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Nordic Mining ASA | N-0250 Oslo | Norway | Tel +47 22 94 77 90 | Fax +47 22 94 77 01 | Org. no 989 796 739 | post@nordicmining.com
Exploration and production of high-end minerals and metals
Engebø project presentation 2013
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
6
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
Engebø titanium project
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
8
Engebø titanium project
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
9
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
10
Resource classJORC
Mill tonnes TiO2% @ 3% cut-off
Indicated 31.7 3.77
Inferred 122.6 3.75
Total 154.3 3.77
Engebø titanium project
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
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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
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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
Engebø titanium project
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
13
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
Engebø titanium project
Final stage of permitting agreed with the authorities
Authorities consider sea disposal a viable alternative for tailings from Engebø
14
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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