Lion Rock Minerals Limited · ASX:LRM
Lion Rock Minerals — Investor Presentation (May 2019)
34 slides from Lion Rock Minerals's investor presentation, May 24, 2019
Slide 1: Investor Presentation - Correction
ACN 072 692 365 24 May 2019 ASX Code: PUA, PUAOC Investor Presentation - Correction Pure Alumina Limited (ASX: PUA) (the Company) advises that it has been brought to the Company’s attention that the investor presentation it released to the market at 10.39am AEST today contained an incorrect value in
Slide 2: A Combination to Create a New Commercial Low Cost Producer of High Purity Alumina
A COMBINATION TO CREATE A NEW COMMERCIAL LOW COST PRODUCER OF HIGH PURITY ALUMINA
Slide 3: Disclaimer
Disclaimer Forward-looking Statements This announcement contains forward-looking statements which are identified by words such as ‘anticipates’, ‘forecasts’, ‘may’, ‘will’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, ‘plan’ or ‘intends’ and other similar words that involve risks and unce
Slide 4: Investment Highlights
Investment Highlights Pure Alumina is raising capital to acquire Polar Sapphire (“Polar”) and to fund a commercial-scale factory 1 One of the world’s highest quality, lowest cost HPA suppliers 2 CapEx substantially lower than other potential HPA suppliers – near term cash flow positive 3 Rapid marke
Slide 5: Team
Team Highly qualified team with extensive industry experience and proven track record of building cleantech companies Scott Nichol Dan Smith Iman Zargaran David Leavy Founder, CEO VP of Operations R&D Manager VP of Finance Experience: Experience: Experience: Experience: • Experienced • Experience sc
Slide 6: The Acquisition – Polar Sapphire
The Acquisition – Polar Sapphire Polar Sapphire, a private Canadian company, has perfected its unique patented HPA production technology over 6 years. • Polar’s innovative process produces 99.999% (5N) HPA (Al 2 O 3 ) - the highest commercial grade of HPA, commanding a price premium. • Polar can als
Slide 7: The Acquisition – Polar Sapphire
The Acquisition – Polar Sapphire Polar’s modular production process has key advantages over existing methods of HPA production • Polar’s modular system has many advantages compared to other methods of producing HPA including: • significantly lower CapEx and Operating Costs, • flexibility to produce
Slide 8: Key Acquisition Terms
Key Acquisition Terms PUA acquires all of the outstanding equity in Polar Sapphire in exchange for: • C$13.75m in PUA Shares • C$12m in cash • 3 board seats in PUA Conditions Precedent Include: • Raising a minimum of A$30m of equity • Completion of due diligence • Progress on sale of PUA gold assets
Slide 9: HPA Applications
HPA Applications LEDs (5N & 4N grade) Semiconductors (5N & 4N grade) Phosphor (for Plasma Displays) (4N grade) Other Sapphire (Non- LED (5N & 4N grade) Lithium-Ion Battery Separators (4N & 3N grade) Other (6N to 3N grades) > | a A wiSirinn POE! Used to produce sapphire boules, which are turned into
Slide 10: Rapid HPA Growth from Multiple Sectors
Rapid HPA Growth from Multiple Sectors 100,000 Demand by Use 90,000 80,000 CAGR 2018-2028 70,000 Others 7.0% 60,000 Batteries 26.0% Tonnes 50,000 Phosphor 6.2% 40,000 Semiconductor 5.8% 30,000 LED 8.0% 20,000 10,000 Total: 10.5% 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Dema
Slide 11: Coated Battery Separators
Coated Battery Separators • Lithium batteries generate significant heat that, if unmanaged, may result in thermal runaway e.g. Samsung Galaxy Note 7 • Demand for larger batteries and greater energy density e.g. EV batteries, increases the thermal management issue • Coating battery separators with HP
Slide 12: Polar’s HPA – Value Proposition
Polar’s HPA – Value Proposition Polar Sapphire HPA produces higher quality boules with fewer defects, increasing ingot yields and revenue for customers by up to 25% HPA in the LED Supply Chain Sapphire Sapphire Sapphire HPA LED Boule Ingot Wafer HPA in the market today produces boules with defects (
Slide 13: Polar is Solution to Existing Issues
Polar is Solution to Existing Issues Polar HPA has increased value in use while solving current HPA issues Competitors HPA HPA in the market today produces boules with defects Sapphire for LED’s (bubbles, colour, cloudy), limiting the ingot yield/boule •Increased clarity •Increased Yield •Fewer defe
Slide 14: Competitive Advantage
Competitive Advantage Polar HPA generates 25% more revenue for producers than competitor HPA Revenue/Sapphire Boule with Competitor HPA vs. Polar HPA (USD $/Boule1) Additional Revenue/Boule - Increased Yield • Full value of Polar Sapphire HPA Material Cost $7,875 HPA is ~USD $77/KG: 2 $1,575 o1 $24/
Slide 15: Business Model
Business Model Polar’s proprietary low-energy process generates one of the world’s highest-purity, lowest production cost alumina • Simple process uses aluminium to produce high quality 5N HPA, which few can compete with. • Polar forecast cost of production $7/kg, equivalent to competitor 4N cost •
Slide 16: Kaolin Based HPA Manufacturing Process
Kaolin Based HPA Manufacturing Process Capital intensive and complex 15
Slide 17: Polar’s HPA Manufacturing Process
Polar’s HPA Manufacturing Process Simple cheaper process • Significantly reduced capital from fewer process stages • Lower forecast operating costs • In production now • Short lead time (12 months) to commercial production & cash flow • Low scale-up risk 16
Slide 18: Polar’s Unique IP is Patented
Polar’s Unique IP is Patented Polar’s proprietary HPA process is protected by 2 patents • The patents are granted in the USA • Patent applications have been lodged in other jurisdictions and are pending • Patent protection significantly mitigates risk of competition 17
Slide 19: Competition – Peer Comparison
Competition – Peer Comparison Polar Sapphire’s proprietary process outperforms competing processes across all relevant parameters Energy Sapphire Purity OpEx CapEx Pollution Use Yield High Low Low Low High Low Kaolin-Based Process Medium Medium Medium High Medium Low Best (Standard Equipment) Assess
Slide 20: Polar Outperforms Peers
Polar Outperforms Peers Polar is already in production at a lower capital cost Altech Chemicals Alpha HPA FYI Resources Company Polar Sapphire (ATC) (A4N) (FYI) Mkt Cap (A$m) $84m $62m $13m NA Production (tpa) 4,500 10,200 8,000 5,000 Initial capex (US$m) $298 $149 $179 $12 per 1,000t Capital Intens
Slide 21: The Transaction Timeline
The Transaction Timeline The indicative transaction timeline is: • Sign non-Binding Heads of Agreement • Sign Binding Agreement • Due Diligence • Roadshow and Capital Structure May • Transaction approvals inc. ASX June • Shareholder meeting July • Transaction Completion July/Aug Sapphire Crystal Bou
Slide 22: Operating Cost (US$/Tonne)
Strategy Post Transaction Production Ramp Up and Decline in Operating Cost per Tonne $9,000 6,000 $8,500 5,000 Operating Cost (US$/Tonne) $8,000 4,000 Tonnes Sold $7,500 3,000 $7,000 2,000 $6,500 1,000 $6,000 - 2020 2021 2022 2023 Tonnes Sold Operating Cost (US$per Tonne) Note: Potential expansion a
Slide 23: Financial Projections
Financial Projections HPA prices can vary significantly by purity, geography, and customer; Polar is using conservative price assumptions Pure Alumina is using a conservative price of $20/kg HPA Price Range by Purity Level Polar – Impact of Pricing per (USD $/KG) 1,000t of HPA Production Low High PR
Slide 24: Experienced Board
Experienced Board Tom Eadie – Chairman • 20+ years as Geologist and mining executive Scott Nichol – Managing Director • Founder and creator of Polar Sapphire Technology • 10+ years experience in C-suite roles in manufacturing and solar energy Martin McFarlane – Non-Executive Director • 25+ years of
Slide 25: Corporate Snapshot
Corporate Snapshot ASX Code: PUA Top Shareholders % Ordinary Shares ~171.1m Tolga Kumova 9.2% Listed Options 42.2m Thea Management Pty Ltd (Chairman) 4.9% Regal Funds Management Pty Limited 4.3% Unlisted Options 29.2m Charles Bass 3.1% Market cap (@$0.053) $9.0m Sacco Developments Australia Pty. Ltd
Slide 26: Polar Sapphire – Capital Structure
Polar Sapphire – Capital Structure Existing shareholdings of Polar Sapphire prior to the proposed acquisition by Pure Alumina Total Common Issued Fully Shareholder Shares Diluted % Scott Nichol (founder, CEO) 1,800,000 37.0% Daniel Smith (founder, COO) 100,000 2.1% YiYi Ventures (private company) 16
Slide 27: Investment Highlights
Investment Highlights 1 One of the world’s highest quality, lowest cost HPA suppliers 2 CapEx substantially lower than other potential HPA suppliers – near term cash flow positive 3 Rapid market growth and order backlog 4 Compelling valuation and lower risk proposition vs industry peers 26
Slide 28: Appendix
Appendix
Slide 29: Manufacturing Process and Products
Manufacturing Process and Products Polar Sapphire’s unique HPA production process is protected by patents and custom-made equipment Polar HPA Manufacturing Process Polar HPA Products and Applications 1 Sapphire Boule Dissolve aluminum/ore in HCl acid to make PAC LEDs 2 Heat and calcinate PAC into al
Slide 30: Execution Plan
Execution Plan Polar Sapphire will initially focus on the large and growing market for HPA in sapphire production (for LEDs and other applications) Sapphire Market (LEDs and Other Lithium-Ion Battery Separators Applications) • Secure letters of intent (LOIs) or contracts with 2-3 • Research into the
Slide 31: Customer Pipeline
Customer Pipeline Estimated to be ~70 sapphire manufacturers (main customers) globally, with the majority located in China • Estimated to be ~70 sapphire manufacturers globally • Most sapphire manufacturers are located in Asia (China, South Korea, and Japan); 50% est. to be in China • Other manufact
Slide 32: Competition – Current HPA Producers
Competition – Current HPA Producers There are ~25 HPA producers globally, with the majority of production in Asia HPA Producers HPA Producers (Tons/Year, Global, 2015) (Market Share by Volume, Global, 2015) Other (15), Company Country Tons/Year Sumitomo 18% Sumitomo Chemicals Japan 3,020 Chemicals R
Slide 33: Polar’s HPA – Production Cost
Polar’s HPA – Production Cost Aluminium metal represents the majority of Polar’s production cost Polar HPA Production Cost Breakdown Historical Aluminum Prices (3 MT/Day Production Rate) (USD $/Tonne) Factory Space Other, 2% (Lease ), 4% Shipping, 1% Packaging, 1% Aluminum, Factory 63% Supplies, 1%
Slide 34: Sapphire Boule Production Cost
Sapphire Boule Production Cost HPA represents ~10% of the total sapphire boule production cost Sapphire Boule Production Cost Breakdown Seed, Water, Labor, 4% Argon, 30% HPA, 10% Crucible, 16% Power, 13% Hot Zone, 27% 33
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