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NEOMETALS LTD — Investor Presentation 2011
Oct 4, 2011
65430_rns_2011-10-04_15f318b2-7052-48cf-b543-079123469d6d.pdf
Investor Presentation
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ASX: RDR
INVESTOR UPDATE – MEEKATHARRA GOLD PROJECT
OCTOBER 2011 Chris Reed – Managing Director Craig Fawcett – GM Gold
www.reedresources.com
Page 1
Important Notice
Disclaimer
This document has been prepared by Reed Resources Ltd (“Reed” or “the Company”) to provide an update of the Company to investors and potential new shareholders.
Any statements, opinions, projections, forecasts or other material contained in this document do not constitute any commitments, representations or warranties by Reed and its associated entities, directors, agents and employees. Except as required by law, and only to the extent so required, directors, agents and employees of Reed shall in no way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatsoever nature arising in any way out of, or in connection with, the information contained in this document.
This document includes certain statements, opinions, projections, forecasts and other material, which reflect various assumptions. The assumptions may or may not prove to be correct. Recipients of this document must make their own independent investigations, consideration and evaluation of the opportunity to invest in the Company. By accepting this document the recipient agrees that if it proceeds further with its investigations, consideration or evaluation of the opportunity to invest in the Company it shall make and rely solely upon its own investigations and inquiries and will not in any way rely upon this document.
All figures in this document are in Australian dollars (AUD) unless stated otherwise.
Competent Persons Statement
Geological aspects of this document have been compiled by Mr Craig Fawcett (MAIMM), a full time employee of Reed. Mr Fawcett has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which is being reported on to qualify as a Competent Person as defined in the Code for Reporting of Mineral Resources and Ore Reserves (2004). Mr Fawcett consents to the inclusion in this document of the matters in the form and context in which it appears.
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Page 2
Reed Corporate Snapshot
Background
-
Reed Resources Ltd ( ASX: RDR ) is a WA‐based resource developer and emerging gold producer
-
Focused on its flagship 2.8Moz Meekatharra Gold Project
-
Targeting first production by December 2012 with a 100‐ 120Koz per annum sustainable production profile
| Market Capitalisation | Market Capitalisation | |
|---|---|---|
| Last price_(30‐Sep‐11)_ | $ | 0.39 |
| Shares on issue | $ | 262.2 |
| Market capitalisation Cash_(est. end Sep)_ |
$m $m |
102.3 15.9 |
| Debt | $m | 0.0 |
| Enterprise value | $m | 86.4 |
- Continues to achieve all milestones of turnaround strategy
12 Month Share Price
| 12 Month Share Price | 12 Month Share Price |
|---|---|
| $0.00 $0.20 $0.40 $0.60 $0.80 |
|
| Substantial Shareholders | |
| David Reed 8% M & G/Vanguard 8% |
|
| TOTAL 16% |
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-
Reed’s strategy has been to acquire and develop undervalued assets across varying commodities
-
Now has 3 company making projects across gold, lithium and vanadium
-
Reed is significantly undervalued compared to peers across all projects
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Page 3
Reed Project Summary
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| 100% | 70% | 100% | 100% | ||
|---|---|---|---|---|---|
| GOLD | LITHIUM | VANADIUM | Other Assets | ||
| Strategy | Production by Dec‐12 |
Stand‐alone SPV |
Stand‐alone SPV |
Incubate & Develop |
|
| Iron ore (Reed 20%) | |||||
| Resource | 2.84Moz (contained) | 14.9Mt @ 1.3% Li2O | 65.2Mt @ 0.82% V2O5 | �JV with Cliffs Natural | |
| Resources for DSO | |||||
| Partners | n/a | Mineral Resources (ASX: MIN) |
China Nonferrous Metal Industry (NFC) |
at Mt Finnerty Nickel (Reed option to |
|
| acquire 100%) | |||||
| Total Funding |
$33 million (to DTM) $4 million remaining |
$40 million (inc. BOO) Fully Funded by MIN |
TBA | �Mt Finnerty ‐ prospective for nickel sulphides |
|
| Other (Au) | |||||
| Target Production |
December Qtr, 2012 | June Qtr, 2012 | 2014/15 | �Comet Vale – 186Koz @ 10.8 g/t |
|
| Page 4 |
Meekatharra Gold Project
Regional Location
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Page 5
Meekatharra Gold Project ‐ Update
(Reed 100%)
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Feb Sep Inventory Increase 2011 2011 Resource 2.5Moz 2.8Moz ↑12% Reserve 420koz 476koz ↑13% Reserve 114koz 250koz ↑119% (open pits)
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-
[3 Mtpa processing plant]
-
� [180 man camp] � [Low capex re‐start]
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Page 6
Reed Development Strategy
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Advanced
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Results to Date
| Results | Feb 2011 | Sep 2011 | Increase |
|---|---|---|---|
| Resource | 2.5Moz | 2.8Moz | ↑12% |
| Reserve | 420koz | 476koz | ↑13% |
| Reserve | 114koz | 250koz | ↑119% |
| (Open Pits) |
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Page 7
Reed Production Strategy
Stage 1
Sustainable Open‐pit Production � Profile 100 – 120Kozpa
Low risk start‐up
Stage 2
Optimal Production Profile 160 – 180Kozpa
Open Pit and Underground Expansion
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Page 8
Meekatharra Fly Through
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Page 9
Stage 1
Bluebird Pit Extension and Cutback
Probable Reserve 1.4 Mt @ 1.9 g/t Au for 87,000 ozs
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Page 10
Stage 1
Bluebird Pit Extension and Cutback
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Page 11
Stage 1
Prohibition Pit Extension and Cutback
Probable Reserve 1.1 Mt @ 2.7 g/t Au for 96,000 ozs
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Page 12
Stage 1
Prohibition Pit Extension and Cutback
Probable Reserve 1.1 Mt @ 2.7 g/t Au for 96,000 ozs
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Page 13
Stage 2 Option Paddys Flat Underground
Probable Reserve 2 Mt @ 3.6 g/t Au for 225,000 ozs
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Page 14
Stage 2 Option
Mickey Doolan Pit Extension and Cutback
Total Resource 19.5 Mt @ 1.0 g/t Au for 609,000 ozs
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Page 15
Stage 2 Option
Meekatharra Super Pit
| Super Pit Tonnes (Mt) Grade (g/t) Gold (koz) |
|
|---|---|
| Total Resources 28.6 1.6 1,486.7 |
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Page 16
Stage 2 Option
Reedys Underground
| Reedys Tonnes (Mt) Grade (g/t) Gold (koz) Resource 4.9 2.5 395 Reserve (o/p) 0.4 2.9 37 Southern Group Long Section |
|
|---|---|
| Reedys Tonnes (Mt) Grade (g/t) Gold (koz) |
|
| Resource 4.9 2.5 395 |
|
| Reserve (o/p) 0.4 2.9 37 |
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Page 17
Meekatharra Summary
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Reed is re‐establishing the integrity,
credibility and value of the
Meekatharra Gold Project
Careful planning and compliance
�
Detailed evaluation and feasibility studies
�
Reliable development schedules
�
Sustainable operations
�
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Page 18
Value Proposition: Size and Scope
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Resource (Moz)
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
SBM NGF RRL FML SAR RDR IGR AXM
Reserve (Moz)
3.0
2.5
2.0
1.5
1.0
0.5
0.0
SBM RRL NGF SAR FML RDR IGR AXM
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Source: IRESS, ASX, company reports
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Page 19
Value Proposition: Time to Production
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Production vs. CAPEX vs. Time to Commissioning
$300m
AMX ‐ 200 kozpa
$250m
GRY ‐ 200 kozpa
$200m
PRU ‐ 280 kozpa
GGB/AZX ‐ 130 kozpa IDC ‐ 150 kozpa
$150m
KGD ‐ 120 kozpa
BDR ‐ 150 kozpa
$100m
CHN ‐ 100 kozpa
$50m
RDR ‐ 100 kozpa
NMG ‐ 160 kozpa
$0m
Feb‐11 Sep‐11 Apr‐12 Oct‐12 May‐13 Nov‐13 Jun‐14
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Page 20
Value Proposition: Comparative Upside
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$EV / Resource Oz
250
200
150
100 Peer Average $ 90/oz
50
0
$ 11/oz
RRL IGR SAR SBM FML NGF AXM RDR ‐
MGP
$EV / Reserve Oz
900
800
700
600
500
Peer Average
400
$ 375/oz
300
200
100
0
$ 66/oz
IGR RRL SAR FML SBM AXM NGF RDR ‐
MGP
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Mt Marion Fly Through
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Page 22
Mt Marion Lithium Project ‐ Update
(Reed 70%)
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Special Purpose Vehicle ‐ Reed Industrial Minerals P/L owned 70% RDR/30% MIN
-
MIN fund evaluation and construction ‘sunk’ costs
-
MIN construct and commission processing plant on BOO basis
-
1.2 Mtpa throughput to produce:
-
200Ktpa spodumene
-
60Ktpa muscovite mica
-
30tpa tantalite
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Mt Marion Lithium Resources
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| Mt Marion | Tonnes | Li Grade | Fe Grade | ||
|---|---|---|---|---|---|
| (100% basis) | (Mt) | (% Li2O) | (% Fe2O3) | ||
| Measured | 2.0 | 1.45 | 0.9 | ||
| Indicated | 4.8 | 1.39 | 1.2 | ||
| Inferred | 8.1 | 1.3 | 1.3 | ||
| Total | 14.9 | 1.3 | 1.2 |
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Page 24
Comparison – Australian Lithium Mineral Producers
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Deposit Comparisons
Talison ‐ Greenbushes Reed/MIN – Mt Marion Galaxy – Mt Cattlin
� Incline vein pegmatite � Flat lying vein pegmatite � Flat lying pegmatite
� Head grade 3% Li2O � Head grade 1.3% Li2O � Head grade 1% Li2O
� Glass, ceramic, chemical � Chemical grade � Chemical grade
grade � Strip ratio 3.3:1 � Strip ratio 2.4:1
� Strip ratio 5.6:1
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| Australian Lithium | Market Cap | Net Cash | EV | (1) Prodn | (2) EV/Prod | Implied | ||
|---|---|---|---|---|---|---|---|---|
| Mineral Producers | $m | $m | $m | kt pa LCE | $/t LCE | EV (1x2) | ||
| Talison Lithium (TSX: TLH) Greenbushes |
264 | 73 | 191 | 51.0 | 3,744 | $111m | ||
| Concentrate producer Reed Resources (ASX: RDR) Mt Marion LiC developer Galaxy Resources (ASX: GXY) Mt Cattlin Integrated LiC developer |
197 | ‐2 | ? 199 |
29.7 20.3 |
9,783 | $291m |
Source: Reed Resources Ltd
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Barrambie Fly Through
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Page 26
Vanadium Market – Strong Long Term Fundamentals
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$75
Roskill
estimate
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Titanium‐Vanadium Alloys
- Increasing intensity of use in aerospace
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+ +
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Lithium Vanadium EV Batteries
-
Highest voltage → POWER
-
Highest energy density → RANGE
-
Contains 4kg Li, 20kg of V
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= ?
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Vanadium Redox (Liquid) Batteries
-
Renewable energy storage, peak shaving, load leveling, backup
-
High efficiency, long life >20yrs
-
Variable input/fixed output
-
Power (cell) and capacity (concentration and volume) varied to suit application
-
1MWh storage = 9t of V2O5
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Vanadium Peer Comparisons
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EV / Resource Multiple ($/t V2O5)
$800
$700
Potential valuation range of
$600 $100 ‐ 400/t V2O5
$500
$400
$300 Mean $251/t V2O5
$200
$100
$0
Largo American Atlantic Apella TNG Energizer Sino Yellow
Vanadium Vanadium Rock
Based on EV/resource benchmarking of listed
vanadium peers, Barrambie has an implied
valuation of $53 ‐ $214m
Source: Bloomberg, ASX, company reports
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Board and Senior Management
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David Reed FCPA, OAM Executive Chairman
Steven Cole Llb(Hons), FAICD Non-Executive Director
Dr Peter Collins BSc(Hons), PhD, MAIG Non-Executive Director
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Chris Reed BCom, GradCertMinEcon, MAusIMM Managing Director and CEO
Dr Vanessa Guthrie BSc (Hons), PhD, GDBM Non-Executive Director
Ian Junk BEng(Hons), MAusIMM Non-Executive Director
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Jason Carone BCom, CA Financial Controller and Company Secretary
Darren Wates Legal Counsel and Company Secretary
Craig Fawcett BSc(Hons), GDipMining General Manager - Gold
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Reed Technical Staff
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Bill Crossley Project Manager – Lithium/Vanadium
James Lawrence Resource Geologist Underground
Dr Bryan Smith Consultant Geologist Lithium/Vanadium/Nickel
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Elizabeth Jones Snr Planning Engineer
Matt Schembri Resource Geologist Open Pit
Tony Simpson Consultant Vanadium
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Jeremy Watkins Project Manager – Gold
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David Hollingsworth Senior Exploration Geologist
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Dudley Kingsnorth Consultant Lithium
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Page 30
Summary
Why Reed?
-
Existing plant and camp
-
Large resource base
Emerging gold producer � targeting +100koz per annum
-
Gold � Low risk start‐up phase
-
Staged expansion upside
Advanced projects across 3 � strategic commodities with strong price outlook
Well funded with experienced � management team
Lithium
-
Exploration upside
-
Operated and funded by Mineral Resources Ltd (ASX: MIN)
-
In construction phase
-
High grade resource
�
Trades at a significant discount to peers across all projects (current share price $0.39)
-
Strong price fundamentals
-
Vanadium
-
In finance/approvals phase
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Page 31
APPENDIX 1
Resource and Reserve Inventory
| Mt Marion | Category | Tonnes (Mt) | Li2O (%) | Li2O (kt) | Meekatharra | Category | Tonnes (Mt) | Au (g/t) | Au (koz) | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1, 2, 2W, 4,5,6 | Measured | 2.0 | 1.45 | 29.2 | Bluebird | Probable | 1.4 | 1.9 | 87.0 | |||
| Indicated | 4.8 | 1.39 | 66.3 | South Junct. | Probable | 0.1 | 1.5 | 4.5 | ||||
| Inferred | 8.1 | 1.30 | 105.1 | Prohibition | Probable | 1.1 | 2.7 | 96.0 | ||||
| Total | 14.9 | 1.35 | 200.7 | Surprise | Probable | 0.1 | 3.0 | 13.0 | ||||
| Meekatharra | Category | Tonnes (Mt) | Au (g/t) | Au (koz) | Batavia | Probable | 0.2 | 2.4 | 14.0 | |||
| Meek. North | Indicated | 0.7 | 1.3 | 29.0 | Jack Ryan | Probable | 0.2 | 3.1 | 21.8 | |||
| Inferred | 0.2 | 1.2 | 6.0 | Callisto | Probable | 0.1 | 3.1 | 7.2 | ||||
| Paddys Flat | Indicated | 18.7 | 1.6 | 987.2 | Rand | Probable | 0.1 | 2.4 | 7.6 | |||
| Inferred | 9.4 | 1.6 | 499.5 | Total (o/p) | Probable | 3.3 | 2.3 | 251.1 | ||||
| Yaloginda | Indicated | 8.8 | 1.8 | 509 | Prohibition | Probable | 1.3 | 2.4 | 104.1 | |||
| Reedys | Inferred Indicated |
6.4 2.0 |
1.7 3.4 |
346 219 Vivian/Cons. Fatts/Mud. Summary |
Probable Probable |
0.3 0.4 |
7.7 4.7 |
63.6 57.2 |
||||
| Inferred | 3.0 | 2.6 | 246 | Total (u/g) | Probable | 2.0 | 3.6 | 224.9 | ||||
| Total | 49.2 | 1.8 | 2,841.7 | Total | Probable | 5.3 | 2.8 | 476 | ||||
| Barrambie | Category | Tonnes (Mt) | V2O5 (%) | TiO2 (%) | Barrambie | Category | Tonnes (Mt) | V2O5 (%) | TiO2 (%) | |||
| Barrambie | Indicated | 49.2 | 0.82 | 17.3 | Barrambie | Probable | 39.7 | 0.82 | 15.7 | |||
| Inferred | 16.0 | 0.81 | 17.2 | Total | 39.7 | 0.82 | 15.7 | |||||
| Total | 65.2 | 0.82 | 17.3 | |||||||||
| Notes: | ||||||||||||
| Comet Vale | Category | Tonnes (Mt) | Au (g/t) | Gold (koz) | 1. Resources and Reserves comply with | the Australian | JORC Code | |||||
| Comet Vale | Indicated | 0.2 | 10.8 | 82.5 | reporting guidelines | |||||||
| Inferred | 0.3 | 10.9 | 103.5 | 2. Resources are inclusive of Reserves | ||||||||
| Total | 0.5 | 10.8 | 186.0 |
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