Alara Resources Limited · ASX:AUQ
Alara Resources — Mines & Money Hong Kong 2014
32 slides from Alara Resources's conference presentation, Mar 25, 2014
Slide 1: Mines & Money, Hong Kong – Resource Developer to Mine Builder and Operator
For personal use only MINES & MONEY, HONG KONG March 2014 Resource Developer to Mine Builder and Operator
Slide 2: Presentation Overview
For personal use only Presentation Overview COMPANY STRATEGY BOARD & MANAGEMENT RESTRUCTURE COMPANY MARKET PROFILE PROJECTS OVERVIEW SAUDI ARABIA UPDATE OMAN UPDATE SUMMARY www.alararesources.com 2 © Alara Resources Limited
Slide 3: Alara Strategy
For personal use only Alara Strategy The Alara strategy is clear: • Moving to mine operations • Operations in the Middle East • Khnaiguiyah Project as the first stage • Build an advanced stage project pipeline • Two mines and a third in Feasibility Study in 6 years www.alararesources.com 3 © Alara R
Slide 4: Board of Directors
For personal use only Board of Directors Ian Williams AO Chairman • 40+ years’ mining industry experience • Hamersley Iron, Rio Tinto, Century Zinc and Pasminco • Awarded Order of Australia for services to Indigenous communities • Retained from the prior Board Philip Hopkins Managing Director • 30+
Slide 5: Management Team
Management Team Philip Hopkins For personal use only Managing Director Justin Richard Country Manager – Saudi Arabia & Oman Under Recruitment Chief Financial Officer Elle Macdonald Corporate Affairs Manager Victor Ho Company Secretary / Acting CFO A.V. Sthapak Corporate Exploration Manager Leanne Cu
Slide 6: Company Market Profile
For personal use only Company Market Profile Company Data Stock Market Capital (14 Mar 2014) $23M Issued Capital: - Shares 242M - Options 36.75M Cash (31 Dec 2013) $5.2M Substantial Shareholders Top Shareholders Acorn Capital 11.0% Northcape Capital 9.0% Antares Capital Partners 7.1% www.alararesour
Slide 7: Current Company Project Overview
For personal use only Current Company Project Overview MOVING FROM EXPLORATION INTO DEVELOPMENT AND PRODUCTION Khnaiguiyah Daris/Washihi • Focused on mining in the Middle East Project Project (Saudi Arabia) (Oman) • Two major projects Khnaiguiyah – Saudi Arabia Daris/Washihi – Oman • Project Status
Slide 8: Saudi Arabia – Moving Towards Production
For personal use only SAUDI ARABIA Moving Towards Production www.alararesources.com 8 © Alara Resources Limited
Slide 9: Khnaiguiyah Project Overview
For personal use only Khnaiguiyah Project Overview KHNAIGUIYAH ZINC-COPPER PROJECT (SAUDI ARABIA) Khnaiguiyah Mining Company LLC (KMC) JV Company is moving from a 50:50 to a 60:40 joint venture agreement between Alara and United Arabian Mining Company LLC (Manajem), a privately owned Saudi Arabian m
Slide 10: Khnaiguiyah Project DFS Summary
Khnaiguiyah Project DFS Summary 2 • 2 Mtpa processing rate – Zn & Cu concentrates produced For personal use only • Project revenue: A$2,074M • Project costs : A$1,201M • EBITDA: A$873M • Cash flow (post Capex): A$467M • Capex: US$257M • Project NPV: A$170M • IRR: 23% AMEK Al Masane Zn/Cu Plant – Sau
Slide 11: Why Saudi Arabia - Commercial
Why Saudi Arabia - Commercial • 2014 Saudi mining budget – largest to date For personal use only SAR$228 Billion (~AU$70 Billion) • Saudi government focus i. Petroleum ii. Mining iii. Financial services • 20% Corporate tax – nil personal tax (staff) • Royalties – nil • SIDF – 75% debt available (low
Slide 12: Why Saudi Arabia - Technical
For personal use only Why Saudi Arabia - Technical • 1970’s BRGM did full review – 5,300 deposits • Saudi Geological Survey • DMMR (Mines Department) +4,000 maps • New mining code 2004 – ease of operation • Resource Potential in the Arabian Shield i. 40 fully identified resources ii. 15 ready to pro
Slide 13: Khnaiguiyah Project – Next Steps
Khnaiguiyah Project – Next Steps KEY/MAJOR PROJECT STAGES: For personal use only • Complete the amended Shareholders’ Agreement • Project Finance • Project construction • Commissioning and then operations 2014 2015 2016 2017 Project Activity Month Mar Apr May Jun Jul Aug Sep Oct Nov Dec Wk/Qtr 3 4 1
Slide 14: Saudi Arabia – Khnaiguiyah Project Upside
For personal use only SAUDI ARABIA Khnaiguiyah Project Upside www.alararesources.com 14 © Alara Resources Limited
Slide 15: Khnaiguiyah Project – CAPEX Opportunities
Khnaiguiyah Project – CAPEX Opportunities DFS REVIEW COMPLETED For personal use only Potential Capex Reductions: Change SAG mill to cone crushers Bulk concentrate shipping Smaller plant – Heavy Media Separation (HMS) addition (slide 17) Mine camp and power station optimisation Potential Opex Reducti
Slide 16: Khnaiguiyah Project – Finance
Khnaiguiyah Project – Finance PROJECT FINANCIAL UPSIDE For personal use only Debt Finance: 75% of the Project assumed debt finance @ 9.1% WACC SIDF Funding would be significantly below this (<3%) Alternate Finance: Off-take agreement in a rising Zinc Market Saudi Off-set funding Other finance vehicl
Slide 17: Khnaiguiyah Project – Heavy Media Separation (HMS)
For personal use only Khnaiguiyah Project – Heavy Media Separation (HMS) KHNAIGUIYAH PROJECT RECENT OPPORTUNITY • Capex <$15M • Opex ~$1.00-1.25/tonne feed • Coarse feed crush @ ~6.5mm diameter • Removes the “light” silica based rock (no metal) • Can up to double feed grade (+7% Zn & 1.2% Cu) • Doub
Slide 18: Zinc – World Market
Zinc – World Market ZINC PRODUCTION For personal use only Zinc demand is forecast to continue to grow Zinc supply is dropping off – major mines are closing or have closed (-+11% world supply) Wood Mackenzie quotes: "Zinc has the most promising fundamental outlook among the metals... The zinc price i
Slide 19: Zinc - Price Forecast
Zinc - Price Forecast Zinc forecast to outperform other commodities in the long term For personal use only Commodity prices: historical and forecast – rebased to 100 300 250 Project goes into production THINK ZINC 200 • Demand continues to grow • 11.4% of supply ceases 150 • Metal moved to deficit i
Slide 20: Zinc - Production Costs
For personal use only Zinc - Production Costs ZINC & COPPER PRODUCTION COSTS Zn bottom 50% of the cost curve Cu bottom 25% of the cost curve Cash costs remain to be optimised and are expected to be in the bottom 30% of the cost curve upon production. www.alararesources.com 20 © Alara Resources Limit
Slide 21: Oman – Project Update
For personal use only OMAN Project Update www.alararesources.com 21 © Alara Resources Limited
Slide 22: Daris/Washihi Project Overview
Daris/Washihi Project Overview DARIS/WASHIHI PROJECT OVERVIEW For personal use only • The Daris/Washihi resources (approximately 185km apart) together form the basis for what is currently termed the Daris/Washihi Project. Each resource is defined under a separate JV agreement as follows: Daris - A
Slide 23: Options Analysis Study
Options Analysis Study SIX DEVELOPMENT SCENARIOS: For personal use only 1) Conventional flotation circuit 2) HMS circuit followed by a conventional flotation circuit (A) 3) HMS circuit followed by a conventional flotation circuit (B) RELEVANT CONSIDERATIONS: 4) Toll treatment of the Daris Sulphide o
Slide 24: Options Analysis Study – Preliminary Study Outcomes
Options Analysis Study Preliminary Study Outcomes For personal use only Original scoping study approach (1) Conventional Flotation No HMS (2) Flotation Post HMS (A) Best indicative economics Smaller scale plant (3) Flotation Post HMS (B) Reduces Capex cost - indicative NPV remains high Positive NPV
Slide 25: Daris/Washihi Project – Scoping Study
Daris/Washihi Project –Scoping Study STUDY STATUS For personal use only • Early 2013 completed 0.5 Mtpa Scoping Study • Post Scoping Study • Completed metallurgical test work • Upgraded Washihi ore tonnage and grade • Queried some of the assumptions/approaches • Commenced upgraded 1.0Mtpa Scoping St
Slide 26: Summary – Way Forward
For personal use only SUMMARY Way Forward www.alararesources.com 26 © Alara Resources Limited
Slide 27: Alara Resources Summary
For personal use only Alara Resources Summary The Company at a glance: • Clear and defined strategy • Board & Management Team restructured accordingly • Recent agreement to move to 60% equity on Saudi Project • ~9 months to finance and then commence Project (end 2014) • Finalising the optimisation o
Slide 28: Mission Statement & Core Values
Mission Statement & Core Values MISSION STATEMENT For personal use only Alara’s mission is to become a mid-tier mineral producer with a focus on mineral deposits and projects in the Middle East region. We will deliver maximum shareholder value through profitable growth, development of low cost opera
Slide 29: JORC Statements – Khnaiguiyah Zinc-Copper Project
JORC Statements Khnaiguiyah Zinc-Copper Project (Saudi Arabia) The information in these JORC Reserve and Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially cha
Slide 30: JORC Statements – Washihi and Daris Projects
JORC Statements Washihi-Mullaq-Al Ajal Copper-Gold Project (Oman) The information in these JORC Reserve and Resource tables was prepared and first disclosed under the JORC Code 2004. For personal use only It has not been updated since to comply with the JORC Code 2012 on the basis that the informati
Slide 31: JORC Competent Person Statements
For personal use only JORC Competent Person Statements 1) The information in this report that relates to Ore Reserves in relation to the Khnaiguiyah Zinc-Copper Project (Saudi Arabia) was compiled by Mr Geoff Davidson, who is a Fellow of the Australian Institute of Mining and Metallurgy and a consul
Slide 32: Contact and Disclaimer
ABN: 27 122 892 719 For personal use only ASX Code: AUQ Level 3, 35 Havelock Street West Perth WA 6005 Telephone +61 8 6323 5900 Facsimile +61 8 6323 5999 info@alararesources.com www.alararesources.com DISCLAIMER This presentation contains certain forecasts and forward-looking information including