Charging forward Altura Mining Limited (ASX:AJM) with Lithium September 2017
Altura Lithium: Investor Update Disclaimer
This presentation has been prepared by Altura Mining Limited (“Altura” or the “Company”). It should not be considered as an invitation or offer to subscribe for or purchase any securities in the Company or as an inducement to make an invitation or offer with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation.
This presentation is provided on the basis that none of Altura nor its respective officers, shareholders, related bodies corporate, partners, affiliates, employees, representatives and advisers make any representation or warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the presentation and nothing contained in the presentation is, or may be relied upon as, a promise, representation or warranty, whether as to the past or the future. The Company hereby excludes all warranties that can be excluded by law.
The presentation contains forward looking information and prospective financial material which is predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties, and may differ materially from results ultimately achieved. All references to future production, production targets and resource targets and infrastructure access are subject to the completion of all necessary feasibility studies, permitting, construction, financing arrangements and infrastructure-related agreements. Where such a reference is made, it should be read subject to this paragraph and in conjunction with further information about the Mineral Resources, Ore Reserves and Exploration Results, as well as the Competent Persons' Statements.
All persons should consider seeking appropriate professional advice in reviewing the presentation and all other information with respect to the Company and evaluating the business, financial performance and operations of the Company. Neither the provision of the presentation nor any information contained in the presentation or subsequently communicated to any person in connection with the presentation is, or should be taken as, constituting the giving of investment advice to any person.
Charging forward with Lithium 1 Highlights
Australia’s next lithium producer
World-class, low-cost lithium project
First production of spodumene (lithium concentrate) in March Qtr 2018
A mining company run by mining people, focussed on delivering shareholder returns
Production Profits Returns
Aerial view of construction
Charging forward with Lithium 2 Overview
2009 – First discovery of lithium mineralisation – now host the world’s largest combined spodumene reserves
2010 – Exploration drilling commenced identifying shallow, thick and consistently mineralised lithium rich pegmatites
2011 – Maiden JORC Mineral Resource Estimate completed
2012 – Scoping Study completed demonstrating positive economic outcomes for project
2016 – Definitive Feasibility Study completed - Key Partnerships formed with Offtake Partners
2017 – Final Mining Permits received - Key contracts in place - Completion of orders for all long lead items Altura Lithium Project location and tenement footprint - Construction commenced - US$110M facility – fully funded
Charging forward with Lithium 3 Location and Infrastructure - World class, low cost lithium development
. Road, rail, gas, port and workforce - Close to Asian markets . 120 km to Port Hedland Port Facility Altura Lithium
Pilgangoora
Pilgangoora Lithium District
Mt Marion
Mt Cattlin
Greenbushes
Charging forward with Lithium 4 Corporate
Board and Management
James Brown Paul Mantell Allan Buckler Zhao Tong Dan O’Neill Managing Director Executive Director, CFO Non-executive Director Non-executive Director Non-executive Director
Mining Engineer +30 Qualified accountant +35 Qualified Mine Manager 25 years experience in Geologist +30 years years operational and years corporate +45 years experience in the international trade of international mining development experience experience in the mining the mining industry, and metals and minerals in experience across in the mining industry, and associated industries, is a former Director and China. Director of the various commodities. incl. 22 years at New incl. 28 years at New Chief Operations Officer Lithium Division of J&R Founding director of Hope Corporation (ASX: Hope Corporation (ASX: of New Hope Corporation Optimum (SHE:300116) current Lithium producer NHC). NHC), the last 12 years as (ASX: NHC). since October 2016. Orocobre (ASX: ORE). its Chief Financial Officer.
BT Kuan Chris Evans Capital Structure (2 August 2017) AUD Non-executive Director General Manager Operations Shares on issue 1,614.3M Mechanical engineer Civil engineer and project Share price $0.17 with +35 years manager. Previously Project experience in logistics Manager for the Mt Webber mine Market capitalisation $274M and development and development in the Pilbara region Cash (30 June 2017) # $13.3M management of bulk of Western Australia for Atlas Iron Top 20 Shareholders ~63% handing and terminal (ASX:AGO) delivering to an operations. aggressive timetable. Board and Management * 18%
Board and Management with a history of # Exclusive of US$110M funding facility; currently US$33M drawn down with remainder successful planned for draw down before 30 September 2017 developments, strong operations and robust dividend returns * Board and management excludes the major shareholder J&R Optimum Energy
Charging forward with Lithium 5 Requirements of a World-Class Project
Orebody . World-class hard-rock lithium resource . 30.1Mt reserve*, 20-year mine life
Infrastructure . Pilbara region of WA . 120km from established port – gateway to Asia
Offtake Agreements . Binding contracts secured for 100% planned production
Funding Solution . US$110 million construction facility secured
Team to Deliver . Experienced project development and mining team from the Atlas Iron and New Hope Corporation stable
Aerial view of construction
* Refer to ASX announcements 26 September 2016 and 30 January 2017
Charging forward with Lithium 6 Pathway to Production
Grant of Mining Leases (ML) in August 2016 Mining Proposal lodged September 2016 Alliance and equity support with leading Chinese battery manufacturer Shaanxi J&R Optimum Energy agreed in November 2016 Mining Proposal approved in February 2017 Commenced onsite construction in March 2017 Key contracts executed for design, construction, mining and transport / port logistics Binding Offtake Agreements with J&R Optimum Energy and Lionergy for 100% of planned production in July 2017 Delivery of complete project funding package in July 2017 . Commissioning and first production in 1st Quarter 2018 . First spodumene sales in 2nd Quarter 2018
April: published FS and March: commence Commissioning and first commenced DFS construction production
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
September: completed DFS
Charging forward with Lithium 7 Project Construction Status
In-house Altura team with recent project construction and operations experience to deliver KEY CONTRACTORS SECURED the Altura Lithium Project
Process plant design Key items secured to reduce project risk and lead time:
. Modern 324 person Pilgangoora Village – Concrete and civil works located 20 minutes from the mine site . High Pressure Grinding Roll (HPGR) crusher purchased (approx. 34 weeks lead time 5-year mining, drilling and blasting saving) . 100% of key long lead mechanical plant packages have been contracted - primary BOO contract for 11MW power plant – operational and secondary crushing circuit, ball mill, Jan 2018 flotation cells, thickeners, concentrate filters, reflux classifiers, cyclones, slurry pumps, conveyors and belt feeders. 5-year transport logistics – load, haul, storage and ship loading CONSTRUCTION ~ 50% COMPLETE
Charging forward with Lithium 8 Financially Robust
Positive DFS* showing strong financials at a concentrate price ~40% below current levels** • Total Revenue A$2.074 billion • Total EBITDA A$1.064 billion • Net Present Value A$411 million • Internal Rate of Return 58.1% • Project payback period 1.8 years
Altura Lithium will be one of Australia’s lowest cost lithium producers • Projected life-of-mine costs of A$316/t (just higher than Greenbushes)*
Robust 5-year offtake contract with two major Chinese users for 100% of production, underpinned by agreed floor price covering downside risk • Minimum price of US$550 dmt for first three years • Maximum price of US$950 dmt for first three years (5% above Galaxy Resources contract price)
Strong growth forecast in battery market
Expansion opportunities
* Refer to ASX announcement 26 September 2016 ** DFS prepared @ US$539/t FOB sales price compared to current +US$800/t
Charging forward with Lithium 9 Financially Robust
Examples of indicative Revenue and EBITDA based on market pricing
Description Altura Neometals Tawana Galaxy Altura Floor Price Price Price Ceiling Selling Price – 6% Li O US$dmt 2 550 810 880 905 950 FOB
st Average Annual FOB Revenue 1 5yrs A$M 172 253 275 283 297
st Average Annual EBITDA 1 5yrs A$M 82 156 176 183 196
Assumptions: Based on Altura's estimated average revenues and costs* during its first 5 years of production (y/e 30 June 2019 to 30 June 2023) Based on an average AUD:USD exchange rate of 0.7500 during first 5 years of production Price A - based on Altura’s floor price as per its offtake agreements for the first 5 year contracts Price B - based on Neometals pricing for September 2017 Qtr of US$841 CIF China, adjusted to an estimated FOB equivalent (NMT ASX release 5 July 2017) Price C - based on Tawana Resources pricing for 2018 and 2019 FOB Esperance (TAW ASX release 26 April 2017) Price D - based on Galaxy Resources FOB pricing for Calendar 2017 (GXY ASX release on 14 December 2016) Price E - based on Altura’s ceiling price as per its offtake agreements for the first 5 year contracts
* Costs based on Altura’s DFS released in September 2016 updated for current estimates (refer to ASX announcement 26 September 2016)
Charging forward with Lithium 10 Compelling Investment Proposition
Altura is the most-advanced lithium newcomer in Australia - Production in < 12 months
Substantially de-risked project - Offtakes and funding in place to support development - Construction ~50% complete
Positive DFS showing strong financials with excellent revenue and EBITDA
Expansion Opportunities - Scoping study underway to double production
Team to deliver - The board and management team (largely ex-New Hope and Atlas Iron) have a history of successful developments, strong operations and robust dividend returns
Charging forward with Lithium 11 Project Construction Status- Development
Site Office and Water Supply Dam
Charging forward with Lithium 12 Project Construction Status- Development
Pit Development
Charging forward with Lithium 13 Project Construction Status- Development
Processing Plant Site
Charging forward with Lithium 14 Project Construction Status- Development
Site Accommodation Facility
Charging forward with Lithium 15 Project Details
Pit Blast
Charging forward with Lithium 16 Project Details
220,000 tonnes per annum of 6% Li2O spodumene concentrate Ore feed of 1.54 million tonnes per annum Very low life of mine strip ratio of 2.9:1 Current Ore Reserve estimate of 30.1Mt @ 1.04% Li2O* - allows for 20 year mine life DFS based on 20Mt Ore Reserve estimate – now 30.1Mt Stage 2 scoping study commenced in August 2017 to consider expansion options to increase production to 450,000 tonnes per annum, due to demand from Offtake partners Significant exploration potential within existing exploration tenements
*Refer to ASX announcements 26 September 2016 and 30 January 2017
Charging forward with Lithium 17 Project Funding
Project construction 100% funded
Senior secured loan notes issue raising a total of $US110 million
Package provided by leading US and Swiss investment management groups
Strong interest from international institutions to provide funding support
Charging forward with Lithium 18 Offtake Contracts
Robust offtake contracts with two major Chinese lithium consumers covering 100% of production
Offtake Agreements – OptimumNano and Lionergy • Minimum 100,000 dmt per annum each for five years, 6% spodumene concentrate • First sales before 30 June 2018 • Minimum price of US$550 dmt for first three years • Maximum price of US$950 dmt for first three years • Market-linked annual pricing
Charging forward with Lithium 19 Offtake Partners
OptimumNano • OptimumNano wholly-owned subsidiary of Shenzhen-listed Shaanxi J&R Optimum Energy (SHE:300116) • Market capitalization ~A$5 billion • Altura’s largest shareholder (~19.3%) contributed A$41.6M in equity placement January 2017 • Focussed on lithium power battery systems for EV, large EV and static storage • Controls ~15-20% of Chinese battery market • Customers include Dongfeng Motors, Sunlong Bus, Dayun Group, FAW Group, Haw Tai Motors • Executed at least seven major battery supply contracts in 2017 to produce +100,000 battery sets • Current capacity to product 12GW of batteries, increasing to have 20GW capacity by end-2017 Lionergy • Lionergy runs a vertically-integrated lithium business covering spodumene exploration, mine development, concentrate sales and distribution, Li2C03 and LiOH manufacturing and sales, lithium metal manufacturing, cathode materials manufacturing for Li-ion batteries • Directors and management have 20+ years in Chinese lithium industry and have excellent reputations and connections
Charging forward with Lithium 20 Compelling Investment Proposition
Altura is the most-advanced lithium newcomer in Australia - Production in < 12 months
Substantially de-risked project - Offtakes and funding in place to support development - Construction 50% complete
Positive DFS showing strong financials with excellent revenue and EBITDA
Expansion Opportunities - Scoping study underway to double production
Team to deliver - The board and management team (largely ex-New Hope and Atlas Iron) have a history of successful developments, strong operations and robust dividend returns
Charging forward with Lithium 21 Project Highlights from DFS*
Description Units Results • The DFS highlighted a very attractive (2) Average Annual Ore Feed to Plant (LOM) Mtpa 1.54 project with a long mine life of 13 years, Total Ore Mined Mt 20.33 producing an average of 220ktpa of
Annual Spodumene Concentrate Production (6% Li2O) tonnes 219,000 spodumene concentrate over the LOM at a low cash cost of A$316/t Life of Mine (LOM) years 13.2 Total Spodumene Concentrate Produced Mt 2.89 • Even assuming a spodumene LOM Strip Ratio Waste:ore 2.9:1 concentrate price of US$539/t (compared with recent sales prices of approx. Spodumene Concentrative Average Market Price (4) US$/wmt 538.80 US$800/t), the project has an assessed Capital Cost Estimate (6) A$M 139.7 pre-tax NPV of A$411m (1) Total Revenue A$M 2,074 • IRR of 58% with project payback period Project EBITDA (3) A$M 1,064 of 1.8 years Total Cash Cost FOB / tonne product (5) A$ 315.90
Net Present Value (NPV) (1) A$M 411
Internal Rate of Return (IRR) % 58.1
Discount Rate % 10
Project payback period years 1.8
Exchange Rate AUD:USD 0.7500
1. Net Present Value (NPV) is pre-tax and on a real basis, at a 10% discount rate 2. Average annual ore feed based nominal 1.4Mtpa capacity; process and mechanical design of the plant allows for 15% engineering contingency on the nominal throughput of 1.4Mtpa, allowing capacity to be maintained at 1.45Mtpa and to peak at 1.54Mtpa. 3. EBITDA is after allowing for Native Title and Royalties 4. Price based on FOB forecast equivalent - refer to Market and Pricing section 5. Total Cash Cost FOB / tonne product are defined as all cash costs to free on board, excluding royalties, interest, tax and depreciation. 6. Including sustaining capital and pre-development capital
* Refer to ASX announcement 26 September 2016
Charging forward with Lithium 22 Appendix 1 – Reserve and Resource Estimates
The Reserve and Resource estimates below vary from the inputs for the Definitive Feasibility Study. The below estimates are the result of an upgrade to estimates post delivery of the DFS*
Table 1 – Altura Pilgangoora Mineral Resource (0.43% Li2O Cut-off Grade) – January 2017
JORC Category Cut-off Li2O% Tonnes (Mt) Li20% Fe2O3 Li20 Tonnes Measured 0.43% - - - -
Indicated 0.43% 40.3 1.00 2.20 403,000 Inferred 0.43% 2.3 0.90 2.50 -
Table 2 – Altura Pilgangoora Ore Reserve Estimate (0.43% Li2O Cut-off Grade) – January 2017
JORC Category Cut-off Li2O% Tonnes (Mt) Li20% Fe2O3 Li20 Tonnes Proven 0.43% - - - -
Probable 0.43% 30.1 1.04 2.16 313,000
Total 0.43% 30.1 1.04 2.16 313,000
* Refer to ASX announcements 26 September 2016 and 30 January 2017
Charging forward with Lithium 23 Appendix 2 – Competent Persons Statement
Pilgangoora – Western Australia
The information in this report that relates to the Mineral Resource for the Pilgangoora lithium deposit is based on information compiled by Mr Stephen Barber. Mr Barber is a Member of the Australasian Institute of Mining and Metallurgy. Mr Barber is a Consultant Geologist to Altura Mining Limited and has sufficient experience that is relevant to the style of mineralisation under consideration and to the activity of mineral resource estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Barber is a former employee of PT Altura Indonesia. Mr Barber consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
The information in this report that relates to the Ore Reserve for the Pilgangoora lithium deposit is based on information compiled by Mr Quinton de Klerk. Mr de Klerk is a Fellow of the Australasian Institute for Mining and Metallurgy. Mr de Klerk is a Director and Principal Consultant of Cube Consulting Pty Ltd and has sufficient experience that is relevant to the activity of ore reserve estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr de Klerk consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
The Company confirms that it is not aware of any new information or data that materially affects the information in included in the ASX announcement on 30 January 2017. Further, all material assumptions and technical parameters underpinning the mineral resource and ore reserve estimates in those announcements continue to apply and have not materially changed.
Charging forward with Lithium 24 Level 2, 23 Barrack Street, Perth WA 6000 Phone: +61 8 9488 5100 Fax: +61 8 9488 5199 E-mail: [email protected]
alturamining.com