Slide 1: ASX/Media Release: Presentation at MENA Mining Show 2014
Alara Resources Limited A.B.N. 27 122 892 719 Telephone | +61 8 6323 5900 Level 3, 35 Havelock Street Facsimile | +61 8 6323 5999 West Perth, Western Australia 6005 AUSTRALIA Web | www.alararesources.com Email | info@alararesources.com PO Box 1890 West Perth, Western Australia 6872 ASX/MEDIA RELEASE
Slide 2: MENA 2014 Dubai Presentation
For personal use only PHILIP HOPKINS, MANAGING DIRECTOR & CEO MENA 2014 DUBAI, UNITED ARAB EMIRATES 21 OCTOBER 2014
Slide 3: Presentation Outline
Presentation Outline For personal use only Company Overview Zinc Market & Forecast Saudi Arabia Project Overview Oman Project Highlights Company Summary www.alararesources.com 2 © Alara Resources Limited
Slide 4: Board of Directors
Board of Directors For personal use only Ian Williams, AO Philip Hopkins John Hopkins HRH Prince Abdullah bin Mosaad bin Abdulaziz Al Saud Chairman Managing Director Non-Executive Director Non-Executive Director BE (Elec), FAusIMM, FIEAust BSc (Mining Engineering); MBA; LLB; FAICD BEng.(Industrial)(
Slide 5: Projects Overview
Projects Overview For personal use only Project Resources Ownership Location Status Khnaiguiyah Zinc-Copper 50% Saudi Arabia Positive completed DFS Washihi Copper-Gold 70% Oman Deposits analysed as single Project Daris Copper-Gold 50% (70% option) Ready to identify next steps www.alararesources.com
Slide 6: Zinc Cycle & Saudi Zinc Project
For personal use only Zinc Cycle & Saudi Zinc Project www.alararesources.com 5 © Alara Resources Limited
Slide 7: Think Zinc - Usage
Think Zinc - Usage For personal use only HOW IS THE WORLD USING ZINC 50% of Zinc is used in galvanising, which is in turn used in: Galvanising - 50% Brass & Bronze -17% • Construction Zinc Alloying -17% • Vehicle manufacturing Zinc Semi-manufacturers - 6% • Roofing Chemicals - 6% Other- 4% The remai
Slide 8: Think Zinc – 11.3% Supply Coming Off
Think Zinc – 11.3 % Supply Coming Off For personal use only MAJOR ZINC MINE CLOSURES (2013-2017) Annual Mine Production Perseverance Lisheen Century 500 kT Brunswick Brunswick 200 kT Lisheen 167 kT Skorpion 162 kT Perseverance 128 kT Skorpion Century Others 540 kT TOTAL 1,697 kT “11.3 % of current w
Slide 9: Think Zinc – 6.2% Supply Coming On
Think Zinc – 6.2% Supply Coming On For personal use only ZINC NEWCOMERS & EXPANSIONS (2013-2017) Annual Citronen Mine Year Production NEW MINE Lalor Lake Dugald River 2017 200 kT Aguas Tenidas Perkoa 2013 90 kT Lalor Lake 2014 40 kT Perkoa Khnaiguiyah Citronen 2015 185 kT Khnaiguiyah 2017 80 kT EXPA
Slide 10: Zinc Supply Drops Off as Demand Rises
Zinc Supply Drops Off as Demand Rises For personal use only • Zinc demand has increased steadily from prior to 1995 • Zinc demand does not include possible emerging uses: • Fertiliser (estimated 500kt/year) • Continuous galvanizing (estimated 400kt/year) Oct 2014 www.alararesources.com 9 © Alara Res
Slide 11: Think Zinc - Economics
Think Zinc - Economics For personal use only kT Price USD/lb 600 1.6 > Previous market deficits resulted in Zinc price rising to 400 1.4 >US$2.00/lb (2006) 200 1.2 > Brook Hunt forecasts Zinc to rise 0 1 to US$1.24/lb this year and climb ‐200 0.8 steadily thereafter ‐400 0.6 > Wood McKenzie forecast
Slide 12: Saudi Arabia: Khnaiguiyah Zinc-Copper Project
For personal use only SAUDI ARABIA Khnaiguiyah Zinc-Copper Project www.alararesources.com 11 © Alara Resources Limited
Slide 13: Saudi Arabia - Technical
Saudi Arabia - Technical For personal use only > 1970’s BRGM (Bureau de Recherches Géologiques et Minières) review – 5,300 deposits (Saudi Geological Survey) > Deputy Ministry of Mineral Resources (DMMR) +4,000 maps > New mining code 2004 – ease of operation > Resource Potential in the Arabian Shiel
Slide 14: Saudi Arabia - Commercial
Saudi Arabia - Commercial For personal use only > 2014 Saudi mining budget – SAR$228B (~AU$70B) > Saudi government focus i. Petroleum ii. Financial services iii. Mining > Tax – Corporate 20% (personal – nil) > Royalties – nil > Saudi Industrial Development Fund (SIDF) up to 75% funding (low rates <4
Slide 15: Saudi Industrial Development Fund
Saudi Industrial Development Fund Value of SIDF Approved Loans For personal use only 2006-2012 (US$M) > KPMG has indicated that the Project would suit KSA Zone 3 (ie. Maximum level) funding > SIDF provides loans up to 75% for industrial and mining development in Saudi Arabia > SIDF has advanced over
Slide 16: Project - Overview
Khnaiguiyah Project - Overview For personal use only > 170km SW of Riyadh – Capital city > Reserves - 26.08Mt at 3.3% Zn & 0.24% Cu* > Resources – Measured & Indicated**: > Domains 1 & 2 Zn rich 25.32Mt @ 4.03% Zn > Domain 3 Cu rich 8.53Mt @ 0.64% Cu > Base case 2 Mtpa process plant throughput for a
Slide 17: Project - Licences
Khnaiguiyah Project - Licences For personal use only The Khnaiguiyah Zinc- Copper Project covers around 225km2 and comprises: > A Mining Licence > 2 Exploration Licences (granted, pending renewal) > 5 Exploration Licences (under application) www.alararesources.com 16 © Alara Resources Limited
Slide 18: Project - Joint Venture
Khnaiguiyah Project - Joint Venture For personal use only > Joint Venture (‘JV’) Partners: United Arabian Mining Company LLC (Manajem), privately owned Saudi Arabian mining company > JV Company: Khnaiguiyah Mining Company LLC (KMC) > Current JV Equity Arrangement: 50:50 (Alara: Manajem) > New JV Equ
Slide 19: Project – Production Profile Highlights
Khnaiguiyah Project – Production Profile Highlights Total CAPEX (incl. of contingency and owner’s costs) US$257 million For personal use only Production 1,410,000t Zn concentrate (775,000t of zinc metal) 210,000t Cu concentrate (52,000t of copper metal) Life of Mine (LOM) First 7 years of full
Slide 20: Project – Production Upsides
Khnaiguiyah Project – Production Upsides For personal use only > Stockpiled oxide cap could augment metal production from year 2 onward > Geology in all three pits is open north/south & at depth > Plant designed for 2.4 Mtpa – process stockpiles earlier > Preliminary Heavy Media Separation (HMS) tes
Slide 21: Project – Financial Highlights
Khnaiguiyah Project – Financial Highlights For personal use only > Project revenue: A$2,074M > Project operating costs : A$1,201M > EBITDA: A$873M > Capex: US$257M > Cash flow (post Capex and Tax): A$467M > Project NPV: A$170M > IRR: 23% > Weighted Avg cost of capital: 9.1% > Payback: 2.8 years > Ca
Slide 22: Project – Financial Upsides
Khnaiguiyah Project – Financial Upsides For personal use only Potential Capex Reductions: $10-12M Change SAG mill to cone crushers $10M Bulk concentrate shipping $40-60M Smaller plant – Heavy Media Separation (HMS) $3M Mine camp redesign $63-85M Potential Opex Reduction: $9-12M Power to the crushing
Slide 23: Project - Finance & Zn Price
Khnaiguiyah Project - Finance & Zn Price For personal use only Debt Finance: Project modelled with discount factor of 9.1% Additional Finance: Off-take/Smelter contract finance Leasing finance Royalties Streaming – Cu EPC vendor’s credit Zinc Price: DFS uses $1.05/lb Zinc ($2,315/tonne) External Zn
Slide 24: Project - Risk Mitigation
Khnaiguiyah Project - Risk Mitigation For personal use only > Alternate water sources being defined (area of opportunity) > New mining code (2004) promotes mining industry > Capex based on “turnkey” EPC quote > Appraised AMAK (Al Masane) > 1.5 Mtpa Zn/Cu mine built in 2010 and operating for 4 years
Slide 25: Project - Strengths
Khnaiguiyah Project - Strengths For personal use only > Adjacent to sealed 4 lane national highway > On national power grid > Shipping access to both Europe and Middle East > Forecast positive Zn price cycle > Early off-take/smelter funding possible > Strong financing options within Saudi Arabia > M
Slide 26: Project - Key Milestones
Khnaiguiyah Project - Key Milestones For personal use only Secure ML and progress the project Commence Community and Government Relations Plans Identify and finalise off-take arrangements Appoint Project Director Appoint Owner’s Team Expand Company capability and team in support of these
Slide 27: Project - Next Steps
Khnaiguiyah Project - Next Steps For personal use only Indicative Development Timeline 2014 2015 2016 2017 2018 Project Activity Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Secure Licences 2 Project Finance 3 Project Construction 4 Commissioning 5 Full Operations www.alararesources.com 26 ©
Slide 28: Project Overview
Khnaiguiyah Project Overview For personal use only Right Location & Fiscal Regime Saudi Arabia strongly in support of mining and new projects Right Metal Robust Zinc project in positive Zinc cycle Right ore body Additional mineralisation and potential resource extensions Right Team Restructu
Slide 29: Zinc – Copper Project Status Summary
Khnaiguiyah Zinc – Copper Project For personal use only Status Summary > 2 Mtpa Zn/Cu Project …… in a 10 year Zn price cycle! > Robust Definitive Feasibility Study (DFS) completed in April 2013 > Outlined and studied material upsides to the DFS/Project > JV partner has not transferred ML to JV compa
Slide 30: Advancing the Project Pipeline - Oman
For personal use only ADVANCING THE PROJECT PIPELINE - OMAN Daris/Washihi Project www.alararesources.com 29 © Alara Resources Limited
Slide 31: Oman - Daris/Washihi Project Overview
Oman - Daris/Washihi Project Overview For personal use only Daris (50% - option to move to 70%) > 150 km west of Muscat > Measured and Indicated Resources of 0.24Mt at 2.4% Cu* Washihi (70%) > 160km south east of Daris > Indicated Resource of 6.84Mt at 0.9% Cu & 0.17g/t Au* > Mineralisation remains
Slide 32: Oman Project – Advanced Scoping Study
Oman Project – Advanced Scoping Study Oman country profile For personal use only Study* - Options Evaluated • 3 Development options evaluated: 1. ‘Base Case’ 0.5Mtpa conventional flotation plant (post HMS) from mining inventory sourced from existing JORC Mineral Resources at Washihi and Daris-East d
Slide 33: Oman Project – Advanced Scoping Study Outcomes
Oman Project – Advanced Scoping Study Oman country Study profile Outcomes For personal use only Base Case: Enhanced Base Case Target Case: > US$40M NPV > US$52M NPV Economics more attractive again but this information has not been > 18% IRR > 20% IRR disclosed per ASX requirements. Opportunity to le
Slide 34: Alara - Summary
Alara - Summary > 2 Mtpa Robust Zinc/Copper project in Saudi Arabia For personal use only • Ready to finance and move toward construction • Impasse with JV partner (partner holds MLs) • No work or movement on the Project in 18 months > 0.5 – 1.0 Open Copper/Gold project in Oman • Ready to enter DFS
Slide 35: JORC Statements: Khnaiguiyah Zinc-Copper Project
JORC Statements Khnaiguiyah Zinc-Copper Project (Saudi Arabia) For personal use only The information in these JORC Reserve and Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information
Slide 36: JORC Statements: Washihi-Mullaq-Al Ajal Copper-Gold Project
JORC Statements Washihi-Mullaq-Al Ajal Copper-Gold Project (Oman) For personal use only The information in these JORC Reserve and Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the informati
Slide 37: Disclaimer and Statements
Disclaimer and Statements FORWARD LOOKING STATEMENTS For personal use only This Presentation has been prepared as a summary only and does not contain all information about the Company’s assets and liabilities, financial position and performance, profits and losses, prospects and rights and liabiliti
Slide 38: Resource Developer to Mine Builder and Operator
For personal use only Resource Developer to Mine Builder and Operator ABN: 27 122 892 719 Level 3, 35 Havelock Street, West Perth WA 6005 Telephone +61 8 6323 5900 I Facsimile +61 8 6323 5999 info@alararesources.com I www.alararesources.com ASX Code: AUQ www.alararesources.com 37 © Alara Resources L