Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — Investor Presentation (May 2020)
31 slides from Arafura Rare Earths's investor presentation, May 2020
Slide 1: Corporate Presentation
15/05/2020 CORPORATE PRESENTATION May 2020 (ASX:ARU) 1
Slide 2: Disclaimer
15/05/2020 This presentation has been prepared by Arafura Resources Limited (Arafura, Arafura Resources or the Company) and is of a summary form only and therefore contains general background information which may not be complete. It should be read in conjunction with and full review made of Arafura
Slide 3: Corporate Snapshot and Capital Structure
15/05/2020 Corporate Developing the world-class Nolans Capital Structure Snapshot NdPr project Nolans will supply 5-10% of ASX Code ASX Share Price (31 March) ARU $0.052 global demand for NdPr oxide, Shares on Issue 1,055m the key rare earths in permanent Market Capitalisation (31 March) $54.8m magn
Slide 4: Nolans Project
15/05/2020 Nolans Project (ASX:ARU) 4
Slide 5: Long Life Asset
15/05/2020 Long Life Asset RESOURCES TONNES (m) RARE EARTHS TREO % PHOSPHATE P2O5 % NdPr ENRICHMENT % Measured 4.9 3.2 13 26.1 Indicated 30 2.7 12 26.4 Inferred 21 2.3 10 26.5 TOTAL 56 2.6 11 26.4 As announced on 7 June 2017. 1% TREO cut-off grade. Numbers may not compute exactly due to rounding. “N
Slide 6: 100% Australian Domiciled in the NT
15/05/2020 100% Australian Domiciled in the NT Product traceability and single site waste Ore to oxide at a single site management certainty DFS includes fully-costed rehabilitation of Environmental approvals secured permanent disposal facility for tailings and (ASX:ARU) process residues 6
Slide 7: Process Flowsheet Supported by Successful Pilot
15/05/2020 Process Flowsheet Supported by Successful Pilot (ASX:ARU) 7
Slide 8: Definitive Feasibility Study (DFS) Completed & Improved
15/05/2020 Definitive Feasibility Study (DFS) Completed & Improved DFS completed February 2019 confirming Nolans as a world class NdPr project Updated CAPEX US$726m, low OPEX producer DFS Ore Updated Ore Mining at US$25.94/kg NdPr Reserves Reserves Inventory Mining & Processing Long-life asset based
Slide 9: Environment & Sustainability
15/05/2020 Environment & Sustainability (ASX:ARU) 9
Slide 10: Licence to Operate – Sustainable Supply
15/05/2020 Extensive community and Licence to Operate – Sustainable Supply stakeholder consultation Waste management plan tailings and residue facility Assessing impact from mining, extraction and transport corridor Surface water and groundwater management plans Biodiversity studies on existing flor
Slide 11: Verified Supply Chain
15/05/2020 Verified Tracking & Tracing across the Supply Chain Supply Sustainable Production Arafura RE NdPr Oxide Metal NdPr Metal Magnet NdFeB Magnet OEM Chain Producer Convertor (China) (Germany) (Australia) (Thailand) Waste Management Certainty Supplier Toll Processor Manufacturer Buyer Each 1 t
Slide 12: Marketing Strategy
15/05/2020 Marketing Strategy (ASX:ARU) 12
Slide 13: NdFeB Magnet Power Central to EV Efficiency & Cost
15/05/2020 Chevrolet Bolt: 150 kW permanent NdFeB Magnet Power Central to EV Efficiency & Cost magnet (PM) motor with 60 kWh lithium-ion battery pack.1 PM motor cost based on US$8 per kW.2 Estimate of 1 kilogram of NdPr metal per Modelled effect of increase in NdPr price, Permanent Magnet PM motor.2
Slide 14: EVs - driving the NdPr Market Opportunity
15/05/2020 EVs - driving the NdPr NdFeB Magnet Demand by Application Market Opportunity Underlying demand for NdFeB magnets across all applications is forecast to grow by 6% p.a. over the period to 2030 NdFeB demand growth for EV applications is more dramatic and forecast to grow by 24% p.a. Supply-
Slide 15: Supply & Demand Balance
15/05/2020 Supply & Demand China continues to dominate the global supply chain Balance being the world's largest producer accounting for about 80% of NdPr for global NdFeB magnet production Supply reforms, industry consolidation and higher environmental standards will constrain China’s ability to ra
Slide 16: China’s Evolving Integrated NdPr Supply Chain
15/05/2020 China’s Evolving Integrated NdPr Supply Chain – Enables Made In China 2025 Strategy Ore Concentrate Oxide Metal Alloy Magnet Component EV 2010 95% 95% 90% 80% 85% 80% 2018 70% 70% 85% 90% 90% 90% Market Value x 10x 100x 1000x MADE IN CHINA CHINA 2025 REST OF THE WORLD More recently China
Slide 17: Rare Earths are Critical Minerals
15/05/2020 Rare Earths China exerts control over most of the global rare earth supply chain are Critical Australia and its strategic allies Minerals recognise the threat posed by China’s strategy to deny capital to new developments Australia is active in its policy response: Critical Minerals Strate
Slide 18: Rest of the World Alternative Supply Chain
15/05/2020 Rest of the World Alternative Supply Chain Ore Concentrate Oxide Metal Alloy Magnet Component EV European auto industry employs Diversification of NdPr supply Government recognition of the Nolans offtake strategy focused 13.8 million people which equates source may provide better strategi
Slide 19: Product Offtake
15/05/2020 Product Offtake Amount Proportion Customer / Target Region Offtake Status (tonnes p.a.) of Revenue NdPr Oxide – targeting contract with NdFeB magnet companies &/or end users JingCi Material Science 900 MoU Baotou Tianhe Magnetics 900 MoU Japan 96% South Korea 2,557 In progress Europe USA
Slide 20: Project Funding Strategy
15/05/2020 Project Funding Strategy (ASX:ARU) 20
Slide 21: Project Funding Solutions
15/05/2020 Project Funding Solutions The Enablers The Opportunities • Alignment with offtake and strategic partners that removes • China new supply more constrained – capital strategically some market risk focused downstream and tougher environmental standards • Offtake contracts and project finance
Slide 22: Project Funding Strategy
15/05/2020 Project Funding Strategy Arafura looking to secure US$726m to meet CAPEX requirements for the Nolans project Potential sources of funding include equity, debt, JV and/or project selldown with a strategic investor DFS completion and environmental approval are critical enablers for engageme
Slide 23: Other Funding Sources
15/05/2020 Other Funding Sources Subordinated debt facilities and other funding sources NAIF and Clean Energy Finance Corporation (CEFC) Mezzanine or cost over-run facility Build-Own-Operate (BOO) and equipment financing Offtake finance – prepayment or working capital (ASX:ARU) 23
Slide 24: Current Focus
15/05/2020 Current Focus (ASX:ARU) 24
Slide 25: Indicative Production Timeline
15/05/2020 Indicative Production Timeline Targeting Front-End Engineering & Design (FEED) to be fully funded prior to commencement Project Commitment Timetable subject to change due to impact on funding and offtake activities of COVID-19 (ASX:ARU) 25
Slide 26: 2020 Focus
15/05/2020 2020 Focus Prioritising project Provision of sample Escalate engagement Continued dialogue work streams against product & advancing with financiers & with Australian & other cash conservation terms sheets with end financial advisors for governments seeking priorities in light of users for
Slide 27: Contact Information
15/05/2020 Contact Information Level 6, 432 Murray St Perth WA 6000 Australia +61 8 6370 2800 arafura@arultd.com www.arultd.com (ASX:ARU) 27
Slide 28: Appendices
15/05/2020 Appendices (ASX:ARU) 28
Slide 29: NdPr Rare Earths – What are they?
15/05/2020 NdPr Rare Earths – What are they? Classified as ‘Critical Minerals’ due to geological scarcity, geopolitical issues, trade policy and other factors (ASX:ARU) 29
Slide 30: Experienced Board
15/05/2020 Experienced Board MARK SOUTHEY CHRIS TONKIN QUANSHENG ZHANG CATHY MOISES GAVIN LOCKYER CHAIRMAN NON-EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR MANAGING DIRECTOR Mark Southey has previously held Chris Tonkin has over 35 years’ Quansheng Zhang holds a Doctoral Cathy Mo
Slide 31: Experienced Management
15/05/2020 Experienced Management RICHARD BRESCIANINI PETER SHERRINGTON LLOYD KAISER BRIAN FOWLER STEWART WATKINS GENERAL MANAGER CHIEF FINANCIAL OFFICER & GENERAL MANAGER GENERAL MANAGER GENERAL MANAGER EXPLORATION & BUSINESS COMPANY SECRETARY SALES & MARKETING NT & SUSTAINABILITY PROJECTS DEVELOPM