Transcript Investor Presentation

Stephen Coates
President & CEO
March 2008
Investor Inquiries:
1 Berkeley Street, Suite 307
London, UK W1J 8DJ
Tel: +44 (0)20 7016 9881, Fax: +44 (0)20 7016 9100
[email protected]
Investor Inquiries:
Naomi Nemeth, VP Investor Relations
144 Front Street, West
Toronto, ON CANADA M5J 2L7
Tel: +1 416 506 1979, Fax: +1 416 362 6830
[email protected]
Legal
This private investor presentation (the ‘Presentation’ is confidential and proprietary and may be furnished to prospective investors
in connection with the private placement of the common stock of Homeland Energy Group Ltd. (‘HEG or the ‘Company’) for such
investor’s confidential use with the express understanding that, without the prior written consent of HEG, such persons will not
release this document or discuss the information contained herein or make reproduction of or use this Memorandum for any
purpose other than evaluation of a potential investment in the common stock of the Company.
This Presentation does not constitute an offer to sell or solicitation of an offer to buy the common stock in any jurisdiction where,
or to any person to whom, it is unlawful to make such offer or solicitation.
This Presentation is not intended to provide the sole basis of any investment decision or other evaluation. Each recipient hereof
contemplating an investment in the common stock of HEG shall make, or shall be deemed to have made, their own independent
investigation of HEG and related documentation and their own appraisals of the prospects and merits of the Company and its
assets described herein.
All forecasts, facts, information, estimates and other statements of opinion contained in this Presentation have been prepared
solely by, or on the basis of information supplied to, HEG. While the information contained herein is believed to be true and
accurate, we expressly disclaim any and all liability for representations or warranties, expressed or implied, contained herein, or
in any other written or oral communications transmitted or made available to any prospective investor. No representation or
warranty is made by HEG that forecasts, projections, business goals or estimates contained herein will be achieved.
This Presentation speaks as of the date hereof. Neither the delivery of the Presentation nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in the affairs of the Company after the date
hereof.
The historical resource estimate of 382 million tonnes of coal for the Eloff Mining Project is based on data and reports prepared
by previous operators and information provided by government ministries. The Company has not yet completed the work
necessary to have the historical estimate verified by a Qualified Person. The company is not treating the estimate as a current NI
43-101 defined resource and the historical estimate should not be relied upon. The property will require additional exploration
which the Company and its consultants intend to carry out in due course.
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The Company
Offices in London, Toronto, Witbank (South Africa)
145.1 million shares on issue, market cap of approx. C$181 million
Listed on TSX March 5, 2008 under the symbol HEG
Main coal properties in South Africa (Eloff & Kendal Mining Projects)
Estimate of up to $80 million/yr in EBITDA from Kendal and Eloff by 2011
Strong BEE partners –working knowledge of Coal Mining, South Africa & DME
Significant regional exploration & development projects
Owns 39% of Homeland Uranium (private), 15% of Altona Resources (AIM:ANR)
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Our History
Dec 2004
Company founded by Steve Coates & Avrom
Howard as Homeland Uranium Inc; raised seed
capital of $106,000
Mar 2005
Pan African Uranium (Niger) formed by Tom Griffis,
raised $1M in seed finance
Jun 2005
Investment of $1.8M by RAB Capital; acquisition of
uranium project in Colorado
Jan 2006
Homeland completes acquisition of Pan African
Uranium for C$4,200,000 in stock
May 2006
Coal project acquisition in South Africa including
Eloff, Vlakvarkfontein & Onbekend
Jun 2006
Raised US$6.2M @ $2.21; completed acquisition
of Kendal with licence under application
Oct 2006
Company re-domiciles to BVI, opens offices in UK,
changes name to Homeland Energy Corp; first
prospecting licences granted in South Africa
(including Eloff & Onbekend)
Nov 2006
Jan 2007
Completes spin out of HUI
Apr 2007
Drilling program begins at Eloff to modernise and
confirm Historic Resource of 382Mt
Jun 2007
Raised C$10.6M @ $2.25; completes RTO
agreement with Chrysalis Capital IV Corporation
Aug 2007
Construction of Kendal Mine plant begins
Aug-Dec 07 Raised C$4.3 @ $3.20 - $4.40 and received
C$500,000 through option exercises
Dec 2007
Agreement to spin out uranium assets to
Homeland Uranium Inc (HUI)
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Receives mining permit for Northfield project,
completing the acquisition of this property
Jan 2008
Raises C$2.4M @ $4.40; completes 12,000 metres
of drilling at Eloff
Feb 2008
Acquires 15.6% of Altona Resources (AIM:ANR) in
transaction valued at C3.45M based on share price
of $4.80; admitted for public trading on the TSX
Mar 2008
Anticipate new resource statement for Eloff project
based on all new drilling to Jan 2008; anticipate
mining permit for Kendal
Key Strengths
1.
Coal production from Kendal Mine (Q1/08)
2.
Development of Eloff Coal Mining Project
3.
Coal production from 4 reprocessing projects
– Environmental Clean-up Projects
4.
Exploration & evaluation of potential coal projects
5
Project Locations
6
Kendal Mine
1,800,000 mtpa production to commence in H1/08
Mining licence anticipated in March ’08, plant 95% complete
Mining contract to be awarded in April ’08
Operating cashflow from first 5 years: $US 145 million (forecast)
$US 20M (2008)
$US 28M (2009)
$US 30M (2010)
Management Forecast, Dec ‘07
$US 32M (2011)
$US 35M (2012)
Washed Coal Qualities - up to 26mJ/kg, 20% Ash, 53% FCC,
4% H2O, low sulphur
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Kendal Mine Cash Flows
Kendal Project
US Dollars Equiv. (2)
(1)
1,800,000 tonnes
(1,400,000 t salable)
Annual Production Figures Updated January 1, 2008
Cost of Production:
Crushed & Screened (C&S)
$11.00/tonne
Washed
$17.00/tonne
Crushed & Screened (C&S)
$13.00/tonne
Washed
$50.00/tonne
Crushed & Screened (C&S)
$ 2.00/tonne
Washed
$33.00/tonne
600,000 tonnes (43%) Raw
$1.2 MM
800,000 tonnes (57%) Washed
$26.4 MM
Total
$27.6 MM
Total Net to HEG (74%)
$20.4 MM
Revenue:
Operating Margin:
EBITDA
Annual Operating Cash Flow:
8
(1) Figures are based on Management Estimates
(2) Exchange rate of 8.00 rand = US$1.00
Note: Homeland holds a 74% Interest in the above
Environmental Clean-up Projects
Numerous opportunities in South Africa for cleaning up old coal
mines with remaining economic resources
Recently received permission from SA Gov’t to sample and test
several coal dumps
First project, Northfield, commenced production in Feb 2008
Initial production from Northfield of up to 25,000 tpm with net cash
flow forecasts of up to US$5.9MM/yr
Homeland intends to develop an environmentally important
business line of old mine clean-up which could add production and
cash flow of up to 100kt and US$1.5M/mo (up to US$18M/yr)
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Eloff Mining Project
More than 180 drill holes completed to date
12,000 m of drilling completed by Jan 31/08
Inferred resource of 382Mt* (resource update pending)
Additional resources under acquisition
Potential for mine-mouth electrical generating plant or
coal-to-liquids
Raw coal qualities: ~16mJ/kg (washable to 20-26MJ/kg),
15- 33% ash, low moisture, low sulphur
* See disclaimer on slide #2
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Projected Coal Operations
Project
Name
Production
Date
Cap Costs
(US$)
Production (Mtpa)
Resources
(M Tonnes)
Mine Life (Yrs)
EBITDA
(US$/Yr)
Kendal
Thermal/Met
Q2/08
$ 9.5M
1.8
34 **
15
$ 21M
Northfields
Coking Coal
Q4/07
$ 400k
0.3
1 **
3
$ 3M
Eloff - Phase I
Thermal/Met
Q4/09
$ 150M
6
100
15+
$ 35M
Eloff - Phase II
Thermal/Met
Q4/10
TBD
6
282
35
TBD
$ 160M
8.1 (to 18)
400 + **
+/- 30 Yrs
$ 59M
TOTALS
** indicates that these figures are based on historic data and have not
been independently verified. As such these resource figures cannot be
relied upon.
•EBITDA reflects Homeland’s NET interest
•Figures do not reflect accretion from potential acquisitions
•All estimates are based on Management Projections
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South Africa Assets
Onbekend Deposit (BEE partner – 50%)
Prospecting Licence granted, resource potential of several million tonnes
metallurgical coal, 2,864 acres. Resource definition drilling commenced Q2 2007
and is ongoing
Witrand Deposit (BEE partner – 50%)
Prospecting Licence granted, resource potential of several million tonnes
metallurgical coal, 1,577 acres. Drilling began in Q4 2007
Vlakvarkfontein Deposit (BEE partner – 50%)
Prospecting Licence granted, resource potential of +2 million tonnes thermal
coal, 1,117 acres. Resource definition drilling began in Q4 2007
Boschpoort Deposit (BEE partner – 50%)
Prospecting Licence granted, large resource potential of thermal coal, 1,645
acres. Resource definition drilling commenced in Q4 2007
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South Africa Assets
(cont’d)
Carolina Deposits (Tyfwelaar, Blenheim, Steynsdraai, Vaalbult)
(BEE partner – 50%)
Prospecting Licence granted, 8,694 acres, Data currently being acquired,
Resource definition drilling commenced in Q4 and is ongoing
Additional Deposits (BEE partner – 50%)
3 additional Prospecting Licences granted, nl. Sheepmoor; Langsloot & Project
X, Drilling to commence in Q1 2008
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Exploration Projects
Kwa-Zulu Natal Deposits
Prospecting rights granted on 9 farms, 6761 Acres. Large resource potential of
anthracite and coking coal. Acquisition deal with BEE Partner in final stages of
completion.
Swaziland Coal Deposit
Homeland has applied for a Prospecting and Mining license for anthracite deposit
at Mpaka Coal. Has been short-listed for consideration.
Botswana Coal
Five concessions with prospecting rights awarded to local partners. Potential for
thermal coal, gasification and Coal Bed Methane. Acquisition deal with local
partners in final stages of completion.
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Investment Opportunity
Development of a mid-tier coal producer
Cash flow anticipated in 2008
Newly TSX-listed company (C$1.50 at listing)
Potential subsequent AIM/JSE listing in 2008
Significant exposure to a new global
uranium play 39% ownership in Homeland Uranium
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Operating Plans
Complete licencing & commence production at Kendal mine in
early 2008
Drill, confirm & licence Eloff for production by end of Q2 2009
Continue discussions for off-take of coal from main projects
Progress environmental assessments and mine planning
Progress prospecting projects to feasibility
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Project Timelines
Q1 2008
Q2 2008
Q3 2008
Kendal mining licence
Development
Projects
Q4 2008
Kendal to full production
Northfield start-up
Northfield to full production
Eloff development, mine permitting, resource definition, environmental permitting
Onbekend, Boschpoort & Carolina Deposits definition drilling
Exploration
Projects &
Project
Acquisition
Corporate
New project acquisition and evaluation
Focus on new, advanced projects
RTO to TSX
Aftermarket coverage
17
Possible Eloff Financing
Management Team
A. Tom Griffis, Executive Chairman
More than 20 years experience with resource investment and exploration in Africa
Founder and director of several public companies in Canada and the UK
Stephen Coates, Chief Executive Officer
Former investment professional specializing in the mining and exploration sectors
Business development in the gold and copper exploration sectors
Founder of Homeland Energy
Mike Nell, Managing Director, Homeland Mining & Energy SA (PTY) Ltd.
Formerly with Anglo Coal and of Injula Mining, both of South Africa
Spent 27 years in the coal and mining sectors in Africa
Responsible for development of Homeland’s coal mining operations
Stephen Woodhead, CA (South Africa), Chief Financial Officer
Former CFO of Desert Sun Mining, Toronto Canada
Experience with 12 public resource companies trading in Canada, UK, USA & South Africa
South African native with more than 16 years experience in the mining & public finance sectors
Sharad Subramanian, EVP, Business Development - India
22 years of international energy sector experience
Extensive international experience with large, multi-national energy companies - Schlumberger & Saipem
Most recently a Partner with international accounting and business consulting firm, Grant Thornton
Malibongwe (Reeboh) Mandela, VP, Business Development - Africa
Former VP Business Development for Energetic Petroleum
Extensive background with the ANC and the Government of South Africa
Responsible for the Company’s Government Relations and new business initiatives in Africa
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Board of Directors
Stephen Coates, Founding Director - London, UK
President & CEO, Homeland Energy Corp,
A. Tom Griffis, Chairman, Director - Toronto, Canada
Founder and Chairman of Griffis International Limited
Avrom Howard, Founding Director - Colorado, USA
VP Exploration, Homeland Uranium Inc.
Laurence Curtis, Independent Director - Oakville, Canada
President and CEO, Intrepid Mines Limited
Neil McLoughlin, Independent Director - Paris, France
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Key Strategic Advisors
Bruce Buthelezi, Johannesburg, South Africa - Managing Director, Energetic Petroleum PTY
Mr. Buthelezi has been a force in the energy sector in Africa since the founding of Energetic Petroleum. Mr. Buthelezi’s influence and
knowledge of regional and national politics is critical to Homeland’s strategic plans going forward. Mr. Buthelezi, along with Mr.
Mandela and Mr. Motalaote form the key African strategic advisors to Homeland Energy Corp.
Laurence Curtis,
Toronto, Canada, President, Intrepid Mines
Internationally renowned exploration geologist with more than 35 years experience in exploration geology around the world including
10 years in uranium exploration and development. Dr. Curtis serves as President and CEO of Intrepid Mines Limited and also serves
on the board of High River Gold Mines and Alturas Resources. Dr. Curtis is a key individual in identifying and evaluating uranium
assets in North America.
Mlungisi Lulu Johnson, Port Elizabeth, South Africa - MP, Gov’t of South Africa
Mr. Johnson is an ANC Member of Parliament (National Assembly) in the Republic of South Africa. Mr. Johnson serves on the
Government’s Portfolio Committee of Finance and of the Standing Committee on the Auditor General. As Chairman of Africa Liquids
Energy, a South African company associated with Homeland Energy, Mr. Johnson is active on behalf of Homeland with respect to
many of the company’s activities in South Africa.
Tshepo Kgadima, Johannesburg, South Africa - CEO, Lontoh South Africa
Mr. Kgadima is a specialist in Black Economic Empowerment and the South African regulations dealing with Historically
Disadvantaged Individuals. Mr. Kgadima is responsible for ensuring that Homeland’s licenses and applications for prospecting and
for mining are not only within government guidelines, but exceeding them. Lontoh South Africa is also the managing partner of
Homeland’s applications for coal licenses in Swaziland. Mr. Kgadima is assisted by Mr. Bheki Simelane who is a retired lawyer from
Swaziland and is consulting presently.
Setty Motalaote, Gaborone, Botswana - CEO, Wave Waste
Mr. Motalaote is an entrepreneur in environmental management and global environmental Mr. Motalaote is a key member of the
Homeland team in his ability to identify opportunities and represent the vision and interests of Homeland Energy in Botswana and
elsewhere in southern Africa.
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Key Technical Team
Martin Bartle, Executive General Manager, HMESA
Mr. Bartle possesses more than 27 years experience in Training, SHEQ, Risk Management and Strategic Management. He is a
recognized expert in Mine Health, Safety and Training in South Africa. Mr. Bartle previously held senior management positions within
Anglo Coal, Eyesizwe and Exxaro Corporations.
Xolani Gamede, Middelburg, South Africa, Corporate Secretary, HMESA
Mr. Gamede is an admitted Attorney having obtained his LLB from UDW (UKZN) specializing in Mining and Securities Law. Mr.
Gamede joined the Dept. of Minerals and Energy in 2002, serving most recently as Deputy Director (Mineral Law) in Durban. Mr.
Gamede is responsible for legal affairs and contracts of HMESA.
J. Andrew Johnson, Middelburg, South Africa, General Manager, Mining & Planning
Mr. Johnson is a professional Mining Engineer with many years experience operating and planning mines in Britain, South Africa,
Angola and Mozambique specializing in coal. With experience in large corporate systems and single operations, Mr. Johnson also has
extensive experience with long term mine budgeting and financing.
Owner Siweya, Johannesburg, South Africa, Manager of License Processing
Trained in Law and very experienced with South Africa’s Department of Mines and Energy (DME) operations. Mr. Siweya heads three
of Homeland’s local black empowered partners and is responsible for shepherding Homeland projects through the application processes
in the DME.
Hanno Spangenberg,
Johannesburg, South Africa, Engineering Manager
Mr. Spangenberg has 18 years experience in the coal mining sector in South Africa. Trained and certificated as an Electrical Engineer,
he is responsible for site and establishment and operations at Homeland’s Kendal Mine as well as well as overseeing planning and
design of the Eloff Mine and other projects in South Africa. Mr. Spangenberg joined Homeland in 2006 from BHP Billiton.
Joe Rensburg, Middleburg,
South Africa, Manager
Mr. van Rensburg has 26 years experience in the Mining Industry, including Financial Management Training and Health and Safety
Management. Mr. van Rensburg worked at Trans-Natal and Xstrata before joining Homeland. He is currently responsible for Health,
Safety and Environment.
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Corporate Profile at IPO
1. Two operating coal mines producing more than 2 MTPY and
increasing to 3 mines and more than 6 MTPY by 2010
2. One advanced project moving to production in 2008
3. Two exploration projects moving to Feasibility stage in 2008
4. Control of expected in situ coal resources in South Africa in excess of
400 Mt
5. Drilling on possible Botswana property with potential for > 1B tonnes
6. Swaziland coal property with potential for production in 2009
7. Significant position of Homeland Uranium (Niger/US)
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Capital Structure
Homeland Energy Group
United Kingdom:
1 Berkeley Street, Suite 307
London W1J 8DJ
Tel: +44 (0)20 7016 9881
Fax: +44 (0)20 7016 9100
Shares Outstanding
145,001 ,117
Canada:
Fully Diluted
158,273,646
144 Front Street West, Suite 780
Toronto, ON M5J 2L7
Cash Position
January 31, 2008
C$5.0 million
Tel: +1 416 506 1979
Fax: +1 416 362 6830
Naomi Nemeth, VP Investor Relations
[email protected]
[email protected]
Tel: +1 416 506 1979
Fax: +1 416 362 6830
23
Coal as a Needed Energy Source
World Primary Energy Consumption
World Electricity Generation
Source: World Coal Institute, 2006 figures
24
Asian Demand Growth
India
SA exports to India have increased from 1.3 Mt in 2003 to 8.7 Mt
in 2007
50 Mt/a of imported coal will be required by 2010 to fuel coastal
power stations on the west coast
Queuing lanes in Newcastle have caused a surge of interest in
SA coal from Indian buyers
China
Consumes 1.3 billion Mt per annum,
In early 2007 became a net importer of coal
New electricity generation is predominately coal fired
Will be short 120mt/a by 2020
25
Eskom’s Current Generation Mix
Type
Number of Plants
Installed Capacity
Coal Fired
13
32 066 MW
Nuclear
1
1800 MW
Pumped Storage
2
1400 MW
Hydroelectric
6
600 MW
Gas Turbines
2
342 MW
TOTAL
24
36 208 MW
• 93% Coal Fired Generation in South Africa
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Eskom’s Strategy
South Africa has no excess electrical generation
capacity
Investing 150 billion ZAR over 20 years to meet growing
demand
Plan to increase generation capacity to 80,000Mw
15,000 Mw of new generation will be coal-fired
New demand for 50 mt/yr coal to meet planned
expansion
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Thank you
Investor Inquiries:
1 Berkeley Street, Suite 307
London, UK W1J 8DJ
Tel: +44 (0)20 7016 9881, Fax: +44 (0)20 7016 9100
[email protected]
Investor Inquiries:
Naomi Nemeth, VP Investor Relations
144 Front Street, West
Toronto, ON CANADA M5J 2L7
Tel: +1 416 506 1979, Fax: +1 416 362 6830
[email protected]
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