ELEMENTOS LIMITED — Investor Presentation 2013

Nov 5, 2013

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elementos.com.au
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NOVEMBER 2013

ASX Code: ELT

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Advancing the Cleveland Tin-Copper and Tungsten Projects towards Development

Corporate Summary

elementos.com.au

Diversified metals company, including Cleveland, advanced stage tin-copper and tungsten projects, together with a number of prospective gold and copper assets in South America and Australia

Share price[1 ] 2.2 cents Cash[2 ] $1.66 million Ordinary shares 528 million Listed options[3 ] 33 million Market $11.6 million capitalisation

• 1 Share price close 1 November 2013

• 2 Post private placement of $1.3m

• 6 cent options expiring April 2014

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People

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Calvin Treacy Managing Director

Corey Nolan Executive Director

Richard Seville Director

Senior Executives

• Linda Scott (Chief Financial Officer and Company Secretary)

• Gustavo Delendatti (Geologist and South America Country Manager)

Technical Consultants

• Dr Mike Adams (Metallurgist)

• Mr Chris Dunks (Project Management)

• Dr Will Goodall (GeoMet)

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Reasons to Invest

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Share price appreciation potential – developing an advanced tin project, in a commodity with excellent supply/demand fundamentals and price outlook, underpinned by the following strengths:

• Advanced tin development project

• JORC Resources – 60kt tin equivalent approaching PFS stage

• Lower capex – existing mine development and supporting infrastructure

• Lower operating costs are possible – known mining and metallurgy

• Significant exploration potential

• Tin-copper mineralisation is open at depth and along strike

• Tungsten resource (12kt contained WO3) plus an Exploration Target of between 72kt and 120kt contained WO3, open at depth

• Creating value from non-tin assets

• Drilling starting at the Millenium joint venture in November 2013

• Board - expertise and experience in developing early-stage resource projects

• Valuation

• Trading at discount to Australian tin industry peers

• No value attributed to the significant tungsten potential

Undervalued Compared to Peers

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Australian Tin Peer Valuation

Enterprise Value per tonne of JORC contained tin

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Kasbah Resources
Venture Minerals
Consolidated Tin
Elementos
Stellar Resources
50 100 150 200 250 300 350 400 450
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Average $311/tonne

NO VALUE ATTRIBUTED TO ELEMENTOS TUNGSTEN

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North-West Tasmania Tin Province

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• Cleveland is located in north-west Tasmania, Australia, approximately 80 kilometres south of Burnie

• Established mining province since early 1900s

• District has a number of high-grade, long life, iron ore, base and precious metal mining operations

• :

• World class tin province including

• Renison Bell (>200kt tin production)

• Mount Bischoff (>50kt tin production)

• Cleveland (24kt tin production)

• Australia’s largest tin mining operation at Renison (~7kt/yr tin production)

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• New tin development projects planned at Zeehan and Mt Lindsay

• Stable, pro-mining jurisdiction:

• Mining Lease recently granted for Venture Minerals Riley DSO project

Total estimated historical production from various reports and references

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World Class Minerals Field

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The Cleveland project area covers the northern margins and metamorphic aureole of the Meredith Granite

The Meredith Granite is part of a suite of Devonian granites which are associated with numerous world class tin deposits in the province

• Other types of deposits and mines in the region include:

• Savage River iron ore

• Henty gold

• Rosebery lead and zinc

• Mt Lyell copper

• Avebury nickel

• Hellyer and Que River lead and zinc

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Large Tenement Holding

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• 96 square kilometres of prospective exploration ground held in three exploration permits:

• EL7/2005 – covers historic Cleveland project site

• EL9/2006 and EL15/2011 – areas adjoining EL7/2005

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Excellent Support Infrastructure

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• Port – Container, cargo and bulk handling port at Burnie, an export port 80 kilometres by road to the northeast, providing access to Asian smelters

• Roads - Adjacent to an all weather sealed road with access to Burnie

• Labour - Mining and industrial-savvy workforces in the region

• Power – High tension transmission lines running through project site

• Water – Adequate water resources exist within the tenement areas

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Previously Operated Tin Mine

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• Historic underground mine operated by Aberfoyle Ltd from 1969 to 1986

• 5.6Mt of ore processed at 0.68% tin and 0.29% copper to produce in concentrate:

• 23,519 tonnes of tin

• 9,691 tonnes of copper

• Cleveland was among the first mines in the world to use trackless mining for ore haulage to the surface

• Significant investment in underground declines and underground development (mine access will be restricted until dewatering and rehabilitation is completed)

• The mine closed due to the low tin prices in the mid-1980s – US$8,000/t compared to US$23,000/t today

Note: Entrance to the Cleveland mine shown by red circle and heights above sea level marked in red on the right

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Geological Snapshot

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At Cleveland, tin and copper mineralisation occurs in a series of sedimentary rocks belonging to Hall’s formation, underlain by sandstones and overlain by volcanics



Mineralisation in the sedimentary rocks originated from the Meredith granite at depth



Transportation and distribution was controlled by a number of faults and favourable lithologies



Known tin and copper bearing semi-massive sulphide mineralisation occurs as lenses within Hall’s Formation

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 The lenses dip more or less vertically with:

• strike lengths of up to 550 metres

• across strike thicknesses of up to 30 metres

• ► down-dip extents of up to 800 metres

Tungsten is hosted in both a quartz stock-work (veinlets and stringers) which surrounds a dyke



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Cleveland Tin-Copper JORC Resources

elementos.com.au

Cleveland Tin and	Cleveland Tin and	Cleveland Tin and	Copper Mineral Resource 31	Copper Mineral Resource 31	Copper Mineral Resource 31	March	2013
		(0.35% Sn cut-off grade)
Category	Tonnage	% Sn	Tin Metal (tonnes)	% Cu	Cu metal (tonnes)	% Sn Eq	Tin Eq Metal (tonnes)
Indicated	4,239,000	0.70	30,000	0.28	12,000	0.80	34,000
Inferred	1,880,000	0.64	12,000	0.19	3,600	0.70	13,000
Total	6,119,000	0.68	42,000	0.25	15,600	0.77	47,000

Cleveland Tin and Copper	Cleveland Tin and Copper	Cleveland Tin and Copper	Tailings Mineral	Resource 31 March	Resource 31 March	2013
		(0%	Sn cut-offgrade)
Category	Tonnage	% Sn	Tin Metal (tonnes) % Cu	Cu metal (tonnes)	% Sn Eq	Tin Eq Metal (tonnes)
Inferred	3,850,000	0.30	11,600 0.13	5,000	0.34	13,000

• Independent JORC Resource prepared by Mining One Consultants – Cleveland Mine, Luina, Tasmania, “Mineral Resource Report” for Rockwell Minerals, April 2013

• Tin Equivalent based on: Sn_Eq % = Sn% + (Cu% / 2.94) – please see disclaimer for calculation methodology

• No mining or metallurgical factors have been applied

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Cleveland Tin Mine Resource Model

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Resource model

• Mineral Resources have been estimated for the tin and copper in the individual lenses

• The tin and copper lenses occur in three main structural domains, separated by two flatly dipping faults - Ratchet and Nadir

Exploration potential

• Aberfoyle focused on the incremental expansion of existing resources

• The deposit is open at depth and along strike

• Two shallow targets near the surface provide opportunities for modest resource increase

• Known tin and copper intersections outside the current

• resource

JORC Resources Database

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Aberfoyle’s mining database includes:

• 2,040 drill holes totalling 134,000 metres

• 75,000 assay points for tin, copper, tungsten, lead and zinc

• Core from 87 diamond drill holes stored in the Mineral Resources Tasmania core facility; 111 samples re-assayed to check reliability of Aberfoyle sampling and assaying

• Tailings resource based on reported operating records of the Aberfoyle processing plant

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Above: 3D model showing all the historical drill holes and decline in green.

Left: Historical core preserved in Hobart

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Precedent for Deposit to Extend to Depth

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• The granite contact is estimated to be ~4km below Cleveland

• Current mine development extends down to approximately 500 metres below the surface

• There are precedents for the possibility that mineralisation will extend down to the granite, for example:

• Renison tin mineralisation extends down vertically for >1km to the granite contact

• Cornish tin mineralisation in the UK occurs within granite

• Implies significant depth potential at Cleveland

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Mining

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• Mine historically a low-cost, open stoping operation

• Significant underground mine development in place:

• 4 km decline development down to 500m via a 5.0m X 5.0m drive expanded to 5.5m² on curves

• More than 11km of underground development in place (needs rehabilitating)

• Key tin deposit characteristics:

• Ore lenses up to 30 metres width

• Steeply dipping and relatively long strike length

• Competent wall rocks

• Amenable to low-cost mechanised bulk extraction methods using large machinery

• Tasmania has cost structures lower than the mainland

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Schematic demonstrating the historical mining method

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Simple Metallurgy and Processing

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Tin and copper

Known process route to produce tin and copper concentrates:

• Tin primarily occurs principally as cassiterite (tin oxide)

• Copper occurs as chalcopyrite

► Previous commercial tin and copper recoveries averaged 60% - best tin recovery 69% and copper 76%

• Metallurgical recoveries have potential to be significantly higher using modern-day tin recovery technologies

Tungsten

► Tungsten occurs as wolframite, readily amenable to gravity, magnetic and flotation concentration

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Conceptual flow sheet for a future operation

• No metallurgical testwork undertaken

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Tungsten Deposit

elementos.com.au

• Top of deposit located approximately 350 metres below the portal

• Existing underground decline development reaches upper portions of the deposit

• Tungsten mineralisation occurs as wolframite ([Fe,Mn]WO3)

• Mineralisation hosted in both the stock-work around, and within a greisenised porphyry dyke

• Potentially amenable to low cost bulk mining

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Wolframite in quartz veins from the stock-work in Foley’s zone (diamond drill hole C1754 which included 175 metres @ 0.26% WO3)

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Tungsten Potential

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Inferred Mineral Resource 31 March 2013	Inferred Mineral Resource 31 March 2013
ABOVE 850m RL
(0.2% WO3 cut-off grade)
Tonnage % WO3 Contained WO3 (tonnes)
3,980,000 0.30	12,000
**Tungsten Conceptual Exploration Target# **
BELOW 850m RL
Cut-off grade % WO3 0.2% % WO3	0 % WO3
Tonnes (Mt) 20	60
Grade (% WO3) 0.3%	0.2%
Metal (tonnes of WO3) 72,000	120,000

The potential quantity and grade of the exploration target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

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Tin Prices – Current Prices Sustainable

elementos.com.au

• Supply constrained and global mine production declining:

• Chinese and Indonesian production in long-term structural decline

• San Rafael mine closure in 2018 to reduce global production by ~10%

• Few new, sustainable projects in development

• Demand growth is real and sustainable, with new uses adding demand pressure

• Higher prices required to reflect the economics of new projects:

• High construction costs for new mines

• ITRI estimate tin prices above >US$25,000/t required (current price US$23,000/t) for new projects to be economic

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Source: ITRI

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Tin Uses – Lead Free Solder Key Driver

elementos.com.au

2012 Tin Consumption by Usage^

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Float Glass
2%
Brass & Bronze Other
5% 9%
Chemicals
14%
Solder
53%
Tinplate
17%
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Lead free solder has transformed the tin market

• Non toxic – replaces lead and other toxic metals

• Excellent fusion ability in making alloys

• Low melting point

• Low cost compared to other metals like silver

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^ CSFB Estimate, “Commodity Forecasts

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• The Setting of the Sun”, April 2013

elementos.com.au

Indonesian Supply Declining[1 ]

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Minsur SA Production Forecast[2 ]

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Issues affecting global tin supply:

• Tin grades are declining and mines are getting deeper

 Costs of production are rising

 Capital costs are too high - current prices do not justify investment

• Regulatory and environmental approvals are increasing

• Political and social instabilities and changing legal frameworks

• Export limitations in some countries

 New projects face greater metallurgical complexity

• Many new projects are small

 Low exploration and mine discoveries during the 1990s

Sources: (1) ITRI (2) Minsur SA of Peru presentation to ITRI

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Tin Demand - Steady Growth

elementos.com.au

Sustainable growth

New markets

• China accounts for nearly half of global demand

• Lead free solder demand growing

• the electronics age plus legislation banning use of lead

• New product development in the modern consumer electronics market key driver

• Lithium ion batteries – graphite anodes replaced with tin

• Tin is highly inelastic – substitution unlikely

• Solar cells, tin alloys, stainless steel

ITRI Tin Demand Forecast (kt)[# ]

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Source: Investing in Tin Seminar, 30 November 2012, ITRI Ltd

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An External Perspective….

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Share Valuation

“Our valuation of ELT is 12.2 cents share”

Cleveland Valuation

“We estimate an after-tax NPV of A$95 million for 100% of the project, for a capital investment of $80 million; an IRR of 46%”

Cleveland Operations

“Proven mining and metallurgy, and 4 km decline in place from historical operation significantly de-risks project and reduces future capex”

Beer & Co Research Report, 25 June 2013, available at www.elementos.com.au

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Development Plans

elementos.com.au

2013

2014

• •Environmental •Pre-feasibility study permitting completed (mid2014)

• •Resource upgrade

• •Reserve statement

• •Millenium JV drilling

• •Feasibility study to commence

• •Resource drilling (if required)

• •Mineralogical studies on tin and tungsten

• •Selwyn Range tenements granted

• •Permitting

• •Off-take partners

2015

• •Mining lease application

• •Project finance

• •Project equity Investment

Disclaimer

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COMPETENT PERSON STATEMENT - The information in this report that relates to Mineral Resources or Ore Reserves at the Cleveland tincopper and tungsten project, Tasmania, is based on information previously issued in the 18 April 2013 ASX Announcement by Elementos entitled “Cleveland Tin, Copper and Tungsten JORC Resources”. The information therein was based on “Cleveland Mine, Luina, Tasmania Mineral Resource Report for Rockwell Minerals Limited” compiled by Michael V. McKeown of Mining One Consultants, a Fellow of the Australasian Institute of Mining and Metallurgy. Mr McKeown is an employee of Mining One Consultants and its subsidiaries, and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which it is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr McKeown was responsible and supervised the preparation of the technical information in the 18 April 2013 release and has relevant experience and competence of the subject matter. Mr McKeown consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Exploration Target and Exploration Results is based on information compiled by Mr Michael McKeown, a Competent Person who is a Fellow of The Australian Institute of Mining and Metallurgy. Mr McKeown is a full time employee of Mining One Pty Ltd, a mining consultancy which has been paid at usual commercial rates for the work which has been completed for Elementos Limited.

Mr McKeown has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves’. Mr McKeown consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

MINERAL RESOURCES AND REPORTING - Mineral Resources, which are not Ore Reserves, do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by economic, environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

# TIN EQUIVALENT CALCULATIONS - The tin equivalency is calculated by the formula: Sn_Eq % = Sn% + Cu% / (Sn price US$25,000 / Cu price US$8,500). No metallurgical assumptions have been built into the resource estimate, although the Company expects that the tin and copper will be recovered into concentrates in a modern concentrator. The Company notes that Cleveland was a historical mine operated by Aberfoyle Limited between 1968 and 1986. During the life of the Cleveland operations, 5.7 million tonnes of ore was mined and processed to produce approximately 24,000 tonnes of tin and 10,000 tonnes of copper in concentrates. The historical life of mine tin and copper recoveries averaged 60% - best tin recovery 69% (1969 and 1973), and copper 76% (1973). The Company believes that recoveries could be substantially improved using modern day tin processing technology. The tailings resource has been subject to a Rockwell scoping study and metallurgical test work which has demonstrated that tin and copper concentrates can be recovered.

The Company believes that all the metals included in the metal equivalent calculations have a reasonable potential to be recovered and it does not believe there are any factors that would result in metallurgical recoveries being materially lower than historically achieved.

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Contacts

elementos.com.au

Elementos Limited ACN 138 468 756 Level 8, 26 Wharf Street tel: +617 3221 7770 Brisbane, Queensland, Australia fax: +617 3221 7773 www.elementos.com.au

For enquiries regarding this presentation please contact: Calvin Treacy – Managing Director email: admin@elementos.com.au

Forward Looking Statements

This presentation may contain certain forward looking statements. Such statements are only predictions, based on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which are beyond Elementos Limited’s control.

Actual events or results may differ materially from the events or results expected or implied in any forward looking statement.

The inclusion of such statements should not be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that any forward looking statements will be or are likely to be fulfilled.

Elementos Limited undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this presentation (subject to securities exchange disclosure requirements).

The information in this presentation does not take into account the objectives, financial situation or particular needs of any person. Nothing contained in this presentation constitutes investment, legal, tax or other advice.

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