Slide 1: Malingunde Scoping Study
MALINGUNDE SCOPING STUDY A RARE COMBINATION OF EXCEPTIONALLY LOW CAPEX & OPEX JUNE 2017 ASX:SVM
Slide 2: Disclaimers
DISCLAIMERS. 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 attaching to SVM’s s
Slide 3: Scoping study confirms a simple and highly profitable flake graphite operation
SCOPING STUDY CONFIRMS A SIMPLE & HIGHLY PROFITABLE FLAKE GRAPHITE OPERATION. MALINGUNDE SOFT SAPROLITE-HOSTED DEPOSIT TO DELIVER VERY LOW COST PRODUCTION, WITH BEST IN CLASS MARGINS. OPERATING COST HIGHEST MARGINS BOTTOM OF THE COST CURVE CAPITAL COST & INTENSITY $ LOWEST OF ALL PEERS OPERATIONS LO
Slide 4: Generating value through a simple, low cost strategy
MALINGUNDE: GENERATING VALUE THOUGH A SIMPLE, LOW COST STRATEGY. US$301/t Average US$29m Total OPERATING DEVELOPMENT COST CAPEX <2 Capital years PAYBACK PERIOD 17yrs 44kt Total Average ANNUAL MINE LIFE PRODUCTION 3
Slide 5: Dominant ground position in Malawi, close to existing infrastructure
DOMINANT GROUND POSITION IN MALAWI, CLOSE TO EXISTING INFRASTRUCTURE. • Enviable access to infrastructure; just 20km from Lilongwe, the capital of Malawi. • Immense upside for further discoveries of saprolite-hosted flake graphite across the large (3,788km2) and 100%-owned tenement package. 4
Slide 6: Project Economics
MALINGUNDE: PROJECT ECONOMICS
Slide 7: The ability to generate cash from existing markets
MALINGUNDE: THE ABILITY TO GENERATE CASH FROM EXISTING MARKETS. • SVM’s simple, low cost strategy is the clearest and lowest risk path to market. • Low cost will enable sales to existing traditional markets. Battery market retained as upside. • Project economics not contingent on extreme volume & pr
Slide 8: A very rare combination of low opex and low capex with realistic scale
MALINGUNDE: A VERY RARE COMBINATION OF LOW OPEX & LOW CAPEX WITH REALISTIC SCALE. • Malingunde achieves Q1 operating costs and best in class capital intensity. • Malingunde’s production volumes can be reasonably placed into existing markets. • Many peers are only economic at unrealistic scale & when
Slide 9: Low cost equates to superior margins and very short payback
MALINGUNDE: LOW COST EQUATES TO SUPERIOR MARGINS & VERY SHORT PAYBACK IN ALL PRICING SCENARIOS. • Credible pricing assumptions for product sold to existing markets. • Exceptional margins even in the most bearish global pricing scenarios. MALINGUNDE OPEX BREAKDOWN MALINGUNDE MARGIN & PAYBACK ANALYSIS
Slide 10: Significant ability to generate cash
MALINGUNDE: SIGNIFICANT ABILITY TO GENERATE CASH. • Rapid payback of initial capital. • Margin sensitivity highlights the significant cash generated across a wide range of price scenarios. CAPITAL ESTIMATE CASH FLOW PROFILE – PRICING SENSITIVITY (US$M) (US$, 44ktpa for 17 yrs) DEVELOPMENT CAPITAL US
Slide 11: The most compelling graphite project across all key metrics
MALINGUNDE: THE MOST COMPELLING GRAPHITE PROJECT ACROSS ALL KEY METRICS. CAPITAL INTENSITY SCALE v. OPEX PROFILE CAPEX : ENTERPRISE VALUE RATIO* (US$M/kt annual plant capacity) (Ability to fund) HIGH COST, MARKETABLE VOLUME 4.00 800 14.0 HIGH COST, SYR: EV ~$560m 3.50 700 LARGE 12.0 MNS: EV ~$280m 3
Slide 12: Technical Detail
MALINGUNDE: TECHNICAL DETAIL
Slide 13: Mining: soft near surface material, free dig, simple and cheap to mine
MINING: SOFT NEAR SURFACE MATERIAL. FREE DIG, SIMPLE AND CHEAP TO MINE. • Saprolite is the very soft, graphite-bearing, clay-rich oxide material formed from intense weathering of the original bedrock. • The Malingunde deposit is near surface, free dig and has a low strip ratio of 0.5. • By compariso
Slide 14: Processing: high grade concentrates produced via a simple process flow-sheet
PROCESSING: HIGH GRADE CONCENTRATES PRODUCED VIA A SIMPLE PROCESS FLOW-SHEET. • Simple process flowsheet – no primary crush or grind. • Significant capex & opex benefits over hard-rock processing. • High grade concentrate across all flake size fractions. CONCENTRATE COMPOSITION v. PEERS MALINGUNDE 2
Slide 15: Logistics: access to operating rail provides material transport cost advantage
LOGISTICS: ACCESS TO OPERATING RAIL PROVIDES MATERIAL TRANSPORT COST ADVANTAGE. • Operating rail allows low transport costs; below or comparable to regional peers utilising trucks. US$65/t Total • Operated by consortium including Vale & Mitsui. MINE GATE TO PORT • Rail delivers product directly to t
Slide 16: The Graphite Market
THE GRAPHITE MARKET
Slide 17: Natural flake graphite: understanding demand
NATURAL FLAKE GRAPHITE: UNDERSTANDING DEMAND. • Long term growth forecasts for energy storage are compelling. • Yet most graphite demand is still driven by traditional industrial applications. OVERALL NATURAL GRAPHITE DEMAND CURRENT APPLICATIONS FOR NATURAL GRAPHITE (ktpa) 2,500 80% Existing 2,000 T
Slide 18: Natural flake graphite: understanding supply
NATURAL FLAKE GRAPHITE: UNDERSTANDING SUPPLY. • The ability to compete on price with China is critical to project success. • China remains the dominant and lowest cost global producer. Canada 2% 75% Turkey 4% India EXISTING 4% SUPPLY Brazil 9% Other 5% 17 Source: Canaccord Genuity, Metal Bulletin Re
Slide 19: Natural flake graphite: understanding pricing
NATURAL FLAKE GRAPHITE: UNDERSTANDING PRICING. • A unique opportunity for Sovereign to enter existing, high-volume traditional markets; inaccessible to majority of peers. • Only small volume, niche markets pay significant premiums for high-grade or specialty concentrates. PEER BASKET PRICING EXISTIN
Slide 20: Summary
MALINGUNDE: SUMMARY
Slide 21: Next steps: rapid pathway to production
NEXT STEPS: RAPID PATHWAY TO PRODUCTION. ACCELERATED PROJECT DEVELOPMENT BASED ON EXCEPTIONAL SCOPING STUDY OUTCOMES: • Commencement of feasibility studies. • Development of product sales agreements. • Permitting – environmental, social & mining license. • Further metallurgy and downstream test-work
Slide 22: The world's best flake graphite project
MALINGUNDE: THE WORLD’S BEST FLAKE GRAPHITE PROJECT. US$301/t US$29m 44kt 17yrs <2 years Average Total Average Total Capital OPERATING DEVELOPMENT ANNUAL MINE LIFE PAYBACK COST CAPEX PRODUCTION PERIOD TECHNICAL FINANCIAL World’s largest, soft saprolite graphite Best in class opex – strong cash g
Slide 23: Appendix
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Slide 24: Market information
MARKET INFORMATION. OPPORTUNITY FOR MATERIAL RE-RATE: CAPITAL STRUCTURE DELIVERY OF WORLD CLASS SCOPING STUDY Current Shares on Issue * 217,329,083 RESULTS WITH A CLEAR & SIMPLE STRATEGY Unlisted Options 14,416,667 ($0.10 to $0.47) Performance Rights 1,400,000 ASX : SVM SHARE PRICE MOVEMENT Un-Dilut
Slide 25: Management team with a proven track record of success
MANAGEMENT TEAM WITH A PROVEN TRACK RECORD OF SUCCESS. IAN MIDDLEMAS JULIAN STEPHENS MARK PEARCE MATTHEW WHEELER DOMINIC ALLEN Chairman Managing Director Non-Executive Technical Manager Business Director Development Manager Mr Middlemas is a Dr Stephens is a Mr Pearce is a Mr Wheeler is a Mr Allen i
Slide 26: Competent Persons Statement
COMPETENT PERSONS STATEMENT. COMPETENT PERSONS STATEMENT The information in this presentation that relates to Malingunde Exploration Results is extracted from announcements dated 29 August 2016, 5 September 2016, 12 October 2016, 26 October 2016, 18 January 2017, 21 February 2017 and 15 March 2017.
Slide 27: Sovereign Metals Limited
26 SOVEREIGN METALS LIMITED
Slide 28: Sovereign Metals Limited contact details
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