Santa Cruz Graphite Project
Transcript of Santa Cruz Graphite Project
July 2019 Corporate Presentation
Santa Cruz
Road To Production in 2022
“Fundamental Value in a Premier Battery Metals Jurisdiction”
Corporate Presentation: September 2021
Graphite Project
TSXV: STS | OTCQB: STSBF
Cautionary and Forward-Looking Statements
www.southstarbatterymetals.com 2TSXV: STS | OTCQB: STSBF
This presentation includes certain statements that constitute “forward-looking statements”, and“forward-looking information” within the meaning of applicable securities laws (“forward-looking statements” and “forward-looking information” are collectively referred to as “forward-looking statements”, unless otherwise stated). These statements appear in a number of placesin this presentation and include statements regarding our intent, or the beliefs or currentexpectations of our officers and directors. Such forward-looking statements involve known andunknown risks and uncertainties that may cause our actual results, performance orachievements to be materially different from any future results, performance or achievementsexpressed or implied by such forward-looking statements. When used in this presentation wordssuch as “believe”, “anticipate”, “estimate”, “project”, “intend”, “expect”, “may”, “will”, “plan”,“should”, “would”, “contemplate”, “possible”, “attempts”, “seeks” and similar expressions areintended to identify these forward-looking statements. Forward-looking statements may relateto the Company’s future outlook and anticipated events or results and may include statementsregarding the Company’s future financial position, business strategy, budgets, litigation,projected costs, financial results, taxes, plans and objectives. We have based these forward-looking statements largely on our current expectations and projections about future events andfinancial trends affecting the financial condition of our business. These forward-lookingstatements were derived utilizing numerous assumptions regarding expected growth, results ofoperations, performance and business prospects and opportunities that could cause our actualresults to differ materially from those in the forward looking statements. While the Companyconsiders these assumptions to be reasonable, based on information currently available, theymay prove to be incorrect. Accordingly, you are cautioned not to put undue reliance on theseforward-looking statements. Forward-looking statements should not be read as a guarantee offuture performance or results.
To the extent any forward-looking statements constitute future-oriented financial informationor financial outlooks, such statements are being provided to describe the current anticipatedpotential of the Company and readers are cautioned that these statements may not beappropriate for any other purpose, including investment decisions. Forward-looking statementsare based on information available at the time those statements are made and/ormanagement's good faith belief as of that time with respect to future events, and are subject toknown and unknown risks and uncertainties, including those risks and uncertainties outlinedunder “Risk Factors” in our most recent AIF, that could cause actual performance or results todiffer materially from those expressed in or suggested by the forward-looking statements. To
the extent any forward-looking statements constitute future-oriented financial information orfinancial outlook, such statements are being provided to describe the current anticipatedpotential of the Company and readers are cautioned that these statements may not beappropriate for any other purpose, including investment decisions. Forward-looking statementsspeak only as of the date those statements are made. Except as required by applicable law, weassume no obligation to update or to publicly announce the results of any change to anyforward-looking statement contained or incorporated by reference herein to reflect actualresults, future events or developments, changes in assumptions or changes in other factorsaffecting the forward- looking statements, except as required by law. If we update any one ormore forward-looking statements, no inference should be drawn that we will make additionalupdates with respect to those or other forward-looking statements. You should not place undueimportance on forward-looking statements and should not rely upon these statements as of anyother date. All forward-looking statements contained in this presentation are expressly qualifiedin their entirety by this cautionary statement.
Confidential Material - This document contains confidential and private material that shall notbe re-transmitted to other parties that not its original addressee. All information containedherein are for informative purposes and shall not be regarded as an offer, solicitation for anyfinancial transaction nor a valuation or commitment of financial / technical performance.
Cautionary Note: This PEA is considered by STS to meet the requirements of a PreliminaryEconomic Assessment as defined by Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101") Standards of Disclosure for Mineral Projects. The economic analysis containedin the technical report is based, in part, on Inferred Resources (as defined in NI 43-101) and ispreliminary in nature. Mineral Resources that are not Mineral Reserves do not havedemonstrated economic viability. There is no guarantee that all or any part of the MineralResource will be converted into a Mineral Reserve. Inferred Resources are considered toogeologically speculative to have mining and economic considerations applied to them and to becategorized as Mineral Reserves (as defined in NI 43-101). Additional trenching and/or drillingwill be required to convert Inferred Mineral Resources to Measured or Indicated MineralResources. Mineral Resources that are not Mineral Reserves do not have demonstratedeconomic viability. There is no certainty that the reserve's development, production andeconomic forecasts on which the PEA is based will be realized.
Key Company Highlights
• Management team with proven track record of taking projects into production & operations in Brazil
• Plant construction planned for H2 2021
• Current market capitalization only 2.5% of project NPV (pre-financing)
• Strong graphite demand in Brazil: high-tech battery market as well as steel-making, foundries, lubricants, electronics and automotive industries
• Graphite uses include: lithium-ion batteries, graphene, fire resistant insulation and coatings and construction materials
• Two-phased approach to minimize risks and intelligently allocate capital for shareholder value:✓ Phase 1 – 5,000tpy Concentrate Pilot Plant✓ Phase 2 – 25,000tpy Concentrate Plant
• Low CAPEX (<US$35M) in two Phases:• Phase 1 – Pilot Plant (US$8M)• Phase 2 – Large Plant (US$27M)
www.southstarbatterymetals.com 3TSXV: STS | OTCQB: STSBF
South Star Mining Highlights
Industrial graphite
US$500 to US$2,500 per tonne
Battery grade graphite
US$3,400 to US$4,400 per tonne
Santa Cruz project situated in second largest flake graphite producing district in the world
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Santa Cruz Graphite Project Advantages
Additional tests yielded high purity, battery
quality products
Drill-ready targets
NI 43-101 PFS & updated Resource Estimate completed
Open-pit deposit within
13,000 ha property
Large Geologic Upside
95% of project unexplored Entire land package mineralized according to Brazilian Mining Authority
Open at depth & along strike
LARGE &EXTRA-LARGE graphite flakes
10-15
Completed bench scale & 30 tonne pilot plant testing programs
Produced quality concentrates and
marketable flake sizes
95-99% Cg
Excellent large flake ore
Approximately
65% of ore > 80 Mesh
GEOLOGY, EXPLORATION & RESOURCES
METALLURGY & PROCESS
KEY PROJECT HIGHLIGHTS
“The larger the flake size, the higher the price!”
Low impurities & Highly crystalline structure
• 14% of global production in 2018
STS Share Information
www.southstarbatterymetals.com 5TSXV: STS | OTCQB: STSBF
Cap Table (000s)*
Stock Information as of August 30, 2021
“Graphite demand just for battery storage is expected to grow 494% by 2050 to a total demand of 4.6Mt. That doesn’t even consider growth coming from industrial or other high tech uses like graphene or
expandable. It is one of the principal critical metals that will require the most investment. ”
Total Outstanding 77,419
Warrants @ $0.06 5,600 (Exp 05/2024)
Warrants @ $0.15 25,015 (Exp 02/2024)
Options @ $0.15 90 (Exp 06/2024)
Options @ $0.30 900 (Exp 05/2022)
Options @ $0.45 600 (Exp 07/2023)
Options @ 0.055 2,660 (Exp 08/2025)
Options @ 0.25 120 (Exp 04/2023)
Fully Diluted 112,404
Market Cap @ CAD $0.16 $12,4 M
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Corporate Structure
• South Star Battery Metals Corp. is a public company traded on the Toronto Venture Stock Exchange under the symbol STS and on the OTCQB under symbol STSBF.
• Brasil Graphite Corp. is a wholly owned subsidiary incorporated in the Cayman Islands.
• Brasil Grafite Mineração Ltda. (“BGSA”) is a is a wholly owned exploration and development company focused on developing the Santa Cruz Graphite Project (“Project”) in the state of Bahia, Brazil.
• BGSA owns 100% of the Santa Cruz Graphite Project.
Brasil Grafite Corp.
South Star Battery Metals Corp.
(TSXV: STS)
Brasil Grafite Mineração Ltda
Santa Cruz Graphite Project
100%
100%
100%
Dave McMillanChairman
Priscila Costa Lima
Indep. Director
Richard PearceExec. Director
Eric AllisonExec. Director
Dan WiltonIndep. Director
Marc LeducIndep. Director
Richard PearcePresident & CEO
Eric AllisonBusiness Dev.
Samantha Shorter CFO
CHF Capital Markets
Investor Relations
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Leadership Team
BOARD OF DIRECTORS
MANAGEMENT
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Investment Highlights
Phase 1 Construction Ready
Simple
Operations
Fully Permitted & Licensed
Environmental & miningReady for Construction
Mining Friendly District
With 80 + years of graphite production
Simple, Proven Flowsheet
& TechnologyExperienced Management
Proven Mine & Plant Builders
No Tailings Dam
With small environmental footprint
Open Pit Mining & No Drill & Blast
With Low Strip Ratio
Excellent InfrastructureWith gas, electric and excellent logistics
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Investment Highlights
Phase 1 Derisked
Established utilities and
infrastructure
Proven tested process circuit
All licenses & permits are valid
& up-to-date
Low capital intensity
Low geological risk
LOW HIGH
MIDDLE
PROJECT RISK
Stepping into production
in phases
Projected increase
In demand
Supply imbalance
Supply chain diversification
Low environmental risk
Low OPEX
in proven producing district
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Santa Cruz Graphite Project
INFRASTRUCTURE COMPETITIVE ADVANTAGES
Phase 1 Construction Ready
Excellent Infrastructure
Experiencedworkforce
nearby
Power, gas, water all
within 5km
Major port of Ilheus is
270km away via paved federal
highwaysfrom paved
highway
1.3km
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ESG & Sustainability
ESG & Sustainable Production is part of our Corporate DNA
ENVIRONMENTAL + SOCIAL + GOVERNANCE
✓ Renewable sources provide 80% of
Brazilian energy generation
✓ Low cost, tax-incentive solar power
project being studied
✓ Sustainable tailings management
with filtered tailings/dry stack
✓ Effective water management & low
freshwater demand with process
water recirculated
✓ Waste characterized as inert/non-
dangerous
✓ Low strip ratio
✓ Low vegetation suppression for
project construction (<2ha)
✓ Committed to provide community
environmental education
✓ Progressive Reclamation
✓ First major industry in the region
✓ Committed to responsible, equitable
hiring practices in partnership w/
community/municipality
✓ Phase 1 - 60-65 Est. Direct Jobs
✓ Phase 1 – 350 Est. Indirect Jobs
✓ Phase 2 - 120-125 Est Direct Jobs
✓ Phase 2 – 700 Est. Indirect Jobs
✓ Committed to provide community
training & educational opportunities
✓ Focus on worker safety w/
compensation tied to performance
✓ Committed to transparency and open
communication
✓ Committed to
community/stakeholder engagement
✓ Committed to ethical, professional
interactions
✓ Review, evaluate and update
regularly governance policies
✓ 2 Independent Directors
✓ Executive management primarily
lives in Brazil and is on-site and
hands - on
✓ TSX and OTC listing
✓ Audited financials
✓ Compensation tied to ESG
performance
✓ Committed to joining key industry
organizations and ESG frameworks
✓ Committed to transparency and
open communications
www.southstarbatterymetals.com 12TSXV: STS | OTCQB: STSBF
Global Markets
Projected Large Increase in Graphite Demand
• Brazil has large internal demand for natural graphite (80-90kt/p.a.)• Graphite has many uses outside of battery metals
• High tech, graphene, military, etc…
• Natural graphite has advantages over synthetic:• Lower cost• Smaller environmental impacts• Easier to scale• Higher energy density
• Need 10-15 new mines by 2025 to meet 2x demand
Graphite Demand is in a Perfect StormFor Battery Metals Supply
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Global Markets
Source: 2020 World Bank - Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition 2DS Scenario
0%
1%
1%
4%
7%
9%
11%
18%
37%
56%
99%
189%
231%
460%
488%
494%
0% 100% 200% 300% 400% 500% 600%
Titanium
Iron
Chromium
Manganese
Copper
Aluminum
Moly
Lead
Neodymium
Silver
Nickel
Vanadium
Indium
Cobalt
Lithium
Graphite
2018 to 2050Growth % (t)
1.73
3
8
15
33
138
366
415
644
694
781
1,378
2,268
4,590
5,583
0 1,000 2,000 3,000 4,000 5,000 6,000
Indium
Titanium
Neodymium
Silver
Moly
Vanadium
Chromium
Lithium
Cobalt
Manganese
Lead
Copper
Nickel
Graphite
Aluminum
2050 Demand Kt
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Global Battery MarketBrazil - Premier Battery Metals Jurisdictions
• Brazil is largest graphite producer of high-quality graphite outside of China with 80+ years of continuous production and 3rd most important country in EV Battery Supply Chain.
Graphite Supply 2020 by Country
EV Supply Chain RankingBy Country
Representative Santa Cruz Graphite Project Concentrates
30# 4% 95%
50# 32% 95%
80# 27% 97%
140# 17% 97%
-140# 20% 97%
Mesh Size (#) Distribution %Cg
+50 mesh with 98% Cg and +99.9% Cg concentrates were also produced during testing.
63% of concentrates contained jumbo to large flakes (+30, +50 and +80 mesh).
Flake Percentage +80 Mesh
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Santa Cruz World-Class Flake Sizes
Recovery 88%
CategoryTonnage
(t)
C
(%)
In-situ Graphite
(t)
Measured 3,947,550 2.40 94,740
Indicated 10,955,570 2.25 246,500
Total M&I 14,903,100 2.29 341,240
Inferred 7,911,450 2.32 183,550
Santa Cruz Graphite 2019 Mineral Resources Update Summary*
The 2019 updated Resource Estimate shows strong geologic potential and continuity of high-quality graphite mineralization in friable, easily mined, weathered materials. New areas with at-surface mineralization were discovered, and the deposit is open both along strike and at depth.
* Cautionary Note: This updated resource estimate is considered by STS to meet the requirements of a resource and reserve estimate technical report as defined by Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101") Standards of Disclosure for Mineral Projects. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There is no guarantee that all or any part of the Mineral Resource will be converted into a Mineral Reserve. Inferred Resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as Mineral Reserves (as defined in NI 43-101). Additional trenching and/or drilling will be required to convert Inferred Mineral Resources to Measured or Indicated Mineral Resources.
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2019 Santa Cruz Update Resource Estimate*
Santa Cruz Graphite Mineral Reserves Summary*
The financial analysis in 2020 PFS shows very favourable and robust results that highlight the Santa Cruz Project’s advantages in the graphite sector.
* Cautionary Note: This PFS is considered by STS to meet the requirements of a Preliminary Feasibility Study as defined by Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101") Standards of Disclosure for Mineral Projects. The economic analysis contained in the technical report is based, in part, on Inferred Resources (as defined in NI 43-101) and is preliminary in nature. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There is no guarantee that all or any part of the Mineral Resource will be converted into a Mineral Reserve. Inferred Resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as Mineral Reserves (as defined in NI 43-101). Additional trenching and/or drilling will be required to convert Inferred Mineral Resources to Measured or Indicated Mineral Resources. There is no certainty that the reserve's development, production and economic forecasts on which the PEA is based will be realized.
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2020 Santa Cruz Preliminary Feasibility Study*
Post-tax NPV5% US$ 81,200,000
Post-tax all Equity IRR 35% p.a.
Post-Tax Free Cash Flow (LOM) US$129M
Payback Period 4 years
Key Financial Results
Mining Method Open Pit
Process/Metallurgy Milling & Flotation
Life of Mine 12 years
Annual Production (years 1-2): 5,000 t p.a.
Annual Production (year 4-11): 25,000 t p.a
Capital Costs – Phase 1 US$ 7,300,000
Capital Costs – Phase 2 US$ 27,200,000
Avg. Operating Costs(LOM): US$ 396 per tonne of conc.
Avg. Weighted Price: US$ 1287/t
Key Parameters
Mineral Reserve Estimate
Tonnage CgIn-situ
Graphite
(t) (%) (t)
Proven 3,989,635 2.49 99,340
Probable 8,318,795 2.35 195,490
Total P&P 12,308,500 2.40 295,400
Enterprise Value as % of NPV
• Currently Undervalued When Compared to Peer Group
STS Value Proposition
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Enterprise Value / T of Cg
Capital Intensity US$/T of Capacity
• Low CAPEX and First Quartile OPEX In a District with 80+ Years of ContinuousOperations
STS Value Proposition
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OPEX US$/T
VRC
SRG
LLG
GPH
LML
ZEN
FMS
NGC
TON
NOU
RNU
STS
BEMGPXNEXT
EGR
BKT
WWR
MNS
-
50
100
150
200
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300
350
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450
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%
CA
PEX
-U
S$M
IRR - ATAX
Net Present Value per Share
Outstanding: C$2.52Fully Diluted: C$2.13
CAPEX vs IRR (ATAX)
• Low CAPEX and High Return on Investments
STS Value Proposition
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STS Ph 1&2SJL
EGA LION
GEM
STS Ph 1
BSMLMR CVE HXG
BEM
NG
VRCRNU
WKTCY SRG
FMS
GRAT BATGPH
BKT
SVMWWR
MNS
EGR
TLG
NOU
NEXT
1
10
100
1000
0 1 2 3 4 5
Mar
ket
Cap
(Lo
g $
M X
chan
ge C
urr
ency
)
Study PhaseMarket Cap < C$20M C$20M < Market Cap < C$50M C$50M < Market Cap < C$100M Market Cap > C$100M
TR PEA PFS FS Licensed & Detailed Eng
Study Phase Vs. Market Cap
• Compelling Value Proposition with Construction Ready Project
STS Value Proposition
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Why South Star?
www.southstarbatterymetals.com 22TSXV: STS | OTCQB: STSBF
✓ Mining friendly
jurisdiction
✓ Great infrastructure
✓ Great logistics
✓ Prolific graphite
producing region
✓ Experienced workforce
✓ Large internal market for
graphite in Brazil
✓ PFS NI43-101 & updated
Resource
✓ Pilot plant testing
completed
✓ High proportion of large
flakes
✓ 1st Quartile OPEX
✓ Low CAPEX
✓ Robust economics
✓ Large geological upside
✓ Management &
Directors hold ~25%
✓ Experienced mine
builders, operators and
financiers
✓ Decades of experience
in Brazil
✓ ESG is in our DNA
✓ Expanding demand in
Brazil
✓ Growing Li-Ion battery
market
✓ New markets developing
✓ First production by
the end of 2022
Santa Cruz Project
Time
Brazil Location
Team
Near-term graphite producer with responsible and sustainable production, committed to tangible, long-term benefits for employees, communities, and stakeholders.
For more information, please contact:
Richard PearceCEO/President
CHF Capital Markets (Canada IR)Iryna Zheliasko, ManagerPhone: 416 868 1079 x 229Email: [email protected]
RBMG – RB Milestone Group LLC (IR US)Trevor Brucato, Managing DirectorEmail: [email protected]
Mr. Dave McMillan, Chairman Email: [email protected]
Email: [email protected]: www.southstarbatterymetals.com Twitter: @southstarbmFacebook: @southstarbatterymetalsLinkedIn: @southstarbatterymetals
Suite 1200 - 750 West Pender StreetVancouver, British ColumbiaCanada, V6C 2T8
R. Barão do Triunfo, 612 – Cj 2210Brooklin Paulista – São Paulo SPBrasil, 04602-002
TSXV: STS | OTCQB: STSBF
APPENDIX 1 - PHASE 1 PROJECT DETAILS (5,000 TPY PILOT PLANT)
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20 Year Mine Life with Terminal Value
Path to Production – Macro Schedule
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2021 Key Milestones
▪ Secure Offtake/Supply Agreement▪ Complete Debt/Equity Finance for
Phase 1▪ Begin Construction within 2-3
months of financing▪ 10-12 month construction schedule
• Environmental Permit Approved for 4 Years
PHASE 1 – LICENSING & PERMITTING
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• Mining License Approved for 3 Years by ANM on Dec 31, 2020• Phase 1 Operations are fully licensed• Permits and licenses can be renewed
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PHASE 1 – ROBUST FINANCIAL METRICS & POTENTIAL RETURNS
• 12-month Construction Schedule• Currently Trading at 4% of Phase 1 NPV or 2% of Phase 1+2 NPV• Target Valuation in 24-36 Months
• C$50M = US$36M• Conservative Approach to Valuation
• Comparables (6-8x EBITDA)• 75% Phase 1 NPV or 44% of Phase 1 + 2 NPV
NPV5% US$ 30,9M
NPV5% + Terminal Value US$ 51,8M
IRR 32% p.a.
Cash Flow (LOM) US$62M
Payback Period (From Construction Kickoff) 3.4 years
Mining Method Open Pit
Process/Metallurgy Milling & Flotation
Life of Mine (LOM) 20 years
Annual Production (years 1): 3,000 t p.a.
Annual Production (years 2): 5,000 t p.a.
Annual Production (year 3-20): 6,000 t p.a
Capital Costs – Phase 1 US$ 7,300,000
Avg. Operating Costs(LOM): US$ 546 per tonne of conc.
Avg. Weighted Price: US$ 1287/t Source: Benchmark Mineral Intelligence
• Graphite amounts to over 95% of anode material for commercial battery technologies
• No substitutes on the horizon
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