Extract Resources Limited Emerging as a major uranium producer in Namibia Africa Down Under Conference, Perth, September 2011

Transcription

1 Extract Resources Limited Emerging as a major uranium producer in Namibia Africa Down Under Conference, Perth, September 2011 September 2011

2 Important Notice The summary information contained herein has been provided by Extract Resources Limited ( Extract or the Company ). No representation, express or implied, or warranty as to the accuracy or completeness of the information contained herein is made by any party and nothing contained herein is or shall be relied upon as a promise or representation asto the future. In all cases, recipients should conduct their own investigation and analysis of Extract. The information is neither anoffer to sell nor a solicitation of an offer to buy any securities. All statements, trend analysis and other information contained in this document related to markets for Extract, trends in revenue, gross margin and anticipated expense levels, as well as other statements about anticipated future events or results, constitute forward-looking statements. Forward-looking statements often, but not always, are identified by the use of words such as seek, anticipate, believe, plan, estimate, expect, intend, forecast, project, likely, potential, targeted and possible and statements that an event or result may, will, would, should, could or might occur or be achieved and other similar expressions. Forward-looking statements are subject to known and unknown business and economic risks and uncertainties and other factors that could cause actual results of operations to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are based on estimates and opinions of management at the date the statements are made. Extract does not undertake any obligation to update forward-looking statements even if circumstances or management s estimates or opinions should change. For the reasons set forth above, investors should not place undue reliance onforward-looking statements. The information in this document that relates to Exploration Results or Mineral Resources is based on information compiled or reviewed by Mr Martin Spivey, who is a Member of The Australasian Institute of Mining and Metallurgy and Mr Andrew Penkethman who is a Fellow of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Both Mr Spivey and Mr Penkethman are full time employees of the Company. Mr Spivey and Mr Penkethman have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Spivey and Mr Penkethman consent to the inclusion in this document of the matters based on their information in the form and context in which it appears. The information in this document that relates to Mineral Reserves is based on information compiled or reviewed by Mr Steve Craig and Mr Ross Cheyne who are both members of The Australasian Institute of Mining and Metallurgy. Both Mr Craig and Mr Cheyne are open pit mining consultants to the Company and work for their own firm, Orelogy. Mr Craig and Mr Cheyne have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Craig and Mr Cheyne consent to the inclusion in this document of the matters based on their information in the form and context in which it appears. The information in this report that relates to Metallurgy and Process Design is based on information compiled or reviewed by Mr Michael Valenta, who is a Member of the South African Institute of Mining and Metallurgy. Mr Valenta is a consultant to the Company. Mr Valenta has the appropriate relevant qualifications, experience and independence to generally be considered a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Valenta consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

3 3 Extract at a glance 4 th largest primary uranium deposit globally Definitive Feasibility Study completed Q Expected to produce 15Mlbs uranium per annum US$1.659bn Project Cost to develop Husab Project Recent resource and reserve upgrades announced Further upside expected from MORE programme Mining licence application submitted

4 4 Extract Corporate snap shot Company Snapshot Listing Share Price ( August 15, 2011) Issued Capital Market Capitalization (August 15, 2011) Cash (June 30, 2011) ASX / TSX / NSX (ASX 200 Company) A$ M ~A$1,955 M A$75 M Major Shareholders Kalahari Uranium Ltd* 42.7% Rio Tinto 14.2% Itochu 10.0% * Kalahari Uranium is a wholly owned subsidiary of AIM listed Kalahari Minerals EXT holding represents its principal asset. Extract Resources is an ASX 200 Company

5 5 Namibia: Long history of uranium mining The Erongo region of Namibia is a globally significant uranium province Features primary (e.g. Rössing) and secondary (e.g. Langer Heinrich) deposits Etango History of providing long term, reliable uranium supply for 36 years Namibia is the fourth largest uranium producer in the world Production from Husab expected to increase importance of Namibia to global markets

6 6 Namibia: Positive investment environment Namibia ranked 10 th in Fraser Institute annual mining survey Of the top 5 uranium producing countries, only Canada is ranked higher than Namibia Ranked 2 nd of all African countries in survey Proposed changes to Namibian Minerals Policy (April 2011) confirmation received from Namibian government that existing licences will be unaffected; current licence applications will continue to be assessed on their own merit Proposed amendments to Namibian taxation law revised proposals (17 August 2011) confirm Namibia is willing to consult and wishes to remain an attractive investment destination DRC (Congo) Venzuela M adagascar Zimbabwe Bolivia Ecuador Niger Guatemala Honduras Kyrgyzstan Guinea Kazakhstan Russia Papua New M ongolia Phillipines Romania South Africa Argentina Indonesia India Panama Bulgaria Zambia Tanzania M exico Peru Vietnam Burkina Faso Ghana China Columbia M ali Turkey Ireland Brazil United States Australia Namibia Norway New Zealand Canada Botswana Chile Finland Greenland Spain Sweden Country Risk Ranking 1 Mild deterrent to investment Strong deterrent to investment Would not pursue investment due to this factor 0% 20% 40% 60% 80% 100% 1 Fraser Institute - annual mining survey (2010/11)

7 7 Husab Project well located

8 8 Resources and exploration potential Husab Uranium Project lies in the centre of a highly prospective region More than 70% Husab geology concealed by surface cover Rapid exploration success and resource evolution achieved with most deposits still open in at least one direction DFS conducted on Zones 1 & 2 of Husab Deposit Unrivalled opportunities to increase resources

9 9 Husab Uranium Project Evolution Charts show resources in Zones 1-5, and exclude Ida Dome. Refer to June 7, 2011 resource update and August 10, 2011 reserve update ASX releases for full details.

10 Contained Metal (M lbs) 10 Husab is the most significant uranium deposit in Namibia Major uranium deposits in Namibia Husab Etango Rossing 200 Marenica Langer Heinrich Trekkopje Valencia Tubas/Tumas/Omahola Ida Dome Grade (ppm) Source: Company data Excludes by-product or co-product uranium projects

11 11 Husab is the 4 th largest uranium only deposit in the world Uranium only deposits Husab steadily moving up the rankings Russia Niger Canada Namibia Kazakhstan Canada Australia Botswana Namibia Namibia Namibia Tanzania Spain Source: Company data Note: Excludes by-product or co-product uranium projects Note: Global resource comparison for in situ uranium The only top 5 deposit not controlled by a major mining house

12 12 Developing the resource: DFS & MORE Definitive Feasibility Study (DFS) completed within three years of discovery Potentially the 3 rd largest uranium mine in the world Production of 15 Mlbs U 3 O 8 per year Project Cost US$1.659 bn (N$12bn) capital investment Low cost, long life, sustainable operation Capital cost US$1,480 million Operating cost $28.5/lb Mine life: DFS: initial 16 year mine life (increase indicated from optimisation of June 2011 resource update) Reserve upgrade (August 2011): mine life now estimated to be 20+ years

13 14 Developing the resource: DFS & MORE Mine Optimisation and Resource Extension (MORE) programme initiated Increasing mine life Optimisation of mine plan and process enhancements Resource Update June % increase in Total Global Resource since Aug 2010 resource estimate Total resource inventory of 513 Mlbs Deposit Resource Classification Tonnes (Mt) Grade (ppm U 3 O 8 ) U 3 O 8 (Mlbs) Zones 1+2 Measured Zones 1+2 Indicated Zones Inferred Reserve Update August Figures rounded & reported above 100 ppm U 3 O 8. Refer to June 7, 2011 resource update ASX release for full details.

14 15 Reserve Update August % increase in Reserves at Zones 1 & 2 Projected mine-life now expected to exceed 20 years 1 Increase in ore grade from 497ppm to 518ppm U 3 O 8 15% reduction in life-of-mine strip ratio from 7.3:1 to 6.2:1 Opex expected to decrease based on reduced strip ratio Reserve Update marks latest phase of the MORE programme Further resource update expected in H Including pre-strip and based on Definitive Feasibility Study processing of 15 million tonnes of ore per year. Refer to August 10, 2011 reserve update ASX release for full details.

15 15 Husab Reserve Update August 2011 Classification Tonnes Grade Mlb Zone 1 Proven Probable Zone 2 Proven Probable TOTAL

16 Elkon Imouraren McArthur River Husab Cigar Lake Jabiluka Rössing Langer Heinrich Inkai Valencia Mkuju River Ranger Reserves (Mlbs) 16 Husab is world class Proven & Probable Uranium (Mlbs) Russia Niger Canada Namibia Canada Australia Namibia Namibia Kazakstan Namibia Tanzania Australia Source: Company data Note: Excludes by-product or co-product uranium projects Note: Global Reserves comparison for insitu uranium on a 100% basis

17 17 Project cost estimate US$ Million 1 Initial Mine Fleet & Infrastructure 407 Processing plant 529 Mine Residue Facility 71 Infrastructure & Temporary facilities 210 Indirect costs (EPCM, Owners costs, other) 158 Contingency 105 Total Capital Cost 1,480 Pre-Strip and Pre-production opex 179 Total Project Cost 1,659 1 Cost estimate excludes escalation, financing costs and working capital

18 18 Operating Cost Estimate US$ / lb U 3 O 1 8 Mining 13.9 Processing 13.4 G&A 1.2 Cost of Production 28.5 Royalties Transport & Marketing 1.5 Total Costs Cost estimate excludes escalation 2 Estimated royalty payment based on current market price Costs will drop based on August 2011 reserve update

19 19 Mining: proposed site layout Truck and shovel mining from two open pits Ore hauled to crusher stockpile Waste rock to adjacent Mine Residue Facility (MRF) Zone 1 Ore conveyor to plant MRF Tailings conveyed to MRF and disposed of with waste rock Zone 2

20 20 Processing: a conventional design Waste rock to MRF (also by truck) Open pit mine Strip liquid Haul trucks Stripping Tram Bin Precipitation Washing Scrub liquor Scrubbing Extraction Thickening Organic Crushers Elution column Acid added Stockpile Resin added Adsorption column Mill Water Leaching tank Sulphuric acid and manganese dioxide Drying Feed stream (liquid) Belt filter Filter cake Flocculant To MRF (solids) Product packaging Uranium Oxide To Market Proven, low risk flow sheet

21 21 Project schedule 33 months from Go ahead to plant hot commissioning 1 Go ahead expected after receipt of mining licence, financing and Board approval Critical path items include: Infrastructure (water & power) Procurement (especially of mine fleet) Year 1 Year 2 Year 3 Months Go Ahead Engineering & Procurement Construction Start of mining Mechanical Completion Cold commissioning 1 1 Hot commissioning 1 Commercial Production 1 Estimate based on information provided for the DFS; procurement timetable may be reassessed at time of placing orders

22 22 Infrastructure supplementing existing infrastructure Access New access Roads from North and South Water Temporary supply Permanent supply from 3 rd party desalination facility at Mile 6 Shared pipeline to site Also consider supply from EDC facility at Wlotzkasbaken Power Temporary & permanent supply from connections to existing grid

23 23 Health, Safety, Environment & Uranium Industry Participation Zero basis for injuries and environmental breaches Health & Safety Best practice health and safety applied Radiation management to international standards Environment Q Mine & Process Plant SEIA and EMP approved Q Linear infrastructure SEIA and EMP approved SEIAs to Equator principles / IFC Standards Uranium industry participation International World Nuclear Association Namibia Chamber of Mines, Uranium Stewardship Committee Australia Australian Uranium Association

24 McArthur River Cigar Lake Husab Ranger Olympic Dam Priargunsky Rössing Muyunkum Langer Heinrich Niger Mkuju River Salamanca (2) (U3O8 Mlbs) 24 Husab to become world s third largest uranium only mine Annual Production of Major Uranium Assets (1) 15.0 Decrease in Production 2015E Additional Production 2010A Production Indicates 2016E Production 2 Arlit and Akouta mines combined Source: RBC Capital Markets estimates, company estimates

25 25 Scale of Husab - it s vast! Large scale Low risk High grade Conventional open pit and tank leach operation Globally strategic asset Delivering MORE

26 Thank you