Becoming Colombia’s Leading Independent Coal Producer
April 2012
TSXV: PAK
Disclaimer
Forward Looking Statement
This presentation contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the business, operations
and financial performance and condition of Pacific Coal, S.A. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect
to business plans and strategies of Pacific Coal; information with respect to the proposed subscription receipt financing of Pacific Coal; estimated production of the various projects
of Pacific Coal; the benefits of the acquisitions and the development potential of properties of Pacific Coal; the future price of coal; estimates regarding mineralization and
exploration results; the ability of Pacific Coal to achieve mining success consistent with management’s expectations; and expected levels of royalty rates, operating costs, and other
costs and expenses. Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject
to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forwardlooking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized.
Actual results will differ, and the difference may be material and adverse to the Corporation and its shareholders.
All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as
“anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “may”, “plan”, “predict”, “project”, “should”, “target”, “will”, or similar words suggesting
future outcomes or language suggesting an outlook. Forward looking statements are based on the opinions and estimates of management at the date the statements are made, as
well as a number of assumptions made by, and information currently available to, the Corporation concerning, among other things, Pacific Coal’s ability to successfully complete the
proposed subscription receipt financing; anticipated geological, operational and financial performance, business prospects, strategies, regulatory developments, future commodity
prices, future production levels of the Corporation’s assets, the ability to obtain financing on acceptable terms, the timely receipt of any required approvals and that there will be no
significant events occurring outside of Pacific Coal’s normal course of business. Although management considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements
include changes in market conditions, risks relating to international operations, fluctuating coal prices and currency exchange rates, changes in project parameters, the possibility of
project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of equipment or processes to operate as anticipated, and
acquisitions not being integrated successfully or such integration proving more difficult, time consuming or costly than expected. Although Pacific Coal has attempted to identify
important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or intended. Pacific Coal undertakes no obligation to update forward-looking statements if circumstances or
management’s estimates or opinions should change except as required by applicable securities laws.
This presentation uses the terms “measured”, “indicated”, and/or “inferred” mineral resources. United States investors are advised that while such terms are recognized by
Canadian regulations, the United States Securities and Exchange Commission does not recognize them. Unites States investors are cautioned not to assume that all or any part of
mineral resources will ever be converted into mineral reserves. Inferred mineral resources have a great amount of uncertainty as to their existence, and as to their economic and
legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of an inferred mineral
resource exists, or is economically or legally mineable.
1
Vision
Explore, expand and develop existing producing
assets to increase efficiencies, reserves and
production, while securing infrastructure capacity
(La Caypa, Cerro Largo, CI Jam/Port of
Barranquilla)
Seek opportunities to secure access to markets
and ensure commercial flexibility
Foster a corporate environment of responsible
citizenship
LEADING
INDEPENDENT
COLOMBIAN
COAL
PRODUCER
2
Strategy
• La Caypa – thermal coal
• Cerro Largo – thermal coal
• CI Jam – hard coking coal
• La Tigra – asphaltite
RAW MATERIAL
PRODUCTION
(UPSTREAM)
MANUFACTURING/
PROCESSING
(MIDSTREAM)
• 100% ownership and
control of La Caypa,
Cerro Largo and La Tigra
• Company owns 92% of
CI Jam
• Upgraded coke production
• Colloidal asphaltite in water (“CAW”)*
• Colloidal coal in water (“CCW”)*
• Pyrolysis
RETAIL/MARKETING
(DOWNSTREAM)
CAW/CCW plant
• 50% equity interest
• Carried interest for
50/50 JV
Pyrolysis plant
• 100% equity interest
• Marketing of colloidal products to:
• Power generation plants
• Heavy oil producing companies and refineries
• Marketing of thermal coal
• Marketing of coke
Vertical integration to secure market access in value-added product streams
*CAW and CCW are technologies being developed by Blue ACF, a company in which PAK has a 5% equity interest, with the right
to increase its investment to 20% pending successful trials. Pyrolysis is a proven procedure.
3
Capital Structure

Pacific Coal became a publicly listed company via RTO on March 14, 2011, making the Company the
only independent, public coal producer in Colombia

Fully leveraged to rising interest in Colombian coal

Strong sponsorship and institutional investor support

As at January 31, 2012, 11.2 million shares have been purchased for cancellation under the normal
course issuer bid
Pacific Coal (TSXV: PAK)
(1)
Shares outstanding:
322 million
Options (vested & exercisable)
35.8 million
Warrants outstanding with weighted avg. exercise price of $2.10(1)
75.1 million
Fully diluted:
437.2 million
Market cap (basic):
Cash (September 30, 2011)
Long-term debt (3) (September 30, 2011)
Enterprise value
$114.3 million (2)
$14.3 million
$32.0 million
$141.7 million
Expiry date March 14, 2016
on closing price of $0.355 on 3/20/2012
Includes finance leases
(2) Based
(3)
4
Pacific Coal
Fully Funded Capex 2011-2012
Exploration = $10 m
Pending* = $9 m
Development = $15 m
Pending* = $2.5 m
Acquisitions = $125 m
Pending* = $15 m
Infrastructure = $17 m
Pending* = $13 m
Equipment = $15 m
Pending* = $5 m
• Drilling at Cerro Largo
to update NI43-101
• Drilling, mapping and
geophysics at La Tigra
• Drilling in Catatumbo
• Drilling La Caypa for
underground mine
design
• South pit expansion at
La Caypa (Royalties)
• Paying Cerro Largo
contract to Masering
• Paying Barranquilla
Port outstanding debt
• Closing 86% Cerro
Largo
• Blue ACF investment
• Completion of Coking
Infrastructure
• Barranquilla Port setup
• Double body trailers
(Trucks were acquired
via leasing)
• Exploration drills
• Equipment for South
Pit operations
• Other equipment
* As at September 2011
5
Executive Management
Strong and Experienced Team
Luis Arturo Carvajales (Chief Executive Officer)

More than 20 years of experience in the mining industry, holding management positions in marketing, sales, logistics, and serving
as legal counsel

Most recently President / Legal Representative of Carbones Colombianos del Cerrejon S.A.
Miguel Velasquez (Chief Financial Officer)

Over 25 years experience as Finance & Administrative Manager at companies in Colombia and at Colombian branches of Canadian
companies
Peter Volk (General Counsel and Secretary)

Mr.Volk has acted as General Counsel and Secretary of PetroMagdalena Energy Corp., Pacific Rubiales Energy Corp., Gran
Colombia Gold Corp., and Bolivar Gold Corp.
Jose Ignacio Noguera (Vice President, Public Relations & Corporate Social Responsibility)

A lawyer with over 20 years experience in the resource industry, holding positions as legal counsel, public affairs, government
relations, and community relations. During the last 8 years, he was the Public and Government Affairs Manager of ExxonMobil
Investor Relations Advice and Support Provided by The Capital Lab Inc.


Belinda Labatte, Principal
Greg DiTomaso, Director Investor Relations and Special Projects
6
Asset Summary
Diverse Portfolio of High Quality Coal Assets
Well-positioned portfolio with diversified current and future production of steam coal, coke and asphaltite
Asset
Type
1
La Caypa
Open pit steam coal
mine with
underground potential
2
Cerro Largo
Open pit steam coal
mine
CI Jam
Underground coking
coal mine upgrading
to coke
3
Stage
Current
Production*
Producing
1.2 Mt1
(Coal)
Producing
298 Kt2
(Coal)
Puerto Brisa
Port of Santa Marta
Port Barranquilla 5
11
2
4
Medellin
Producing
(ramp-up)
7 kt
(Coke)
Bogota
3
Cali
4
La Tigra
Asphaltite
Exploration/
Development
Start early2013
5
Port Barranquilla
Port concession for
coke export
Development
-
Source: Management estimates
*Annualized rate
1 La Caypa produced 1,239,583 tonnes 2011
2 Cerro Largo produced 298,041 tonnes in 2011; Q1 production of 110,875 tonnes was prior to Pacific Coal acquisition of Cerro Largo
7
Thermal Coal Production Profile
Robust production growth from existing assets with additional greenfield and consolidation opportunities
Annual Production (millions of tonnes)
Total Production
Cerro Largo
3.4-3.6
La Caypa
2.7-2.9
2.6-2.9
1.5
1.2
2010A
2011A
2012E
Source: Management estimates
*Includes total production from Cerro Largo Q1/2011, before the acquisition closed
2013E
2014E
8
Coke Production Profile
 Operational adjustments
during the first year of
operations resulted in
reduced production
guidance for 2011
(7,000 t of coke)
 These adjustments also
allowed for infrastructure
and capacity to be built
up, resulting in longerterm production targets
being achieved sooner
Annual Production in tonnes
High value coke operation with long mine life and coal to coke conversion of ~70%
90,000120,000
90,000120,000
2013E
2014E
CI Jam
60,00072,000
7,000
2010A
2011A
2012E
Source: Management estimates
9
La Caypa Mine
Significant Thermal Coal Production
High quality steam coal production with attractive expansion and underground potential
Location:
• Guajira Department, Colombia
• Adjacent to Carbones del Cerrejón mine, largest coal mine in South
America
Resource estimate:
• 47.0 Mt of measured resource (1)
• 17.8 Mt of indicated resource (1)
Area:
• 300 hectares
Average BTU:
• 12,264
Average Sulphur:
• 0.69%
Operations:
• One open-pit mine currently operating
₋ South pit expansion in development with expected start-up in 2012
and potential production of additional 1.0 Mtpa
• One underground mine in exploration, expected development in 2013
(1)
(1)
2011 Production
• 1,239,583 t
Projected Costs (2):
• US$85/t
Avg Contract Price:
• US$102/t in long-term contracts for 100% of production to 2013
Infrastructure:
• Secured allocation at Santa Marta (250 km)
• Expected additional capacity at Puerto Brisa, early-2012, reducing
freight costs by 40%-50%
Current strip ratio:
• 6.59:1
(1)
LA CAYPA – COAL CHARACTERISTICS
(1)
Year Moisture % Ash % Sulphur % CV Btu/lb
2009
10.11
5.78
0.69
12,264
RESERVES & RESOURCES (1)
LA CAYPA - (Inclusive of Additional Resources)
Surface (Mt) Underground (Mt)
Measured
11.2
35.8
Indicated
17.8
(1) Source: Report titled “NI 43-101 Compliant Technical Report, La Caypa Mine, Department of Guajira, Colombia” prepared by SRK Consulting and dated November 1, 2010
(2) Includes transportation, port, and administrative costs
10
La Caypa Mine
South Pit Expansion to Extend Mine Life
Potential incremental production of 1.0 Mt per annum
 Extension of existing open pit to south of highwall with same premium coal characteristics
as the primary pit with a similar CV Btu/lb
 Straightforward integration into existing mining operations
 Expected production start-up in 2012 with all permits in hand
 South pit measured and indicated resources of 7.7 Mt(1)
 South pit development to be concurrent with existing mining operations
SECTOR +400
(1) Report titled “NI 43-101 Compliant Technical Report, La Caypa Mine, Department of Guajira, Colombia” prepared by SRK Consulting and dated November 1, 2010
11
La Caypa Mine
Underground Production to Drive Growth
Underground potential to drive resource expansion and continued growth in production(1)
 Mine planning underway based on 16 coal seams showing consistent thicknesses suitable for underground mining (average
thickness ranging from 2.3 meters to 6.8 meters)
 Measured and indicated resource of 53.6 Mt (1)
 Potential thermal coal production to increase 0.8 – 1.0 Mtpa expected to commence in 2013
 Existing pit provides underground access point with three contemplated levels to depth of 240 meters from pit bottom
 Studies underway to determine optimum mining method and design; potential to become the largest underground coal
operation in Colombia
EXISTING OPEN PIT
ELEVATION: 0
ELEVATION: -150
ELEVATION: -300
Level 1
Cradle
Level 1
Level 2
(1) Source: Report titled “NI 43-101 Compliant Technical Report, La Caypa Mine, Department of Guajira, Colombia” prepared by SRK Consulting and dated November 1, 2010 and management
projections
12
Cerro Largo – La Divisa
Acquisition of Significant Coal Production
Contains high volatile bituminous type B coal with high calorific values and low sulphur
Location:
•
•
Cesar Department, Colombia in the La Jagua de
Ibirico coalfield
Adjacent to licences owned by Drummond and
Vale. Glencore is currently operating an open-pit
mine on the adjacent La Jagua sector
Resource estimate:
•
11.6 Mt – 21.2 Mt inferred
Area:
•
488 hectares
Average BTU:
•
12,000
Average Sulphur:
•
0.78%
Operations:
•
One open-pit mine currently operating
Projected Costs (2):
•
US$80/t, expected to lower US$2/year with
improved efficiencies and strip ratio
2011 Production
•
298,041*
Infrastructure:
•
•
Secured allocation at Santa Marta (250 km)
Expected additional capacity at Puerto Brisa in
early-2012, reducing freight costs by 30%-40%
Current strip ratio:
•
•
20.64:1 (during ramp up)
Long-term mine plan has been implemented
(1)
(1)
(1)
(1) Source: Report titled “Independent Technical Report, Cerro Largo Mine” prepared by SRK Consulting and dated February 2011
(2) Includes transportation, port, and administrative costs
* Q1/2011 production of Cerro Largo was prior to Pacific Coal acquisition
13
Regional Infrastructure
Proximity to Infrastructure Supporting Growth
Significant port and road infrastructure in place to support existing regional coal production
Puerto Bolivar
 Secured 1.8 Mtpa of stockpiling and
shipping capacity at the Port of Santa
Marta until 2013
Port of Santa Marta Puerto Brisa
Barranquilla
Port
La Caypa
Barranquilla
Cartagena
Cartagena Port
Cerro Largo
Panama
Catatumbo
Venezuela
Colombia
La Tigra
CI Jam
 Production trucked 250 km by paved
highway to Santa Marta at a cost of
approximately US$20-$23 per tonne
from La Caypa and 280 km from Cerro
Largo at a cost of approximately
US$23-US$24
 Expected capacity at Puerto Brisa
provides alternative port location closer
to both La Caypa and Cerro Largo with
potential to reduce freight costs by 40%50% and by 30%-40%, respectively
 Puerto Brisa construction
expected to be completed by
Q1/2013, providing additional
35 Mt of specialized coal
shipping capacity
Legend
River Transport
Coal Mine
Coal Project
Road
Ports
14
CI Jam
Coking Coal and Upgraded Coke Production
Underground coking coal operation selling premium coke into high price environment
Location:
•
•
Samaca Municipality, in Department of Boyaca
3,000 small HCC producers in the area
Resource estimate:
•
2.8 Mt in situ
Area:
•
52 hectares
Average BTU:
•
13,800 with coking properties (1)
Average Sulphur:
•
0.92%
Operations:
•
•
Underground coking coal
Upgrading coking coal to coke
Projected Costs (2) :
•
US$210/t
2011 Production:
•
7,000 tonnes of coke
Avg Market Price:
•
US$280/t
Infrastructure:
•
Well maintained roads to truck coke to domestic markets and
to port terminals (800 km to Barranquilla)
Status:
•
•
•
Completed refurbishment of 160 beehive coking ovens
Completed refurbishment of coker infrastructure
Currently building additional 100 ovens to bring capacity to
120,000 tpa
(1)
(1)
(1) Source: Report titled “SRK Technical Report Written To Be Compliant With NI 43-101 On Contract 7241, Boyaca, Colombia” prepared by SRK Consulting and dated August 2010
(2) Includes transportation, port, and administrative costs
15
Port of Barranquilla
Investing in Long-Term Port Access for Coke
 Pacific Coal acquired a port concession situated on the Magdelena River near the Port of Barranquilla (approximately 5km from the
Caribbean Sea) to be used to export coke, specialized coals, and bulk commodity products. Excess capacity at the port can be
monetized by selling to other exporters
 Pacific Coal plans to tender for engineering, construction and procurement by Q3/2012, expecting to have an early start on coal loading
operations with a provisional set-up for Q3/2012
Main features of the final proposed scheme:
 Two portable shiploaders
 A pile supported concrete berth with 12 m water depth
 Portable Stacker
 Coal/Coke piles
BARRANQUILLA
CONCESSION
 Reclaim conveyor alongside the open stockpiles
 Office/Maintenance building
 FEL receiving hopper (rail mounted)
 Overall average loading capacity of
approximately 10,000 tonnes per day
BARRANQUILLA
CONCESSION
16
La Tigra’s Asphaltite
Profile
Asphaltites are species of bitumen, dark-colored, comparatively hard
and non-volatile solids, composed principally of hydrocarbons.
Gilsonite
As of today in the La Tigra area, there is evidence for the presence of
two different types of asphaltite: Grahamite and Gilsonite.
Management expects a significant resource at La Tigra to be confirmed
with a National Instrument 43-101 compliant report – physical
evidence on outcrops, oil seeps and 3 mines already in production in
the area lead to optimistic forecasts on the existence of important
asphaltite reserves.
Grahamite
Location of La Tigra:
•
80 km from Barrancabermeja
Area:
•
5,700 hectares
Operations:
•
Initial exploration drilling, mapping, trenching and geophysics commenced
June 2011 with the objective of a NI 43-101 compliant report by Q3/2012
Production start planned for Q1/2013
•
Infrastructure:
•
•
La Tigra outcrop
70 km from Bucaramanga with paved roads between Bucaramanga and
San Alberto
80 km from Barrancabermeja, the centre for petroleum refining and a port
on the Magdalena River
17
La Tigra’s Asphaltite Applications
Applications in Evaluation Phase
Proven Applications
Asphalt modifiers
Colloidal Asphaltite in Water (“CAW”)
•
•
•
•
•
Oil drilling and mud additive
Metal casings
Paving/roofing asphalts
Paint resins
Pyrolysis
•
•
•
•
•
•
Extensively used technology at the industrial level
Converts asphaltite to valuable liquid and gas products,
and pet coke
Pet coke is a by-product produced through pyrolysis
Prefeasibility study indicates excellent economics based on
lab tests conducted with Colombia grahamite and gilsonite
High margin application, potential for substantial volumes
Feasibility study in progress in order to select the specific
technology and to conduct pilot plant tests (100% PAK)
•
•
•
•
Crushed asphaltite, suspended in water forming a colloid,
can be used as fuel by power generators
PAK and Blue ACF are in the process of developing a pilot
plant test for CAW at Babcock & Wilcox facilities in Ohio,
USA
Trials on track at Babcock & Wilcox
Significant marketing opportunities as CAW can be sold as
a fuel oil substitute
Management foresees strong market demand for CAW in
Central America and the Caribbean
Colloidal Coal in Water (“CCW”)
•
Similar to CAW, but using coal instead of asphaltite
•
Blue ACF will conduct CCW trials at Babcock & Wilcox in
May 2012
PAK has investment option in the development
of the CAW and CCW plants (50%)
18
Pacific Coal
Health, Safety and Community
Health and Safety Mission: Achieve Health and Safety goals through stewardship, integrity, and empowerment
The Company seeks to continuously reduce the number of workplace and operational safety incidents, with the ultimate
goal of achieving the lowest accident frequency rates in the industry
• The Company strives for eco-friendly operations wherever possible, by forming strategic alliances with environmental
corporations
• The Company seeks to work with partners with high health and safety policies and standards
• The Company encourages its employees to participate actively in safety initiatives and prevention programs
• All of our employees take part in our community health programs as both volunteers and patients
• The Company maintains weekly updates of its safety performance indicators
Community Mission: Maximize shareholder value while fostering a corporate environment of responsible
citizenship and respecting the interests of our stakeholders and members of the communities in which we operate
• The Company aligns its initiatives with the needs and activities of local governments, to contribute to the nation’s progress
• The Company works closely with non-profit organizations to maximize its community efforts
• The Company ensures responsible operations by minimizing wherever possible its impact on the environment
19
Pacific Coal
Achievement Scorecard
Achieved
In Progress
Completion of amended NI 43-101 at La Caypa and Cerro Largo
O
Commencement of development of south pit expansion /
O
Commencement surface work for underground at La Caypa

Implementation of integrated mine plan at Cerro Largo
O
Transition from Port of Santa Marta to Puerto Brisa, reducing freight
costs by 30%-50%
O
Completion of refurbishment of 160 beehive coking ovens at CI Jam

O
Building additional 100 beehive ovens at CI Jam
Commencement of exploration at La Tigra

Completion of NI 43-101 on La Tigra
O
Development of Port of Barranquilla
O
CAW tests and trials
CCW tests and trials

O
20
Pacific Coal
Summary
Strategically located, high-quality projects in a world-class jurisdiction with significant growth potential
 High-grade material of which global supply is permanently depleting and thus carrying premiums
 High quality coal characteristics – high BTU, low moisture, low ash, low sulphur
 Access to international markets via ports – improving efficiencies and cost reductions
 Opportunities to develop projects to access growth markets such as coking coal and asphaltite
 Strong operating team with a proven track record for project advancement
21
APPENDIX
22
Colombia
A World-Class Coal District
LA GUAJIRA DEPARTMENT
Catatumbo
La Tigra
Cerrejon
(BHP/Xstrata/Anglo)
CI Jam
La Caypa
 Colombia is the world’s 10th largest producer (76
million tonnes in 2009) and 4th largest exporter of
coal
 Coal represented 25% of total export earnings for
Colombia in 2009
CESAR DEPARTMENT
El Descanso
(Drummond)
El Hatillo
La Francia
Calenturitas
(Glencore)
 Colombia’s estimated 2011 coal production is 85
million to 95 million tonnes
(Vale)
(Goldman Sachs)
Cerro Largo
 Colombia has one of the largest proven coal reserves
in the world, with over 7 billion tonnes of recoverable
reserves and 17 billion tonnes of potential reserves
La Jagua
(Glencore)
Pribbenow
(Drummond)
Source: Ingeominas Colombian Institute of Geology and Mining; Energy Information Administration; Reuters; Intierra
23
Colombia
A World-Class Coal District
Colombia is a significant coal mining region with 2012 production forecast to exceed 87 million tonnes*
Colombian Coal Production (Mt)
DMTU Thermal Coal Price (FOB Puerto Bolivar)
100
90
$250
80
70
Production in Mt
Colombian Coal
prices up over 60%
since January 2010
$200
60
50
$150
40
$100
30
20
$50
10
$0
2012E*
0
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
FOB Puerto Bolivar to Europe
Source: BP Statistical Review of World Energy and Bloomberg
*Economist Intelligence Unit
Jul-11
Jul-12
Jul-13
API#2 Price
24
Valuation Metrics
Opportunity For Re-evaluation
As at March 20, 2012
$140
$16
$14.62
$14
$120
$12
$100
EV / Tonne Sold
EV / Resource
$10
$8
$6
$92.04
$80
$60
$40
$4
$2
$114.38
$1.72
$20
$Pacific Coal
Peer*
Source: Management estimates, Fraser Mackenzie research, and Bloomberg
* Peers: Corsa Coal Corp., Forbes & Manhattan Coal Corp., Lipari Energy, and Xinergy Ltd.
** Production sales as of most recent quarter on an annualized basis
$Pacific Coal
Peer*
25
Becoming Colombia’s Leading Independent Coal Producer
April 2012
TSXV: PAK
26