Firering Strategic Minerals (LSE:FRG) — Interim Results

0:00 Good afternoon, and welcome to the FIRING STRATEGIC MINERALS PLC Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just click Q and A, type in your question and press send. Company may not be in a position to answer every question received during the meeting itself, but the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the management team of FIRM Strategic Minerals PLC. Good afternoon to you.

0:32 Good afternoon. Thank you, and thank you, everyone. My name is Vasili. I'm an NED one of the NEDs on on firing. And with me today as well is our CEO who's based in Zambia, and we're gonna be running through running you through this presentation on our on our line project in Zambia. It's a fully constructed near term quick line production asset. And when I say near term, you know, we we we are on schedule to get the first kiln going in this next quarter. It's a fully permitted operation, fully constructed. It's the next Glencore project where they've had a historical spend of over a $100,000,000. What you see in the top right hand corner is not a stock photo, that's the actual facility itself. As you can see, it's quite a a large facility.

1:26 We have a a an SPA, an option agreement in place to purchase up to 45%, of of the operation. And, we are in the final stages of getting everything, up and running, and in preparation for commissioning in December. In addition to, Limestone Zambia, we we have our, lithium exploration license in Cote D'Ivoire, where we've carried out two drilling campaigns, and, we currently have interest from third parties that are currently looking at taking that project forward. A little bit about Kutuan. In in in Zambia, it it does. The price range varies from between 160 to $220 a ton.

2:20 The president in Zambia has set himself a a goal of increasing the copper production in Zambia to 3,000,000 tons per annum. At the moment, they're less than a million tons per annum, and quick time is directly linked to copper production. It's it's used widely used in the flotation of copper sulfide minerals. And so therefore, you know, as it is at the moment, there's a shortage in country. And with the increasing forecasted increase in copper price and forecasted increase production in country, there's gonna be an increase in demand for for the the product for the for the for the quick line. Apart from the mining industry, it's also used in the agriculture.

3:06 It's used in the chemical industry. It's used in the construction industry. So although at the moment, our main focus is to provide, you know, to to provide the product into the mining space, we are at the same time keeping our options open and and looking to provide quick time into other sectors as well. A little bit little bit about Zambia for those of you that don't know about it. It's a landlocked country, but, accessed, by the various ports around Sub Saharan Africa. Copper generates copper is the main export earning. It generates 70% of of Zambia's export earnings, and it's strategically located, you know, it's it's between Zambia and and the DRC of that African copper belt. And that's where all the most of the copper is coming out of Africa at the moment.

3:57 Good place to work. You know, it's it's a pleasant work, you know, pleasant, stable environment to do business. A little bit about the opportunity itself. The the picture there that basically is what it is. We have the facility in the top right hand corner and the quarry where there has already been a little bit of mining. The current resource, there's 74,000,000 tons of material. And with that resource, we're looking at a thirty year mine life with the current eight kilns that we have on-site, which produce roughly between 600 to 800 tons of quicklime per day. There is an additional, resource to, the the south of the current resource, and we've just recently been awarded the license, for that. So we're now in the process of, carrying out an update to the resource, and I'll I'll share a little bit more back up to them on the next slide.

5:02 And as I mentioned, this facility was established by Glencore, and that was really to supply the Mopani mine, which it had at the time.

5:13 We are close to the Mopani mine is currently being mothballed, but it's currently being it's been acquired by the IRH out of out of Emirates, and they'll be looking to turn that on soon as well. So along with that and KCM and all the existing operations, you know, the the future look the demand is there for for Quickline. A little bit about the resource. The colored blocks that you see there are make up the 74,000,000 ton resource. The pink lines that you see are the actual drill holes. As you can see, we got some white blocks, and those were the part of the resource that weren't in in the license. As I've mentioned, we now have that area under license, and we are in the process of of, adding those that resource, to the current one, and we believe that that will probably double the current 70,000,000 tons that we have there. So one is looking at, you know, with that the additional resource that potentially, you know, another sixty years of plenty of material in the ground, and therefore plenty, you know, we do have the option to to scale up should the the demand be there for that in country.

6:27 At this point, I'll hand over to our CEO who's, as I said, he's currently in Zambia, and he can run you through what he's actually been doing on-site and all the the good things that are happening leading up to commissioning. Thank you, Vasily. Thank you, Vasily. As you can see, this site is fully constructed. The main improvement that we did is for the crushing circuit. We had the impact crusher in order to improve the crushing. In addition to that, as you can see, we have eight kilns with the capacity of 600 to 800 tons a day.

7:13 The main modification that we are doing at the moment is changing the energy source from HFO into coal gasification. It's give us a few advantages. The main advantage is that the coal is coming from Zambia. It's more economical, but it it's also

7:35 more environmental friendly, the process. So we are in the this modification stage. From from the past, we have an additional stockpiles next to the next to the crushing plant. We have over a 150,000 tons of material that's mined next to the crusher and additional, what we call today, secondary stockpile of 250,000 tons that located next to the pit. Currently, we have a revenue revenue channels that we coming from three different sources. Main is the aggregate. Second is the logistic agreement that we have with with third party and some additional equipment that we are renting. So overall, we are cash flow positive operationally, and all the investment that's coming is going into the CapEx investments.

8:42 A bit about the timeline. As you can see, we are already respecting the respecting the timeline, and we started the modification in h h one of twenty twenty four. We are on schedule to bring the gasifier on-site.

9:02 It's on its way, and we should should be able to respect the time timetable to start the key. The first key in q one q four, sorry, 2024. Afterwards, as you can see, the we we should operate the four kid in the q 01/2025 and eight kids q three 2025. Yep. Quick

9:31 overview on our activities in Ivory Coast. This is an exploration project in the North Of Ivory Coast. It's contain 500 square kilometers of exploration pit for lithium. We did some scout drilling in the main the main result were positive. The first in the first campaign, the best result was 64 meters at 1.2

10:10 1.24% lithium, and the and it was one of the top 10 hits all over the world in this particular time. So, currently, our main focus and interest is going into LimeCo and starting the first. But in the background, we have also this project.

10:38 Thank you very much. Have a good handout to Thank you, Yuval. Thanks, Yuval. At this point, I think I'll I'll open up to the q and a. I see there's a a few questions have come through, so I'll start reading through them and I'm answering as best we can. How far down the line are you with off take discussions and when can we expect news? We we've we've you know, these are ongoing. We're now in a position to actually send the material to the relevant interested parties, which we have. And we're now at the stages where they've come back to us and given us the green light in terms of the product being, you know, good enough, and and and we're down to discussions of pricing.

11:28 These are ongoing, and, obviously, one, you know, once we we we they are firmed up and signed up, then we'll be in a position to to announce. But, obviously, you know, we expect that before the end of the year and be able to then start selling material from the first kiln when that comes online in December. Next question, how much cash flow is LimeCo already generating from ancillary revenue streams? I'll hand it over to Hugo. He's on the ground, so he's got his hands on the pulse and the bank account so he can advise what we're doing there. Hugo? Thank you, Vasily. As I said, there are three main channels of revenue. The revenue is currently around 100 around 150,000 US dollars, and the the profit is around $50,000 for the from from that.

12:23 Yes. So yes, that's even before the first kiln is up and running, we're already cash flow positive. So that's pretty good. Next question, a good question. So what are the expected revenue profitability from the Labcorp project once production ramps up to six to 800 tons per day? At the moment, we're looking at somewhere between 33 to $35,000,000 a year, and that's based on the base case price of $160 a ton. So that's, you know, with all eight kilns up and running, which should be by the middle of of next year. Next question, how do you plan to scale up revenue from Lancome in the medium term?

13:12 Yeah. So as I mentioned, we we've got the the resource base there for sixty years based on the two batches of eight kilns there. So, obviously, we have the resource base to add another batch of kilns, so we could expand the resource that way. But probably more realistically is, we do have a cement plant that's sitting in containers on-site. The foundations for the cement plant have already been set, And that would be the obvious next thing to do because it doesn't require any capital in terms of buying any equipment and as it's already on-site. And so instead of selling aggregate at the gate for 5 to $6 a ton, We'd be looking to sell cement and and that, you know, putting aggregate through the cement plant and and producing cement, and that they sell at $120 a ton. So that would theoretically add another sort of $20,000,000 to the bottom line in terms of revenue.

14:14 But we, you know, we still have we haven't really looked at that in in great detail yet. We've been very focused on getting the kilns up and running, but that would be the next thing we do in the medium term. Next question, you mentioned Glenco spent a $100,000,000 on the facility. How what is the current ownership structure of the assets on the ground in the first few images? So then, basically, we're buying we've basically got a a a share a payment plan in place where we're acquiring our position to get up to 45%. So at the moment, we're sitting at about 15%. And then as we we we we we we buy our way in and get ourselves up to 45%. How much capital is required to ramp up to full capacity?

15:03 As you can see, the the the actual facility has been built. The capital has been sunk. The the work that we have been doing has mainly been replacing, you know, wearable bits and pieces such as conveyor belts. We've done some modifications to to the bottom of the kilns. And the big thing that we've done is converted the way the kilns are fired, whereas in the past, they're fired using heavy fuel oil. And now we're converting that to to fire for using a coal gasification. How close to roof tech contract are we? I think I've just answered that.

15:50 What is the NPV of the Lime project? Depending on on on on on a base on on on how you the metrics and pricing and so forth, but anything between a 100 to a $150,000,000. And, you know, at the moment, obviously, once we the the the all stakes are in place and pricing is firm, then that number will be firmed up as well. Is primarily a strategic shift brought in to fund ongoing work at Attics, or is Limekote to become our new primary concern? Look. We we we ended up in a situation where we this opportunity came to us.

16:37 Usually, a junior exploration company, you know, they can be exploring for ten, fifteen years and still not have anything that that's that's producing. So it was quite a unique opportunity that we were in the right place at the right time. So, you know, I would say that that that Lancome is now the the primary assets and focus for the company going forward. Do you need capital to realize the current project? Capital I mean, at the moment, the you know, the most of the capital has gone in. And once the first kiln is up and running, it will be self funding, really. I mean, it is, it's it's it's cash flow positive.

17:27 What are the main risks to LimeCo project? Well, you've got a resource that's already been drilled out, and then we're currently doing the update to the resource. We've got a plot that's already built. We've got a project that's that's been fully permitted, so we got all the licenses in place to operate. And we are now in the process of turning on the first kiln in December with the remaining kiln sequentially coming on stream sort of months thereafter. So the project has been significantly derisked in terms of exploration risk, in terms of, you know, capital risk, You know? So we we we there is, you know, as far as I can see, very low risk at this point in time.

18:22 I think, that's it for now. You know? So in summary, we have a clear path to early cash flow with the first kiln coming online in December. As I mentioned, the offtake agreements for the product, are quite advanced. We're in a market where the demand for the product is is is there. In actual fact, there's a deficit in country. And, you know, what I haven't touched on is is the people. And, you know, our our main shareholders, you know, which includes our chairman, have got, interest in a lime quick lime operation in Israel.

19:14 So, you know, we know what we're doing. It's not something that is is foreign to us. It's it's something that, the core team that are driving this have, you know, have been producing QuickTime for the last ten, fifteen years. And so I'll think I'll end it there. Fantastic. Very much. So, yeah, thank you very much, Eva. Thank you very much indeed for the presentation and taking all those questions. Of course, any further questions that do come in, the team will have the ability to, review those, and we will publish responses where it's appropriate to do so. Look, I'd like to thank the team for updating investors today. Could I please ask investors not to close this session? She's now automatically redirected to provide your feedback in order the management team better understand your views and expectations. It's only take a few moments to complete and I know it's greatly valued by the company. On behalf of the management team of FIRERING STRATEGIC MINERALS PLC, we'd like to thank you for attending today's presentation.

20:06 That concludes today's session, and good afternoon to you all.