Swedbank Mining Seminar. 28 November 2013

Transcription

1 Swedbank Mining Seminar 28 November 2013 Exploration and production of high-end minerals and metals Nordic Mining ASA N-0250 Oslo Norway Tel Fax Org. no

2 Disclaimer This document has been used by Nordic Mining during an oral presentation. Therefore, this document is incomplete without the oral explanations, comments and supporting instruments that were submitted during the referred presentation. To the extent permitted by law, no representation or warranty is given, express or implied, as to the accuracy of the information contained in this document. Some of the statements made in this document contain forward-looking statements. To the extent permitted by law, no representation or warranty is given, and nothing in this document or any other information made available during the oral presentation should be relied upon as a promise or representation as to the future condition of Nordic Mining s business. 2

3 Value potential in strategic minerals Nickel, Copper, Platinum, Palladium Reinfjord Nordic Ocean Resources AS (85%) Lithium Titanium Nordic Rutile AS Quartz Nordic Quartz AS Keliber Oy (38%) Responding to the increasing mineral deficit in Europe 3

4 Solid shareholder structure Largest shareholders * Share overview and share price development ** Top 20 shareholders Shares Percent 1 NORDNET BANK AB ,8 % 2 SKAGEN VEKST ,8 % 3 MP PENSJON PK ,1 % 4 NORDEA BANK PLC FINLAND ,3 % 5 FINNISH INDUSTRY INVESTMENT LTD ,0 % 6 DYBVAD CONSULTING AS ,8 % 7 VPF NORDEA SMB ,3 % 8 DANSKE BANK A/S ,0 % 9 MAGIL AS ,7 % 10 VERDIPAPIRFONDET DNB ,5 % 11 VICAMA AS ,5 % 12 SNATI AS ,4 % 13 NORDNET PENSJONSFORSIKRING ,3 % 14 OVE KLUNGLAND HOLDING AS NIL ,2 % 15 CITIBANK NA S/H POHJOLA BANK ,1 % 16 OLE KRISTIAN GUNDERSEN STOKKEN ,9 % 17 AUDSTEIN DYBVAD ,9 % 18 FEMCON AS ,7 % 19 DIMA AS ,7 % 20 LITHINON AS ,7 % Total top ,9 % Other ,1 % Total ,0% Share overview Stock symbol NOM Stock exchange Oslo Axess Number of issued shares Owned by Norwegian shareholders 79% Owned by international shareholders 21% Owned by management 2,5% Options of which owned by management Fully diluted number of shares Current share price (NOK) 1,10 Market capitalisation (NOKm) month trading range (NOK) 0,30-1,32 Share price development last 12 months NOK Increasing institutional shareholding Note *: Shareholder overview as of 26 November 2013 Note **: Share price as of 26 November

5 Engebø Engebø rutile deposit: JORC resource of 154M tonnes One of the world s largest titanium 3.77% TiO 2 Historical estimate of 383M 3.96% TiO 2

6 Rutile (%) Engebø is among the largest rutile deposits in the world Rutile projects grade and target production 4,50% 4,00% 3,50% 3,00% 2,50% Engebø Cerro Blanco Murray Basin 2,00% 1,50% 1,00% 0,50% 0,00% -0,50% -1,00% Sierra Rutile Coburn Donald Ranobe Kwale Planning Moma Construction Grande Cote Production Production (Ktpa) Size of bubble indicates resource size Source: Company websites 6

7 Engebø has the highest rutile grade Rutile grade for current TiO 2 producers and planned projects Engebø 3.77% Murray Basin - Iluka 2.32% Cerro Blanco 2.10% Akonolinga (Years 1-6) Sierra Rutile 1.42% 1.66% Project Producer Akonolinga 1.15% Kwale Snapper 0.65% 0.59% Donald Gingko Cyclone Perth Basin - Iluka Fairbreeze Jacinth - Ambrosia Namakwa Mindarie Zircon Stradbroke 0.37% 0.35% 0.29% 0.27% 0.22% 0.20% 0.20% 0.16% 0.13% High grade ore with low impurities brings processing benefits and premium pricing Source: Company websites 7

8 Engebø has low impurities and implies reduction of climate gases S Africa Norway Source: Production of titanium dioxide (2007) by Fahli and Martin-Matarranza 8

9 The rutile process from mine to consumer Mining Processing End use Rutile is mined from ore or mineral sands producing a rutile concentrate Key rutile producing countries are Sierra Leone, South Africa and Australia Rutile is processed through chlorination in reactors which produces TiO 2 pigment Optional metallurgical process to produce titanium metal and high performance alloys Majority of TiO 2 feedstocks are used in production of pigment in paints, plastics and paper Approximately 5% is used for titanium metal Rutile is also used in welding rods Hard rock Mineral sand Rutile is more efficient than other feedstocks: TiO 2 value chain Rutile Less waste 94-96% TiO 2 Ilmenite/slag Rutile ~80% Less consumption of process chemicals Ilmenite 35-65% ~15% TiO 2 Leucoxene ~5% Less consumption of coke Leucoxene > 65% TiO 2 Processing Paint, plastics Less use of ore and paper ~90% Aircraft & Medical ~5% Welding ~6% TiO 2 ; small part of total cost for end-use manufacturers with few viable substitutes 9

10 Rutile and garnet, environmentally friendly products with growing markets 10

11 Strong correlation between global GDP growth and TiO 2 demand TZMI s recent global forecast is 3.8% CAGR (compound annual growth rate) Source: IHS Global Insights, TZMI 11

12 TiO 2 demand follows an S-shaped industrialisation/wealth curve China, India and other fast-growing economies are still in an emerging phase Source: Rio Tinto, TZMI 12

13 Favourable long-term market outlook for titanium feedstock Tight short-term market balance; demand surplus forecasted from 2016 and onwards Source: TZMI (November 2013) 13

14 Market balance is tightening; rutile price on the rebound Historic prices RBC short/medium term forecast NM LT price assumption USD 1,000/t RBC long-term price forecast is USD 1,200 per tonne Source: Industrial Minerals, RBC Capital Markets (November 2013) 14

15 25 % 25 % Long 20 % sea freights underpin 25 attractiveness % of new European supply 22% 15 % 20 % 25 % 20 % 10 % 15 % 8% 20 % 15 % 10 % 5 % 0 % 5 % 0 % 25 % 20 % 5% 15 % US 10 % 5 % 0 % Canada 25 % 20 % 15 % 10 % 5 % 0 % 3% Sierra Leone 25 % 15 % 5% 20 % 10 % Norway 15 % Ukraine 5 % 10 % 0 % 5 % 0 % 20% 25 % 20 % 15 % 10 % 5% 5 % India 0 % 8% China 5% 25 % 20 % Vietnam 15 % 19% 25 % 10 % 10 % 20 % 5 % 5 % 15 % 10 % 0 % South Africa 0 % Australia Rutile producer 5 % Ilmenite producer Ilmenite & rutile producer 0 % Cylinder indicates % of world TiO Zimbabwe 2 feedstock production European feedstock consumption is 30% of world total Source: TZMI 15

16 European pigment majors will be future customers Regional, stable supply brings customer benefits Substantial freight reduction compared to existing supply Plant-to-plant shipment operation Simple logistics improves working capital, storage and planning Several European customers can each take Engebø s annual production Long term commercial interest confirmed by pigment, metal and welding rod producers Large pigment plants for high grade feedstock Company Plant location Country Huntsman Tioxide Greatham UK Cristal Global Stallinborough UK Kronos Gent / Leverkusen Belgium / Germany Tronox Rotterdam Netherlands Significant supply deficit in Europe makes Norwegian rutile attractive 16

17 Long-term international value chains and customer potential Pigment and paint industries Titanium metal / Welding rods Global industries and players with strong European foothold Source: Company reports, webpages and presentations 17

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19 Favourable project logistics and configuration Efficient and area-tight concept, low transportation costs 19

20 First results from measuring program recorded Moderate current velocities at depth; favorable settling conditions in fjord deposit Source: Picture and newspaper clipping from Firda 20

21 Political discussions and permitting process advancing From the new government platform: The mineral industry represent significant value and the government will seek to improve predictability in the planning processes towards permitting. Use of sea disposal may still be an option, in combination with best practise procedures and comprehensive environmental monitoring Source: Firda Political decisions ahead: - Resolution regarding the industrial area plan - Criteria and guidelines for waste disposal permit 21

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23 Final permits will trigger accelerated progress Permits Resource classification Process tests & pilot production Water/power supply Pre. study Offtake agreements Basic eng. Feas. study(dfs) Financing Investment decision Pre-investment expenditure of approximately USD 20 million 23

24 Nordic Rutile strategic business scenarios Pre-investment phase Investment/Production phase NM maintain 100% shareholding in NR Ti-focused shareholding in NR Industrial shareholding in NR Institutional shareholding in NR NM >50% shareholding in NR Ti-focused shareholding in NR Industrial shareholding in NR Customer based shareholding in NR Separate listing of NR Feasibility study (DFS) basis for debt financing 24

25 Preliminary project financial estimates * Main assumptions CAPEX: USD 300m Rutile recovery rate: 55% Ore production: 4 million tonnes p.a. Rutile production: 87,000 tonnes p.a. Rutile price: USD 1,000/t Garnet price: USD 300/t Mine life: 50 years OPEX (open pit): USD 550/t ex. by-product credit USD 185/t incl. by-product credit Key figures 8% WACC: USD 466m (after tax) IRR 20.7% Payback time: 4.5 years EBITDA % open pit: 55-60% EBITDA % underground: 30-35% Break even price, rutile: USD 370/t (IRR = 0) Project ROI : 10 (undiscounted) Cashflow projection NPV sensitivity to key input factors USDm % -10% Base case +10% +20% Rutile price Garnet prod. Capex Opex Rutile recovery Long project life-time - short payback time Note (*): Assumptions and estimates are based on preliminary internal assessment. Product prices and OPEX are inflation adjusted with 2.5% p.a. 25

26 Thank you for your attention! 26

27 Engebø, a unique titanium rutile project (100%) Project highlights JORC resource of 154M 3.8% TiO 2 * Historical estimate of 383M 3.96% TiO 2 50 years expected mine life NPV of USD 8% WACC after tax (company estimate) Planned production of K tonnes 95% TiO 2 per year Key features Large, high grade resource Low on radioactive elements Main infrastructure in place Deposit located next to deep sea port Strategically located near European markets Potential to be Europe s largest producer of natural rutile (TiO 2 ) Note (*): Refer to the November 2008 scoping Study by Wheeler and Dowdell for resource statements 27

28 Fast track development project in High Purity Quartz Nordic Quartz HPQ project Project highlights Key features Estimate of 3.45 million tonnes of quartz, under exploration* Mine life up to 60 years (30 years in base case) NPV of USD 60 8% WACC after tax Estimated production of 5,000 tonnes of HPQ pa Demonstrated superior product quality for advanced applications/markets Outcropping hydrothermal quartz deposit Low in critical elements as Ti, Al, Fe, P, Na, K, Li, B Ideally situated, close to infrastructure and port Small-scale mining operation; 20 30,000 tonnes ore pa Limited environmental impact Bringing a new long term supplier to the HPQ play Note *): Refer to the December 2012 Scoping Study by Dorfner Anzaplan for resource statements 28

29 Keliber Development project in high-grade lithium Project highlights Estimated 3.14m tonnes mineral resource; 2.65m tonnes is classified as ore reserve (JORC compliant) Cost efficient and environmentally friendly processing method Planned production of 4,000 tonnes per year of high-purity lithium carbonate Robust shareholder base: - Nordic Mining ASA 38.0 % - Finnish Industry Investment Ltd % - Ilmarinen Mutual Pension Insurance Company 13.0 % Key features Mining permit (Länttä deposit) and environmental permits in place Ideally located; close to processing industry cluster, competent personnel, infrastructure and port +99.9% Li-product suitable for advanced battery applications Region with promising exploration potential Keliber(38%) targets to be the first European producer of Lithium carbonate 29

30 Nordic Ocean Nordic Ocean Resources AS (85%) NORA wants to be a long term pioneer on the Norwegian shelf NORA has submitted an application to Norwegian authorities for licenses in Norwegian exclusive economic zone (EEZ) NORA wants to expand internationally by submitting an application to the International Seabed Authority NORA, Statoil and The Norwegian University of Science and Technology (NTNU) have entered into a cooperation regarding potential resources within the Norwegian EEZ 30

31 Board of Directors and Management Company background and overview Board of Directors Management Tarmo Tuominen, Chairman Chief Technology Officer in Nordkalk, Finland mmmmm Kjell Roland, Deputy chairman CEO of Norfund, Norway Ivar S. Fossum, CEO 20 years experience from management positions in Hydro, Yara and FMC Technologies Lars K. Grøndahl, CFO More than 20 years experience from industrial management positions in i.a. Aker, Scancem Group and Heidelberg Cement Mari Thjømøe, Board member Extensive executive and board experience from oil and gas, finance and investment management (e.g. Statoil, Hydro and KLP) Mona Schanche, Exploration Manager Resource geologist from the University of Science and Technology in Trondheim, former project geologist in Titania (Kronos Group) Hilde Myrberg, Board member Extensive executive and board experience from oil and gas, power and consumer industries (e.g. Hydro and Orkla) Tore Viana-Rønningen, Board member VP in Dag Dvergsten AS, Norway. Previous experience from Barclays Natural Resource Investments ($2.2 bn PE fund) mmm Differentiated mining and industrial experience combined with extensive network 31

32 Well defined deposit and efficient mining scenario JORC Resource* 3D block model of the Engebø ore body Resource class JORC Mill tonnes TiO 2 3% cut-off Indicated Inferred Total Total JORC resource of 154 M 3.77% TiO 2 Historical estimate of 383 M 3.96% TiO 2 50 drill holes totaling 15,000 meters have been drilled, and the company aims to build the resource through further drilling Open pit mining for years, years underground mining Open pit strip ratio of 70 % Rutile is main product, while Garnet and Aggregates are by-products Considerable JORC compliant resource with upside potential from additional drilling Note *): Refer to the November 2008 scoping Study by Wheeler and Dowdell for resource statements 32

33 Preliminary capital cost estimate Capex estimate (USDm) Outline of Engebø industrial plant Royalties & land acquisition 13 Infrastructure & civil 83 Mine 17 Crushing facility 22 Wet process package 107 Dry process package 55 Laboratory and others Total 300 The preliminary capital cost estimate was prepared internally by the company in 2011, and includes 20% contingency Capex review will be part of the continued project planning process Total construction time of 24 months Deep sea key already in place, ready to use Ideal location and simple ore and product logistics reduce capex and overrun risk 33

34 Engebø titanium project Efficient mine plan; first open pit, then underground Standard open pit/glory hole design Underground mining by Longwall stoping 34