Investor Presentation

A GLOBAL LEADER
IN MINERAL DRILLING SERVICES
TSX: FAR
TABLE OF CONTENTS – Slide #
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
Forward Looking Statements
Highlights
Foraco Market Profile (as of March 1, 2016)
Tracking Stock Performance (as of March 1, 2016)
Key Takeaway – Point 1 - Global Mineral & Water Driller
Strong & Experienced Management Team
Global Reach
Skilled People Based Business
Versatile and Modern Drill Fleet
Delivering Drilling Solutions (Stages of the Mine Life Cycle)
Competitive Landscape (Global Mineral Rig Counts)
Consistent Strategy (Focus on Leveraging our Position)
Key Takeaway – Point 2 - Diversified by Commodity & Geography
Diversified Commodity Exposure (Revenue by Commodity Full Year 2015)
Expanding Geographic Coverage (Revenue by Region Full Year 2015)
Leveraging Strong Customer Relationships (Revenue by Customer Full Year 2015)
Key Takeaway – Point 3 - Financial Data
Selected Financials (Income Statement Actuals (2015, 2014, 2013, 2012, 2011)
Selected Financials (Balance Sheet 2015, 2014, 2013, 2012, 2011)
A Target Acquisition Strategy (2007 – Current)
Key Takeaway – Point 4 - Adapting to a Changing Market
Mineral Drilling Services Macro Environment
Adapting to a Changing Market
Compelling Investment Proposition
Contact Information
Analyst Coverage
TSX: FAR
2
FORWARD LOOKING STATEMENTS
Certain statements herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information
within the meaning of applicable securities laws. Such forward-looking statements or information include, but are not limited to, statements or
information with respect to: the business and development of the Company; the Company’s future business and strategies; and requirements for
additional capital and future financing. Forward-looking statements or information also includes information contained in pro forma financial
statements.
Often, but not always, forward-looking statements or information can be identified by the use of words such as “plans”, “expects” or “does not
expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes” or variations of
such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
With respect to forward-looking statements and information contained herein, we have made numerous assumptions including among other things,
the assumptions made in connection with the preparation of the pro forma financial statements. Although our management believes that the
assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that a forwardlooking statement or information referenced herein will prove to be accurate. Forward-looking statements and information by their nature are based
on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or
achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statement or information.
Readers should also refer to the Company’s Annual Information Form for the year ended December 31, 2014 and the Company’s most recent
Management Discussion and Analysis and the risk factors discussed in such documents for additional information on risks and uncertainties relating to
forward-looking statements and information. Although we have attempted to identify factors that would cause actual actions, events or results to
differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or
results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of the Company. Accordingly, readers should
not place undue reliance on forward-looking statements or information. The Company undertakes no obligation to reissue or update any forwardlooking statements or information as a result of new information or events after the date hereof except as may be required by law. All forwardlooking statements and information contained in this presentation are qualified by this cautionary statement.
TSX: FAR
3
HIGHLIGHTS
 World’s 3rd Largest Mineral Driller – 302 rigs
 Comprehensive & Innovative Service Offering
 World Class Customer Base & Global Footprint
 Diversified Commodity & Geographic Exposure
 Strong & Experienced Management Team
 Proven Ability to Reshape the Company for the Downturn
TSX: FAR
4
FORACO MARKET PROFILE
Stock Symbol:
Shares Issued and Outstanding:
Share Price (as of March 1, 2016):
Market Capitalization:
2014 Dividend:
2013 Dividend:
2012 Dividend:
TSX: FAR
90.0 million
C$0.30
C$26.5 million
Nil
Nil
C$0.055 per share
Major Shareholder:
JPC-DS1
1
42.0% basic
Shares of JPC-DS are held by Financière Marville SARL, Financière Berlaimont SARL, Financière Tornaco SARL
TSX: FAR
5
TRACKING STOCK PERFORMANCE
1 Year
5 Years
As of March 1, 2016
TSX: FAR
6
KEY TAKEWAY – Point 1
Global Mineral &
Water Driller
TSX: FAR
7
INTRODUCTIONS
Daniel Simoncini
Chairman and Co-CEO
Jean-Pierre Charmensat
Co-CEO and CFO
Timothy Bremner
SVP North America
Ibrahim Baderi
VP Africa
Thierry Merle
VP Europe & Middle East
• Director & CEO since incorporation
• Over 30 years of industry experience
• Based in Singapore
• Director & Executive Officer since incorporation
• Over 35 years of management experience
• Based in London
Philippe Violle
SVP Engineering
Andrey Popov
VP CIS
Peter Jacobs
SVP Asia Pacific
Olivier Demesy
VP Brazil
Fabien Sevestre
Deputy CFO
TSX:
TSX:FAR
FAR
8
GLOBAL REACH
Canada
United States
Brazil
Mexico
Argentina
Chile
Peru
England
France
Turkey
Russia
Burkina Faso
Chad
Republic of Congo
Ivory Coast
Ghana
Guinea
Mali
Niger
Kazakhstan
Australia
New Caledonia
Singapore
23 countries
TSX:
TSX:FAR
FAR
9
SKILLED PEOPLE BASED BUSINESS
• 1,500+ experienced employees located around the globe
TSX: FAR
10
VERSATILE AND MODERN DRILL FLEET
Global Drill Rig Fleet
302
Drill Rigs
62 Rotary
212 Diamond
28 Combination
TSX: FAR
11
DELIVERING DRILLING SOLUTIONS
At Every Stage of the Mine Life Cycle
Exploration
Drilling Activity
Geotechnical
Metallurgical
Sampling
Water
TSX: FAR
12
COMPETITIVE LANDSCAPE
Global Mineral Rig Counts
1200
1000
914
800
696
600
226
220
200
97
82
60
Swick
Mining
234
Ausdrill
302
Capital
Drilling
400
39
Geodrill
Layne
Christensen
Orbit Garant
Energold
Foraco
Major
Drilling
Boart
Longyear
0
•
Highly fragmented market with a small group of globally active companies.
•
Foraco has grown to become the 3rd largest global driller with approximately 5% share of the world’s
mineral drilling fleet.
•
There remains abundant room for consolidation and future growth. There is a growing number of
contractors going under administration or liquidation.
Source: CLSA Reports and Company Reports
TSX:
TSX:FAR
FAR
13
STRATEGY FOR THE UPTURN
Focus on Leveraging existing Position
1 Grow directional drilling
2
Expand underground
business line
3 Continue to capitalize
on African opportunities
4 Develop niche markets in Asia
TSX: FAR
14
KEY TAKEAWAY – Point 2
Diversified by
Commodity & Geography
TSX: FAR
15
DIVERSIFIED COMMODITY EXPOSURE
Revenue By Commodity Full Year 2015
• Broad spread of
commodity exposure
• No reliance on any
one particular
resource
TSX:
TSX:FAR
FAR
16
GLOBAL COVERAGE
Revenue By Region Full Year 2015
• Presence in all major
mining markets
TSX:
TSX:FAR
FAR
17
STRONG CUSTOMER RELATIONSHIPS
Revenue By Customer Full Year 2015
Main Customers
13%
87%
Majors & Multinational Institutions
Juniors
TSX: FAR
18
KEY TAKEAWAYS – Point 3
Financial Data
TSX: FAR
19
SELECTED FINANCIALS
Includes amortization and depreciation expenses
² Net Cash generated from operations less Capex
Source: Company Reports.
1
TSX: FAR
20
SELECTED FINANCIALS
Source: Company Reports.
TSX: FAR
21
A TARGETED ACQUISITION STRATEGY TO REACH A GLOBAL SCALE
2008
2007
2009
2010
2012
2011
January ‘07:
Connors Drilling
September ‘08:
North West
Sequoia
April ‘09:
Mosslake
Drilling Services
April ‘10:
Eastern Drilling
Company
April ‘10:
Adviser Drilling
April ‘12:
Servitec
November ‘12:
Geography
Added
North America
North America
Australia
Russia
Lat Am
Brazil
Australia
Rigs
Acquired
19
3
8
90
15
Acquisition
History
Rigs end of
the year
80
108
50
5
115
John Nitschke
Drilling
192
119
303
% of Worldwide Mineral Drilling Market Foraco Operations Touch
73%
76%
56%
36%
2007
43%
2008
2009
2010
Current
TSX: FAR
22
KEY TAKEAWAY – Point 4
Adapting to a
Changing Market
TSX: FAR
23
MINERAL DRILLING SERVICES MACRO ENVIRONMENT
•
Metals pricing is the key driver to mineral
drilling. Prices entered a bear market in
the second half of 2012 and have
continued to deteriorate since then.
•
Majors have reviewed their cost
structures and significantly decreased
their CAPEX, including exploration.
•
Market sentiment towards mining in
general, and juniors in particular, is still
negative; few explorers can raise capital
on the market today.
•
Worldwide Mineral Exploration Spending1
FAR Activity by Mine Stage 2015:
More exposed to Production
Drilling market is in the low part of the
cycle. However, producers will need to
replace depleting reserves through
exploration activity.
1Source:
MEG and CIBC Research estimate
Exploration
Feasibility Stage
Life of Mine Extension
Water
TSX: FAR
24
ADAPTING TO A CHANGING MARKET
Macro
Environment
Pressures
Actions towards a leaner, more efficient Organization
ready for the next phase of Growth
Rigs Moved to more Active Regions
Decrease in
Activity
Reduced Total Headcount from 4,400 (2012 peak) to 1,500 today
Downward
Pricing
Pressure
Reduced
Visibility
Reduced Supplier Costs and Optimize Performance
SG&A Costs Reduced by 30% YoY
Continuous CAPEX & Working Capital Scrutiny
TSX:
TSX:FAR
FAR
25
COMPELLING INVESTMENT PROPOSITION
• World’s 3rd Largest Global Mineral Driller.
• Reliable and innovative, with a safety and customer first culture.
• Solid management team, with a world-class customer base who, on
average, rated FAR services at 82.4/100 in a 2014 customer survey.
• Increased Financial Resilience:
Free Cash Flow Positive for the last 15 years
• Well positioned for next phase of growth.
TSX: FAR
26
FOR MORE INFORMATION PLEASE CONTACT
Brenda Patterson-Mack
[email protected]
T: + 1.877.795.6363 | M: + 1.705.825.0169
www.foraco.com
TSX: FAR
TSX: FAR
27
ANALYST COVERAGE
Broker
Analyst
Contact
CIBC World Markets
Kevin Chiew
1.416.594.7457
Cormark Securities
Maggie MacDougall
1.416.943.6733
Ryan Hanley
1.416.860.8837
Mackie Research Capital
TSX: FAR
28