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Lion Smelter Visit
10 November 2017
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Legal notice/disclaimer
This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by MerafeResources to be reliable but no warranty is given that such information is accurate or complete and it should not be relied upon as such. Views and opinions expressed in this presentation reflect the judgment of Merafe Resources as of the date of this presentation and are subject to change. Merafe Resources will not be responsible for any liability for loss or damage of any kind which arises, directly or indirectly, and is caused by the use of any of the information provided. The entire presentation is subject to copyright with all rights reserved. The information contained herein shall not be published, rewritten for broadcast or publication or redistributed in any medium without prior written consent from MerafeResources. Prospective investors should take appropriate investment advice and inform themselves as to applicable legal requirements, exchange control regulations and tax considerations in the countries of their citizenship, residence or domicile. The distribution of the information contained in this presentation in certain countries may be restricted by law and persons who access it are required to inform themselves and to comply with any such restrictions. This information does not constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. Past performance is not a guarantee of future performance. The price of shares can go down as well as up and may be affected by change in exchange rates, market conditions and risks associated with a mining venture.
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Key Agenda
• Overview
• Glencore Merafe Mines and Smelters
• Lion Smelter Overview
• Lion Smelter Construction
• HSEC
• Community Involvement
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 20174
Overview
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Lydenburg ❶
Lion ferrochrome (I & II) ❷
Wonderkop ❸
Boshoek❹
Rustenburg ❺
UG2 Plants – East ⓫
Magareng ❿
Helena ❾
Thorncliffe ❽
UG2 Plants – West ❼
Kroondal ❻
Geographical Positioning and Capacities
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Design Capacity: 396kt FeCr
Furnaces: 3 Premus and 1 semi-
closed conventional
Design Capacity: 553kt FeCr
Furnaces: 6 semi-closed
conventional with Bokamoso
Outokumpu pelletising
Design Capacity: 240kt FeCr
Furnaces : 2 Outokumpu closed
with pelletising
Design Capacity: 720kt FeCr
Furnaces: 4 Premus
Lion II commissioned H1 2014
Design Capacity: 430kt FeCr
Furnaces: 6 semi-closed
conventional with Tswelopele
Outokumpu pelletising
Smelters
❶❷
❸❹❺
❻
Processing Capacity: 1710kt
Production Capacity: 940kt
Mines
Processing Capacity: 3380kt
Production Capacity: 2020kt
Processing Capacity: 1410kt
Production Capacity: 850kt
Processing Capacity: 1300kt
Production Capacity: 760kt
Processing Capacity: 1340kt
Production Capacity: 730kt
Processing Capacity: 1900kt
Production Capacity: 130kt
❽
❾⓫
Ports
Maputo ●
Richards Bay ●
Durban ●
●
●
●
❼
❿
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Glencore Merafe Smelters• World-leading technology and processes:
• 22 furnaces spread across five smelting facilities in South Africa, with a capacity of
2.34 million tonnes per annum. Three technologies are employed; conventional,
Outokumpu and Premus.
• Premus technology is the most sophisticated ferrochrome production technology
currently in existence globally, and is used at the Lion and Lydenburg plants. The
process was designed to reduce electricity consumption in countries with
expensive electricity and reduce reliance on expensive reductants whilst still
maintaining focus on a premium product.
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Continuous improvement on MWh/t efficiency
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3.99
3.66
3.46
3.29
3.47
3.33.19 3.15
3.25
3.113.06
3.14
2.95 2.95 2.93
Conventional
Bokamoso
Tswelopele
2
2.5
3
3.5
4
4.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
MW
h/t
Lion 1
Lion 2
Conventional Open furnaces(4.1 MWh/t)
Premus (2.4 MWh/t)
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Continuous improvement on ore efficiency
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2.79
2.69
2.60
2.52 2.53
2.40
2.272.30 2.30
2.222.20
2.09
2.00 2.01 2.00
1.8
2
2.2
2.4
2.6
2.8
3
3.2
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
t/t
Conventional Open furnaces (3.1 t/t)
Bokamoso
Tswelopele
Lion 2
Lion 1
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Cr Mines and UG2 production
• Mined ore: total capacity of 3.6 million tpa
• Western Mines:
– Kroondal, Waterval
• Eastern Mines:
– Thorncliffe, Helena and Magareng
• UG2 ore: total capacity of 2.35 million tpa
– 8 Operations in West
– 1 Operation in East
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 201710
Lion Smelter
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Lion Smelter
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• Description
• 360ktpa ferrochrome production
per Phase
• Rationale
• Lowest cost (opex) & best return on
capex ferrochrome expansion
• Budgeted Capex
• R1,7 billion including the Helena
mine, Phase 1 - 2006
• R4.9 billion including Magareng
mine, Phase 2 - 2014
• Technology
• Glencore Proprietary Technology -
Premus
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Lion I & II addresses the key challenges facing
the SA Ferrochrome industry
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Challenge Solution
Escalating electricity costs Lowest specific electricity consumption
37% better than nearest rival
Increased fine ore 1 500 000 tonnes per annum pelletizing capacity
Skills shortages In-house training centre
Lagging logistics Close to Maputo Harbor
Rising mining costs ECM ore utilization
Close to Mototolo UG2
Reductant shortages Reduced reliance on coke consumption (20% vs
40%)
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Premus is the superior technology choice
Chrome operations have access to a suite of technologies:
• Conventional Process, Semi-closed and pellets
13 of the 22 furnaces in the PSV are conventional furnaces
Lowest capital cost per ton of alloy
• Outokumpu Process
Basis for the 2 Boshoek furnaces
Accounts for most recent expansions in FeCr in South Africa and worldwide
• DC Arc/ Plasma Process
Only 3 furnaces built in South Africa
High technological risk, expertise not generally available
Poor availability and very high specific energy consumption at these installations, but new developments have made the technology much more competitive.
• Premus (Lion)
Developed, optimised and modelled at Lydenburg plant
Implemented at Lion
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Complex process
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RAW MATERIALS
BENTONITE
ANTHRACITE
ORE
BATCHING
HOT GAS
DRYINGMILLING
SCREENING
MIXING
PELLETIZING
COAL
MILLING
SCREENING
GRANULATION
LUMPYSLAG
CRUSHING
CHAR, COKE, ANTHRACITE
FLUXES
LUMP
REDUCTANTS
BATCHING
GAS SCRUBBING
USABLE OFF GAS
PRE-HEATING
ROASTING
Complicated Hot loadingsystem
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 201715
Lion Phase 1 & 2
Construction
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Lion Phase I & II Construction
• Entire project managed by in-house project management team
- Wherever possible, fabrication, erection and civil work conducted in-house
• Team has an exemplary track record
- Managed all of Glencore Alloys’ major projects, including the Wonderkop
Smelter, Lion Phase 1 and Lion Phase 2
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January 2004
October 2004
November 2005
April 2006
July 2006
January 2007
December 2012
July 2013
January 2014
January 2014
February 2014
March 2014
May 2014
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 201730
Lion HSEC
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
HSEC Stats
January2017
February2017
March2017
April 2017 May 2017 June 2017 July 2017August2017
September2017
Oct-17 Nov-17 Dec-17
FFR 0.00 0.00 0.26 0.26 0.26 0.25 0.25 0.24 0.24 0.23
LTIFR 1.83 1.82 1.80 1.55 2.05 2.51 2.74 3.14 2.87 2.86
RWIFR 3.40 3.38 2.57 2.33 2.30 2.01 1.99 1.45 1.67 1.90
TRIFR 6.28 5.98 5.41 4.92 5.12 5.53 5.73 5.55 5.25 5.48
DISR 191.69 224.70 246.93 258.53 241.58 228.40 238.60 250.86 278.96 323.93
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Fre
qu
en
cy R
ate
s
YTD 2017
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Safety drive at Lion
• Commitment base safety - 2008
• SafeWork – 2014
• Safe Family campaign 2015
• Positive reinforcement safety drive 2018
– Focused on immediate
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Consequence Model
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• Experience is;
– Positive (P)
– Negative (N)
• Occurs after behaviour is;
– Immediate (I)
– Future (F)
• Certainty of consequence after
behaviour;
– Certain (C)
– Uncertain (U)
NIC
PIC
PIU
NIU
NFC
PFC
NFUPFU
Consequence: Relative Power of Consequence
MostPowerful
LeastPowerful
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 201734
Corporate Social
Investment
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 201735
Technical InformationCommunity: Sekhukhune and Neighbouring Communities Glencore Alloys Operation: Eastern Leg OperationsSpend: R 40 000 000Percentage complete: 100%
Project DescriptionArtisan Development – 295 QualifiedL2 Eng. Qualifications – 132 QualifiedL1 Generic Eng. Qualification – 242 QualifiedPortable Skills. Eng. Met. & Building – 664 QualifiedOperative Qualification – 259 QualifiedNational Tooling Institution Programme – 75 QualifiedMaths & Science, Cambridge Matric – 75 PassedNATED N1 & N2 – 120 Passed
BeneficiariesLocal communityLocal GovernmentBusiness:• Lion Smelter • Eastern Chrome Mines• Mototolo Platinum Mine• Lydenburg Smelter• Two Rivers• Dwars Rivier• Samancor• Modikwa• Small businesses, providing a service to local operations
Steelpoort Training Centre
Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Bursary statistics
38%
17%
28%
2%
15%
0%
5%
10%
15%
20%
25%
30%
35%
40%
African Males White Males African Females Coloured Females White Females
47 Glencore Merafe Bursary Holders in 2017
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Artisan Learnership Program
70%
5%8%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
African Males Coloured Males White Males African females
Total number of learners on Artisan Learnership Program is 201
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Rehlahleng School for
Disabled
Two Class roomsKitchenBoys and Girls BathroomsWaterFencing
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 2017
Katlegong
Primary
Two Class roomsKitchen, stove and fridgeBoys and Girls BathroomsOfficeWater and ElectricityFencing
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Merafe Resources Ltd | Investor Site Visit – Lion Smelter 10 November 201740
Questions