an infrastructure-rich magnetite play Marcus Flis MD, CEO

Transcription

1 The Razorback Iron Project an infrastructure-rich magnetite play Marcus Flis MD, CEO February 2010 Razorback Ridge from the north west

2 Full Disclaimer and Competent Person s Statement This presentation has been prepared by Royal Resources Limited (ABN ) ( Royal ) based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, i opinions i and conclusions contained din this presentation. To the maximum extent permitted by law, none of Royal, its related bodies corporate, its or their directors, employees or agents, advisers, nor any other person accepts any liability for any loss arising from the use of or reliance on this presentation or anything contained in, omitted from or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of Royal, its related bodies corporate or its or their directors, employees or agents. Royal Resources acknowledges exploration targets set out in this presentation are not to be interpreted as Mineral Resources or Ore Reserves unless specifically stated as being JORC compliant. Quoted targets are based on the interpretation of host rock prospectivity, volume of rock, and assumed densities. The potential quantity and grade is conceptual in nature and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in determination of a mineral resource. The details contained in this report that pertain to ore and mineralisation is based upon information compiled by Mr Marcus Flis B Sc (Hons), M Sc, a full time employee of the Company. Mr Flis is a Fellow of the Australasian Institute of Mining and Metallurgy (AUSIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity it which h he is undertaking to qualify as a Competent tperson as defined d in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Flis consents to the inclusion in this report of the matters based upon his information in the form and context in which it appears. The distribution of this document in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. This presentation is not an offer, invitation, solicitation or recommendation to invest in Royal and neither this document nor anything in it shall form the basis of any contract or commitment. The information in this presentation does not take into account the investment objectives, financial situation and particular needs of investors and does not constitute investment, legal, tax or other advice. Before making an investment in Royal an investor should consider whether such an investment is appropriate to their particular investment objectives, financial situation and particular needs and consult a financial adviser if necessary. This presentation does not purport to constitute all of the information that a potential investor may require in making an investment decision. Investments are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Royal does not guarantee the performance of the investment referred to in this presentation, the repayment of any capital invested or any particular rate of return. Nothing in this presentation is a promise or representation as to the future. Statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. Royal does not make any representation or warranty as to the accuracy of such statements or assumptions. You acknowledge that circumstances may change and the contents of this presentation may become outdated as a result. Royal accepts no obligation to correct or update the information or opinions in this presentation. Opinions expressed are subject to change without notice. By accepting this document, you agree to be bound by the above limitations.

3 Capital Raisings Royal completed a renounceable 1 for 1 rights issue, priced at 10 c, in November 2009 The issue included one free option for every 3 shares taken up, exercisable at 10 c and having a life of two years If the new option is exercised during May 2010, it will be replaced by a piggyback option with an exercise price of 12 c and having a three year life The rights issue raised $10.8M, before costs Singaporean company Sin Tang Development Pte Ltd took a 15% share placement at 15 c each, at a 36% premium to market, raising $2.1M Royal s directors participated fully in the rights issue, accounting for 12% of the rights issue raising

4 Issued Securities 226,079,656 Fully Paid Shares 36,013,276 Listed Options 18,945,000 Unlisted Options Share Price at 26/2/10 $0.18 Royal Snapshot $ M $60 $50 $40 Market Cap Share Price Share Price $30 Market Cap $41M $0.20 Cash $9.5M $20 $10 Portfolio value $3.4M $0.00 $0.60 $0.50 $0.40 $0.30 $0.10 Experienced management team: Philip Crabb Chairman Marcus Flis Managing Director Frank DeMarte Executive Director Brian Richardson Non executive Director Ml Malcolm l Randall Non executive Director Directors Shareholdings 13% Top 20 shareholders 42% $0 01/09 03/09 05/09 07/09 09/09 11/09 Fortis 8% Sin Tang 13% Directors 13% Norilsk Nickel 2% Share structure Thundelarra 1% Retail 63% $0.10

5 Royal s Portfolio: two irons in the fire Two topical commodities in two low sovereign risk countries...

6 Royal s iron ore strategy Iron ore is an infrastructure play, first and foremost Iron is a bulk commodity: it must sustain large tonnage extraction The project must be at the low end of the production cost curve DSO Hematite is the preferred target, but magnetite is a good target as long as it ticks all the right boxes Get an end user partner early

7 Royal s Iron Exploration Projects

8 The Razorback Iron Project A potentially ti huge magnetite resource in an infrastructure rich t ihlocation that t ticks all the right boxes Outcropping magnetite on Razorback Ridge

9 Location of the Razorback Iron Project Exploration target of >500Mt to 25% to 65% Fe 1 Target size to support a notional 10Mtpa production rate over 20 years mine life Target tonnageandgradesand grades based on SA Department of Mines assessment done in the 1960s Razorback Ridge Central EL owned 100% by Royal Surrounding ELoptionedfromGoldus at $50,000pa and exercisable within 10 years for $10M Around 1,500km2 prospective ground 1 The potential quantity and grade of the exploration target is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

10 Razorback ticks all the right boxes JVA with an end user partner Access to existing, available, open user rail Access to existing, available, open user ports Occurs in an infrastructure rich area Is likely to be a low cost producer Will produce a good product Low environmental, native title & social risks Located in a supportive jurisdiction Huge blue sky potential

11 Access to existing, available, open user rail Mine to rail is ~40km Rail has 10Mtpa capacity available and expandable through the addition of passing loops Rail services twoexisting andone proposed ports Cartage cost will be substantially below that of similar magnetite operations accessing third party rail Access to this rail translates to over $500 M savings in CAPEX compared to similar magnetite projects in Australia

12 Access to existing, available, open user port Pt Pirie is ~170km from load out Pt Pirie is equipped with a car tippler Shallow draft, but trans shipment ready Proposed Pt Bonython is nearby Option to use Pt Adelaide Transhipping at Whyalla Pt Bonython

13 Occurs in an infrastructure rich area The district i is well endowed d with dormitory towns: Razorback will not require an accommodation village A future mine can be serviced by the district s existing industrial capability The Moomba gas pipeline is within 50km of the deposit High tension power line is within 50kmofthedeposit Sufficient ground water exits in the area for exploration, resource definition, and start up mining.

14 JVA with a steel maker end user partner Sin Tang is a Chinese steel maker, coke producer, and iron trader Sin Tang has taken a 15% share placement in Royal at a premium to market Sin Tang will provide $50 M in funding to bring the project to FS $10M on Razorbackachievingachieving 250Mt Inferred Resource $20M on finalising a PFS $20M on finalising a FS They will earn a 50% interest in all magnetite resources in the Razorback Iron Project Tangshan Ganglu Iron and Steel, a Sin Tang company

15 It is likely to be a low cost producer Main mineralisation forms a ridge: very low stripping ratio Mineralisation is not a cherty bif: low grinding cost Preliminary metallurgical tests indicate >40% recovery: high yield 2 2 Based on preliminary metallurgical test work. Further testing of more representative samples may or may not confirm these initial results.

16 Razorback will produce a good product Fe% SiO 2 % P 2 O 5 % Al 2 O 3 MgO% Na 2 O TiO 2 % % % Head grade Concentrate grade at 106μm Grind size of 75μm produces a concentrate of 69% Fe, suitable as DRI feed Magnetite outcrop, Razorback Ridge

17 Low environmental, native title & social risks Project is located in one of the few Native Title free areas of South Australia Razorback Ridge is on a low holding capacity sheep station High local community support Razorback Adit at Razorback Ridge

18 Located in a supportive jurisdiction SA has one of the lowest iron ore royalty rates in the country (3.5% vs 5% in WA for beneficiated ore) Case management of explorers developers Source: Fraser Institute, 2008

19 Sin Tang are earning a 50% interest in the magnetite from the Red Dragon area of Razorback Royal retain ownership of all DSO hematite potential in Red Dragon Royal retain ownership of all iron in the Pualco area of Razorback Royal has access to over 100 strike kilometres of untested host rocks Huge blue sky potential 10 km Aeromagnetic image over the Razorback project

20 2010: An exciting year for Razorback Since completing the deal in mid November, 2009, Royal has: Flown a high resolution aeromagnetic and radiometric survey Geologically mapped the Red Dragon Area Signed an MOU with Flinders Ports Pty Ltd to progress a bulk handling and export solution through h existing iti or proposed ports Progressing negotiation for an MOU on rail access The plan for 2010 includes: First phase drill out of Razorback Ridge and Iron Peak prospects in the Red Dragon area to support a maiden Inferred Resource within months (>12,000m) Initiate metallurgical testing Initiate Fauna and Flora baseline surveys Activities to support delivery of a PFS by Q4 2011, aiming for a BFS by Q4 2012

21 Contact Registered Office Level 3, IBM Building POBox Hay Street Cloisters Square WEST PERTH WA 6005 PERTH WA 6850 Tl Telephone: Facsimile: Australian Securities Exchange Code: ROY For further information: Phil Crabb Chairman Marcus Flis MD & CEO info@royalresources.com.au