Snapshot. Thursday, 13 October Northern Minerals. Rare potential. Analysts Matthew Keane James Wilson. Event & Impact Positive.

Transcription

1 Snapshot SPEC BUY Current Price $0.13 Ticker: Sector: NTU Materials Shares on Issue (m): 525 Market Cap ($m): 68.3 Cash est. ($m) 3.5 Debt ($m) 2.6 Enterprise Value ($m): wk High/Low: $0.19 $ m Av Daily Vol (m): 0.39 Key Project Browns Range Location Western Australia Mineral Inventory (100% basis) Mt (%) Cont. TREO (kt) Reserve Resource Directors Conglin Yue Kevin Schultz George Bauk Colin McCavana Adrian Griffin Yanchung Wang Bin Cai Executive Chairman Deputy Chairman Managing Director / CEO Non-Executive Director Non-Executive Director Non-Executive Director Alternate Director Substantial Shareholders % Conglin International Investment 27.1% Conglin Yue 9.8% Huatai Mining Pty Ltd 5.6% All values in A$ unless stated otherwise Share Price Graph $0.25 $0.20 $0.15 $0.10 $ $ Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Thursday, 13 October 2016 Northern Minerals Rare potential Analysts Matthew Keane James Wilson Quick Read Northern Minerals (NTU) is developing the Browns Range rare earth oxide (REO) project in north-western Australia. The project is a unique high grade dysprosium (Dy) deposit, a strategic REO used in the production of stationary magnets. This market is expected to grow at 4-6% pa out to 2020, driven by increasing demand for electric vehicles and generators (i.e. wind turbines). Browns Range is well advanced having completed a Definitive Feasibility Study (DFS), attained a Mining Lease and environmental approvals and negotiated a coexistence agreement with Traditional Owners. The project has potential to produce at a pilot scale level just 12 months from the completion of funding. Event & Impact Positive Unique Heavy Rare Earth Project: The Browns Range Project is a unique deposit with extraordinary Dy grades amongst its heavy REO (HREO) assemblage. The project boasts a 9Mt Resource containing 87% HREO of the total REO with 0.53kg/t Dy2O3. The nearest analogy outside China is the Lofdal Project in Namibia, grading 75% HREO ~0.20kg/t Dy2O3. Most Dy is currently sourced from China by leaching ionic clays in the countries southern provinces. Brown Range is a strategic asset given its grade and low sovereign risk location. China s aim to clean up illegal and environmentally damaging REO mining and the desire by end users to source ex-china supply increases the projects appeal to strategic investors. Low start-up capital: NTU is planning a staged development of the Browns Range Project starting with the construction of a 60ktpa pilot plant producing 590,000kgpa TREO in a mixed REO carbonate containing 49,000kgpa Dy. Stage 2 will incorporate testing, project optimisation and further Resource development. Stage 3 will be the development of a full scale plant, designed under the 2015 Definitive Feasibility Study (DFS) to produce 1.5Mkgpa TREO. Pilot plant capex is estimated at US$30m with a 9-month construction timeline. The capex for the full scale plant was originally estimated at US$247m with operating costs of US$28/kg TREO. The current basket price for Brown Range is US$34/kg. Partnership secured: NTU has entered into a binding equity funding agreement with Huatai Mining Pty Ltd. Through a Subscription Agreement, NTU will raise $30m by issuing 230m shares at an average price of over $0.13/sh. $3m has been received to date with the remainder due following shareholder approval, which was attained at a General Meeting on 29 September Well funded for the pilot phase: The investment by Huatai will provide a large portion of the $60m required to fund the pilot plant (inc. working capital). NTU also expects significant Government Research and Development (R&D) funding during this stage. In addition, The Company will receive up to $2.75m for the sale of exploration licences to Northern Star (NST). Recommendation Argonaut assigns a SPEC BUY recommendation. Corporate Advisers Stockbroking & Research Special Situations Financing Page 1

2 Browns Range has an exceptionally high ratio of HREO to TREO with the highest percentage of Dy of the total REO mix Investment thesis A unique, high grade deposit NTU s Browns Range is a unique REO deposit with an exceptionally high concentration of HREO. Most REO deposits have a dominance of Light REO (LREO), with only seven deposits having a +20% proportion of HREO (HREO/TREO). Browns Range is the highest grade of these with a resource average of 87% HREO. Importantly, of the HREO assemblage, high value Dy is anomalously high making up 9% of TREOs. Native Title agreements have been attained and the project is on an EPA approved granted Mining Lease. While the current resource is sufficient for an 11-year mine life, NTU has only explored 12% of the 1,500km 2 landholding with 170 prospective targets. Argonauts recent site visit confirmed the project has substantial exploration upside. Table 1: Ex-China Rare Earth projects with HREO compositions above 20% Company Project Location Tonnage (Mt) TREO (%) HREO (%) HREO/TREO (%) Dy 2 O 3 (%) Northern Minerals Browns Range Australia Namibia Rare Earth Lofdal Namibia Alkane Resources Dubbo Australia Stans Energy Kutessay II Kyrgyzstan Tasman Metals Norra Karr Sweden Quest Rare Minerals Strange Lake Canada Matamec Explorations Zeus Canada Average Source: Argonaut, Company Reports, Dy is a growth metal used in the manufacture of electric motors and generators NTU has attained partnership to largely fund its pilot plant and entered into an MOU for offtake Well positioned for a developing market Dy is a growth metal used in the manufacture of permanent magnets used in electric motors and generators (e.g. electric cars and wind turbines). Consumption is anticipated to grow at ~4-6%pa out to NTU is destined to be the first significant Dy producer outside of China (currently 90% of REO supply). An estimated 30% of global REO supply is attributed to illegal Chinese mining, which the Country s Government is aiming to eliminate/regulate. Much of China s production comes from environmentally and socially damaging heap leaching or in-situ leaching of ionic clays. While China has been slow to implement policy, Argonaut believes recent closures and regulation in the coal and zinc sectors have set a precedence for the REO sector. Reducing illegal mining would put the global Dy market into deficit. Browns Range would stand to benefit from substantial production in a low risk jurisdiction, making it attractive to consumers looking for non- Chinese supply. Partnered for success NTU has entered into a binding equity funding agreement with Huatai Mining Pty Ltd, a related body corporate of Taizhong Energy Australia Pty Ltd, the Australian investment arm of Chinese coal producer Shandong Taizhong Energy Co. Ltd. NTU will raise $30m by issuing 230m shares at an average price of over $0.13/sh. This funding will largely finance pilot plant construction in As Huatai s primary business is coal trading, this diversion, undertaken after extensive due diligence, demonstrates the importance of clean energy in China and the expected demand of battery/magnet feed stocks. Off-take MOU NTU has entered into a memorandum of understanding with a substantial REO market participant relating to off-take from the pilot plant. Pricing mechanisms and payment terms have been discussed and will be finalised in final sales agreement currently under negotiation. Corporate Advisers Stockbroking & Research Special Situations Financing Page 2

3 NTU has a large land holding in the Tanami region on the border of Western Australian and the Northern Territory Project overview NTU has a large tenement holding in the Tanami region on the Western Australia and Northern Territory border. The Company s flagship project is the 100% owned Browns Range Rare Earth Project, which contains high value Dy and other HREOs. The project is located in the upper Sturt Creek Basin, in the southeastern Kimberley region, ~160km southeast of the town of Halls Creek and 50km southeast of the Yaruman Aboriginal Community at Ringer Soak. Figure 1: Browns Range project location An initial DFS was completed in early 2015 outlining 270,000kgpa Dy production with A$329m development capex generating an NPV of A$552m with a 34% IRR after applying a basket price of US$89/kg Initial DFS NTU completed a DFS in March 2015 outlining an 11-year project life processing 570ktpa to produce 279,000kgpa of Dy within 3,098,000kgpa of TREO. Development capex was estimated at A$329.4m with cash operating costs (inc. royalties) of US$58/kg Dy, versus an estimated basket price at the time of US$89/kg TREO. The project generated a posttax NPV of A$552m and a 34% IRR. Key metrics are tabled below. Ore will be mined from four deposits with a mix of open pit and underground sources. Processing will incorporate two stages of relatively simple physical beneficiation then a hydrometallurgical circuit (sulphation bake, water leach, purification, and precipitation) to produce a REO carbonate. Table 2: Browns Range DFS key metrics Physical Unit Result LOM Ore Processed Mt 6.4 Ave. LOM TREO Head Grade % 0.68 Ave. Annual Plant Throughput ktpa 570 Life of Mine Yrs Beneficiation Dy Recovery % 91 Annual Dy Production M kg 0.28 Total TREO Recovery % 80 Annual TREO Production M kg 3.1 Est. Basket Price for REO products US$/kg Est. Capex A$M 329 NPV A$M 522 IRR % 34 Source: Argonaut/NTU Corporate Advisers Stockbroking & Research Special Situations Financing Page 3

4 Browns Range has Reserves of 0.7% TREO Reserves and Resources The Browns Range Mineral Resource of 0.63% TREO in contained in a number of deposits including Wolverine, Gambit, Gambit West, Area 5 and Cyclops. With 0.86% TREO, Wolverine is the largest deposit. Gambit and Gambit West have the highest Dy2O3 grade ( %). The 0.70% TREO Ore Reserve is based on four of these deposits (Tabled below). Fifty-nine percent of the Reserves are generated from underground sources. adequate for an initial 11-year mine life Table 3: Brown Range Reserves and Resources with ore to be sourced for both underground and open pit deposits Figure 2: Ore feed by source The prominent geological feature of the region is the Browns Range Dome Geology and mineralisation The most prominent regional feature of the project area is the Paleoproterozoic Browns Range Dome which was formed by a granitic intrusion into Paleoproterozoic Browns Range Metamorphics and Archaean rocks to the south. The dome is surrounded by the later Mesoproterozoic Gardiner Sandstone. Corporate Advisers Stockbroking & Research Special Situations Financing Page 4

5 Mineralisation is hosted in hydrothermal breccias Figure 3: Brown Hills geological map occurring in roughly east-west structures however the source of elevated HREOs remains poorly understood Mineralisation is hosted in breccia hydrothermal systems with Dy and other HREOs contained in the phosphate mineral xenotime. The mineralisation has an exceptionally high proportion of HREO (i.e. 89% HREO at Wolverine). Controlling structures generally strike east-west and dip steeply to the north. The source of REOs and mineralisation genesis remain poorly understood, however there appears to be a relationship with the granite intrusion as either a fluid source or deformation event. Mineralisation outcrops at surface. Corporate Advisers Stockbroking & Research Special Situations Financing Page 5

6 Figure 4: Wolverine mineralisation in outcrop (up to 8% TREO) Typical Browns Range Hydrothermal Breccia outcrop Browns Range will be developed in three stages Revised development strategy In February 2016, NTU revised its business plan to develop Browns Range in three stages. Stage 1 will be the construction of a test pilot plant. Stage 2 will involve project development studies, resource development and completion of engineering and design to a DFS level. Stage 3 will be the construction of a full scale plant based upon the outcomes of the previous two stages. starting with a pilot plant to test the metallurgy, geology and the processing route Pilot plant development The proposed pilot plant will have 60ktpa throughput capacity producing 49,000kg Dy within 590,000kg TREO contained in a mixed rare earth carbonate (~52% TREO). The plant will test key elements of the design process and mining will provide critical information about mineralisation and effective grade control. This stage will also allow NTU to establish its product in the market. The pilot plant has attained Project Management Plan approval from the Western Australian Department of Mines and Petroleum. Figure 5: Browns Range process flow sheet Browns Range Process flow diagram Corporate Advisers Stockbroking & Research Special Situations Financing Page 6

7 During the ~3-year test pilot plant, the project will focus on process optimisation Ore will be campaign mined over an eight-month period to provide adequate feed for ~3 years processing at 60ktpa. An elevated grade of 1.19% TREO will be sourced from small open pits at Wolverine, Gambit and Gambit West. Due to the low volumes, high-grading during this stage will have negligible impact on the residual resource grade. Capex for the pilot plant is estimated at $30m with a nine-month construction timeline post funding. Optimisation The second stage of development will involve project development studies, resource development and completion of engineering and design to a BFS level. Key deliverables include: Reducing mine costs through optimisation of the mining methods and scheduling Boost production by increasing the head grade Create a premium product, primarily by removing low payable yttrium (Y) Increase the Ore Reserve by expansion of existing deposits and testing numerous targets in the project area Following success of stages 1 and 2, NTU will develop a full scale plant Full scale production Following success in Stages 1 and 2, NTU will embark on full scale development. Argonaut believes the scale will be similar to that outlined in the original DFS, whereby a 585ktpa plant will treat 0.66% TREO ore to produce 279,000kt Dy contained in 3.1Mkg TREO in a mixed rare earth carbonate. This original capex estimate is A$329m with an 18-month construction lead time. Figure 6: Downstream stages of REOP processing for permanent magnets producing a mixed REO in carbonate product with Dy, TB and Lu being the main payable metals The key payable elements from Browns Range include Dy, Terbium (Tb) and Lutetium (Lu), representing 60%, 15% and 15% of revenue respectively. Tabled below is the DFS estimates for production and basket prices. Note that REO prices have declined substantially since the publication of this report with Dy currently price at ~US$185/kg (vs US$275/kg at the time of publication). Corporate Advisers Stockbroking & Research Special Situations Financing Page 7

8 Key REO s produced under the DFS include yttrium, dysprosium, terbium and lutetium Table 4: DFS production breakdown by element and estimated basket price Development timeline NTU aims to mobilise development of the pilot plant in ~April 2017 Targeted milestones for the Browns Range development are as follows: Q Complete pilot plant funding Q Order long lead items April 2017 Mobilise mining and construction after the end of the wet season Eight months campaign mining of 180kt ore Q Commence pilot plant operation 2021 commence development of the full scale plant Funding NTU has signed a binding agreement with Huatai for $30m with $3m received to date and a further $9m expected over the coming month NTU will require ~$60m to fund the development of the pilot plant, this incorporates infrastructure capex (~$30m), working capital and upfront mining costs. In early August, NTU entered into a binding equity funding agreement with Huatai. Through a Subscription Agreement NTU will raise $30m by issuing 230m shares at an average price of over $0.13/sh. Huatai can elect two Directors following $12m investment and a Non-Executive Chairman upon full completion of the transaction. $3m has been issued to date via the placement of 30m shares, equating to 5.6% of NTU s issued capital. Upon Completion, Huatai will own 31% of outstanding shares. Shareholder approval has been attained for the outstanding investment. The remaining $27m (200m shares) will be received in three equal tranches within 30, 60 and 90 days of the General Meeting which was held on the 29 th September. The Company will also receive $1.25m upfront from NST for the sales of its tenements The Company will also receive $1.25m for the sale of exploration licences to Northern Star (NST), in an agreement whereby NTU will retain REO rights and receive an additional $1.5m for the discovery of a >1Moz Gold Inferred Resource. Corporate Advisers Stockbroking & Research Special Situations Financing Page 8

9 Upon the definition of a >1Moz Resource, NST will pay NTU a further $1.5m Figure 7: Map showing pro-forma rights following the transaction between NST and NTU NTU believes it can attract 40-45% government R&D funding for the pilot plant opex and capex The Browns Range project and surrounding projects are vastly underexplored R&D funding to support Pilot Phase NTU should be able to attract 40-45% of opex and capex (based on a leased plant) Research and Development (R&D) rebates from the Federal Government. This should make the pilot plant profitable even at today s suppressed REO prices. Exploration upside NTU has only explored 12% of its total ~1,500km 2 land holding. Resources defined to date all outcrop at surface and little drilling has been undertaken along prospective structures which host the Wolverine, Gambit and Gambit West deposits. In addition, all deposits remain open at depth. The high grade Gambit West deposit has only been tested down to 200m below surface. Corporate Advisers Stockbroking & Research Special Situations Financing Page 9

10 Mineralisation remains open at depth at the Wolverine, Gambit and Gambit West deposits Figure 8: Long section of Gambit West (top) and Wolverine (bottom) highlighting open mineralisation at depth and along strike to the west at Wolverine Corporate Advisers Stockbroking & Research Special Situations Financing Page 10

11 NTU has only explored 12% of its ~1,500km 2 land holding with 170 targets identified During Argonaut s site visit, numerous targets were inspected and tested with handheld XRF. Visible xenotime mineralisation and high yttrium readings were a common feature. Yttrium comprises ~58% of the REO distribution and the ratio of Y:Dy is very consistent. Argonaut sees the most prospective targets for new discoveries along the Gambit structural trend and at Banshee South. Figure 9: Niton (XRF) reading at Banshee South prospect (58.8K Y correlates to ~0.8% Dy) Regional potential exists from the John Galt and Boulder Ridge projects with high grade TREO recorded in rock chips Regional potential The John Galt project to the north and the Boulder Ridge project to the south both have similar mineralisation to Browns Range and offer further regional upside potential. Rock chip samples from John Galt returned an average 1.47% TREO (99 samples) from in-situ mineralisation outcropping on a ridge and 5.53% TREO (12 samples) from colluvium/scree below the ridge. HREO comprised approximately 95% of TREO. Boulder Ridge was also tested with rock chips returning grades up to 12% TREO containing up to 1.15% Dy. NTU has not drill tested either of these targets to date. Figure 10: Location of the John Galt and Boulder Ridge projects Corporate Advisers Stockbroking & Research Special Situations Financing Page 11

12 Market Dy is used in high end permanent magnets with expected consumption growth of 4-6%pa out to 2020 REO uses Dy is used in high end permanent magnets (neodymium-iron-boron magnets) and allows them to operation under high temperature conditions. Global consumption of DY is estimated at 1,500-1,800tpa, with a market value of US$285m to US$720m. Tb is used to dope calcium fluoride, calcium tungstate and strontium molybdate, materials that are used in solid-state devices, and as a crystal stabilizer of fuel cells which operate at elevated temperatures. It can also be used as a substitute for Dy in neodymium-iron-boron magnets. Lutetium oxyorthosilicate (LSO) is currently used in detectors in positron emission tomography (PET). This is a non-invasive medical scan that creates a threedimensional image of the body s cellular activity. Lu is also used as a catalyst in petroleum cracking and can also be used in alkylation, hydrogenation, and polymerisation. Y, which comprises 58% of Browns Range TREO, is primarily used in LEDs and phosphors. Y prices have declined with decreased demand down to US$3/kg, making it a loss making byproduct. NTU are therefore considering a Y removal circuit. DY makes up nearly 9% of Browns Range TREO Figure 11: Browns Range REO distribution REO prices are expected to rise of current lows with an expected decrease in illegal Chinese mining and growing demand from the electric vehicle market REO prices expected to rebound off lows The rare earth market continues to languish at five year lows, maintained in surplus by illegal mining in China. The dysprosium oxide price is currently US$185/kg, off highs of US$1,470kg in mid However, market commentator Argus Consulting expects prices to more than double in the next 12 months to US$400/kg. Tb and Lu oxides are currently priced at US$413/kg and US$622/kg. Argonaut understands a Dy price above US$300/kg will be required to incentivise development of the full scale plant development. REO prices are expected to rise due to anticipated Chinese stockpiling, temporary production closures (as a result of persistent low prices) and Chinese government clampdown on illegal REO mining. Magnet specific REOs (inc. Dy, Tb, Nd and Pr) are anticipated to have the highest consumption growth rate base on the rise of electric vehicles. Corporate Advisers Stockbroking & Research Special Situations Financing Page 12

13 Argus forecasts DY prices doubling to ~US$400/kg in 2017 Figure 12: Forecast REO prices out to Q higher than the anecdotal incentive price of US$300/kg to embark on Browns Range Full scale development Source: Argus Consulting Services Illegal Chinese mining accounts for 30% of global HREO supply with about 35-40% coming from environmentally damaging extraction methods which the Chinese Government is targeting to clean up the REO sector Illegal Chinese mining and industry restructuring Illegal mining It is estimated that 30% of global dysprosium, terbium and yttrium supply is from illegal Chinese mining. There are three broad levels of illegal mining; i) small back yard operations with no history of a licence, ii) companies operating outside or above their current licence conditions, and iii), operations with expired licences. Without this illegal mining the global REO market would be in deficit. Environmental impacts of REO mining in China Around 35-40% China s REO supply comes from environmentally and socially unfriendly heap leaching and in-situ leaching of ionic clays in the southern provinces of Jiangxi, Guangdong, Fujian, Zhejiang, Hunan, Guangxi and Yunnan. Mineralisation is generally near surface and grades are low ( % REO) which results in high levels of vegetation clearing and land disturbance. Uncontained aquifers and heap leach run-off results in ammonium sulphate and heavy metal contamination in waterways and surrounding farmland. Landslides are a further issue. Regulation and restructure While China is keen to maintain its REO market dominance, there is increasing social and political pressure to clean up the industry. In a statement earlier this year Vice-Minister of Industry and Information Technology, Xin Guobin, stated, in future China will continue exercising tight controls on rare earth mining, smelting and production quotas, and investigate and prosecute illegal and unauthorized (REO) projects. While China has been promising to clean its REO industry for some time, Argonaut believes the regulation and consolidation which has significantly influenced the country s coal and zinc sectors will soon be passed onto the REO sector. In 2015, China imposed its first REO quotas limiting mining to 52,500 ton and smelting to 50,050. Corporate Advisers Stockbroking & Research Special Situations Financing Page 13

14 Current Board and Management (The following bios have been soured from the NTU website) Conglin Yue - Executive Chairman Mr Yue has long standing relationships with a number of major steel producing companies in China, having developed a successful coking coal and iron ore trading business in China over many years. These well-developed relationships should benefit Northern Minerals as it moves closer to the production of rare earth materials on a commercial scale through improved marketing and distribution channels. Mr Yue is also the Chairman of Conglin Baoyuan International Investment Group, a Chief Executive Officer of Huachen and a Director of the Chinese University of Political Science and Law. Kevin Schultz - Deputy Chairman Mr Schultz, a geologist and mining engineer from the Western Australia School of Mines, and a Fellow of the Australasian Institute of Mining and Metallurgy, he has extensive experience in mining, mineral exploration, international consulting and company management. His experience ranges across a wide variety of mineral commodities, with gold and uranium of particular relevance to Northern Minerals. Mr Schultz has been on the Board since Northern Minerals' inception and listing as Northern Uranium Limited in George Bauk - Managing Director / CEO Mr Bauk is an experienced executive, with 25 years experience in the resources industry. He holds a Bachelor of Business from Edith Cowan University and a MBA from the University of New England. Prior to Northern Minerals, George held global operational and corporate roles with WMC Resources, Arafura Resources and Western Metals. Mr Bauk has a strong background in strategic management, business planning, building teams, finance and capital/debt raising, and experience with a variety of commodities in particular rare earths and nickel. Mr Bauk has been Managing Director of Northern Minerals since Colin McCavana - Non-Executive Director Mr McCavana has more than 35 years of management experience worldwide in the earthworks, construction and mining industries. Much of this has been related to acquisition, development and operation of mining and mineral recovery projects. Mr McCavana, is Non-Executive Chairman of Reward Minerals Ltd, was formerly the Managing Director of Haddington Resources Limited and a Non-Executive Director of Polaris Metals NL. Adrian Griffin - Non-Executive Director An Australian trained mining professional with exposure to metal mining and processing throughout the world, Mr Griffin has been involved in the development of extraction technology for platinum group metals and agricultural commodities. He was also a pioneer of the lateritic nickel processing industry. He specialises in mine management and production. Mr Griffin is the founding Director of ASX listed Empire Resources Limited, Ferrum Crescent Limited and Potash West NL where he is Non-Executive Chairman. Corporate Advisers Stockbroking & Research Special Situations Financing Page 14

15 Yanchung Wang - Non-Executive Director Ms Wang acts as a strategic investor for a number of Chinese based companies. Ms Wang is Vice Chairman of Conglin Baoyuan International Investment Group and also a Director of Huachen. Bin Cai - Alternate Director Mr Cai is the Managing Director of Conglin International Investment Group Pty Ltd based in Brisbane. He has a record of successful strategic investments in emerging Australian resources companies based on his long experience in resources investment. Prior to joining the Conglin Group Mr Cai had eight years experience with the China Investment Bank. Robin Wilson - Exploration Manager Mr Wilson has held senior exploration positions in several exploration and mining companies, including Polaris Metals, Tanganyika Gold, Troy Resources and CRA Exploration. In addition, he spent 5 years working in oil and gas exploration for Woodside Energy. During the 20 years of his involvement in mineral exploration, Mr Wilson has worked on gold, nickel, copper, REE and uranium projects in Western Australia and Africa and was involved in the initial discovery and outlining of several gold deposits. Robin Jones - Project Manager Mr Jones has more than 20 years experience in the mining industry, the majority of which has been in the assessment and development of resource projects from scoping study level through to operation. He has worked on PGM, nickel, copper, gold and uranium projects in Australia, South Africa and China, and has held senior management positions in several companies including Mega Uranium, CopperCo, Aquarius Platinum and Impala Platinum. Mark Tory - Chief Financial Officer/Company Secretary Mr Tory is a Chartered Accountant with 25 years of professional experience in the mining industry and accounting professions. Prior to Northern Minerals, he held senior positions at Crescent Gold Limited, Anglo American Exploration and Homestake Gold (now Barrick Gold). Before joining Homestate, Mr Tory worked for Deloittes in the Audit Division with the majority of his clients being in the mining and resources industry. Corporate Advisers Stockbroking & Research Special Situations Financing Page 15

16 RESEARCH: Ian Christie Director, Industrial Research ichristie@argonaut.com Matthew Keane Analyst, Metals & Mining Research mkeane@argonaut.com James Wilson Analyst, Metals & Mining Research jwilson@argonaut.com Helen Lau Analyst, Metals & Mining Research hlau@argonaut.com INSTITUTIONAL SALES - PERTH: Chris Wippl Executive Director, Head of Sales & Research cwippl@argonaut.com John Santul Consultant, Sales & Research jsantul@argonaut.com Damian Rooney Senior Institutional Dealer drooney@argonaut.com Ben Willoughby Institutional Dealer bwilloughby@argonaut.com INSTITUTIONAL SALES HONG KONG: Travis Smithson Managing Director - Asia tsmithson@argonaut.com CORPORATE AND PRIVATE CLIENT SALES: Glen Colgan Executive Director, Desk Manager gcolgan@argonaut.com Kevin Johnson Executive Director, Corporate Stockbroking kjohnson@argonaut.com James McGlew Executive Director, Corporate Stockbroking jmcglew@argonaut.com Ian Dorrington Director, Corporate Stockbroking IDorrington@argonaut.com Geoff Barnesby-Johnson Senior Dealer, Corporate Stockbroking bj@argonaut.com Rob Healy Dealer, Private Clients , rhealy@argonaut.com Tony Locantro Dealer, Private Clients , tlecantro@argonaut.com Cameron Prunster Dealer, Private Clients cprunster@argonaut.com James Massey Dealer, Private Clients jmassey@argonaut.com Chris Hill Dealer, Private Clients , chill@argonaut.com Important Disclosure Argonaut acts as Financial Adviser to NTU and will receive fees commensurate with these services. Argonaut holds or controls 894,133 NTU shares. Information Disclosure Each research analyst of this material certifies that the views expressed in this research material accurately reflect the analyst's personal views about the subject securities and listed corporations. None of the listed corporations reviewed or any third party has provided or agreed to provide any compensation or other benefits in connection with this material to any of the analyst(s). General Disclosure and Disclaimer This research has been prepared by Argonaut Securities Pty Limited (ABN ) ( ASPL ) or by Argonaut Securities (Asia) Limited ( ASAL ) for the use of the clients of ASPL, ASAL and other related bodies corporate (the Argonaut Group ) and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this report in any way. ASPL is a holder of an Australian Financial Services License No and is a Market Participant of the Australian Stock Exchange Limited. ASAL has a licence (AXO 052) to Deal and Advise in Securities and Advise on Corporate Finance in Hong Kong with its activities regulated by the Securities and Futures Ordinance ( SFO ) administered by the Securities and Futures Commission ( SFC ) of Hong Kong. Nothing in this report should be construed as personal financial product advice for the purposes of Section 766B of the Corporations Act 2001 (Cth). This report does not consider any of your objectives, financial situation or needs. The report may contain general financial product advice and you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. This research is based on information obtained from sources believed to be reliable and ASPL and ASAL have made every effort to ensure the information in this report is accurate, but we do not make any representation or warranty that it is accurate, reliable, complete or up to date. The Argonaut Group accepts no obligation to correct or update the information or the opinions in it. Opinions expressed are subject to change without notice and accurately reflect the analyst(s) personal views at the time of writing. No member of the Argonaut Group or its respective employees, agents or consultants accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Nothing in this research shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction. The Argonaut Group and/or its associates, including ASPL, ASAL, officers or employees may have interests in the financial products or a relationship with the issuer of the financial products referred to in this report by acting in various roles including as investment banker, underwriter or dealer, holder of principal positions, broker, director or adviser. Further, they may buy or sell those securities as principal or agent, and as such may effect transactions which are not consistent with the recommendations (if any) in this research. The Argonaut Group and/or its associates, including ASPL and ASAL, may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. The analyst(s) principally responsible for the preparation of this research may receive compensation based on ASPL s and / or ASAL s overall revenues. Hong Kong Distribution Disclosure This material is being distributed in Hong Kong by Argonaut Securities (Asia) Limited which is licensed (AXO 052) and regulated by the Hong Kong Securities and Futures Commission. Further information on any of the securities mentioned in this material may be obtained on request, and for this purpose, persons in the Hong Kong office should be contacted at Argonaut Securities (Asia) Limited of Unit 701, 7/F, Henley Building, 5 Queen s Road Central, Hong Kong, telephone (852) Copyright All rights reserved. No part of this document may be reproduced or distributed in any manner without the written permission of Argonaut Securities Pty Limited and / or Argonaut Securities (Asia) Limited. Argonaut Securities Pty Limited and Argonaut Securities (Asia) Limited specifically prohibits the re-distribution of this document, via the internet or otherwise, and accepts no liability whatsoever for the actions of third parties in this respect. Corporate Advisers Stockbroking & Research Special Situations Financing Page 16