Arafura Rare Earths Limited · ASX:ARU
Arafura Rare Earths — Arafura Resources — Investor Presentation (April 2017)
31 slides from Arafura Rare Earths's investor presentation, Apr 4, 2017
Slide 1: Nolans: A Source of High-Value Magnet Feed (NdPr) Rare Earths
For personal use only Arafura Resources Nolans: A Source of High-Value Magnet Feed (NdPr) Rare Earths Hong Kong Investor Update April 2017 Arafura Resources Limited (ASX: ARU)
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice This presentation has been prepared by Arafura Resources Limited (Arafura Resources). It is of a summary form only and therefore contains general background information which may not be complete. It should be read in conjunction with and full review
Slide 3: Company Snapshot
Company Snapshot For personal use only ASX listed company developing the Nolans Rare Earths Project in Australia Nolans 100% owned, no debt, uncomplicated ownership and capital structure Finalising project feasibility study – ore to oxides 20+ year resource – exploration complete Focus on strong gro
Slide 4: Capital Structure
Capital Structure For personal use only ASX Code ARU Shareholder Spread China 1‐year range 4.1 – 10.5 cents (ECE) 22.18% Market Cap 494.7m shares @ 7.6c A$37.6 million* Australia 46.46% Other Cash at 28/02/17 A$12.2 million Asia 1.46% Debt Nil *Excludes 6.3m employee options @ 10.5c expiry September
Slide 5: Secure Supplier of Magnet-Feed Rare Earths
Secure Supplier of Magnet-Feed Rare Earths For personal use only One of the world’s largest Neodymium (Nd) Praseodymium (Pr) deposits Critical for production of RE magnets. 88% of revenue derived from NdPr Secure supply from long‐life resource in low sovereign risk location Project approvals well ad
Slide 6: Nolans Project – Australia
Nolans Project – Australia For personal use only Underpinned by world‐scale, low risk resource in Australia’s Northern Territory Resource sits at surface and remains open at depth Amenable to low‐cost open cut mining and standard beneficiation techniques Mining and processing at site to produce RE I
Slide 7: Nolans – A Clear Path to Market
Nolans – A Clear Path to Market For personal use only 20yr+ resource CAPEX: US$680m3 Low cost operation OPEX: US$6.23/kg TREO3 Close to vital infrastructure: energy, water & transport Targeting RE offtake customers in: Japan Germany Korea USA Phosphoric acid sales targeted for Asian region 1. Contai
Slide 8: Infrastructure and Project Approvals
Infrastructure and Project Approvals For personal use only 10km west of all‐weather Stuart Highway 135km north of major service town (Alice Springs), railyard and airport Amadeus natural gas pipeline dissects project area New bore field identified 30km south Site layouts well defined and Mineral Lea
Slide 9: Project Approval Status
Project Approval Status For personal use only EIS Terms of EIS Studies & EIS Environmental Environment Notice of Intent Reference Issued Lodged Approval MLs Granted & All Mineral Lease Native Title Holders Negotiations Agreement Regulatory Approvals Land Applciations Identified Secured Groundwater G
Slide 10: CAPEX Nearly Halved
CAPEX Nearly Halved For personal use only CAPEX by Area (US$m) $500 Total Project CAPEX (US$m) $1,200 $400 $378 $330 June 2015 $304 $1,000 $1,221 $300 $279 $234 $800 $195 $179 Dec 2015 $200 $600 $835 $133 June 2016 $105 $96 $66 $400 $680 $73 $82 $100 $50 $63 $58 $59 $31 $200 $15 $4 $4 $‐ Mining & Ex
Slide 11: Other Project Enhancements
Other Project Enhancements For personal use only Reduced throughput defers plant upgrade to Year 10+ Phosphoric acid recovered to reduce commodity risk Capital cost reduced to US$680m Operating costs reduced to US$6.23/kg TREO Reduction in waste streams Reduction in reagent usage Higher rare earths
Slide 12: Market Update
For personal use only Market Update Arafura Resources Limited (ASX: ARU)
Slide 13: The NdPr Opportunity
The NdPr Opportunity For personal use only Arafura Resources Limited (ASX: ARU) 13
Slide 14: NdPr Supply Dynamics
NdPr Supply Dynamics For personal use only China’s consolidation to NdPr Oxide China Domestic Price 2015-7 RMB/kg the “big 6” producers in ￥340.00 2015 is starting to positively impact price ￥320.00 Enforcement of illegal and ￥300.00 polluting mines and ￥280.00 smelting ￥260.00 Chinese rehabilitatio
Slide 15: Recent Changes in Market Sentiment?
Recent Changes in Market Sentiment? For personal use only In 2016 Chinese exports increased by 34% but decreased in value by 2.7% China Northern, the world’s largest producer, announces significant losses at current prices for 20161 (SHH:600111) Chinese Government taking hard line to regulate supply
Slide 16: Market Focus – It's All About The Magnets
Market Focus – It’s All About The Magnets For personal use only NdPr accounts for 26.5% of Nolans rare earths composition by volume but 88% by value Arafura Resources Limited (ASX: ARU) 16
Slide 17: How Much NdPr Are We Talking About?
How Much NdPr Are We Talking About? For personal use only 41 million by 2040 each 1.7kg of NdPr containing 1kg of NdPr Up to 150kg of 30 million in 2017 NdPr per MW each 0.1kg of NdPr containing Arafura Resources Limited (ASX: ARU) 17
Slide 18: Market Focus – Growth Is In New Applications
Market Focus – Growth Is In New Applications For personal use only Established magnet market demand steady Magnet growth being driven by clean technologies Source: Adamus Intelligence, Arnold Magnetic Technologies, Japanese industry participants, Roskill Arafura Resources Limited (ASX: ARU) 18
Slide 19: EV Growth Enablers
EV Growth Enablers For personal use only Arafura Resources Limited (ASX: ARU) 19
Slide 20: EV Automakers Focus PMSM = NdPr Magnets
EV Automakers Focus PMSM = NdPr Magnets For personal use only Arafura Resources Limited (ASX: ARU) 20
Slide 21: Arafura's Marketing Strategy and Products
Arafura’s Marketing Strategy and Products For personal use only 2015‐16 was focussed on cost reduction and process refinement 2017 focus will be on cementing offtake alliances with strategic partners 95% of revenue to be derived from customers in Japan, Germany, Korea and the USA mt on this slide re
Slide 22: Project Funding
For personal use only Project Funding Arafura Resources Limited (ASX: ARU)
Slide 23: Project Funding Strategy
Project Funding Strategy For personal use only Reduced domestic institutional investor interest Underperformance (or failure) of non‐Chinese producers and volatility in rare earth prices has resulted in reduced institutional equity investor interest in the rare earth sector Equity will remain primar
Slide 24: Targets for 2017-18
For personal use only Targets for 2017-18 Arafura Resources Limited (ASX: ARU)
Slide 25: Targets for 2017-18
Targets for 2017-18 For personal use only To take advantage of the pending NdPr supply shortfall we will complete the following as quickly : Final piloting – results to be reported throughout 2017 Fast track where possible detailed design to Bankable Feasibility status Obtain environmental approval
Slide 26: Value Proposition
For personal use only Value Proposition Arafura Resources Limited (ASX: ARU)
Slide 27: Nolans Value Proposition
Nolans Value Proposition For personal use only One of the world’s largest NdPr deposits in a low sovereign risk location Established and responsible regulatory environment Environmental approvals expected 2017 20+ year resource can provide a stable, secure, clearly defined supply of critical raw mat
Slide 28: Value Proposition: Unit Operating Costs After By-Product Credits
Value Proposition For personal use only Unit Operating Costs After By Product Credits (US$ per kg Forecast Production) 30 70 25 60 50.83 61.49 57.33 50 20 US$/kg NdPr 19.89 US$/kg TREO 19.44 40 15 42.17 14.43 30 31.21 10 24.38 9.83 10.07 20 5 6.23 10 0 0 ARU GGG LYC PEK HAS NTU** Per kg TREO Source:
Slide 29: Contact
For personal use only Contact: Level 3, 263 Adelaide Terrace Perth, WA, 6000. Australia. T: +61 8 6210 7666 E: arafura@arultd.com Arafura Resources Limited (ASX: ARU)
Slide 30: Appendix A: Nolans Mineral Resources
Appendix A: Nolans Mineral Resources For personal use only Tonnes Rare Earths Tonnes Phosphate Uranium Resources (million) TREO % TREO P2O5 % U3O8 lb/t Measured 4.9 3.2 158,000 13 0.54 Indicated 30 2.7 816,000 12 0.44 Inferred 21 2.3 489,000 10 0.36 TOTAL 56 2.6 1,462,000 12 0.42 1% TREO cut-off gra
Slide 31: Appendix B: Information on RCR Graphs
Appendix B: Information on RCR Graphs For personal use only Key Assumptions Enterprise Value (“EV”) is based on market capitalisation as at February 3 2017 less reported cash on hand, plus reported debt, as at December 31 2016. ASX‐Listed Peer Group Companies Exchange rate of AUD1 = USD 0.76. Co
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