Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — 3rd Annual Strategic Metals & Rare Earths Conference 2013
25 slides from Arafura Rare Earths's conference presentation, Feb 26, 2013
Slide 1: Arafura Resources Limited
Arafura Resources Limited For personal use only 3rd Annual Strategic Metals & Rare Earths Conference 26-27 February 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. Introduction to Arafura 2. The Nolans Project 3. ECE partnership 4. Addressing the key issues 5. Value proposition and path ahead Arafura Resources Limited (ASX: ARU) 3
Slide 4: Introduction to Arafura
1. Introduction to Arafura For personal use only Arafura Resources is an Australian company developing a major Rare Earths project, the Nolans Project, from a world class resource located in the Northern Territory, Australia. ASX Code ARU Shares on offer 441 million Options 11.5 million Market Cap @
Slide 5: Strong investment case
Strong investment case For personal use only Nolans Rare Earths Project – world scale and well advanced Can supply 10% of global rare earths products this decade Maiden JORC Ore Reserve established Five REO products separated to 99% purity Recent Project Update confirms robust economics Independent
Slide 6: Recent achievements – momentum building
Recent achievements – momentum building For personal use only A$8.2m MOU signed Nolans A$10m Maiden Share with major Project Share JORC Ore Purchase Korean Update placement Reserve Plan company completed to ECE established Mar-12 May-12 Aug-12 Oct-12 Dec-12 Strong momentum continues Major Four REO F
Slide 7: Experienced Board and Management
Experienced Board and Management For personal use only Ian Kowalick – Non-Executive Chairman Gavin Lockyer – Company Secretary & CFO Appointed 1 February 2012. Ian has worked in Over 20 years’ international experience in technical and project consulting, economic and finance and mining. Held positio
Slide 8: The Nolans Project
2. The Nolans Project For personal use only Mine and concentrator at Nolans Bore in the Northern Territory Chemical processing in Whyalla, South Australia Low resource risk and a JORC Ore Reserve established early 2013 Feasibility Study advanced to a Project Base Case established from › extensive te
Slide 9: Regulatory and community support
Regulatory and community support For personal use only Clearly defined regulatory frameworks in the Northern Territory and South Australia Whyalla Processing Complex has Major Project status from South Australian government Advanced environmental studies at both sites – no major issues identified Co
Slide 10: Nolans Bore – world scale resource
Nolans Bore – world scale resource For personal use only Tonnes Rare Earths Tonnes Tonnes Tonnes Resources (million) REO % REO P2O5 U3O8 Measured 4.3 3.3 144,000 572,000 1,120 Indicated 21 2.6 563,000 2,610,000 4,090 Inferred 22 2.4 511,000 2,220,000 3,610 TOTAL 47 2.6 1,217,000 5,410,000 8,830 1% R
Slide 11: Nolans Bore – maiden reserve
Nolans Bore – maiden reserve For personal use only Tonnes Rare Earths Tonnes Tonnes Tonnes Reserves (million) REO % REO P2O5 U3O8 Probable 24 2.8 672,000 2,976,000 4,900 Arafura recently announced its maiden JORC Ore Reserve Based on Measured and Indicated Resource estimates as at 8 June 2012 95% of
Slide 12: Nolans Project Update shows robust economics
Nolans Project Update shows robust economics For personal use only Base Case has robust project economics over 20 years: › NPV of A$4.3 billion (10% discount rate) › IRR of 30% (after tax and capital payback) › Capital payback within 4 years of operation › Capital cost A$1.9 billion including core c
Slide 13: ECE Partnership
3. ECE Partnership For personal use only East China Mineral Exploration and Development Bureau (“ECE”) has a long-term relationship with Arafura – first investing in ARU in 2009 In 2012, ECE demonstrated its confidence in Arafura by increasing its ownership from 16.27% to 24.86% through a share plac
Slide 14: ECE Partnership
ECE Partnership For personal use only ECE is a strategic and important partner capable of providing: › Strategic and technical support › Assistance with funding options for the Nolans Project Through introductions provided by ECE, Arafura is engaging with Chinese rare earth experts to undertake a Te
Slide 15: Addressing the key issues
4. Addressing the key issues For personal use only Status of the Feasibility Study Project economics Product mix Funding Arafura Resources Limited (ASX: ARU) 15
Slide 16: Status of the Feasibility Study
Status of the Feasibility Study For personal use only The Nolans Project Feasibility Study is the product of over seven years of development Involved bringing together much of the work that had been undertaken over that period – put together in 2012 Enabled Arafura to set the direction and value of
Slide 17: Project economics – building on the Base Case
Project economics – building on the Base Case For personal use only Base Case delivers an NPV of A$4.3 billion and an IRR of 30% Since the Base Case: › Rare earth prices have fallen › Upward pressures on costs › Project optimisation review underway Optimisation benefits expected to more than offset
Slide 18: Project Optimisation Program well underway
Project Optimisation Program well underway For personal use only With the support of its major shareholder ECE, Arafura has initiated a project optimisation program and has engaged with Chinese experts The objective is to review and consider methods of optimising project economics, with a particular
Slide 19: Product Mix – five separated REO products
Product Mix – five separated REO products For personal use only Testing completed to produce five separated REO products to 99% purity In-specification final REO products verified by customers LOI and MOU signed with ThyssenKrupp and a major Korean company for product sales (each 3,000t REO p.a.) an
Slide 20: Critical REOs well represented in product mix
Critical REOs well represented in product mix For personal use only ‘Critical Rare Earths’ demand high prices Praseodymium , 5.93% Samarium , Gadolinium , 2.29% 0.99% Lanthanum, 19.13% Other, 0.21% Europium Terbium Neodymium, Dysprosium 20.58% Neodymium Yttrium Praseodymium Gadolinium Yttrium , 1.35
Slide 21: Nolans – a major supplier of 'Critical Rare Earths'
Nolans – a major supplier of ‘Critical Rare Earths’ For personal use only Annual Revenue USD Major supplier of ‘Critical Rare Earths’ millions Comparison to other ‘Heavy Rare Earth’ projects 800 700 600 500 400 300 200 100 0 Yttrium p.a. Neodymium p.a. Dysprosium p.a. Terbium p.a. Europium p.a. Araf
Slide 22: Funding – ability to access and source funds
Funding – ability to access and source funds For personal use only Arafura is confident that it can source the necessary funds required to complete its Feasibility Study › Estimated cost to complete A$70 million › Cash at hand A$40 million › A$30 million required from investors Factors underpinning
Slide 23: Arafura comparison to peers
Arafura comparison to peers For personal use only Market TREO EV/Tonne Mining EV Forecast REO Grade Company Location Project Stage Cap Resources Resources Method (US$m) Production (tpa) % (US$m) (Mt) (US$/tonne) Arafura Australia Open Pit Feasibility 70 17 1.2 20,000 14x 2.6% Australia Lynas Corp Op
Slide 24: Value proposition and path ahead
Value proposition and path ahead For personal use only Arafura is Australia’s leading rare earths company – positioned to supply 10% of world’s supply of rare earths ‘Critical Rare Earths’ product mix – in critical demand Strong prospective returns and good growth prospects Unique and strategic rela
Slide 25: Arafura Resources Limited
Arafura Resources Limited Level 5, 16 St Georges Terrace Perth WA 6000 Australia For personal use only Tel: +61 8 6210 7666 arafura@arafuraresources.com.au www.arafuraresources.com.au Arafura Resources Limited (ASX: ARU)
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