Reward Minerals Ltd · ASX:RWD
Reward Minerals — Non-Deal Roadshow (May 2018)
32 slides from Reward Minerals's roadshow presentation, May 2018
Slide 1: Reward Minerals Limited - LD Project PFS Roadshow
REWARD MINERALS LIMITED LD Project PFS Roadshow May 2018 The largest and longest-life brine ASX | RWD SOP Project outside of China www.rewardminerals.com
Slide 2: Forward Looking Statements & Disclaimer
FORWARD LOOKING STATEMENTS & DISCLAIMER This document includes forward-looking statements. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should”, and similar expressions are forward-looking statements. Although RWD believes that t
Slide 3: Contents
CONTENTS ►PFS Highlights ►Reward Corporate Snapshot ►SOP Market Overview ►Critical Success Factors ►LD Project ►Conclusions 3
Slide 4: PFS Highlights
PFS HIGHLIGHTS1 Production: ► Over 400,000 tpa – largest brine SOP producer outside of China ► 27-year LOM, based on extraction of only 6% of current resource Costs: ► Capex – A$345M, incl. indirects and owners costs (+/-20% accuracy) ► Total Capex – A$451M, incl. contingency and pre-production cost
Slide 5: PFS Highlights Continued
PFS HIGHLIGHTS CONTINUED1 Process: ► Over 40 phases of metallurgical testwork completed ► ERCOSPLAN independent review of mass balance and flowsheet: ► “State of the art” Timing: ► 3¼-Year development period ► One year production ramp-up Life extension: ► Excellent potential to increase production a
Slide 6: Reward Corporate Snapshot
REWARD CORPORATE SNAPSHOT Capital Structure 2 May 2018 ASX:RWD Ordinary Shares on Issue 135.8m Rights and Options on Issue 4m Share Price $0.21 Undiluted Market Capitalisation $28.5m Short Term Debt A$1.0m Net Cash & Equivalents1 ~A$1.7m Undiluted Enterprise Value A$27.8m Major Shareholders Name Sha
Slide 7: SOP Market Overview
SOP MARKET OVERVIEW SOP is the premium Potash fertiliser ►Sulphate of Potash – “SOP” or K2SO4 (44.8% K, 55.2% S) ►Provides a chloride free source of potassium and sulphur ►Essential plant macronutrient; increases yields, water retention & disease resistance ►Sulphur also important nutrient, helps pr
Slide 8: SOP Growth Drivers
SOP GROWTH DRIVERS 80 8 Demand is driven by Global Midyear Population (billions) 70 7 ► Increasing population, decreasing arable land Potash Demand (Mt) 60 6 ► Diet influenced by changing demographics 50 5 ► Concerns over increasing soil salinity 40 4 ► Need for improved water efficiency 30 3 ► Indi
Slide 9: SOP Market Update
SOP MARKET UPDATE SOP is the premium Potash fertiliser The SOP:MOP Price premium has stayed close to U$270/t for Key Growth Markets most of the last three years China India Southeast Asia 2011 Historical Midpoint NW Europe SOP Prices LD Source: Integer Research – Used with permission Project 9 Sourc
Slide 10: Global SOP Producers > 100ktpa
GLOBAL SOP PRODUCERS > 100ktpa Over 70% of SOP supply is from high cost Mannheim and K Salts Production LD is positioned to be the largest brine SOP producer outside of China Yara Kokkola – 200ktpa Compass Minerals ▪ SOP (Mannheim) Great Salt Lake – 300ktpa K+S ▪ SOP (Brine) Aktiengesellschaft– 1,20
Slide 11: Brine SOP Critical Success Factors
BRINE SOP CRITICAL SUCCESS FACTORS Critical Success Factors for Brine-based SOP Operations Geology Operational Environment • Current producers operate from large, • High evaporation rates all year round single deposit, long-life operations • Relatively low rainfall (recharge) • Simple geology, consi
Slide 12: Geology – 1
GEOLOGY – 1 Playa versus palaeochannel basics: A picture paints a thousand words….. 50 Limited or no operational synergistic benefits from multiple, regionally dispersed deposits Use of the Lake Wells image is purely for the purpose of geological explanation only and is not an opinion of potential p
Slide 13: Geology – 2
GEOLOGY – 2 Playa versus palaeochannel basics: What is the difference? Playas Palaeochannels Linear, space is a constraint on abstraction Large surface area – space is not a system design & therefore environmental constraint on abstraction system design. risk. Low energy depositional environment, Va
Slide 14: Operational Environment – 1
OPERATIONAL ENVIRONMENT – 1 Year-round evaporation is critical, not just the average….. ~ Lake Disappointment “The winter is coming….” Denser potash salts brines evaporate very slowly 14
Slide 15: Operational Environment – 2
OPERATIONAL ENVIRONMENT – 2 Rainfall is useful for recharge, but not welcome in winter….. ~ Lake Disappointment “The winter is coming….” Lower evaporation, higher rainfall further south means larger ponds 15
Slide 16: Grade
GRADE Assuming the same operating environment, a 8.25 g/l SOP brine requires a halite evaporation pond area some 160% larger than a 13.4 g/l SOP brine Also, assuming similar seepage rates1, an evaporation pond that is 160% larger will also suffer ~60% greater seepage losses, for the same SOP output
Slide 17: LD SOP Project – Introduction
LD SOP PROJECT – INTRODUCTION ► 100% owned – the largest SOP outside of China, offering long life and scalability ► Excellent brine chemistry; the highest in-situ grade SOP resource in Australia ► A playa-style deposit – lower resource risk ► Ideal operating environment, low rainfall, high evaporati
Slide 18: A Globally Significant Tier 1 Resource
A GLOBALLY SIGNIFICANT TIER 1 RESOURCE LD’s Drainable SOP Resource dwarfs other local resources (Even though its not the largest playa in Australia by area) Plan Section: A-A Accessible Zone Exclusion Zone Open to depth Notes: 1. Total area of LD:1,241km 2 2. Total area of the Accessible Zone: 749km
Slide 19: LD – Capital Costs
LD – CAPITAL COSTS1 Initial and Sustaining Capital Costs (LOM Real) AUD M Production - Trenches and Ponds 57.6 Process Plant 73.2 Infrastructure 108.8 Site Support Temporary Services 2.9 Construction Costs 59.2 Subtotal 301.7 Indirect Costs (EPC, Consultants, Commissioning) 20.0 Owners Costs 23.4 Su
Slide 20: LD – Cash Opex Costs
LD – CASH OPEX COSTS1 A$91/t A$102/t Other Opex Costs Closure – A$2/t Martu Royalty – A$7/t Road Maint - A$15/t FOB Cash Cost: Site Services - A$22/t A$362/t (US$272/t) EBITDA Margin: A$123/t ~41.9% @ US$500/t Ex-Works Cost: A$239/t (US$180/t) 1. All figures taken from 2018 PFS Study – Refer to ASX
Slide 21: LD – Cash Cost Detailed Breakdown
LD – CASH COST DETAILED BREAKDOWN1 Cash Cost Brook Hunt Cash Costs (A$/t SOP) C1 Cost Evaporation Ponds & Harvesting 91 Processing Plant 102 Road Maintenance 15 Site Services & Administration 22 Closure Costs & Rehabilitation 2 Transport Costs 123 Native Title Royalty 7 C1 Costs 362 C2 Cost C1 Costs
Slide 22: LD – Schedule
LD – SCHEDULE 2018 2019 2020 2021 2022 2023 ACTIVITY Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Project Quarter Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Project Assessment and Approval EPA Assessment and Approval Feasibility Study Feasibility Study Assess
Slide 23: Ex-Works Global SOP Cost Curve
EX-WORKS GLOBAL SOP COST CURVE Primary playa-style brine SOP deposits have the lowest ex-works production costs… …but even including logistics LD compares favourably 500 450 LD’s Estimated 400 FOB Cash Cost Estimated Operating Cost / t (US$)1 LD’s Estimated in US$/t1 350 Ex-works Cash Cost in US$/t1
Slide 24: LD – Sensitivity Analysis
LD – SENSITIVITY ANALYSIS LD Project - After-tax Sensitivity Analysis A $ 600.00 M A $ 500.00 M A $ 400.00 M A $ 300.00 M NPV A $ 200.00 M A $ 100.00 M SOP Price Plant Opex Pond Opex Capex Overall Opex Downstream Opex A $ 0.00 M (A $ 100.00 M) (20.00%) (15.00%) (10.00%) (5.00%) 0% 5.00% 10.00% 15.00
Slide 25: Next Steps
NEXT STEPS1 Funding ► Progress discussions with potential strategic partners Environmental Assessment ► Address EPA comments/questions ► Finalise ERD for public review period Project Enhancements ► Further R&D can deliver process improvements ► Assess contractor consolidation options ► Investigate a
Slide 26: Conclusion
CONCLUSION The LD Project is Technically Sound ► Conservative PFS conducted to exacting standards (+/-20% accuracy) ► Successful independent process review completed (ERCOSPLAN) … and Economically Robust ► Pre-tax NPV8%: A$460 M ► EBITDA margin 42%, generates A$110 M/year ► With the scope to improve
Slide 27: Appendix
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Slide 28: Experienced Board & Management
EXPERIENCED BOARD & MANAGEMENT Colin McCavana – Non-Executive Director, Chairman Daniel Tenardi – Projects Director - 30+ years experience in mining and earthmoving industries - 25+ years mining experience with various organisations including the management, acquisition and development of including
Slide 29: Globally Significant Tier 1 Resource
GLOBALLY SIGNIFICANT TIER 1 RESOURCE LD’s Drainable SOP Resource dwarfs all Australian deposits (…it has the highest average in-situ grade…) Assigned Specific SOP Brine Unit Nominal Dimensions (m) Volume Area Yield Drainable JORC Resource Hydrostratigraphic Unit Grade Symbol Effective 3 (1) SOP (Mt)
Slide 30: Competent Person Statement
COMPETENT PERSON STATEMENT This information in this report that relates to Resource Estimation and hydrogeology is based on information compiled by Mr Robert Kinnell, a hydrogeologist and Competent Person who is a Member of The Australian Institute of Mining and Metallurgy and a Fellow of the Geolog
Slide 31: Notes
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Slide 32: Reward Minerals Ltd contact details
Reward Minerals Ltd 159 Stirling Highway Nedlands WA, 6009 (T): +61 8 9386-4699 (W): www.rewardminerals.com