VYSARN LIMITED — Investor Presentation 2012

Aug 26, 2012

MHM Metals Limited ASX : MHM

COMPANY PROFILE

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MHM Metals Limited (ASX:MHM) is an industrial / green-tech
company, focusing on innovative solutions for the aluminium
industry, with long term global growth potential.
MHM‟s primary focus is the implementation of a technology to
recycle waste from the aluminum industry and help to eliminate
the current practice of sending this waste to landfill. With
operations in Australia maturing, MHM is embarking on a
program of growth into the United States, and potentially beyond.
MHM retains some of its original silica assets in Tasmania, and is
continuing to develop opportunities for silicon smelting and high
purity silica flour production.
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COMPANY PROFILE

COMPANY SNAPSHOT

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At 22 August, 2012
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Phil Thick

Managing Director & CEO

$4m

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Shareholder profile
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Top 20 34%
Other 66%
Top Shareholders
Rogers Southern PL 10%
Brazil Farming PL 9%
UBS 8%
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COMPANY PROFILE

Aluminum Waste Recycling Operations

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Aluminium Waste
• There are two sectors in the aluminium industry. The primary sector involves the production of
new aluminium metal from alumina. The secondary sector involves the recycling and re-melting of
scrap aluminium. MHM‟s core business is to recycle salt cake and black dross, which are by-
products from smelters of the secondary industry. In Australia, MHM also processes white dross,
which is another by-product of primary aluminium smelters.
• Salt cake is produced when a salt/potash flux is introduced into the furnaces, along with scrap
aluminum. The flux floats on the surface of the molten metal to provide a barrier to prevent the
metal from oxidising, increasing process efficiencies. Once the molten metal has been poured out
of the furnace the aluminum salt cake must be disposed of
• Aluminum salt cake and black dross are very similar wastes produced by the secondary
aluminum industry. They are recycled in the same manner by MHM. They have been traditionally
sent to landfill, though it is becoming increasingly problematic to do this in Australia and overseas.
The Alreco (MHM) Technology
• MHM‟s technology provides a viable alternative to traditional landfilling. The technology recovers
aluminum metal concentrate (10-20%), salt/potash (30-50%) and aluminum oxide / AL80
(balance), all valuable commodities. The recovery will vary depending on the original feedstock
material. The MHM process is „closed-loop‟ – salt cake is processed in a way
that nothing is landfilled.
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ALUMINUM OPERATIONS

COMPETITION & IP PROTECTION

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Competition
• MHM has conducted extensive patent review /analysis of competing salt cake processing
technologies.
• Alternate processes fundamentally different, MHM‟s technology has significant capital &
operating expense advantages.
• The greatest competitive threat to MHM in the United States is the cost of landfill.
However, provided recycling can be provided in a manner that does not increase the cost
for industry it is reasonable to assume there will be broad acceptance of MHM‟s solution.
This will result in fundamental industry change that has been driven by innovation rather
than regulation.
IP Protection
• MHM has perpetual, exclusive global rights to salt cake processing technology.
• Technology providers opted not to apply for patent, instead adopted „black box‟ trade
secret approach. Issues surrounding ability to administer patent rights in every
jurisdiction, perceived difficulties in protecting processing patents & unwillingness to
advertise to the world how the process operates.
• MHM has procedures in place to protect technology, and is comfortable with IP
protection position.
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ALUMINUM OPERATIONS

AUSTRALIAN OPERATIONS: STRUCTURE

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Alreco Pty Ltd is 100% owned Australian operating subsidiary of MHM.
Alreco owns perpetual, exclusive global rights to proprietary technology to process aluminum
salt cake from secondary aluminum industry.
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ALUMINUM OPERATIONS

AUSTRALIAN OPERATIONS: BACKGROUND

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ALUMINUM OPERATIONS

AUSTRALIAN OPERATIONS: DETAIL

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3-year contract with Alcoa to process 11,000-13,000t aluminum salt cake pa for $300 per tonne.
Alcoa retains ownership of recovered metal & salt, Alreco retains aluminum oxide. $250 per
tonne paid during plant upgrade, extra $50 per tonne once salt/potash returned to Alcoa.
Contract due for renegotiation before end 2012.
1-year contract with Sims to process aluminum salt cake, aluminum non-salt cake & aluminum
dross. Contract expired though Alreco still processing material for Sims under contract terms:
$300 per tonne for salt cake, $165 per tonne for non-salt cake and white dross. MHM retains
ownership of salt and potash flux and aluminum oxide.
Access to Alcoa-owned landfill to process 160,000t material. Landfill contains ~20% metal,
~50% salt & ~30% aluminum oxide. Alcoa relinquished ownership of all reclaimed material.
Company founder Frank Rogers & his associates, through a JV, currently own the Alcoa
processing & Alcoa landfill contracts. These were brought to MHM by the JV. Alreco (MHM)
owns 100% of Sims contract and processing.
The Alcoa processing is structured as profit-sharing contract. Alreco gets full recovery of all
costs plus a 10% management fee, then operating profit is split between the JV and Alreco
(MHM). Alreco owns all plant, equipment and land and the overseas expansion. Frank Rogers
company will receive a 5% royalty on the US income.
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ALUMINUM OPERATIONS

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US OPERATIONS

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Supply volume potential
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Executed Supply Contracts
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Four US supply contracts have been executed, for both salt cake and black dross recycling on a
tipping and tolling basis. Identity of most contract counterparties will remain confidential during
construction to avoid short-term negative business impacts - current volumes contracted ~65,000 tpa
(35,000 tpa 5 year tolling contract, 30,000 tpa 1 year tipping contracts).
Anticipated that additional supply contracts will continue to be added during the construction and
commissioning stages, and once operational. It is expected that the full capacity of stage 1 will be
reached after start-up.
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ALUMINUM OPERATIONS

FIRST US FACILITY - RUSSELLVILLE, KENTUCKY

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Purchased 115-acre site in February 2012 for US$838,000.Site also contains 90,000sf of
buildings and offices. Site is zoned correctly for its intended purpose.
Plant layout and design is in final stages and is expected to be completed with full costing
in October 2012.
Environmental permitting applications being prepared and preliminary civil works,
renovation of the office facilities, and any site works that do not require approval have been
completed.
Plant will be built in two 125,000 tonnes per annum phases to reduce up-front capital and
deliver cash flow as early as possible.
Consideration of financing options is underway and discussions have progressed with
many parties. Full debt financing is preferred to reduce any further dilution of shareholders,
but it is expected that a combination of debt and equity is more likely. It is expected to have
completed review of all financing options and have funding agreements drawn up in line
with completion of design and costing, to allow the construction to commence at the
beginning of 2013.
It is planned to complete construction of the first phase ready for operation by end 2013.
Long lead items may require commitment out of current cash prior to funding to meet this
deadline.
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ALUMINUM OPERATIONS

RUSSELLVILLE, KENTUCKY PLANT SITE

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ALUMINUM OPERATIONS

REGIONAL ALUMINIUM PRODUCERS

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GRANTS AND INCENTIVES

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The economic and political climate in the United States is positive for business
developers
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Kentucky Department of
Economic Development
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$825,000 cash rebate, paid over ten years
Committment made on the basis of
creation of at least 10 jobs and a minimum
of US$100,000 investment
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$250,000 cash incentive to be used for
infrastructural development eg rail spur
Extremely “pro-business” environment
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Tennessee Valley Authority
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Rail Company
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Potential for significant energy cost credits,
paid monthly against utility bill
Low interest financing available, 3% pa
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Possible interest-free finance on balance of
rail spur costs
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ALUMINUM OPERATIONS

SILICA BUSINESS

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Silica assets to be spun off into a wholly owned subsidiary of MHM, Silco
Industries Pty Ltd, which will be responsible for its own budget, staff and capital
raising, to allow MHM to focus on the Aluminium business and to prevent loss of
further MHM funds on the Silica business.
Seeking pre-IPO capital raising into Silco to fund mining and smelting
opportunities.
Advanced discussions continue with a number of parties around acquisition of
resources, feasibility studies for potential smelters for both rock silica and high
quality silica flour and implementation of new technologies.
Significant interest and support being received from State and Federal
Governments.
Existing deposits that cannot be developed or sold will be relinquished so as to
not burn any more cash on these assets.
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SILICA BUSINESS

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CONTACTS

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MHM Metals Limited
52 Channel Highway, Kingston TAS 7050, Australia
Alreco Pty Ltd
80 Buckley Grove, Moolap VIC 3221, Australia
MHM Metals Corporation
1500 W9th Street, Russellville KY 42276
Postal Address
PO Box 21, Kingston TAS 7051
p: +61 3 6229 9955
f: +61 3 6229 8430
e:
w:
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CONTACTS

DISCLAIMER

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This document has been prepared by MHM Metals Limited (“MHM” or the “Company”). It should not
be considered as an offer or invitation to subscribe for, or purchase any, securities in the Company
or an as inducement to make an offer or invitation with respect to those securities. No agreement to
subscribe for securities in the Company will be entered into on the basis of this presentation.This
presentation contains forecasts, projections and forward looking information. Such forecasts,
projections and information are not a guarantee of future performance and involve unknown risks
and uncertainties, many of which are out of MHM‟s control. Actual results and developments may
differ materially from those expressed or implied. To the maximum extent permitted by applicable
law, MHM makes no representation and can give no assurance, guarantee or warranty, express or
implied, as to, and takes no responsibility and assumes no liability for (1) the authenticity, validity,
accuracy, suitability or completeness of, or any errors or omissions from, and information,
statement or opinion contained in this presentation and (2) without prejudice to the generality of the
foregoing, the achievement or accuracy of any forecasts, projections or other forward looking
information contained within this presentation.Throughout this presentation all figures are quoted in
A$ unless otherwise stated. You should not act in reliance on this presentation material. This
overview of the Company does not purport to be inclusive or contain all information that recipients
may require in order to make an informed assessment of MHM‟s prospects. You should conduct
your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy
and completeness of this information, statements and opinions contained in this presentation
before making any investment decision.
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DISCLAIMER