Highfield Resources Ltd Utopia in Potash

Transcription

1 Highfield Resources Ltd Utopia in Potash RFC Ambrian Potash and Phosphate Day 1 December 2014

2 COMPETENT PERSON STATEMENT Information relating to resources was prepared by Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo, of Agapito Associates. The Competent Person under JORC Code standards is Mr Leo Gilbride, P.Eng and Ms Vanessa Santos, P.Geo. of Agapito Associates of Colorado, USA. Mr Gilbride is a licensed professional engineer in the State of Colorado, USA and is a registered member of the Society of Mining, Metallurgy and Exploration Inc. Ms Santos is a licensed professional geologist in South Carolina and Georgia, USA, and is a registered member of the Society of Mining, Metallurgy and Exploration Inc. The Society of Mining, Metallurgy and Exploration Inc is a JORC Code Recognized Professional Organization (RPO). An RPO is an accredited organization of which the Competent Person under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore Reserves through the ASX. Mr Gilbride is the Vice President of Engineering and Field Services and Ms Santos is the Chief Geologist with Agapito Associates and both have sufficient experience to qualify as a Competent Person for the relevant style and type of mineralisation and deposit under consideration of this release. Mr Gilbride and Ms Santos consent to the inclusion in the report of the matters based on this information in the form and context in which it appears. FORWARD LOOKING STATEMENTS This presentation includes certain forward looking statements. All statements, other than statements of historical fact, are forward looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove accurate, and actual results and future events could differ materially from those anticipated in such statements. Such information contained herein represents management s best judgment as of the date hereof based on information currently available. The company does not assume any obligation to update any forward looking statement.

3 Highfield Resources Ltd Utopia in Potash CONTENTS Section 1 Background Global fertiliser market Potash 101 Highfield Resources Corporate snapshot Highfield Resources Project map HFR Muga-Vipasca Pre-Feasibility Study Section 2 Utopia in Poash Geological setting and mineralogy Infrastructure and location Global project comparison Section 3 What does it mean? 3

4 Global fertiliser market K is key to participation in a $200bn market Market concentration Barriers to entry (capex and mineable resources) World Fertiliser supply breakdown High K K Specialty 90Mt N 153Mt Medium P P K 70Mt P 47Mt Low* N N Source: IFA Fertilizers Global Supply , Ceresana * Noting this is relative as the fertiliser market generally has high barriers to entry 4

5 Potash 101 What is Potash? Also know as Muriate of Potash (MOP) or potassium chloride (KCl) Most common method of providing potassium to crops Over 95% of production is destined for use in fertilisers Supply/Demand Global consumption of MOP currently 60m tpa Expected to trend upwards as population grows and hence food demand grows Different views on production capacity but most believe there is a capacity gap beyond 2020 Source: Integer s Outlook for Potash, Edition 4 (Oct 2014) 5

6 Corporate Snapshot Fully Diluted Equity ,500,000 Ordinary Shares on Issue m Options 39.25m Performance A* Shares 51.50m Performance B* Shares 51.50m Fully Diluted m Undiluted Market Cap at 60c $120m Fully Diluted Market Cap at 60c $206m Cash as at 30 September 2014 ~A$30m Average Daily Volume (6 months) ~325,000 Shareholders (Fully Diluted) Spanish in-country management 21% Australian based management 8% EMR Capital 20% Other Shareholders 51% Total 100% * Performance shares were granted for acquisition of the Spanish assets with the following milestones A. JORC Indicated Resource of 150m tonnes at 13% K 2 0 (20.6% KCl); and B. Construction and operating approvals for production of 500,000 tonnes of potash per annum. Price (A$) ,000,000 2,500,000 2,000,000 1,500, ,000, , Nov-09 Feb-10 May-10 Aug-10 Nov-10 Broker Recommendation 12-month Price Target Bell Potter BUY $0.90 Canaccord Genuity BUY $0.98 Foster Stockbroking BUY $1.35 GMP Securities BUY $0.94 Numis Securities BUY $2.20 Taylor Collison BUY $1.18 Volume 6

7 Project map km

8 Highfield - Muga-Vipasca Pre-Feasibility Study Underground mine accessed via a decline supported by first world infrastructure and domestic markets Post tax NPV 10 of US$1.06bn Post tax, unlevered IRR of 48.4% EBITDA in first year of full production estimated at $US235m Initial 20 year mine life at an average of 860k tonnes of potash (K60 product) per annum Pre-production capital cost estimated at less than US$250m (from total capital cost estimate of US$307.9m) Virtual image of proposed mining operations All in cash costs to port of Bilbao of US$145 per tonne. Total C3 costs of US$162 per tonne 2016 FOB Vancouver potash price reference of $384 per tonne (nominal) ASX Release 20 May 2014 Highway between Sangüesa and Pamplona Port of Bilbao 8

9 Utopia in Potash Geological setting and mineralogy Criteria Utopia is Utopia means Depth Water Shallow depth from surface: less than 500m but deep enough to enable conventional mining Absence of aquifers and rivers above mineralisation Decline access or shallow, low cost shaft No expensive shafts through aquifers or water leaking into mines Mining horizon Thick, continuous beds of sylvinite Efficient, highly mechanised mining Mining method Evaporite geology Underground conventional mining Continuous evaporite, minimal faulting, horizontal beds with minimal folding Lower opex, capex and sustaining capital with higher extraction ratios Lower opex, capex and sustaining capital with higher extraction ratios Net grade High grade sylvinite and high recovery rates Lower mining and processing costs Scale Ease of processing Deposits facilitating annual production of 2m tpa or greater Minimal magnesium, sulphur and insolubles, with coarse grains and limited incursions into KCl grains Positive economies of scale Lower processing costs and simple flotation circuits 9

10 Utopia in Potash Infrastructure and location Criteria Utopia is Utopia means Utilities Proximity to, quality and reliability of electricity, gas and water networks Lower capex and lower opex Energy cost Cost of energy at the lower end of global pricing scale Lower opex Labour Logistics Geopolitical profile Tax regime Access to qualified, experienced and economical workforce High quality roads, rail and ports with available capacity, in close proximity to operations Stable, transparent and favourable jurisdiction Low corporate tax rate, mining tax incentives and low royalty rates Low cost mining and processing Minimised transport-related capex and opex Access to more sources cost of capital at a lower cost Higher net margins and more robust economics By-product credits Ability to monetise by-products Additional margin Addressable markets Proximity to multiple sources of significant demand paying relatively higher prices Maximised margin and consistent demand 10

11 Project comparison Company Highfield Intrepid PotashCorp Mosaic Belaruskali Uralkali ICL Project Muga Carlsbad West Lanigan Belle Plaine Soligorsk III Bereznikl IV Suria Location Spain USA Canada Canada Belarus Russia Spain Mining method 1 Conventional Conventional Conventional Solution Conventional Conventional Conventional Access 1 Decline Shaft Shaft N/A Shaft Shaft Decline / Shaft Scale mtpa 0.4 mtpa 2.5 mtpa 2.8 mtpa 2.3 mtpa 3.0 mtpa 0.8 mtpa Geological setting and mineralogy Infrastructure Depth ++ + = = Water ++ = = = - - = Mining horizon + = Mining method Evaporite geology Net grade Scale + = Ease of Processing = Utilities ++ + = = Energy cost = = Labour Logistics = = = = ++ Geopolitical profile Location Tax regime = = ++ By-product credits + = = = = + Addressable markets = = ++ Table based on Highfield assessment 1) Company information - Most favourable - Least favourable 11

12 What does it mean? Project Highfield Muga* Belaruskali BHP Jansen* Intrepid Potash K+S Legacy* Price at Customer $300 CFR Brazil / CIF NW Europe US$380 / tonne SE Asia / Brazil / Europe US$350 / tonne FOB Vancouver US$310 / tonne CIF US Midwest US$450 / tonne FOB Vancouver US$310 / tonne Estimated EBITDA margin (US$ / tonne) $200 $100 $228 $188 $156 $108 $71 $- $(95) $(63) $(67) $(80) Estimated delivered cost to customer (US$ / tonne) $(100) $(200) $(300) $(43) $(45) $(35) $(9) $(37) $(10) $(21) $(13) $(19) $(11) US$152 US$162 US$154 $(215) $(40) $(15) $(14) $(33) US$317 $(58) $(36) $(40) $(25) US$239 $(400) Operating Costs Freight Costs Sustaining Capital Royalties Corporate SG&A EBITDA Margin Source: Street research, Company reports and HFR estimates * Under development 12

13 REGISTERED OFFICE 169 Fullarton Road Dulwich SA 5065 Australia HEAD OFFICE Avenida Carlos III, 13-15, 1B, Pamplona, Spain T F info@highfieldresources.com.au FURTHER INFORMATION Anthony Hall Managing Director T John Claverley General Manager T Hayden Locke Coporate Development T