1. CAUTIONARY STATEMENT ON FORWARD LOOKING
INFORMATION AND DISCLAIMER
Certain information contained in this presentation, including any information as to company strategy, plans or future financial or operating performance and other statements that express
management's expectations or estimates of future performance, constitute "forward-looking statements”. All statements, other than statements of historical fact, are forward-looking
statements. The words “believe”, "expect", "will", “anticipate”, “contemplate”, “target”, “plan”, “continue’, “budget”, “may”, “intend”, “estimate” and similar expressions identify forward-
looking statements.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual financial results, performance or achievements of Australian Energy Company Limited (AEC), to be materially different from the
Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of
future performance. These risks, uncertainties and other factors include, but are not limited to: the availability of financing; the values of assets and liabilities based on projected future
cash flows; changes in the worldwide price of coal, oil or certain other commodities; fluctuations in currency markets; changes in U.S. dollar interest and exchange rates; risks arising
from holding derivative instruments; ability to successfully complete announced transactions and integrate acquired assets; legislative, political or economic developments in the
jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costs
associated with mining inputs and labour; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing
quantities or grades of reserves; contests over title to properties; the risks involved in the exploration, development and mining business.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as
required by applicable law.
Empire Securities Group Pty Ltd Corporate Authorised Representative of Novus Capital Ltd. Australian Financial Services License 238-168
Empire Securities Group Pty Limited (Empire) is a Corporate Authorised Representative of Novus Capital Limited ("Novus") , the holder of Australian Financial Services License No
238 168. Empire, Novus, their directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage,
p , , , , p y y, , y p g ,
commission, fees or other benefits from the companies mentioned in this presentation. Unless specifically stated within this document or an attached document, constitutes
unsolicited general advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular
investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives,
financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you,
particularly if based on past performance or relate to a future matter.
Empire believes that information in this presentation is accurate when issued but do not warrant its accuracy or reliability. Empire and Novus have not, unless specifically stated in
writing, independently verified the information contained in this document. Empire is not obliged to provide you with updated information or advice if circumstances change. Empire,
Novus and its directors, officers, associates and employees exclude to the full extent permitted by law, all liability of any kind whether in negligence, contract, under a fiduciary duty or
otherwise, for any loss or damage, whether direct, indirect, consequential or otherwise, whether foreseeable or not, arising from or in connection with this document.
2. EXECUTIVE SUMMARY
Australian Energy Corporation Ltd (AEC) is an unlisted Australian public company, has an institutional
shareholder base and plans to list on the Australian Stock Exchange.
AEC is see g a subs a a co e s o e investor, p e e ab y with coa assoc a o s which would a so
C s seeking substantial cornerstone es o , preferably coal associations c ou d also
take board seats and contribute to accelerated project development.
AEC has substantial coal assets in Australia and the USA and is focusing on its Australian assets at
the current time
time.
1st Strategy is to have large resource, long life mines that are already in production.
2nd Strategy is to beneficiate the coal by proven and low cost methods to substantially value add the
coall t produce th f ll i t h i l specification range.
to d the following technical ifi ti
Country Gross Calorific KCAL/kg Moisture Content % Ash % Sulphur %
Australian Product 6,283-6,569 <2.00 0.70 – 1.90 0.25 – 0.38
Production of the Australian beneficiated coal will increase in stages to 7 mtpa and then to 15 mtpa.
g p p
4
3. AUSTRALIAN OPERATIONS
AEC has a 600 million tonne Coal Reservation Agreement with the existing Loy Yang Power Station Mine in the
Latrobe Valley, Victoria which has been activated and will be the initial long term source of coal supply. Therefore
y, g pp y
AEC will not have the capex cost and time constraint of a new mine development.
The Loy Yang mine has over 3 billion tonne of reserves and a current 60 year mine plan.
AEC h also agreed to develop a JV interest in two adjoining deposits totalling 10.19bn tonnes of JORC
has l dt d l i t ti t dj i i d it t t lli 10 19b t f
compliant resources of low ash lignitic coal located in the Latrobe Valley, Victoria, Australia.
The JORC breakdown of the resource is as follows:
Measured 2.30 billion tonnes
2 30
Indicated 4.24 billion tonnes
Inferred 3.65 billion tonnes.
In addition, AEC has a 500m tonne coal resource adjoining the 10.19bn tonnes abovementioned resource which
because of the highly beneficial strip ratio is the most proficient area to start a new pit.
The total resource will be held in reserve ready for new mine development if needed to expand the operation.
The total FOB cost to export the beneficiated coal is estimated at AUD65.15 per tonne.
5
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4. AUSTRALIAN OPERATIONS
PROJECT COSTS, CAPEX SAVINGS & INDICATIVE REVENUES
COSTS
The Stage One beneficiation plant is estimated to cost AUD500M and will produce 7.14 mtpa of high
quality steaming coal product ($250M equity and $250M project finance)
finance).
The after tax net cash flow is estimated at $235 million per annum for the initial 7 mtpa project (see
Financial Models on pages 8 – 10 herein), based on a 50:50 debt:equity basis. After tax net cashflow
p g ), q y
rises to over $640 million for Stage Two.
Planned production is to rise to 15 mtpa.
An immediate saving to the AEC venture is the capex costs of not having to establish a new coal
mine due to the 600 million tonne Coal Reservation Agreement with the existing Loy Yang Power
S
Station mine and this capex s
s p saving is conservatively estimated at AUD400M.
g s s y s U 00
The Loy Yang mine has over 1.25 billion tonne of unallocated coal and an excess of production
capacity. It has a mine plan extending out 60 years.
6
5. AUSTRALIAN PROJECT Operating Costs $000’s
PROJECT ECONOMICS Opex cost to mine (dry tonne equivalent) 21.25
21 25
Internal stockpiling, reclaiming and 3.27
handling
Upgrading cost per dry tonne 15.40
Road transport 16.00
Coal loading at port 8.00
Stage One – Base Product Incidentals 1.23
Case 6,300 kcals TOTAL FOB COST 65.15
65 15
Selling Price – FOB
This kcal thermal coal trades in the range 120-135 per tonne
Margin per tonne (Product 6,283-6,569 kcal) 54.85 – 69.85
Capital costs are current estimated as $000’s
follows:
Infeed, crushers and conveyors 64,000
Energy Supply (Boilers) 130,000
130 000
Coal drying 35,840
Dust extraction 28,560
Briquetting presses 21,000
Ancillary works including design 96,970
96 970
Contingency @ 23.73% 117,130
TOTAL 493,500 7
7
11. AUSTRALIAN PROJECT
Transport Logistics
The briquettes have been subjected to standard industry f t and d t t re their suitability f
Th b i tt h b bj t d t t d d i d t fracture d drop tests th i it bilit for
bulk transport.
As there is no traditional bulk loading coal terminal in Victoria, Stage One production of 7 mtpa will be
transported via road transport to Port Anthony (Barry Beach) where it will be transferred to
conventional coal barges and then transferred to a bulk carrier via clam cranes or barge conveyor.
This loading method is q
g quite common throughout the world, p
g particularly in Indonesia.
y
The berth for barge loading at Port Anthony is complete and the stockpile area is about to
commence.
Stage T production will b b a 100 k rail extension t th existing rail network and will b
St Two d ti ill be by km il t i to the i ti il t k d ill be
funded by an infrastructure fund.
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14. AUSTRALIAN PROJECT
Typical Dimensions
Description “L” Industrial 43mm Victoria Briquettes
Size (approx )
(approx.) 58mm x 43mm x 40mm
Weight (approx.) 90g
Bulk Density 0.75 tonne/m3
Other Properties
Ash Fusion Temperature 1250°C (reducing atmosphere)
Hardgrove Index 40-45
Compressive St
C i Strength (k / 2)
th (kg/cm 160-200
160 200
Briquette Particle Density (g/cm3) 1.118-1.240
Bulk Density 0.75 tonne/m3
Size (approx.) 58mm x 43mm x 40mm
Weight (approx.) 90 gms
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15. AUSTRALIAN PROJECT
Analysis of Ash Constituents
Ash Constituents Predicted Minimum Predicted Maximum
(Laboratory Furnace Ash) Value (% db) Value (% db)
Silica 5 60
Alumina 5 30
Titanium oxide 0.2 2
Iron oxide 5 15
Calcium oxide 2 10
Magnesium oxide 5 20
Sodium oxide 4 20
Potassium oxide 0.2 1
Sulphur trioxide* 10 40
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