Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — Shareholder Meeting (November 2008)
23 slides from Arafura Rare Earths's shareholder meeting presentation, Nov 28, 2008
Slide 1: Annual General Meeting Presentation
For personal use only Arafura Resources Limited Annual General Meeting Presentation Mick Muir Alistair J Stephens Chairman Managing Director November 2008
Slide 2: Important Notice
Arafura Resources Limited For personal use only Important Notice This presentation contains certain statements which may constitute "forward-looking statements". Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, perform
Slide 3: Capital markets are very difficult and volatile
Arafura Resources Limited For personal use only Capital markets are very difficult and volatile, so… • We continually review our costs • Office relocations to reduce costs • Exploration has been stopped completely • Remuneration is under review • And forward programs are dependent on funding
Slide 4: The Achievements for 2008
The Achievements for 2008 For personal use only 1. Solid progress in community, environment & approvals 2. Inner Mongolia Bao Tou Steel Rare Earth Hi-Tech Co. Ltd. ¾ MOU signed on exchange of rare earths separation information and marketing experience ¾ The world’s largest producer of high purity ra
Slide 5: Environment & Community
Environment & Community For personal use only ¾ Arafura continues to established partnerships with key communities based on: ¾ Open and meaningful communications ¾ Active participation in community activities ¾ Supporting community initiatives ¾ Responding appropriately to community concerns and ¾ R
Slide 6: Agreement with Bao Tou Steel Rare Earth
Agreement with Bao Tou Steel Rare Earth For personal use only ¾ In November 2008 Arafura announced the signing of a Memorandum of Understanding (MOU) with Inner Mongolia Bao Tou Steel Rare Earth Hi-Tech Co., Ltd. (“Bao Tou Steel Rare Earth”) (600111.SS) ¾ the parties express their intention to coope
Slide 7: Agreement with Incitec Pivot Limited
Agreement with Incitec Pivot Limited For personal use only ¾ In August 2008 Arafura announced the signing of a heads of agreement with Incitec Pivot Limited (“Incitec Pivot”) (ASX:IPL) ¾ the agreement will evaluate the feasibility of constructing co-located chemical facilities to supply the majority
Slide 8: YA Global A$20m Equity Line of Credit
YA Global A$20m Equity Line of Credit For personal use only ¾ Facility offered to Arafura ¾ Equity only facility – no debt or convertible component ¾ Entirely executable at Arafura’s discretion ¾ No contractual requirement to draw down ¾ 5 year availability ¾ YAG only permitted to sell physical ARU
Slide 9: For personal use only
For personal use only Exposed at surface, open at depth, only drilled to 130m below surface, enough resources for 30 years. Resource statement published on ASX 11 November 2008.Rounding up accounts for apparent tonnage discrepancy
Slide 10: The Demonstration Plant Success
The Demonstration Plant Success For personal use only We have validated recoveries from laboratory test work 9 Rare earths recovery 80% 9 Phosphate recovery 80% technical grade (fertiliser grade higher) 9 Uranium recovery 80% indicative 9 Calcium chloride residue Lower chemical consumption Identifie
Slide 11: The Demonstration Plant
The Demonstration Plant HMC Tails and Concentrate For personal use only Chemical Processing Phosphoric Acid Recovery
Slide 12: Nolans Site Design Underway
Nolans Site Design Underway For personal use only Mine design Initial Mining Area “North Zone” 500m
Slide 13: Nolans Rare Earths Mix has Improved in Value
Nolans Rare Earths Mix has Improved in Value For personal use only REO Price 2008 to Current value Rare Earth Element REE Current content date1 (US$/kg) (US$/kg) Lanthanum $7.70 20.0% $1.54 Cerium $4.28 48.2% $2.06 Praseodymium $29.96 5.9% $1.77 Neodymium $30.11 21.5% $6.47 Samarium unvalued 2.4% un
Slide 14: Rare Earth Prices & Nolans Value
Rare Earth Prices & Nolans Value For personal use only $40 ¾ Long term demand outlook for rare earths Product price remains robust $35 Nd $30 ¾ However the outlook for cerium and lanthanum $25 Pr indicate an oversupply US$ / kg $20 ¾ In the next 1 to 2 year period rare earth prices Y $15 are likely
Slide 15: Phosphate Product Prices
Phosphate Product Prices For personal use only World Phosphoric Acid and DAP Prices Product price 2500 ¾ Phosphate rock supply is very “liquid” ¾ Phosphoric acid production is relatively “tight” Average Nominal Price - US$ per tonne 2000 in world production capacity – but more is coming on line 1500
Slide 16: Total Product Value
Total Product Value Comparative product values. Nolans includes co-product and by-product credits in US$/kg as REO For personal use only equivalent based on 2008 YTD average prices 30 Valuation CaCl Expressed in US$/kg REO equivalent Uranium 20 US$/kg REO Phos Acid Rare Earths 10 0 Nolans Mt Weld Ba
Slide 17: Operating Costs
Operating Costs For personal use only ¾ Demonstration plant has realised reduced chemical consumption Hydrochloric acid 25% reduction Sulphuric acid 50% reduction ¾ Results in a real annual reduction of $50m in operating costs ¾ We have identified and are currently assessing additional chemical
Slide 18: Capital Expenditure = A$600m
Capital Expenditure = A$600m Capital is accurate to 30% based on pre-feasibility study. Additional capital reductions have For personal use only been identified through lower raw material costs (e.g. steel) & overseas modularisation Mine, concentrate A$70m grind & leach Rare Earths Uranium Phosphori
Slide 19: Financial Analysis
Financial Analysis NPV @ 10% discount rate $1.7 billion after tax and capital payback (20 year mine life) For personal use only Production per Price Total revenue annum (tonnes) (USD) US$ million Rare earths 20,000 $14,000/tonne 280 P2O5 80,000 $1,000/tonne 80 Calcium chloride 400,000 $100/tonne 40
Slide 20: Proposed Operating Model
Proposed Operating Model For personal use only Arafura Incitec Pivot Looking for more REO Baotou Steel REHT 100% MOU opportunities MOU Chemical Rare earth Separation & Resources & Mining plant carbonate Marketing sales sales sales
Slide 21: Summary - Project Status
Summary - Project Status For personal use only 9 Large resource to support long life operation 9 Demonstration plant successfully operating 9 Bankable Feasibility Study in progress 9 Site selection for processing plant in progress 9 Heads of Agreement with Incitec Pivot for chemical supply 9 MOU wit
Slide 22: The Tasks Ahead
The Tasks Ahead For personal use only ¾ Report on RE carbonate Q1 2009 ¾ Complete RE separation works 1st half 2009 ¾ Complete bankable feasibility Dec 2009 ¾ Mining lease approval 2009 ¾ Processing plant Notice of Intent 2009 ¾ Undertake project costing, sourcing, financing 1st half 2010 ¾ And cons
Slide 23: Introducing Hon. Ian Laurance AM
Introducing Hon. Ian Laurance AM For personal use only The incoming Chairman of Arafura Resources Ltd.
Arafura Resources — Shareholder Meeting (November 2008) on 6ix