Reward Minerals Ltd · ASX:RWD
Reward Minerals — Investor Presentation (February 2020)
27 slides from Reward Minerals's investor presentation, Feb 3, 2020
Slide 1: Reward Minerals Limited
REWARD Developer of the MINERALS largest high-grade brine SOP Deposit in Australia LIMITED Proactive Investors Presentation Sydney ASX | RWD 3 February 2020 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: Investment Rationale
INVESTMENT RATIONALE Reward Minerals is the developer of the Lake Disappointment Brine Sulphate of Potash Project Largest Env. Australian Detailed, permitting high-grade conservative finish line in And… brine SOP Highest PFS Native title clearly sight deposit evaporation, secured, undervalued Lowest
Slide 4: Contents
CONTENTS ►Corporate Snapshot ►SOP Market Basics ►Lake Disappointment? What’s with that name? ►LD Project Overview & Metrics ►LD Upside ►Current Activities ►Conclusions 4
Slide 5: Reward Corporate Snapshot
REWARD CORPORATE SNAPSHOT Capital Structure 22 Jan 2020 ASX:RWD Colin McCavana – Non-Executive Chairman - 30+ years experience in mining and earthmoving industries Ordinary Shares on Issue 162.6m - Ops and development management of Australian and international projects Rights and Options on Issue 17
Slide 6: What is SOP? Sulphate of Potash
WHAT IS SOP? SULPHATE OF POTASH The Premium source of potassium fertiliser – K2SO4 ► A low-chloride source of potassium and sulphur ► Potassium (K) – one of the 3 essential plant macronutrients ► Sulphur is also an important nutrient ► Applied to speciality and/or chloride sensitive crops ► SOP supp
Slide 7: What is Driving SOP Growth?
WHAT IS DRIVING SOP GROWTH? SOP Demand drivers SOP Growth forecast: ~4% pa ► Increasing population, decreasing arable land Global SOP Demand 8.0 ► Increasing soil salinity (Mtpa) 7.0 ► Need for improved water efficiency ► China prompted major growth 6.0 ► Could India be next? 5.0 ► Changing demograp
Slide 8: What's with that name?
WHAT’S WITH THAT NAME? Here to the southward he sighted a large lake ten miles distant, and they made their way to it next day, but found it was all white salt ... “it is the largest thing in lakes I ever saw ... I shall call the lake Lake Disappointment as I was disappointed in not finding water in
Slide 9: Lake Disappointment Brine SOP Project
LAKE DISAPPOINTMENT BRINE SOP PROJECT Location ► 866 km from Port Hedland, class-leading bulk export terminal ► 511 km on the Great Northern Highway ► 355 km on existing, dirt roads/tracks 9
Slide 10: Highest Evaporation Rate
HIGHEST EVAPORATION RATE No better location for a brine evaporation operation in Australia LD Project 10
Slide 11: Low Rainfall
LOW RAINFALL No better location for a brine evaporation operation in Australia LD Project 11
Slide 12: Superior Grade and Evaporation
SUPERIOR GRADE AND EVAPORATION Grade and evaporation have a direct impact on production 40 Typical Potassium Target Concentration Potassium Concentration – g/l LD Grade 30 & Evaporation 13.4 g/l SOP = 8 g/l K 20 Goldfields Evaporation & Lower Grade* ~8 g/l SOP = ~3.6 g/l K 10 100 200 300 400 500 600
Slide 13: Operational and Cost Implications
OPERATIONAL AND COST IMPLICATIONS To match output, lower grade operations need to: Abstract/Pump More Brine Build Bigger Ponds National Geographic Bigger ponds, more seepage, lower evaporation rates make it worse: Suffer More Seepage Capex & Opex Costs Decreasing grade/Lower Evaporation 13
Slide 14: Standard Solar Evaporation Process
STANDARD SOLAR EVAPORATION PROCESS A$91/t A$102/t Other Opex Costs Closure – A$2/t Martu Royalty – A$7/t FOB Cash Cost: Road Maint - A$15/t A$344/t Site Services - A$22/t (US$258/t) EBITDA Margin: ~44.6% A$105/t @ US$500/t Ex-Works Cost: A$239/t (US$180/t) 14
Slide 15: Realistic and Deliverable Logistics
REALISTIC AND DELIVERABLE LOGISTICS Port Hedland: A world class port exporting millions of tonnes per year 511 km on the Great Northern Highway First 250 km designed in detail from terrain models at +/-100mm accuracy 355 km of existing, frequently used dirt roads/tracks Logistics cost per tonne SOP:
Slide 16: Permitting is Critical
PERMITTING IS CRITICAL….. UPDATED WA EPA SCHEDULE Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Public exhibition of ERD DWER provided final comments to Reward Reward submits response to submissions DWER reviews responses to submissions and publish
Slide 17: Permitting is Critical
PERMITTING IS CRITICAL….. Government of Western Australia: Environmental Protection Authority Status of Active Formal Assessments - s. 38 Part IV of the Environmental Protection Act 1986 Last Updated: 20 January 2020 Stage 1 and 2 Stage 3 Stage 4 Stage 5 Proposal Information Referral of Proposal Ass
Slide 18: Project Metrics – Costs & Production
PROJECT METRICS – COSTS & PRODUCTION • A$345 M, includes indirects and owners costs (+/-20%) Capital cost • A$451 M, includes contingency & pre-production costs • At least 400,000 tpa Production • ~9 Mt SOP produced over ~25 years • Less than 10% of the resource • Cash cost – A$335/tonne (FOB Port H
Slide 19: Project Metrics – Economics
PROJECT METRICS – ECONOMICS • Price: US$500/tonne, FX: AUD/USD: 0.75 Assumptions • Discount Rate: 8% Real • Royalty: State: 3.75%, Martu: 1.25% • Average EBITDA – 45% (~$118 M/year) Margins • Average Cash – 48% (~$122 M/year) • Pre-tax: NPV8% – $518 M, IRR – 19% Returns • Post-tax: NPV8% – $293 M, I
Slide 20: Industry Economic Assumptions
INDUSTRY ECONOMIC ASSUMPTIONS Study Effective AUD State Company Project Discount Rate Pricing AUD / USD Exchange Rate Level SOP Price Royalty 8% Pre- and Post-Tax Australian 0.67 average derived from forward Curve Lake Wells DFS nominal. Inflation 2%. US$614/t (real) LOM A$916/t A$0.73/t SOP Potash
Slide 21: Current/Upcoming Activities
CURRENT/UPCOMING ACTIVITIES* ► Environmental Permitting: ▪ Final stages at state level ▪ Well advanced at federal level ► Resource Conversion: ▪ Infill drilling program completed ▪ Grade upside ► Flowsheet Improvements: ▪ Ongoing R&D (focused on enhancing recovery) ▪ Targeting cost reductions & oper
Slide 22: Conclusions
CONCLUSIONS Reward is well positioned, its LD Brine SOP Project: Is technically robust ► Conservative PFS conducted to exacting standards ► On Australia’s largest high-grade SOP deposit, with an ► Independently reviewed Flowsheet … and economically attractive, with ► Scope to improve economics on mu
Slide 23: Appendices
\ na APPENDICES 21
Slide 24: Globally Significant Tier 1 Resource
GLOBALLY SIGNIFICANT TIER 1 RESOURCE 153 Mt Indicated & Inferred Drainable SOP Resource – Australia’s largest Assigned Nominal Dimensions (m) Volume Area Specific SOP Brine Drainable Unit Yield Hydrostratigraphic Unit Grade SOP Symbol Effective 3 6 2 6 (kg/m3) (Mt) Top Base Thick. (m x 10 ) (m x 10
Slide 25: PFS Results – Capital Costs
PFS RESULTS – CAPITAL COSTS 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
Slide 26: Source Information for Industry Economic Assumptions
SOURCE INFORMATION FOR INDUSTRY ECONOMIC ASSUMPTIONS The table on Slide 18 contains information sourced from the following company reports: 1. Australian Potash Ltd: AUSTRALIAN POTASH LTD ANNOUNCES DEFINITIVE FEASIBILITY STUDY OUTSTANDING OUTCOMES OVER 30 YEAR MINE LIFE, 28 August 2019. 2. Kalium La
Slide 27: Compliance Statements
COMPLIANCE STATEMENTS Competent person statements: The information in this report that relates to the existing Lake Disappointment Project Mineral Resource Estimate and hydrogeology is extracted from the report titled “Lake Disappointment (LD) Project Confirmed as a Globally Significant Tier 1 Sulph
Reward Minerals — Investor Presentation (February 2020) on 6ix