Specialty fertilizers & plant nutrition for a changing world

Transcription

1 Specialty fertilizers & plant nutrition for a changing world Corporate Presentation TSXV: CPM Q2 2016

2 Forward-Looking Information This presentation is for informational purposes & does not constitute an offer or a solicitation of an offer to purchase securities. This presentation contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements related to activities, events or developments that Crystal Peak Minerals Inc. ( CPM or the Company ) expects or anticipates will or may occur in the future, including, without limitation; statements related to the economic analysis of the Project; the Feasibility Study; mineral resource estimate; the permitting process; environmental assessments; business strategy; objectives & goals; & exploration of the Sevier Playa Project. Forward-looking information is often identified by the use of words such as "plans", "planning", "planned", "expects" or "looking forward", "does not expect", "continues", "scheduled", "estimates", "forecasts", "intends", "potential", "anticipates", "does not anticipate", or "belief", or describes a "goal", or variation of such words & phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is based on a number of factors & assumptions made by management & considered reasonable at the time such information is provided. Forward-looking information involves known & unknown risks, uncertainties & other factors that may cause the actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking information. The Company s Preliminary Feasibility Study (the PFS ) is, by definition, preliminary in nature & should be considered speculative. It is based upon a process flow sheet that may change, which would impact all costs & estimates. Operating Costs for the Project were based upon assumptions including future energy costs, natural gas costs, water costs, labor, & other variables that are likely to change. Capital Costs were based upon a list of equipment thought to be necessary for production. SOP price forecasts were based upon third-party estimates & management assumptions that may change due to market dynamics. The mineral resource estimates were based upon assumptions outlined in the Resource Estimate section. Some figures were calculated using a factor to convert short tons to metric tonnes. Changes in estimated costs to acquire, construct, install, or operate the equipment, or changes in projected pricing, may adversely impact project economics. Among other factors, the Company s inability to complete further mineral resource & mineral reserve estimates; the inability to complete a Feasibility Study; the inability to obtain sufficient recharge; the inability to anticipate changes in brine volume or grade due to recharge or other factors; changes to the economic analysis; the failure to obtain necessary permits to explore & develop the Sevier Playa Project; environmental issues or delays; inability to successfully complete additional drilling at the Sevier Playa Project; factors disclosed in the Company's current Management's Discussion & Analysis; as well as information contained in other public disclosure documents available on SEDAR at may adversely impact the Project. The information presented herein was approved by management of the Company on September 1, Although CPM has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in the forward-looking information, there may be other factors that cause actions, events, or results not to be as anticipated, estimated, or intended. There can be no assurance that forward-looking information will prove to be accurate. The forward-looking information contained herein is presented for the purposes of assisting investors in understanding the Company's plans, objectives, & goals & may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. CPM does not undertake to update any forward-looking information, except in accordance with applicable securities laws. This Investor Presentation should be read in conjunction with the Company s technical report titled NI Technical Report Preliminary Feasibility Study of the Sevier Lake Playa sulfate of Potash Project, Millard County, Utah, filed on November 18, 2013 with an effective date of October 25, 2013 ( PFS ), available at the Company s website and on its SEDAR profile at Qualified Persons for that report include: Michael Blois, MBL Pr. Eng., is the Qualified Person in accordance with Canadian National Instrument Standards of Disclosure for Mineral Projects ( NI ) who has reviewed, &is responsible for, the mineral processing &metallurgical testing, recovery methods, infrastructure, capital cost, &operating cost estimates described in this MD&A &has approved it. Mr. Blois is an independent consultant contracted by the Company. Lawrence D. Henchel, P. Geo., Vice President Geological Services with Norwest Corporation, is the Qualified Person in accordance with NI who has reviewed the resource estimate in this MD&A &has approved it. Mr. Henchel is an independent consultant contracted by the Company. Michael Hardy, P. Eng., President with Agapito Associates, Inc., is the Qualified Person in accordance with NI who has reviewed the mining methods described in this MD&A &has approved it. Mr. Hardy is an independent consultant contracted by the Company. Scott Effner, P.G., Principal Geochemist/Hydrogeologist with Whetstone Associates, is the Qualified Person in accordance with NI who has reviewed the hydrogeological modeling content in this MD&A &has approved it. Mr. Effner is an independent consultant contracted by the Company. David Waite, P.E., Senior Engineer with CH2M HILL is the Qualified Person in accordance with NI who has reviewed the environmental &permitting content of this MD&A &has approved it. Mr. Waite is an independent consultant contracted by the Company. 2

3 CPM Highlights Premium Specialty Fertilizer Potassium sulfate (SOP) premium priced specialty fertilizer with growing demand & strong pricing Project located in the US, adjacent to the highest price point in the SOP market Accessible rail infrastructure with direct routes to market CPM s brine production & sustainable solar evaporation SOP processing facilitate the lowest quartile CapEx and OpEx CPM intends to be one of the highest margin SOP operations globally Advanced stage project Bankable Feasibility Study (BFS) due in July 2017 C$85 million equity financing commitment from EMR Capital Resources (EMR) 3

4 SOP Premium Fertilizer for Today s World What is SOP? Potassium sulfate (K 2 SO 4 or SOP ) Used in fertilizers, providing both potassium & sulphur SOP does not contain chloride like potassium chloride ( KCl ) produced as muriate of potash ( MOP ), most widely used potassium based fertilizer Types of SOP Production Brine Processing: turns natural potassium-rich brines into SOP, using low-cost solar evaporation. Lowest costs in industry KCl + Sulphate Salts: Converts potassium bearing minerals to SOP with the addition of sulfate salts Mannheim Process: Converts MOP to SOP using a sulphuric acid & high temperature energy intensive process. Highest costs in industry Why Use SOP? Increased crop yields: Stimulates growth Improved disease & drought resistance with thicker outer cell walls Improves color, flavor & storing quality of fruit & vegetables SOP must be used for sensitive high value crops, including nuts, fruits & vegetables as chloride from MOP can be harmful Saline and arid soils require additional sulfate nutrients Less sensitive crops may still require SOP for optimal growth if soil accumulates chloride from irrigation water Subsurface irrigation SOP is soluble & can be delivered directly to plants with subsurface water delivery 4

5 SOP Increasing Pricing & Support Levels Price Growth Increasing populations + declining arable land + changing diets = need for higher crop yields Growing more sensitive crops as consumption patterns change Research driving increased SOP consumption for new markets such as potatoes Global warming & drought in major growing regions require the use of more SOP Price Support Brine processing: Key producers: Compass Minerals & SQM KCl + sulfate salts: Key producers: K+S, Rusal Mannheim process: Key producers: Tessenderlo Group, Chinese Compass Minerals SOP Sales Price 1 $900 $800 $700 $600 $500 Industry Cost Curve Operating cost (USD/t) Compass Minerals SOP Sales Price ($/mt) Q1 2016Q Brine Production Reacted Salts Production Mannheim Production Annual production CPM PFS OPEX $181/t 5 1 Source: Compass Minerals company reports

6 SOP Market Size Potassium Fertilizer Market Global potassium fertilizer market: 64 million tonnes per annum Global SOP market: 6 million tonnes per annum SOP CAGR: 4-6% through 2020 Additional expected growth as certain MOP usage areas transfer to SOP US Market MOP 55mtpa SOPM 1.4mtpa NOP 1.4mtpa SOP 6mtpa Current U.S. Market: 550,000 to 600,000 tonnes per annum California: 1/3 of the U.S. Market (approx.) - Production of high value sensitive crops, such as almonds, and - Continuing water shortages Growth: Potential up to approx. 970,000 tonnes per annum over the next 5 years Sevier Lake Project Primary Demand Mid Tier Demand Source: Parthenon Study 6

7 Sevier Playa Project Overview Sevier Playa at a Glance Location Size Product Resource: (K 2 SO 4 ) Deposit Type: Process: Stage: 1980 s Development: Central Utah About 124,200 acres SOP (Potassium sulfate) M&I: million tonnes Inferred: million tonnes Over 30 years 300,000 tonnes per annum Terminal lake salt brine Solar evaporation BFS underway to be completed in H Evaporation ponds & brine collection trench built. Salt & magnesium chloride brine were produced in 1989 & 1990 & test ponds operated to produce potash salts Sevier Playa Source: PFS & Company reports 7

8 Sevier Playa Project Location Utah Utah, U.S. Mining-friendly state with trained local workforce Well documented permitting process with many key permits, such as water, already in place CPM applying for state support, especially tax rebate Proven potassium fertilizer producing basin Compass Minerals (SOP) & Intrepid Minerals (MOP) Region is proven evaporation environment Compass Minerals producing SOP operation using brine extraction & evaporation Rail line direct access to California, the main U.S. growing regions & ports on both Atlantic & Pacific coasts Intrepid Potash (MOP) Compass Minerals (SOP) SALT LAKE CITY CRYSTAL PEAK MINERALS Sevier Playa Intrepid Potash (MOP) Approximate Outline of Ancient Lake Bonneville 8

9 Sevier Playa Project Location Excellent Local Infrastructure Local infrastructure: Road to proposed plant site 15 miles to rail line 35 miles to natural gas pipeline 52 miles to power substation Integrated U.S. Rail System Access by rail to U.S. core markets Less than 500 miles to largest U.S. SOP market: California Ease of access to extensive U.S. wide rail network Access by rail & port to international markets East & west coast ocean ports Source: PFS & Company reports Sevier Lake Project Integrated Rail Line Port Access to Pacific / Atlantic Legend: Union Pacific Railroad Freeway Access Road Powerline Gas Pipeline Proposed Plant Proposed Rail Loadout Town of Delta CPM Leases LUMA Leases N 9

10 CapEx & Financing CapEx: - PFS estimates: $378 million - 300,000 tonne per annum operation for 30-year mine life - Low level of infrastructure investment required USDm CapEx Development Asset CapEx Achievable Financing Project debt: Expected to be in the region of 65% project finance Construction equity commitment from EMR: - Larger of C$60m or 1/3 of project equity Alternatives sources of financing: - Off-take - Infrastructure, sale & lease back - Equipment leasing Source: PFS & Company reports 10

11 Sevier Playa Project Robust PFS Complete Production Metrics Capital Cost Estimates Production Rate Year 1 Year 2 Year 3 (Nameplate) Mine Life Source: Preliminary Feasibility Study First Production updated to Press Release (Feb 2016) 50,000 tpy 100,000 tpy 300,000 tpy 30 years Capital Costs: Playa Infrastructure Plant Facilities Utility Infrastructure Rail Direct Costs Indirect Costs Contingency $ 49 million $ 167 million $45 million $ 31 million $292 million $ 50 million $ 36 million Total Capital Costs $378 million Sustaining Capital Costs (LoM) $199 million SOP Price (2020) Project Economics EBITDA at Nameplate Production Pre-tax NPV (8% Discount) Pre-tax IRR After-tax NPV (8% Discount) After-tax IRR Payback $721/t $143 million $957 million 24% $629 million 20% 5.5 years Effective Tax Rate 29% Production Royalty 5.61% Source: PFS & Company reports Operating Cost Estimates Unit Operating Costs: Labor Power Natural Gas Reagents, Consumables & Maint Salt Harvest & Haul to Rail G&A Total Cash Costs $ 34.76/t $ 13.97/t $ 37.57/t $ 40.34/t $ 37.57/t $ 16.70/t $180.91/t 11

12 Optimizations for BFS BFS Opportunity for CapEx & OpEx optimization Optimization opportunity of items including: CapEx accelerating time to market CapEx scalability CapEx capital deployment OpEx environmental sustainability OpEx state tax support OpEx associated minerals revenue BFS scheduled for completion in H BFS catalyst for final submission of EIS permitting process documents 12

13 Sevier Playa Project Resource Estimate Estimated Mineral Equivalent Compounds from Brine Resource Resource Classification (Million tonnes) SOP Bitterns Salt Cake Halite K 2 SO 4 MgCl 2 MgSO 4 Na 2 SO 4 NaCl Measured Indicated Measured + Indicated Inferred Source: PFS Mineral resource estimate is delineated from surface to 30 meters below surface Additional upside as mineralization continues to depth PFS economics exclude revenue from additional essential minerals Source: PFS and Company reports 13

14 Potential Additional Revenue Streams Potential Additional Revenue Streams Associated Minerals Salt Magnesium chloride Magnesium sulfate Lithium Boron Usage Snow melt, industrial Dust control, snow melt, erosion control, fertilizer Fertilizer, industrial, medical Batteries, ceramics Fertilizer, water treatment Peer Comparables Company Additional Revenue Streams Comment Compass Minerals SQM Source: Compass Minerals; SQM Salt Magnesium chloride Lithium Potassium and sodium potassium nitrate 1.4 million tonnes per annum 0.7 million tonnes per annum 40,000 tonnes per annum 0.5 million tonnes per annum 14

15 CPM Key Milestones & Catalysts Year Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Engineering Schedule Feasibility Study Detailled Engineering Sept 2016 Updated Timeline (Pilot Ponds/Trenches Included) Financing Schedule Project Financing Permiting Schedule US Army Corps of Engineers Minor Source Air Permit Draft EIS BLM Mining Plan/ DOGM Large Mine Permit Plan of Development (POD) Record of Decision (ROD) Other Construction & Operating Permits Construction Schedule Pilot Pond/Trench Devlopment/Initial Pumping Pond Construction/Brine Pumping Process Plant Construction SOP Production Preparation Evaporation Season EIS Environmental Impact Study NTP Notice to Proceed ROW Right of Way Grants PSD Prevention of Serious Deterioration 15

16 Future Valuation Future Cash Flow Project NPV 8 : $629 million 1 Full production for CPM would give an EBITDA of $143 million CapEx to reach full production of $378 million USDm EBITDA Progression Peer Group Valuations Compass Minerals, the most direct U.S. producing peer, trades at a 9.4x multiple Recent industry acquisitions at 9.9x to 11.9x EBITDA SQM US Equity CMP US Equity Source: Bloomberg 1 - at $721/tonne SOP. Source: PFS & Company reports 16

17 Financial Overview CPM Share Ownership Ticker Canada: TSXV: CPM Ticker U.S.: OTCQX: CPMMF Price: (approx.) C$0.41/share 1 Float, 27% EMR, 43% Shares Outstanding: (approx.) 196 million 2 Market Capitalization: (approx.) C$74 million 1 EMR Investment Management, 9% Knox, 6% Tata, 15% Initial commitment: (June 2015) Follow on commitment: (May 2016) C$10 million at C$0.30/share C$25 million at C$0.42/share Future investment: (at point of construction decision): C$60 million or up to 1/3 of project equity Valuation methodology: 1 Source: share price & market cap as of 05/16/2016 (Canadian dollars) other details sourced from PFS and Company reports Stair Step investment based on project value & achieving milestones 2 issued and outstanding does not include unexercised warrants and options 17

18 Government and Local Support Broad support from state, county, and local officials Jobs Tax Revenue Tax Credit Bill Approved Federal Government State Government County Government Local Community BLM assistance on permitting through regular meeting and direct dialogue Support from Senate Bill 216 Utah High Cost Infrastructure Development Tax Credits up to 50% of $150 million CapEx in post performance tax credits Significant support from Millard County Commission and Director of Economic Development. Millard County to maintain 15-mile road to project Engagement with local community and stakeholders has helped cultivate support for the Project Preliminary Feasibility Study economics show great benefit to State of Utah 18

19 Leadership Management Lance D Ambrosio CEO & Executive Board Chairman 25+ years experience in financing, building, & operating start-up projects Named E&Y Entrepreneur of the Year in 2002 Thomas Pladsen CFO & Director Finance executive with 35+ years of experience Former CFO of a number of public start-up companies Dean Pekeski VP Project Development 20+ years as project manager Managed development of Milestone Potash Project in Saskatchewan for Western Potash Woods Silleroy VP Operations 25+ of operations & natural resource investing experience Former VP & COO of Justice Design Group LeeAnn Diamond Environmental Manager Over 30+ years of western U.S. based technical and compliance experience Former project manager for Kleinfelder Board of Directors De Lyle Bloomquist Lead Independent Director Former President of Global Chemicals Business at Tata Chemicals Former CEO of General Chemical Industrial Products Dan Basse Director President of AgResource Company with 40+ years of experience in commodity based industries Donald Carroll Director EMR representative Senior executive with BHP Billiton for 30+ years in BHP Japan, BHP India, & BHP Marketing Asia Rob Curtis Director EMR representative Geologist with 19+ years experience executing investments in Sandfire, IMX, Toro Energy, & others John Mulhall Director Tata representative CFO of Tata Chemicals Limited Ted Botts Director Former executive at UBS Group & Goldman Sachs & President of Kensington Gate Capital 19

20 EMR Investment EMR commitment of not less than C$85 million or one-third of project equity in three tranches Specialist resources private equity manager with deep linkages to Asian markets - in particular, commodity purchasers & end users, resources companies, investors, & governments Focused on four commodities: potassium fertilizer, gold, copper, & metallurgical coal Target investments in projects with: a compelling resource opportunity, bottom quartile CapEx & OpEx, a stable jurisdiction & proximity to existing infrastructure, and a location where target markets already exist & where major operators reside who might pursue future M&A 20

21 Environmental Relevance Process and products with positive impacts on our environment s most precious resources: Air, Water, Land Environmentally responsible production process harvests the power of the sun Solar evaporation provides CPM with low-carbon footprint production process Solar ponds allow CPM to harness the sun s solar energy for production process Most of CPM s energy needs will come from a renewable source 21

22 Sustainability Products suited for today s challenging and changing environment SOP is low in chlorides which is preferred in a world facing water scarcity SOP is soluble so it can be used in drip irrigation & fertigation saving valuable fresh water resources SOP reduces the toxic effects of chloride build up in soils, especially in dry conditions, that can occur with the use of standard MOP SOP is the best fertilizer to use on most fruits, vegetables and nut trees as consumers rotate to a healthier diet 22

23 Contact Details Crystal Peak Minerals Inc South 1300 East Suite 200 Salt Lake City, UT Phone: website: 23