Sheffield Resources Limited · ASX:SFX
Sheffield Resources — Diggers & Dealers 2017
32 slides from Sheffield Resources's conference presentation, Aug 7, 2017
Slide 1: Thunderbird: The Emerging Force in Mineral Sands
For personal use only Thunderbird The Emerging Force in Mineral Sands Diggers & Dealers - BFS August 2017 ASX : SFX
Slide 2: Compliance and Disclaimer
COMPLIANCE AND DISCLAIMER For personal use only PREVIOUSLY REPORTED INFORMATION This presentation includes information that relates to Exploration Results, Mineral Resources and Ore Reserves prepared and first disclosed under the JORC Code (2012) and a Bankable Feasibility Study. The information was
Slide 3: Compliance and Disclaimer (Continued)
COMPLIANCE AND DISCLAIMER CAUTIONARY STATEMENTS AND RISK FACTORS (Continued) For personal use only Forward-looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance. Forward-looking statements may be affected by a range of variables that
Slide 4: Corporate Snapshot
CORPORATE SNAPSHOT For personal use only ASX ISSUED SHARE SHARE PRICE MARKET CASH ENTERPRISE TOP TWENTY CODE SHARES OPTIONS (1 Aug 2017) CAP (UNAUDITED)1 VALUE SHAREHOLDERS2 SFX 181.4M 14.6M2 A$0.52 A$94M A$8.3M A$86M ~49% 12 Month Price History (AUD) $0.80 $0.75 13% Directors $0.70 15% Institutiona
Slide 5: World Class Project
WORLD CLASS PROJECT For personal use only • Low risk mining jurisdiction • Robust, high grade and consistent Ore Reserve1 • 42 year mine life2 • Close to Asian markets than other supply • Simple and low cost project logistics • High quality zircon and ilmenite products • Favorable zircon and ilmenit
Slide 6: World Class, High Grade Ore Reserve
WORLD CLASS, HIGH GRADE ORE RESERVE For personal use only 5.00 Fairbreeze (TROX) • Amongst the largest and highest grade zircon and TiO2 Grade 4.00 Namakwa (TROX) ilmenite rich Ore Reserves In Situ Titanium Minerals (Ilm+Lux+Rut) % QMM (RIO) Cataby (ILU) THUNDERBIRD (SFX) • Australia, the best minin
Slide 7: Our Team – Experienced and Skilled
OUR TEAM – EXPERIENCED AND SKILLED For personal use only MANAGEMENT Bruce McFadzean – Managing Director Mining engineer with over 35 years experience leading the financing, development and operation of mines in Australia and overseas, including roles with BHP Billiton and Rio Tinto. Previously Manag
Slide 8: Mineral Sands – Everyone, Everyday
MINERAL SANDS – EVERYONE, EVERYDAY For personal use only 2 Distinct Product Streams ZIRCON TITANIUM FEEDSTOCKS BFS 62% Revenue BFS 35% Revenue • 1.1 million tonne global p.a. • 6.5-7.0 million tonne p.a. global market (TiO2 units) • >50% is used in the ceramics industry (tiles, crockery, etc.) • Glo
Slide 9: Significant Zircon Supply Shortfall Predicted
SIGNIFICANT ZIRCON SUPPLY SHORTFALL PREDICTED For personal use only Declining Production Thunderbird Production • Without new projects, global zircon supply is expected to decline significantly over the coming years, 2017- 2025 • Key drivers include; o Closure of existing mines (North Stradbroke, Ma
Slide 10: BFS Key Highlights
BFS KEY HIGHLIGHTS1 For personal use only LOM site costs4 US$8.55/t ore mined 1. Actual results may differ from these estimates. Please refer to the assumptions, sensitivities, risk factors and cautionary statements disclosed respectively on pages 7, 9, 10 and 56 of the Company's announcement “THUND
Slide 11: VHM Grade and Deposit Thickness = Value
VHM GRADE AND DEPOSIT THICKNESS = VALUE For personal use only • Thunderbird has a continuous High Grade Zone of up to 46m thickness: the “GT Zone” • Project economics are based on GT Zone’s strong continuity and very high Valuable HM grades • Near-surface, high value areas targeted in early years of
Slide 12: Conventional Processing – High Quality Products
CONVENTIONAL PROCESSING – HIGH QUALITY PRODUCTS For personal use only • Conventional heavy mineral sands processing circuit1 • Includes an ilmenite upgrade step using a low temperature roast (“LTR”) • LTR upgrades the primary ilmenite to 56.1% TiO2 sulfate ilmenite with ability to control to higher
Slide 13: Product Volumes
PRODUCT VOLUMES For personal use only 1,400 Stage 1 Stage 2 1,200 1,124 1,134 1,025 1,000 966 336 336 878 869 2 YEAR RAMP-UP 307 773 288 000 Tonnes 800 99 96 261 259 559 581 584 99 109 84 80 226 600 95 73 71 90 415 166 170 170 81 79 68 76 400 52 53 122 49 51 58 60 567 568 518 486 441 437 200 382 280
Slide 14: Strong Revenue A$ – Flat Cost Structure
STRONG REVENUE A$ – FLAT COST STRUCTURE For personal use only 550 Revenue Royalties Capex Opex Working capital Pre-tax cash flow 500 450 4%5% Robust annual cash flow 400 350 29% 43% 300 250 200 150 19% 100 50 - (50) (100) (150) (200) (250) Flat LOM cost structure (300) FY18 FY19 FY20 FY21 FY22 FY23
Slide 15: Competitive Revenue to Cost Ratio
COMPETITIVE REVENUE TO COST RATIO For personal use only 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Thunderbird • High margin producer • Thunderbird represented adjacent to first quartile producers, several of whom are vertically integrated with beneficiation plants • Independently derived m
Slide 16: Stage Annual Operating Expenditure
STAGE 1 ANNUAL OPERATING EXPENDITURE 2% For personal use only Mining 5% 7% Labour 21% Electricity 78% OF COSTS 8% Natural Gas Transport & Logistics 11% 12% Consumables Maintenance 17% 17% Site G&A (excluding labour) Sustaining Capital • Mining, power, logistics and gas costs consistent over 42 year
Slide 17: Capital Expenditure
CAPITAL EXPENDITURE For personal use only Description US$M A$M Stage 2 Processing – Stage 1 200 186 funded by Plant Area Civils & Process Water Systems 19.0 25.3 180 cash flow and Wet Concentrator Plant 43.5 58.0 152 debt 160 Concentrate Upgrade Plant 25.7 34.3 140 Zircon Processing Plant 59.2 78.9
Slide 18: Logistics – Simple and Close to Market
LOGISTICS – SIMPLE AND CLOSE TO MARKET For personal use only • Products to be trucked 140km from mine to ports at Derby and Broome, including 110km on major National Highway • Road haulage fleet and marine barging based in Derby • Access agreement in place for port storage, wharf and bulk handling f
Slide 19: A Project for the Community
A PROJECT FOR THE COMMUNITY For personal use only • Lead Agency status demonstrates State and Regional importance • ~300 construction jobs, then up to 200 direct full time local jobs for 42 years • Business opportunities with focus on Aboriginal participation • Commitment to transparent Aboriginal e
Slide 20: Offtake and Market Status
OFFTAKE AND MARKET STATUS For personal use only • Off-take discussions continue with a number of non-binding agreements signed with key groups in Europe, China and India. • Premium zircon current MoU commitment at 70%. • Zircon concentrate current MoU commitment at 47%. • Ilmenite current MoU commit
Slide 21: Financing
FINANCING For personal use only • Sheffield focuses on a funding solution that delivers at least A$355 million1 in new capital via debt, equity and/or JV options • Sheffield has appointed leading Australian advisory firm, Azure Capital, to co-ordinate and lead funding and Joint Venture discussions f
Slide 22: Timeline – Key Targets to Production
TIMELINE – KEY TARGETS TO PRODUCTION1 1 For personal use only 3 EPC 2017 Complete negotiations PRE-WORKS and award contracts Q3/Q4 2017 Commence pre-works, camp, site preparation 5 7 for construction team commence engineering CONSTRUCTION2 FINAL PRODUCTS BFS and procurement 2017 - 2019 2019 Q1 2017
Slide 23: 100% Carawine Resources Pty Ltd – Exploration DNA
100% CARAWINE RESOURCES Pty Ltd – EXPLORATION DNA For personal use only Gold-Copper Focus Investible Precious Metals • High-value deposits • Proven mineral provinces Gold • 100% owned New Copper • In Australia Projects • Added value from associated Value Uplift Through commodities Discovery Deliveri
Slide 24: Thunderbird: A World Class Mineral Sands Project
THUNDERBIRD: A WORLD CLASS MINERAL SANDS PROJECT For personal use only • 42 year mine life • 100% owned • World’s best mining jurisdiction • Permitting finalised Q3 2017 • Pre-tax NPV10 of A$676 million, IRR of 25% • Stage 1 capex of US$261m, A$348m • EBITDA of US$3.8, A$5.1 billion over LOM, averag
Slide 25: Zircon – Premium Product
Appendix 1 ZIRCON - PREMIUM PRODUCT For personal use only • Ceramic Grade Zircon • > 66% ZrO2 • Low Fe2O3 • Low TiO2 • Very Low Al2O3 • Moderate U+Th • Good Opacity • Off-take Discussions in Progress Composition (%) Premium Zircon Typical1 ZrO2+HfO2 % 66.2 – 66.6 Raw Ilmenite 66.30 TiO2 % 0.09 – 0.1
Slide 26: LTR Ilmenite – Premium Product
Appendix 2 LTR ILMENITE - PREMIUM PRODUCT For personal use only • Exceptional Grade Global Ilmenite Comparison FeO:Fe2O3 • 56 – 58% TiO2 Ratio • Outstanding FeO:Fe2O3 3.0 • Low Fe2O3 (<13%) 2.5 • Low Levels of Cr2O3 2.0 1.5 • High Acid Solubility 1.0 • Good reactivity rate 0.5 0.0 • Market Leading q
Slide 27: Product Price Assumptions
Appendix 3 PRODUCT PRICE ASSUMPTIONS1 For personal use only TZMI long term pricing $1,387 $1,400 $1,200 US$/tonne FOB, real 2017 prices $1,000 $800 $677 $600 $500 $400 $200 $183 $48 $0 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Premium Zircon Zircon Concentrate Hi-Ti 88 LTR Ilmenite Tit
Slide 28: Summary BFS Outputs
Appendix 4 SUMMARY BFS OUTPUTS STAGE 1 STAGE 2 LOM For personal use only Financial Year Financial Year LOM7 A$m, Real 2017 Prices 2019 – 20235 2024 – 20336 (4 years) (10 years) (42 years) Ore Mined (Mt) 32.8 173.8 680.6 Low LOM strip ratio supports Strip Ratio (W:O) 0.52 0.58 0.77 consistent and pre
Slide 29: Project NPV Sensitivities A$ (+/-10%)
Appendix 5 PROJECT NPV SENSITIVITIES A$ (+/-10%) Product prices, recoveries and ore grade are key sensitivity drivers For personal use only Base Case: NPV A$675.6m All Product Prices (in AUD) 418 933 Plant Recoveries – All Products 440 902 Ore VHM Grade 446 902 Product Price - Premium Zircon & Zirco
Slide 30: Summary BFS Metrics
Appendix 6 SUMMARY BFS METRICS For personal use only Thunderbird Project Assumed Product Prices Thunderbird Project Estimated Production Outputs Financial Financial Financial Financial Average Product Average Production Year Year LOM5 Year Year LOM5 Prices (US$)2 per annum 2019 – 2023 2024 – 20334 3
Slide 31: Ore Reserves
Appendix 7 ORE RESERVES For personal use only THUNDERBIRD DEPOSIT ORE RESERVES1,4 Valuable Heavy Mineral (VHM) in-situ grade In-situ HM Valuable HM Grade (In-situ)2 Ore Reserve Ore Tonnes HM Grade Slimes Osize Tonnes Zircon HiTi Leuc Leuc Ilmenite Category (millions) (%) (%) (%) (millions) % % % % P
Slide 32: Mineral Resources
Appendix 8 MINERAL RESOURCES THUNDERBIRD DEPOSIT MINERAL RESOURCE1,2,7 For personal use only Mineral Material In-situ HM Valuable HM Grade (In-situ)4 HM Grade3 Slimes Osize Cut-off (HM%) Resource Tonnes Tonnes Zircon HiTi Leuc Leuc Ilmenite (%) (%) (%) Category (millions) (millions) (%) (%) (%) (%)