Annual General and Special Meeting

Transcription

1 TSX:NML Annual General and Special Meeting June 23, 2016 Toronto, ON Robert Patzelt, Q.C. President & CEO Taconite Project Proposed Concentrator

2 Forward Looking Statements and Other Legal Matters This presentation contains certain forward looking statements and forward looking information (collectively referred to herein as forward looking statements ) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward looking statements. Forward looking information is often, but not always, identified by the use of words such as could, should, can, anticipate, expect, believe, will, may, projected, sustain, continues, strategy, potential, projects, grow, take advantage, estimate, well positioned or similar words suggesting future outcomes. In particular, this presentation may contain forward looking statements relating to future opportunities, business strategies, mineral exploration, development and production plans and competitive advantages. The forward looking statements regarding the Company are based on certain key expectations and assumptions of the Company concerning anticipated financial performance, business prospects, strategies, regulatory developments, exchange rates, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of labour and services and the ability to obtain financing on acceptable terms, the actual results of exploration and development projects being equivalent to or better than estimated results in technical reports or prior activities, and future costs and expenses being based on historical costs and expenses, adjusted for inflation, all of which are subject to change based on market conditions and potential timing delays. Although management of the Company consider these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. By their very nature, forward looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward looking statements will not be achieved. Undue reliance should not be placed on forward looking statements, as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in the forward looking statements, including among other things: inability of the Company to continue meet the listing requirements of stock exchanges and other regulatory requirements, general economic and market factors, including business competition, changes in government regulations or in tax laws; general political and social uncertainties; commodity prices; the actual results of exploration, development or operational activities; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting the Company; timing and availability of external financing on acceptable terms; conclusions of, or estimates contained in, feasibility studies, pre-feasibility studies or other economic evaluations; and lack of qualified, skilled labour or loss of key individuals; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, along with the Company s annual information form, all of which are filed and available for review on SEDAR at Readers are cautioned that the foregoing list is not exhaustive. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward looking statements included in this presentation are made as of the date of this presentation and the Company does not undertake and is not obligated to publicly update such forward looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws. 2

3 Agenda Mining Industry Context NML in the New Normal Resources, Infrastructure and Market The NuTac Initiative TSMC and DSO Project Update Management and Board of Directors Working Capital Conclusion Q & A 3

4 Investment Climate Source: pwc Mine 2016 Source: pwc Mine 2016 Mining shares fell out of favour with decline in metals prices and gap with broader indices has widened. NML not immune to challenging environment for mining industry overall. 4

5 Ongoing Commodity Price Volatility and Drop in Returns Source: pwc Mine 2016 Commodity prices fluctuated in 2015, with iron ore falling 40%. Modest recovery in 2016 to date, but pricing levels and volatility remain a hurdle to new project investment. Even top miners showing poor returns. Source: pwc Mine 2016 Period of iron ore market adjustment continues as more fines supply comes on stream. Pellet supply side capacity is more limited. 5

6 NML in the New Normal Challenging market environment Rate of economic growth in China has slowed. Iron ore majors and new entrants continue to increase supply. End of materials shortage concern associated with China Boom. Continued overcapacity impacting global steel industry profitability. Tata Steel Europe BF Opportunity remains in pellet segment Different supply/demand dynamics from fines segment. Iron ore oversupply confined mainly to sinter fine ores not to pellets. Deteriorating ore quality is increasingly important steelmaker concern. Ongoing concentration of supply is another and diversification needed. HYL/Energiron DRI Module Strategy for taconite development readiness The taconite properties are NML s principal assets. NuTac adapts earlier NML studies to lower cost and capacity alternatives. Enables NML to reconnect with target markets and companies. Improves potential for market entry. Now better prepared for next upturn. Midrex DRI Module 6

7 Long Life Resources Our Key Asset Lac Ritchie M&I 3,330 I 1,437 Fe 30.3% KéMag DSO M&I 98.9 I 6.7 Fe 58-60% P&P 2,384 M&I I 1,007 Fe 30.6% Howells Lake Howells River North Sheps Lake M&I 1,967 I 289 Fe 32.7% M&I 7,631 I 3,310 Fe 30.39% LabMag P&P 3,933 M&I 388 Perault Lake M&I 1,612 I 507 Fe 29.4% I 1,063 Fe 29.7% 7

8 Connected to Infrastructure and Support Services Availability of water and hydropower. Commercial airport at project site. Railway from site to port. Multi-user loading dock at Sept-Îles. Versatile shipping capability for global market reach. Local skilled labor. Support from experienced suppliers. 8

9 Market Opportunity in High Quality Products Australia and Brazil are dominant seaborne market producers. Canada is the sweetener between 2-3% market share. Low impurity mineralogy complements higher gangue ores. BF and DR pellets provide growth opportunities. Pellets are high value products. 9

10 Response: The NuTac Initiative Background and Rationale Ability to apply lessons learned and previous investments. A taconite project scoped and optimized to suit market opportunities. NML s taconite deposits provide mine planning and processing flexibility. Existing rail and port infrastructure available. EIS/EA process well-defined. PFS was delivered on time and under budget. Project Criteria Studies generated all-qc and NL-QC project alternatives. Mine and concentrator at northern site, with concentrate haulage via rail to pellet plant and shipping terminal at Pointe-Noire, Sept-Îles, QC. NuTac-KéMag has optimal combination of attributes and was thus the base case. Production of 9 Mtpy of pellets split between DRI and blast furnace grades. Long-term price assumption of USD 70 for 62% Fe fines CFR North China. Solid PFS Results (Before Tax, 25 Year Mine Life) Estimated Capital Cost - CAD in millions (excluding sustaining capital) 3,220 IRR (100% equity) 12.2% Payback (years after start of production) 7.1 NPV CAD in millions (@ 8%) 1,319 Average Operating Cost per Tonne of Pellets (CAD, loaded in vessel at Port of Sept-Îles)

11 TSMC and DSO Project Update Successful 2015 operating season with 2.3 Mt of crushed and screened sinter fines shipped to TSE and China. Similar targets for 2016 season. Also good progress made on wet processing plant, including trial production, and Howse Deposit studies. Mining operation now comprises Area 3 (Timmins/Fleming deposits) and Area 4 (Kivivic deposits), linked by 35 km Goodwood Road. Dilution settlement reached in October Iron ore pricing a major challenge. Financing discussions continue with Government of Québec. 11

12 Management and Board of Directors Recent cost reduction measures have reduced NML s workforce to 8, from 40 in October Management team has expertise and resources necessary to protect NML s land, mining claim and other assets, advance development and financing activities, and nurture existing relationships across industry, government and communities. Administrative staff combines 35+ years of service at NML, along with the range of skills and languages to support activities and operations. Proxy contest was destabilizing and unfortunate. However, Board renewal process has successfully resulted in election of 5 new independent directors, bringing to NML extensive and proven track records in mining development and operations, coupled with capital markets experience. Resolution of Board representation issues will facilitate NML s financing initiatives. 12

13 Working Capital Stood at $17.65 million at end of 2016 Q1: - Includes $14.97 million in cash and S-T investments. Since NML s initial cost reduction measures in November 2014, annualized payroll savings realized are $3.54 million. Measures to further reduce overhead are being implemented. Exploration and engineering studies to date provide sufficient basis for next phase of taconite project evaluation and marketing. At present expenditure levels, NML has sufficient working capital to support activities through end of Priority activity and initiatives to end of 2016: - Sept-Îles Port Authority take-or-pay - Québec mining tax credits - Conclude Taconite Project Heads-of-Agreement 13

14 Conclusion NML continues to navigate through difficult commodity and capital market conditions. Management is committed to fiscal prudence and taking necessary action even if it has meant painful decisions. Completion of core exploration enables focus on monetization of mineral assets as conditions warrant. NuTac was a low-cost opportunity to: - Optimize taconite development plans - Reduce CAPEX requirements - Build on investment and work completed to date NML is now better prepared with more options to present when conditions permit. 14

15 Thank You TSX: NML 15