Sheffield Resources Limited · ASX:SFX
Sheffield Resources — Melbourne Mining Club (September 2018)
29 slides from Sheffield Resources's conference presentation, Sep 18, 2018
Slide 1: Melbourne Mining Club - Cutting Edge
MELBOURNE MINING CLUB Cutting Edge Date; 18 September 2018 Presenter: Bruce McFadzean
Slide 2: Disclaimer
DISCLAIMER PREVIOUSLY REPORTED INFORMATION This presentation includes information extracted from Sheffield Resources Limited's ACN 125 811 083 ("the Company" or "Sheffield") previous ASX announcements, as follows: “MAIDEN BINDING ILMENITE OFFTAKE AGREEMENT” 21 June 2018 “EPA RECOMMENDS APPROVAL OF T
Slide 3: Corporate Snapshot
CORPORATE SNAPSHOT ASX ISSUED SHARE RIGHTS SHARE PRICE MARKET CASH ENTERPRISE TOP 20 SHARE CODE SHARES & OPTIONS (11 SEPT 2018) CAP (UNAUDITED)1 VALUE HOLDERS SFX 229.0M 15.4M2 A$1.03 A$236M A$25M A$211M ~52% $220 SFX: 30 Month Market Capitalisation Growth 11Maiden TiO 2 $200 offtake 26% 9A$32M capi
Slide 4: Our Team – Experienced and Skilled
OUR TEAM – EXPERIENCED AND SKILLED BOARD Will Burbury Non-Executive Chairman Bruce McFadzean Managing Director David Archer Technical Director Bruce McQuitty Non-Executive Director MANAGEMENT Bruce McFadzean – Managing Director Jim Netterfield – Project General Manager Mining engineer with over 35 y
Slide 5: World Class Project: Thunderbird
WORLD CLASS PROJECT THUNDERBIRD • Located in northern Western Australia • Low risk mining jurisdiction • Excellent infrastructure • Large scale, high grade and low cost project • 42 year mine life1 • High grade, premium quality, zircon and TiO2 products • Exciting exploration upside • Emerging as a
Slide 6: World Class, High Grade Ore Reserve
WORLD CLASS, HIGH GRADE ORE RESERVE TiO2 Grade % 5.00 Fairbreeze (TROX) Namakwa (TROX) 4.00 In Situ Titanium Minerals (Ilm+Lux+Rut) % QMM (RIO) THUNDERBIRD (SFX) Cataby (ILU) Moma (KMR) Kwale (BSE) 3.00 Dongara (TROX) Richards Bay (RIO) Cyclone (DRX) 2.00 Sierra Rutile (ILU) Keysbrook (MZI) Cooljarl
Slide 7: Globally Significant Zircon Discovery
GLOBALLY SIGNIFICANT ZIRCON DISCOVERY – 30 YEARS 20 Thunderbird, SFX • Thunderbird is the most 18 significant zircon discovery in the last 30 years Contained Zircon in Resource1 - million tonnes 16 • Large zircon rich deposits Moma, KMR 14 are not discovered often • The industry needs 12 significant
Slide 8: Zircon - Significant Supply Shortfall Predicted
ZIRCON - SIGNIFICANT SUPPLY SHORTFALL PREDICTED Zircon – 62% of BFS Revenue “Industry and Consumers are expecting Thunderbird to come on line to help bridge the zircon supply gap” • Global zircon supply is declining • Demand modest 2.8% per annum to 2026 Supply Gap • Supply decline of 4.7% per annum
Slide 9: Significant Growth in Chloride Slag Predicted
SIGNIFICANT GROWTH IN CHLORIDE SLAG PREDICTED Titanium Feedstocks – 29% of BFS Revenue Large Market Opportunity 8000 Stage 1 Stage 2 • Chloride supply to grow faster than sulphate 7000 • Chloride slag is set for supply growth as industry particularly in China expands chloride pigment 6000 Offtake Su
Slide 10: Binding Offtake Complete
BINDING OFFTAKE COMPLETE • Thunderbird will deliver a secure supply of high quality products Offtake Status • Consistent supply over a 42 year mine life 23% % of Revenue Binding Offtake • Sourced from a low risk jurisdiction proximal to the largest emerging market % Uncommitted • Binding offtake mee
Slide 11: High Grade Continuity x Deposit Thickness = Value
HIGH GRADE CONTINUITY x DEPOSIT THICKNESS = VALUE • Continuous HG Zone up to 46m thickness OPEN • Strong continuity and very high VHM grades • Near-surface HG targeted early Plan View • HG Zone remains open, growth likely • Regional exploration upside • Build Resource base and extend mine life to gr
Slide 12: Conventional Processing
CONVENTIONAL PROCESSING • GR Engineering Services (ASX:GNG) – experienced preferred tenderer • Early Works Agreement and Key Term Sheet signed • 30% engineering complete • Lump sum EPC contract • New 7.5Mt/yr plant Stage 1 • 2 year construction and commissioning schedule Final Thunderbird Plant Desi
Slide 13: Conventional Processing: Flowsheet
CONVENTIONAL PROCESSING Flowsheet Producing High Grade Products • Conventional HM sands processing circuit1 • Ilmenite upgrade via low temperature roast (“LTR”) • LTR upgrades to >56% TiO2 producing premium sulphate ilmenite, and chloride slag feed • LTR ilmenite is low in chrome and alkalis with ma
Slide 14: BFS Product Volumes
BFS PRODUCT VOLUMES Stage 1 Stage 2 1,400 1,200 1,134 1,124 1,025 • Stage 1 single 966 1,000 336 336 878 process train 2 YEAR RAMP-UP 869 307 800 288 773 • Stage 2 duplicate 000 Tonnes 99 96 84 261 259 stage 1 226 559 581 584 99 109 80 600 95 90 73 71 • Globally significant 68 415 166 170 170 81 79
Slide 15: Strong Revenue – Flat LOM Cost Structure (BFS)
STRONG REVENUE – FLAT LOM COST STRUCTURE (BFS) 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 A$M 200 150 19% 100 50 - (50) (100) (150) Flat LOM cost structure (200) (250) (300) FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 F
Slide 16: Competitive Revenue to Cost Ratio
COMPETITIVE REVENUE TO COST RATIO 2% 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 7% Thunderbird 5% 21% 8% 11% 12% 17% 17% Mining Labour Electricity 80% cost Natural Gas Transport & Logistics Consumables Maintenance Site G&A (excluding labour) Sustaining Capital 1. 4 Year production period fo
Slide 17: Debt Structure - US$200M Underwritten Senior Debt
DEBT STRUCTURE - US$200M UNDERWRITTEN SENIOR DEBT • Finance provider - Taurus Mining Finance Fund and Taurus Mining Finance Annex Fund (“Taurus") • Attractive funding terms: o Average cost of funds of ~7.6% across several tranches and the CI Facility1 o A revenue royalty of 0.5% (years 1 - 4) and 0.
Slide 18: Sheffield Community Investment
SHEFFIELD COMMUNITY INVESTMENT Our Pledge to the Kimberley Community Our Current Social Licence To Operate • Local Content Employment– 280 DIDO Jobs • Creating positive change through engagement with Aboriginal People • Intergenerational Employment over 42 years • Partnerships with Local Communities
Slide 19: Timeline – Key Targets to Production
TIMELINE – KEY TARGETS TO PRODUCTION1 4 5 EARLY WORKS Q4 2017 CONSTRUCTION2 Commenced pre-works, 2018 - 2020 7 camp, site preparation Construction commences2 FINAL PRODUCTS progress engineering Q4 2018 until commissioning in late 2020 1 and procurement 2019 Progressive ramp-up of EPC Early Works Con
Slide 20: Exploration Targeting Large Zircon Rich Deposits
EXPLORATION TARGETING LARGE ZIRCON RICH DEPOSITS • Strategy to grow a globally significant Resource and Reserve base • Focus on zircon rich deposits with premium zircon products • Target Tier 1 stable mining jurisdiction Sheffield Thunderbird expands regional drilling exploration commenced footprint
Slide 21: Thunderbird Is a World Class Mineral Sands Project
THUNDERBIRD IS A WORLD CLASS MINERAL SANDS PROJECT • 42 year mine life • 100% owned • Outstanding economics • World’s best mining jurisdiction • US$200m debt mandated on attractive terms • Binding zircon offtake complete, TiO2 50% complete • Engaging with potential strategic equity partners • Target
Slide 22: Mineral Sands – Everyone, Everyday
Appendix 1 MINERAL SANDS – EVERYONE, EVERYDAY Two Distinct Product Streams ZIRCON - BFS 62% Revenue TITANIUM FEEDSTOCKS - BFS 29% 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, • Global ilmenite 52-58% T
Slide 23: Zircon - Premium Product
Appendix 2 ZIRCON - PREMIUM PRODUCT • Ceramic Grade Zircon • > 66% ZrO2 • Low Fe2O3 • Low TiO2 • Very Low Al2O3 • Moderate U+Th • Good Opacity • Off-take 100% complete • 100% of Stage 1 premium zircon and Composition (%) Premium Zircon Typical1 zircon concentrate under binding contracts ZrO2+HfO2 %
Slide 24: LTR Ilmenite - Premium Product
Appendix 3 LTR ILMENITE - PREMIUM PRODUCT • Exceptional Grade • 56 – 58% TiO2 • Outstanding FeO:Fe2O3 ratio Highly reactive ilmenite • Low Fe2O3 (<13%) Suited to Chinese market • Low Levels of Cr2O3 • High Acid Solubility • Good reactivity rate • Market Leading quality • Very low CaO and MgO • Suita
Slide 25: BFS Product Price Assumptions
Appendix 4 BFS PRODUCT PRICE ASSUMPTIONS1 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 $0 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Premium Zircon Zircon Concentrate Hi-Ti 88 LTR Ilmenite Titano-Magnetite TZMI
Slide 26: Summary BFS Outputs
Appendix 5 SUMMARY BFS OUTPUTS STAGE 1 STAGE 2 LOM Financial Year Financial Year LOM7 A$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 predictable LOM cost stru
Slide 27: Capital Expenditure
Appendix 6 CAPITAL EXPENDITURE Description US$M A$M Stage 2 200 186 funded by Processing – Stage 1 180 cash flow and 152 debt Plant Area Civils & Process Water Systems 19.0 25.3 160 Wet Concentrator Plant 43.5 58.0 140 Concentrate Upgrade Plant 25.7 34.3 122 EPC 120 Zircon Processing Plant 59.2 78.9
Slide 28: Ore Reserves
Appendix 7 ORE RESERVES 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) % % % % Proved 235.8 31.4 13.3
Slide 29: Mineral Resources
Appendix 8 MINERAL RESOURCES THUNDERBIRD DEPOSIT MINERAL RESOURCE1,2,7 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) (%) (%) (%) (%) Measured 510 45 8.9 0.
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