A Pure-Play Cobalt Opportunity

Transcription

1 AUGUST 2016

2 Disclaimer THIS MANAGEMENT PRESENTATION (THE "PRESENTATION") WAS PREPARED AS A SUMMARY OVERVIEW ONLY OF THE CURRENT AFFAIRS OF ECOBALT SOLUTIONS INC.( ECOBALT" OR THE "COMPANY") AND WAS NOT PREPARED FOR THE PURPOSE OF ASSISTING PROSPECTIVE INVESTORS IN MAKING A DECISION TO INVEST IN ECOBALT. ECOBALT DOES NOT MAKE ANY REPRESENTATION AS TO THE COMPLETENESS, TRUTH OR ACCURACY OF THE INFORMATION CONTAINED IN THIS PRESENTATION. THE RECIPIENT IS CAUTIONED, THEREFORE, THAT IT IS INAPPROPRIATE TO USE THIS PRESENTATION, OR ANY PORTION THEREOF, TO ASSIST IN MAKING A DECISION TO INVEST IN ECOBALT. CONFIDENTIALITY This Presentation is confidential and the contents are not to be reproduced or distributed to the public or the press. Securities legislation in all provinces and territories prohibits such unauthorized distribution of information. Each recipient of the information contained in this Presentation will treat such information in a confidential manner and will not, directly or indirectly, disclose or permit its affiliates or representatives to disclose such information to any other person or reproduce this Presentation in whole or in part, without the prior written consent of ecobalt Solutions Inc.. NOT FOR U.S. DISTRIBUTION This Presentation is for use solely in Canada and is not to be provided by any means to anyone in the United States. The securities of ecobalt have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Act"), or the securities laws of any state and may not be offered or sold in the United States or to "U.S. Persons" (as defined in Regulation S of the U.S. Act) unless an exemption from registration is available. PRELIMINARY ECONOMIC ASSESSMENT ( PEA) The Company cautions that this PEA is preliminary in nature, and is based on technical and economic assumptions which will be evaluated in further studies. The PEA is based on the current (as at March 10, 2015) ICP estimated resource model, which consists of material in both the measured/indicated and inferred classifications. Inferred mineral resources are considered too speculative geologically to have technical and economic considerations applied to them. The current basis of project information is not sufficient to convert the mineral resources to mineral reserves, and mineral resources that are not mineral reserves do not have demonstrated economic viability. Accordingly, there can be no certainty that the results estimated in the PEA will be realized. FORWARD-LOOKING INFORMATION This PEA presentation contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Statements in this PEA presentation pertaining to projected revenues and cash flows, quantity and grade of mineralized materials, estimated mineral prices and the continued expansion of the market for battery grade cobalt chemicals are forward-looking statements. These forward-looking statements are based on assumptions and address future events and conditions and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Many of the assumptions respecting projected revenue, cash flow and quantity of mineralized materials will be set out in detail in the PEA. Such projections are and will inevitably always be dependent on assumptions about future mineral prices and development costs which will be subject to fluctuation due to global and local economic conditions. This PEA presentation also contains forward-looking statements respecting the growing demand for battery grade cobalt chemicals, which demand may or may not continue to grow depending on consumer habits and technological developments. Further information regarding risks and uncertainties which may cause results to differ from those contained in forward-looking statements are included in filings by the Company with securities regulatory authorities and are available at Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws. The statements contained in this PEA presentation in regard to ecobalt Solutions Inc. that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including ecobalt Solutions Inc.'s beliefs, expectations, hopes or intentions regarding the future. All forward-looking statements are made as of the date hereof and are based on information available to ecobalt Solutions Inc. as of such date. It is important to note that actual outcome and the actual results could differ from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as technological, legislative, corporate, commodity price and marketplace changes. Note: All dollar amounts quoted in the Presentation are in USD unless otherwise noted. E.R. (Rick) Honsinger, P. Geo., Vice President of the Company is the Qualified Person under NI who has reviewed and approved the technical content in this presentation. 1

3 A Pure-Play Cobalt Opportunity ECS-T Cobalt Deficit Looming Toronto Stock Exchange listed company with a flagship pre-production primary Cobalt mining project 49% of demand driven by rechargeable batteries, used primarily in electric vehicles and portable electronic devices. (11.7% y/y growth) - Li Ion: LCO, NCM, NCA cathode, NiMH: anode/cathode Cobalt supply/demand balance expected to move into deficit territory in 2016 Conflict and Child Labour Growing scrutiny of global supply chain of Cobalt poses public relations risk for electric vehicle and electronics manufacturers Pure-play Vast majority of Cobalt production tied directly to primary Nickel and Copper mines which are under pressure in current market 2

4 ecobalt Solutions Inc. Corporate Snapshot Shares Issued M Options Outstanding 6.7 M Warrants Issued 7.9 M Fully Diluted M Share price of ECS $ Week High / Low $ $0.085 Market Capitalization $55.0 M Working Capital (as at May31 th, 2016) C$1.3 M* * Closed C$4.4M financing June 1 st, 2016 Note: Al figures as at July 18, 2016, unless otherwise noted Information above is from the Company s May 18 th, 2016 Financial Statements and are expressed in Canadian Dollars. To read the full financial statements, please visit the Company s website at or contact Investor Relations at

5 ecobalt Solutions Inc. Management Mr. J.Paul Farquharson B.B.A. Position: President & CEO, Director Mr. Farquharson is President and Chief Executive Officer of the Company. Previously, he was Chief Financial Officer and has been with the Company for over 23 years. He was integral in the success of numerous financings totaling over $100M with the Company. He has made valuable contributions to business development and strategic acquisitions of ecobalt. He possesses extensive inhouse experience with the numerous aspects of the mining industry, including corporate management, administration, compliance, and capital markets. Mr. Marc Tran, CPA, CGA, B.Comm., B.A. Position: Chief Financial Officer & Corporate Secretary Prior to being appointed to CFO in January of 2014, Mr. Tran was the Controller for the Company since October He has over 12 years of experience in corporate finance, financial management, and regulatory compliance with public companies. He has previously served as Director and CFO for other public companies with projects in mineral exploration, development, and production in Canada, US, Mexico, Central and South America. Mr. E.R. (Rick) Honsinger B.Sc., P.Geo. Position: Vice President Mr. Honsinger's geological and technical background brings over 30 years of project management, exploration and Q.P. related experience to the Company. He is Senior Vice President overseeing Corporate Development, Communications and related compliance and has managed and contributed to the success of numerous field and special projects during his past 20 years with ecobalt Solutions Inc. 4

6 ecobalt Solutions Inc. Board of Directors Robert J. Quinn, B.S.B.A., J.D. Director Chairman Founding partner of mining law firm Quinn & Brooks LLP, former Vice President and General Counsel for Battle Mountain Gold Company. David Stone, Ph.D., M.B.A., P.E., P.Eng Director 30 years of engineering and financial consulting experience to metal mines worldwide. Managed and led multidisciplinary project teams through pre-feasibility and feasibility evaluations of development-stage projects. Robert Metka, B.Sc., Eng., M.B.A. Director 23 years of mineral production and engineering experience as V.P. of Projects for Noranda Minerals and V.P. and General Manager of CEZinc. He is presently a Principal of Hatch. Gregory Hahn, CPG, B.A, M.S. Director Over 30 years of mining industry experience and currently President of Canamex Resources. Former District and Senior Geologist and Chief Mine Geologist with Noranda (Xstrata) on the Blackbird deposit Scott Hean, B.A., MBA, ICD.D Director Member of the Audit and Chair of the Compensation Committee of Sabina Gold & Silver Corp., former Senior VP and Managing Director with the Bank of Montreal, natural resources sector financing North America. David Christie, P.Geo. Director President and CEO of Eagle Hill Exploration Corp. and Vice President with Goodman & Company, Investment Counsel Inc. and Dundee Resources Limited. Cecil D. Andrus Director Emeritus Governor Andrus is a previous four-term Idaho State Governor, former U.S. Secretary of the Interior and former counsel to Gallatin Public Affairs. 5

7 Cobalt Demand by Application 49% (+11.7%) 98,200,000 lbs Battery Chemicals Superalloys 18% (+3%) 35,100,000 lbs Hardmetals 8% (-3%) 16,500,000 lbs Ceramics/ Pigments 6% (+1%) 11,400,000 lbs Catalysts Hard Facing Tyres / Paint Driers Magnets 5% (-8%) 10,600,000 lbs 4% (+3%) 7,900,000 lbs 4% (+2%) 7,900,000 lbs 3% (+4%) 6,000,000 lbs Battery Chemicals Superalloys Hardmetals Rechargeable Batteries: Li Ion (LCO, NCM, NCA cathode) and NiMH/NiCd Nickel Cobalt based alloys: Aerospace, land based turbines, medical and other Cobalt as a binding material: Cutting tools, mining and oil and gas drilling, etc. Others 3% (-6%) 5,900,000 lbs Ceramics/Pi gments Pigment / decolouriser: Ceramics, glass and colouring applications Catalysts Cobalt Salts as Precursor for catalysts Hard Facing For wear solutions: Stellites, Trialloy etc Refined Cobalt Demand (E) 198,700,000 lbs (+5.4%) Tyres / Paint Driers Magnets Others Soaps and Driers: Drying agent and rubber adhesion promotor Permanent magnets: AlNiCo, SmCo, NdFeB, CoFe Various: Electroplating, high speed steel, agriculture, synthetic diamonds Source: Darton Commodities Ltd, Jan

8 Cobalt: Battery Growth Driven by Electric Vehicles Tesla - $5B Gigafactory for battery manufacturing Ford to invest US$4.5B on13 new EV s by 2020 Porsche to invest 1B for EV production Faraday Future to invest US$1B to develop intelligent Electric Vehicles Other Current & Future Auto Manufacturers, that intend to collectively invest billions of dollars in electric vehicles include: Source: Umicore Capital Markets Day, Sept 2, 2015 and Darton Commodities Ltd. Jan

9 DRC & Cobalt Supply 65% of the world cobalt supply mined from DRC Cobalt produced primarily a by-product of nickel and copper mining (60% copper, 38% nickel production) Over 10% cobalt offline resulting from closures due to weak Cu and Ni prices: Glencore/Katanga Mining (10% of global cobalt metal supply) OTHERS: Votorantim, ERG/Chambishi, Norilsk Nickel, and Queensland Nickel Artisanal mining accounts for 22% of total cobalt production from the DRC Amnesty International exposes abuses of the human rights related to artisanal mining likely leading to future reductions in artisanal supply All of the above have lead to cobalt shortfalls in supply, especially for cobalt chemicals used in EV sector Source:: CRU May

10 Cobalt: Supply/Demand Balance Cobalt demand growth (5.4%) outpaced supply growth (2.4%) reducing surplus Supply/demand balance expected to move into deficit territory in 2016 Metal market balance to tighten in output is scheduled to fall at least 11% from by 3,3750MT CAGR: Demand 5.6%, Supply 6.7% CGAR: Demand 5.5%, Supply 2.8% CAGR: Demand 5.6%, Supply 6.7% CGAR: Demand 5.5%, Supply 2.8% Source: Darton Commodities Ltd, Jan 2016 Surplus Deficit 9

11 Results of Cobalt Supply Demand Imbalance Expected improved prices in CRU s base-case scenario Source: After CRU May

12 Project Summary Cobalt Sulphate Product Sold directly into High-Growth Battery Market Environmental Permits in Hand Idaho Cobalt Project (ICP) C$110M in Expenditures to Date Resource Upside, Open at Depth Project Located in Idaho, U.S.A. Increased Focus on Ethical Sourcing of Cobalt 11

13 Idaho Cobalt Project: Advanced Development Idaho Cobalt Project ( ICP ) Mine & Mill Facility, Salmon, Idaho In excess of C$110 M including exploration, development, permitting and construction ICP Mine Site Proposed CPF ICP Mine Site Earthworks 90% Complete Tesla Gigafactory Cobalt Production Facility ( CPF ) Trade-off studies underway on location Tesla Final Assembly Project History Completed Bankable Feasibility (2007) for high purity cobalt metal 1 All critical permits in place, with an approved mine Plan of Operations Preliminary Economic Assessment for cobalt sulfate production for battery sector completed (March 2015) Feasibility level metallurgical work completed demonstrating successful production of high purity cobalt sulfate heptahydrate crystals (February 2016 ) 1 Investors are cautioned that previously SEDAR filed Pre-Feasibility Study and Feasibility study can not be relied upon as a number of critical assumptions are out of date. Please refer to the October 1, 2014 news release. 12

14 ICP Additional Advantages Environmentally Sound Underground Project Design - Small Environmental Footprint 100% Reclaimable - Modest 135 Acre Disturbance No Tailings Pond - Dry Stacked Tailings Conservation Act Program ( CAP ) - J/V with Idaho Conservation League to promote remediation of water shed area for fish habitat in Lemhi County, Idaho Mine Plan of Operations - Approved Ethically Sourced ICP offers a unique potential for consumers to secure an ethically sourced, environmentally sound supply of battery grade cobalt chemicals, mined safely and responsibly in the United States Apple, Samsung and Sony face child labour claims 19 January Human rights organisation Amnesty has accused Apple, Samsung and Sony, among others, of failing to do basic checks to ensure minerals used in their products are not mined by children. In a report into cobalt mining in the Democratic Republic of the Congo, it found children as young as seven working in dangerous conditions. 13

15 PEA Highlights PEA Revenue by Product Initial Capital Requirements Cost (USD$M) Mine (with 10% Contingency) Mill (with 15% Contingency) CPF (with 20% Contingency) Initial Net Working Capital 3.81 Total Initial Capital Mine Development Cost During Production 26.9 Sustaining Capital Total LOM Capital

16 PEA Cash Costs and NPV Sensitivity LOM Total Cash Costs of processed cobalt: $13.25/lb. LOM Total Cash Costs of processed cobalt net of by-product credits: US$4.94/lb. LOM Total Cash Production Cost/lb Processed Cobalt ($) LOM Total Cash Production Cost/ton ($) LOM Total Cash Production Cost ($M) Percentage of Total Cost (%) Mining Mill CPF General & Administrative LOM Cash Production Cost Less By-Product Production Credits ( 8.31) ( 84.98) ( ) LOM Net Cash Production Cost Post Tax NPV (discounted at 8.5%) and IRR Sensitivities to Price Cobalt Sulfate Heptahydrate ($/lb. Contained) $14.50 $17.00 $19.50 $22.00 $24.50 Post-tax NPV $25.94 $68.06 $ $ $ Post-tax IRR 12.35% 18.19% 24.07% 29.51% 34.88% 15

17 PEA Cash Costs and NPV Sensitivity NPV Sensitivity 16

18 Resource Summary and Growth Potential Resource Summary (Prepared in accordance with NI ) Class Cut-off (%Co) tons %Co Lbs. Co %Cu Lbs. Cu oz. Au/ton oz. Au Measured 0.2 2,266, ,587, ,123, ,600 Indicated 0.2 1,214, ,996, ,839, ,100 M + I 0.2 3,480, ,583, ,962, ,700 Inferred 0.2 1,675, ,648, ,753, ,900 Resource Growth Potential Mineralization open at depth along one strike direction +12 additional targets 4 drill tested with several intercepts exceeding current cut-off grades Mineral resources that are not mineral reserves do not have demonstrated economic viability 17

19 Successful Feasibility Level Metallurgical Work Formation has demonstrated it can successfully produce high purity, battery grade cobalt sulfate from ICP ore March PEA completed on proposed flowsheet,- SEDAR filed May 2015 July - August Flotation tests finalized, final flow sheet determined, Leaching successfully produced Pregnant Leach Solution (PLS) as per the existing PEA flow sheet October Cobalt Solvent Extraction (SX) was piloted and successfully produced the required cobalt PLS November Cobalt Sulfate Heptahydrate crystals successfully produced at desired battery grade specifications February Bench tests of Cytec Industries Inc.'s solution reagents and General Electric crystallizers were successful Source: ecobalt Solutions Inc. s News Release, Dec 8 th,

20 Moving Forward Raised $4.4M for feasibility study June, 2016 Feasibility study initiated June, 2016 Idaho Cobalt Project (ICP) Q1/17 Feasibility study released Q4/16- Identifying Strategic Partners off- streaming, construction financing Objective recommence construction in take, 2017* Disclaimer: Times are estimates and can change without notice, construction dependant on successful BFS & Capex financing 19

21 Conclusions Unique Primary Source of Cobalt - USA is the number one cobalt consumer with no domestic supply Resource Upside - Upside as resource open at depth - Potential to extend 12.5 year PEA mine life Idaho Cobalt Project Strong Cobalt Demand Fundamentals - Fueled primarily by expanding rechargeable battery use Small Environmental Footprint Environmental permits in hand 135 acres Dry stack tailings Clean water discharge Long-term Offtake Partners Sought - Security of supply makes offtakes with ecobalt appealing - Potential source of project financing 20

22 Paul Farquharson, B.B.A. President & CEO Marc Tran, CPA, CGA, B.Comm., B.A. CFO & Corporate Secretary Rick Honsinger, P.Geo., B.Sc. Vice President ecobalt Solutions Inc. (ECS.TSX) has strategically positioned itself to offer its shareholders North America s only primary cobalt deposit - an advanced staged, environmentally conscious opportunity that can be rapidly advanced towards production upon the successful conclusion of mine financing. CONTACT INFORMATION ecobalt Solutions Inc. Tel: +1 (604) West Hastings St. inform@ecobalt.com Vancouver, B.C., Canada, V6C 2W2 Web: 21