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CAT MINING FINANCE

SME Finance Conference: Current Trends in Mining Finance Chris Patterson; Executive Director – Structured Finance April 2013. CAT MINING FINANCE. Americas North 2120 West End Ave Nashville, TN 37203. United States +1 (800) 651 0567. Americas South Sanchez Fontecilla 310 5o. Piso .

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CAT MINING FINANCE

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  1. SME Finance Conference: Current Trends in Mining Finance Chris Patterson; Executive Director – Structured Finance April 2013 CAT MINING FINANCE Americas North 2120 West End Ave Nashville, TN 37203. United States +1 (800) 651 0567 Americas South Sanchez Fontecilla 310 5o. Piso. Las Condes. Santiago Chile +56 (2) 363 3500 Asia Pacific 1 Caterpillar Drive Tullamarine Victoria 3043, Australia +61 (0)3 9953 9333 EAME/CIS Mühlebachstrasse 43 CH-8008 Zürich, Switzerland +41 (0) 43 222 61 41

  2. Agenda Overview Financial Products Leasing (juniors vs. producers) Underground Mining Considerations Regional Issues & Outlook Q & A

  3. Types of Debt Financing (Bank & non-Bank) • Traditional Commercial Project Finance (single/club/syndication) • Equipment Facility (loan or lease) – aka vendor finance • Stream Finance • Mezzanine / Off-take Finance • High Yield Bonds • Convertible Notes • ECA Finance • Pre-Export • Asset Backed Revolvers

  4. Financial Products - DEBT Finding the Equipmentfinancing solutions that fit the business needs of customers:

  5. Equipment Leasing 101

  6. Examples: Capital Lease Equipment Price $5,000,000 Initial Payment $1,000,000 (20%) Term 5 year Residual $1.00 Rate 5% Quarterly Pay $227,400* Operating Lease Equipment Price $5,000,000 Advance Rental $0 Term 5 year Residual $1,250,000 (25%) Rate 4% Quarterly Pay $220,983* (w/ 5% down) $207,125 *Taxes not included • Considerations: • - Insurance - Return requirements • - Depreciation & Tax Benefits - Inter-creditor Agreement • - Cash Flow Timing - Minimal covenants • - Tenure vs. Rebuild vs. Useful Life - Impact on ratios / hedging …

  7. Juniors – Financing Basics Financing available for those that have the basics Equipment finance continues to be a major request

  8. Juniors vs. Producers • Juniors • Need capacity • Tighter controls • Collateral requirements • Ongoing surveillance • Shorter tenure • Higher rates • Focus on the Project • Producers • Need Maximum flexibility • More options – suite of products • Less equity / security • Less oversight • Variable tenures • Lower rates • Focus on History WHY- it is all about the risks!!!

  9. Underground - word of caution • Equipment finance is available • Shorter terms (18-48 months) • Primarily Loans • Possibly higher down payment / security deposits • Highly spec’d equipment – diminished remarketing value • Move toward automation • Leasing generally available only to majors What goes down, does not necessarily come back up = lender conundrum

  10. World Economic Growth The world still leans on the U.S. and China for direction and growth

  11. Economic Growth Rates Recoveries range from 7-16 qrtrs

  12. Full Service- Full Product Line-Full Distribution

  13. Caterpillar Finance- wherever there’s mining

  14. Caterpillar Finance- wherever there’s mining

  15. Caterpillar Finance- wherever there’s mining

  16. Caterpillar Finance- wherever there’s mining

  17. QUESTIONS: DEDICATED SME Assistance for Caterpillar Equipment or Dealer contact? Contact: Andy Jobes @ Jobes_Andy_L@cat.com

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