Earths Energy Ltd · ASX:EE1
Earths Energy — Cradle Resources — Africa Down Under Conference 2015
25 slides from Earths Energy's conference presentation, September 2015
Slide 1: Panda Hill Niobium Project: The Next Producer
For additional information contact: Panda Hill Niobium Project Grant Davey Thankyou Panda ”The Next Hill Producer” Niobium Niobium Managing Director E: [email protected] T +61 8 9389 2000 Project Africa Down Under Conference – September 2015
Slide 2: Current Situation
Current Situation Panda Hill Niobium Project ● Cradle and its joint venture partner own 50% of the Panda Hill niobium project in Tanzania (and exclusive right to acquire remaining 50%) ● Panda Hill has post-tax NPV10 of US$420 million1 (Cradle’s 50% share US$210 million) ● Panda Hill is well advance
Slide 3: Opportunity Highlights
Opportunity Highlights Cradle presents a standout investment proposition ● Panda Hill is a strategic, long life asset ● Located in Tanzania, a favourable African jurisdiction ● Differentiated commodity in niobium with favourable industry dynamics ● Low technical risk - simple open-pit mining and pro
Slide 4: Strategic Appeal
Strategic Appeal Commercial niobium projects are very rare, strategic and valuable ● Niobium makes stronger, lighter & corrosion resistant steel products - i.e. high-strength low- alloy steels (HLSA) ● Niobium production generates in excess of $800 million in annual operating profits ● Lack of any d
Slide 5: Key End Users
Key End Users 90% of niobium is used for producing high-strength low-alloy steels Ferroniobium Consumption by Application, 2012 Ferroniobium Consumption by Region/Country, 2012 Other Other Stainless & 10% 5% heat resistant steel China 6% 26% Rest of Europe 23% Structural Steel Linepipe 45% 16% Germa
Slide 6: Intensity of Use
Intensity of Use Low intensity of use in emerging countries, especially China & India, demonstrates potential for significant uplift in niobium demand FeNb Intensity of Use vs. FeNb Consumption Crude Steel Production vs. FeNb Intensity of Use, 2013 Nb Intensity (FeNb g/t) 120 World Average 100 80 60
Slide 7: Consumption in China
Consumption in China Despite a slowdown in Chinese steel production, ferroniobium consumption in China grew in excess of 21% in the first five months of 2015 Chinese Crude Steel Output (Mt) vs Chinese Ferroniobium Consumption (t FeNb) 900 25,000 800 20,000 700 Apparent FeNb Consumption (t) Crude Ste
Slide 8: Global Supply
Global Supply 3 mines dominate global niobium supply (~99%) with Panda Hill set to become the world’s 4th niobium mine with minimal supply impact expected (~6%)1 Niobec 9% Panda Hill Expected ~6% Araxa 81% Catalao 9% Source: Roskill 8 1. Based on initial production rate based on throughput of 1.3Mtp
Slide 9: Stable Pricing
Stable Pricing Niobium has a long history of stable prices given long term contracts, increasing underlying demand and supply responsibility Niobium Price History (US$/kg) (Average annual value of ferroniobium imports) 42.9 42.8 Between 2006 and 2008, CBMM doubled the price of ferroniobium. At 41.1
Slide 10: Key Project Attributes
Key Project Attributes Panda Hill has the key attributes required for a successful niobium project ● Relatively high grade ● Favourable metallurgy ● Simple open-pit mining and non-complex processing ● Favourable jurisdiction ● Excellent access to infrastructure ● Low capex and compelling economics 1
Slide 11: Strong Resource Base
Strong Resource Base Resource is carbonatite hosted and can support +30 year mine life Resource Mineralisation (Mt) JORC Resource Summary Primary Carbonatite 6% Classification Mt Nb2O5 % Nb2O5 (kt) Measured 14 0.62 84 Indicated 50 0.49 247 Inferred 103 0.48 496 94% Total 167 0.50 827 Weathered Carbo
Slide 12: Significant Resource Upside
Significant Resource Upside An additional 200Mt to 400Mt of resources are expected - only a third of carbonatite outcrop tested to date and deposit remains open at depth* 108m @ 0.27% Nb205 *JORC statement: The Exploration Target is conceptual in nature as there has been insufficient exploration to
Slide 13: Excellent Infrastructure
Excellent Infrastructure Well located to key infrastructure (air, road, rail, water & power) which provides valuable advantages, especially in relation to capex efficiency Panda Hill 13
Slide 14: Robust PFS & DFS Scenario
Robust PFS & DFS Scenario Post robust PFS in March 2015, DFS being advanced as staged production scenario in order to minimise any supply disruption (i.e. now ~6% global supply vs. ~10%) Updated PFS Case vs. Management Case Adjusted PFS Case Management Case Mining Inventory 60Mt 67Mt Throughput Capa
Slide 15: Project Layout
Project Layout Straightforward layout with footprint of only 3km2 15
Slide 16: Non-Complex Processing
Non-Complex Processing Non-complex process able to upgrade the materials to ferroniobium - similar processing method to Niobec mine Process Flow Sheet Key Metallurgical Results (Management Case) Years 1-10 LOM % Fresh Carb 40% 50% Av Feed 0.70% Nb2O5 0.54% Nb2O5 Grade Av Nb 61% 62% Recovery Av FeNb
Slide 17: Robust Operating Costs
Robust Operating Costs Operating costs are predominately mining & processing and provide a robust margin relative to long term niobium price LOM All-in Cost Breakdown (Management Case) All-in Sustaining Costs (Management Case) US$/kg Nb 50 Assumed Long term Niobium Price Royalties US$44/kg Nb 45 Hea
Slide 18: Compelling Economics
Compelling Economics Low capex, strong margin & long life generates compelling economics and returns with significant leverage to positive niobium outlook Project Free Cashflow (Management Case) Rolling NPV (100% basis ungeared) (Management Case) 1,000 150 Peak NPV 900 ~US$890m 100 800 700 Free Cash
Slide 19: Development Schedule
Development Schedule Panda Hill is set to commence production in early 2018 Today Project Activities H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 Definitive Feasibility Study Piloting Test Work Basic Design Environmental Certificate Reporting Front End Engineering Detailed Design
Slide 20: Capital Structure
Capital Structure ASX-listed Cradle’s board, management & founders together own ~45% Capital Structure Key Shareholders (assuming all performance shares vest) CXX:ASX Quoted Shares 128,727,617 1 25.1% Performance Shares 18,750,000 Board & Management 38.9% Total Shares (fully diluted) 147,477,617 Tre
Slide 21: Board & Management Team
Board & Management Team Cradle is led by a highly experienced board and management team Board & Management Name Role Background Experience Craig Burton Chairman Resource Entrepreneur • Panoramic, Exco, Capital Drilling, Mirabela Grant Davey Managing Director Mining Engineer • Senior operational mana
Slide 22: Summary
Summary Cradle and Panda Hill makes for an attractive investment opportunity ● Panda Hill is well advanced – DFS underway and expected decision to mine in early 2016 ● Strategic commodity with stable pricing ● World class Mineral Resource with low technical risk ● Located in a “mining-friendly” juri
Slide 23: Site Work Photos
Site Work Photos Field Mapping Mineralised Carbonatite Outcrop Drilling Water Test Bores Bulk Sampling Irrigation Canal Relining Geotechnical Drilling 23
Slide 24: Disclaimer and Competent Person
Disclaimer and Competent Person The summary information contained herein has been provided by Cradle Resources (“Cradle” or the “Company”). No representation, express or implied, or warranty as to the accuracy or completeness of the information contained herein is made by any party and nothing conta
Slide 25: Thank You
For additional information contact: Grant Davey Thank you Managing Director E: [email protected] T +61 8 9389 2000 For additional information contact: THANK YOU Grant Davey Managing Director E: [email protected] T +61 8 9389 2000