Cummins Range: Value from a Rare Opportunity. April 2011

Transcription

1 Cummins Range: Value from a Rare Opportunity April 2011

2 DISCLAIMER The information contained in this presentation is not financial product advice. The presentation is for information purposes and is of a general and summary nature only. It does not constitute an offer. Kimberley Rare Earths Limited (KRE) gives no warranties in relation to the statements and information in this presentation. Investors should seek appropriate advice on their own objectives, financial situation and needs. This presentation contains certain statements which may constitute forward-looking statements. Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, performance or achievementsto differ materially from those expressed, implied or projected in any forward looking statements. KRE disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Investors are cautioned that forward-looking statements are not guarantees of future performance and investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. This presentation does not constitute or form any part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company nor shall it or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment or investment decision relating to any securities in the Company. Any decision regarding any proposed subscription for securities in the Company must be made solely on the basis of information on the Company that is publicly available. This presentation does not constitute an offer of securities for sale. COMPETENT PERSONS STATEMENT Sections of information contained within this report that relate to Exploration Results, Mineral Resources or Ore Reserves at the Cummins Range Rare Earth Project are based on information reviewed by Bernie Kirkpatrick who is a full-time employee of Navigator Resources Limited and a Member of the Australasian Institute of Mining and Metallurgy. Bernie Kirkpatrick has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Bernie Kirkpatrick consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

3 Cummins Range Inferred Resource September 2009 Tonnage (Mt) Cut-off grade REO (%) P 2 O 5 (%) U 3 O 8 (ppm) Th (ppm) Total REO (kt) % Inferred Resource containing: 72,000t of rare earth oxides 460,000t of phosphate 780t of uranium oxide Rare earth oxide blend similar to Mt Weld Low thorium levels 120,000t of rare earth oxides at 0.5% cut-off grade (11Mt at 1.1%REO) Favourable Terrain at the Cummins Range Prospect

4 120km by road to the Great Northern Highway running from Broome to Wyndham 130km SW of Halls Creek Town and airstrip 550km by air and 700km by road to major town, seaport and airport of Broome 850km by air and 1,100km by road to international hub airport, seaport and city of Darwin Several operating mines already in the area including Coyote gold, Savannah nickel-copper and Argyle diamond mines Halls Creek Cummins Range Darwin Northern Australia is the nearest future REO region to Japan (5,500km) and China (4,500km)

5 From the Chairman. I commend the Kimberley Rare Earths IPO offer to prospective shareholders. The new Company represents an opportunity to participate in the focused development of one of Australia s most advanced rare earth prospects in Cummins Range, with the Company s initial activities aimed at increasing the (JORC-compliant) Resources at the Project. Ian Macpherson, March 2011 From the Independent Geologist. There is considerable potential to extend the currently known resource and to identify additional mineralisation within the Cummins Range carbonatite. SRK Consulting, March 2011 Prospectus available from

6 Activity Date Public Offer Opens 29 March 2011 Priority Offer Record Date 4 April 2011 Priority Offer Opens 4 April 2011 Prospectus Dispatched 5 April 2011 Priority Offer Closing Date 21 April 2011 Public Offer Closing Date 5 May 2011 Allotment of Shares 13 May 2011 Demerger Record Date 16 May 2011 Anticipated Listing Date 18 May 2011 In Specie Distribution by Navigator Resources within 1 month of ASX Listing

7 Priority Offer to Navigator Resources Limited (NAV) shareholders Eligible NAV shareholders will be entitled to subscribe for 1 KRE share for each 10 NAV shares held on the Priority Offer Record Date (4 April 2011) Entitlements to be rounded to the nearest share Applications for over-subscriptions will be considered Subscription price of A$0.20 to raise A$9.31 million Subject to NAV shareholder approval, In Specie Distribution of KRE shares to NAV shareholders on the basis of 1 KRE share for every 20 NAV shares held at the Demerger Record Date (16 May 2011)

8 Lead Manager: BGF Equities Public Offer of 25 million KRE shares at a subscription price of A$0.20 to raise up to A$5 million plus any balance of Priority Offer shares KRE ownership structure subsequent to Priority, Offer, Public Offer and NAV In Specie Distribution based on current shares on issue: Based on 100% take up by NAV Shareholders of Priority Offer Based on 50% take up by NAV shareholders of Priority Offer 23.6% 10.5% 10% 44% 65.9% 46% NAV Shareholders NAV New Shareholders

9 Upon listing, KRE will acquire 25% ownership of Cummins Range via a sale agreement with NAV On IPO 25% Additional 30% interest to be earned from NAV with expenditure of A$10 million in exploration over a 4 year period A$10 million 55% Additional 25% interest to be earned through the completion of a bankable feasibility study BFS* 80% BFS = Bankable Feasibility Study Decision to mine

10 Growing an Independent Rare Earth Oxide Supplier The strategic objectives of the Company are as follows: Create shareholder value by materially advancing the scale, geological and metallurgical understanding of the Cummins Range rare earths deposit, initially through drill-focused exploration aimed at increasing the size of the JORC-compliant resource at the Project. The Company considers that geological potential to increase resources exists at Cummins Range. Build the value of the Project by undertaking metallurgical test work studies targeting the test-scale production of rare earth metal concentrates. Such metallurgical studies will assist the Company with a preliminary understanding of the scoping-level economics of producing saleable rare earth products from Cummins Range. Assess and, if warranted, acquire other rare earths projects that have potential to add value to the Company.

11 Ian Macpherson Non-Executive Chairman Ian is a chartered accountant and holds directorships of several public companies, including NAV Gerry Kaczmarek Non-Executive Director Gerry is an accountant and economist and Chief Financial Officer/Company Secretary of NAV Peter Rowe Non-Executive Director Peter is a chemical engineer with rare earths experience and a director of several public companies (not NAV) Allan Trench Non-Executive Director Allan is a geologist/geophysicist and business management consultant and a director of NAV, amongst others Company Secretary: Darren Crawte Over 13 years experience in corporate advisory

12 Discovered by CRA Exploration Aerosurveying by Navigator Resources (2002) Review of data by Navigator shows high grade zone suitable for delineation Successful drill program Preliminary Resource announced Independent Resource announced Independent valuation undertaken Independent valuation updated IPO preparation & implementation Mineralisation of 2-4% REO (60-160kt of REO) Part of Navigator Resources IPO (2003) Strong aircore intersections announced Good RC intersections announced Deposit confirmed as a laterite with potential for enrichment (eg. Mt Weld) * JORC-compliant independently verified Inferred Resource (1.0% cut-off grade) 69kt REO, 398kt phosphate & 765t U 3 O 8 72Kt REO, 459kt phosphate & 780t U 3 O 8 * Deposit confirmed to have low thorium levels reducing environmental risk Drill planning (5,000m program in 2011) Mineralogical studies confirm deposit primarily apatite and monazite

13 Similar to Mt Weld geology Laterite on a carbonatite diatreme intruded into pyroxenite Cummins Range best NAV drill intersections to date Drillhole Width Grade Depth NRC038 17m 5.27% REO 42m NRC058 29m 4.57% REO 27m NRC038 20m 5.55% REO 2m NRC059 33m 382ppm U 3 O 8 24m NRC066 20m 919ppm U 3 O 8 73m NRC058 35m 962ppm U 3 O 8 27m Cross section of Cummins Range showing horizontal mineralisation within the weathered layer overlying a carbonatite diatreme

14 High grade drill hole (NCR070) samples from Cummins Range the hole averages approximately 5.36% over 20m, with 12-13m and 13-14m grading 28.7% and 21.43% respectively More high grade drill hole (NCR068) samples from Cummins Range the hole averages approximately 3.74% over 40m, with 47-48m, 48-49m and 50-51m grading 12.63%, 13.56% and 14.84% respectively

15 A 2010 study by CSIRO/WA Museum has shown the rare earths mineralogy at Cummins Range to be predominantly monazite and apatite, with minor bastnaesite There is a long history of mining and processing monazite and bastnaesite for rare earths Primary apatite grain (light grey) with secondary overgrowths (mid-grey). Bright grains are monazite. The ore sample from which this slide came from contained 4.54% REO (backscattered SEM image). Arafura Resources (ARU) has recently commercially produced rare earths from apatite Source: CSIRO Petrographicand mineralogical studies of ten samples from the oxidised zone of the Cummins Range carbonatite, Western Australia March 2010

16 Drilling has only partially tested the Cummins Range diatreme REO mineralisation open beyond current extent of drill-testing Approximate resource drilling area (400m x 500m) Tenement Map of Cummins Range superimposed on magnetics showing carbonatite infusion ( white elevated magnetics)

17 Cummins Range Resource Composition Resource oxide blend (US$/kg) Metal 1 st -8 th March 2011 oxide price (US$/kg) Proportion in resource (%) Value of resource oxide blend (US$/kg) Lanthanum Cerium Praseodymium Neodymium Samarium Europium Gadolinium Terbium Dysprosium Others Total US$110.16/kg Thor Lake Lake Hoidas Nolans Dubbo Mt Weld Cummins Range Kvanefjeld Bayan Obo Steenkampskraal Bear Lodge Mountain Pass Data Compilation: John P. Sykes Mining Consultancy; Oxide prices: Metals Pages; Resource data: Green Leader Cummins Range Rare Earth Project March 2011 & Lynas Corporation website for Mt Weld resource composition

18 Production size and mine life have yet to be determined, but deposits of similar size and grade indicate 2,000-4,000tpa of REO may be possible, assuming no expansion of the resource Assuming about 60% recovery* this would give a mine life of +10 years, if the full resource was consumed Most likely development path would be a bulk, low-grade operation with on-site concentration through flotation, heavy media separation and magnetic methods By-product uranium and/or phosphate may also contribute Production Potential of Advanced REE Projects Project Resource Status Mountain Pass Mt Weld Nolan s Bore Bear Lodge Thor Lake Kangankunde Cummins Range 9.2% REO 8.1% REO 2.8% REO 3.46% REO 1.46% REO 4.2% REO 1.7% REO Operating & expanding Construction Production target (REOtpa) Currently 3,000t expanding to 19,000t then 40,000t 11,000t ramping up to 22,000t Feasibility 20,000t Scoping ~10,500t Feasibility 10,000t Advanced exploration Advanced exploration 5,000t 2,000-4,000t * Based on indicative comparable recoveries to Mt Weld Project

19 Of 155 rare earth assets outside China in the Infomine database over half are still just raw prospects 0 mines 1 project 6 projects Operating P+P Reserves M+I Resources 5 projects (including Cummins Range) 58 projects Inferred Resources Early Exploration 85 prospects Raw Prospect Data: Infomine 14 March 2011

20 Metal Oxide Price (Mar 2010) Oxide Price (1 st -8 th Mar 2011) Annual Increase La US$6.06/kg US$93.00/kg +1,435% Ce US$4.15/kg US$96.00/kg +2,213% Pr US$28.66/kg US$143.50/kg +401% Nd US$29.16/kg US$153.33/kg +426% Sm US$4.50/kg US$91.00/kg +1,922% Eu US$505.56/kg US$783.33/kg +55% Gd US$7.65/kg US$100.50/kg +1,214% Tb US$531.11/kg US$790.00/kg +49% Dy US$178.23/kg US$477.00/kg +168% Y US$10.92/kg US$106.17/kg +872% Cu US$7.49/kg (US$7,494.85/t) US$9.82/kg (US$9,820.83/t) +31% Ag US$550.10/kg (US$17.11/oz) US$1,135.56/kg (US$35.32/oz) +106% Au US$35,794.71/kg (US$1,113.34/oz) US$45,927.34/kg (US$1,428.50/oz) +28% Price sources: REOs Metals Pages; Copper LME; Precious - LBMA

21 Cummins Range is further developed than most rare earth projects Comparable size resources to produce 2,000-4,000tpa of rare earth oxides Apatite and monazite mineralogy is well understood and mined commercially elsewhere in the world for many years Nearby infrastructure Potential for high grade selective mining Low stripping ratio Low thorium levels reduce environmental issues Niobium, uranium and phosphate to be further investigated Potential to further expand the resource: Drilling stopped in the deposit s best grades and widths to the north-west Further drilling is also required to the north Other prospects within the diatreme are effectively undrilled

22 Demand for rare earth metals and prices are increasing Rare earth metals have important environmental and strategic military applications Rare earth oxide supply is dominated by China exports are being restricted The world is in a rare earth supply bottleneck It has become critical that the location of rare earth mines becomes geographically diversified Cummins Range is one of the few advanced stage rare earth projects in Australia Cummins Range represents an opportunity to develop a rare earth mine The KRE listing will provide direct exposure to increasing rare earth oxide prices

23 Principal Place of Business Ground Floor, 45 Richardson Street WEST PERTH 6005 Western Australia Registered Office Level 7, The Quadrant, 1 William Street PERTH 6000 Western Australia Contact Details Telephone: +61 (8) Facsimile: +61 (8) Other Details ABN: Lead Manager: BGF Equities Company Secretary: Darren Crawte