Introduction to Graphite production in Madagascar

Transcription

1 Introduction to Graphite production in Madagascar February 2013 stratminglobal.com

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3 StratMin: the opportunity > Stratmin Global Resources PLC (AIM:STGR) is London s only listed emerging natural flake graphite producer and explorer > The company s assets are located in Madagascar, a country that has experienced significant investment in their natural resources > Growing global demand for graphite, a relatively scare commodity, with an increasing importance in high end technology and green energy applications > StratMin aims to produce ought after large flake graphite > A low cost production model provides attractive profit margins > RTO fund raise of 1.5m expected to support business into full production > Graphite has been declared supply-critical by both the US and the EU* > Good relations with local government and wider community London Listed AIM: STGR Current Share Price 59p Market Capitalisation 36m Issued Shares 60,060,998 Shares not in public hands 87.2% 52 Week High/Low 63.9p/20p * Source: Resource Security Action Plan: Making the Most of Valuable Materials, published by the Department for Business Innovation and Skills and Department for Environment Food and Rural Affairs, March

4 StratMin: the investment case > StratMin aims to produce the most sought after form of graphite; premium large flake variety > Graphite has a growing importance in high end technology and green energy applications > Global consumption increased from 600,000t in 2000 to 1.2mt in 2012 (worth ~ US$12bn)* > 70% of world supply currently comes from China, BUT * Easily mined Chinese surface oxide deposits are dwindling Chinese graphite is declining in quality as miners go deeper Production costs are increasing and industry consolidating, eliminating marginal producers Chinese government has implemented a 20% export duty on graphite and 17% VAT* > Large flake graphite sells for $900 - $2,500/t, depending on the size of the flakes and the purity of the carbon > Attractive profit margins StratMin plans to produce 12,000tpa Estimated production costs of $700pt in the first year, $350pt thereafter *Source 1: USGS. *Source 2: Resource Security Action Plan: Making the Most of Valuable Materials, published by the Department for Business Innovation and Skills and Department for Environment Food and Rural Affairs, March

5 StratMin: unique amongst peers > Few new graphite projects in the world with both exploration and production capabilities > StratMin is at the top of this pyramid as a company embarking on production of beneficiated graphite directly for export Company Market Cap Syrah Resources $452m Focus Graphite $73m Uragold Bay Resources $63m Northern Graphite $62m Talga Resources $15m Flinders Resources $7m Standard Graphite Corp $6m 5

6 StratMin: Board of directors Gobind Sahney, Chairman Mr Gobind Sahney was appointed to the Board on 14 November Gobind Sahney has a background in corporate finance and business management, becoming the Chairman and Managing Director of Alpha Universal Management Plc. At Alpha, Mr. Sahney is involved in the analysis, acquisition, collection, and disposition of performing and non-performing debt portfolios and other distressed opportunities for the Company's account and investors. Prior to joining Alpha, Mr. Sahney, through GO Services LLC and other proprietary entities acquired over $750 million in distressed unsecured consumer and commercial receivables in the USA, Europe, and UK. Jeffrey Marvin, Managing Director Mr Marvin was appointed to the board in December, He has extensive experience in mineral exploration and development across a diverse range of commodities including coal, chrome, manganese, mineral sands, precious metals and coal seam gas. Mr. Marvin has solid international minerals management, corporate governance and public markets experience. Prior to joining the board of Stratmin, Mr. Marvin spent several years in Australia coordinating and managing multi-million dollar exploration programs in the areas of thermal coal, mineral sands and coal seam methane. Manoli Yannaghas, Non-Executive Director Mr Manoli Yannaghas, has been in the mineral exploration and production industry for over 6 years. He has particular experience in acquisitions and operations throughout East Africa as well as South and Central America. He is currently an executive director of Red Rock Resources PLC (AIM listed). He is a former financial analyst with international financial consulting firm Greenwich Associates, who has experience with small and medium sized businesses where he has fulfilled roles in operations and corporate finance. 6

7 Our asset: the details Two 40-year mining permits located in eastern Madagascar; Loharano & Antsirabe Competent Person s Report (CPR) for the Northern half of the Lohorano Loharano > JORC Resource of 234,659 tonnes of contained graphite Indicated Resource of 421,000 tonnes at 5.15% Inferred Resource of 5,273,000 tonnes at 4.04% > Low Mining Costs High quality, crystalline large flake graphite deposits which are near surface and open cast, with low overburden ratios The ore is located in clay-soft rock > Additional exploration upside exists by upgrading both the indicated and inferred resource through planned drilling program Further exploration > Trenching saw graphite concentration increasing with depth and finishing in mineralisation > Drilling program expected to confirm considerable carbon quality and resources size upgrade 7

8 Production: Loharano > Production plant installed with potential to produce 12,000 tpa of high grade flake graphite > Potential to expand production capacity > Plant targeting initial graphite product parameters of +80 mesh with 94% carbon > Mine site 110 kms via paved road from port of Toamasina, where the graphite will be containerised and exported > Port of Toamasina handles 90% of Madagascar s container traffic and more than 80% of all trade traffic > Off Take discussions with leading global buyers are on-going Port of Toamasina 8

9 Management: in-country management > Marius Pienaar, Country Manager: Over 20 year s experience in all aspects of mineral project development including project origination, exploration and production. A specialist in equipment and processing plant design, Marius has a proven track record of project development internationally. He is responsible for overall project management at the mine site > Guy Aldworth: (One Vision) A specialist mining engineer with over 30 year s experience in mine management, production and engineering. He is responsible for carrying out the initial mining operation and the planned mine expansion. Guy has previously worked at RandCoal (Pty) Ltd & JCI Gold (Pty) Ltd > The company has 52 employees and strong ties to the local government and industry On-site technical consultants: > One Vision: Leading experts in specialized equipment manufacturing, plant layout and design, crushing and screening. Specialists in processing operation optimization for the extractive mineral industry with more than 40 year s experience > Creo Design: Specialists in mineral exploration/evaluation and mine planning and design. The company draws on the experience of a well-qualified and experienced team of mining professionals 9

10 Madagascar: expanding mining industry Madagascar is home to an expanding mining industry featuring major international companies: > Sherritt International s $6bn investment in a nickel-cobalt venture > World Titanium Resources 959m tonne Mineral Project in Ranobe > Ruby mine > TRE exploration project > Coal exploration company > One of India's major steel producers, > Titanium dioxide project with projections of 2m tpa 10

11 Why Graphite?

12 Why Graphite? Graphite has the highest natural strength and stiffness of any material known today. > It is one of the lightest of all reinforcing agents and has high natural lubricity that helps makes it an important ingredient in advanced technology manufacturing > The long term growth potential of large flake graphite in the electric car battery as well as aerospace, sensor and solar industries, will drive demand for this unique resource > The UK is at the forefront of the graphite industry with a world-leading, 70m research and development facility, currently being formed at the University of Manchester Graphite is used in a number of growing sectors > applications with lithium ion batteries, notably used in electric vehicles, and > mobile electronics, solar PV cells, brake linings, refractories, foundry facing and lubricants This booming demand will require more than a doubling of current global graphite production to meet the needs of traditional markets like North America and Europe, as well as such emerging markets as China, India, Russia and Brazil. Fortunately, graphite reserves are present around the world, though many sites would require several years of development and significant investment to begin production. Technology Metals Research co-founder Jack Lifton,

13 Graphene: the future of Graphite? Said to be the strongest and most conductive material ever measured, graphene has been dubbed a miracle material of the 21st Century. Though graphene technology is in its infancy, applications of this carbon material are seemingly endless: > the outstanding properties of graphene make it attractive for applications in flexible electronics and both Samsung and Nokia are currently developing products that use graphene > Samsung researchers have created a flexible touchscreen several feet wide from printed graphene that could eventually be commercialized in strong, lightweight, flexible solar cells, touch sensors and flat-panel screens, perhaps maybe even directly integrated into clothing Graphene has a potential to revolutionise many aspects of our lives simultaneously. Some applications might appear within a few years already and some still require years of hard work. Nobel Prize winner Professor Konstantine Novoselov Our research establishes graphene as the strongest material ever measured, some 200 times stronger than structural steel. It would take an elephant, balanced on a pencil, to break through a sheet of graphene the thickness of Saran Wrap. Professor James Hone, Columbia University 13

14 Appendix

15 Graphite: a real growth story > Even if some mines increase their production, this will not solve the persisting supply problem for large flake crystalline graphite. Technographit, Feb 2009 > The days of cheap, abundant graphite from China are over. Industrial Minerals Magazine, May

16 Types of Graphite Graphite, often referred to as the highest grade of coal, is an allotrope of carbon (others including diamond, charcoal and graphene) that has unique properties. Natural graphite is produced and marketed in a range of different qualities and crystallized sizes. It can be grouped in 3 general categories: 1. Flake > Distinctive plate-like or flake formation. Flake graphite is subdivided into large, medium and fine sizes > Flake is less common a generally at high quality, so sells for a premium > Natural flake has the widest range of use and accounts for about 49% of natural graphite consumption > Company expects to produce mostly large flake for global export (+80 mesh) 2. Amorphous > Typically lower in purity than other natural graphite and is the most abundant > Very fine crystalline microstructure > Used where lower quality product is acceptable or where fine particle sizes are required > Sells at a significantly lower price than flake graphite and accounts for about 50% of global natural graphite market 3. Vein > Found in defined veins and is the purest of the natural graphites > Traditionally has sold at a premium but modern processing of Flake graphite can produce a superior product > Commercially mined only in Sri Lanka and accounts for only about 1% of the global natural graphite market 16

17 Graphite deposits Flake graphite deposits of economic scale are found in China, India, parts of Europe, Mexico, Brazil, North/South Korea, Canada, Madagascar and Australia: > China and other global deposits host a mix of flake sizes > Madagascar and Canada host large deposits (jumbo flake material) > Madagascar is entering from an increase in mineral exports, enabling it to increase GDP in line with the source country growth rates of developed countries Arrows are pointing to major Graphite occurrences around the world. Source: USGS, IAS 17

18 Global graphite production Top producers share of supply Year on year China dominates world supply 80% + Brazil world s biggest outside China 8% + India modest flake graphite producer 4% - North Korea supplier to China 3% - Canada only minor in North America 2% = > From now to 2025 the demand for large flake for the automotive industry is expected to rise from 100,000t today to 400,000t > With current Global production of large flake graphite represented by a total of 400,000t, StratMin s strategy to develop long term production of 24,000t+ should find their increased production absorbed readily into this level of increased demand Source: Industrial Minerals Natural Graphite Report 2012 ( 18

19 Graphite: recent market trends > A growing total demand for Graphite has resulted in a forecasted deficit for the industry going forward > Few graphite companies are near the production stage and most require large capital investment, which place StratMin in a unique position following the acquisition of Graphmada Natural graphite supply and demand 19

20 StratMin: Global advisers Nominated Adviser Broker Solicitors as to English law Legal Advisers as to Singaporean law Legal Advisers as to Madagascan law Solicitors to the Nominated Adviser Auditors and Reporting Accountants Competent Person Adviser to StratMin Board of Directors Financial Public Relations Libertas Capital Corporate Finance Limited, London Optiva Securities Limited, London Speechly Bircham LLP, London Moey & Yuen, Singapore John W. Ffooks, Madagascar Edwin Coe LLP, London Welbeck Associates, London Creo Design (PTY) Limited, Cape Town Harry Lopes, former mining executive Tavistock Communications 20

21 Contact Registered address StratMin Global Resources Plc 31 Harley Street London W1G 9QS Tel: Fax: Company number: