Sovereign Metals Limited · ASX:SVM
Sovereign Metals — Technology and Low Emission Minerals Conference (November 2018)
24 slides from Sovereign Metals's conference presentation, November 2018
Slide 1: Malingunde PFS
ABN: 71 120 833 427 MALINGUNDE PFS LOWEST OPERATING COST COARSE FLAKE GRAPHITE PROJECT GLOBALLY NOVEMBER 2018 ASX:SVM
Slide 2: Disclaimers & Disclosures
DISCLAIMERS & DISCLOSURES. DISCLAIMER NOTICE This presentation has been prepared as a summary only, and does not contain all information Sovereign Metals Limited’s (“SVM”) assets and liabilities, financial position and performance, profits and losses, prospects, and the rights and liabilities attach
Slide 3: Sovereign Metals: Investment Highlights
SOVEREIGN METALS: INVESTMENT HIGHLIGHTS ONE OF A KIND HIGH GRADE, SOFT, FREE-DIG SAPROLITE DEPOSIT LOW COST AN EXCEPTIONALLY LOW COST, COARSE FLAKE GRAPHITE PROJECT LOW TECHNICAL RISK FREE-DIG MINING WITH SIMPLE, PROVEN PROCESS FLOWSHEET HIGH QUALITY CONCENTRATES OPEN TO TRADITIONAL REFRACTORY AND E
Slide 4: Potential for a simple & highly profitable flake graphite operation
POTENTIAL FOR A SIMPLE & HIGHLY PROFITABLE FLAKE GRAPHITE OPERATION MALINGUNDE SOFT SAPROLITE-HOSTED DEPOSIT TO DELIVER VERY LOW COST PRODUCTION, WITH HIGH VALUE CONCENTRATES. OPERATING COST HIGHEST MARGINS $ BOTTOM OF THE COST CURVE OPERATIONS SIMPLE MINING & PROCESSING ONLY LOWEST RISK MARKETING E
Slide 5: Saprolite advantage: very simple operations with significant operating cost advantages
SAPROLITE ADVANTAGE: VERY SIMPLE OPERATIONS WITH SIGNIFICANT OPERATING COST ADVANTAGES VERSUS HARD ROCK PEERS FREE DIG, NO DRILL & BLAST, NO PRIMARY CRUSH OR GRIND REQUIRED Peers – Hard rock material Sovereign – Soft saprolite (clay) material XX X SAPROLITE + HIGH GRADE + COARSE FLAKE = LOW COST & H
Slide 6: PFS confirms extremely robust project
PFS CONFIRMS EXTREMELY ROBUST PROJECT US$323/t US$49m US$1,216/t Average Total BASKET SALES OPERATING DEVELOPMENT PRICE COST CAPEX (including contingency of US$5.2m) 16 years 52,000t 600,000t Average annual Average PLANT Total ANNUAL THROUGHPUT MINE LIFE PRODUCTION US$201m IRR 56% US$42m NPV Pre-tax
Slide 7: Malingunde is at the right end of the curve
MALINGUNDE IS AT THE RIGHT END OF THE CURVE THE PFS SHOWS THE PROJECT’S LOW CAPITAL AND VERY LOW OPERATING COSTS ARE AT THE BOTTOM OF THE GRAPHITE SUPPLY COST-CURVE. $350 BUBBLE SIZE = ANNUAL PRODUCTION $300 Positioned at the right end of the curve at a Tanz-5 $250 marketable scale Capital Costs (US
Slide 8: Operating costs: at the bottom of the curve
OPERATING COSTS: AT THE BOTTOM OF THE CURVE MALINGUNDE HAS THE LOWEST ESTIMATED UNIT OPERATING COST OF THE CURRENT AND FUTURE LISTED GRAPHITE DEVELOPMENT PIPELINE. LISTED SUPPLY PIPELINE: OPEX $1,200 $1,216 $59 $118 $700 $1,100 $80 $650 $1,000 $66 $900 $26 $600 $79 US$323/t $800 +$788 $550 USD/t $70
Slide 9: Capital costs: providing a short payback period and increased ability to finance
CAPITAL COSTS: PROVIDING A SHORT PAYBACK PERIOD AND INCREASED ABILITY TO FINANCE MALINGUNDE IS PLACED AT THE LOW END OF THE FUTURE SUPPLY PIPELINE IN TERMS OF BOTH ABSOLUTE CAPITAL AND CAPITAL INTENSITY. CAPITAL INTENSITY DEVELOPMENT ANNUAL PRODUCTION CAPITAL PROCESSING 40kt 58kt 52kt 18kt 83kt 45kt
Slide 10: Operating costs: at the bottom of the curve
OPERATING COSTS: AT THE BOTTOM OF THE CURVE MASSIVE OPERATIONAL ADVANTAGE OVER HARD ROCK PEERS. MINING COSTS ✓ Free-dig (no drill and blast) SVM ✓ Near surface ✓ Low strip ratio 1:1 PEERS* ✓ Conventional truck and shovel operation $0 $20 $40 $60 $80 $100 $120 $140 PROCESSING COSTS ✓ Simple process S
Slide 11: Logistics: access to operating rail provides material transport cost advantage
LOGISTICS: ACCESS TO OPERATING RAIL PROVIDES MATERIAL TRANSPORT COST ADVANTAGE • Operating rail = low transport costs; below or comparable to regional peers utilising trucks. • Transport MoU signed with Vale & Mitsui. Drafting of formal US$66/t Total agreement in progress. MINE GATE TO PORT • Rail d
Slide 12: Excellent existing infrastructure
EXCELLENT EXISTING INFRASTRUCTURE THE PROXIMITY OF THE PROJECT TO MALAWI’S CAPITAL CITY LILONGWE OFFERS SIGNIFICANT INFRASTRUCTURE ADVANTAGES. ✓ Grid power from 2024 ✓ Rail. ✓ Road network. ✓ Established labour pool and other industrial services. Recently commissioned (on time and budget) Nkhoma pow
Slide 13: Maiden Ore Reserve
MAIDEN ORE RESERVE HIGH GRADE RESERVE WITH 32% IN THE PROVED AND 68% IN THE PROBABLE CATEGORY. PFS BASED 100% ON RESERVES. Saprolite is the very soft, graphite- bearing, clay-rich oxide material that is formed from intense weathering of the original bedrock. Significant opportunity to increase the m
Slide 14: Malawi: mining friendly jurisdiction
MALAWI: MINING FRIENDLY JURISDICTION A STABLE, TRANSPARENT JURISDICTION, INCREASINGLY ATTRACTING INTERNATIONAL INVESTMENT. Strong government and community support with long standing relationships. 13
Slide 15: Marketing strategy: Sovereign has the ability to sell into both markets
MARKETING STRATEGY: SOVEREIGN HAS THE ABILITY TO SELL INTO BOTH MARKETS TARGETING SALES INTO EXISTING TRADITIONAL MARKETS AND EMERGING LI-ION BATTERIES MARKETS. Premium quality product with ~60% +150µm, 96-98% TGC commanding high revenues. Realistic basket pricing assumption of US$1,216 per tonne of
Slide 16: The right market
THE RIGHT MARKET MAJORITY OF SOVEREIGN’S REVENUE TO BE FROM HIGH VALUE COARSE FLAKE FORECASTED GRAPHITE PRICES Malingunde flake basket $5,000 2018 2025 $4,500 optimised to higher-value $4,000 industrial market INDUSTRIAL MARKET Refractories & Expandable Average $3,500 sales price $1,000-$3,000 $3,00
Slide 17: The battery revolution is rapidly gaining momentum
THE BATTERY REVOLUTION IS RAPIDLY GAINING MOMENTUM. SOVEREIGN METALS WILL BE IN THE BEST POSITION TO SUPPLY HIGH QUALITY, LOW COST GRAPHITE FOR BOTH BATTERY & TRADITIONAL APPLICATIONS. ANNUAL GLOBAL EV SALES BY VEHICLE CLASS (million cars per year) Bloomberg New Energy Finance BATTERY PACK COMMODITY
Slide 18: Next steps: rapid pathway to production
NEXT STEPS: RAPID PATHWAY TO PRODUCTION ACCELERATED PROJECT DEVELOPMENT BASED ON EXCEPTIONAL PFS OUTCOMES: • Commencement of definitive feasibility study (DFS). • Development of product sales agreements. • Permitting to commence – environmental, social & mining license. • Community development agree
Slide 19: Malingunde: the world's best flake graphite project
MALINGUNDE: THE WORLD’S BEST FLAKE GRAPHITE PROJECT. US$323/t US$49m 52kt 16 years US$201m Average Total Average Total Pre-tax OPERATING DEVELOPMENT ANNUAL MINE LIFE NPV COST CAPEX PRODUCTION TECHNICAL FINANCIAL ✓ World’s largest, soft saprolite graphite ✓ Best in class opex – strong cash generation
Slide 20: Appendices
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Slide 21: Mineral Resource Estimate – June 2018
MINERAL RESOURCE ESTIMATE – JUNE 2018 Malingunde is the world’s largest reported saprolite-hosted graphite resource. MALINGUNDE MINERAL RESOURCE ESTIMATE 4.0% cut-off grade Measured Indicated Inferred Total Tonnes Grade Tonnes Grade Tonnes Grade Tonnes Grade (Mt) (% C) (Mt) (% C) (Mt) (% C) (Mt) (%
Slide 22: Market information: capital structure
MARKET INFORMATION OPPORTUNITY FOR MATERIAL RE-RATE: CAPITAL STRUCTURE1 DELIVERY OF WORLD CLASS PFS WITH A Shares on Issue 276,796,073 CLEAR & SIMPLE STRATEGY. Unlisted Options ($0.10 to $0.18) 32,325,000 Performance Rights 700,000 ASX : SVM SHARE PRICE MOVEMENT Un-Diluted Market A$22.1 m Capitalisa
Slide 23: Management team with a proven track record of success
MANAGEMENT TEAM WITH A PROVEN TRACK RECORD OF SUCCESS RAISED OVER $1 BILLION TO FUND NATURAL RESOURCE PROJECTS, INCLUDING TWO PROJECTS CURRENTLY IN CONSTRUCTION. Mr Middlemas was a Senior Group Executive for Normandy Mining for more than ten years, which was IAN MIDDLEMAS Australia’s largest gold mi
Slide 24: Sovereign Metals Limited | ASX: SVM
Sovereign Metals Limited | ASX : SVM T: +61 8 9322 6322 | F: +61 8 9322 6558 E: info@sovereignmetals.com.au | www.sovereignmetals.com.au Level 9, BGC Centre, 28 The Esplanade, PERTH WA 6000 | ABN: 71 120 833 427 FOLLOW US
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