Jean-Raymond Boulle, Titanium Resources Group
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Transcript of Jean-Raymond Boulle, Titanium Resources Group
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Company Overview
Presentation by
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TRG
Produces three commodities rutile
ilmenite and bauxite
At its two mines in Sierra Leone
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Location
Sierra Leone
Africa
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Sierra Leone
Nitti Port
Sierra Rutile Mine
Freetown
Sierra Leone
SML Bauxite
Sherbro Island
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Sierra Rutile
Projected mine life of 19 years withmineable reserves of 3,825,000tonnes rutile
Current production capacity of100,000 tpa rutile
Production capacity expected tomore than double to 240,000tparutile by 2008
Production fully sold until 2008 Self contained mine site with
refurbished infrastructure
Excellent potential to expand reservebase through low risk near mineexploration
Current production capacity of18,000 tpa ilmenite
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SML Bauxite
10 year mine life with mineablereserves of 12.4 million tonnes
grading 53.1% alumina Current production of
approximately 1.2mtpa premiumgrade metallurgical bauxite
Long term off take agreementsin place with Alcoa and Glencore
Shares infrastructure withSierra Rutile
Operated under contractby PW Mining
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Overview
Listed on AIM in August 2005raising 41m ($74m)
Placing in October 2005 raising
10m ($17.5m) Experienced management team Market cap of $247m (127m) at 20
March 2007 Mines in full production Significant exploration upside for
bauxite and rutile
Stable political and economicenvironment 2,000 employees
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Summary financials, yr ended 31.12.06
Sales of $51.3m (05 $337,000) Gross profit of $21.5m (05
$239,000) Attributable loss before tax of
$1.47m (05 $17.5m) Profit after tax of $34m $9.7m net cash generated from
operations $39m in investment activities Cash and cash equivalents of
$52m
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Investment case
Demand for titanium mineralsand bauxite increasing
TRG produces premiumproduct
natural rutile grades 95.5% bauxite used as a sweetener
All production fully sold Rutile production will more
than double by 2008 giving TRG30% market share
Significant low risk near mineexploration upside exists
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The rutile market
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TiO 2
Rutile and ilmenite are titanium-bearing minerals
Used in production of titanium dioxide pigments titanium metal and welding rods
Titanium mineral industryrevenues of approx. $2bn perannum
2006 TiO 2 pigment consumptionapprox. 4.8m tonnes 2015forecast demand of 7.3m tonnes
2006 TiO 2 pigment revenueapprox. $10.5bn
Consumption of TiO 2 pigmenthas grown on average by 3% perannum over the past thirtyyears*
* TZMI estimate
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TRGs share of natural rutile market (2006)
Numbers are estimated and based on the companys own figures
Exxaro (inc TiWest) 13.8%
Volnogorsk 12.3%
Bemax 6.1% TRG 13.6%
Iluka (inc CRL) 31.9%
RBIT 16.5%
Others 5.1%
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TRGs share of natural rutile market (2008 expected)
Numbers are estimated and based on the companys own figures
Exxaro (inc TiWest) 9.9%
Volnogorsk 8.1%
BeMax 7.3%
TRG 29.8%
Iluka (inc CRL) 26.1%
RBIT 11.1%
Others 7.7%
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TRGs customers by market sector
Expressed as a percentage of TiO 2 units
TiO 2 pigments 87%
Ti metal 9%
Welding rods 4%
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Natural rutile vs other mineral sands
0
50
100
150
200
250
300
350
400
450
500
2004 2005 2006
Cl2 Ilmenite
Cl2 Slag
SR
Rutile
$ per tonne
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Strategy
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Strategy
Expand production at existingmines
rutile: dredges D2 & D3
bauxite: 300,000 tpa expansion Increase reserve and resource
base through exploration onexisting licences
Wallace Drilling on contract in house banka drills
Acquire additional mineralproperties
criteria Turners Peninsular
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Expansion programmes - rutile
Dredge D2 Commission in Q4 2007 3,000 tonnes of structural elements imported Will add 100,000 tpa to production capacity
Dredge D3 Dredge purchased Being readied for shipment to SL Will add 40,000 tpa to production capacity
Land plant upgrade Engineering phase underway Completed by Q4 2007
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Exploration
Targeting prospective areaswithin existing tenures
Additional bauxite deposits at Sierra Mineralsidentified
Sierra Rutile mine plan being amended as additionalrutile found
Turners Peninsular acquiredin 2006
40km from current operations Mineral potential identified by Geological Survey of
Sierra Leone Predominantly ilmenite and zircon Exploration underway
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Performance in 2006
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Operating performance
Sales of $51.3m 73,802 tonnes of rutile produced 13,819 tonnes of ilmenite produced 1,072,159 tonnes of bauxite
produced
First shipments from Nitti port rutile, May 2006 bauxite, February 2006
New HFO power station purchased
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2006 TiO 2 production volumes
0
5000
10000
15000
20000
25000
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Ilmenite
Standardrutile
Industrialrutile
tonnes
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2006 Bauxite production volumes
tonnes
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Bauxite
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HSEC
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Health and safety
Key determinant of operatingperformance
Long Term Injury Frequency Rateof 0.36 in 2006
HIV/AIDS awareness campaigndeveloped in partnership withNGOs
Developing voluntary testing,counselling and treatmentprogramme for HIV/AIDS
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Environment and communities
Facilitating the DarwinExperimental Project to developpractical methods for successfulreclamation and conservationprogrammes
Surface rent payments to localcommunities and agriculturaldevelopment fund
Local pop. has grown from 5,000people to 105,000 people
Not for profit Sierra Rutile
Foundation established bio fuel conversion plant
Sierra Minerals planting andrehabilitation programmes
underway
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Financial ResultsYear 2005 2006
P fi & l
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Profit & loss statement
2006($ 000)
2005($ 000)
Sales 51,304 337
Cost of sales (29,764) (98)Gross profit 21,540 239
Other income 2,812 1,721
Operating expense (58) (2,598)
Administrative and marketing expenses (16,011) (14,828)
Other expenses (5,866) (1,606)
Operating profit / (loss) 2,417 (17,072)
Exceptional item (2,200) -Finance costs (1,694) (489)
Loss before taxation (1,477) (17,561)
Income tax 35,923 3,984
Profit / (loss) for the period 34,446 (13,577)
B l h t
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Balance sheet($ 000) 2006 2005
Non-current assets
Property, plant andequipment 92,665 61,279
Intangible assets 13,115 12,985
Non-currentreceivables 753 1,367
Deferred tax assets 86,373 50,304
192,906 125,935
Current assets
Inventories 15,054 7,155
Trade and otherreceivables 14,275 8,777
Cash and cashequivalents 52,393 79,682
81,722 95,614
Total assets 274,628 221,549
($ 000) 2006 2005
Share capital 198,160 194,951
Revenue reserve (deficit) 20,869 (13,577)
Equity holders interest 219,029 181,374
Liabilities
Borrowings 36,856 28,390
Provision for liabilitiesand charges 2,150 2,150
39,006 30,540
Current liabilities
Trade and otherpayables 16,464 9,625
Current tax liabilities 85 10
Borrowings 44 -
Total equity andliabilities 274,628 221,549
Concl sion
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Conclusion
One of the worlds largest natural rutile deposits High quality rutile production sold under long term off take contracts
to world class chemical companies Established premium-grade metallurgical bauxite reserve base and
long term off take agreements Well-established infrastructure and support from the Government Experienced and highly successful management team Cost mitigation projects expected to make the Sierra Rutile mine one
of the lowest cost producers of natural rutile On track to double rutile production rates and extend bauxite reserves
within current financial year Possibility of significant expansion of production and proved reserves
on existing licence areas Several different growth initiatives currently under evaluation