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Investment opportunity with a miner and transporter of coking coal

“IB club training group” is mandated to offer an opportunity to acquire up to 41% of a Russia based company engaged in mining and transportation of coking coal (hereinafter referred to as “the Company”). The reason of sale is that the Company’s Shareholders are prepared to go ahead with the deal in order to streamline the Company’s operations, bring in new dedicated shareholders committed to moving the Company forward and enhance corporate governance and ownership structure
Investment rationale   This opportunity has a strong investment appeal due to the following factors: ► The Company is a dynamically growing corporation that permanently improves its production facilities in conformity with best international practices. At present, accordance to expert assessments, the Company is the indisputable leader of the Russian coal industry — the company is armed with advanced technologies reflecting global achievements in mechanization of mining, transportation and environmental safety procedures ► The Company has licenses to carry out mining activities exceeding the period of 20 years. ► The Company is believed to be No.1 by reserves-to-production ratio among five largest Russian coking coal producers. The Company’s reserves-to-production ratio amounts to about 55 years of production ► 8,4x EV/EBITDA 2013e, 31% upside potential ► Relatively low cash costs. The Company remains among the low-cost coking coal producers both in Russia and globally. ► Low leverage. The Company benefits from one of the lowest debt levels in the Russian metals and mining universe. ► The Company’s 2013 cash costs at about down 15% YoY if it delivers half of what it plans to produce ► The Company began exporting coal in 2Q12 and shipped 19% of total output to Asia: Korea, Japan, Taiwan and Vietnam. ► The Company is more likely to sign this winter new contracts in Asia and export 30-35% of output in 2013 (hence, raise output 31% in 2013 YoY) ► High quality of the Company’s reserves allows it to employ highly productive modern equipment and achieve high recovery rates. ► Upside issues: · rebound in coking coal prices; · ruble devaluation

Company profile The Company engaged in mining and transportation of coking coal. The Company’s coal production is 100% coking coal. The Company specializes in production of cooking coal and operates on the domestic market. At the same time the Company sells its production to coke and chemical plants in Ukraine and metallurgical enterprises in Eastern Europe. The Company operates through more than 10 subsidiaries located in Russian Federation. The Company is one of the largest and most efficient coking coal producers in Russia. Coal output peaked in 2007 but has since slowed because of the drop in demand. Currently, the company operates three underground mines and an open pit. The Company’s M&I coking coal resources exceed 2bnt. The Company through operates on the domestic market, as well as sells its production to coke and chemical plants in Ukraine and metallurgical enterprises in Eastern Europe. The Company operates through 11 subsidiaries located in the Russian Federation. The company currently employs 7,863  
Production facilities and infrastructure Production facilities consist of four mines in operation, a preparation plant, companies engaged in infrastructure development and transportation, a trading company and a managing company. During the latest conference call the company guided for 7mn tonnes of raw coking coal output in 2012 and 11,4mnt in 2013 The Company to reach 13-15mn tonnes pa production target during the next three years, depending on market conditions Two enrichment complexes were purchased and installed in 1998-2001. New equipment was purchased along with enrichment complexes. Low-producing and unsafe coal-plough machines were replaced by up-to-date models. Due to equipment upgrades and reorganization undertaken in 2004, daily production increased 3.5-4.0 times to compare to 1994 levels; the time required for equipment re-mounting reduced significantly, and numerous other indicators were improved. The Company have introduced in 1H2012 two power transmitting lines and three sub lines -- and three sub-stations. So it has enough energy for all its producing facilities so it enabled the Company to bring up the quality of RB Power and strengthen the reliability of the equipment it has  
Clients The Company is one of the leading suppliers to the largest Russian smelters, including NLMK (Novolipetsk Steel), MMK (Magnitogorsk Iron & Steel Works) and NTMK (Nizhniy Tagil Iron & Steel Works). In Mid 2011 the Company extended long-term contracts most of which with expiration up to 2014-2016 The Company coal is well-known to customers in the Asia-Pacific region and Eastern Europe · The Company commenced sales to Ukraine in October 2011 and resumed sales to Asia in Mid – April 2012 · In the mid-year export share amounted to more than a quarter of all sales · Current plans envision increasing sales outside of Russia to approximately 30–35% of the Company’s total sales in the future · In 2nd and 3rd quarter the Company promotes its brand through direct conversation and coking coal testing and shipping to Asian countries such as Taiwan, Korea, Vietnam, Japan, China The Company derives almost all of its revenues in its home market of Russia: in 2011 it was 99,2% of total sales. Sales in Russia increased 29,1%.
Development strategy   The Company’s strategic goal is to expand total production to 17mn tonnes of raw coal pa The Company’s maintenance and development capex was about 32,43% of revenue during 2011-2012 Russian Federation was adopted the program on the development of the coal industry up to 2030. So the Company adjusted its program phasing in line with this governmental program and it was adopted through relevant committee  
Competitors   The Company looks at what its competitors do, especially in coking coals. They are its direct competitors in terms of grades they sell. Some of these companies are public. Some of them use regional statistics to report. The Company’s costs per tonne and fuel direct proportion between higher volumes of production and the costs. The best of its competitors have 55, 57 and worst about 100. So the Company’s growth enables its to compete within Russia.

 



Disclaimer

The information contained in this document is intended to provide prospective investors (“the Recipient”) with a preliminary understanding of the investment opportunity.

The sole purpose of this teaser is to assist recipients in deciding whether they wish to proceed with an investigation of a possible Transaction. This teaser is not intended to form the basis of any investment decision or any decision to purchase any equity interests (or other interests), directly or indirectly, in the Projects.

IB club training group does not make any representation or warranty, either expresses as to the accuracy, completeness, reasonableness or reliability of the information contained in this teaser. IB club training group expressly disclaims any and all liability for any direct or consequential losses relating or resulting from the use of this teaser.

This teaser does not purport to be all-inclusive or to contain all of the information that the Potential Investor may require. No investment, divestment or other financial decisions or actions should be based on the information in this teaser.

This teaser and the information contained herein are highly confidential and have been prepared solely for the informational use of the Potential Investor. Distribution of this teaser to any person other than the Potential Investor and those persons retained to advise the Potential Investor, who agree to maintain the confidentiality of this material, is unauthorized. This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of IB club training group. By accepting the delivery of this presentation, you agree to the foregoing.

All Rights Reserved.

Contacts

For more information regarding the investment opportunity please contact:


Dmitry Kuzmenkov

+7(916)446 67 69


Date: 2015-12-24; view: 743


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