposit which will upgrade up to 76 million resources into highly measured reserve category Khadat Tolgoi License: 11595A Tamiryn Gol License: 9772A Tsenkher Deposit License: 10551A Beren Mining JSC, Mongolian Iron Ore Processing Company 5
  6. 6. Production Iron Ore Concentrate • The plant commenced in 2007, exporting since 2008 • Current capacity is to produce 250k tons of iron ore concentrate with 63% to 67% of iron content per annum • Raw material (iron ore) supplied by its own mine • Currently using 84% of the existing capacity • 100% owned by Beren Mining JSC Currently sells 92% of the total outcome to China. (plant site) Khukh Gan JSC - Direct Reduced Iron (DRI) • The plant commenced in 2008, supplying 200000 150000 Darkhan Metallurgical Plant (DMP) since 2010 180000 145000 besides exporting with small volume 160000 140000 140000 • Current capacity is to produce 30k tons of DRI 120000 135000 with 88% to 92% of iron content per annum 100000 130000 80000 • 125000 Raw material (concentrate) supplied by the Iron 60000 120000 Ore Concentrate plant 40000 20000 115000 • The installed capacity has been fully used 0 110000 • 56% owned by Beren Group LLC 2008 2009 2010 2011 Export Domestic Export Price The export volume rose 10x in 2011. Also supplies Khukh GanBeren Mining JSC, Mongolian Iron Ore Processing Company 6
  7. 7. Infrastructure • Connected with the capital city of Mongolian with 420km auto-road 93% paved and 7% unpaved • 30km from the central paved road, 70km from the province capital and 20km from the nearest residential center (soum) • Connected to 35kW electricity line supplying residential centers in the region • Water is supplied through own technical water wells • Currently >100 employees and to be increased to over 800 as the expansion project advances * Road to export market – 1153 km in total, 63% rail Erilan City UB City Products trucked to UB City The company has its own warehouse and reloading The plant facility at UB City Then shipped to China via Trans-Mongolian railwayBeren Mining JSC, Mongolian Iron Ore Processing Company 7
  8. 8. Expansion Project • The plan is to double the existing iron ore concentrating plant capacity to 0.5 million tons per annum and to build a new direct reduced iron plant with 0.3 Mtpa capacity based on the mine Mining Concentration Direct Reduction - Iron Ore with 42% of iron - Iron ore concentrate with content 65% of iron content - Direct reduced iron with 95% of iron content - Capacity increases to - Capacity to increase 0.5 1Mtpa from 0.5Mtpa Mtpa from 0.25 Mtpa - 0.3 Mtpa capacityBeren Mining JSC, Mongolian Iron Ore Processing Company 8
  9. 9. Raw Material Supply • Being able to supply the major raw materials by itself is a big advantage • The locally supplied raw materials are suitable for the plants Raw material Quality consumption Supplier Iron ore Iron ore 38-42% iron 1 Mtpa Own mine concentrate content plant Iron ore > 63% Fe 401 Ktpa Own plant concentrate Direct reduced Coal > 3,000 kcal/kg 286 Ktpa Alag Chuluut, iron (DRI) plant Saikhan Ovoo Limestone > 80% activation 63 Ktpa Khutul Clay pot Fire resistant 25,067 pieces China Iron ore Concentrate Coal Lime Stone Clay pot DRIBeren Mining JSC, Mongolian Iron Ore Processing Company 9
  10. 10. Production and transportation cost • In terms of DRI (similar to pig iron) transportation costs account for 17% of the total costs • Mongolian parliament has approved the construction plan of new railroad connecting UB city with the nearest residential center of the plant site Production and transportation cost per ton Production cost breakdown (US$ per ton Production cost US$ 32.1 Production US$ 11.3 of concentrate cost of DRI 135.8 9.9 7.1 35.7 32.1 Transportation Plant to UB city US$ 31.4 Overburden removal 24.1 and extraction 2012 2013 2014 Iron ore UB city to the border US$ 16.4 concentration 135.8 Direct reduction 135.8 117.8 Total costs US$ 80 US$ 183.7 Price at the US$ 117.7 US$ 400 border * 2012 projection, * US$ rate = 1335.58 /Mongol Bank/Beren Mining JSC, Mongolian Iron Ore Processing Company 10
  11. 11. Iron ore and DRI markets Chinese iron ore import (mln tons) • China is the largest consumer and the largest importer of iron ore in the world • Chinese annual iron ore consumption grown an average 11.3% since 2005 Source: WorldSteel • The country imports more than 60% of its annual iron ore consumption China imported iron ore price • Its annual iron ore import grown 17.1% in the last 5 years • Mongolia has annual consumption of reported 230k tons of steel making raw materials Source: BloombergBeren Mining JSC, Mongolian Iron Ore Processing Company 11
  12. 12. Chinese steel consumption • Chinese steel consumption could reach 750 million tons by 2015Beren Mining JSC, Mongolian Iron Ore Processing Company 12
  13. 13. Chinese iron ore/DRI consumption • Steel making raw materials set for strong demand in another decade Million tons Source: WorldSteelBeren Mining JSC, Mongolian Iron Ore Processing Company 13
  14. 14. The Issue Issuer Beren Mining Type of share Common # of outstanding shares 1,740,813,320 post IPO Par value MNT 157,35 # of shares offered 522,243,996 The offer price MNT 250 Expected capital to be MNT 130,5 billion raised Expected market cap MNT 435.2 billion /*US$ 325.8 post IPO million/ Use of proceeds Construction of the second production line of the concentrating plant and a DRI plant Listing of the shares Mongolia Stock Exchange Date of regulatory (FRC) Feb 15, 2012 approvalBeren Mining JSC, Mongolian Iron Ore Processing Company 14
  15. 15. Public offering • Placement for strategic investors is to take place before a public sale • BDSec JSC as sole manager and book runner of the issue • Q3 would be expected timing for the public sale • The shares will be sold through Mongolian stock exchange • The founders’ shares will be locked up until the commence of the proposed plants The offer structure Use of proceeds Beren Mining JSC (100%) DRI plant Concentrate plant Founders IPO (30%) other costs (70%) Beren Strategic Public Sor Metal Group LLC Investors Offering LLC (49%) (51%) (70%) (30%)Beren Mining JSC, Mongolian Iron Ore Processing Company 15
  16. 16. Financial projection Million MNT 2011 2012E 2013E 2014E 2015E Concentrate production /tons/ 40,000 100,000 202,500 300,000 500,000 DRI production/tons/ 10,000 100,000 160,000 300,000 Sales revenue 6,262 16,605 60,282 97,270 179,565 COGS 1,910 6,098 22,239 34,554 62,780 Gross profit 4,352 10,507 38,043 62,716 116,785 Operating expenses 4,128 8,695 15,984 23,932 43,084 EBITDA 224 1,812 22,059 38,784 73,701 Tax 22 181 5,065 9,246 17,975 Net profit 202 1630 16,994 29,538 55,726Beren Mining JSC, Mongolian Iron Ore Processing Company 16
  17. 17. Contact usBDSec Munkhtulga GanboldZaluuchuud Avenue 27-1 Head of Institutional Sales8th Khoroo, Sukhbaatar District Email: mganbold@bdsec.mnUlaanbaatar, Mongolia Phone 976-11323411Phone/Fax: 976-11313108Email: info@bdsec.mnBeren Mining JSC, Mongolian Iron Ore Processing Company 17