Lion Rock Minerals Limited · ASX:LRM
Lion Rock Minerals — Investor Presentation (June 2019)
35 slides from Lion Rock Minerals's investor presentation, Jun 17, 2019
Slide 1: Investor Presentation - Revised
ACN 072 692 365 Revised Investor Presentation 17 June 2019 ASX Code: PUA, PUAOC Investor Presentation - Revised Pure Alumina Limited (ASX: PUA) (Pure Alumina) advises that it has received a request from the Australian Securities Exchange (ASX), in relation to the announcement entitled “Investor Pres
Slide 2: Revised Investor Presentation replaces 14 June presentation
The Revised Investor Presentation replaces the 14 June Investor Presentation and former Slides 18 and 19, as referred to above, are retracted and investors should not rely on any comparisons made on those retracted slides. Martin McFarlane Managing Director Media - For further information, please co
Slide 3: A New Commercial Low Cost Producer of High Purity Alumina
A NEW COMMERCIAL LOW COST PRODUCER OF HIGH PURITY ALUMINA
Slide 4: Disclaimer
Disclaimer Forward-looking Statements This announcement contains forward-looking statements which are identified by words such as ‘anticipates’, ‘forecasts’, ‘may’, ‘will’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, ‘plan’ or ‘intends’ and other similar words that involve risks and unce
Slide 5: Investment Highlights
Investment Highlights Pure Alumina is raising capital to acquire Polar Sapphire (“Polar”) and to fund a commercial-scale factory 1 One of the world’s highest quality, lowest cost HPA suppliers 2 CapEx substantially lower than other potential HPA suppliers – near term cash flow positive 3 Rapid marke
Slide 6: Team
Team Highly qualified team with extensive industry experience and proven track record of building cleantech companies Scott Nichol Dan Smith Iman Zargaran David Leavy Founder, CEO VP of Operations R&D Manager VP of Finance Experience: Experience: Experience: Experience: • Experienced • Experience sc
Slide 7: The Acquisition – Polar Sapphire
The Acquisition – Polar Sapphire Polar Sapphire, a private Canadian company, has perfected its unique patented HPA production technology over 6 years. • Polar’s innovative process produces 99.999% (5N) HPA (Al 2 O 3 ) - the highest commercial grade of HPA, commanding a price premium. • Polar can als
Slide 8: The Acquisition – Polar Sapphire
The Acquisition – Polar Sapphire Polar’s modular production process has key advantages over existing methods of HPA production • Polar’s modular system has many advantages compared to other methods of producing HPA including: • significantly lower CapEx and Operating Costs, • flexibility to produce
Slide 9: Key Acquisition Terms
Key Acquisition Terms PUA acquires all of the outstanding equity in Polar Sapphire in exchange for: • C$13.75m in PUA Shares • C$12m in cash • 3 board seats in PUA Conditions Precedent Include: • Raising a minimum of A$30m of equity • Completion of due diligence • Progress on sale of PUA gold assets
Slide 10: HPA Applications
HPA Applications LEDs (5N & 4N grade) Semiconductors (5N & 4N grade) Phosphor (for Plasma Displays) (4N grade) Other Sapphire (Non- LED (5N & 4N grade) Lithium-Ion Battery Separators (4N & 3N grade) Other (6N to 3N grades) > | a A wiS.ninn POE! Used to produce sapphire boules, which are turned into
Slide 11: Rapid HPA Growth from Multiple Sectors
Rapid HPA Growth from Multiple Sectors 100,000 Demand by Use 90,000 80,000 CAGR 2018-2028 70,000 Others 7.0% 60,000 Batteries 26.0% Tonnes 50,000 Phosphor 6.2% 40,000 Semiconductor 5.8% 30,000 LED 8.0% 20,000 10,000 Total: 10.5% 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Dema
Slide 12: Coated Battery Separators
Coated Battery Separators • Lithium batteries generate significant heat that, if unmanaged, may result in thermal runaway e.g. Samsung Galaxy Note 7 • Demand for larger batteries and greater energy density e.g. EV batteries, increases the thermal management issue • Coating battery separators with HP
Slide 13: Polar’s HPA – Value Proposition
Polar’s HPA – Value Proposition Polar Sapphire HPA produces higher quality boules with fewer defects, increasing ingot yields and revenue for customers by up to 25% HPA in the LED Supply Chain Sapphire Sapphire Sapphire HPA LED Boule Ingot Wafer HPA in the market today produces boules with defects (
Slide 14: Polar is Solution to Existing Issues
Polar is Solution to Existing Issues Polar HPA has increased value in use while solving current HPA issues Competitors HPA HPA in the market today produces boules with defects Sapphire for LED’s (bubbles, colour, cloudy), limiting the ingot yield/boule •Increased clarity •Increased Yield •Fewer defe
Slide 15: Competitive Advantage
Competitive Advantage Polar HPA generates 25% more revenue for producers than competitor HPA Revenue/Sapphire Boule with Competitor HPA vs. Polar HPA (USD $/Boule1) Additional Revenue/Boule - Increased Yield • Full value of Polar Sapphire HPA Material Cost $7,875 HPA is ~USD $77/KG: 2 $1,575 o1 $24/
Slide 16: Business Model
Business Model Polar’s proprietary low-energy process generates one of the world’s highest-purity, lowest production cost alumina • Simple process uses aluminium to produce high quality 5N HPA, which few can compete with. • Polar forecast production cost $7/kg*, equivalent to competitor 4N cost • Lo
Slide 17: Kaolin Based HPA Manufacturing Process
Kaolin Based HPA Manufacturing Process Capital intensive and complex 15
Slide 18: Polar’s HPA Manufacturing Process
Polar’s HPA Manufacturing Process Simple cheaper process • Significantly reduced capital from fewer process stages • Lower forecast operating costs • In production now • Short lead time (12 months) to commercial production & cash flow • Low scale-up risk 16
Slide 19: Polar’s Unique IP is Patented
Polar’s Unique IP is Patented Polar’s proprietary HPA process is protected by 2 patents • The patents are granted in the USA • Patent applications have been lodged in other jurisdictions and are pending • Patent protection significantly mitigates risk of competition 17
Slide 20: The Transaction Timeline
The Transaction Timeline The indicative transaction timeline is: • Sign non-Binding Heads of Agreement • Sign Binding Agreement • Due Diligence • Roadshow and Capital Structure June • Transaction approvals inc. ASX July • Shareholder meeting Aug • Transaction Completion Aug Sapphire Crystal Boule ma
Slide 21: Strategy Post Transaction
Strategy Post Transaction Production Ramp Up and Decline in Operating Cost per Tonne $9,000 6,000 $8,500 5,000 Operating Cost (US$/Tonne) $8,000 4,000 Tonnes Sold $7,500 3,000 $7,000 2,000 $6,500 1,000 $6,000 - 2020 2021 2022 2023 Tonnes Sold Operating Cost (US$per Tonne) Note: Potential expansion a
Slide 22: Financial Projections
Financial Projections HPA prices can vary significantly by purity, geography, and customer; Polar is using conservative price assumptions Pure Alumina is using a conservative price of $20/kg HPA Price Range by Purity Level Polar – Impact of Pricing per (USD $/KG) 1,000t of HPA Production Low High PR
Slide 23: Experienced Board
Experienced Board Tom Eadie – Chairman • 20+ years as Geologist and mining executive Scott Nichol – Managing Director • Founder and creator of Polar Sapphire Technology • 10+ years experience in C-suite roles in manufacturing and solar energy Martin McFarlane – Non-Executive Director • 25+ years of
Slide 24: Corporate Snapshot
Corporate Snapshot ASX Code: PUA Top Shareholders - 12 June 2019 % Ordinary Shares 221.8m Tolga Kumova 7.2% Listed Options 52.2m Thea Management Pty Ltd (Chairman) 4.1% Robert Hallas 2.0% Unlisted Options 29.2m BNP Paribas 1.6% Market cap (@$0.037) $8.2m Andrew Brown 1.4% 52 week high-low (A$) $0.09
Slide 25: Polar Sapphire – Capital Structure
Polar Sapphire – Capital Structure Existing shareholdings of Polar Sapphire prior to the proposed acquisition by Pure Alumina Total Common Issued Fully Shareholder Shares Diluted % Scott Nichol (founder, CEO) 1,800,000 37.0% Daniel Smith (founder, COO) 100,000 2.1% YiYi Ventures (private company) 16
Slide 26: Intended Use of Proceeds
Intended Use of Proceeds Intended Use of Funds Amount Cash to Polar Shareholders VC Preferred Shareholders $6.5m Current Management $2.15m Other Shareholders $3.35m Capex for 1000t per Year Plant $15m General Working Capital $3m Total $30m 24
Slide 27: Investment Highlights
Investment Highlights 1 One of the world’s highest quality, lowest cost HPA suppliers 2 CapEx substantially lower than other potential HPA suppliers – near term cash flow positive 3 Rapid market growth and order backlog 4 Compelling valuation and lower risk proposition vs industry peers 25
Slide 28: Appendix
Appendix
Slide 29: Manufacturing Process and Products
Manufacturing Process and Products Polar Sapphire’s unique HPA production process is protected by patents and custom-made equipment Polar HPA Manufacturing Process Polar HPA Products and Applications 1 Sapphire Boule Dissolve aluminum/ore in HCl acid to make PAC LEDs 2 Heat and calcinate PAC into al
Slide 30: Execution Plan
Execution Plan Polar Sapphire will initially focus on the large and growing market for HPA in sapphire production (for LEDs and other applications) Sapphire Market (LEDs and Other Lithium-Ion Battery Separators Applications) • Secure letters of intent (LOIs) or contracts with 2-3 • Research into the
Slide 31: Customer Pipeline
Customer Pipeline Estimated to be ~70 sapphire manufacturers (main customers) globally, with the majority located in China • Estimated to be ~70 sapphire manufacturers globally • Most sapphire manufacturers are located in Asia (China, South Korea, and Japan); 50% est. to be in China • Other manufact
Slide 32: Competition – Current HPA Producers
Competition – Current HPA Producers There are ~25 HPA producers globally, with the majority of production in Asia HPA Producers HPA Producers (Tons/Year, Global, 2015) (Market Share by Volume, Global, 2015) Other (15), Company Country Tons/Year Sumitomo 18% Sumitomo Chemicals Japan 3,020 Chemicals R
Slide 33: Polar’s HPA – Production Cost
Polar’s HPA – Production Cost US$ / KG Total estimated cost of production of US$6.70/kg is based on: Insurance, $0.17 Consultants, $0.09 Factory Lease, $0.29 • results achieved by Polar Sapphire from Shipping, operating their Pilot line $0.25 Aluminum, • consumables, chemicals, energy costs, $3.05 l
Slide 34: Sapphire Boule Production Cost
Sapphire Boule Production Cost HPA represents ~10% of the total sapphire boule production cost Sapphire Boule Production Cost Breakdown Seed, Water, Labor, 4% Argon, 30% HPA, 10% Crucible, 16% Power, 13% Hot Zone, 27% 32
Slide 35: Polar Technology Solves Orbite Issues
Polar Technology Solves Orbite Issues • Calcining step is a major challenge for all HPA companies that use a hydrochloric acid-based process • Orbite has not resolved calcining yet and this contributed to their bankruptcy issues • Polar developed and proved its own calcining technology at its pilot
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