White Energy Company Limited White Energy Company Limited (ASX : WEC) (ASX : WEC) Managing Director’s Presentation Annual General Meeting 30 November 2007
Whatever your views on coal, it’s clearly here to stay but we need to find a balance between our energy ambitions and environmental concerns. White Energy’s coal upgrading technology helps address this important global issue. Page 2
2007 Highlights • BHP Billiton appointed as global marketing agent in exchange for US$35M funding package. All relevant documentation in relation to this transaction has now been finalised. • Joint venture with Bayan Resources finalised and construction of first Indonesian plant commenced. • Second Indonesian joint venture announced with Adaro Group and Itochu Corporation. • Final stage of China feasibility with Datang International Power Company Ltd. • During FY07 and post balance date the Company has raised a significant amount of capital (approximately A$100M) to fund its development program. • American Depository Receipt program initiated. • AusIndustry grant secured (A$4.35M). Page 3
Financial Commentary • Net loss for year ended 30 June 2007 was $10.6M, which includes: – Depreciation / amortisation charges $3.3M (mainly amortisation licence fee $3.1M). – Unrealised foreign exchange losses $0.6M. – Employee share based payment expense $2.1M. • Increase in net asset position from $61.4m to $77.5M. • Cash on hand at 30 June 2007 $15.1M. • Significant investment in core infrastructure (mainly critical engineering and design works) were necessary in FY2007 to create the foundation from which the Company can rollout its process on a global basis. • Post balance date, WEC has increased its access to funds by A$85M through: – Raising of AU$45M in a convertible note issue; and – BHP Billiton US$35M facility. Page 4
Financial Snapshot (30 June 2007) Consolidated Balance Sheet (A$000’s) FY2007 FY2006 Current Assets 18,411 6,700 Non Current Assets 67,482 59,126 Total Assets 85,892 65,826 Total Liabilities 8,423 4,411 Net Assets 77,469 61,415 Total Equity 77,469 61,415 Consolidated Statement of Cash Flows (A$000’s) FY2007 FY2006 Net Cash (outflows) from Operating Activities (1,301) (769) Net Cash (outflows) from Investing Activities (12,700) (1,518) Net Cash (outflows) from Financing Activities 22,509 5,902 Net Increase (decrease) in cash & equivalents 8,508 3,615 Closing Cash & Cash Equivalents 15,072 6,564 Page 5
Dwindling reserves of oil and natural gas suggest that their contribution to world energy use will show modest growth at best. New demand will be met partly by carbon-free energy sources, but mostly by coal.
Bayan Resources Joint Venture Progress • Substantial effort has been devoted to delivering the Bayan Project. • The Bayan Project is a JV owned 51% by WEC and 49% by Bayan. • The JV is building its first 1MTPA plant with production capacity growing to 5MTPA. • Bayan has agreed to acquire up to 1.5 MTPA of upgraded coal from the JV over the first five years of the plant’s operation representing over US$200M in guaranteed revenue for the JV. • WEC entered into an alliance with Thiess Indonesia to build, operate and maintain the Tabang plant. This extends to a broader role for Thiess to build subsequent plants as WEC's Indonesian EPCM partner. The agreement with Thiess is strategically important however their involvement obviously will increase overall project costs. In our view, involving Thiess is critical in that they provide: – greater certainty that the project is delivered on time and on budget. – a mechanism for better protecting our core intellectual property. • The JV continues to make steady progress on all major activities relating to the construction of the plant: – Site work activities completed to date include the site camp facilities, earthworks of production plant and power station, haul roads, lay down areas and drainage works. Page 7
Bayan Resources Joint Venture Progress Bayan JV : Tabang Project Site Kalimantan (October 2007) Page 8
Bayan Resources Joint Venture Progress – Detailed engineering and design of the production plant has been completed and documents issued for construction. This has included enhancements to the existing plant design which improve efficiency, scalability and economies but have resulted in a slight increase in overall project costs. – All of the long lead items for the production plant have been ordered and these items will be received on site progressively from now through to early 2008 in accordance with the procurement schedule. – Global prices for raw material inputs (most notably steel) have continued to escalate which has impacted costs. Now that all design elements are fixed (including all localisation issues) WEC is in the process of locking in the significant material purchase arrangements to minimise any future escalation issues. – The process control software design is being undertaken with testing of software due to be completed by end of the year. – The power station (8mW) for the Tabang plant is being delivered under a turnkey contract. The contractor is on site and critical foundation work almost completed. Installation of the power station is currently on schedule which is critical to ensuring that the plant is commissioned in accordance with the project plan. – The JV has ordered and will commission more briquetters than is required for 1MTPA output. This initially assists with redundancy issues but has the benefit of facilitating more rapid scale up of the plant. Page 9
“Coal needs to be clean to be viable. Technologies already exist, the issue is their application.” Source: World Energy Council, 2007
Research and Technology Enhancements White Energy’s strategy is to: Act as an enabling technology partner today: • Coal upgraded by White Coal Technology can be used to supply each of the stages of the coal technology lifecycle offering significant environmental benefits. • WEC will continue to improve our existing process and invest in developing our technology with a particular emphasis on applications to coking coal Invest in coal technologies for the future: • As the global market for coal and related end products grows, White Energy will continue to develop and acquire synergistic technologies in both coal upgrading technology and emissions reductions. • Developing a unique suite of coal upgrading and emissions reductions technologies will enable White Energy to partner with a growing number of players in the coal value chain and enable it to be a key player in a zero emissions world. Page 11
WEC - A Facilitator to Zero Emissions Efficiency Improvements Advanced Technologies White Coal + + + Zero Emissions Existing Power Plants New Power Plants Coal upgraded by the White Conventional sub-critical plants can Integrated gasification Carbon capture and storage can reduce Coal technology can be used to achieve thermal efficiencies of up to combined cycle and emissions of C0 2 to near zero. Advanced supply each of the stages of the 40%. Improving less efficient plants pressurized fluidized bed technologies gasify coal by heating it to coal technology lifecycle offering will reduce CO 2 emissions by up to combustion plants operating in temperatures so high that it breaks down immediate CO 2 emission 22%. Improved efficiency sub-critical the USA, Japan, and Europe into a variety of petroleum products. CO 2 reductions of up to 10%. plants operate throughout the world. achieve very high efficiencies is separated out and then sequestered by Supercritical and ultra supercritical and low CO 2 emissions. directing it into underground reservoirs plants can achieve efficiencies of up Integrated gasification fuel where it will remain buried forever. When to 45% and operate in Japan, USA, cells, under development, can combined with advanced technologies, Europe, Russia, China, and achieve even higher carbon capture and storage will facilitate Australia. efficiencies. the hydrogen fuel economy. Source: Adapted from World Coal Institute (2003) Page 12
Strategy for the Year Ahead - Asia Asian Coal Outlook Operations (build earnings and cash flow): • Global thermal coal import demand (seaborne plus – Bayan Resources (Indonesia) : commission land-borne) is forecast to grow by 116Mt by 2015. the 1MTPA plant at the Tabang coal mine in • Demand for thermal coal in Asia will grow by 77Mt accounting for 66% of total growth. Indonesia. • 41Mt or 55% of thermal coal demand growth in Asia is – Adaro Group / Itochu Corporation in India and China. (Indonesia) : complete all pre production work • China predicts energy sector growth of 15% p.a. with majority being coal based. and commence construction of the 1MTPA plant at one of Adaro’s mines in East Kalimantan. – Datang International Power (China) : conclude financial feasibility, agree holding structure issues and conclude JV to build ten 1MTPA White Coal technology plants at Datang’s sub-bituminous coal mine in Inner Mongolia, China. Initial Targets = Indonesia & China Page 13
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