ARCHER EXPLORATION LIMITED Leigh Creek Magnesite Revisited 2010 Sept 2010 www.archerexploration.com.au ASX : AXE
Disclaimer Competent persons statement The exploration results reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr. Wade Bollenhagen, Exploration Manager of Archer Exploration Limited. Mr. Bollenhagen is a Member of the Australasian Institute of Mining and Metallurgy who has more than fifteen years experience in the field of activity being reported. Mr. Bollenhagen consents to the inclusion in the report of matters based on his information in the form and context in which it appears. Forward looking statements The information in this presentation is published to inform you about Archer Exploration Limited and its activities. Some statements in this presentation regarding estimates or future events are forward looking statements. Although Archer Exploration Limited believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results and outcomes will be consistent with these forward-looking statements.
Background ASX Listing 14 th August 2007 ASX code AXE Exploration Base Adelaide Projects South Australia
Leigh Creek Magnesite Revisited Leigh Creek Magnesite History Magnesium Metal Early 21 st Century - Impact of China Post WW2 Magnesium Market Magnesium Future Archer and the Leigh Creek Magnesite Deposits Geology Leigh Creek Magnesite Resources Leigh Creek Magnesite a New Paradigm
Leigh Creek Magnesite History. 1914 First documented magnesite mining 1947 FH Faulding small quantities mined for pharmaceutical and Chemical use. 1984-85 30,000 t to QAL(Gladstone) for water treatment (44.7% MgO, 4.2% SiO 2, 2.4% CaO, 0.13% Al 2 O 3, 0.16% Fe 2 O 3 ) SAMAG 1997-98 SAMAG 1999 Resource diamond drilling at 5 Prospects Resource Estimate April 1999 AXE 2010 Declared SAMAG magnesium metal project a Major Development Licence Application
Magnesium Metal 1998-2002 AMC Prospectus to raise $500m Oct 2001 AMC a Sardine trying to give birth to a Whale AMC Mothball Stanwell Magnesium Project June 2003 Dow Electrolytic Process Australian Magnesium Corporation QMAG
Magnesium 1998-2002 Magnesium Metal 4 times lighter than Iron and a third lighter than Aluminium 4 C s Computers, cameras, cell phones, cars Superior strength to weight ratio. Mg is the Aluminium of the new century
Magnesium Last Century 1959 Convair RB-36D Peacemaker U.S.A.F. Intercontinental strategic bomber. Contained 8.6 tonnes magnesium saved 26 tonnes steel or 2.9 tonnes Al. 1970s BMW Rennsport motorcyle. Magnesium engine and magnesium gearbox castings. From 1936 Volkswagon 1965 Beetle 20 kgms/vehicle Mg Metal
1937 1941 1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 Magnesium v s Aluminium Mg the Aluminium of the new century? Bayer Electrolytic Bauxite Process Alumina Aluminium Reduction Al atomic No 13. 3 rd most abundant crustal element Al Metal 30 m tonne pa Business Price approx $2,000/tonne 40,000,000 30,000,000 20,000,000 10,000,000 0 Al Production Mg atomic No 12. 8 rd most abundant crustal element Mg Metal 0.8 m tonne pa Business Price approx $2,800/tonne 800,000 600,000 WW2 400,000 200,000 0 Mg Production
Magnesium 1998-2002 Beneficiated Magnesite >40% MgO Electrolysis Process Mg Metal First Commercial Production 1852 HCl Leach Calcium Removal Purification Filtration Boron Removal Becdancour. Canada Magnesium to Casting Cl 2 Fluid Bed Drying MgCl 2.2H 2 O Electrolytic Cells
KMgCl Magnesium Metal MgCO 3 Processes Electrolytic Reduction v s Thermal Reduction H 4 Mg 3 Si 2 O 9 MgCa (CO 3 ) 2
700000 600000 500000 400000 300000 200000 100000 0 Other Israel EU USA Canada Russia China 1990 2009 World Magnesium Metal Production 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Other Israel EU USA Canada Russia China Before GFC Growth 10% pa Nth America Plant Closures 1999 Dow Texas 2007 Nork Hydro Quebec Timminco Ontario
Magnesium 2010 Thermal Reduction Quarry Dolomite 20% MgO Quarry Dolomite FeSi Gas Fired Rotary Kiln Cool Calcined Dolomite Ball Mill Grind and Mix Ferrosilicon Briquette Press Retort Furnace Retort Furnace Magnesium Crowns Refining & Casting Residue Sludge Magnesium Crowns Magnesium Ingots
Magnesium Future Pigeon Process? Pigeon Process Advantages Capital Cost <$500 /tonne annual production v Electrolytic Capital Cost $10,000/tonne annual production Retorts can be added progressively - incremental expansion of production Dolomite is an abundant source material Process has high tolerances suitable for developing nation. Plants are small and mobile can follow cheap energy Disadvantages Labour intensive Batch Process individual retorts typically produce < 200 kgms/batch Dolomite source material 20% MgO v s 40% MgO in Magnesite Consumes 1.08 tonnes of FeSi/tonne of Mg. Plants are currently polluters. China s dominance of production is a concern to consumers.
Current Mg Consumption Die Casting ( 40%) US Auto Mg Die CastingConsumption 2000-75,000 tonnes 2008-34,000 tonnes 2008 Aluminium Casting (27 %) No Substitute Al. beverage can 1.1% Mg in can body 4.5% Mg in can top Desulphurizing Steel ( 23%) Mg s affinity for Sulphur Price Sensitive
Magnesium in the 21 st Century Thermal reduction of MgO (from magnesite) with carbon.
ARCHER and the Leigh Creek Magnesite Deposit Identified SAMAG Magnesite Resource Feb 2010 License Application Feb 2010 PIRSA Offer Aug 2010 Expect Grant Sept 2010 Archer 100% owner
Leigh Creek Magnesite History 1998-2000 232Kms Rail Photo from Myrtle Springs Pit owned by MIL. Regional Historic Resources Area Measured Indicated Inferred MgO Pug Hill 10 10 42.7% Termination Hill 4 5 20 42.8% Mt Hutton 18.3 42 53 42.9% Mt Playfair 10 10 42.7% Witchelina 23.7 94 99 40.0% Source: SAMAG Project Report 1999 High quality > 42% MgO (magnesite 47% MgO) Low impurity magnesite chemical sediment Large outcropping Deposits Adjacent to existing rail link & infrastructure * Tenements are Exploration license applications
Magnesite Geology Resources 6 Deposits Paleoproterozoic Age Ancient Coorong 120 kms strike length Multiple Beds Vast Resource Potential
Magnesite Geology Hymapper at Witchelina
Leigh Creek Magnesite Project 1998-2000 Pastoral Leasehold Independent Resource Estimate & audit. Baseline Environmental Study Geotechnical Study EIS for 200kpa mining Mt Hutton Pit Design Outcropping Magnesite
A New Paradigm For Leigh Creek Magnesite Previous work has focused on Magnesium Metal Magnesia (Mg0) market has expaned Refractories supplying the Steel Industry Expansion into building Products (MgO) Board binder for bricks Chemical applications lateritic Ni/Co Magnesia Market Advantages Lower capital cost Broad range of consumers Magnesia is a bigger market
Magnesite Uses 14% 23% 63% Refractory Chemical Metal Magnesium Metal Refractory MgO
Electrical Steel Grade MgO Magnesia CHEMICAL USES Wastewater and Water Treatment Electric Utilities Agriculture Lateritic Ni/Co Chemical Precipitation of Ni & Co from Sulphate solutions Food Grade MgO Board Pulp Bleaching Flame Retardant and Smoke Depressant
MgO Board MgO Board approved for construction in US 2003 Florida Mold Resistant Beijing Olympics preferred construction material - Internal & external Brick and Binding
Magnesite Chemically Active Fillers, fertilizers, industrial, pharmaceutical 1000 O C Caustic Calcined Magnesite 40,000 tpa Vertical Shaft Furnaces up to 2,300 o C Deadburned Magnesite 10,000 tpa Electric Arc Furnaces 2,800 3,000 o C Electrofused Magnesite
Caustic Calcined Magnesite CCM Deadburned Magnesite DBM Electrofused Magnesite EFM $ 450-590* $ 750* $ 1200* Critical Contaminants Critical Contaminants - CaO, SiO - Product Specific 2, Fe 2 O 3 Al 2 O 3 Critical Contaminants - CaO, SiO 2, Fe 2 O 3 Al 2 O 3 * Indicative Only
Product Specification 30k tonnes 1984-85 44.7% MgO; 2.42% CaO; 4.21% SiO 2 0.13% Al 2 O 3 ; 0.16% Fe 2 O 3 MgCO3 MgCO3 For DBM and EFM SiO2 and CaO are too high. Talc Leigh Creek Magnesite Talc
To Meet Refractory Specifications SELECTIVE MINING Mt Hutton alone 17 Beds unique mineralogy over >4 Kms probably low SiO2 Units BENEFICIATION Flotation or heavy media NB Historic metallurgy focused on CaO removal for Mg Metal Production Pure MgCO 3
LCM - Order of Magnitude Study Leigh Creek Mine Crushing Plant 200KT MgCO 3 Mine 200kt Magnesite 800kt O&W Calcine Crush to 20mm remove fines $3-$5/t 200kt Crushed MgCO 3 Rail to Pt Pirie 100kt MgO Capital $30-35m. Caustic Calcined MgO Markets
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