AMG Mining Mibra Mine Update By Itamar Resende October 2011
Cautionary Note THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE COMPANY ) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe, expect, anticipate, intends, estimate, forecast, project, will, may, should and similar expressions, reflect the beliefs and expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. This document has not been approved by any competent regulatory or supervisory authority. 2
3 Critical Raw Materials AMG s activities 1 H Hydrogen 1.0 3 Li Lithium 6.9 11 Na Sodium 23.0 19 K Potassium 39.1 37 Rb Rubidium 85.5 55 Cs Caesium 132.9 87 Fr Francium 223.0 88 Ra Radium 226.0 4 Be Beryllium 9.0 20 Ca Calcium 40.1 38 Sr Strontium 87.6 56 Ba Barium 137.4 39 Y Yitrium 88.9 57-71 89-103 21 Sc Scandium 45.0 22 Ti Titanium 47.9 40 Zr Zirconium 91.2 72 Hf Hafnium 178.5 104 Rf Rutherfordlium 261 23 V Vanadium 50.9 41 Nb Niobium 92.9 73 Ta Tantalum 181.0 105 Db Dubnium 262 24 Cr Chromium 52.0 42 Mo Molybdenum 95.9 74 W Tungsten 183.9 106 Sg Seaborgium 263 25 Mn Manganese 54.9 43 Tc Technetium 99 75 Re Rhenium 186.2 107 Bh Bohrium 264 26 Fe Iron 55.9 44 Ru Ruthenium 101.0 76 Os Osmium 190.2 108 Hs Hassium 265 27 Co Cobalt 58.9 45 Rh Rhodium 102.9 77 Ir Iridium 192.2 109 Mt Meitnerium 266 28 Ni Nickel 58.7 46 Pd Palladium 106.4 78 Pt Platinum 195.1 110 Ds Darmstadtium 269 29 Cu Copper 63.5 47 Ag Silver 107.9 79 Au Gold 197.0 111 Rg Roentgenium 272 30 Zn Zinc 65.4 48 Cd Cadmium 112.4 80 Hg Mercury 200.6 112 Uum Ununbium 277 5 B Boron 10.8 13 Al Aluminum 27.0 31 Ga Gallium 69.7 49 In Indium 114.8 81 Tl Thallium 204.4 113 Uut Ununtrium 284 6 C Carbon 12.0 14 Si Silicon 28.1 32 Ge Germanium 72.6 50 Sn Tin 118.7 82 Pb Lead 207.2 114 Uuq Ununquadium 289 7 N Nitrogen 14.0 15 P Phosphorus 31.0 33 As Arsenic 74.9 51 Sb Antimony 121.8 83 Bi Bismuth 209.0 115 Uup Ununpentium 288 8 O Oxygen 16.0 16 S Sulfur 32.1 34 Se Selenium 79.0 52 Te Tellurium 127.6 84 Po Polonium 210.0 116 Uuh Ununhexium 292 9 F Fluorine 19.0 17 Cl Chlorine 35.5 35 Br Bromine 79.9 53 I Iodine 126.9 85 At Astatine 210.0 2 He Helium 4.0 10 Ne Neon 20.2 18 Ar Argon 40.0 36 Kr Krypton 83.8 54 Xe Xenon 131.3 86 Rn Radon 222.0 57 La Lanthanum 138.9 89 Ac Actinium 132.9 90 Th Thorium 232.0 58 Ce Cerium 140.1 59 Pr Praseodymium 140.9 91 Pa Protactinium 231.0 60 Nd Neodymium 144.2 92 U Uranium 238.0 61 Pm Promethium 147.0 93 Np Neptunium 237.0 62 Sm Samarium 150.4 94 Pu Plutonium 242.0 62 Eu Europium 152.0 95 Am Americium 243.0 64 Gd Gadolinium 157.3 96 Cm Curium 247.0 65 Tb Terbium 158.9 97 Bk Berkelium 247.0 66 Dy Dysprosium 162.5 98 Cf Californium 251.0 67 Ho Holmium 164.9 99 Es Einsteinium 254.0 68 Er Erbium 167.3 100 Fm Fermium 253.0 69 Tm Thallium 168.9 101 Md Mendelevium 256.0 70 Yb Ytterbium 173.0 102 No Nobelium 254.0 71 Lu Lutetium 175.0 103 Lr Lawrencium 257.0 12 Mg Magnesium 24.3
Summary CIF overview Orebodies, estimated reserves and new potential Current production and future expansion Greater recovery of Tantalum from tailings Current and future business model New product development Final remarks 4
CIF Overview Founded in 1912 in Rio de Janeiro, Brazil Bought by Metallurg Group in 1979 (now AMG) Split into 2 entities: CIF Mineração S.A. - Mine located in Nazareno LSM Brasil S.A. Metallurgical & Chemical plant located in São João del Rei 4.2MW hydropower plant (meets 100% of demand) 135 employees at Mibra mine and 220 in São João del Rei AMG Advanced Metallurgical Group N.V. (Netherlands) AMG Brazilian Holdings BV (Netherlands) 5 CIF Mineração S.A. Ta Concentrate Feldspar Tin LSM Brasil S.A. Ta and Nb Oxides Aluminum master alloys Aluminium grain refiners Boron based fluoride salts
Tantalum (Ta) and Niobium (Nb) Activities CIF extracts Ta and Nb containing ores from the Mibra mine and either converts them into high-purity Ta and Nb oxides via chemical processes or sells them as concentrate Mibra mine, Nazareno Acid leaching & solvent extraction at chemical plant 6 Production plant, São João del Rei
Mibra Mine The mine has several orebodies with Orebody A being the main source of pegmatite (6.32 million tons) Further exploration work on Orebody A, B & C as recommended by SRK Activities at the mine include surface mining and gravimetric, electrostatic, and electromagnetic concentration 7 Mine drilling, excavating, & loading Metal Orebody A Grade (g/t) Metal Content (million lbs) Ta 2 O 5 375 5.2 Nb 2 O 5 92 1.5 Sn 283 2.1 The Mibra mine has an estimated additional 11.1 million lbs of Ta 2 O 5 in other orebodies
Orebody A Mineralogy Albite (25 30%) Microcline (15 20%) Quartz (20-30%) Spodumene (10 15%) Zinnwaldite (8 10%) Certification SRK certification through the National Instrument (NI) 43-101 technical report as issued on 30 th July 2008 Indicated mineral resources for CIF Volta Grande deposit A pegmatite of 6.32 million tons at 375 ppm Ta 2 O 5, 92 ppm Nb 2 O 5, and 283 ppm Sn Resource Utilization 450 mt Ta Concentrate (~30% Ta content) 240,000 mt Feldspar Mix CKS-6825 600,000 mt/yr of Processed Pegmatite 36,000 mt Lithium Concentrate 40,000 mt Feldspar By-Product CKS-6830 120,000 mt Albite 8 164,000 mt Lower grade ceramic market
Other Orebodies The Mibra mine has several other hard and soft pegmatite orebodies Orebodies B and C-south 11.6 million tons of hard orebodies New drilling and surveys lead to existing resources much higher than previously expected Completion of this work is expected by Q1 2012 8.6 million lbs Ta 2 O 5 contained in ore Orebody A Orebody B Kaolinized or Soft Pegmatite 7.6 million tons of soft orebodies Mineralogy: Quartz (50 60%) Kaolinite (35 40%) Kaolin resources estimated at 2.7-3.0 million tons White Mica (1 5 %) and Iron Oxides (0 2%) 2.5 million lbs Ta 2 O 5 contained in ore Orebody C 9
New Exploration Work 2011 Orebodies A, B and C 5,933.3 meters 2012 10 Orebodies A, B and C 11,283.5 m
Resource Status and Mine Life Resource Status Orebody Volume (million mt) Grade (g Ta 2 O 5 /mt) Ta 2 O 5 Content (million lbs) Indicated Orebody A 6.32 375 5.23 Estimated * New Drilling Underway Estimated New Drilling Underway Other Hard Orebodies 11.62 335 8.58 Soft Orebodies 7.60 150 2.51 Total 25.54 290 16.32 Hard Orebodies Resources Reserves (million mt) Orebody A 6.32 Others (Balance of A, B, & C-south) * 11.62 Total Resources 17.94 Annual Pegmatite Consumption Mine Life 1.06 million mt 17 years Subject to further exploration work, which will be concluded by Q1 2012 We expect to confirm reserves for 17 years at increased production capacity (excluding soft orebodies) 11
Mibra Production 1400 600 1200 500 400 800 300 600 200 400 100 200 0 Klbs 000's MT 1000 0 2007 2008 2009 Hard Pegmatite 2010 2011e 2012e Soft Pegmatite 2013e 2014e Ta₂O₅ Growth based on: Upgrading & expanding old plant (plant 2) Greater recovery of Ta₂O₅ from tailing fines Mine infrastructure development Debottlenecking existing plant (plant 1) 12 Further development of soft orebodies Note: 2013 & 2014 production expansion subject to market conditions and AMG board approval
Gravimetric Plants Expansion & Debottlenecking Plant 1 Processing 600,000mt pa hard pegmatite Expanding to 700,000mt pa by end of 2011 Modifying to handle soft pegmatite by 2013 Plant 2 Processing 180,000mt pa of pegmatite Expanding to 360,000mt pa by December 2011 Will process hard and soft pegmatite 13
Ta₂O₅ Mass Balance In Gravimetric Process 79% 21% 100% Line 1 Line 2 5% 42% Coarse Grades 22% 64% Fines Ultrafine Rejects 26% 18% 44% +53µm 32% 4% 36% -53µm + 16% 4% Total Concentration 20% = 56% 14
Ta₂O₅ Contained In Tailing Fines Mesh # Weight gm % Retained Ta₂O₅ Grade Ta₂O₅ Content % Distribution 50 109 22 52 146 14 60 50 10 42 55 5 100 152 31 41 162 16 140 76 15 60 118 12 200 47 10 92 113 11 230 21 4 184 100 10 325 19 4 164 79 8 400 9 2 401 95 9 <400 12 2 472 148 15 495 100 79 1,016 100 Spirals & shaking table are less efficient at recovering Ta₂O₅ from fines 15
Recovery Of Ta₂O₅ From Tailing Fines Tantalite Plant s Tailings (Thickener) Clean Water Tailings (Flotation) Rougher Cleaner Tailings 16 Final Concentrate Tantalum Concentrate Centrifugal concentrator Flotation Column
Further Development Of The Process Flow Orebody A (Pegmatite) Microlite & Cassiterite Tin Smelting (toll process) Final Products Tin Markets Tin Ta slag Extraction, Crushing & Grinding Gravimetric Concentration Magnetic Separation Ta Ores Blending Ta Concentrate Capacitors Option Pond Tailings Processing Chemical Processing Ta205 Nb205 Capacitors Superalloys Soft Orebodies (Pegmatite) Kaolin Ceramics Magnetic Separation Mixed Feldspar Ceramics Mine Chemical Plant Outsourced Feldspar Raw Material Flotation Lithium Concentrate Albite Lithium Carbonate Ceramics Batteries 17 Development phase Li Concentrate Ceramic Grade Ceramics
Ceramic Minerals Production Mibra is the largest feldspar raw material supplier to the Brazilian porcelain (chinaware) industry Quality control of feldspar in laboratory 118 132 133 130 138 101 84 42 19 18 2003 2004 2005 2006 2007 2008 2009 2010 2011E Ceramic minerals production ( 000 mt/yr)
Potential Projects Kaolin (Soft Orebodies) Kaolin reserves estimated at 3 Million Tonnes Pilot plant installed & operating during H1 2010 Development work with established Kaolin producer Potential production Phase 1: Production: Kaolin 36,000 mt pa Mibra Mine soft orebody Tantalite 30 klb Ta₂O₅ pa Potential production Phase 2: Production: Kaolin 60,000 mt pa Tantalite 50 klb Ta₂O₅ pa 19 Note: Subject to market conditions and AMG board approval
Potential Projects Lithium Concentrate Pilot plant installed and operating since Q1 2010 Targeting production of Ceramic and Chemical grade Li concentrates R&D project to produce Lithium carbonate from flotation by-product Working with US & European engineering companies Lithium concentrate Process design expected by the end of 2011 Engineering design expected by the end of 2012 Targeting brine route production costs Potential capacity: Flotation cells Lithium Concentrate Albite Lithium Carbonate 36,000mt pa 120,000mt pa 2,400mt pa 20 Note: Subject to market conditions and AMG board approval Conditioning reagents
Mibra Mine Strategic Plan - Increased pegmatite processing - New Products Development: Spodumente, Albite, Kaolin - Increased Ta205 production to 400klbs - Infrastructure upgrade - Increased Ta₂O₅ production to 500klb pa - Spodumene, Albite & Kaolin production - Lithium Carbonate Production LSM Brasil Hydro power plant 2013/2015-300.000 Lbs/Ta2O5-140.000 ton/feldspar - SRK Certification - New Process Plant 2010/2012 150.000 Lbs/Ta2O5 140.000 ton/feldspar 2008/2009 21 2008 Note: 2013 / 2015 expansion projects subject to market conditions and AMG board approval
Final Remarks Mibra Mine s business model will position it as reliable long term source of Tantalum for the industry, Multi product concept will ensure Mibra s competitiveness, financial and environmental sustainability, New ceramic products under development will consolidate and strengthen the business model, CIF targeting the following production levels for Ta₂O₅: 2012 400klbs pa 2013 500klbs pa 2015 550klbs pa based on additional soft pegmatite production 22