Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — Investor Presentation (January 2009)
34 slides from Arafura Rare Earths's investor presentation, Jan 6, 2009
Slide 1: Arafura Resources Limited Investor Presentation
For personal use only Arafura Resources Limited Investor Presentation Hon Ian Laurance Alistair J Stephens Chairman Managing Director January 2009
Slide 2: Important Notice
Arafura Resources Limited For personal use only Important Notice This presentation contains certain statements which may constitute "forward-looking statements". Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, perform
Slide 3: Flow of Presentation
Flow of Presentation For personal use only Who are we? What are our achievements? The Nolans project The pilot plant results What are rare earths? The rare earth market What are the projects returns? How are we going to do it?
Slide 4: The Arafura Board
The Arafura Board For personal use only Hon Ian Laurance AM Mick Muir Ian Kowalick Terry Jackson AM Dr. Steve Ward Chairman Director Director Director Director Age 68 Age 72 Age 63 Age 69 Age 53 Mick is a Western Ian is a director and Terry is a Western PhD in Chemical Ian is Chairman of the Austral
Slide 5: Arafura Management
Arafura Management For personal use only Alistair Stephens Gavin Lockyer Steven Mackowski Richard Brescianini Brian Fowler Managing Director / Company Secretary GM - Project GM - Strategic Manager CEO / CFO Development Development Sustainability Age 45 Age 41 Age 56 Age 45 Age 55 Alistair has over 2
Slide 6: Capital markets are very difficult and volatile
Arafura Resources Limited For personal use only Capital markets are very difficult and volatile, so… • We continually review our costs • Exploration, other than Nolan's, has been restricted • And forward programs are being managed in line with cashflow
Slide 7: The Achievements for 2008
The Achievements for 2008 For personal use only 1. Solid progress in community, environment & approvals 2. MOU with Inner Mongolia Bao Tou Steel Rare Earth Hi-Tech Co. Ltd. 3. MOU with Incitec Pivot Ltd. 4. Resource up 63% from 2005 to 30.3 million tonnes of total resources 5. Highly successful pilo
Slide 8: Project Status
Project Status For personal use only 9 Resource to support long life operation of +20 years no resource risk 9 Demonstration plant successfully operating the process works 9 Bankable Feasibility Study in progress a development plan 9 Site selection for processing plant in progress the lowest cost ba
Slide 9: Nolans project location
Nolans project location For personal use only Nolans project 135 km north of Alice Springs 5km to gas line 10km to Stuart Highway 15km to Aileron Roadhouse 60 km to rail line 1200 km north to Darwin 1300 km south to Port Pirie
Slide 10: Nolans Project Flowsheet
Nolans Project Flowsheet Concentration | | RARE EARTH PHOSPHATE processing processing Calcium Chloride Rare Earth Uranium Phosphoric Basics Concentrate Oxide Acid (By-Product) See tti(<“‘“‘s™S™~™SO”C*C*C;C;CSCSC GO UOope a 08 EOI ON Wir sO OA
Slide 11: Nolans resource exposed at surface, open at depth
For personal use only Exposed at surface, open at depth, only drilled to 130m below surface, enough resources for 30 years. Resource statement published on ASX 11 November 2008.Rounding up accounts for apparent tonnage discrepancy
Slide 12: Nolans Rare Earths Mix has Improved in Value
Nolans Rare Earths Mix has Improved in Value For personal use only REO Price 2008 to Current value Rare Earth Element REE Current content date1 (US$/kg) (US$/kg) Lanthanum $7.82 20.0% $1.56 Cerium $4.36 48.2% $2.10 Praseodymium $28.00 5.9% $1.65 Neodymium $28.00 21.5% $6.02 Samarium Unvalued 2.4% Un
Slide 13: Nolans Rare Earths mix is highly competitive
Nolans Rare Earths mix is highly competitive SEGY Nd, Pr, Dy Ce+La For personal use only 100 4% 95 90 percentage 85 28% 80 75 70 65 68% 60 Mt Pass Baotou Sichuan Mt Weld Nolans Value US$/Kg 9.9 11.4 10.5 13.6 14.2 Nolans has additional co-product of phosphoric acid and by-products of uranium and cal
Slide 14: Another of our competitive advantages
Another of our competitive advantages Comparative product values. Nolans includes co-product and by-product credits in US$/kg as REO For personal use only equivalent based on 2008 YTD average prices 30 Valuation CaCl Expressed in US$/kg REO equivalent Uranium 20 US$/kg REO Phos Acid Rare Earths 10 0
Slide 15: Nolans Site Design Underway
Nolans Site Design Underway For personal use only Initial Mining Area “North Zone” 500m
Slide 16: The Demonstration Plant Success
The Demonstration Plant Success For personal use only We have validated recoveries from laboratory test work 9 Rare earths recovery 80% 9 Phosphate recovery 80% technical grade (fertiliser grade higher) 9 Uranium recovery 80% indicative 9 Calcium chloride residue The pilot plant has realised lower c
Slide 17: The Demonstration Plant
The Demonstration Plant HMC Tails and Concentrate For personal use only Chemical Processing Phosphoric Acid Recovery
Slide 18: Rare earth applications
Rare earth applications For personal use only
Slide 19: Rare earths prices are linked to substitutability
Rare earths prices are linked to substitutability For personal use only Price Product Use Substitute US$/tonne Automotive exhaust catalysis PGM’s (limited) Cerium $4,280 Polishing agent None NiMH batteries Lithium Ion Lanthanum $7,700 Fluid cracking catalyst None Neodymium $30,000 Powerful permanent
Slide 20: Environmental & Social Benefits
Environmental & Social Benefits For personal use only REO Production Component End Product Environmental Savings Reduces NOX which aggravates respiratory CeO2 3,500t Auto catalysts 25 million cars problems, causes acid rain and damages aquatic environments. Ultra violet Architectural CeO2 1,600t Red
Slide 21: Rare earths market
Rare earths market For personal use only Source: Roskill, IMCOA
Slide 22: Rare earths by use in 2008
Rare earths by use in 2008 For personal use only By Region By application Ceramics Europe 5% Other 9% 7% Catalysts USA 20% 12% Phosphors 8% Glass 12% China Magnets 55% 19% Rest of Asia 24% Polishing 13% Metal 16% Total forecast production is about 140,000 tonnes for 2008 Source : IMCOA
Slide 23: Rare earth industry structure
Rare earth industry structure For personal use only Source: Arafura research
Slide 24: Demand is strong
Demand is strong Rare earths For personal use only Chemical catalysts Growing at 5% to 10% per annum Stronger growth to come from rechargeable battery market and increased heavy crude oil production Magnets Market growth currently 15% to 20% per year Strong growth in the hybrid car market Current pr
Slide 25: Rare earth price outlook
Rare earth price outlook For personal use only Arafura expects a stabilising in rare earth prices 2008 Solid growth in H1 slowed in H2 late due to Olympics & the global credit crunch 2009 – 2010 Global economy to stabilise for recovery 2010 – 2015 New sources will introduce competition • Mt Weld 5,0
Slide 26: Rare Earth Prices & Nolans Value
Rare Earth Prices & Nolans Value For personal use only $40 ¾ Long term demand outlook for rare earths remains robust $35 Nd $30 ¾ However the outlook for cerium and lanthanum $25 Pr indicate an oversupply US$ / kg $20 ¾ In the next 1 to 2 year period rare earth prices Y $15 are likely to reduce espe
Slide 27: Phosphate Product Prices
Phosphate Product Prices For personal use only World Phosphoric Acid and DAP Prices 2500 ¾ Phosphate rock supply is very “liquid” ¾ Phosphoric acid production is relatively “tight” Average Nominal Price - US$ per tonne 2000 in world production capacity – but more is coming on line 1500 ¾ Australia i
Slide 28: Capital Expenditure = A$600m
Capital Expenditure = A$600m Capital is accurate to 30% based on pre-feasibility study. Additional capital reductions have For personal use only been identified through lower raw material costs (e.g. steel) & overseas modularisation Mine, concentrate A$70m grind & leach Rare Earths Uranium Phosphori
Slide 29: Financial Analysis
Financial Analysis NPV @ 10% discount rate $1.7 billion after tax and capital payback (20 year mine life) For personal use only Production per Price Total revenue annum (tonnes) (USD) US$ million Rare earths 20,000 $14,000/tonne 280 P2O5 80,000 $1,000/tonne 80 Calcium chloride 400,000 $100/tonne 40
Slide 30: Proposed Operating Model
Proposed Operating Model For personal use only Arafura Incitec Pivot Looking for more REO Bao Tou Steel REHT 100% MOU opportunities MOU Chemical Rare earth Separation & Resources & Mining plant carbonate Marketing sales sales sales
Slide 31: Capital needed going forward
Capital needed going forward 700 For personal use only MOU with MOU with Bao Tou 100% Arafura Steel REHT Incitec Pivot 600 500 A$50m A$500m A$50 - 100m 400 300 To be Looking Looking 100% 200 owned by to joint to joint Arafura venture venture 100 0 Mining & concentration Chemical plant RE separation
Slide 32: Nolans Project Flowsheet
Nolans Project Flowsheet Concentration | | RARE EARTH PHOSPHATE processing processing Calcium Chloride Rare Earth Uranium Phosphoric Basics Concentrate Oxide Acid (By-Product) See tti(<“‘“‘s™S™~™SO”C*C*C;C;CSCSC GO UOope a 08 EOI ON Wir sO OA
Slide 33: The Plan Ahead
The Plan Ahead For personal use only ¾ Report on RE carbonate Q1 2009 ¾ Complete RE separation works 1st half 2009 ¾ Complete bankable feasibility Dec 2009 ¾ Mining lease approval 2009/2010 ¾ Processing plant Notice of Intent 2009/2010 ¾ Undertake project costing, sourcing, financing 2010 ¾ And cons
Slide 34: Arafura Resources Limited
ARAFURA RESOURCES LIMITED
Arafura Resources — Investor Presentation (January 2009) on 6ix