Alkane Resources — Investor Presentation 2012

Nov 5, 2012

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R ESOURCES L TD
ABN 3 5 0 0 0 6 8 9 2 1 6
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6 November 2012

Manager Announcements Company Announcements Office ASX Limited 20 Bridge Street Sydney NSW 2000

Dear Sir,

PRESENTATION – DUBBO ZIRCONIA PROJECT

Attached is a copy of the Company’s presentation at the TZMI Congress 2012.

A copy of this presentation will also be available on the Company’s website www.alkane.com.au.

Yours faithfully,

for ALKANE RESOURCES LTD

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D I Chalmers Managing Director

65 Burswood Road, Burswood WA 6100, AUSTRALIA (PO Box 4384, Victoria Park WA 6979, AUSTRALIA) Telephone: +61 8 9227 5677 Facsimile: 61 8 9227 8178 www.alkane.com.au mail@alkane.com.au

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Dubbo Zirconia Project NSW Australia

Hong Kong 6 November 2012

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Location and Business Strategy

• Alkane is 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

• � Developed Peak Hill Gold Mine in 1996, operated to 2005. Site almost fully rehabilitated Central West Region

• � Tomingley Gold Project waiting approval, several other significant discoveries 2

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Equity

Equity & Ownership

Ownership

• Shares – 372,231,500

• � Opt ons –i 4 000 000, , Domestic Hedge Funds, 8% Institutions, 23%

• � Market Capitalisation – A$320M Retail and others, Foreign

• � Cash – A$92M (30 September 2012) 32% Institutions, 12% Directors and

• � Investments ‐ ~A$95M management, 27%

• � Debt – nil � Share turnover – ~0.6M / day current � 12 Month Low/High – A$0.74/$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 3

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Rare Metals – Rare Earths

• China produces 90% of world downstream zirconium chemicals

• China currently produces 95% of world REE output

• China is limiting the export of raw rare earths materials

• 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 & Reserves

Resources & Reserves

• Resources & Reserves – open at depth

• Life – +20 years but can support longer life and higher production rates

• 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)
		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)
		Probable	26-45	27 9 .	As above
		Total	0-45	35.9	As above

• The deposit contains about 100ppm uranium and 350ppm thorium, and would be classified as weakly radioactive

• 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 refine and recovery
DPP Filtration, PLS, SX, Zr and Nb recovery
Zirconium refine and 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
		� Rail– railway hub � Road– major highways intersection/hub � Water– numerous sources 10km
		� Electricity NSW State power grid 25km – � Gas– NSW State gas grid 30km � Industrial– substantial light industry � Agriculture– major agricultural hub
		� Process chemicals available from multiple sources in eastern Australia � Limestone for waste neutralisation
		available at Geurie
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DZP Site Infrastructure
Solid residue
SRSF
storage facility
LRSF Li q uid residue
storage facility
Land
Six aC ll Options o acqu re rura t i l
properties or part of properties.
One property acquired.
Several Put Options for small
property owners at Toongi rail
siding site.
Community consultation with
surrounding residents and those
on the Dubbo to Toongi railway.
Total land area 3,500 hectares,
only part to be used for
operations, remainder will
continue to be farmed.
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DZP Plant Layout
Zirconium and niobium
Sulphuric acid plant recovery
Office and workshops
R oas ti ng an d l eac hi ng
Rare earth recovery and refining
Solvent extraction
Crushing and grinding
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DZP Products

• Zirconium Products

zirconium sulphate, hydroxide, oxychloride, oxide (zirconia)

• Niobium Products

niobium oxide concentrate, ferro‐niobium

• Light Rare Earth Concentrate

lanthanum, cerium, neodymium, praseodymium, samarium chloride/oxide

• Heavy Rare Earth Concentrate

yttrium, gadolium, terbium, dysprosium, europium chloride/oxide

These products are non-toxic, can be acidic and require no special handling

Many end use applications in alternative energy sources, emissions minimisation, miniaturisation, energy efficiency

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Zirconium

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Zirconium Industry Pricing

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Averaged quarterly prices as compiled from multiple sources

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Source: TCMS 15

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Niobium
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Niobium Demand and Price
Niobium 2010
(Ferroniobium units)
consumption
~85,000t – 90% Brazil
Estimate for 2012
~100,000t
Ferroniobium price spiralled to US$60/kg in March 07 and is currently around US$40 - 45/kg
Sources: IAMGOLD / TZMI
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Rare Earth Elements

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Rare Earth Pricing
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These prices are for individual separated rare earth oxides at 99% purity, and the actual value for DZP concentrates will depend on market acceptance of the concentrate, but for this table 70% of the value has been assumed. The prices quoted above are averaged for the full quarter.

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Source: IMCOA 19

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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

• Zirconium – 100% under MOU (subject to review)

• Niobium – 100% under MOU

• LREE – MOU to JV process concentrate

• YHREE – MOU to JV process concentrate

• Throughput – five MOU’s which target production at 1Mtpa

				Memorandums of Understandings (MOU’s)
		MOU	Date Announced	Product Details
		1	16 May 2011	Zirconium Leading Chemical Company to produce zirconium oxychloride – under review
		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
		3	15 August 2011	Zirconium European manufacturing / trading company to market DZP products
		4	26 October 2011	Niobium European alloy manufacturer JV to produce and market ferro-niobium
		5	16 July 2012	YREE Japan Shin-Etsu Toll treatment JV for separation and sale

• Separate project to produce chemical zirconia for ceramics industries ramped up by AZL

• � 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 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 before end of
2012
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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

• for the potential sale of a strategic minority interest in the DZP

• 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.

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
		Financing
		Development Consent																			?
		Construction																		?
		Production																									?

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Dubbo Zirconia Project

A strateg c ani d alternate supp y or l f the z rcon um, i i niobium and rare earths industries

The DZP is a world c ass pro ecl j t capable of supp y ng new age mel i “ ta sl ” in to rapidly developing international markets for many years.

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: DZP

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 (Alkane Chief Geologist) 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 Ore Reserves are based upon information compiled by Mr Terry Ransted MAusIMM (Alkane Chief Geologist) 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 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.

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