tsx-v · 2. peers: altius, franco-nevada, labrador iron ore royalty, maverix metals, osisko, royal...

January 2020

TSX-V

MOXMorien by the ChartsWhere Business Meets Mining

w w w . m o r i e n r e s . c o m | T S X - V : M O X Page | 02

Forward Looking Statements

Some of the statements made by Morien Resources Corp. (“Morien”) in this presentation may constitute"forward-looking information" as defined under applicable securities laws. These statements reflect Morien'scurrent expectations of future revenues and business prospects and opportunities and are based on informationcurrently available to Morien. Morien cautions that actual performance will be affected by a number of factors,many of which are beyond its control, and that future events and results may vary substantially from what Moriencurrently foresees. Factors that could cause actual results to differ materially from those in forward-lookingstatements include risks and uncertainties described in Morien’s annual information form filed with the CanadianSecurities regulators on SEDAR (www.sedar.com). Morien cautions that its royalty revenue will be based onproduction by third party property owners and operators who will be responsible for determining the mannerand timing for the properties forming part of Morien’s royalty portfolio. These third party owners and operatorsare also subject to risk factors that could cause actual results to differ materially from those predicted hereinincluding: volatility in financial markets or general economic conditions; capital requirements and the need foradditional financing; fluctuations in the rates of exchange for the currencies of Canada and the United States;prices for commodities including gold, coal and aggregate; unanticipated changes in production, mineralreserves and mineral resources, metallurgical recoveries and/or exploration results; changes in regulations andunpredictable political or economic developments; loss of key personnel; labour disputes; and ineffective title tomineral claims or property. There are other business risks and hazards associated with mineral exploration,development and mining. Although Morien believes that the forward-looking information contained herein isbased on reasonable assumptions, readers cannot be assured that actual results will be consistent with suchstatements. Morien expressly disclaims any intention or obligation to update or revise any forward-lookinginformation in this news release, whether as a result of new information, events or otherwise, except inaccordance with applicable securities laws. Unless otherwise indicated, all dollar values herein are in C$.


Corporate Snapshot

41%Retail

28%High Net Worth Retail

(Holding > 1%)

16%Board & Management

11%The Cline Group

4%Institutional

Donkin CoalProject

Black PointAggregate Project

MOXTSX-V

52.9 mlnShares o/s

55.6 mlnShares f/d

$25 mlnMarket cap

$3.5 mlnWorking cap

nilDebt


John P. A. Budreski• 30+ years of extensive capital

markets and executive management experience

• Former Head of Investment Banking for Scotia Capital. Formerly Vice Chairman of Cormark Securities Inc. and prior to that, President and CEO of Orion Securities Inc.

• Director of EnWave Corporation, Sandstorm Goldand NuLegacy Gold

Charles G. Pitcher• 40+ years experience in

operations, engineering, management and mining project development

• Former President of Wilson Creek Coal in Pennsylvania, and former President & CEO of Western Canadian Coal where he led the acquisition, development and startup of major coal projects in western Canada.

John P. Byrne• 30+ years of investment

banking and corporate finance experience

• President of Petroleum Corporation of Canada Exploration Ltd., which helped finance EnerplusEnergy Services Ltd. for which Mr. Byrne served as its Vice Chairman

• Former senior executive with Levesque Beaubien Geoffrion (now NBF)

J. William Ritchie• Mr. Ritchie’s distinguished

career includes having been chair and CEO of Scotia Bond Ltd., as well as being one of the founders of Keltic Savings Corporation Limited.

• Over the years, Mr. Ritchie has served on boards of companies including Empire Company Ltd., Sobeys Inc., and DHX Media Ltd.

• Inducted into the Nova Scotia Business Hall of Fame in 2010

Board of Directors


Morien’s Three Pillars

Donkin Coal Mine Royalty

§ 2% to 4% production royalty

§ Operation ramping up toward full production

Black Point Aggregate Project Royalty

§ Per-tonne production royalty (undisclosed)

§ Production decision in Q2 2020

Capital Allocation Strategy

§ Disciplined strategy to drive higher returns on invested capital

§ No debt

Dividend NCIB

ProjectGeneration


Morien’s Approach to Business

Maintain and grow the dividend commensurate with growth in royalty income;

Grow its portfolio by acquiring additional long-life, cash-flowing royalties in the bulk commodity and industrial mineral sectors in North America; and

Continue increasing individual shareholder value in Morien through its annual normal course issuer bid program.

1.

2.

3.


Overhead Costs (G&A) Down 38%

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

2013 2020

Corporate Overhead Costs (G&A)

2019


Common Shares Down 13% Since 2015

50,000,000

52,500,000

55,000,000

57,500,000

60,000,000

2015 2020

Total Common SharesOutstanding

2019


Management Ownership Up 10% Since 2013

0%

2%

4%

6%

8%

10%

12%

14%

16%

2013 2020

Management & DirectorsOwnership

2019


Number of Shareholders Down by 58% Since 2013

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2019

Total Number of Shareholders

w w w . m o r i e n r e s . c o m | T S X - V : M O X

$3,300,000

$810,000 $110,000

$940,000 $400,000

($660,000)

($530,000)

($750,000) ($135,000)$3,485,000

01/0

1/20

19Do

nkin

Roy

alty

Blac

k Poi

nt …

Land

Sale

Optio

n Pr

ocee

ds

G&A

Divid

ends

NCIB

Proj

ect …

12/3

1/20

19

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Increase Decrease Total

Page | 11

2019 Cash Flow Summary

(1) The reported 2019 Donkin royalty of $810k is an estimate only; Morien’s Q4-2019 Donkin royalty payment is not due until February 15, 2020

Wor

king C

apita

l

01/0

1/20

19Don

kin Ro

yalty

1

Asse

t Sale

Divide

nds

NCIB

Proje

ct Gen

erat

ionW

orkin

g Cap

ital

12/3

1/20

19

Option

Proc

eeds

Black

Point

Roya

lty

Overh

ead C

osts

(G&A)


Coal Markets – A Reality Check


Global Seaborne Coal Trade Up 3% in 2018

9301000

11191182 1216

1138 11421203 1240

2010 2011 2012 2013 2014 2015 2016 2017 2018

Total volume of coal traded on global seaborne market from 2010 to 2018(in million metric tons)

Source: S&P Global Platts data (no distinction made between thermal and metallurgical coal)


Why? … Growth in Global Energy Demand

Source: BP 2018 Energy Outlook

Driven by Increasing Prosperity and Improving Living Standards in Fast-Growing Emerging Economies

▸

Global Energy Consumption; 1970 to 2040

-

5

10

15

20

1970 1980 1990 2000 2010 2020 2030 2040

Bill

ion

Tonn

es (o

il eq

uiv.

)


Thermal Coal - A Dominant Energy Source

Source: BP 2018 Energy Outlook

It is currently not possible to decarbonize the power sector fast enough to offset the global growth in power demand

▸

-

5

10

15

20

1970 1980 1990 2000 2010 2020 2030 2040

Bill

ion

Tonn

es (o

il eq

uiv.

)

RenewablesHydroNuclearCoalGasOil

Power Generation Fuel Mix; 1970 to 2040

33%28% 23% 21%

25%28%27%30%

Global electricity demand grew 2.3% in 2018, the fastest pace in a decade▸


Renewable Energy

Renewable energy demand grew 14% per year over the last 5 years▸

Renewables includes wind, solar, geothermal, biomass, and biofuels.


Renewable Energy Put Into Perspective

… and now accounts for 4% of global energy consumption▸

Renewables includes wind, solar, geothermal, biomass, and biofuels.


Metallurgical Coal – Essential for Steel Construction


(in Millions of Metric Tons)

1538 15601650 1669 1620 1627

17301809

2011 2012 2013 2014 2015 2016 2017 2018

Page | 19

Rising Annual Global Steel Production

Every Ton of Steel Needs 0.7 Tons of Metallurgical Coal▸


Metallurgical Coal Demand

(1) Source: CRU and Wood Mackenzie

Projected to Grow by 41 Million Tonnes Through 2025 (1)

53

35

15

5260

37

18

77

Europe South Korea Brazil India

2017 2025

Expected Global Metallurgical Coal Imports (in Millions of Metric Tons)

▸


The Donkin Mine


Coal Resource Peer Comparison

15 1636

60

165 174204

265 272

316

388

484

0

50

100

150

200

250

300

350

400

450

500

Teck

- Card

inal Rive

r

Corsa - A

costa

Teck

- Quint

ette

Teck

- Line C

reek

Teck

- Gree

nhills

Wes

tmorel

and -

Coal Vall

ey

Consol -

Harvey

Teck

- Elkv

iew

Consol -

Bailey

Consol -

Enlow

Teck

- Fordi

ng Rive

r

Cline -

Donkin

30+ YearMine Life

Million tonnes


Donkin Development PhaseM

illio

n sa

leab

le to

nnes

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2017 2018 2019 Year 1 Year 2 Year 3 Year 4 Year 25

Donkin Saleable Production

Highly Productive Retreat Mining Phase (25+ Years)

1

(1) Includes an assumption on Donkin’s Q4-2019 production; Morien’s Q4-2019 Donkin royalty is not due until February 15th.

Development Phase


Donkin Production Phase (Retreat Mining)M

illio

n sa

leab

le to

nnes

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2017 2018 2019 Year 1 Year 2 Year 3 Year 4 Year 30

Donkin Saleable Production

Highly Productive Retreat Mining Phase (30 Years)Development Phase

1

(1) Includes an assumption on Q4-2019 production; Morien’s Q4-2019 Donkin royalty is not due until February 15th.


Donkin Royalty Set to Materially Increase

(1) Q4-2019 royalty not yet received; estimate only(2) Estimated royalties are pre-tax

Received Annual Royalties 1 Forecast Annual Royalties 2

$80/tCoal price ($CAD)

$100/t $120/t

2017 2018 Assumes 3.0 mln Saleable Tonnes$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$0.1 mln

$6.5 mln

$8.0 mln

$9.5 mln

$0.9 mln

$11.0 mln

$140/t (1)

20191

$0.8 mln


Prospective Dividend

$0

$2

$4

$6

$8

$10

$12

3 Mt @ $80/t 3 Mt @ $100/t 3 Mt @ $120/t 3 Mt @ $140/t

Donkin Royalty RevenueFree Cash FlowAnticipated Dividend Payout Range

$0.04 - $0.05per share

$0.05 - $0.07per share

$0.07 - $0.09per share

$0.08 - $0.11per share

CAD $000,000

Donkin Annual Clean Saleable Production (Tonnes) and Coal Price Assumptions


Current Dividend Yield – Peer Comparison

0.7% 0.8% 0.9%1.1% 1.1% 1.2% 1.3%

1.8%

2.3%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Maverix

Metals

Abitibi R

oyaltie

s

Metalla Roya

lty

Franco

-Neva

da

Royal G

old

Osisko Royaltie

s

Wheaton Precious

Altius M

inerals

Morien Reso

urces


Dividend Calculator (Morien Website)


Price to NAV Royalty Peer Company Valuation

1. Source: Company filings2. Peers: Altius, Franco-Nevada, Labrador Iron Ore Royalty, Maverix Metals, Osisko, Royal Gold, Sandstorm3. NAV is post tax, and assumes a 10% discount rate for Donkin and 20% for Black Point

0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x

Peer Median

Morien Upper end ($140/t coal price)

Morien Lower end ($80/t coal price)

1.4x

0.25x

0.40x

P/NAVMorien’s NAV is post-tax and assumes a 10% discount rate for the Donkin royalty and 20% for the Black Point royalty


MOX - Own it for These Reasons

MOX - Donkin advancing toward high productivity retreat mining phase

MOX - Significant valuation multiple expansion and re-rate potential

MOX - Quarterly dividend levered to Donkin production and coal price

MOX - Coal demand will remain robust

MOX - Long life royalties

MOX - Focused on accretive acquisitions on long-life royalties in N.America

MOX - Continued share buy backs

MOX - Annual Donkin royalty could be one-half of market cap in 18-months

w w w . m o r i e n r e s . c o m | T S X - V : M O X 31

1701 Hollis St, Suite 800Halifax, N.S.

Canada, B3J 3M8

Tel: 902-466-7255

John P. A. Budreski

Executive Chairman

DawsonBrisco

President & CEO

SusanneWillett

CFO

TSX-V: [email protected]

http://www.MorienRes.com

http://morienres.com

tsx-v · 2. peers: altius, franco-nevada, labrador iron ore royalty, maverix metals, osisko, royal...

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