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Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol

Fairmount Santrol · Jan 4, 2018 · 40 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 1
    Creating a Leader in Proppant and Industrial Materials Solutions January 2018
  2. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 2
    Creating Value through Scale, Diversity, and Complementary Assets Value creation levers suggest 55-70% increase to pre-transaction share value (1) Significant 35% ownership provides a premium above relative contribution, including…
  3. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 3
    Compelling Transaction for All Stakeholders Transaction Fairmount Santrol to combine with Unimin, a wholly-owned subsidiary of Sibelco Structure Combined company to list on NYSE concurrent with closing Fairmount Santrol shareholders…
  4. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 4
    Fairmount Santrol Long-Term Value Creators National Scale/Footprint 900M tons of proven reserves across Ohio, Illinois, Wisconsin, Minnesota, Missouri and Texas Ability to adjust production mix by grade to better meet demand Ability…
  5. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 5
    Section 1 Overview of Unimin
  6. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 6
    Unimin An Industry Leader Key Highlights Two Complementary Segments (1) 28Mt 39 Energy Current Plants 46% Capacity Industrial 54% 38 Leader In Operating RoW Feldspar Others Safety Canada Clays Terminals Mexico Lime…
  7. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 7
    Unimins Optimized Plant & Logistics Network Key Statistics (1) Canada Plants: 39 28 plants and two RCS facilities in USA St.Canut Kasota Ottawa NSO 9 Plants in Mexico Emmett Tunnel City Portage Oregon 2 Plants in Canada Troy…
  8. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 8
    Unimins Minerals Serve a Wide Variety of Industries oil & gas glass ceramics construction metals polymers coatings Silica Nepheline Syenite Feldspar Olivine Clay & Kaolin Lime Diversity across minerals…
  9. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 9
    Unimins Energy Business A Leading Supplier of Proppants to the O&G Segments Key Highlights Selected Flagship Plants & Terminals Comprehensive portfolio of API quality quartz proppants, resin Plants Terminals coated sands, cementing…
  10. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 10
    Unimins Industrial Business Large, Resilient, and Growing Business Generating Strong Cash Flows Key Highlights Diverse Customer Segments Served Container, float, fiberglass, solar Highly resilient and growing business generating…
  11. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 11
    Unimin Has a Predictable and Profitable Industrial Business Predictable Unimin Industrial Volumes Industrial Minerals Attributes Resilient and predictable earnings and cash flow profile Diversity in customers, industries and…
  12. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 12
    Financial Overview of Unimin Unimin Key Financials Overview (1) YTD 2015A 2016A 3Q17 Outlook All figures in Millions 9/30/2017A Energy Volumes 7.8 6.8 8.4 3.1 Strong outlook for energy growth: Industrial Volumes 11.5 12.2 9.2…
  13. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 13
    Unimin is Growing Rapidly and Poised to Expand Further Growth through Capacity Expansion and Operational Efficiency Investments Key Drivers Mt Permian and Utica (1) 5.5 38.0 Sufficient capacity in place to meet Expansion growing…
  14. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 14
    Sibelco Long-term Shareholder Shared Values and Global Expertise 2016 sales of 2.7Bn Founded in 1872 Multi-mineral product offering Vision 200 plants in 40 countries To be the best global material 10,000 employees solutions…
  15. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 15
    Sibelco Supportive, Value-Added Business Partner Sibelco Key Highlights Sibelco and the Combined Company A leading global producer of industrial minerals with Majority owner of Unimin since 1973 (currently wholly owned operations in…
  16. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 16
    Section 2 Value Creation for Fairmount Shareholders
  17. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 17
    Significant Value Creation for Fairmount Santrol Shareholders Illustrative Bottoms-Up Build Up of Value Creation per Fairmount Share (1) /share 55-70% Value 4 Uplift (2) 1.50 3 2 0.74 0.601.00 1 170M cash consideration 35x…
  18. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 18
    Ownership of 35% for Fairmount Shareholders Implies a Premium Even at 1 Comparable Base Multiples Fairmount Ownership Implied by EBITDA Contribution to Combined Company (1) 65% 67% 66% 64% 74% 100% 35% Ownership for…
  19. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 19
    2 Value of Stability Reflected in Industrial Trading Multiples Industrial minerals companies trade at meaningfully higher multiples than proppant companies, and with less volatility due to business model stability 42% of combined…
  20. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 20
    3 Indicative Transaction Sources & Uses Indicative Transaction Sources & Uses As of September 30, 2017 Sources (M) Uses (M) NewCo TLB 1,650 Refinancing of Fairmount Net Debt (1) 630 Refinancing of Unimin Net Debt 830 Cash on…
  21. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 21
    4 1Bn(1) Value Creation from Quantified Synergies Rigorous synergy analysis performed by leading consultants over two months in clean room setting 3rd party model assumes - Frac sand demand grows at 16% annually from 2017-2020 -…
  22. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 22
    Section 3 Market Dynamics
  23. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 23
    Expected Increase in Proppant Demand for 2018 Increasing Number of Well Completions (1) Higher Proppant Intensity Per Well (2) U.S. HORIZONTAL LAND RIG COUNT AVERAGE PROPPANT TONS PER U.S. HORIZONTAL WELL 850 800 750 6,500 - 700…
  24. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 24
    Growing Demand Across all Basins Expected 2018 demand to be supplied by both Northern White and Local/Regional sands Millions of tons 100M Tons in 2018 100 Over 50% growth outside Demand to be supplied from sources outside of the the…
  25. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 25
    Well Suited to Meet Demand Across All Basins Northern White Supplier of Choice in all Basins Strong Permian Footprint 75M tons Northern White Demand Mix Two plants, each with 3 million tons of annual (Permian + Rest of North…
  26. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 26
    Permian Assets Strategically Placed to Meet Local Needs Combined 6 million ton capacity Hobbs Snyder Two plants in different locations Lamesa with attractive grade mix Carlsbad Scheduled to come online in Q2 Big Spring 18…
  27. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 27
    Diversified, Strong Logistics to Meet Demands Across North America Access To Major Rail Lines Enhances Flexibility, Diversity Highly Complementary Large- and Cost Efficiencies Scale Terminal Network Proppant Rail and Trucking Capacity…
  28. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 28
    Section 4 Compelling Pro Forma Investment Thesis
  29. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 29
    Diversified and Balanced Portfolio Sales Volumes Profitability Pro Forma Volume; Mt, LTM (9/30/2017) Total Pro Forma Gross Profit (1) (2); M, LTM (9/30/2017) 35 573M 42% 23 42% 54% 58% 12 21% 58% Industrial Materials…
  30. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 30
    Product Breadth to Win Across Segments Broad Product Portfolio High-Purity Sands Resin-Coated Products Nepheline Syenite Propel SSP Custom Blending DustShield High quality pure silica High-performance resin Silica-free material…
  31. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 31
    Complementary Footprint Across North America Combined footprint of more than 50 sand Canada & coating plants across North America (1) Access to all major railways serving major oil & gas basins Expanded terminal network with 96…
  32. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 32
    Stable Industrial Base with Energy Poised for Growth Adjusted EBITDA (1) M 398 352 137 2015 2016 LTM Sep-17 Fairmount Unimin 1. Fairmount Adj. EBITDA as disclosed in SEC filings, Unimin financials prepared under IFRS…
  33. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 33
    Pro Forma Capitalization Supported by a Strong & Flexible Balance Sheet Positive Reception by Credit Rating Agencies Moodys: Merger with Unimin is Credit Positive S&P: Fairmount Santrol Inc. Ratings Placed On Watch Positive On Planned…
  34. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 34
    Industry Defining Transaction Benefiting All Stakeholders SHAREHOLDERS DEBTHOLDERS Significant value creation from Improved leverage substantial synergies position Strong cash flow generation driving Enhanced cash flow generation…
  35. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 35
    Roadmap to Completion Regulatory approvals and customary closing conditions Approval by Fairmount Santrol shareholders Shareholders representing 26% have entered into voting agreements (1) Expected to close around mid 2018…
  36. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 36
    Appendix Unimin Selected Assets
  37. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 37
    Unimins Industrial Business Glass and Ceramics Glass Ceramics Overview Overview Active in container, float and fiberglass markets US housing construction main driver for production growth in both US and Mexico in both sanitary and…
  38. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 38
    Unimins Industrial Business Coatings & Polymers Coatings & Polymers Overview Architectural coatings sales enjoys relatively steady growth driven by housing starts, DIY and industry consolidation Mineral portfolio includes nepheline…
  39. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 39
    Unimins Industrial Business Construction Construction Overview Multi-mineral portfolio including silica, lime, clays, kaolin and feldspars Applications include mortars, grouts, carpet and roof backing and other cementing…
  40. Creating a Leader in Proppant and Industrial Materials Solutions – Fairmount Santrol – slide 40
    Unimins Energy Business Selected Key Assets Northern White and Regional Sand Assets Terminals Plant Bulk Loading Railroad Terminal Shale Play Rail Road Tunnel Truck and Rail Canadian Pacific Benwood Marcellus CSX City, Wisconsin Kasota…

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