Alara Resources Limited · ASX:AUQ
Alara Resources — Non-Deal Roadshow (June 2014)
38 slides from Alara Resources's roadshow presentation, Jun 17, 2014
Slide 1: Resource Developer Transitioning to Mine Builder and Operator
For personal use only Resource Developer Transitioning to Mine Builder and Operator ASX: AUQ PHILIP HOPKINS, MANAGING DIRECTOR INVESTOR ROADSHOW SYDNEY & MELBOURNE JUNE 2014
Slide 2: Disclaimer and Statements
Disclaimer and Statements For personal use only FORWARD LOOKING STATEMENTS This Presentation has been prepared as a summary only and does not contain all information about the Company’s assets and liabilities, financial position and performance, profits and losses, prospects and rights and liabiliti
Slide 3: Corporate focus
For personal use only Corporate focus … “To develop and operate a world class Zinc mine in a 10 year high Zinc metal price “up cycle” while progressing a high potential Copper‐Gold prospect to a Definitive Feasibility Study as rapidly as practical.” www.alararesources.com 3 © Alara Resources Limited
Slide 4: Company Overview
For personal use only Company Overview www.alararesources.com 4 © Alara Resources Limited
Slide 5: Market Profile
Market Profile : ASX: AUQ For personal use only Stock (AUQ) Announced HRH Prince Announced delay Announced MD Abdullah appointed to Announced JV with JV revised Issued Capital purchase of 1M shares Alara Board revised equity agreement equity agreement 12 Aug 2013 29 Oct 13 14 Mar 2014 4 Jun 2014 – O
Slide 6: Board of Directors
Board of Directors For personal use only Ian Williams, AO Philip Hopkins John Hopkins HRH Prince Abdullah bin Chairman Managing Director Non‐Executive Director Mosaad bin Abdulaziz Al > BE (Elec), FAusIMM, FIEAust > BSc (Mining Engineering); MBA; > LLB; FAICD Saud > Over 40 years’ experience in P.En
Slide 7: Management Team
Management Team For personal use only John Watkins Elle Macdonald Chief Financial Officer Corporate Affairs Manager > Highly credentialed and experienced mining industry > Highly experienced corporate administrator executive with commercial and geoscience qualifications > Over 30 years’ experience i
Slide 8: Current Company Projects Overview
Current Company Projects Overview For personal use only Khnaiguiyah Daris/Washihi (Zinc-Copper) (Copper-Gold) Project Project (Saudi Arabia) (Oman) Head Office (Perth) Project Resources Ownership Location Status Khnaiguiyah Zinc-Copper 50% Saudi Arabia Finance Washihi Copper-Gold 70% Oman Scoping St
Slide 9: Zinc Cycle & Saudi Zinc Project
For personal use only Zinc Cycle & Saudi Zinc Project www.alararesources.com 9 © Alara Resources Limited
Slide 10: Think Zinc – Bullish Outlook
Think Zinc – Bullish Outlook For personal use only > Zinc market entered into supply deficit in 2013 > Zinc market deficits are forecast for the next 5‐7 years > 1.69Mt or 11.3% of global 2013 Zinc production forecast to drop off by 2017 > Only 0.89Mt or 6.5% of new Zinc supply forecast to commence
Slide 11: Think Zinc – Supply Coming Off
Think Zinc – Supply Coming Off For personal use only MAJOR ZINC MINE CLOSURES (2013‐2016) Annual Mine Production Perseverance Lisheen Century 500 kT Brunswick Brunswick 200 kT Lisheen 167 kT Skorpion 162 kT Perseverance 128 kT Skorpion Century Others 540 kT TOTAL 1,697 kT “11.3 % of current world Zi
Slide 12: Think Zinc – Supply Coming On
Think Zinc – Supply Coming On For personal use only ZINC NEWCOMERS & EXPANSIONS (2013‐2017) Annual Citronen Mine Year Production NEW MINE Lalor Lake Dugald River 2017 200 kT Aguas Tenidas Perkoa 2013 90 kT Lalor Lake 2014 40 kT Perkoa Khnaiguiyah Citronen 2015 185 kT Khnaiguiyah 2017 80 kT EXPANSION
Slide 13: Zinc Supply Drops Off as Demand Rises
Zinc Supply Drops Off as Demand Rises For personal use only ZINC DEMAND VS DEFICIT • Zinc demand has increased steadily from prior to 1995 • Zinc demand does not include possible emerging uses: • Fertiliser (estimated 500kt/year) • Continuous galvanizing (estimated 400kt/year) June 2014 www.alarares
Slide 14: Zinc Supply/Demand vs. Price
Zinc Supply/Demand vs. Price For personal use only kT Price USD/lb 600 1.6 > Previous market deficits resulted in 400 1.4 Zinc price rising to >US$2.00/lb (2006) 200 1.2 > Brook Hunt forecasts Zinc to rise to 0 1 US$1.24/lb this year and climb steadily thereafter ‐200 0.8 ‐400 0.6 > Wood McKenzie fo
Slide 15: SAUDI ARABIA Khnaiguiyah Zinc-Copper Project
For personal use only SAUDI ARABIA Khnaiguiyah Zinc‐Copper Project www.alararesources.com 15 © Alara Resources Limited
Slide 16: Ownership & Partners
Ownership & Partners > Joint Venture (‘JV’) Partners: United Arabian Mining Company LLC (Manajem), For personal use only privately owned Saudi Arabian mining company. > JV Company: Khnaiguiyah Mining Company LLC (KMC) > Current JV Equity Arrangement: 50:50 (Alara: Manajem) > Future JV Equity Arrange
Slide 17: JV Agreement Status
JV Agreement Status For personal use only > March 2014 ‐ signed Heads of Agreement (‘HoA’) amending the Khnaiguiyah Zinc‐ Copper Project JV arrangement from 50:50 equity to 60:40 > HoA currently delayed due to a lack of compliance with the HoA by Manajem (announced 4 June 2014) > HRH Prince Abdullah
Slide 18: Why Saudi Arabia? - Technical
Why Saudi Arabia? ‐ Technical For personal use only > 1970’s BRGM review – 5,300 deposits (Saudi Geological Survey) > Deputy Ministry of Mineral Resources (DMMR) +4,000 maps > New mining code 2004 – ease of operation > Resource Potential in the Arabian Shield i. 40 fully identified resources ii. 15
Slide 19: Why Saudi Arabia? - Commercial
Why Saudi Arabia? ‐ Commercial > 2014 Saudi mining budget – SAR$228B (~AU$70B) For personal use only > Saudi government focus i. Petroleum ii. Mining iii. Financial services > Corporate tax – 20% > Personal tax – nil (staff) > Royalties – nil > Saudi Investment Development Fund (SIDF) up to 75% fund
Slide 20: Khnaiguiyah Project Overview
Khnaiguiyah Project Overview For personal use only > Joint Venture agreement to move: > Alara to 60% > Manajem to 40% > 170km SW of Riyadh – Capital city > Reserves of 26.08Mt at 3.3% Zn & 0.24% Cu*. > Resource note*: > Zone 2 ‐ Zn rich = 5.48% Zn > Zone 3 – Cu rich = 0.64% Cu > Base case 2 Mtpa pro
Slide 21: Khnaiguiyah Project - Licences
Khnaiguiyah Project ‐ Licences For personal use only The Khnaiguiyah Zinc‐Copper Project covers around 225km2 and comprises: > A Mining Licence > Five Exploration Licences (under application) www.alararesources.com 21 © Alara Resources Limited
Slide 22: Khnaiguiyah Project DFS Summary
Khnaiguiyah Project DFS Summary For personal use only PRODUCTION HIGHLIGHTS > Zinc & Copper concentrates produced > Average production @ 2Mtpa throughput years 1 ‐ 7 > 80 ktpa Zn > 5.8 ktpa Cu > Peak production year 4 > 99 kt Zn > 8.3 kt Cu > Low cash costs of US$0.46/lb for years 1‐7 > Upside poten
Slide 23: Khnaiguiyah Project DFS Summary
Khnaiguiyah Project DFS Summary For personal use only FINANCIAL HIGHLIGHTS > Project revenue: A$2,074M > Project operating costs : A$1,201M > EBITDA: A$873M > Capex: US$257M > Cash flow (post Capex and Tax): A$467M > Project NPV: A$170M > IRR: 23% > Weighted Avg cost of capital: 9.1% > Payback: 2.8
Slide 24: Potential Project Upsides
Potential Project Upsides For personal use only Potential Capex Reductions: $10‐12M Change SAG mill to cone crushers $10M Bulk concentrate shipping $40‐60M Smaller plant – Heavy Media Separation (HMS) $3M Mine camp redesign $63‐85M Potential Opex Reduction: $9‐12M Power to the crushing circuit – LOM
Slide 25: Heavy Media Separation (HMS)
Heavy Media Separation (HMS) For personal use only > Capex <$15M > Opex ~$1.00‐1.25/tonne feed > Coarse feed crush @ ~6.5mm diameter > Removes the “light” silica based rock (minor metal) > Can potentially increase feed grade to: > +6.0% Zn from reserve grade of 3.3% Zn > +0.4% Cu from reserve grade
Slide 26: Potential Project Upsides - Finance
Potential Project Upsides ‐ Finance For personal use only Debt Finance: Project modelled with discount factor of 9.1% Additional Finance: Off‐take/Smelter contract finance Leasing finance Royalties Streaming – Cu EPC vendor’s credit Zinc Price: DFS uses $1.05/lb Zinc ($2,315/tonne) External Zn Price
Slide 27: Khnaiguiyah Project Strengths
Khnaiguiyah Project Strengths For personal use only > Located adjacent to 4 lane national highway > Located on national power grid > Forecast positive Zinc price cycle > Early off‐take/smelter funding possible > Strong financial options in Saudi Arabia > Government has mining as one of 3 economic pi
Slide 28: Khnaiguiyah Project Risk Mitigation
Khnaiguiyah Project Risk Mitigation For personal use only > AMAK (Al Masane) ‐ 1.5 Mtpa Zn/Cu mine built in 2010 and operating for 4 years > Capex based on EPC “turnkey” quote > Al Masane EPC company bid on Khnaiguiyah Project > Potential to build in < 2 years > SIDF finance process target ~9 months
Slide 29: Khnaiguiyah Project Next Steps
Khnaiguiyah Project Next Steps For personal use only Indicative Development Timeline 2014 2015 2016 2017 2018 Project Activity Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 SHA Completion 2 Project Finance 3 Project Construction 4 Commissioning 5 Full Operations www.alararesources.com 29 ©
Slide 30: Advancing the Project Pipeline - Oman
For personal use only ADVANCING THE PROJECT PIPELINE ‐ OMAN Daris/Washihi Project www.alararesources.com 30 © Alara Resources Limited
Slide 31: Oman - Daris/Washihi Project Overview
Oman ‐ Daris/Washihi Project Overview For personal use only Daris (50% ‐ option to go to 70%) > 150 km west of Muscat > Measured and Indicated Resources of 0.24Mt at 2.4% Cu* Washihi (70%) > 160km south east of Daris > Indicated Resource of 6.84Mt at 0.9% Cu & 0.17g/t Au* > Mineralisation remains op
Slide 32: Daris/Washihi Project Development Options
Daris/Washihi Project Development Options For personal use only Six Development Options Evaluated 1. Conventional flotation circuit 2. Heavy media separation followed by smaller scale conventional flotation circuit 3. Heavy media separation followed by larger scale (x2) conventional flotation circui
Slide 33: Summary: Way Forward
For personal use only SUMMARY Way Forward www.alararesources.com 33 © Alara Resources Limited
Slide 34: Key Future Milestones
Key Future Milestones For personal use only Resolve current HoA delays – key priority Pre‐construction finance – DFS optimisation, Owner’s Team etc Project Director selected EPC company identified and contract finalised Project finance – SIDF & “Gap” finance Construction commences (mid 2
Slide 35: What differentiates Alara from the rest?
What differentiates Alara from the rest? Right Metal For personal use only Robust Zinc project in positive Zinc cycle Right ore body Additional mineralisation and potential resource extensions Right Team Restructured Board and Management Team in place with clear and defined strategy for next s
Slide 36: JORC Statements - Khnaiguiyah Zinc-Copper Project
JORC Statements Khnaiguiyah Zinc-Copper Project (Saudi Arabia) For personal use only The information in these JORC Reserve and Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information
Slide 37: JORC Statements - Washihi-Mullaq-Al Ajal Copper-Gold Project
JORC Statements Washihi-Mullaq-Al Ajal Copper-Gold Project (Oman) For personal use only The information in these JORC Reserve and Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the informati
Slide 38: For personal use only
For personal use only ABN: 27 122 892 719 Level 3, 35 Havelock Street, West Perth WA 6005 Telephone +61 8 6323 5900 I Facsimile +61 8 6323 5999 info@alararesources.com I www.alararesources.com ASX Code: AUQ www.alararesources.com 38 © Alara Resources Limited