Hawsons Iron Ltd · ASX:HIO
Hawsons Iron — Carpentaria Resources — Global iron ore and steel forecast conference, Perth WA 2019
39 slides from Hawsons Iron's conference presentation, March 2019
Slide 1: Hawsons Iron Project: Right product, right place, right time
March 2019 Global iron ore and steel forecast conference, Perth WA HAWSONS IRON PROJECT Right product, right place, right time Quentin Hill, Managing Director
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation has been prepared by the management of Carpentaria Resources Limited (CAP) for the benefit of customers, analysts, brokers and investors and not as specific advice to any particular party or persons. The information is based on publicly available information, i
Slide 3: About Us
ABOUT US + Carpentaria Resources (ASX:CAP) is an Listed: 2007 Shares: 213.8m emerging producer of low cost, Cash : $1.195M 31 Dec 2018 premium quality iron ore products. Hawsons Iron Project + The Company’s flagship Hawsons Iron (CAP 68.7%, Pure Metals 31.3%) Project near Broken Hill, NSW has been M
Slide 4: Key Messages
KEY MESSAGES Hawsons is a leading development project in a growth market. + Hawsons Supergrade® is the world’s best iron ore product + Customer-led development plan is driving Hawsons’ development, amid very strong market fundamentals + Positive PFS showed strong financial case and funding potential
Slide 5: BFS funding update
KEY MESSAGES BFS funding update + Negotiations are active with multiple parties regarding equity and non-dilutive offtake linked BFS and construction funding + CAP is moving through the internal processes of our multiple counterparties + CAP continues to receive offtake enquiries this quarter by cre
Slide 6: Tier One People
TIER ONE PEOPLE QUENTIN HILL RAY KOENIG ADAM WHEATLEY LOU JELENICH MANAGING DIRECTOR (~5yrs) PROJECT DIRECTOR PROJECT FINANCING DIRECTOR PRODUCT MARKETING DIRECTOR Geologist, >20 years’ One of Australia’s leading Past projects, Iron ore marketing and steel experience magnetite engineers; ex-Savage G
Slide 7: Tier One People
TIER ONE PEOPLE JON PARKER PAUL CHOLAKAS NEIL WILLIAMS ROBERT HAIR NON-EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR CHAIRMAN COMPANY SECRETARY Former General Manager Mining engineer, currently Former Chief Geologist Former GM Commercial Highlands Commercial Rio Tinto Iron Ore, Executive General Manager
Slide 8: Hawsons Supergrade: The world's best quality iron ore
HAWSONS SUPERGRADE® The world’s best quality iron ore (70% Fe). 19 March 2019 70%+ 65% Fe 62% Fe Fe $US87/t $US99/t >$US110/t Source: Formula as per Hawsons prefeasibility study announced on 28 July 2017, 65% Fe Source: Platts Source: Platts (Platts) + VIU (Platts) + Magnetite premium (SMM) – see ap
Slide 9: Carpentaria is delivering
CARPENTARIA IS DELIVERING Single-minded focus on realising the >$1 billion NPV* of Hawsons 3 4 Delivered 1 2 1. Product offtake LOIs 2. Resource upgrade 3. PFS 4. Mitsui commits support * Refer Appendix SLIDE | 9 www.carpentariares.com
Slide 10: Customer support and product quality
CUSTOMER SUPPORT AND PRODUCT QUALITY COMPANY VOLUME + Has customer acceptance + 140% of production under letters of Mitsui & Co 2.0 Mtpa** intent, blast furnace and DRI customers Formosa Plastics 2.6 Mtpa* + Premium ~USD$25/t over 62%Fe Bahrain Steel 3.0 Mtpa* benchmark Shagang 2.5 Mtpa* + World’s h
Slide 11: Prefeasibility study results – strong financial case
PREFEASIBILITY STUDY RESULTS – STRONG FINANCIAL CASE Iron Ore Price Outstanding Assumption PFS COST ESTIMATES PFS Price Assumption 65%Fe US95/t independent (GHD) prefeasibility study Operating costs - C1 FOB US$33.08 US$33.08 (PFS) results: US$39.74 US$39.74 Operating costs - All in Operating costs
Slide 12: Low cost project
LOW COST PROJECT + First quartile of the quality adjusted global cost curve + Cash flow positive at under US$30/t benchmark iron ore price + Supports downside price risk management for investors and lenders. SLIDE | 12 www.carpentariares.com
Slide 13: Projected 2025 cost curve
PROJECTED 2025 COST CURVE 2025 seaborne export VIU adjusted cost curve (CFR China, 62% Fe fines basis, real Q2 FY 2019) VIU adjusted cost curve is sourced from Wood Mackenzie and is based on 100 actual costs of production by existing producers as derived from stock exchange compliant information, mo
Slide 14: Hawsons a standout project
HAWSONS A STANDOUT PROJECT + Hawsons is the standout independent iron ore development project globally + Well placed to compete for capital + Likely first magnetite project incentivised at long term forecast prices + Hawsons’ competitive advantages include: + Product quality + Costs + Market forces
Slide 15: Hawsons a standout project: IRR and product grades
HAWSONS A STANDOUT PROJECT 25 IRR and product grades for unfinanced projects Hawsons PFS stage or later 20 *All projects except Hawsons at BFS stage Corunna Downs *Assumes that Hawsons is in production and the outcomes 15 are as set out in the prefeasibility study announced on 28 July Marillana Kami
Slide 16: Market is ready for Hawsons Supergrade product
MARKET IS READY FOR HAWONS SUPERGRADE® PRODUCT + Iron ore outlook robust based on modest steel demand growth in China, declining Chinese iron ore production, increasing iron ore demand in India. + Pellet feed is the highest growth market, industry forecast a lift in pellet use in China from current
Slide 17: High quality supply niche – direct reduction
HIGH QUALITY SUPPLY NICHE – DIRECT REDUCTION + DR quality raw material supply is typically expensive to produce because of + 10- +20% yield losses in upgrade step + wet processing + DRI production is expanding, greater expansion is constrained by lack of raw material + China influence on pellet mark
Slide 18: Post accident in Brazil – a market fundamental game changer
Post accident in Brazil – a market fundamental game changer • Seaborne supply disruptions appear >50- Longer term 60mtpa* • 10-15Mtpa pellets • Minas Gerais a significant pellet feed • ~4Mtpa DRI pellets producer • projects to shift to dry stacking of • The forecast pellet feed market supply gap tai
Slide 19: Project funding strategy
PROJECT FUNDING STRATEGY + Very strong market fundamentals to trigger investment + Secure remaining 80% (~A$22m) BFS funding from a mix of funding methods and Tier 1 sources, including non-dilutive methods to preserve shareholder value (Mitsui conditionally committed A$5.4m, 20% of BFS funding) + Pr
Slide 20: Market fundamentals driving development
Market fundamentals driving development + Company moving through internal processes of multiple counterparties for BFS funding and is considering a mix of funding methods + Company well known to market players + Strong business cases support strategic investment in Hawsons + Secure offtake for exist
Slide 21: Project location
PROJECT LOCATION Hawsons’ project advantages extend from soft homogeneous ore through to access to the highest value markets SLIDE | 21 www.carpentariares.com
Slide 22: Project summary
PROJECT SUMMARY + Located 60km SW of Broken Hill + Resource 330mt concentrate product (refer Appendix) + Power from reliable eastern states grid + Water from defined high yield saline aquifer 90km south + Mine and process on site for 10 Mtpa concentrate production + Hawsons’ unique soft ore makes th
Slide 23: Logistics & approvals
LOGISTICS & APPROVALS + Slurry product 55km in pipeline to Broken Hill + Rail to Port Pirie or Whyalla on existing rail (12 Mtpa spare capacity); CAP engaged with all infrastructure owners + Transhipment to Capesize vessels to customers in Asia and Middle East + Product quality 70% Fe (tested by cus
Slide 24: Key to the project's leading position – costs
Key to the projects HAWSONS leading position - costs IRON PROJECT SOFT ORE SINGLE ORE TYPE EXISTING INFRASTRUCTURE • ~A$4-$21/t power cost savings • Process simplicity – no • Access to rail, port, power over typical WA magnetite ores blending, no selectivity, no and water existing complexity infrast
Slide 25: Key to the project's leading position – cost control
Key to the projects HAWSONS leading position – cost control IRON PROJECT SOFT ORE SINGLE ORE TYPE EXISTING INFRASTRUCTURE • Simple circuit minimises • Process simplicity • Reduces design risk of ramp up delay complexity • Mining simplicity • No HPGR’s, no fine • Reduces completion risk grinding, no
Slide 26: Next steps
NEXT STEPS + Secure BFS funding on acceptable terms + Complete BFS and Approvals 12-15 months + Finance and construct 18 – 24 months + Production 3 years from BFS funding 2018 2019 2020 2021 2022 Task Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Approvals BFS Test work BFS Engineering and Fina
Slide 27: Key Messages
KEY MESSAGES Hawsons is a leading development project in a growth market + Hawsons Supergrade® is the world’s best iron ore product + Customer-led development plan is driving Hawsons’ development, amid compelling market fundamentals + Positive PFS showed strong financial case and funding potential,
Slide 28: Appendix
APPENDIX SLIDE | 28 www.carpentariares.com
Slide 29: Project prefeasibility study results
PROJECT PREFEASIBILITY STUDY RESULTS USD Hawsons operating and sustaining costs USD/dmt Base case 10 Mtpa Hawsons PFS preproduction costs (yr 1-2) (m) (after prestrip, ~YR 3-22) product Hawsons Supergrade® production exported through Port Pirie Preproduction mining costs including pre-strip 194 Mini
Slide 30: Project prefeasibility study results
PROJECT PREFEASIBILITY STUDY RESULTS at August 20, 2018 prices 65%Fe fines Hawsons PFS key economic results Base case US$94.55/t 62%Fe price US$67.95 Base case 10 Mtpa Equity IRR (post tax, geared) 29.90% 43.04% Hawsons Supergrade® Equity NPV (10%) (post tax, geared) US$1,091m US$1,973m production e
Slide 31: Project resource and reserve
PROJECT RESOURCE AND RESERVE Resource increase, 30+ year mine life + Total resources >330mt concentrate + Conversion rate from Inferred to Indicated Resources was outstanding at 96%, giving + High value concentrate grade and recovery confidence in future upgrades unchanged after ~40% more data point
Slide 32: Project resource and reserve
PROJECT RESOURCE AND RESERVE Davis tube mass recovery DTR % 3km 1km SLIDE | 32 www.carpentariares.com
Slide 33: Processing
PROCESSING Supergrade from unique siltstone ore, a technological step change 50um 1000um Natural grain size <50um easily Crushing stage generates high 45% rejection at first magnetic achieved proportion of fines ~30% separation <150um Ball Milling 100% <40um 7kwh/t After second magnetic Elutriation
Slide 34: Processing
PROCESSING ➢ Simple proven flow sheet ➢ Non chemical processing ➢ On site processing ➢ Significant water recycling ➢ Benign tailings NO Acid Mine Drainage Flow sheet SLIDE | 34 www.carpentariares.com
Slide 35: Processing
PROCESSING SLIDE | 35 www.carpentariares.com
Slide 36: Existing infrastructure: Low development risk
EXISTING INFRASTRUCTURE Low development risk 25 t axle load rail, 12 Mtpa spare capacity Port Pirie Spare Berths Closer to markets Cape Size Capacity
Slide 37: Hawsons Supergrade product
HAWSONS SUPERGRADE® PRODUCT + Has customer acceptance Elements and Compounds Supergrade Pellet Supergrade pellets (CISRI) Midrex DR Feed (ALS, CISRI) Specifications* Fired at 12300C + Premium ~USD$25/t over Fe 70.3 67.80 67.00 min. 62% Fe benchmark SiO2 1.99 2.39 After Wood Mackenzie chemical Analys
Slide 38: Approvals: Project pathway clear and achievable
APPROVALS Project pathway clear and achievable + No Native Title – it is extinguished on the mining and easement areas + Mining Lease Application lodged + Federal government Major Project status + Environmental Impact Assessment guidelines received, a NSW State Significant Development + Ecology and
Slide 39: Quentin Hill, Managing Director
Quentin Hill, Managing Director www.carpentariares.com Email [email protected] Phone +61 7 3220 2022 Mobile +61 4 2396 8786
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