Sheffield Resources Limited · ASX:SFX
Sheffield Resources — Zircon Industry Association (ZIA) Conference 2017
30 slides from Sheffield Resources's conference presentation, September 2017
Slide 1: Zircon Industry Association (ZIA) Conference, Bangkok
ZIRCON INDUSTRY ASSOCIATION (ZIA) CONFERENCE Bangkok Date: September 2017 Presenter: David Archer
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 (5 SEP 2018) CAP (UNAUDITED)1 VALUE HOLDERS SFX 229.0M 15.4M2 A$0.97 A$222M A$23M A$199M ~52% $220 11Maiden $200 TiO2 offtake 26% SFX: 30 Month Market Capitalisation Growth 9A$32M $180 ca
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 • Close to markets • Excellent infrastructure • Large scale, high grade and low cost project • 42 year mine life1 • High grade, premium quality, zircon and TiO2 products • Exciting exploration upsi
Slide 6: World Class, High Grade Ore Reserve
WORLD CLASS, HIGH GRADE ORE RESERVE 5.00 TiO2 Grade % Fairbreeze (TROX) Namakwa (TROX) In Situ Titanium Minerals (Ilm+Lux+Rut) % 4.00 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 is the most Thunderbird, SFX significant zircon 18 discovery in the last 30 years 16 Contained Zircon in Resource1 - million tonnes • Large zircon rich Moma, KMR 14 deposits are not discovered often 12 • The industry needs 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” Supply Gap • Global zircon supply is declining • Demand modest 2.8% per annum to 2026 8 • Supply decline of 4.7% per ann
Slide 9: Significant Growth in Chloride Slag Predicted
SIGNIFICANT GROWTH IN CHLORIDE SLAG PREDICTED Large Market Opportunity 8000 Titanium Feedstocks – 29% of BFS Revenue Stage Stage 1 2 7000 • Chloride supply to grow faster than sulphate Sulphate Stable Market • Chloride slag is set for supply growth as industry 6000 Offtake Ilmenite particularly in C
Slide 10: Binding Offtake Complete
BINDING OFFTAKE COMPLETE • Thunderbird will deliver a secure supply of high quality products • Consistent supply over a 42 year mine life Offtake Status • Sourced from a low risk jurisdiction proximal to the largest 23% % of Revenue Binding emerging market Offtake 77% • Binding offtake meets conditi
Slide 11: High Grade Continuity x Deposit Thickness = Value
HIGH GRADE CONTINUITY x DEPOSIT THICKNESS = VALUE • Continuous HG Zone up to 46m thickness • Strong continuity and very high VHM grades OPEN • 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 Producing High Grade Products
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 1,124 1,134 1,025 1,000 966 2 YEAR RAMP-UP 336 336 878 869 307 800 288 773 000 Tonnes 99 96 261 259 559 581 584 99 109 84 80 226 600 95 73 71 90 68 415 166 170 170 81 79 76 400 52 53 122 49 51 58 60 567 568 518 486 441 437 200 382 280 286 286 205 0 Yea
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% 400 Robust annual cash flow 350 29% 43% 300 250 A$M 200 19% 150 100 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 5% 7% Thunderbird 21% 8% 12% 11% 17% 17% Mining Labour 80% Electricity cost Natural Gas Transport & Logistics Consumables Maintenance Site G&A (excluding labour) 16 1. 4 Year production period following Stage 1
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 Q1 2019 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 Thunderbird Sheffield 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: Australian Permitting Process
Appendix 1 AUSTRALIAN PERMITTING PROCESS Mining laws in Australia are managed by the States resulting in each State having separate legislation for the exploration and or extraction of those minerals from the ground. Environmental Process Native Title Process • Environmental approvals are required f
Slide 23: Mineral Sands – Everyone, Everyday
Appendix 2 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, crockery, etc.) • Global i
Slide 24: Zircon - Premium Product
Appendix 3 ZIRCON - PREMIUM PRODUCT • Ceramic Grade Zircon • > 66% ZrO2 • Low Fe2O3 • Low TiO2 • Very Low Al2O3 • Moderate U+Th • Good Opacity • Off-take 100% complete Composition (%) Premium Zircon Typical1 • 100% of Stage 1 premium zircon and zircon concentrate under binding ZrO2+HfO2 % 66.2 – 66.
Slide 25: LTR Ilmenite - Premium Product
Appendix 4 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 26: BFS Product Price Assumptions
Appendix 5 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 $0 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Premium Zircon Zircon Concentrate Hi-Ti 88 LTR Ilmenite Titano-Magnetite TZMI
Slide 27: Summary BFS Outputs
Appendix 7 SUMMARY BFS OUTPUTS STAGE STAGE LOM 1 2 Financial Year Financial Year LOM7 A$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 28: Capital Expenditure
Appendix 7 CAPITAL EXPENDITURE Description US$M A$M Stage 2 200 186 funded by cash flow Processing – Stage 1 152 and debt Plant Area Civils & Process Water Systems 19.0 25.3 150 122 Wet Concentrator Plant 43.5 58.0 Concentrate Upgrade Plant 25.7 34.3 Zircon Processing Plant 59.2 78.9 EPC 100 Ilmenit
Slide 29: Ore Reserves
Appendix 8 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 30: Mineral Resources
Appendix 9 MINERAL RESOURCES THUNDERBIRD DEPOSIT MINERAL RESOURCE1,2,7 Mineral Material In-situ HM Valuable HM Grade (In-situ)4 Cut-off HM Grade3 Slimes Osize Resource Tonnes Tonnes Zircon HiTi Leuc Leuc Ilmenite (HM%) (%) (%) (%) Category (millions) (millions) (%) (%) (%) (%) Measured 510 45 8.9 0.
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