The Critical Metals Streaming Company “ Providing finance for Critical Metals with a market value of over US $370 billion per annum ”
Contents • Overview 3-5 • Demand is Growing 6-8 • The Mining Sector Needs Finance 9-12 • Streaming Provides Finance 13-15 • Medium to High Risk Critical Metals 16-18 • AUS Streaming Advantage 19-22 • AUS Streaming Competition 23-25 • Summary 26-28 • Reference 29 • Important Information 30 2
Overview “ Securitised Streaming Contracts provide debt with equity - a much needed financing solution for mining companies ” 3
Introduction • AUS Streaming Investments Limited (AUS Streaming) completed an agreement on June 30 th 2015 to be acquired by ASX listed Murchison Holdings Limited (ASX:MCH). Upon approval at its EGM, Murchison Holdings Limited will change its name to AUS Streaming Limited and AUS Streaming will become a wholly owned subsidiary of Murchison Holdings Limited. • AUS Streaming currently has $300m + of legacy assets that it will be selling down and re-investing into Securitised Streaming Contracts for critical metals. • Critical Metals targeted by AUS Streaming have annual sales of over US $370 billion per annum and cover a third of all mining production by value. 1 • There are currently only 4 public streaming companies as compared to over 2,400 public mining companies. 1 • One of the leading public streaming and royalty companies, Silver Wheaton (TSE: SLW), addresses a market a third of the size of AUS Streaming and has a current market cap of over $7bn. • Recent challenging times in the mining sector have resulted in a lack of available financing which, coupled with forecast increased demand, has created a unique window for value creation. 4
AUS Streaming Corporate Snapshot Key Statistics Senior Management Ordinary shares 2 320,000,000 Chris Every CEO Net Asset Value per share 2 $0.93 Christopher Tawney CFO Fair Value per share 3 $1.51 Warren Straude Director FY End 31 st December 2016 2017 2018 2019 2020 Gross Revenue ($ 000 ’ s) 3,125.00 26,250.00 93,125.00 200,000.00 320,000.00 Cost of Production 0.00 3,750.00 26,250.00 75,000.00 135,000.00 Expenses & Tax 5,639.36 17,165.77 33,710.80 50,977.66 69,930.07 Net Income ($ 000 ’ s) -2,514.36 5,334.23 33,164.20 74,022.34 116,710.14 Net Assets ($ 000 ’ s) 321,725.64 327,059.87 360,224.07 434,246.41 550,956.55 Diluted Shares Outstanding (000,000 ’ s) 420.00 420.00 420.00 420.00 420.00 Earnings Per Share (0.01) 0.01 0.08 0.18 0.28 Net Asset Value Per Share 0.77 0.78 0.86 1.03 1.31 5
Demand is Growing “ Commodity demand will continue to grow – Driven by population growth and urbanisation of over 1.5 million people PER WEEK ” 6
Why Demand is Growing • The Global Economy is in the middle of a “ Great Transformation ” from “ North to South ” that began at the beginning of the 21 st century. • Global GDP is projected to grow by over 250% between now and 2050. 4 • The global population has grown from 3.6 billion in 1970 to 7 billion in 2011 and is forecast to grow to over 9 billion by 2050 (over two thirds of whom will be in emerging markets). 4 • The global middle class was 1.8 billion at the end of 2009, and is projected to grow to 3.2 billion by 2020 and 4.8 billion by 2030. 5 • Urbanisation will continue to drive growth, between now and 2050 it is predicted that the 3.5 billion people currently living in cities will increase to 6.5 billion - an increase of over 1.5 million people per week. 6 • The factors above will create an unprecedented demand for natural resources because of corresponding needs for infrastructure, construction and energy plus consumer consumption. 7
Projected Critical Metals Prices 2015-2025 • The World Bank Ten Year Major Metals price forecasts listed below show that prices for major metals are now forecast to remain steady at their current levels. • Major Metals prices recently sold off and lost roughly one third of their value compared to where they were at the peak of the current cycle in 2011. • AUS Streams targeted Critical Metals include the Base Critical Metals in the table listed below and 45 other Critical Metals which are all subject to supply risk and increasing demand. 8
The Mining Sector Needs Finance “ Even with commodity demand increasing capital for mining companies is scarce due to recent sector under performance ” 9
Lack of Available Finance • The global mining sector is in a depressed state due to recent under performance and, as such, there is a lack of finance available throughout the sector. • The mining sector was the worst performing sector during 2014 and it has continued its decline in value during 2015 as commodity prices have declined further. • Specialist mining indices have decreased between 34% and 70% between 2011 and 2015 the cause of which is a decline in commodity prices and sector under performance. • In the same period the Dow Jones Industrial Average increased by 43%. • There is a need for consolidation in the sector as there are too many small public mining companies - over 70% of the public mining companies by number have a value of US$20 million or under (1,358 out of 2,494 mining companies). • Write-offs by Majors has also negatively affected earnings and sector sentiment. 10
Major Mining Indexes lost over 26% in the third quarter (67.31% off of all time high) • The third quarter of 2015 saw the five major mining indexes covered lose 26.47% of their value, after losing 18.63% during 2014, as compared to an 8.56% third quarter loss by the five major all-share indexes covered, after a 4.27% gain during 2014. • The five major mining indexes were over 67% off of their all-time high, whereas the five major all- share indexes covered were 16.46% off of their all-time high. Of the five major mining indexes, the FTSE/JSE General Mining Index was down the least from its all-time high at 54.28%. Index Symbol: %age Country Exchange Index Currency 30/09/2015 30/06/2015 All Time High % Difference Exchange difference Australia ASX S&P/ASX 300 Metals & Mining Index XMM:ASX AUD 2124.87 2566.5 -17.21 6,153.40 -65.47 Canada TSX S&P/TSX Global Mining Index TXGM:TOR CAD 46.65 60.13 -22.42 135.53 -65.58 UK LSE FT FTSE 350 Mining Index FTNMX1770:FSI GBP 8321.49 12614.27 -34.03 30,745.80 -72.93 South Africa NYSE FTSE/JSE General Mining Index XX:MET:JNB ZAR 575.5 7350.02 -24.14 12,193.60 -54.28 USA S&P S&P Metals & Mining Index SPSIMM:PSE USD 819.81 1252.3 -34.54 3,774.92 -78.28 AVERAGE -26.47 -67.31 11
Lack of Traditional Capital IPO volume and proceeds (2007-2014) for mining companies outlines the recent decline. 7 25 300 250 20 200 15 Proceeds $b Number of 150 IPOs 10 100 5 50 0 0 2007 2008 2009 2010 2011 2012 2013 2014 Total Proceeds Number of Deals • The mining and metals sector lagged a broader IPO recovery, as commodity price weakness put continued pressure on share prices and dampened risk appetite. 7 • There were a total of 17 IPO ’ s in the sector in 2014, in comparison to 26 in 2013. 7 12
Streaming Provides Finance “ Streaming is a solution that can provide much needed finance for the mining industry ” 13
Advantages of Streaming • Diversification – A streaming company typically has agreements with multiple miners, thus spreading and mitigating any potential risk. The larger existing streaming companies have dozens of deals and multiple streams of income. • Align Interests – Streaming is a method of financing which aligns the interest of the miner with the interests of the streaming company, enabling incremental value creation for both parties. • Upside – Since the deals are usually for a percentage of the mine ’ s lifetime production, the streaming company stands to benefit immensely if new zones are discovered and actual production comes in higher than originally forecast. This often occurs in the industry when drilling delineates new resources, increasing production and extending the life of the mine. • Limited Downside – While a miner may see profit margins squeezed as the cost of production rises, the streaming company has a contract for a percentage of the metal produced at a fixed pricing formula which doesn ’ t increase with increasing mining costs. The contracts contain a number of other provisions to protect the streaming company. • Favourable tax treatment – Streaming companies enjoy a favourable tax situation as long as the company is structured correctly and reinvests profits or pays them out as dividends. 14
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