The right moves:
strategy for value-add
Petrus Cilliers, Managing Director
African Mining Investor Dinner
Cape Town
Wednesday, 6 February 2013
Disclaimer
Opinions expressed herein are, by nature, subjective to known and unknown risks and uncertainties. Changing
information or circumstances may cause the actual results, plans and objectives of Chrometco Limited (the
“Company”) to differ materially from those expressed or implied in the forward-looking statements. Financial
forecasts and data given herein are estimates based on the reports prepared by experts who, in turn, relied on
management estimates. Undue reliance should not be placed on such opinions, forecasts or data. No representation
is made as to the completeness or correctness of the opinions, forecasts or data contained herein. Neither the
Company, nor any of its affiliates, advisors or representatives accepts any responsibility for any loss arising from the
use of any opinion expressed or forecast or data herein. Forward-looking statements apply only as of the date on
which they are made and the Company does not undertake any obligation to publicly update or revise any of its
opinions or forward-looking statements whether to reflect new data or future events or circumstances.
6 February 2013 African Mining Investor Dinner | 2
Company profile
• Minerals exploration and mining company
• have chrome, acquiring PGMs
• Focus on delivering value to shareholders
• Unique in SA as an exploration company
• JSE AltX listed
• strategy to combine chrome and PGMs
• Experienced management
• Primary asset – Rooderand Mine
• resource statement of 60Mt chrome ore
• existing chrome stockpile of ±70 000t
6 February 2013 African Mining Investor Dinner | 3
Chromex Canada
Korpo Trust
(Pty) Ltd
Chrometco Mining
Services (Pty) Ltd
Structure
6 February 2013 African Mining Investor Dinner | 4
4
19% 76%
14%
PILANESBERG MINING COMPANY
(PTY) LTD
New Order Mining Rights
100%
ROODERAND CHROME
(PTY) LTD
Section 11 transfer
5%
Moepi Mining SPV
(Pty) Ltd
Board and management
Jonathan Scott (58)
Independent non-executive chairman
BSc (Hons), MBA
Many years of experience in mining, mining finance, banking and corporate finance, and
has served on the Boards of a number of JSE-listed companies over the years.
Petrus Cilliers (47)
Managing director
PrEng, BEng (ChemEng), MBA
Chemical engineer with more than 20 years’ experience in the mining and metallurgical industry as a
consultant and in managerial capacity.
Christopher Seabrooke (59)
Independent non-executive director
BCom, BAcc, MBA, FCMA
Joined the Board in February 2012. Christopher has been a director of over 20 JSE-listed companies over the
years. He is currently CEO of Sabvest and a non-executive director
of Brait, Datatec, Massmart, Metrofile and Net1.
Edward Bramley (44)
Non-executive director
Experienced mining and exploration professional with international experience in business exploration and
management. Edward is a co-founder of the Chrometco group of companies
and has had a long-standing association with the Chrometco group.
Richard Rossiter (56)
Independent non-executive director
Richard is an experienced mining professional and geologist, currently based in Australia as the executive
chairman of Realm Resources (ASX Listed). Richard was the former chairman of Sylvania Platinum (LSE
Listed).
Ivan Collair (58)
Independent non-executive director
BCom (Hons), BSc
Joined the Board in February 2012. Ivan has over 30 years of business experience and is currently the
Government Relations Manager for Shell South Africa.
Trevor Scott (34)
Financial director
BCom (Hons), BAcc, CA(SA)
Specialist in providing IFRS, tax, corporate governance, and other services to local and offshore listed
companies. He has many years of experience in the disciplines of corporate finance and management.
6 February 2013 African Mining Investor Dinner | 5
Snapshot (as at 29 February 2012)
• Total assets: R223 million
• Revenue: R618 561
• Gross profit: R304 259
• Cash: R31 million
• HLPS: (9.01 cents)
• Market capitalisation: R48 million
• Shares in issue: 185 million
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20-month timeline
6 February 2013 African Mining Investor Dinner | 7
June 2011
Presented DCM
deal to shareholders
Shareholders reject deal
December 2011
DCM mining and
management ends
December 2011
CMO takes operational
control of Rooderand
December 2011
CMO sells chrome ore
for own account
February 2012
Resource revalued
June 2012
Nkwe discussions start
August 2012
Nkwe deal agreed
and signed
November 2012
Shareholders meeting
for Nkwe deal
December 2011
NOMR awarded
Jun
2011
Jul
2011
Aug
2011
Sep
2011
Oct
2011
Nov
2011
Dec
2011
Jan
2012
Feb
2012
Mar
2012
Apr
2012
May
2012
Jun
2012
Jul
2012
Aug
2012
Sep
2012
Oct
2012
Nov
2012
Dec
2012
Jan
2013
Feb
2013
Rooderand Mine
• Location: Western Limb of Bushveld
Igneous Complex, North West
Province
• Mining neighbours include:
• Platmin’s Pilanesberg Mine
• Xstrata’s Horizon Mine
• Anglo Platinum’s Tumela Mine
• Average market value of ± R186 million
at current resource statement
• upper value of R257 million
• New order mining rights in place
6 February 2013 African Mining Investor Dinner | 8
S N
Pilanesberg
12° dip
Middle group: MG1, 2, 3, 4
Upper group: UG1, 2
Lower group: LG7, 6, 6A
Merensky: very close to UG2
Rooderand Mine
• Acquired by Chrometco in early 2004
• Provisional sale of shares agreement with DCM Chrome for R62 million in 2007
• DCM Chrome manages and mines Rooderand Mine from 2007 to 2011
• Implementation of conditional disposal agreement not approved by shareholders
in July 2011 at a special general meeting
• Mining and management agreement expired in December 2011
• DCM Chrome paid
• R13 million deposit
• R13 million per year as part of a mining management contract
• DCM Chrome defaults on the final 2011 payment of R10 million
• Chrometco re-acquires Rooderand Mine for accounting purposes
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Rooderand Mine: location map
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Rooderand Remainder
(Nkwe)
Portion 1
Portion 3
Portion 2
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Markets: South African domestic
chrome ore prices
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-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
500.00
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
CIF PRICE $
1.1 1.2
5.54.7 5.0
7.58.3
8.1
6.4
9.88.69.5
13.6
11.1
14.8
-
5
10
15
20
2000 2005 2008 2009 2010
SA
ch
rom
e o
re p
rod
uc
tio
n (
Mt
ma
teri
al)
Exported Domestic consumption
Chrome market
South Africa is the largest chrome ore producer and exporter globally…
6 February 2013 African Mining Investor Dinner | 13
South Africa accounts for ~50% of global chrome ore
production in 2010, growing in line with global average
8.6 9.5
13.611.1
14.8
8.0
12.1
15.0
11.5
15.0
16.7
21.6
28.6
22.6
29.8
-
5
10
15
20
25
30
35
2000 2005 2008 2009 2010
Glo
ba
l c
hro
me
ore
pro
du
cti
on
(M
t m
ate
ria
l)
South Africa Rest of world
Source: Heinz Pariser
South Africa exported ~5Mt chrome ore in 2010,
~34% of its production compared to ~12% in 2000
1.1 1.2
5.54.7 5.0
7.58.3
8.1
6.4
9.88.69.5
13.6
11.1
14.8
-
5
10
15
20
2000 2005 2008 2009 2010
SA
ch
rom
e o
re p
rod
uc
tio
n (
Mt
ma
teri
al)
Exported Domestic consumption
Markets: UG2 exports
6 February 2013 African Mining Investor Dinner | 14
Source: Heinz Pariser
Markets: Chinese chrome ore imports
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Source: Heinz Pariser
Nkwe acquisition – update
• Shareholders approved the transaction on 2 Nov 2012
• Phase one of the acquisition complete
• Consideration
• 20 million Chrometco shares issued
• Acquired historical drill core and geological data
• Incorporated new data into the resource model
• Benefits :
• increased geological definition of the
existing chrome resource
• Increased valuation
• Ability to mine better
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Reserves and resources (Feb 2012)
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Existing Rooderand indicated mineral resources (Cr2O3)
Source Unit 2013 Tonnes Grade Cr2O3 (%) 2013 Cr2O3 content
(tonnes)
Indicated
LG5, LG6,
LG7, MG2,
MG3, MG4
41 950 096 8 671 629 39.00 15 090 833 3 371 342
Inferred
LG5, LG6,
LG7, MG2,
MG3, MG4
25 650 242 nil 39.00 9 222 751 nil
Exploration
target
LG6, LG7,
MG2, MG3,
MG4, MG4A
18 957 226 51 131 623 Estimated 8 616 920 23 270 000
Total 86 557 564 59 803 252 39.00 32 930 504 26 241 342
4 PGE mineral resources (as declared by Nkwe Platinum Limited in 2011)
Source Unit Tonnes (mil) * 4E grade (g/t) 4E content (Moz)
Indicated UG2 and MR 11.90 3.80 1.50
Inferred UG2 and MR 24.80 3.80 3.00
Total 36.70 3.80 4.50
*Geological losses of 30% applied
Value-add: the Nkwe acquisition
Chrome resource statement pre- and post- new data from Nkwe, DCM data
and limited geological work
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8.6 8.6
41.95
51
38
19.98 13
25.65
0
10
20
30
40
50
60
70
80
90
100
Current Cr resource (Mt) Forecast data Crresource (Mt)
Current data Crresource (Mt)
Indicated (Cr) Exploration target (Cr) Inferred (Cr)
Value-add: the Nkwe acquisition
Resource valuation pre- and post- new data from Nkwe, DCM and limited geological work
6 February 2013 African Mining Investor Dinner | 19
174 174
849
70
138
12
9
5
117
117
0
200
400
600
800
1 000
1 200
Existing valuation:R186m
Oldest value with Nkwedata: R370m
Newest value with alldata: R1 109m
Indicated (Cr) Inferred (Cr) Exploration target (Cr) PGM
Rooderand Map - future open cast pits
Board presentation | 20
Ptn 3
Ptn 7
Ptn 5
Ptn 6
Ptn 2
Ptn 1
Ptn 4
ROODERAND 46 JQ
N
PGM pits
chrome
pit
chrome
pits
Also see Google map
Strategy
• Enhance resource portfolio
• acquisitions of complimentary assets (like Nkwe)
• may look at other commodities
• Exploration
• cost-effective to acquire drill data from others
(like Nkwe)
• infill drilling as required
• Mining/trading opportunities
• looking for cash generators
• stockpiles at Rooderand as prime target
• JV, tolling options possible
• align with the market
• Disposal
• for the right price
6 February 2013 African Mining Investor Dinner | 21
Value-add: the Nkwe acquisition
• Rest of transaction in progress – mineral rights
• Benefits include:
• increased resource through the addition
of PGM and other minerals
• increased resource valuation
• operational and mining benefits:
• minerals to be mined simultaneously
• increased cost efficiency
• Consideration
• 70 million Chrometco shares to be issued
6 February 2013 African Mining Investor Dinner | 22
Looking ahead
• New acquisition – Phase 2
• Section 102 to be completed
• PGM resource to be incorporated
• infill drilling as required
• Watching brief:
• market conditions-dependent
• look out for cash-generating projects
• evaluate niche products from
Rooderand stockpiles
• secure offtake agreement for
Rooderand production
• adjust Rooderand production accordingly
• look for potential buyers, JV partners
• look for distressed assets
6 February 2013 African Mining Investor Dinner | 23
Investment case
• Excellent core asset (Rooderand Mine)
• in prime chrome/PGM neighbourhood
• various value-add options
• buy, sell, merge, JV
• various cash-generation options
• 70kt stockpile
• Value-add acquisition (Nkwe)
• Well placed to weather/take advantage of current
market conditions
• comfortable cash position
• low costs
• no debt
• ‘first-mover’ advantage for distressed assets
• Experienced, multi-disciplinary team
• Low cost of entry for investors
6 February 2013 African Mining Investor Dinner | 24
Contact details
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Contact details
Tel: +27 (11) 258 8660
Fax: +27 (86) 562 2889
Email: [email protected]
Registered office
Building 2
Country Club Estate
Woodlands Drive
Woodmead
Shareholder data
(Incorporated in the Republic of South Africa)
Registration number: 2002/026265/06
JSE share code: CMO
ISIN: AE000070249