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Increasing iron ore royalties supporting Mardie

BCI Minerals 16 April 2019 Update
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BCI Minerals

Increasing iron ore royalties supporting Mardie

Q319 quarterly
activities report

Metals & mining

16 April 2019

Price

A$0.17

Market cap

A$66m

A$1.4000/US$

Net cash (A$m) at 31 March 2019

35.4

Shares in issue

397.6m

Free float

63%

Code

BCI

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.3

14.8

10.7

Rel (local)

2.0

6.2

3.3

52-week high/low

A$0.2

A$0.1

Business description

BCI Minerals has two major assets in Western Australia, including a 100% interest in the Mardie salt and potash project and a royalty-type interest in the Iron Valley iron ore mine operated by Mineral Resources. It also has exploration tenements in iron ore and other minerals.

Next events

Mardie Port PFS optimisation

May 2019

Q419 activity report

July 2019

Mardie DFS

Q4 CY19

Mardie investment decision

Q1 CY20

Analyst

Charles Gibson

+44 (0)20 3077 5724

BCI Minerals is a research client of Edison Investment Research Limited

BCI Minerals reported a c 33.3% increase in royalty EBITDA during Q3 from operations at Iron Valley under the influence of higher iron ore prices in the aftermath of Vale’s Feijao tailings dam disaster in January and the supply disruptions to exports from north-western Australia occasioned by a trio of cyclones in the region. Notwithstanding the disruptions, shipments from Iron Valley were steady at 1.8Mt (cf Edison’s prior estimate of 7.5Mt for FY19, or 1.875Mt per quarter) – albeit comprising a higher proportion of lower-value ‘fines’ product as the operator sought to draw down existing fines stockpiles. We have updated our forecasts for FY19 to reflect these changes. More significantly however, BCI’s share price remains at a >50% discount to our ‘base case’ valuation of 34.05c/share (see below) at a time when the DFS target parameters are becoming increasingly de-risked.

Year end

Revenue (A$m)

PBT*
(A$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

06/17

64.3

6.0

1.9

0.0

8.9

N/A

06/18

33.0

(16.9)

(4.3)

0.0

N/A

N/A

06/19e

59.8

(7.9)

(1.6)

0.0

N/A

N/A

06/20e

57.6

(3.6)

(0.5)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Mardie DFS advanced

At the same time that it has been benefiting from strength in the iron ore market, BCI has been advancing its Mardie salt and SOP project. So far in 2019, it has made three engineering appointments, being GR Engineering as lead DFS engineer and, recently, Australia’s WorleyParsons and Switzerland’s Salt Partners as specialist pond and plant design engineers. Having completed a PFS in 2018, BCI thus remains on track to complete a definitive feasibility study (DFS) later this year, ahead of a final investment decision on the project in early calendar 2020.

Approvals process being de-risked

A number of recent pronouncements suggest Western Australian state government support for the Mardie project. In particular, the minister for ports has provided ‘in principle’ approval for a port facility at Mardie, which contributes to de-risking the approvals process as well potentially giving BCI access to the improved economics of an expanded operation with a more optimal logistics solution, which we estimate could add 9.62 Australian cents to our ‘base case’ valuation (see below).

Valuation: 34.05c, potentially rising to 43.67c

In the wake of its quarterly activities report, we value the stream of dividends payable to BCI shareholders from Iron Valley and the development of Mardie at 31.62c (cf 30.66c previously). To this should be added a further 2.43c for its Buckland assets and potentially a further 9.62c as the (increasingly de-risked) expanded Mardie port development option becomes more likely, to take the total to 43.67c. Further upside then exists if iron ore prices remain at elevated levels beyond June.

Q3 results review

BCI reported A$2.8m in EBITDA during Q3 from operations at Iron Valley (including a positive prior quarter adjustment of A$0.6m), influenced by:

Benchmark prices for 58% iron ore, which we estimate were 35.5% higher than during the previous quarter and 42.0% higher than during H119, as a result of the supply squeeze apparent in the market after Vale’s Feijao tailings dam disaster and the suspension of selected iron ore mining operations in Brazil and subsequent disruptions to Australian exports out of Port Hedland, in particular, as a result of Cyclone Veronica.

In part, the effect of the stronger pricing environment in Q3 will have been mitigated by the decision of Iron Valley’s operator, Mineral Resources (MIN), to increase the percentage of fines shipped during the quarter from a typical level of c 50% to 65% to draw down existing fines stockpiles. Note that Iron Valley’s lump product typically commands a US$9.00/t price premium over its fines product.

Notwithstanding Cyclone Veronica, MIN reported that it shipped 1.8m wet metric tonnes during the quarter (cf 3.7m wet metric tonnes during H1) putting it on track to ship 7.38m wet metric tonnes during the year (Edison updated estimate) compared with our prior estimate of 7.5m wet metric tonnes.

The prices of both standard grade 62% iron ore and 58% lower grade ore have continued to exhibit material strength since late January and into Q419, while the discount of the latter to the former has narrowed significantly (as predicted in our Outlook note, see BCI Minerals: Salt plus potash plus iron equals value, published on 7 February 2019):

Exhibit 1: 62% iron ore price (US$/t) vs 58% iron ore price, July 2014-present

Exhibit 2: Discount of 58% iron ore price vs 62% iron ore price, July 2014-present (%)

Source: Refinitiv, Edison Investment Research

Source: Refinitiv, Edison Investment Research

Exhibit 1: 62% iron ore price (US$/t) vs 58% iron ore price, July 2014-present

Source: Refinitiv, Edison Investment Research

Exhibit 2: Discount of 58% iron ore price vs 62% iron ore price, July 2014-present (%)

Source: Refinitiv, Edison Investment Research

While Q319 prices were materially higher for Iron Valley than those experienced in H119, since the upward momentum only began in late January, they nevertheless did not reflect the full extent of the actual movement in the spot prices over the period. For example, whereas we estimate that the average price for benchmark 58% iron ore was US$60/t in Q319 (vs US$42/t in H119), the spot price had actually reached US$79/t by early April. Similarly, whereas we estimate that the average price for benchmark 62% iron ore was US$83/t in Q319 (vs US$69/t in H119), the spot price had actually reached US$96/t by early April. In conjunction with its interim results (announced on 22 February) and the report of its third quarter performance, the assumption that iron ore prices will remain at elevated levels for the remainder of the quarter (and that the discount of 58% iron ore vs 62% iron ore will remain narrow) has caused us to revise our FY19 forecasts for BCI as follows:

Exhibit 3: Revised Edison estimates of BCI’s FY19 income statement

Year end June (A$000s)

H118

H218

H119

H219e

FY19e

(current)

FY19e

(previous)

Revenue from continuing operations

Sale of goods

17,192

15,778

20,222

40,084

60,306

52,529

Other revenue

366

(307)

(457)

(457)

Total revenue from continuing operations

17,558

15,471

19,765

40,084

59,849

52,529

Forex gain/(loss)

0

0

Cost of sales (estimate)

(14,146)

(12,972)

(16,254)

(33,543)

(49,797)

(43,104)

Depreciation and amortisation (estimate)

(1,459)

(1,459)

(1,459)

(1,459)

(2,917)

(2,917)

Selling and marketing

0

0

0

0

0

0

Administration expenses

(3,698)

(3,340)

(2,409)

(2,409)

(4,818)

(2,000)

Exploration and evaluation expenditure

(4,310)

(8,977)

(3,374)

(6,924)

(10,298)

(10,298)

Impairment of mine property and other assets

0

0

17,818

17,818

17,000

Loss before finance cost and income tax

(6,054)

(11,276)

14,088

(4,251)

9,837

11,210

Finance income

0

420

0

Finance costs

(27)

27

0

Net finance income

(27)

447

0

98

98

196

Loss before income tax

(6,081)

(10,829)

14,088

(4,153)

9,935

11,406

Income tax/(credit)

0

0

(1,510)

0

(1,510)

0

Marginal tax rate (%)

0.0

0.0

(10.7)

0.0

(15.2)

0.0

Profit after income tax from continuing operations

(6,081)

(10,829)

15,598

(4,153)

11,445

11,406

Weighted average number of ordinary shares (000s)

394,597.863

394,597.863

397,608.910

396,063.455

396,836.183

396,063.455

Derivatives (000s)

19,752.271

19,752.271

19,752.271

Fully diluted weighted average number of ordinary shares (000s)

394,597.863

394,597.863

397,608.910

415,815.726

416,588.454

415,815.726

EPS (cents)

(1.54)

(2.74)

3.92

(1.05)

2.88

2.88

Fully diluted EPS (cents)

(1.54)

(2.74)

3.92

(1.00)

2.75

2.74

Source: Edison Investment Research, BCI Minerals. Company reported basis.

Mardie salt and potash project update

In addition to the operating and financial performance of Iron Valley during the quarter, BCI has also provided an update on developments at its Mardie salt and potash project.

Engineering appointments

So far, during 2019, BCI has made three material engineering appointments. The one remaining, material design contract outstanding is the Mardie port design and engineering contract, which is expected to be awarded next month, following recent receipt of Western Australian (WA) state government support for a new port facility there.

GR Engineering

On 22 March, BCI appointed GR Engineering as lead DFS engineer, responsible for the co-ordination and integration of the key process and engineering design packages and the preparation of detailed capex and opex estimates.

GR Engineering is a reputable Perth-based engineering group with significant experience in study management, engineering design and the construction of resource projects in Western Australia and globally, both as an EPCM and an EPC contractor.

It will also design and supervise the construction of pre-FID (final investment decision) site works and supporting infrastructure throughout the remainder of 2019.

WorleyParsons

As per its quarterly activities report, BCI has also appointed WorleyParsons to complete the process and engineering design of the evaporation and crystallisation ponds as well as the sulphate of potash (SOP) plant.

WorleyParsons is a global engineering services consultant providing engineering, procurement and construction management services in a range of industries. More specifically, it has more than 20 years’ experience of engineering in the fertiliser industry, including completing design and engineering engagements for brine-based SOP projects globally, which has allowed it to assemble a Potash Centre of Excellence in Saskatoon, Canada.

Salt Partners

Finally, Salt Partners has been appointed to complete the process and basic engineering design of the salt plant at Mardie. BCI’s engagement of Salt Partners continues an existing relationship between the two. Salt Partners was responsible for the salt plant designs used in the Mardie pre-feasibility study, although the detailed engineering of this project component for the DFS will be completed by the Mardie DFS lead engineer, GR Engineering.

Salt Partners is a firm of engineering contractors based in Switzerland. It has decades of experience in salt production, processing and hypersaline biotechnology. Salt Partners has established a proprietary salt purification process – Hydrosal – which produces high-purity salt with low product losses, which has been adopted by numerous plants around the world.

Mardie DFS site activities

Construction of a small-scale evaporation trial pond is currently underway at site. The trial will comprise pan evaporators plus a 1:40,000 scale version of the entire project layout, including the eight evaporation ponds and one series of the primary salt crystallisers and SOP crystallisers. The trial is being conducted on a small, raised ‘island’ off the Mardie mudflats in order to protect it from the potential effects of preternatural weather. As a result, the ponds and crystallisers will be lined with plastic in order to simulate the low-permeability conditions of the mudflats. Nevertheless, the trial is being designed to provide site-specific evaporation data at a range of densities and simulate the full evaporation process at a reduced scale, as well as producing raw salt and kainite-type mixed salts for salt and SOP processing test-work and marketing samples.

In the meantime, a geotechnical drilling and test-work programme in order to confirm the optimal locations for the evaporation ponds and infrastructure, including the alignment of the proposed export jetty, is nearing completion.

Tenure and approvals

A number of recent pronouncements have indicated WA state government support for the Mardie project. The minister for ports, in particular, has provided approval for BCI to commence the planning process for the development of a multi-user port facility at Mardie (as opposed to the port being located at Cape Preston East, which was originally conceived to also accommodate output from BCI’s erstwhile iron ore assets at Kumina, etc, and was the assumption on which its Mardie PFS was based). This ‘in principle’ approval for a port at Mardie follows positive discussions with various government bodies over a number of months. Developing port facilities at Mardie is BCI’s preferred logistics solution for the project, as it eliminates material road haulage costs to the alternative Cape Preston East port. In receiving ‘in principle’ approval therefore, BCI’s expanded target DFS for Mardie (see Improvements vs the PFS on page 21 of our initiation note, BCI Minerals: Salt plus potash plus iron equals value, published on 7 February 2019) becomes a more realistic possibility (ie it contributes to its de-risking). While this expanded target scenario does not yet represent our base case valuation (which continues to be based on the Mardie PFS for the time being), we estimate that its adoption would add c 30.4%, or 9.62c (updated from 9.32c due to updated dilution assumptions), to our valuation of the present value of the dividends payable to BCI shareholders of 31.62c (see below) to take it to 41.24c. Simultaneously, BCI is working with the Pilbara Ports Authority and other government departments to establish the tenure and agreements required for BCI to develop the multi-user Mardie Port as a foundation proponent.

In the meantime, all of the environmental surveys and studies required to support the assessment of the Mardie project have now been completed. The next key step in the Environmental Protection Authority (EPA) process is the Environmental Review Document, which has now been prepared and is due to be submitted to the WA EPA within a matter of days, which will keep BCI on track for full ministerial approval of the project by early 2020.

Heritage

BCI has native title agreements in place with the Yaburara & Mardudhunera (YM) and Kuruma Marthudunera (KM) peoples that allow for production at Mardie. Of the planned project footprint, 90% is within the YM claim area, to which end BCI has received the required heritage-related consents to proceed with construction and operations. A heritage survey with the KM people is planned in April 2019 over the remaining 10% of the project footprint area.

Valuation

BCI has stated that it will advance development funding options and ownership structures for the project in detail during the preparation of the Mardie DFS. Notwithstanding the de-risking of the Mardie port option therefore, pending the publication of the DFS at Mardie, our valuation continues to be based on the parameters defined in its pre-feasibility study (the results of which were published in June 2018). Within this context, project development capex of A$335m is “likely to be funded from a combination of project debt, equity, product offtake pre-commitments and via build-own-operate (or similar) models where feasible.” However, it has also said that it “will consider all feasible funding structures for the equity component including raising equity in BCI for investment into the project, or raising direct equity into the project.”

Assuming that BCI were to fund Mardie via equity into the company, we estimate that it would have to raise c A$100m in FY20 in order to maintain a maximum leverage ratio (net debt/[net debt+equity]) of no more than 50% in FY23 when net debt to fund the project would peak at c A$192m (some of the equity having been provided by retained earnings from income from Iron Valley). Conducted at the current share price, this would involve the issue of an additional c 644.4m shares, in which case Edison’s long-term estimates of BCI’s earnings, (maximum potential) dividends per share and valuation trajectory are as follows:

Exhibit 4: BCI EPS and (maximum potential) DPS forecasts, FY17–53 (cents)

Source: Edison Investment Research, BCI Minerals. Note: Income derived from Iron Valley and Mardie, combined; no contribution assumed from Buckland or any other assets.

Discounting at Edison’s customary discount rate of 10% per year, the value of these dividend flows to shareholders is 31.62 Australian cents (cf 30.66c/share previously) fully diluted as at 1 July 2018 (the change being principally as a result of BCI’s prevailing share price rising to 16c from 13.5c previously). Note that our valuation, on this basis, peaks at 70.66 Australian cents (cf 68.46c previously) in FY28, when EPS would be 5.43 Australian cents, therefore putting it on a contemporary P/E ratio of 13.0x. Self-evidently, this valuation could increase further to the extent that iron ore prices remain at elevated levels beyond June 2019. Moreover, as noted previously, optimisation and expansion of the parameters defined in Mardie PFS will add c 30.4%, or 9.62c (updated estimate as mentioned above), to our valuation to take it to 41.24c. We will update our project assumptions and valuation following the publication of the DFS.


Exhibit 5: Financial summary

A$'000s

2015

2016

2017

2018

2019e

2020e

June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

281,211

151,279

64,324

33,029

59,849

57,560

Cost of Sales

(278,465)

(158,210)

(55,190)

(47,442)

(64,913)

(58,629)

Gross Profit

2,746

(6,931)

9,134

(14,413)

(5,064)

(1,069)

EBITDA

 

 

2,746

(6,931)

9,134

(14,413)

(5,064)

(1,069)

Operating Profit (before amort. and except.)

(26,090)

(12,622)

5,665

(17,330)

(7,981)

(3,986)

Intangible Amortisation

0

0

0

0

0

0

Exceptionals

(170,881)

(40,108)

(302)

0

17,818

0

Other

(2,935)

812

(5)

0

0

0

Operating Profit

(199,906)

(51,918)

5,358

(17,330)

9,837

(3,986)

Net Interest

(3,505)

(951)

311

420

98

403

Profit Before Tax (norm)

 

 

(29,595)

(13,573)

5,976

(16,910)

(7,883)

(3,583)

Profit Before Tax (FRS 3)

 

 

(203,411)

(52,869)

5,669

(16,910)

9,935

(3,583)

Tax

44,912

(27,086)

0

0

1,510

0

Profit After Tax (norm)

12,382

(39,847)

5,971

(16,910)

(6,373)

(3,583)

Profit After Tax (FRS 3)

(158,499)

(79,955)

5,669

(16,910)

11,445

(3,583)

Average Number of Shares Outstanding (m)

174.8

196.2

316.7

394.6

396.1

719.8

EPS - normalised (c)

 

 

7.1

(20.3)

1.9

(4.3)

(1.6)

(0.5)

EPS - normalised and fully diluted (c)

 

7.1

(19.5)

1.9

(4.3)

(1.5)

(0.5)

EPS - (IFRS) (c)

 

 

(90.7)

(40.8)

1.8

(4.3)

2.9

(0.5)

Dividend per share (p)

0.0

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

1.0

-4.6

14.2

-43.6

-8.5

-1.9

EBITDA Margin (%)

1.0

-4.6

14.2

-43.6

-8.5

-1.9

Operating Margin (before GW and except.) (%)

-9.3

-8.3

8.8

-52.5

-13.3

-6.9

BALANCE SHEET

Fixed Assets

 

 

154,904

86,546

78,059

85,768

78,669

154,452

Intangible Assets

60,237

33,618

33,063

43,615

39,433

44,433

Tangible Assets

94,667

52,928

44,996

42,153

39,236

110,019

Investments

0

0

0

0

0

0

Current Assets

 

 

102,374

23,204

46,429

20,270

41,719

59,452

Stocks

9,886

61

0

0

82

79

Debtors

24,427

13,694

10,053

7,213

14,757

14,193

Cash

67,671

9,449

36,376

13,057

26,880

45,180

Other

390

0

0

0

0

0

Current Liabilities

 

 

(77,222)

(21,769)

(12,107)

(9,373)

(12,279)

(11,424)

Creditors

(70,947)

(19,749)

(12,107)

(9,373)

(12,279)

(11,424)

Short term borrowings

(6,275)

(2,020)

0

0

0

0

Long Term Liabilities

 

 

(20,773)

(11,307)

(5,225)

(6,054)

(6,054)

(6,054)

Long term borrowings

0

0

0

0

0

0

Other long term liabilities

(20,773)

(11,307)

(5,225)

(6,054)

(6,054)

(6,054)

Net Assets

 

 

159,283

76,674

107,156

90,611

102,056

196,425

CASH FLOW

Operating Cash Flow

 

 

(77,686)

(19,721)

11,860

(11,957)

(9,785)

(1,356)

Net Interest

(1,120)

0

0

0

98

403

Tax

44,912

(27,086)

0

0

1,510

0

Capex

(10,987)

(8,075)

(2,220)

(10,074)

(5,000)

(78,700)

Acquisitions/disposals

24,338

0

(5,151)

(1,288)

27,000

0

Financing

6,118

1,510

24,403

0

0

97,953

Dividends

(18,652)

0

0

0

0

0

Net Cash Flow

(33,077)

(53,372)

28,892

(23,319)

13,823

18,300

Opening net debt/(cash)

 

 

(94,473)

(61,396)

(7,429)

(36,376)

(13,057)

(26,880)

HP finance leases initiated

0

0

0

0

0

0

Other

0

(595)

55

0

(0)

0

Closing net debt/(cash)

 

 

(61,396)

(7,429)

(36,376)

(13,057)

(26,880)

(45,180)

Source: BCI Minerals accounts, Edison Investment Research

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Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Australia

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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