For personal use only. Indian Iron Ore Production and Australian Thermal Coal Exploration

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1 Indian Iron Ore Production and Australian Thermal Coal Exploration 1

2 Disclaimer This presentation has been prepared and issued by NSL Consolidated Limited ( the Company or NSL ). It contains general information about the Company s activities current as at the date of the presentation. The information is provided in summary form and does not purport to be complete. This presentation is not to be distributed (nor taken to have been distributed) to any persons in any jurisdictions to whom an offer or solicitation to buy shares in the Company would be unlawful. Any recipient of the presentation should observe any such restrictions on the distribution of this presentation and warrants to the Company that the receipt of the presentation is not unlawful. The presentation does not constitute, and should not be considered as, an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. The presentation is based on internal company reports, stock exchange announcements and technical information believed to be reliable but NSL does not make any representation or warranty to its accuracy, completeness or currency. Some statements contained regarding estimates or future events are forward looking statements. They involve risk and uncertainties that could cause actual results to differ from estimated results. They are conceptual and will change as further technical and financial information is generated. In relation to any statements pertaining to future exploration targets or conceptual exploration targets, the nature of the exploration target means that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. NSL accepts no obligation to correct or update the information or opinions expressed in the presentation. Opinions expressed are subject to change without notice and accurately reflect the views of NSL at the time of presenting. The presentation does not purport to provide all of the information an interested party may require in order to investigate the affairs of NSL nor shall it be construed as a solicitation to buy or sell NSL securities, or to engage in or refrain from engaging in any financial transaction. In preparing this presentation NSL did not take into account the investment objectives, financial situation and particular needs of the individual investors. Before making an investment decision on the basis of this presentation, the investor needs to consider, with or without the assistance of a financial advisor, whether the investment is appropriate in light of their particular investment needs, objectives and financial circumstances. To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and, to the maximum extent permitted by law, no responsibility or liability is accepted by the Company or any or its officers, employees, agents or consultants or any other person as to the adequacy, accuracy, completeness or reasonableness of the information in this presentation. To the maximum extent permitted by law, no responsibility for any errors or omissions from this presentation whether arising out of negligence or otherwise is accepted. An investment in the shares of the Company is to be considered highly speculative. 2

3 NSL corporate profile Shares Number Total shares on issue 352,274,859 Total options on issue 20,900,000 Top shareholders 40 ~ 54% Board and Management ~ 25% Total shareholders ~1700 Price $0.11 $0.1 $0.09 $0.08 $0.07 $0.06 $0.05 $0.04 Volume Jul Jul Aug Sep Sep Oct Nov Nov Dec Jan Jan Feb 12 3

4 Board and management Jock Muir Non Executive Chairman 30 years experience in global mining services Strong business development experience Current Non Executive Chairman of Barminco Ltd, Former Non-Executive Director of Dyno Nobel Limited Cedric Goode Managing Director/CEO 20 years experience in mining and mining services (iron ore, gold, coal) Proven track record in global strategic planning, business development and profit and loss responsibility Former Vice-President Commercial at Dyno Nobel Peter Wall Non Executive Director Partner of Steinepreis Paganin a leading Western Australian commercial law firm Significant experience in equity capital markets, mergers and acquisitions, and resources law Peter Richards Non Executive Director 30 years experience in mining and mining services (BP, Wesfarmers, Dyno Nobel) Strong business development experience Former CEO of Dyno Nobel, current Chairman of Kangaroo Resources Limited, Minbos Limited, Director of Emeco, Bradken, Norfolk and Sedgman Sean Freeman Chief Operating Officer Mining engineer with 20 years industry experience, including lead of strategic planning at BHP Billiton s Nickel West Global mining experience throughout in India, Canada USA, Europe, Asia and Australia 4

5 Highlights Indian Iron Ore PHASE 1 Modelled Net cashflow (EBITDA) of $9.6M per annum 2 200ktpa Kurnool beneficiation plant and two iron ore projects in India, first sales by end first half PHASE 2 Modelled cumulative Net cashflow (EBITDA) of $15.6M per annum 2 200ktpa Kurnool plant expansion targeted for completion first half PHASE 3-4 Targeting 1.5 million tonnes per annum throughput by end Third Project acquired with exploration target of 62 million to 125 million tonnes of magnetite 1 at grades of 20% to 50% iron. 1. It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. 2. Refer to Historical operating costs and plant modelling overview for full details, Provided capacity and production targets are achieved. Slides 6 and 7. 5

6 Phase 1: Historical operating costs and plant modelling overview 1 Focus on Domestic sales Strong Growth plan through modular plant expansion and rapid cashflow based acquisitions Mining Maintenance Processing (modelled) Potential output (annual) Modelled ROM input grade Yield per 100t Final product grade 200,000 t 35% Fe 30 t 56-58% Fe Total modelled cash cost All costs are per tonne of saleable concentrate produced Royalties - US$15 $3 Ex mine gate (grade 58%, lump) Modelled financial outcomes 4 INR 4500/t US$90 /t Total throughput (per hour) Total throughput (annual) 100 tonnes ~ 600,000 t NET CASH FLOW US $ PER MONTH US $9.6M PER ANNUM 1. The numbers in the tables above are based on the theoretical plant design capacity. They are not a forecast and actual results may vary significantly after the plant has been commissioned. 2. These costs are based on the actual mining costs incurred under contracts by NSL from its Mangal and Kuja projects historically at the time of trial mining and through subsequent equipment contracts. 3. This plant performance has been modelled on the lowest proposed feed grade, and a two shift operation. However increasing ROM grade, based on the test work to date, is expected to have a positive impact on the recovery, and more specifically an impact on the yield of the plant. 4. These outcomes are based on achieving all outcomes as presented in the historical operating costs and plant modelling overview above, including achieving an annual throughput of 496,000 tonnes of iron ore. The ability of the Company to achieve these results will depend on the Company mining or securing the required throughput and grades to feed the beneficiation plant as modelled. In the event that any of the variables in the above tables are not achieved, it could significantly impact the modelled returns to the Company. 6

7 Phase 2: Historical operating costs and plant modelling overview 1 Focus on export sales Historical Operating Costs (US$ per tonne) 2 Mining $4 Maintenance $1 Transport and port $24 Beneficiation (modelled) $15 Total modelled cash cost All costs are per tonne of saleable concentrate produced Royalties, Export Duties - Plant Design Capacity 3 US$44 $32 Estimated Plant Performance 3 Potential output (annual) 196,000 t Modelled ROM input grade 25-27% Fe Recovery (at input grade) 74-76% Yield per 100t t Final product grade 58-62% Fe Current Pricing Current Spot price (grade 58%-62%) Modelled financial outcomes 4 US$105 to $125 /t Short term modelled US$105 /t Long term modelled (2014+) US$95 /t Total throughput (per hour) Total throughput (annual) 100 tonnes ~ 496,000 t NET CASH FLOW US $ PER MONTH US $6M PER ANNUM 1. The numbers in the tables above are based on the theoretical plant design capacity. They are not a forecast and actual results may vary significantly after the plant has been commissioned. 2. These costs are based on the actual mining costs incurred under contracts by NSL from its Mangal and Kuja projects historically at the time of trial mining and through subsequent equipment contracts.. 3. This plant performance has been modelled on the lowest proposed feed grade, and a two shift operation. However increasing ROM grade, based on the test work to date, is expected to have a positive impact on the recovery, and more specifically an impact on the yield of the plant. 4. These outcomes are based on achieving all outcomes as presented in the historical operating costs and plant modelling overview above, including achieving an annual throughput of 496,000 tonnes of iron ore. The ability of the Company to achieve these results will depend on the Company mining or securing the required throughput and grades to feed the beneficiation plant as modelled. In the event that any of the variables in the above tables are not achieved, it could significantly impact the modelled returns to the Company. 7

8 Indian Iron Ore Projects INDIAN IRON ORE INDUSTRY Large but fragmented industry with smallscale operations. 160 Mtpa iron ore production 80 companies, 250 operating mines Worlds 4 th largest steel producer Worlds 3 rd largest iron ore exporter 8

9 Indian Iron Ore Projects KURNOOL PROVINCE OF ANDHRA PRADESH SOUTHERN INDIA Recognised and established iron ore region Only foreign company to own and operate Indian iron ore mines. Significant progress and assets in India trial mining undertaken, port facilitates secured, assay laboratory, advanced approvals, known costs. 360km from port by road/rail Good access to labour 9

10 Mining Kuja & Mangal Evaluations undertaken include: drilling, independent geological assessment, geophysical interpretation; and trial mining. Mining plans approved, to 831,297 tonnes per annum over the 5 year period of validity for the Mining Plan. Adjacent to NSL stockyard facilities 2.5km site access road constructed. Mine location and export route 10

11 Stockyard Adjacent to Kuja and Mangal Facilities Weighbridge Laboratory Three stage crushing Screening Dry separation 5-20mm material Wet Beneficiation three stage primary crushing circuit twin ball mills magnetic separation shaking tables. water recycling 11

12 New Acquisition AP14 AP14 magnetite project in Karimnagar (200km NE of Hyderabad in Andhra Pradesh) consists of 290 acre Mining Lease application. Exploration Target of 62 million to 125 million tonnes of magnetite 1 at grades of 20% to 50% iron. Banded Magnetite Quartzite style mineralisation spot samples ranging from 39.72% Fe up to 69.23% Fe. Project represents second generation for NSL in India significantly larger potential than Mangal and Kuja project currently underway. Area well served by infrastructure including: Two ports (Vizag & Krishnapatnam) for international export. Singareni coal mines for power generation. Railway siding within 30km, linked by sealed road Domestic power within 5km. Nearby perennial water source for process water. Low acquisition and holding costs during early development stage, with royalty based acquisition. Two to three year pathway to development. 1. It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. View from top of AP14 project Regional Setting No. Sample Code Fe% 1 AP14/KHM1/LU/ AP14/BMQK2/LU/ AP14/K3/LU/ AP14/K4/LU/

13 NSL Iron Ore - strong growth pipeline Near-term production from Kurnool (via Mangal / Kuja) 1 st half 2012 Cash back within 2-3 months post commissioning Nine month development timeframe Strong cash flows thereafter Kurnool Expansion leverage existing asset base 2 nd half 2012 to 2013 Close proximity opportunities Timely access to material Low cost Target acquisitions 2012 to 2014 Queensland thermal coal evaluation continues DSO and low grade beneficiation projects Strict criteria Target run rate of 1.5 million tonnes per annum One to two year time horizon to production Continue AP14 development Finalise Mining Lease approval Initial review scope project Establish JORC resource Two to three year time horizon to production Unlock further value through beneficiation Move up the value chain Pelletisation offers attractive margins Government incentives to value add no export duty 13

14 Queensland Thermal Coal Leveraging NSL s knowledge and relationships within India to explore opportunities to supply Australian thermal coal to the expanding Indian market In Oct 2011, 29 power stations, of the 86 coal-based power projects in India, were operating with less than 4 days coal stock and 44 with less than 7 days stock 14

15 Highlights Queensland thermal coal Queensland exploration permits for coal (EPCA) 2198, 2336, 2337 & 2338 covering 2585km 2 Analysis of historical drilling derives attractive exploration targets of 6.6 billion tonne to 18.7 billion tonne in thermal coal 1 exist at the projects Advanced permitting allows NSL to deliver certainty to Native Title and land owner negotiations, site access and initial schedules and contracting required to commence first exploration in the field 1. It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. 15

16 Large known resources near by Geology similar to East Energy (ASX: EER), 1.2 Billion tonnes Thermal Coal JORC Inferred Resource Adjacent EPC 2197, International Coal Limited (ASX:ICX). Exploration Target of billion tonnes, commenced drilling August 2011 Sentry Petroleum Limited, NASDAQ listed, quote a 2000 square mile coal deposit COALBANK (ASX: CBQ), EPC 1993 and 1719 drilling intercepts seams from 16m, total coal >10m confirmed in CBQ holes at shallow depths 16

17 Coal quality and infrastructure Coal Quality Potential coal quality can be garnered from the reported results of East Energy Resources (ASX:EER). NSL is targeting the same coal bearing formations Infrastructure Potential link to East Energy and Hancock through existing and planned rail link to port Blackall rail Hancock rail Potential link via southern railway to Brisbane port NSL EPCAs 17

18 NSL s coal business plan Progressive EPC Granting Native Title Cultural Heritage Landholder Access Drilling and geophysical work Surveying, Drilling, Testing - 2H Establish JORC resource Testing of Coal Quality Two to three year time horizon Queensland thermal coal evaluation JORC Probable/Measured Resources Feasibility Study Mineable and economically processed, rail, port infrastructure Bankable Feasibility Study Development Production 18

19 Time is right for NSL strong growth potential Only foreign company to own and operate Indian iron ore mines Near-term cash flow early 2012 from Kurnool iron ore beneficiation plant 2 High leverage to near-term iron ore prices, both domestic and export Strong growth plan for expansion and acquisition, leverage cash flow and asset base Additional upside with Queensland thermal coal historical drilling derived exploration targets of 6.6 billion tonne to 18.7 billion tonne in thermal coal 1 Ultimate vision of becoming a dual bulk minerals commodity company, with Indian iron ore production and Australian coal 1. It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. 2. Refer to Historical operating costs and plant modelling overview slide for full details 19

20 Thank you 20

21 Appendices 21

22 Why India? Size of India India's GDP is currently US$1.3 trillion, making it the 8th largest economy in the world. However, in PPP (Purchasing Power Parity) terms, which recognises India's low cost base, the GDP notionally rises to three times this amount (US$3.8 trillion) which places it on a similar size to Japan and, by 2013, it will become the third largest economy in the world (after the USA and China) in PPP terms. Economic growth India's economy is currently growing by 8.75% per annum (in 2010) and this GDP growth rate is expected to be maintained per annum for each of the next 10 years. India's GDP will grow five times in the next 20 years, and GDP per capita will almost quadruple. Demographics India is one of the youngest countries in the world, with an average age of 25 and likely to get younger. India's working-age population will increase by 240 million over the next 20 years. With a population of 1.2 billion, a strong work ethic, high levels of education, democracy, English language skills and an entrepreneurial culture. 22

23 Why India? High Savings With a savings rate of 37% of GDP, India's domestic savings fuels most of its investment requirements, and only 20% of India's total public debt is sourced from foreign borrowing. With significant investment to be made in upgrading India's poor infrastructure in the next 10 years (estimated to be US$1.7 trillion) India's Government is taking various steps to further encourage private and foreign investments. Domestic economy India's domestic consumption, has played a significant role in India's growth and is expected to remain firm as more people enter the workforce and the emerging middle classes. India's wealthiest consumers (those earning US$1m or more in PPP terms) will increase by 40 million in the next 10 years! Every sector within India's consumer market is booming, making India far less vulnerable to external shocks and pressures than other emerging markets. 23

24 Why India? Iron ore Large but fragmented industry with small-scale operations ~ 223 Mtpa production ~ 80 companies ~ 250 operating mines, ~ 250 inactive mines Approx 100 Mtpa utilised domestically in steel production Approx 100 Mtpa exported: China, Japan, Taiwan and Korea Well serviced by existing infrastructure 24

25 Why India? Iron ore Close to key markets Domestic and international Strong local steel demand, forecast to increase substantially Per capita estimated steel consumption World 206kg China 427kg India 55kg India s domestic steel growth profile: million tonnes million tonnes million tonnes million tonnes 25

26 Key Indian iron ore provinces Goa 51-62% Fe Karnataka 58-64% Fe Orissa 58-67% Fe Jharkhand 58-67% Fe Chhattisgarh 58-67% Fe Andhra Pradesh 51-67% Fe 26

27 31-Jul 14-Aug 28-Aug 11-Sep 25-Sep 09-Oct 23-Oct 06-Nov 20-Nov 04-Dec 18-Dec 01-Jan 15-Jan 29-Jan 12-Feb 26-Feb 12-Mar 26-Mar 09-Apr 23-Apr 07-May 21-May 04-Jun 18-Jun 02-Jul 16-Jul 30-Jul 13-Aug 27-Aug 10-Sep 24-Sep 08-Oct 22-Oct 05-Nov 19-Nov 03-Dec 17-Dec 31-Dec 14-Jan 28-Jan 11-Feb 25-Feb 11-Mar 25-Mar 08-Apr 22-Apr 06-May 20-May 03-Jun 17-Jun 01-Jul 15-Jul 29-Jul 12-Aug 26-Aug 09-Sep 23-Sep 07-Oct 21-Oct 04-Nov 18-Nov 02-Dec 16-Dec 30-Dec 13-Jan 27-Jan 10-Feb Pricing history Indian east coast fines Iron Ore Pricing - India 200 Grade U S D / T O N N E S Fe 63.5/63% Fe 63.5/62.5% Fe 63/62 % Fe 62 / 61% Fe 61 / 60 % Fe 60/59 % Fe 59 / 58 % Fe 58 / 57% Fe 57/56 % Fe 56/55% Fe 55/54 % Fe 54/ 53 % Fe 53/52 % Fe 52/51 % Fe 51/50% July February

28 Why India? Thermal coal India has the 5th largest generation capacity in the world 182GW (Aug 2011), expected to be ~240 GW (FY 2017) Acute power deficit ~ 15% At present the thermal power sector is facing a 15% shortage (50-60 Mt) of domestic coal Owing to rapid economic growth creating increasing energy needs, thermal coal requirement growth in India is likely to outstrip domestic thermal coal supply growth If announced plants proceed as planned, the installed coal based capacity in FY 2012 will be 136GW and in FY 2017 may be 240GW. All this from a base of ~85GW in FY 2010 Domestic coal deficit for thermal power plants will touch 30% and 32% in FY 2012 and FY 2017 respectively As coal assumes an even greater role in India's energy supply, the projected coal shortage is likely to lead to increased coal imports in the future 28

29 Why India? Thermal coal 29

30 Indian Iron Ore Phase One Construction Pictures 30

31 Indian Iron Ore Phase One Construction Pictures 31

32 Indian Iron Ore Phase One Construction Pictures 32

33 Indian Iron Ore Phase One Construction Pictures 33

34 Indian Iron Ore Phase One Construction Pictures 34

35 Competent Person s Statement Technical information relating to the coal projects in this announcement has been compiled by Mr Mark Biggs, Principal Geologist of Moultrie Database and Modelling. Mr Biggs is a member of the Australasian Institute of Mining and Metallurgy and has over 24 years of experience relevant to the style and type of coal mineralisation under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined by the Australasian Code for Reporting of Minerals Resources and Reserves (JORC) The estimates of the Coal Exploration Targets presented in this Report are considered to be a true reflection of the Coal Exploration Targets as at 1 st March 2011 and have been carried out in accordance with the principles and guidelines of the Australian Code for Reporting of Coal Resources and Coal Reserves published in September 2004 (JORC Code). Mr Mark Biggs consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears The information in this statement relating to the iron ore exploration results is based on information compiled by Mr Paul Blackney who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Blackney is employed by Optiro Pty Ltd. Paul has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking 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. Mr Paul Blackney consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. 35