Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — Finance & Treasury Association WA State Chapter Function hosted by UWA (September 2020)
27 slides from Arafura Rare Earths's conference presentation, Sep 25, 2020
Slide 1: ASX Announcement: Nolans Project & the Impacts of COVID-19
ASX ANNOUNCEMENT PRESENTATION- NOLANS PROJECT & THE IMPACTS OF COVID-19 25 September 2020 For personal use only Arafura Resources Limited (ASX:ARU) (“Arafura” or the “Company”) is pleased to attach a copy of the presentation given at the WA State Chapter function hosted by the University of Western
Slide 2: Nolans Project & the impacts of Covid-19
24/09/2020 Nolans Project & the impacts of For personal use only Covid-19 Finance & Treasury Association – WA State Chapter Function hosted by UWA 24 September 2020 (ASX:ARU) 1
Slide 3: For personal use only
24/09/2020 For personal use only This presentation has been prepared by Arafura Resources Limited (Arafura, Arafura Resources or the Company) and is of a summary form only and therefore contains general background information which may not be complete. It should be read in conjunction with and full
Slide 4: Agenda
24/09/2020 Agenda What are Rare Earths? For personal use only Impact of COVID-19 on global supply chain About Arafura Resources & Nolans Project Project Financing (ASX:ARU) 3
Slide 5: What are Rare Earths?
24/09/2020 What are Rare For personal use only Earths? (ASX:ARU) 4
Slide 6: The Nolans Project: Rare Earths and NdPr
24/09/2020 The Nolans Project Rare Earths contains all the Rare Earths but is particularly For personal use only Rare Earths are Critical Minerals. enriched in the ‘Magnet They are essential to the economic Feed’ Rare Earths NdPr wellbeing of the world’s major and emerging economies. 60 59 Nd Pr NEO
Slide 7: NdPr Market Opportunity
24/09/2020 NdPr Market Opportunity For personal use only Underlying demand for NdFeB magnets across all applications is forecast to grow by 6% p.a. over the period to 2030 New energy vehicle (NEV, comprising EV, HEV, PHEV) applications require efficient permanent magnet motors using NdFeB magnets Nd
Slide 8: NdPr Magnet Power Efficiency & Deprival Value
24/09/2020 Chevrolet Bolt: 150 kW permanent magnet (PM) motor with 60 kWh NdPr Magnet Power Efficiency & Deprival Value For personal use only lithium-ion battery pack.1 PM motor cost based on US$8 per kW.2 Estimate of 1 kilogram of NdPr metal per Modelled effect of increase in NdPr price, Permanent
Slide 9: Impact of COVID-19 on the global supply chain
24/09/2020 Impact of For personal use only COVID-19 on the global supply chain (ASX:ARU) 8
Slide 10: China's Evolving Integrated NdPr Supply Chain
24/09/2020 China’s Evolving Integrated NdPr Supply Chain – Enables Made In China 2025 Strategy For personal use only Ore Concentrate Oxide Metal Alloy Magnet Component EV 2010 95% 95% 90% 80% 85% 80% 2018 70% 70% 85% 90% 90% 90% Market Value x 10x 100x 1000x MADE IN CHINA CHINA 2025 REST OF THE WORL
Slide 11: Rest of the World Alternative Supply Chain
24/09/2020 Rest of the World Alternative Supply Chain For personal use only Ore Concentrate Oxide Metal Alloy Magnet Component EV European auto industry employs Diversification of NdPr supply Government recognition of the Nolans offtake strategy focused 13.8 million people which equates source may p
Slide 12: Companies relying solely on China supply are stuck
! 24/09/2020 Companies relying solely 1. Orders cancelled, procurement was Diversify supply chains complicated on China supply are 2. Workforce shortages - labour intensive suddenly stuck finding 3. production stalled Shipments stalled causing widespread outside of China out that they do not have pr
Slide 13: Rare Earth supply chain at risk and vulnerable to disruption
24/09/2020 Rare Earth supply chain at risk and For personal use only vulnerable to value chain disruption Global priority to rebuild and invest in ex-China RE Supply Chains End Users seeking alternatives and shifting from sole sourcing and non sustainable inputs Lack of visibility and transparency o
Slide 14: Impact of Covid-19 to Australia and its strategic allies
24/09/2020 Impact of China exerts control over most of the global rare earth supply chain Covid-19 to Australia and its strategic allies For personal use only Supply Chains recognise the threat posed by China’s strategy to deny capital to new developments Australia is active in its policy response:
Slide 15: About Arafura Resources & Nolans Project
24/09/2020 About Arafura For personal use only Resources & Nolans Project (ASX:ARU) 14
Slide 16: Corporate Snapshot and Capital Structure
24/09/2020 Corporate Nolans world class NdPr project – Capital Structure Snapshot DFS completed February 2019 ASX Code ARU For personal use only NdPr is the key input for high ASX Share Price (31 August) $0.077 performance NdFeB permanent Shares on Issue 1,168m magnets Market Capitalisation* $89.92m
Slide 17: Nolans NdPr Project Globally Strategic
24/09/2020 Nolans NdPr Project Globally Strategic For personal use only 100% Australian Domiciled (ASX:ARU) 16
Slide 18: What we have achieved in the last year
08/09/2020 What we have 1 DFS completed 2019 achieved in the 2 Federal & NT environment approvals secured For personal use only last year 3 Native Title Agreement executed 4 Mining Licence granted 5 Federal Major Project Status renewed 6 Updated Ore Reserves & Life of Mine 7 Completion of Indigenous
Slide 19: Project Financing
24/09/2020 Project For personal use only Financing (ASX:ARU) 18
Slide 20: Project Funding Strategy
24/09/2020 Project Funding Strategy Arafura looking to secure US$726m to meet CAPEX requirements for the Nolans project For personal use only Potential sources of funding include equity, debt, JV and/or project selldown with a strategic investor DFS completion and environmental approval are critical
Slide 21: Offtake Drivers – Aligned with Nolans Strengths
27/08/2020 Offtake Drivers – Aligned with Nolans Strengths For personal use only Drivers Price Customer Pull Supply Security Sustainability NdFeB China Domestic NdFeB China Export NdFeB Japan Automotive Component Wind Turbine Automotive OEM Customer engagement targeted at NdPr U.S. emerging as an of
Slide 22: Aligned with Customer Needs: Verified Supply Chain
24/09/2020 Aligned with Verified Supply Chain Economic Waste Customer Benefits to Sustainable Management Community Production Certainty For personal use only Needs 1 2 3 4 Aim to achieve a positive social, environmental and economic NdPr NdPr NdFeB legacy which supports the Oxide Metal Magnet Arafur
Slide 23: Product Offtake
24/09/2020 Product Offtake For personal use only Amount Proportion Customer / Target Region Offtake Status (tonnes p.a.) of Revenue NdPr Oxide – targeting contract with NdFeB magnet companies &/or end users JingCi Material Science 900 MoU Baotou Tianhe Magnetics 900 MoU Japan 96% South Korea 2,557 I
Slide 24: Nolans Project Funding Strategy
24/09/2020 Nolans Project Nolans is an Australia based NdPr Funding For personal use only project and, being a strategic Strategy geopolitical asset, the funding strategy is leveraged against this significant attribute. The project is wholly aligned with key Export Credit Agency (ECA) mandates of EV
Slide 25: Debt Led Funding Strategy
24/09/2020 Debt Led Funding Strategy For personal use only Higher Share Price Funding strategy is debt led, ECA Led Debt Higher Market = Lower Dilution of Capitalisation leveraging Nolans “shovel ready” Equity Raise status Offtake and financing activities Higher Project NPV interlinked Longer Tenor
Slide 26: Targeted Funding Structure
24/09/2020 Targeted Funding Offtakers Structure For personal use only ECA Loans/ ECA debt will be Guarantees Nolans Project critical but not the entire funding solution NAIF Commercial Debt EFA & Other Equity Portfolio of funding Instruments sources Offtake, debt and Strategic Equity strategic equit
Slide 27: Contact Information
24/09/2020 Contact Information For personal use only Level 6, 432 Murray St Perth WA 6000 Australia +61 8 6370 2800 arafura@arultd.com www.arultd.com (ASX:ARU) 26