Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — Investor Presentation (September 2013)
24 slides from Arafura Rare Earths's investor presentation, Sep 23, 2013
Slide 1: Investor Presentation September 2013
For personal use only INVESTOR PRESENTATION September 2013 Arafura Resources Limited (ASX: ARU)
Slide 2: Disclaimer
DISCLAIMER For personal use only Important Notice This presentation contains certain statements which may constitute “forward-looking statements”. Such statements are only expectations or beliefs and are subject to inherent risks and uncertainties which could cause actual values, results or performa
Slide 3: Agenda
AGENDA For personal use only 1. Arafura Resources – snapshot 2. Rare Earths market – long term, sustainable growth 3. Arafura positioned to be a major global supplier of Rare Earths 4. Flagship Nolans Project 5. The Nolans Project Base Case 6. Optimising the Project 7. Strategic partnerships 8. Araf
Slide 4: Company Snapshot
1a. COMPANY SNAPSHOT For personal use only Key statistics Arafura Resources is an Australian ASX Code: ARU company with a world-class Rare Earths Shares on offer: 441.3 million project in the Northern Territory – the Options: 10.7 million Nolans Project Market Cap @ 9.9 c: A$43.7 million 1-year rang
Slide 5: Experienced Board and Management
1b. EXPERIENCED BOARD AND MANAGEMENT For personal use only Ian Kowalick – Non-Executive Chairman Peter Sherrington – CFO and Company Secretary Appointed 1 February 2012. Ian has worked in technical Over 20 years’ experience in professional & corporate and project consulting, economic and business an
Slide 6: REO Market – Long Term Sustainable Growth
2a. REO MARKET – LONG TERM SUSTAINABLE GROWTH For personal use only Attractive long-term growth profile, driven by industrial sector, ongoing technology innovation and ‘green energy’ Supply, demand and pricing provide a strong base for attractive investment Growth in demand is driven by technology a
Slide 7: Growing Global Demand for Rare Earths
2b. GROWING GLOBAL DEMAND FOR RARE EARTHS For personal use only Global demand and supply of Rare Earths (kilo tonnes per year, 2012) 200 Certainty of supply is expected to grow demand further as REO-using products become more cost effective 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013f
Slide 8: Global Imbalance – Demand vs Supply
2c. GLOBAL IMBALANCE – DEMAND vs SUPPLY For personal use only • China is the largest Rare Earths producer, with over half of the world’s Reserves • Concerns about ongoing Chinese supplies – export restrictions & domestic stockpiling • Grade depletion of Chinese resources Key outcomes of this SUPPLY
Slide 9: Arafura – Positioned to be a Major Global Supplier
3. ARAFURA – POSITIONED TO BE A MAJOR GLOBAL SUPPLIER For personal use only Rationale: Project size – Potential to supply 10% of global Rare Earths demand Project life – Ore Reserves support a 22-year mine life Composition – Nolans Bore resource contains high concentrations of ‘Critical Rare Earths’
Slide 10: Flagship Nolans Project – Highlights
4a. FLAGSHIP NOLANS PROJECT – HIGHLIGHTS For personal use only Nolans Project – underpinned by a world-scale, low-risk resource at Nolans Bore Project status – well advanced with Feasibility in progress Potential to supply 10% of the world’s rare earths demand Significant JORC Ore Reserves establish
Slide 11: Nolans Bore Mineral Resources
4b. NOLANS BORE MINERAL RESOURCES For personal use only Tonnes Rare Earths Tonnes Phosphate Uranium Resources (million) % REO REO % P2O5 % U3O8 Measured 4.3 3.3 144,000 13 0.03 Indicated 21 2.6 563,000 12 0.02 Inferred 22 2.4 511,000 10 0.02 TOTAL 47 2.6 1,217,000 11 0.02 1% REO cut-off grade 1.22 m
Slide 12: Nolans Bore Ore Reserves
4c. NOLANS BORE ORE RESERVES For personal use only Tonnes Rare Earths Tonnes Phosphate Uranium % Reserves (million) % REO REO % P2O5 U3O8 Probable 24 2.8 672,000 12 0.02 Independently prepared Ore Reserves support a 22-year mine life Amenable to low-cost open cut mining & standard beneficiation tech
Slide 13: Future Supplier of 'Critical REOs'
4d. FUTURE SUPPLIER OF ‘CRITICAL REOs’ For personal use only ‘Critical Rare Earths’ Europium, Terbium, Dysprosium, Neodymium & Yttrium demand high prices: Nolans has strong representation in all ‘Critical Rare Earths’ and will derive significant revenue from Neodymium & Europium Rare Earth Prices –
Slide 14: Nolans Project Base Case
5. NOLANS PROJECT BASE CASE For personal use only Established in August 2012 Project economics over 20 years NPV of A$4.3 billion (10% discount rate) IRR of 30% (after tax & capital payback) Capital payback within 4 years of operation Capital cost of A$1.9 billion Operating cost of A$20.55/kg of REO
Slide 15: Optimising the Nolans Project (1 of 2)
6a. OPTIMISING THE NOLANS PROJECT (1 of 2) For personal use only Five stages to produce five key REO products and strategic co-products Comminution & Pre-leach & Rare Sulphation & Rare Earth Mining Beneficiation Earths Recovery Purification Separation • Small & simple open • Ore crushed & • Acid lea
Slide 16: Optimising the Nolans Project (2 of 2)
6b. OPTIMISING THE NOLANS PROJECT (2 of 2) For personal use only Arafura is targeting capital cost reductions of at least A$500 million Current initiatives: Relocation of Intermediate Chemical Processing from Whyalla (SA) to Nolans Bore (NT) - Aided by the discovery of an extensive aquifer system cl
Slide 17: Strategic Partnerships
7. STRATEGIC PARTNERSHIPS For personal use only ECE (East China Mineral Exploration & Development Bureau) is a major shareholder and important long-term strategic partner for Arafura - Supportive relationship with Arafura since 2009 - Equity increased to 24.86% via SPP (A$10 million) in 2012 Via ECE
Slide 18: On Track to Achieve Commercial Production
8a. ON TRACK TO ACHIEVE COMMERCIAL PRODUCTION For personal use only High Steenkampskraal Arafura is ARU 2007 on track Cost Effectiveness to achieve ARU 2010 Chinese Production Optimisation Norra Karr Mount Weld Program ARU 2013 Zandkopsdrift Ngualla Nechalacho Kvanefjeld Kipawa Mountain Pass ARU 201
Slide 19: Peer Comparison
8b. PEER COMPARISON For personal use only Arafura is undervalued compared to peers and thus represents the opportunity for strong value growth REO Market TREO TREO EV/Tonne Avg. Mining EV Forecast REO Company Listing Location Project Stage Offtake Cap Resources Reserves Resources Grade Method (A$m)
Slide 20: Disconnect Between Share Price & Operational Performance
8c. DISCONNECT BETWEEN SHARE PRICE & OPERATIONAL PERFORMANCE For personal use only Farm-in secured with ARU Share price $0.25 Rox over Jervois Base & Precious Metals Project 5th REO product separated to 99% purity Farm-in secured with $0.20 Ark over Mt Porter Gold Project Independent Project valuati
Slide 21: Funding Requirements Significantly Reduced
9. FUNDING REQUIREMENTS SIGNIFICANTLY REDUCED For personal use only Targeted Capex cost-reduction and funding Project returns measures requirements Targeting total capital costs reduction of at least A$500 million: - Immediate savings identified through project reconfiguration (c. A$410 million) - F
Slide 22: Strong Investment Case
10. STRONG INVESTMENT CASE For personal use only Nolans Rare Earths Project – world-scale and well advanced Potential to supply 10% of global rare earths products this decade JORC Ore Reserves established Five REO products separated to 99% purity Chinese expertise leveraged through strategic partner
Slide 23: Contact Us
For personal use only CONTACT US Arafura Resources Limited Level 5, 16 St Georges Terrace Perth WA 6000 Australia Tel: +61 8 6210 7666 arafura@arafuraresources.com.au www.arafuraresources.com.au Arafura Resources Limited (ASX: ARU)
Slide 24: Exploration Portfolio
EXPLORATION PORTFOLIO For personal use only Mt Porter • Gold – Ark Mines farm-in Kurinelli • Gold Aileron-Reynolds • REEs Jervois • Iron – Ferrowest farm-in • Base & precious metals – Rox Resources farm-in • Iron-Vanadium Hammer Hill • Base metals Arafura Resources Limited (ASX: ARU) 24
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