Charging forward with Lithium. Investor Update. August Pilgangoora Lithium: World Class Near Term Production Project

Transcription

1 Charging forward with Lithium Investor Update August 2017 Pilgangoora Lithium: World Class Near Term Production Project

2 Disclaimer This presentation has been prepared by Altura Mining Limited ( Altura or the Company ). It should not be considered as an invitation or offer to subscribe for or purchase any securities in the Company or as an inducement to make an invitation or offer with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation. This presentation is provided on the basis that none of Altura nor its respective officers, shareholders, related bodies corporate, partners, affiliates, employees, representatives and advisers make any representation or warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the presentation and nothing contained in the presentation is, or may be relied upon as, a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law. The presentation contains forward looking information and prospective financial material which is predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, and may differ materially from results ultimately achieved. All references to future production, production targets and resource targets and infrastructure access are subject to the completion of all necessary feasibility studies, permitting, construction, financing arrangements and infrastructure-related agreements. Where such a reference is made, it should be read subject to this paragraph and in conjunction with further information about the Mineral Resources, Ore Reserves and Exploration Results, as well as the Competent Persons' Statements. All persons should consider seeking appropriate professional advice in reviewing the presentation and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the presentation nor any information contained in the presentation or subsequently communicated to any person in connection with the presentation is, or should be taken as, constituting the giving of investment advice to any person. 1

3 Presentation summary 1. Overview 2. Location and infrastructure 3. Corporate 4. Investment imperatives 5. Revenue and EBITDA Comparisons 6. Low cost production 7. Pilgangoora development 8. Project timeline 9. Offtake Partners 10. DFS Highlights 11. Appendices 2

4 Overview Australia s next spodumene concentrate producer Altura's 100% owned Pilgangoora is a world class low cost lithium project located in the Pilbara region of Western Australia. Ideally located 120km to established port and gateway to north Asian markets 2009 First discovery of lithium mineralisation now host the world s largest combined spodumene reserves 2010 Exploration drilling commenced identifying shallow, thick and consistently mineralised lithium rich pegmatites 2011 Maiden JORC Mineral Resource Estimate completed 2012 Scoping Study completed demonstrating positive economic outcomes for project 2016 Definitive Feasibility Study complete * - Key Partnerships formed with Offtake Partners 2017 Final Mining Permits received - Key contracts in place - Completion of orders for all long lead items - Construction commenced Funding completed US$110M facility fully funded *Refer to ASX announcement 26 September

5 Location and Infrastructure World class, low cost lithium development Road, rail, gas, port and workforce - Close to Asian markets 120 km to Port Hedland Port Facility Pilgangoora Pilgangoora Pilgangoora Lithium District Mt Marion Mt Cattlin Greenbushes 4

6 Corporate - Summary Altura Mining Limited (ASX:AJM) is an emerging low-cost developer of lithium concentrates with its 100% owned Pilgangoora project. The project is now fully funded via completion of US$110M debt facility. Altura's flagship project is the world class Pilgangoora hard-rock lithium project located in the Pilbara region of Western Australia. The Company completed a Definitive Feasibility Study in September 2016 and commenced bulk earthworks on 13 March 2017 with commissioning and production expected to commence in Q to enable first sales of spodumene concentrate in Q Additionally, Altura has other non-core coal assets in Indonesia, which as previously announced by the Company, it intends to divest. Altura share price performance 6 months to 2 August 2017 (A$/share) Capital Structure (2 August 2017) Shares on issue AUD 1,614.3M Share price $0.17 Market capitalisation $274M Cash (30 June 2017) $13.3M Top 20 Shareholders ~63% Board and Management * 18% * Board and management excludes the major shareholder J&R Optimum Energy Source: CommSec as at 2 August

7 Corporate - Board and Management Altura s Directors and Management have extensive mining experience and demonstrated capacities in identifying and commercialising ore bodies across various commodities and jurisdictions. Altura is a Mining Company run by Mining People. James Brown (Managing Director) Paul Mantell (Executive Director/CFO) Allan Buckler (Non Executive Director) Zhao Tong (Non Executive Director) Dan O Neill (Non Executive Director) BT Kuan (Non Executive Director) Chris Evans (General Manager - Operations ) Mr Brown is a Mining Engineer with extensive operational and development experience in the mining industry, including 22 years at New Hope Corporation (ASX: NHC). James was appointed Managing Director of Altura in September 2010 having previously been the Group General Manager since December Mr Mantell is a qualified accountant with in excess of 35 years corporate experience in the mining and associated industries, including 28 years at New Hope Corporation (ASX: NHC), the last 12 years as its Chief Financial Officer. He was appointed a Director in May Mr Buckler has over 45 years experience in the mining industry and has been directly responsible for the commercialisation of several projects from resource identification through to production. He is a former Director and Chief Operations Officer of New Hope Corporation (ASX: NHC), and was appointed a Director of Altura in December Mr Zhao Tong has over 25 years experience in the international trade of metals and minerals, and has worked for China Shaanxi Metals and Minerals International Trade Co., Ltd. Mr Tong has been the Director of the Lithium Division of J&R Optimum since October Mr O'Neill is an exploration geologist with over 30 years international mining experience across various commodities, across Australasia, Africa, Asia and North America. Dan was a founding director of current Lithium producer Orocobre (ASX: ORE). He was appointed a Director in December Mr Kuan is a mechanical engineer with considerable experience in logistics specifically the development and management of bulk handing and terminal operations. He was appointed a Director in November Mr Evans is an experienced civil engineer and project manager. Prior to commencing at Altura, Chris was Project Manager for the Mt Webber mine development in the Pilbara region of Western Australia for Atlas Iron delivering to an aggressive timetable. The board and management are supported by an experienced full-time professional project development and operations team with recent operational history in the Pilbara region of Western Australia. 6

8 Investment Imperatives Australia s next spodumene concentrate producer TOP 5 GLOBAL sized Ore Reserve of low cost hard rock lithium 100% Altura owned STRONG FINANCIALS Excellent Revenue and EBITDA s * HIGHLY EXPERIENCED in-house project delivery and production team FULLY PERMITTED all approvals in place - construction commenced in Q ALL CONTRACTS in place to mine, build, process and transport product for shipping BINDING OFFTAKE AGREEMENTS in place with leading Chinese battery producers FUNDING COMPLETE US$110M debt facility to build and operate mine LONG LEAD ITEMS advanced purchase to allow rapid project commissioning and product sales COMMISSIONING Q PRODUCTION Q *Refer to ASX announcement 26 September

9 Revenue and EBITDA Comparison Based on product price variations Altura s Pilgangoora Lithium Project will deliver significant earnings via robust lithium materials pricing underpinned by an agreed floor price to cover downside risk. The following table provides examples of indicative Revenues and EBITDA s that Altura may generate based on examples of prices being received by other lithium companies on the ASX. Description Price A Price B Price C Price D Price E Selling Price 6% Li 2 O US$dmt FOB Average FOB Revenue 1 st 5 years A$M Average EBITDA 1 st 5 years A$M Assumptions: Based on Altura's estimated average revenues and costs* during its first 5 years of production (y/e 30 June 2019 to 30 June 2023) Based on an average AUD:USD exchange rate of during first 5 years of production Price A - based on Altura s floor price as per its offtake agreements for the first 5 year contracts Price B - based on Neometals pricing for September 2017 Qtr of US$841 CIF China, adjusted to an estimated FOB equivalent (NMT ASX release 5 July 2017) Price C - based on Tawana Resources pricing for 2018 and 2019 FOB Esperance (TAW ASX release 26 April 2017) Price D - based on Galaxy Resources FOB pricing for Calendar 2017 (GXY ASX release on 14 December 2016) Price E - based on Altura s ceiling price as per its offtake agreements for the first 5 year contracts *costs based on Altura s DFS released in September 2016 updated for current estimates (refer to ASX announcement 26 September 2016) 8

10 Low Cost Production Peer Comparison Altura s Pilgangoora Lithium Project ranks just outside of brine producers in LCE cost comparison; only surpassed by Greenbushes operation 9

11 Pilgangoora Development Key production parameters 220,000 tonnes per annum of 6% Li 2 O spodumene concentrate Ore feed of 1.54 million tonnes per annum Very low life of mine strip ratio of 2.9:1 Current Ore Reserve estimate of 1.04% Li 2 O * - allows for 20 year mine life Stage 2 scoping study commenced in August 2017 to consider options for expansion of the project with the aim of increasing production to 450,000 tonnes per annum, due to demand from Offtake partners Significant exploration potential within existing exploration tenements *Refer to ASX announcements 26 September 2016 and 30 January

12 Pilgangoora Development Altura Pilgangoora Lithium Project - Pit - Waste Rock Dump and Tailings Storage Facility 3D Model 11

13 Pilgangoora Development Key Contracts Issued Altura has partnered with a group of significantly qualified and experienced service providers in order to deliver an effective design, construction, operations and logistics package DRA Pacific Pty Ltd (DRA) - awarded the process plant design for the Pilgangoora mine development. DRA has extensive experience in DMS and flotation processes both to be utilised at Pilgangoora. Australian based Civmec Limited (Civmec) - awarded the contract to provide all concrete and civil works associated with the construction of the Pilgangoora process plant. NRW Holdings (NRW) - awarded a five-year contract to perform mining, drilling and blasting services at the Pilgangoora Mine. NRW mobilised on site in March Kalgoorlie Power Systems (KPS) - awarded a contract to build, own and operate an 11MW power station at Pilgangoora. The power station will become operational in December Qube Bulk Pty Ltd - awarded the contract to provide transport logistics services for a fiveyear period. Covers product loading, haulage, storage and ship loading in Port Hedland. 12

14 Pilgangoora Development Operational readiness In order to deliver the project as per the planned schedule Altura has engaged a highly experienced in-house professional team and has executed strategic purchases of long lead capital items Altura has employed an expert full time in-house team with recent project construction and operations experience to deliver the Pilgangoora Lithium Project Altura has successfully acquired several key items to reduce project risk and reduce lead times: Acquisition of 324 person Pilgangoora Village modern accommodation facility strategically located 20 minutes from the mine site High Pressure Grinding Roller (HPGR) crusher has been purchased for utilisation in the crushing unit for the process plant saving an estimated 34 weeks lead time for this item 100% of key long lead mechanical plant packages have been let inc. primary and secondary crushing circuit, ball mill, flotation cells, thickeners, concentrate filters, reflux classifiers, cyclones, slurry pumps, conveyors and belt feeders. Process Plant Layout Overlaid on Current Cleared Area 13

15 Pilgangoora Development Mine Construction Site Office and Water Supply Dam Tailings Storage Facility Construction Process Plant Site Preparation Site Accommodation Facility 14

16 Project Timeline The pathway to production and milestones are: Grant of Mining Lease (ML) in August 2016 Mining Proposal lodged September 2016 Alliance and significant Subscription and Cooperation Agreement with leading Chinese battery manufacturer Shaanxi J&R Optimum Energy share to raise A$41.6M (before costs) in November 2016 Mining Proposal approved in February 2017 Commenced onsite construction in March 2017 Key contracts executed for design, construction, mining and transport / port logistics Binding Offtake Agreements with J&R Optimum Energy and Lionergy for 100% of planned production in July 2017 Delivery of complete project funding package completed 28 July 2017 Commissioning in 1 st Quarter 2018 First production of spodumene in 2 nd Quarter 2018 April: published FS and commenced DFS March: commence construction December: commence commissioning Q Q Q Q Q Q Q Q August: completed DFS March: first production from Pilgangoora 15

17 Offtake and Partners Battery Alliance Partnership J&R Optimum Energy Altura OptimumNano Binding Offtake Agreement (BOA) Minimum of 100,000 dry metric tonnes (dmt) per annum of 6% grade spodumene concentrate (prorated) - first product sales to commence before 30 June Term of BOA of 5 years minimum Conditional on Altura obtaining financing for the development of the project on or before 31 August 2017 (or such later date as may be notified by Altura to J&R Optimum Energy) Minimum price of US$550 dmt (FOB) for first three (3) years of BOA (based on Li 2 0 content per dmt on 6% Li 2 0) Maximum price of US$950 dmt (FOB) for first three (3) years of BOA Annual pricing to be agreed via consideration of current market pricing information, including but not limited to indices for spodumene (if available); prices published or announced by other companies and movement in lithium carbonate prices, subject to the floor and ceiling price for first three (3) years Any additional spodumene concentrate will be available for purchase by J&R Optimum Energy, and any shortfall of sales to Lionergy will be purchased by J&R Optimum Energy 16

18 Offtake and Partners Battery Alliance Partnership J&R Optimum Energy About J&R Optimum Energy J&R Optimum Energy is listed in Shenzhen (SZSE code: ) and wholly owns the Optimum Nano battery operations also headquartered in Shenzhen, China. J&R Optimum Energy has a current market capitalisation of 28 billion RMB (approximately A$5 billion) and is focussed on lithium power battery systems utilised in EV, large EV and static storage systems. In 2016, J&R Optimum Energy had capacity to produce 12GWh of batteries and is expected to have 20GWh capacity by end of J&R Optimum Energy has executed at least seven (7) major battery supply contracts in 2017 to produce 103,400 battery sets at a contract value of 10.3 billion RMB (~A$2.0 billion). Recently J&R Optimum Energy updated that market in which it stated the company sold 1.1Gwh of batteries in Q and expected to sell 2.5GWh by the completion of Q

19 Offtake and Partners Battery Alliance Partnership J&R Optimum Energy Altura OptimumNano (wholly owned subsidiary of Shaanxi J&R Optimum Energy) Significant producer / developer of Lithium iron phosphate (LFP - LiFePO4) battery systems Listed in Shenzhen (code: ) Chinese battery market share ~ 15 20% Current annual requirement of 20kt LCE (30GWh) almost 70% of Altura s initial production Firm growth plans and capacity to meet market Altura focused on meeting demand requirement through expanded capacity from operations Award winning production and technology focused group holds many patents 18

20 Offtake and Partners - Lionergy Altura Lionergy Limited Binding Offtake Agreement (BOA) Minimum of 100,000 dry metric tonnes (dmt) per annum of 6% grade spodumene concentrate (prorated) first product sales to commence before 30 June 2018 Term of BOA of 5 years minimum Conditional on Altura obtaining financing for the development of the project on or before 31 August 2017 (or such later date as may be notified by Altura to J&R Optimum Energy) Minimum price of US$550 dmt (FOB) for first three (3) years of BOA (based on Li 2 0 content per dmt on 6% Li 2 0) Maximum price of US$950 dmt (FOB) for first three (3) years of BOA Pricing to be agreed via consideration current market pricing information, including but not limited to indices for spodumene (if available); prices published or announced by other companies and movement in lithium carbonate prices, subject to the floor and ceiling price for first three (3) years 19

21 Offtake and Partners - Lionergy About Lionergy Limited Lionergy Limited is a China based company specialized in the Lithium industry. Its business scope covers spodumene exploration, spodumene mine development, spodumene concentrate sales and distribution, Li 2 CO 3 and LiOH manufacturing and sales, Lithium metal manufacturing, cathode materials manufacturing for Li-ion batteries. This broad coverage and the integration of the lithium industry places Lionergy at the cutting edge in China s Lithium industry. The directors and the management of Lionergy have been working in the Chinese Lithium industry for almost twenty years. They have experienced the growth in the Lithium industry in China from a very small scale to a presently booming sector. The directors of Lionergy have established a very good reputation and connections in the Chinese Lithium industry. 20

22 Project highlights from DFS Altura Pilgangoora Lithium Project DFS Key Results* The DFS highlighted a very attractive project with a long mine life of 13 years, producing an average of 220ktpa of spodumene concentrate over the LOM at a low cash cost of A$316/t Even assuming a spodumene concentrate price of US$539/t (compared with recent sales prices of approx. US$600/t), the project has an assessed pre-tax NPV of A$411m (1) IRR of 58% with project payback period of 1.8 years 1. Net Present Value (NPV) is pre-tax and on a real basis, at a 10% discount rate 2. Average annual ore feed based nominal 1.4Mtpa capacity; process and mechanical design of the plant allows for 15% engineering contingency on the nominal throughput of 1.4Mtpa, allowing capacity to be maintained at 1.45Mtpa and to peak at 1.54Mtpa. 3. EBITDA is after allowing for Native Title and Royalties 4. Price based on FOB forecast equivalent - refer to Market and Pricing section 5. Total Cash Cost FOB / tonne product are defined as all cash costs to free on board, excluding royalties, interest, tax and depreciation. 6. Including sustaining capital and pre-development capital *Refer to ASX announcement 26 September

23 Appendix 1 Reserve and Resource estimates The Reserve and Resource estimates below vary from the inputs for the Definitive Feasibility Study. The below estimates are the result of an upgrade to estimates post delivery of the DFS* Table 1 Altura Pilgangoora Mineral Resource (0.43% Li 2 O Cut-off Grade) January 2017 JORC Category Cut-off Li 2 O% Tonnes (Mt) Li 2 O% Fe 2 O 3 Li 2 O Tonnes Measured 0.43% Indicated 0.43% ,000 Inferred 0.43% Table 2 Altura Pilgangoora Ore Reserve Estimate (0.43% Li 2 O Cut-off Grade) January 2017 JORC Category Cut-off Li 2 O% Tonnes (Mt) Li 2 O% Fe 2 O 3 Li 2 O Tonnes Proven 0.43% Probable 0.43% ,000 Total 0.43% ,000 *Refer to ASX announcement 30 January

24 Appendix 2 Competent Persons Statement Pilgangoora Western Australia The information in this report that relates to the Mineral Resource for the Pilgangoora lithium deposit is based on information compiled by Mr Stephen Barber. Mr Barber is a Member of the Australasian Institute of Mining and Metallurgy. Mr Barber is a Consultant Geologist to Altura Mining Limited and has sufficient experience that is relevant to the style of mineralisation under consideration and to the activity of mineral resource estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Barber is a former employee of PT Altura Indonesia. Mr Barber consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. The information in this report that relates to the Ore Reserve for the Pilgangoora lithium deposit is based on information compiled by Mr Quinton de Klerk. Mr de Klerk is a Fellow of the Australasian Institute for Mining and Metallurgy. Mr de Klerk is a Director and Principal Consultant of Cube Consulting Propriety Limited and has sufficient experience that is relevant to the activity of ore reserve estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr de Klerk consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information in included in the ASX announcement on 30 January Further, all material assumptions and technical parameters underpinning the mineral resource and ore reserve estimates in those announcements continue to apply and have not materially changed. 23

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