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Alkane Resources — Investor Presentation 2012
Dec 9, 2012
48579_rns_2012-12-09_505aace3-6e82-4f7a-a706-0d2102055aa4.pdf
Investor Presentation
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Corporate Presentation Poised for significant growth
December 2012
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Location and Business Strategy
� Alkane is a public company (listed on ASX since 1969) � 6,100 shareholders (85% Australian) � Multi commodity exploration and development in the Central West of NSW � Active in region for more than 20 years with strong community recognition and support � Developed Peak Hill Gold Mine in 1996, operated to 2005. Site almost fully rehabilitated � Tomingley Gold Project waiting approval, several other significant discoveries � World class Dubbo Zirconia Project in final stages of feasibility 2
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Equity and Ownership
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Equity Ownership � Shares – 372,539,000 � Opt ons –i 4 000 000, , Domestic Hedge Funds, 8% Institutions, 23%
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� Market Capitalisation – A$250M Retail and others, Foreign
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� Cash – A$92M (30 September 2012) 32% Institutions, 12% Directors and
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� Investments ‐ ~A$95M management, 27%
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� Debt – nil � Share turnover – ~0.6M / day current � 12 Month Low/High – A$0.61/$1.62 As at 30 Sept 2012 � Top 20 – 58% Major Shareholder: Abbotsleigh (Gandel Metals) – 25% � Codes – ALK (ASX) Fidelity Investments – 5% – ANLKY (OTCQX ) Source: ASX
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Rare Metals – Rare Earths
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China produces 90% of world downstream zirconium chemicals
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China currently produces 95% of world REE output
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China is limiting the export of raw rare earths materials
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Brazil produces 90% of world niobium
Rare Metals ‐ Rare Earths
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Rare metals Light rare earths Middle Heavy rare earths
� Green technology is dependent on rare metals and rare earths � Increased demand also driven by changes in legislation � China has dominant position
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…not so rare, but increasingly valuable
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DZP Geology
0 200
metres Jurassic aged trachyte intrusive or
lava flow
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DZP Geology sections
20 year
pit floor
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DZP Resources and Reserves
Resources & Reserves
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Resources & Reserves – open at depth. Additional resource potential at nearby Railway deposit
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Life – +40 years but can support longer life and higher production rates
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Major world resource ‐ zirconium, hafnium, niobium, tantalum, yttrium & rare earth elements
| Resources | Depth (m) | Tonnes (Mt) | Grade | ||||
|---|---|---|---|---|---|---|---|
| Measured | 0-55 | 35.7 | 1.94% Zr02, 0.04%HfO2, 0.46% Nb2O5, 0.03% Ta2O5, 0.14% Y2O3, 0.74% REO (0.9% TREO) |
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| Inferred | 55-100 | 37.5 | As above | ||||
| Total | 0-100 | 73.2 | As above | ||||
| Reserves | |||||||
| Proven | 0-26 | 8.1 | 1.93% Zr02, 0.04%HfO2, 0.46% Nb2O5, 0.03% Ta2O5, 0.14% Y2O3, 0.75% REO (0.9% TREO) |
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| Probable | 26-45 | 27 9 . |
As above | ||||
| Total | 0-45 | 35.9 | As above |
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The deposit contains about 100ppm uranium and 350ppm thorium, and would be classified as weakly radioactive
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The deposit contains about 25% high value heavy rare earths
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DZP Process Flow Sheet
� Demonstration Pilot Plant – established 2008
� ANSTO – Aust. Nuclear Science & Tech. Org.
� Process – unique & advanced
� –
Optimization ongoing
� Sulphuric acid leach whole of ore
� Solvent extraction, separation
& refining
� Chemical precipitation
� Zirconium products
� Niobium products
� Heavy RE product
� Light RE product
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Demonstration Pilot Plant
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Y and HREE refiningand recovery
DPP Filtration, PLS, SX, Zr and Nb recovery
Zirconium refiningand precipitation Reverse osmosis and water recycle
Operating at ANSTO since 2008 9
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DZP Location and Infrastructure
| DZP Location and Infrastructure | DZP Location and Infrastructure | DZP Location and Infrastructure | |
|---|---|---|---|
| Infrastructure � Population– 80,000 Dubbo region |
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| � Rail– railway hub � Road– major highways intersection/hub � Water– numerous sources 10km |
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| � Electricity NSW State power grid 25km – � Gas– NSW State gas grid 30km � Industrial– substantial light industry � Agriculture– major agricultural hub |
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� Process chemicals available from multiple sources in eastern Australia � Limestone for waste neutralisation |
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| available at Geurie | |||
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DZP Plant Layout
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Office and workshops
Rare earth recovery and refining
Solvent extraction
Sulphuric acid plant Roasting and leaching
Zirconium and niobium
recovery and refining
Crushing and grinding
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Environmental Impact
Environmental Impact Statement – key areas of focus
� Existing land use (agriculture)
� Soc o‐econom ci i
� Air quality
� Noise and vibration
� Surface and ground water
� Soil stability
� Flora and fauna
� Biodiversity
� Visibility
� Rail freight movements
� Road traffic
� Aboriginal and European heritage
� Natural radioactivity
� EIS scheduled to be lodged
with NSW Dept of Planning
and Infrastructure early 2013
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Zirconium
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Niobium
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Rare Earth Elements
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DZP Product Output
Anticipated Production at 1,000,000 ore processed per year Product Output ZBS, ZOH, ZBC, ZOC, ZrO2 (+99% ZrO2 + HfO2) 15,700tpa Nb -Ta concentrate / FeNb (70% Nb) 3 005tpa, LREE concentrate (REO) 3,772tpa YHREE concentrate (REO) 1,019tpa TOTALS 23,496tpa Tonnage based upon recoveries developed from mass balances of the demonstration pilot plant
Product output at 1 million tonnes pa of ore processed as estimated September 2012.
Process improvements should see increased output of zirconium and heavy rare earth products
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DZP Marketing
Off‐take
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Zirconium – 100% under MOU (subject to review)
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Niobium – 100% under MOU
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LREE – MOU to JV process concentrate
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YHREE – MOU to JV process concentrate
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Throughput – five MOU’s which target production at 1Mtpa
| Memorandums of Understandings (MOU’s) | ||||||
|---|---|---|---|---|---|---|
| MOU | Date Announced | Product Details |
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| 1 | 16 May 2011 | Zirconium Leading Chemical Company to produce zirconium oxychloride – under review |
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| 2 | 26 J l 2011 u y |
Zi i A t li Mi t h Ch i l I d t i t d i i hl id rcon um us ra an n ec em ca n us r es o pro uce z rcon um oxyc or e |
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| 3 | 15 August 2011 | Zirconium European manufacturing / trading company to market DZP products |
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| 4 | 26 October 2011 | Niobium European alloy manufacturer JV to produce and market ferro-niobium |
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| 5 | 16 July 2012 | YREE Japan Shin-Etsu Toll treatment JV for separation and sale |
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Separate project to produce chemical zirconia for ceramics industries ramped up by AZL
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� Primary filter cake contains ~ 200ppm Ta2O5. At 1Mtpa this equates to about 200tpa (>400,000lbs pa ). A program has commenced to review recovery of this valuable Ta2O5 product
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DZP Feasibility Studies
Definitive Feasibility Study – September 2011
DFS 0.4Mtpa ore processed Capex (incl EPCM and Contingency) A$470M Revenue per annum A$189M NPV (20 years) A$181M Scaled estimates 1.0mtpa Capex (incl EPCM and Contingency) A$893M Revenue per annum A$504M NPV (20 years) A$1,207M Definitive Feasibility Study – scheduled Q1 2013 Interim estimates 1.0mtpa Capex (incl EPCM and Contingency) A$1,064M (July ‐ September 2012) Revenue per annum A$452M NPV (20 years) A$739M The interim results reflect an Australian industry wide increase of 10‐15% in capex and opex, and current spot prices for revenues. Process optimisation, value engineering in progress and combined with more long term price projections should improve financial returns.
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DZP Financing Program
Credit Suisse (Australia) Limited (“CS”), Sumitomo Mitsui Banking Corporation (“SMBC”) and Petra Capital Pty Limited (“Petra”) to provide investment banking services, including the arrangement of project financing to fund the development of the Dubbo Zirconia Project as follows:
Credit Suisse and SMBC appointed financial advisors to provide general financial and strategic adv sory serv ces i i
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for the potential sale of a strategic minority interest in the DZP
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for the arrangement of a commercial debt facility
SMBC as the so e eal l d coordinator of E xport reC dit gency anA d other available government assistance programs; and
Credit Suisse and Petra as joint lead managers and joint book runners in connection with a potent a equ ty ra s ng, wi l i i i hich C redit u sse s engageS i i d to underwr te, sui bject to customary terms, conditions and due diligence. The equity component should be the last step in the process.
Securing the finance package is expected to take up to 12 months to coincide with final project approvals allowing the construction program for the DZP to commence in Q4 2013.
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DZP Development pathway
| DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | DZP Development pathway | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||
| Resource definition 2001 ‐ 2002 | � | |||||||||||||||||||||||||||||||||
| Flow sheet development 2002 | ~~�~~ | |||||||||||||||||||||||||||||||||
| Laboratory Zr – Nb 1999 –2002 | � |
|||||||||||||||||||||||||||||||||
| Pilot plant Zr – Nb 2002 | � | Co | nti | nu | ed | pro | du | ct | ||||||||||||||||||||||||||
| Mine Plan & Scheduling 2002 | ~~�~~ | de | vel | op | me | nt | ||||||||||||||||||||||||||||
| Plant Design & Engineering 2002 | ~~�~~ | |||||||||||||||||||||||||||||||||
| Laboratory Y & REE 2009 ‐ | � | |||||||||||||||||||||||||||||||||
| Demonstration Pilot Plant 2008 ‐ | ~~�~~ | |||||||||||||||||||||||||||||||||
| Zr – Nb Product Distribution | � | � | � | |||||||||||||||||||||||||||||||
| Y‐REEProductDistribution | ~~�~~ | ~~�~~ | ||||||||||||||||||||||||||||||||
| Secure Offtake Agreements | ||||||||||||||||||||||||||||||||||
| Definitive Feasibility Study | 2002 | ~~D~~ ~~e~~ |
~~et~~ ~~xp~~ |
~~ail~~ ~~an~~ |
~~cos~~ ~~ed~~ |
~~ts~~ ~~d~~ |
~~for~~ ~~ve~~ |
~~lo~~ | ~~m~~ | ~~nt~~ | ||||||||||||||||||||||||
| Environmental Impact (EIS) | 2000 | |||||||||||||||||||||||||||||||||
| D il d D i eta e es gn |
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| Financing | ||||||||||||||||||||||||||||||||||
| Development Consent | ? | |||||||||||||||||||||||||||||||||
| Construction | ? | |||||||||||||||||||||||||||||||||
| Production | ? | |||||||||||||||||||||||||||||||||
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Location / Infrastructure / Resources
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TGP located 50km south west of Dubbo on the Newell Highway
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15km north of Alkane’s Peak Hill Gold Mine (467,000oz)
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Resource – 12.6 Mt @ 2.0g/t (812,000oz)
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Three deposits – Wyoming One; Wyoming Three; Caloma, with Caloma Two a potential resource
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Exploration – significant upside
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Infrastructure
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water ‐ 45km pipeline
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power ‐ State Grid with 20km 66Kv power line
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roads ‐ primary & secondary access
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Skilled local workforce
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150,000 population within 120km diameter area
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– no accommodation required (no fly‐in / fly‐out)
Tomingley Gold Project
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TGP Geology
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Geological Summary – Wyoming / Caloma Pelitic Sediments Feldspar porphyry Volcaniclastic sediments Gra p hitic mudstone Volcaniclastic conglomerate Epidote altered volcanics Chlorite ‐ talc schist Andesitic volcanics Mineralisation Additional Resource Potential Caloma underground Caloma Two open pit and underground Myalls underground Wyoming Two underground McLeans Typical Orogenic style gold deposits
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Current Project Activities
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Project approval by NSW Department of Planning and Infrastructure late July 2012. Waiting for Mining Lease approval
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Long lead construction items ordered
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(ball mill, water supply, tenders for earth works and other infrastructure)
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CAPEX – A$107M
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($54M plant; $30M infrastructure; $23M owners costs)
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Throughput – 1.0Mtpa
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Head Grade – 2.00g/t
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Recoveries – 93%
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Gold Production – average 50 ‐ 60,000ozpa
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Operating Costs – ~$1000/oz
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EBITDA ‐ $200M (base case at $1,600/oz)
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Life – 7.5years (targeting +10 years)
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Mine method – open cut & underground
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Caloma Two resource estimate
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Production anticipated late 2013
TGP Summary
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Exploration
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Core drilling at Bodangora
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Exploration
Discoveries in 2010‐2011
� Bodangora (100%) – NSW. Glen Hollow gold‐copper:
– 46m @ 0 9 . g/t gold & 0 25% . copper
–
18m @ 1.7g/t gold & 0.45% copper
� Wellington (100%) – NSW. Galwadgere copper‐gold:
–
2Mt @ 1.0% copper & 0.3g/t gold (with upside)
–
14m @ 0.9% copper & 1.1g/t gold‐recent deep hole
� Cudal (100%) – NSW. Bowen Park gold‐zinc:
–
17m @ 1.2g/t gold & 2.9% zinc
–
4m @ 2.2g/t gold 7.0% zinc
Other Projects
� Calula (100%) – NSW McPhillamys type Au – base
metal mineralisation
� Leinster Area (21%) – WA (Xstrata JV)
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Outlook
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- Dubbo Zirconia Project (DZP):
Global Strategic Significance – a long term, significant project in the zirconium and heavy rare earth industries, which can generate substantial cash flows
Production costs – spread across the four metal outputs which will assist to insulate the DZP from price instability in certain sectors. Four outputs:
(i) zirconium
(ii) niobium (tantalum)
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(iii) light rare earths
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(iv) heavy rare earths (plus yttrium)
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Tomingley Gold ‐ provides cash flow insurance against any DZP delays and possible slow down in world growth. It also has mine life upside and provides operating expertise.
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Exploration ‐ a tight geographical focus in NSW with exploration success, provides further development potential.
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Currently cash and RRL shares total ~$180 million.
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CONCLUSION ‐ Alkane is a long term investment opportunity with a clear development strategy of multiple operations with substantial emerging cash flow, and capacity to pay dividends.
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Conclusion
Alkane has suffered multiple negative market impacts like many of its peers
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Compared to Lynas Compared to Iluka
The Company is in a strong financial position and is poised to grow substantially over the next four years
Alkane’s current cash resources are 70% of its market capitalisation Less than $100M value attributed to the DZP and TGP??? www.alkane.com.au
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Disclaimer
Disclaimer
This presentation contains certain forward looking statements and forecasts, including possible or assumed reserves and resources, production levels and rates, costs, prices, future performance or potential growth of Alkane Resources Ltd, industry growth or other trend projections. Such statements are not a guarantee of future performance and involve unknown risks and uncertainties, as well as other factors which are beyond the control of Alkane Resources Ltd. Actual results and developments may differ materially from those expressed of implied by these forward looking statements depending on a variety of factors. Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.
This document has been prepared in accordance with the requirements of Australian securities laws, which may differ from the requirements of United States and other country securities laws. Unless otherwise indicated, all ore reserve and mineral resource estimates included or incorporated by reference in this document have been, and will be, prepared in accordance with the JORC classification system of the Australasian Institute of Mining, and Metallurgy and Australian Institute of Geosciences.
Competent Person
The information in this presentation that relates to mineral exploration, mineral resources and ore reserves is based on information compiled by Mr D I Chalmers, FAusIMM, FAIG, (director of the Company) has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian Chalmers consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears.
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Resource & Reserves: Tomingley + Peak Hill
Tomingley (TGP) – Mineral Resources
| DEPOSIT MEASURED INDICATED INFERRED |
TOTAL |
|---|---|
| Top Cut Tonnage Grade Tonnage Grade Tonnage Grade Tonnage 2.5x2.5x5.0m model (t) (g/t) (t) (g/t) (t) (g/t) (t) |
Grade Gold (g/t) (koz) |
| Wyoming One 2,316,550 2.2 890,340 2.2 3,117,350 1.7 6,324,240 |
1.9 392.4 |
| Wyoming Three 642,470 2.0 63,225 2.0 102,820 1.3 808,510 |
1.9 49.9 |
| Caloma 2,690,530 2.3 567,860 2.1 2,194,490 1.9 5,452,870 |
2.1 369.4 |
| Total 5,649,550 2.2 1,521,420 2.1 5,414,660 1.8 12,585,630 |
2.0 811.7 |
These Mineral Resources are based upon information compiled by Mr Richard Lewis MAusIMM (Lewis Mineral Resource Consultng Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Richard Lewis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology are given in the ASX Reports dated 25 March 2009, 2 October 2010 and 29 March 2012.
Tomingley (TGP) – Ore Reserves
| DEPOSIT | PROVED | PROBABLE | TOTAL |
|---|---|---|---|
| Tonnage Grade |
Tonnage Grade |
Tonnage Grade Ounces |
|
| (t) (g/t) |
(t) (g/t) |
(t) (g/t) |
|
| Wyoming One | 1,700,000 1.6 |
200,000 1.3 |
1,900,000 1.6 94,500 |
| Wyoming Three | 500,000 1.6 |
0 0.0 |
500,000 1.6 28,100 |
| Caloma | 1 100 000 2 3 , , . |
100 000 1 7 , . |
1 200 000 2 2 86 500 , , . , |
| Total | 3,300,000 1.8 |
300,000 1.5 |
3,600,000 1.8 209,100 |
These Ore Reserves are based upon information compiled under the guidance of Mr Dean Basile MAusIMM (Mining One Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The Reserves and Resources are estimated at an effective A$1,540 per ounce gold price. Dean Basile consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.
Peak Hill – Mineral Resources
| DEPOSIT 0.5g/t gold cut off |
MEASURED Tonnage Grade (t) (g/t) |
INDICATED Tonnage Grade (t) (g/t) |
INFERRED Tonnage Grade (t) (g/t) |
TOTAL Tonnage Grade k Ounces (t) (g/t) |
||||
|---|---|---|---|---|---|---|---|---|
| Proprietary | 9,440,000 1.35 |
1,830,000 0.98 |
11,270,000 1.29 467.4 |
|||||
| 3.0g/t gold cut off |
Tonnage Grade (t) (g/t) |
Tonnage Grade (t) (g/t) |
Tonnage Grade (t) (g/t) |
Tonnage Grade k Ounces (t) (g/t) |
||||
| Proprietary P | 810,000 4.40 |
810,000 4.40 114.6 |
||||||
These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the 2004 Annual Report.
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Resource & Reserves: Dubbo + Galwadgere
Dubbo Zirconia Project – Mineral Resources
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|---|---|---|---|---|---|---|---|---|
|Toongi|Tonnage|ZrO2|HfO2|Nb2O5|Ta2O5|Y2O3|REO|U3O8|
|Deposit|(Mt)|(%)|(%)|(%)|(%)|(%)|(%)|(%)|
|Measured|35.70|1.96|0.04|0.46|0.03|0.14|0.75|0.014|
|Inferred|37.50|1.96|0.04|0.46|0.03|0.14|0.75|0.014|
|Total|73.20|1.96|0.04|0.46|0.03|0.14|0.75|0.014|
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These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the 2004 Annual Report.
Dubbo Zirconia Project – Ore Reserves
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|---|---|---|---|---|---|---|---|
|Toongi|Tonnage|ZrO2|HfO2|Nb2O5|Ta2O5|Y2O3|REO|
|Deposit|(Mt)|(%)|(%)|(%)|(%)|(%)|(%)|
|Proved|8.07|1.91|0.04|0.46|0.03|0.14|0.75|
|Probable|27.86|1.93|0.04|0.46|0.03|0.14|0.74|
|Total|35.93|1.93|0.04|0.46|0.03|0.14|0.74|
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These O re Reserves are based upon in ormation compiled by Mr Terry Ransted MAusIMM f ( Alkane C hie f G eologist ) who is a competent person as de ined in the f 200 4 Edition o f the Australasian C ode f or Reporting o f Exploration Results, Mineral Resources and Ore Reserves. The reserves were calculated at a1.5% combined ZrO2+Nb2O5+Y2O3+REO cut off using costs and revenues defined in the notes in ASX Announcement of16 November 2011. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Wellington – Galwadgere – Mineral Resources
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|---|---|---|---|---|---|---|
|DEPOSIT|MEASURED|INDICATED|
|0 5% Cu cut off.|Tonnage|Grade|Grade|Tonnage|Grade|Grade|
|(t)|(% Cu)|(g/t)|(t)|(% Cu)|(g/t)|
|Galwadgere|-|-|2,090,000|0.99|0.3|
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These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the 2005 Annual Report
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