Investor Presentation Acquisition of the Goondicum Mine 31 March 2014
2 FORWARD LOOKING STATEMENTS DISCLAIMER Certain information contained in this presentation constitutes forward looking information under the provisions of Canadian securities laws. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", projects, potential, "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", should, "might" or "will be taken, "occur" or "be achieved" or the negative connotation. Such statements and information include, without limitation, statements regarding, the estimated mineral resources at the Goondicum property, and other benefits of the Potential Transaction. This forward looking information is subject to numerous risks, uncertainties and assumptions, certain of which are beyond the control of Melior, including, without limitation, risks relating to acquisitions, such as the parties may be unable to complete the acquisition, problems may arise with the ability to successfully integrate the businesses of Belridge and Melior, the parties may be unable to obtain regulatory approvals required for the acquisition, Melior may not be able to achieve the benefits from the acquisition or it may take longer than expected to achieve those benefits; and the acquisition may involve unexpected costs or unexpected liabilities. Other risks include the impact of general economic conditions; industry conditions; volatility of minerals prices; volatility of commodity prices; currency fluctuations; mining risks; risks associated with foreign operations; governmental and environmental regulation; competition from other industry participants; the lack of availability of qualified personnel or management; stock market volatility. Readers are cautioned that the material assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise. Actual results, performance or achievement could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits Melior will derive therefrom. Melior disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
3 FORWARD LOOKING STATEMENTS DISCLAIMER (CONT D) The scientific and technical information, as it relates to Belridge Enterprises Pty Ltd, in this presentation has been reviewed and approved by Simon Tear (BSc (Hons), MIAusIMM, PGEO, EurGeol, IMO3) a director H&SC, Graham Lee (BSc, FAusIMM, CP(Geo)), an Associate of H&SC and Chris Desoe (B.E.(Min)(Hons), FAusIMM, RPEQ, MMICA), who are all Qualified Persons under National Instrument 43-101. The effective date of the mineral resources estimates disclosed in this presentation is February 25, 2014 A new geological model has been developed with four mineralized units being delineated from drilling information and surface topography/mapping, thought to represent in situ to short-distanced transported material from both alluvial and gravity slide (soil creep) processes. The gabbro in the area under investigation has undergone multiphase oxidation and erosion producing a relatively complex weathering pattern of the host rock. The decomposed gabbro is believed to be in situ. Mineralization comprises resistive ilmenite liberated by the relatively complex weathering process. Reporting of the resource estimates used a 2.5% available ilmenite cut-off grade and a partial percent volume adjustment factor for the 2013 topographic surface. Reconciliation of the new H&SC block model with the 2012-2013 production showed a 10% difference which is considered acceptable for an Indicated Resource. Further exploration opportunities exist within the remainder of the Goondicum Crater as some of the earlier drilling work by Monto Minerals had intersected significant amounts of similar style mineralization within the Crater. A feasibility study has not been completed and there is no certainty the proposed operation will be economically viable For detailed technical information please see the technical report prepared by H&SC Consultants Pty Ltd, which will be posted on Melior s SEDAR profile.
Melior to acquire and re-start the Goondicum ilmenite mine Investment Thesis The Goondicum mine is a high-grade ilmenite mine located in Queensland, Australia Significant Resource Substantial resource base with significant potential for expansion within existing and adjacent exploration license areas Low Risk Re-start Fully-permitted mine with +60kt of historical production and over A$120m invested to date Asset history and installed infrastructure significantly de-risks re-start plan Near-Term Production & Cash Flow Existing infrastructure supports a cost-effective re-start, well within Melior s funding ability Near-term re-start plan outlines a 12-year mine life with ilmenite production of +200ktpa Strong Board & Management Our new Board of Directors is composed of industry leaders with deep sector knowledge Acquired management team has in-depth operational experience with the mine Strong Market Fundamentals Ilmenite market experiencing strong and growing demand, specifically from Asian pigment producers 4
Category Indicated Inferred 5 Large existing resource base Goondicum Resource 43-101 Mineral Resource 1 The Goondicum deposit is comprised of nearsurface, ilmenite-rich oxidized gabbros Continuous high-grade, surface-lying portion of the resource at 10.1-12.9% available ilmenite Apatite also produced as a by-product, enhancing production and cash flow profile Potential to recover additional titanomagnetite and feldspar by-products Lithology CL Tonnes (millions) Available Ilmenite (%) Available Ilmenite (million tonnes) 4.1 10.8 0.44 CS_H 4.9 12.9 0.63 CS_L 5.0 4.0 0.20 DG 17.3 3.6 0.62 Total 31.3 6.1 1.90 CL 2.5 10.1 0.25 CS_H 8.8 11.2 0.99 CS_L 5.9 4.0 0.24 DG 13.7 3.3 0.45 Total 30.9 6.3 1.93 1 Resource estimates from H&SC 43-101 report February 2014
6 Significant expansion upside provides opportunity for mine extension Resource Expansion The current mine plan occupies only 20% of the Goondicum crater Current mining area Goondicum crater Crater is expected to show similar geology and mineralization to the current mining area offering significant exploration potential Belridge holds exploration licenses for the wider deposit covering over 28km 2 Diagrammatic cross section of the Goondicum Complex Mineralisation 6.6km
Simple mining process and conventional processing minimizes operational risk Mining and Processing Facilities Simple mining process using standard earth moving equipment No overburden No drill and blast Short haul distances Ore is processed by a feed preparation plant and wet concentration plant using a conventional extraction process including scrubbers, screens, cyclones, gravity spirals and magnets Processing plant to be upsized to achieve throughput of approximately 2.8mtpa of feed Preliminary mine plan shows a total of 39mt at a grade of 7.7% available ilmenite to be mined over a 12-year mine life 1 Average ilmenite production of over 200ktpa 1: The mine plan is preliminary and does not constitute a Mineral Reserve Estimate 7
8 Infrastructure in-place with further opportunity to reduce transportation costs Supporting Infrastructure Product is trucked 260km to a port facility at Gladstone where it is shipped to final customers Opportunity to reduce trucking distance to 160km through the construction of a new 22.6km mine access road, reducing shipping costs significantly Fully-operational port with bulk loading facilities available 9kt storage facility located at the port Extensive installed utilities 37km water pipeline 26km grid-connected power line
9 Goondicum Re-Start Plan Jul Aug Sept Oct Nov Dec Jan Feb Mar 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Recruitment Tradesmen Supervisors Technical / Operators Engineering Design Process Design Mechanical Design Electrical Design & Programing Existing Plant Re-Configuration Trommel & Scrubber Configuration Bore Pump & Process Water CD Tank Completion Other Site Work Process Plant Expansion Tailings System Upgrade FPP Plant Upgrades Ball Mill Upgrades Scrubber Installation / Refurbishment WCP Upgrades Electrical & Instrument Installation New Screening Plant Pump Station Upgrade
Industry-leading board to drive project re-start Charles Entrekin Director, Chief Executive 1 and Chairman of the Board of Directors Over 35 years of experience in the mining and metals sector Previous President and Chief Operating Officer of Titanium Metals Corporation, a $2.8 billion NYSE-listed titanium alloy producer and President and Chief Executive Officer of Timminco Ltd, a magnesium, silicon and aluminum company Currently Non-Executive Director at Sierra Rutile Ltd, a leading mineral sands producer Successfully implemented restructurings and turnarounds of mining and metals companies in North America and worldwide Martyn Buttenshaw Director Over 12 years experience in the mining sector A mining engineer who has held technical and management roles at Rio Tinto and Anglo American Currently a Senior Manager with Pala Investments Ltd and a Non-Executive Director of Sierra Rutile Ltd Glenn Black Director Mechanical engineer with over 36 years experience in senior management and operational positions at companies such as De Beers and Anglo American, including managing and implementing the delivery of major projects in both South Africa and Botswana Currently Chief Operating Officer of Peninsula Energy and Chief Project Officer for Firestone Diamonds Joe Connolly Director Experienced finance professional and Chartered Accountant with deep knowledge of the mineral sands sector Previously, Chief Financial Officer of Sierra Rutile Ltd and held roles with Clipper Windpower, Morgan Stanley and Deloitte Currently co-founder and CEO of Buckthorn Partners Ltd, a financial services advisory company 1: To step down as CEO in favor of Mark McCauley on closing 10
Driven and knowledgeable management team Mark McCauley Proposed Director and Proposed Chief Executive Officer Mr. McCauley is currently Managing Director of Belridge Enterprises which has owned the Goondicum mine since 2009 He has substantial mining experience and has been involved in the development of several major mining projects in both Australia and Argentina, including turnaround and organizational restructuring Previously Non-Executive Director and Chair of the Audit Committee at Norton Goldfields Previously served as Chief Financial Officer and Company Secretary of Felix Resources Ltd, an ASX-listed coal mining company during which time the market capitalization increased from $35m to over $1 billion He has completed the Advanced Management Programme at Harvard Business School, holds an MBA from Bond University in Australia and has a Bachelor of Engineering from the University of Queensland Thomas Masney Chief Financial Officer and Corporate Secretary Mr. Masney is currently the Chief Financial Officer of Melior and was previously the Chief Financial Officer of Astar Minerals plc, an AIM-listed natural resource company He is a qualified Chartered Accountant (ACA) and has experience in Canada, UK and Hong Kong Wicky Moffat Operations Manager Experienced Metallurgist and Chemical Engineer Previously held numerous technical positions with BHP Base Metals and Anglo American Base Metals and has been involved with the Goondicum mine since 2012 11
Ilmenite & Apatite Market Overview 12
Refractive Index 13 TiO 2 & Ilmenite Market Overview Titanium dioxide (TiO 2 ) pigment is a fine white powder used in paints, plastics and paper products - which imparts whiteness, brightness and opacity on the products TiO 2 Use by End Market 4% 6% Pigments (paint) Titanium sponge Titanium dioxide pigments are produced from titanium feedstocks such as ilmenite, rutile and titanium slag 90% Other (welding) 90% of titanium feedstocks are used for the manufacture of titanium pigment Titanium pigments are produced using the sulfate process or the chloride process The sulfate process, prevalent in China, utilizes ilmenite feedstocks Little ability to substitute other products for TiO 2 pigments given TiO 2 s uniquely high refractive index Source: Credit Suisse Few Viable Substitutes for TiO 2 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Source: DuPont Highly opaque TiO2 Pigments Zinc Oxide Clay Calcium Carbonate Vaccum
Pigment Apparent Consumption (kg) '000 TiO 2 units 14 Strong fundamentals for growing TiO 2 demand Strong TiO 2 & Ilmenite Outlook TiO 2 demand is anticipated to increase significantly as both developed and emerging economies continue to strengthen TiO 2 is a late-cycle commodity with usage increasing substantially as GDP per capita rises China is anticipated to require significantly more TiO 2 Population forecasted to peak at 1.4 billion in 2025 with middle-class growing to 70% by 2020 Urbanization in Asia, Latin America, and India will further impact TiO 2 demand US housing recovery presents near-term upside Increasing end-use demand is predicted to lead to an ilmenite supply deficit from 2016 onwards Pigment Consumption vs. GDP per Capita 4.5 4.0 3.5 3.0 2.5 2.0 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 South Korea (Average) China (annual) 0 10,000 20,000 30,000 40,000 50,000 Existing supply & approved projects/expansions Underlying demand Indicative S- Curve USA (Average) Western Europe (Average) Japan (Average) GDP Per Capita (PPP Basis 2005$) Source: Rio Tinto Ilmenite Supply & Demand Forecast 1.5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: J.P. Morgan estimates
15 Growing ilmenite demand from China and TiO 2 feedstock substitution Strong Ilmenite Demand in China More than 50% of global ilmenite feedstock is used in Chinese sulfate pigment plants shift to chloride processing is unlikely in the near-term TZMI believes it could be another 4-5 years before China produces a more meaningful and consistent amount of chloride-based TiO 2. The focus in the near-term will therefore continue to be on improving the sulfate process. RBC November 7, 2013 Feedstock Consumption by Type 16% High Grade - China High Grade - Rest of World 53% 31% Low Grade - China Ilmenite is the Preferred TiO 2 Feedstock Increase in global feedstock prices has strengthened the case for substitution to sulfate pigment production using lower-cost ilmenite Stronger profit margins being realized by sulfate-based TiO 2 producers Evidence of continued strength in sulfate ilmenite demand illustrated by recent M&A activity $/t TiO 2 Source: Credit Suisse Production Cost - Sulfate Production Cost - Chloride $1,200 $1,000 $800 $600 $400 $200 $0 2007 2008 2009 2010 2011 2012 2013 2014E 2015E Source: Goldman Sachs
16 Goondicum ilmenite is a superior product within the sulfate ilmenite market Goondicum Ilmenite Key Attributes Ideal Chemical Attributes Minimal Impurities Environmental Benefits The chemical attributes allows for high reactivity when used in the sulfate pigment process Low Fe 2 O 3 content of <10% Contains few impurities such as chrome and other residual elements Few impurities allow for improved pigment manufacturing and the ability to blend feedstocks Low in U+Th elements (10ppm), making it more environmentally friendly than competing ilmenite Low U+Th content also improves the ability to use ilmenite as a blending feedstock Fe 2 O 3 Content 16.1% 10.0% Peer Median Goondicum Cr 2 O 3 Content 0.09% 0.01% Peer Median Goondicum U+Th Content (ppm) 35.7 10.0 Peer Median Goondicum Source: Company estimates
Volume in kt Apatite by-product Phosphate Market Overview Apatite is the most abundant phosphate mineral Phosphate minerals are dissolved with sulphuric acid to produce phosphoric acid This phosphoric acid can be further transformed into fertilizers and animal feed products Approximately 85% of phosphoric acid is used to produce fertilizers such as DAP and MAP 1 Phosphate fertilizer used to stimulate crop growth and yield in combination with potash and nitrogen The Oceania market is expected to be in deficit of phosphate fertilizer on the medium term Expected deficit of ca. 300kt by 2016 supporting local demand for phosphoric acid and phosphate rock 1: DAP: Diammonium Phosphate; MAP: Monoammonium Phosphate Phosphate Market at a Glance 100% 80% 60% 40% 20% - Source: RBC Oceania Fertilizer Market 1 800 600 400 200 - Phosphate Rock Other Phosphoric Acid 2012 2013E 2014E 2015E 2016E Supply Demand Balance Source: Food and Agriculture Organization of the United Nations (2012) 1 Phosphate (P 2 O 5 ) fertilizer volume based on phosphoric acid (H 3 PO 4 ) Other Rock TSP Other Phosphoric Acid MAP DAP Mined Processing Phosphate End-Use (200) (250) (300) (350) (400) 17
Transaction Overview 18
19 Summary of Transaction Consideration Offered Melior will indirectly acquire 100% of Belridge Enterprises Pty Ltd, the 100% owner of the Goondicum Mine, in an all-share deal Approximately 38 million new common shares to be issued to Belridge shareholders Equivalent to 18% of Melior s pro forma share balance Earn-out Consideration The Vendor s are entitled to receive an Earn-out payment, payable in Melior shares, based on the performance of the Melior share price Earn-out shares issued can range from zero (if the Melior share price is <C$0.41 * ) up to a maximum of 38.1m shares (where the Melior share price exceeds C$1.11 * ) Structure Transaction structured by way of share purchase agreement Melior s TSX-Venture Exchange listing status is expected to change from a Tier I Investment Issuer to a Tier I Mining Issuer Timetable The transaction is expected to close in 4 to 6 weeks, and has the full support of Melior s majority shareholder, Pala Investments * Assumes no change-of-control within the 4-year validity period of the Earn-out Consideration