F e b r u a r y

Transcription

1 February 2018

2 FORWARD LOOKING STATEMENTS These materials include forward looking statements. Forward looking statements inherently involve subjective judgement and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside of the control of, and may be unknown to Centrex Metals Limited ( Centrex or the Company ). Actual results and developments may vary materially from those expressed in these materials. The types of uncertainties which are relevant to the Company may include, but are not limited to, commodity prices, political uncertainty, changes to the regulatory framework which applies to the business of the Company and general economic conditions. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Forward looking statements include, but are not limited to, statements concerning Centrex s planned exploration program, targeted resources, commencement of product export and other statements that are not historical facts. When used in this document, the words such as could, target, plan, estimate, intend, may, aim, potential, should, and similar expressions reflected in these forwardlooking statements are reasonable, such as statements involving risks and uncertainties and no assurance can be given that actual results be consistent with these forward-looking statements. 2

3 Corporate Overview Capital Structure February 2018 Ordinary shares on issue million Share rights on issue 5.1 million Share Price (15 February 2018) $0.14 Market Capitalisation (15 February 2018) $44.2 million Cash (31 January 2018) $17.1 million Top 5 Shareholders South Cove Limited 35.2% WISCO International Resources Development & Investment 12.8% Baotou Iron & Steel (Group) Company Limited 6.9% HSBC Custody Nominees (Australia) Limited 4.7% Mr Sik Ern Wong 2.6% Share Price ($A) Volume Adj Close Volume (million) 3

4 Centrex Summary $44 million market capitalisation $17 million in the bank High-grade phosphate rock project with Scoping Study showing pre-tax NPV range of $124 to $129 million Feasibility underway and due for completion mid-2018 Initial financing required for preliminary operation targeted to start by end of 2018 to provide trial shipments to customers for long-term off-take contracts Project financing for full-scale operations targeted end of 2019 once long-term off-takes in place Experienced team of bulk commodities specialists 4

5 Ardmore Phosphate Project

6 SCOPING STUDY CAUTIONARY STATEMENT The Scoping Study referred to in this presentation was first announced on 15 th January 2018: Investors are advised to read this presentation in conjunction with that announcement and the cautionary statement, which has been reproduced below: The Scoping Study referred to in this announcement has been undertaken to determine the potential viability of an open pit mine and phosphate rock processing plant at the Ardmore Phosphate Rock Project in North West Queensland, in order to provide Centrex Metals Limited confidence on which to continue with its ongoing feasibility studies for the project. It is a preliminary technical and economic study of the potential viability of the Ardmore Phosphate Rock Project. It is based on low level technical and economic assessments that are not sufficient to support the estimation of ore reserves. Further evaluation work including bulk beneficiation, fertiliser conversion test work, and appropriate studies are required before Centrex Metals Limited will be in a position to estimate any ore reserves or to provide any assurance of an economic development case. The Production Target referred to in this announcement is based on 11% Measured, 88% Indicated, and 1% Inferred Mineral Resources for the mine life. The Company has concluded that it has reasonable grounds for disclosing a Production Target that includes a modest amount of Inferred Mineral Resources. However, there is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work (including infill drilling) at the Ardmore Phosphate Rock Project will result in the determination of additional Indicated Mineral Resources or that the Production Target itself will be realised. The Scoping Study is based on the material assumptions outlined below. These include assumptions about the availability of funding. While Centrex Metals Limited considers all of the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved. To achieve the range of outcomes indicated in the Scoping Study, funding of in the order of $A million will likely be required. Investors should note that there is no certainty that Centrex Metals Limited will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of Centrex Metals Limited s existing shares. It is also possible that Centrex Metals Limited could pursue other value realisation strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce Centrex Metals Limited s proportionate ownership of the project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study. 6

7 Ardmore Advantages One of the few undeveloped high-grade phosphate deposits in the world Shallow low-cost strip mining without the need for blasting No expensive flotation plant required Premium phosphate rock concentrate with simple crushing and deslime circuit Existing roads, rail, and port Significantly lower capital intensity than other projects proposed around the globe Major freight cost advantage to Australia, New Zealand, Indonesia and Eastern India Australia and New Zealand single superphosphate production reliant on 1 million tonnes of imports, mainly from North Africa 7

8 Scoping Study Highlights Item Approximate Value or Range Potential Mine Life 10 years Timing First shipments: 2019 Full production (776ktpa): 2021 Life of mine ( LOM ) conceptual pit inventories (dry) 11.1 million tonnes LOM in-pit phosphate grade 29% P 2 O 5 Mining LOM strip ratio: 4.6:1 Selective mining recovery: 90% Estimated Selectively mined process plant feed grade 31% P 2 O 5 Annual process plant feed (dry) / Process plant mass recovery 1,065,000 tonnes Mass recovery: 73% Concentrate production target (dry) Annual: 776,000 tonnes LOM: 7.3 million tonnes Concentrate phosphate grade 35% P 2 O 5 Exchange rate, LOM (AUD:USD) 0.75 Initial capital cost (inclusive/exclusive contingency) $A million $US million LOM sustaining capital (inclusive/exclusive contingency) $A million $US 9 10 million LOM average FOB operating cost (inc. royalties, overheads) $A 115/tonne $US 86/tonne LOM average freight cost $A 45/tonne $US 34/tonne LOM average CFR operating cost (inc. royalties, overheads) $A 162/tonne $US 121/tonne CFR sales price at full-scale production being reached $A 177/tonne $US 133/tonne LOM average CFR sales price $A 210/tonne $US 158/tonne Pre-tax net cash flow $A million $US million Pre-tax NPV 10 $A million $US million Pre-tax IRR & Payback period IRR: 39% - 42% Payback: 3 years 8

9 Fertiliser Long-Term Fundamentals Simple demand side story Long-Term Phosphate & Potash Growth Trends Source: Derived from USGS (Production), World Bank (Population) More mouths to feed More food to feed them Less land to produce it from Higher crop yields needed = More Fertiliser Phosphate & potash 2 of the 3 required macronutrients Million Tonnes Billion People World Potash (MOP eqv.) Production (Mt) World Phosphate Rock Production (Mt) World Population (billion) No substitutes! 9

10 Global Phosphate Rock Trade (2016) Importer 000 tonnes Exporter 000 tonnes India 7,500 Morocco 7,903 Brazil 1,711 Jordan 4,735 Indonesia 1,693 Peru 3,828 USA 1,588 Russian Federation 2,491 Poland 1,313 Egypt 1,530 Lithuania 1,281 Algeria 1,138 Turkey 1,061 Israel 1,080 Belgium 864 Togo 846 Mexico 731 Senegal 473 Rep. of Korea 601 Kazakhstan 388 New Zealand 569 China 278 Serbia 532 Netherlands 138 Bulgaria 481 Finland 126 Belarus 480 Belgium 23 Australia 448 Pakistan 20 Rest of World 4,044 Rest of World 46 Total Imports 24,897 Total Exports 25,042 Source: UN Comtrade

11 Ardmore Comparison Concentrate Grade Igneous Harder to Convert Typical Analyses of Imported Rock Phosphates (% P 2 O 5 ) Mining By Morocco In Contested Region High-Grade Running Out Benchmark Guano Deposit Almost Depleted How Long Can Remaining Quality Reserves Supply Massive Domestic Consumption? Source: derived from FAI

12 Ardmore Comparison Cadmium Content 300 Average Cadmium Content of Phosphate Rock Sources (mg per kg P 2 O 5 ) Igneous Deposits New European import limit (60ppm) Proposed future import limited (20ppm) Source: derived from Oosterhuis et al

13 Historical Phosphate Rock Pricing $250 $200 Integer provided Centrex forecast CFR pricing over the life of mine delivered to each of 8 target customers across Australia, New Zealand and India $US/t (real 2017) $150 $100 $50 $0 New Zealand CFR Morocco Imports Morocco 72 BPL FAS Customers based on Centrex s marketing trips to those countries CFR pricing based on Integer Morocco FOB 32% P2O5 benchmark, adjusted for specific customer current imports (e.g. discount for Jordan), Ardmore higher quality adjustment made, and Integer competitor freight forecast all used to predict import parity Ardmore has a roughly $US 20/t freight advantage over Morocco to NZ and Australia Source: World Bank, UN Comtrade

14 Ardmore Phosphate Deposit The Ardmore deposit is hosted in the same Cambrian sedimentary package as the nearby Duchess Mine (Phosphate Hill) Phosphate mineralisation occurs in two units within the same formation; an upper high-grade (>25% P 2 O 5 ) phosphorite member, and a basal lower grade (10-15% P 2 O 5 ) phosphorite member with a series of cherts in between The upper high-grade member has been the focus of exploration and outcrops within the Ardmore Mining Lease Phosphate occurs as relatively coarse ( 200µm) apatite pellets 14

15 Ardmore Mineral Resource Mineral Resource Category Million Tonnes P 2 O 5 % Measured Indicated Inferred Total Mineral Resources 14.2* 28.7 Northern Zone * Totals may not add precisely due to rounding More than 600 drill holes completed with the majority of the deposit on Measured & Indicated Mineral Resources Additional infill drilling campaign nearing completion to increase Measured Resources in Southern Zone and convert all of Northern Zone to Indicated Resources For full details of the Mineral Resource refer announcement 18 th December 2017; The results were reported under JORC 2012 and Centrex is not aware of any new information or data that materially affects the information contained within the release. All material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed. Central Zone Southern Zone 15

16 Mining Deposit is shallow dipping and outcropping in many areas Excavations and dozer stripping trials show ability to free-dig the deposit Northern Zone Pit & Dump Deposit to be strip mined with dozers to remove shale overburden, truck and shovel within the ore zone for selective mining 11.1 million tonne conceptual pit inventories at 4.7 to 1 life of mine strip ratio with <1% of that at Inferred 10 year mine life producing 800,000tpa concentrate (wet basis) Selective mining (as demonstrated in recent excavations) produces higher grade ROM feed than the resource model given the model is based on fixed 0.5 sample downhole intervals across contacts Southern Zone Pit 16

17 Mining Trials Selectively free-digging ore Dozing stripping overburden without blasting or ripping 17

18 Process Testwork Sample P 2 O 5 (%) CaO (%) Al 2 O 3 (%) Fe 2 O 3 (%) MgO (%) SiO 2 (%) F (%) Cd (ppm) MER Ratio Head Concentrate Recoveries (%) Scoping study composite showed ability to produce a premium 35% P 2 O 5 concentrate with ultra-low cadmium For full details of the recent testwork results refer announcement 21 st September 2017; The results were reported under JORC 2012 and Centrex is not aware of any new information or data that materially affects the information contained within the release. All material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed. Almost 1 tonne bulk composite created from 24 hole PQ diamond drilling program, plus another 4 tonne of bulk samples taken from Feasibility level beneficiation pilot plant trials nearing completion 18

19 Ardmore Phosphate Beneficiation Circuit Simple crush and deslime processing circuit to remove clays, and meet customer sizing specifications (P90 2mm, P10 75µm) Common circuit globally for phosphate rock operations Low-risk design Piloting in the US now shows crushing can be reduced to a single stage hammer mill in the Feasibility Study Original costed Scoping Study design had 3 stage rolls crushers 19

20 Process Plant Layout Water Supply Compact plant layout Wet Plant Drying Product Transport Current design for fixed plant but potential to change components such as crushing to mobile or semi-mobile Potential to consider used equipment closer to execution Crushing Circuit Smaller footprint and less complex than an equivalent throughput gold plant ROM Pad 50m Diesel Generators Quarry sized equipment 20

21 South Pit Plant North Pits Camp Site Layout 21

22 Logistics Product from Ardmore is planned to be trucked 90km by existing roads in triple or quad road trains to a siding at Duchess Qube s Market Leading Rotabox TM System The road routes are already gazetted for road trains and are state roads After loading at Duchess, the product will be railed in either containers or bulk wagons to the Port of Townsville Product will be stored in either bulk or containers at the port, and loaded by either existing rotainer or bulk shiploading facilities Centrex has received indicative proposals for road, rail and port options from a number of 3 rd parties 22

23 Rail Siding Centrex and QR Rail have been investigating an approximately 1km extension of an existing maintenance turnout at Duchess to form a new siding The extension would utilise the existing corridor for the decommissioned Dajarra spur line Utilising the existing turnout and decommissioned line would provide a very cost effective siding option Environmental baseline monitoring at the proposed siding location has commenced by Centrex 3 rd party siding options raised to Centrex and still in consideration Decommissioned Dajarra Spur Line Corridor Existing Turnout 23

24 Water Groundwater pump testing completed within Northern Zone of the Ardmore deposit 4 day pump test at 3.5 litres per second Negligible drawdown within water bore ore surrounding monitoring bores demonstrating large potential volume Moderately saline water to be treated with reverse osmosis plant ( RO ) for process plant Surface water harvesting being assessed along with other potential fresh groundwater sources off the Mining Lease 24

25 START-UP CAPEX CAPEX & OPEX Area $A M $US M Mine Establishment $2.3 $1.8 Process Plant & Site Infrastructure $29.9 $22.4 Road Haulage $0.8 $0.6 Rail Siding $2.5 $1.9 Port $2.2 $1.6 Sub-Total Directs $37.7 $28.3 Owners $4.7 $3.5 Other Indirects $13.0 $9.7 Sub-Total Indirects $17.7 $13.3 Total Installed Cost $55.4 $41.5 Contingency $5.5 $4.1 Total Cost $60.9 $45.7 Working Capital $8.4 $6.3 LOM Sustaining Capital $13.4 $10.0 CFR OPEX Area LOM Average $A/t Product $US/t Product Mining $11 $8 Processing $17 $13 Road Haulage $15 $11 Rail & Port $59 $45 Owners $6 $5 Freight* $45 $34 State Royalty $2 $2 SCF Royalty $6 $5 Total CFR Cash Cost $162 $121 LOM Average CFR Price $210 $158 *2017 Ardmore freight estimate $US 23/t, significant rise in real terms forecast for global freight rates over LOM by Integer (which in turn is forecast to raise CFR pricing as competitors freight rises also) 25

26 Key Financial Results Key Output Initial Capital Cost (inclusive & exclusive contingency) LOM Sustaining Capital (inclusive & exclusive contingency) Approximate Value Range $A 55-61M $US 41 46M $A 12-13M $US 9 10M Pre-tax Net Cash Flow $A M $US M Pre-tax NPV 10 $A M $US 93 97M Pre-tax IRR 39-42% Pre-tax Payback Period 3 years 26

27 Identified Potential Upside to Cost Estimates Pilot work has already demonstrated ability to reduce from 3-stage to single stage crushing circuit Modular plant options likely lower cost than currently assumed stick built fixed plant Cost assume containers from mine to ship, still reviewing cheaper hybrid bulk options that will depend on project timing and facility availability Fresh water sources being assessed off-lease, along with dry plant option that could reduce current desalination cost including evaporation ponds 27

28 Current Activities Pilot plant beneficiation trials to be completed by end of February Product samples from pilot plant to go to KemWorks for independent conversion test work and to customers Additional infill drilling to increase Measured Resources in Southern Zone and convert all of Northern Zone pit inventories to Indicated to be completed by end of February then resource model update to follow Water bore testing off-lease plus dam designs for fresh water source assessments Feasibility study due for completion in mid-2018 Environmental baseline studies continuing Start-up plant to be commissioned in 2019 along with first shipments to secure long-term off-takes Off-takes to support project financing for full scale plant expansion 28

29 Ardmore Advantages One of the few undeveloped high-grade phosphate deposits in the world Shallow low-cost strip mining without the need for blasting No expensive flotation plant required Premium phosphate rock concentrate with simple crushing and deslime circuit Existing roads, rail, and port Significantly lower capital intensity than other projects proposed around the globe Major freight cost advantage to Australia, New Zealand, Indonesia and Eastern India Australia and New Zealand single superphosphate reliant on 1 million tonnes of imports, mainly from North Africa 29

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