tellus’s chandler salt mine project

Commercial in Confidence

Chandler Salt Mine Project

6th Mining the Territory Conference - Darwin Convention Centre

19th September 2012


Important Notice

Disclaimer This conference presentation (Presentation) has been prepared by Tellus Holdings (ABN 97 138 119 829) (Tellus). The Presentation and information contained in it is being provided to conference delegates for information purposes only.

Summary information This Presentation contains summary information about Tellus and its subsidiaries and their activities current as at the date of this Presentation. The information in this Presentation is of general background and does not purport to be complete. Delegates are advised that by their nature as visual aids, presentations provide information in a summary form. The key information on detailed Exploration Target statements and feasibility results can be found in Tellus ’s media releases. Exploration Targets statements are appended to comply with ASX guidelines but investors are urged to read supporting information in full on the website.

Not financial product advice This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Tellus shares and has been prepared without taking into account the objectives, financial situation or needs of individuals.

Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Future performance This Presentation contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could ”, “may”, “plan”, “will”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements, opinions and estimates are not guarantees of future performance.

Not an offer This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment.

Competent Person Statement The information in this presentation that relates to exploration results is based on information reviewed by Dr.Simon D. Beams, a full time employee of Terra Search Pty Ltd, geological consultants employed by Tellus Holdings Limited. Dr. Beams has BSc Honours and PhD degrees in geology; he is a Member of the Australasian Institute of Mining and Metallurgy (Member #107121) and a Member of the Australian Institute of Geoscientists (Member # 2689). Dr Beams has sufficient relevant experience in respect of the style of mineralisation, the type of deposit under consideration and the activity being undertaken to qualify as a Competent Person within the definition of the 2004 Edition of the AusIMM’s “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

Exploration Target Note All statements as to exploration targets of Tellus salt and statements as to potential quality and grade are conceptual in nature. There has been insufficient exploration undertaken to date to define a salt resource and identification of a resource will be totally dependent on the outcome of further exploration. Any statement contained in this document as to exploration results or exploration targets has been made consistent with the requirements of the Australasian code for reporting of exploration results, mineral resources and ore reserves (“JORC Code”).


Contents

A. Strategy and People

B. Salt Market

C. Salt Mining in the NT

D. Lessons Learnt to date


A. Tellus Strategy

Tried, tested and profitable business model overseas Tellus first to market with this model in Australia

Salt / minerals

Tellus Group

Complementary business

Industrial & edible salt Minerals -fertiliserUnderground

warehouse storageHybrid diesel/solar salt

battery

Mine tourismApprentice trainingSpin off salt business


Ex BD Director Penrice Soda, roles

ICI Australia, Merck, Ajax Chemicals

Mine development engineer BHP, Rio, Xstrata, Anglo Coal

Ex BD Coffey Environmental

Ex GM Dampier Salt, Ex CEO of Albany Port (WA)

Chairman Realm Resources & Sylvania, ex Macquarie, JP Morgan

A. Tellus People

Richard RossiterGroup Chairman

Mark ShepherdTellus RockVault NED

John CookTellus RockVault Chair

Ron SiftonTellus RockVault NED

Duncan van der MerweGroup MD

Brett BoyntonGroup FD

Noel DavisMD ClayVault WA

Robert CharterBusiness Development

Michael CarterTellus Salt Sales

Bob EmeryTellus Salt Chair

Joe LuxfordTellus Mining

Fergus HerbertTellus Holdings NED

Mining (GencorCSM Energy), waste & infrastructure (BOS)

Ex UBS, FBR Capital & Credit Suisse, Signature Gold

Director, Driftwood Capital,

Ex NSW Chief Mining Engineer, Ex MD Waste Service NSW

Ex MD Coffey WA, managed Australia’s only Class V waste facility.

Ex FD Newalta, Canada’s largest salt cavern waste storage operator

Ex WA Environmental Regulator, Managed only Class V waste facility

Experienced international mining, storage and logistics team supported by ex -government regulators


A. Tellus Assets - NT

State Leases Area Status Own.

NT 9 EL’s 1,432km2 Granted 100%

High grade asset - thick, shallow, flatHot dry climateClose to infrastructure & markets

Tellus has consolidated the best available underground salt targets in Australia


B. Salt Market – Domestic and Export

South. Solar ponds transport costs high for Asian markets

Eastern Solar ponds prone to flooding

Western Solar ponds prone to flooding 95%

1%

Cyclones (25 years)

4%

Global salt trade routes


B. Salt Market- Tellus Salt / Mineral Products

Product mix strategy –Targeting higher value salts and minerals

Water treatment salts

Edible -livestock salts

Minerals (Mg) – fertilizer, industrial uses

Soda ash salts – glass

Edible – food & food processing salts

Chloralkali salts -soaps


C. Salt Mining in NT – Rediscovering the Chandler Salt

Source: McGraw Hill

Source: xx

Image: Victoria Museum, Source: Colorado Plateau GeosystemsSource: Colorado Plateau Geosystems

Cambrian -580myo lifeless land teeming ocean Salt trap for oil and gasGillen 700myo-Chandler 500myo-Late Cambrian

Mt Charlotte 1 Well – 95% haliteMt Charlotte 1 and Magee 1 (6.6km)145km seismic, 6.6km core

Source: Ambrose and Young (2007)


C. Salt Mining in NT– PFS Study Results

Asset Description

Historical exploration Gen. area - 29 km of drilling, 14 wells -$17.5 MStudy area - 145km seismic (15 lines),6.6 km drilling $6.5 M

JORC - exploration target(1)

Charlotte North site (ELA29018)200-500 Mt2% of lease area

Mt Charlotte site (EL27972) 4,000-4,500 Mt 40% of lease area

Geology (Charlotte North site ) First class salt depositFlat, 375 m thick salt bed, 450 m deep

Grade (export quality) High quality salt - 80-95% in situ halitePost processing 97%+ halite (NaCl)

Next step - JORC Resource Drilling and seismic (mine planning)

Fatal flaw analysis No fatal flaws identified

(1) Refer to Exploration Target and Competent Person Note (p.1 –Important Notice)

PFS confirmed the technical and economic feasibility of the project


C. NT Chandler Project – PFS Study Results

Mining Profile

Mining method Underground, room and pillar design, cut and blast mining

Room dimensions 140mL x 10mW x 6mH plus 10mW pillars

Processing Dry and wet

Implementation –contracting strategy

Owner operated - core businessAlliance & contractor - non-core business

Implementation –human resources

Construction jobs - 267 contractors)Operational jobs - 66 FT employees / con.Indirect jobs - 264 jobsSpin off business - ?

Mine layout

Underground room & pillar 750m deep,

Production Profile

First salt sales 2015 – target 1M tpa

Ramp up 3 years (salt)

Potential project life 25 years initially, (then many generations)

Market - salt 80% export (Asia), 20% domestic


C. NT Chandler Project - Design

Chandler Project - underground salt mine, proven room & pillar design and simple cut & blast mining techniques

Stage 2Stage 1

Stage 2Stage 1

Stage 2Stage 1


Blasting after shift end Auger drilling

Muck pile load and dump

Roof scaling

Roof bolting

Cleaning

Drilling

Loading with explosives

0

2

3

4

5

6

7

1

C. NT Chandler Project – Cut and Blast


Darwin East Arm Logistics Precinct

4

3

12

Infrastructure to service Asian salt markets & Australian storage markets

Chandler Salt & Mineral Processing Plant

Alice – Speciality Salt Processing Plant

Chandler Salt Mine

1

3

Chandler rail siding (25km)

1

2

C. NT Chandler Project – Supply Chain

4


D. Lessons Learnt to Date

Integrated technical and commercial team – best team with track record

Understand your market - get the best sales team that understands product supply and demand and that has a good track record closing deals

Understand your asset – constantly challenge all assumptions - the best geologist is the drill bit

Front end load feasibility studies - to identify as quickly as possible the potential project fatal flaws, technical and commercial feasibility

Sensitivity analysis – conservative but realistic – life cycle economics - take care of the worst case because upper case takes care of itself

Financing options - Understand costs and benefits of different financing tools during whole project/ funding lifecycle

Community stakeholder engagement - Early engagement benefits the project and starts to build “social licence”.


Contact

Duncan van der Merwe (CEO)[email protected]

+61 02 9241 7678

tellus’s chandler salt mine project

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