Engebø project presentation - /Engebø... · PDF fileEngebø project...

JORC resource of 154M tonnes @ 3.8% TiO2*

Historical estimate of 383M tonnes @ 3.96% TiO2

50 years expected mine life

NPV of USD 466M @ 8% WACC after tax (company estimate)

Planned production of 80-100K tonnes rutile @ 95% TiO2 per year

2

Engebø titanium project

Large, high grade resource

Low on radioactive elements

Main infrastructure in place

Deposit located next to deep sea port

Strategically located near European markets

Engebø, a unique titanium rutile project (100%)

Potential to be Europe’s largest producer of natural rutile (TiO2)

Project highlights Key features

Note (*): Refer to the November 2008 scoping Study by Wheeler and Dowdell for resource statements

Rutile 94-96% TiO2

Ilmenite 35-65% TiO2

Leucoxene > 65% TiO2

Rutile is mined from ore or mineral sands producing a rutileconcentrate

Key rutile producing countriesare Sierra Leone, South Africaand Australia

Mining Processing End use

Rutile is processed through chlorination in reactors which produces TiO2 pigment

Optional metallurgical process to produce titanium metal and high performance alloys

Majority of TiO2 feedstocks are used in production of pigment in paints, plastics and paper

Approximately 5% is used for titanium metal

Engebø titanium projectThe rutile process from mine to consumer

TiO2; small part of total cost for end-use manufacturers with few viable substitutes

3

Ilmenite/slag~80%

Rutile~15%

Leucoxene~5%

Paint, plasticsand paper

~90%

Aircraft & Medical~4%

Welding

~6%

Processing

Hard rock Mineral sand

TiO2 value chain

Rutile is more efficient than other feedstocks:

Less waste

Less consumption of process chemicals

Less consumption of coke

Less use of ore

Rutile is mined from ore or mineral sands producing a rutileconcentrate

Key rutile producing countriesare Sierra Leone, South Africaand Australia

Mining Processing End use

Rutile is processed through chlorination in reactors which produces TiO2 pigment

Optional metallurgical process to produce titanium metal and high performance alloys

Majority of TiO2 feedstocks are used in production of pigment in paints, plastics and paper

Approximately 5% is used for titanium metal

Engebø titanium projectThe rutile process from mine to consumer

TiO2; small part of total cost for end-use manufacturers with few viable substitutes

4

Ilmenite/slag~80%

Rutile~15%

Leucoxene~5%

Paint, plasticsand paper

~90%

Aircraft & Medical~4%

Welding

~6%

Processing

Hard rock Mineral sand

TiO2 value chain

0.13%

0.16%

0.20%

0.20%

0.22%

0.27%

0.29%

0.35%

0.37%

0.59%

0.65%

1.15%

1.42%

1.66%

2.10%

2.32%

3.77%

Stradbroke

Mindarie Zircon

Namakwa

Jacinth ‐ Ambrosia

Fairbreeze

Perth Basin ‐ Iluka

Cyclone

Gingko

Donald

Snapper

Kwale

Akonolinga

Sierra Rutile

Akonolinga (Years 1‐6)

Cerro Blanco

Murray Basin ‐ Iluka

Engebø

Project

Producer

The highest rutile grade and lowest impurity contentEngebø titanium

project

High grade ore with low impurities brings processing benefits and premium pricing

5Source: Company websites, “Production of titanium dioxide” (2007) by Fahli and Martin‐Matarranza

Rutile grade for current TiO2 producers and planned projects

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Engebø is among the largest rutile deposits in the world

Source: Company websites

Engebø

Kwale

Donald

Ranobe

Sierra Rutile

Cerro Blanco

Murray Basin

Moma

Coburn

Grande Cote

-1,00%

-0,50%

0,00%

0,50%

1,00%

1,50%

2,00%

2,50%

3,00%

3,50%

4,00%

4,50%

0 50 100 150 200 250

Ru

tile

(%

)

Production (Ktpa)

Rutile projects grade and target production

Planning

Construction

Production

Size of bubble indicates resource size

Zimbabwe

Rutile producerIlmenite producerIlmenite & rutile producer

South Africa

Canada

Australia

China

Norway

US

India

Vietnam

Ukraine

Cylinder indicates % of world TiO2 feedstock production


European feedstock consumption is 30% of world total

7Source: TZMI

Sierra Leone

5%

5%

5%

5%

8%

8%

3%19%20%

22%Long sea freights underpin attractiveness of new European supply

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European pigment majors will be future customers

Significant supply deficit in Europe makes Norwegian rutile attractive

Large pigment plants for high grade feedstock

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

Regional, stable supply brings customer benefits

Company Plant location Country

Huntsman Tioxide

Greatham UK

Cristal Global Stallinborough UK

Kronos Gent / Leverkusen

Belgium / Germany

Tronox Rotterdam Netherlands

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Legacy contracts with fixed prices at low levels expiring

New contracts on 6 months basis

Long-term pricing to be in line with other commodities

Industrial demand from aircraft industry expected to give upward price pressure

High grade feedstock required for chloride processing

Engebø titanium projectNew price level for rutile; tight supply/demand balance

Long-term supply forecasts supports a new, higher price level

Rutile price (95% TiO2, FOB Australia)1 Titanium feedstock supply/demand2

Source: 1) Industrial Minerals, 2) TZMI

000’ TiO2 units

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Resource classJORC

Mill tonnes TiO2% @ 3% cut-off

Indicated 31.7 3.77

Inferred 122.6 3.75

Total 154.3 3.77


Well defined deposit and efficient mining scenario

Considerable JORC compliant resource with upside potential from additional drilling

JORC Resource* 3D block model of the Engebø ore body

Total JORC resource of 154 M tonnes @ 3.77% TiO2

Historical estimate of 383 M tonnes @ 3.96% TiO2

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 10-15 years, 35-40 years underground mining

Open pit strip ratio of 70 %

Rutile is main product, while Garnet and Aggregates are by-products

Note (*): Refer to the November 2008 scoping Study by Wheeler and Dowdell for resource statements

821

700

N

821700 N

821

800

N

821800 N

821

900

N

821900 N

822

000

N

822000 N

822

100

N

822100 N

822

200

N

822200 N

822

300

N

822300 N

822

400

N

822400 N

822

500

N

822500 N

822

600

N

822600 N

822

700

N

822700 N

822

800

N

822800 N

822

900

N

822900 N

823

000

N

823000 N

823

100

N

823100 N

823

200

N

823200 N

823

300

N

823300 N

823

400

N

823400 N

-500 Elev -500 Elev

-400 Elev -400 Elev

-300 Elev -300 Elev

-200 Elev -200 Elev

-100 Elev -100 Elev

0 Elev 0 Elev

100 Elev 100 Elev

200 Elev 200 Elev

300 Elev 300 Elev

400 Elev 400 Elev

500 Elev 500 Elev

Process plant

Ore

body

Shaft

Crusher

Open pit

Deep sea tailings disposal

Principle illustration

Engebø titanium projectFavourable project logistics and configuration

Efficient and area-tight concept, low transportation costs

11

12

Royalties & land acquisition 13

Infrastructure & civil 83

Mine 17

Crushing facility 22

Wet process package 107

Dry process package 55

Laboratory and others 4---------------------------------------------------

Total 300


Preliminary capital cost estimate

Ideal location and simple ore and product logistics reduce capex and overrun risk

Capex estimate (USDm) Outline of Engebø industrial plant

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

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

NPV @ 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)

Engebø titanium projectPreliminary project financial estimates *

Long project life-time - short payback time

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NPV sensitivity to key input factors

Main assumptions Key figures

USDm

Note (*): Assumptions and estimates are based on preliminary internal assessment. Product prices and OPEX are inflation adjusted with 2.5% p.a.

0

100

200

300

400

500

600

700

‐20% ‐10% Base case +10% +20%Rutile price Garnet prod. CapexOpex Rutile recovery

Cashflow projection

• ‘Concentration of particles in the upper water body are well below the critical limits for any harmful consequence for marine life.’

*NIVA report 5875-2009


Final stage of permitting agreed with the authorities

Authorities consider sea disposal a viable alternative for tailings from Engebø

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Supplementary investigation program clarified with the Ministry of the Environment

Additional documentation of water circulation in the fjord and assessment of risk regarding distribution of finer particles

Additional survey of possible spawning grounds and endangered species in the disposal area

Plan for disposal and assessment regarding drilling and blasting

Information regarding supply of fresh water supply and consequences for nature and the water environment

«I believe that Engebø will get a yes»Minister of Trade and Industry, Trond Giske

Stations for measurement of ocean currents

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