Q42013 - Gold Investment Letter · 3 Company Snapshot Industry Insights • "RareHearth"pricing"...
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1 Q4 2013 Investor Presentation
Transcript of Q42013 - Gold Investment Letter · 3 Company Snapshot Industry Insights • "RareHearth"pricing"...
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Q4 2013
Investor Presentation
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Disclaimer
This presenta2on by Medallion Resources Ltd. (“the Corpora2on”) is for informa2onal purposes only and does not cons2tute a solicita2on or offer to sell securi2es. This presenta2on contains projec2ons and forward-‐looking informa2on that involve various risks and uncertain2es regarding future events. Such forward-‐looking informa2on can include, without limita2on, statements based on current expecta2ons or other assump2ons that involve a number of risks and uncertain2es. Forward-‐looking statements and informa2on are not guarantees of future performance of the Corpora2on. Forward-‐looking informa2on is subject to risks and uncertain2es that may cause actual results, and the Corpora2on’s plans and objec2ves to differ materially from those expressed in the forward-‐looking informa2on. Such risks and uncertain2es are detailed in the Corpora2on’s public filings available on SEDAR. Actual results and future events could differ materially from those an2cipated in forward-‐looking informa2on. These, and all subsequent wriVen and oral forward-‐looking statements are based on es2mates and opinions of management on the dates that they are made and expressly are qualified in their en2rety by this no2ce. The Corpora2on assumes no obliga2on to update forward-‐looking informa2on, should circumstances or management’s es2mates or opinions change.
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Company Snapshot
Industry Insights
• Rare-‐earth pricing • Rare-‐earth demand
Monazite Concentrate Production Strategy
• Fast-‐Track Strategy • Environmental • Medallion Approach
Management
Advisors
Investment Summary
Contents
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Company Snapshot
• Medallion Resources has a rare-‐earth produc2on strategy that takes a direct approach to rare earths – impor2ng tailings and processing them in Oman.
• Is led by Dr William Bird—a recognized rare-‐earth-‐industry leader. • Recently announced partnership MOUs with:
– Oman state-‐owned Takamul Investment Company, to be a joint-‐venture equity partner in a proposed facility in Duqm, Oman.
– Arab Mining Company, a Pan-‐Arab mining-‐industry investor keen to exploit rare-‐earth processing opportuni2es.
• Plans to process the readily available rare-‐earth phosphate mineral monazite: – Original rare-‐earth source with simple metallurgy. – Available as a by-‐product material from heavy-‐mineral-‐sands miners.
• With compara2vely few technological challenges and small capital requirements, this is a fast-‐track, rare-‐earth produc>on strategy.
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Industry Insights
• For 30 years, encouraged by good geology and state support, China built a world-‐domina2ng rare-‐earth industry. However, in 2010, the Chinese government implemented changes: – Imposed export quotas and taxes, enforced new environmental regula2ons
and directed state-‐owned enterprises (SOE’s) to consolidate rare-‐earth produc2on and processing.
– Result: A key mining industry was directed, for industrial policy purposes, to support value-‐added benefits of the high-‐tech manufacturing sector.
• The Rest of the world responded with an examina2on of known rare-‐earth occurrences: – Many marginal explora2on projects were funded — up to 300 at one point. – Two advanced projects (Molycorp and Lynas) were fully funded and are now
gecng to produc2on.
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Industry Insights Rare-Earth Prices Up . . . Then Down
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Industry Insights
• New supply capacity, outside of China, has been constrained due to: – Significant metallurgical challenges – High capital costs for new mines, processing and infrastructure – Insufficient funding
• Virtually all of China’s heavy rare earths (HREE) come from an unusual geological secng in South China—there are no magic bullets to significant HREE produc2on.
• Current supply/demand is in balance; however, future demand for rare earths cannot be met by China alone.
• The by-‐product monazite represents the best rare-‐earth opportunity to deliver significant amounts of the key elements used in permanent magnets: Neodymium and Praseodymium.
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Industry Insights
Evolution of Market Distribution of REE Demand
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Monazite Concentrate
• A phosphate mineral containing 50-‐60% rare earths.
• The world’s original commercial rare-‐earth source, simple and well-‐understood metallurgy.
• Significant quan22es are concentrated during heavy-‐mineral-‐sands processing – currently monazite is discarded or stockpiled.
• Major heavy-‐mineral-‐sands producers are: – Focused on 2tanium and zircon – Not interested in the rare-‐earth
industry, which involves chemical rather than physical processing
Monazite – a Major Rare-Earth Mineral
* Source: US Geological Survey
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Monazite Concentrate
11 80% of the world’s monazite is produced in the Indian Ocean basin
Monazite Sources Countries with 50,000+ tonnes of Monazite Sources
Make Oman green
Source: US Geological Survey
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Production Strategy
• Medallion is convinced that projected global rare-‐earth demand in the near and medium term cannot be met through Chinese produc2on or development of known hard-‐rock occurrences: – Hard-‐rock, rare-‐earth metallurgy is very complex – Many projects lack infrastructure – Capital costs can become prohibi2ve
• US Geological Survey confirms monazite is a major source of poten2ally economical rare earths.
• Medallion is ac2vely pursuing monazite-‐processing partnerships and monazite purchase agreements to advance its rare-‐earth produc2on strategy.
• Based on cri2cal success factors, Medallion selected the industrial city of Duqm, Oman for a proposed large-‐scale, monazite-‐processing facility.
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Production Strategy
Backed by sovereign-‐funded partners, Medallion is posi2oned to fast track an expected high IRR project and reset the global rare-‐earth marketplace.
– Compresses what is typically an 8-‐12 year development cycle into 2-‐3 years.
– Medallion’s strategy creates a Middle East facility that could emerge as one of only a few significant non-‐Chinese producers.
– Proximity to monazite feedstock.
– Excellent port and infrastructure. – Low-‐cost energy and chemicals.
Critical Success Factors for Duqm, Oman Facility
– Industry-‐friendly government.
– Capital available to fully fund such projects.
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Production Strategy Milestones 2012-2013
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Fast-Track Strategy Rare-Earth-Production Flow
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Fast-Track Strategy A Pro Forma Rare-Earth Facility 10,000 tonnes/year of rare-earth-oxide output
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Environmental
• Medallion is commiVed to following best-‐prac2ces and accepted interna2onal environmental and safety standards.
• SENES Consultants inves2gated issues associated with monazite processing — concluded that, with proper design and opera2on (including radiological protec2on at cri2cal points), there are no significant safety or environmental concerns.
• All rare-‐earth deposits have radioac2vity issues. • Monazite today is processed in China and India; Brazil and Russia are planning
processing. • The management and storage of monazite processing wastes will be handled
safely. • In August of 2013, an Environmental Impact Assessment (EIA) was ini2ated to
inves2gate environmental impact in the jurisdic2on of Oman.
Building a Safe Rare-Earth Facility
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Medallion Approach Fast-Track Strategy
MEDALLION
SOVEREIGN BACKING TURNKEY INFRASTRUCTURE REGULATORY SUPPORT LOCAL DEBT FINANCING
MIDDLE EAST PARTNERING
GWG TASMAN QUEST
MATAMEC RARE ELEMENT
FRONTIER
AVALON ALKANE ARAFURA
MOLYCORP
LYNAS
NAMIBIA STANS PEAK
NORTHERN Many more …
Source: JP Morgan, IMCOA, Company reports
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Management
• William H Bird, PhD, PGeo Chairman, CEO & Director 40+ years in mineral explora2on. He is a recognized rare-‐earth expert with a worldwide rare-‐earth technical network.
• Donald M Lay, BSc. President & Director 15+ years of interna2onal experience in public and private venture-‐capital and project funding.
• Tom Arnould, CA CFO & Corporate Secretary 30+ years in mergers and acquisi2ons and senior finance roles.
• Sothi Thillairajah, MBA General Manager, Middle East 20+ years in interna2onal finance. He is well-‐connected throughout Indian Ocean basin.
• Warwick Bartle, Director, Feedstock Acquisi>on 50 +years in interna2onal mineral sales and marke2ng of monazite, 2tanium minerals and zircon.
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Advisors
• Anthony Mariano, PhD—Interna2onally renowned rare-‐earth consultant, 50+ years experience in mineral explora2on, former advisor to Molycorp Inc and currently advises Rare Element Resources Ltd and other poten2al rare-‐earth producers.
• James Clark, PhD, LGeo—VP Explora2on for Rare Element Resources Ltd, 30+ years experience in geology and mineralogy of rare earths and rare metals, including work with Molycorp Inc.
• Dennis LaPoint, PhD, LGeo—Consul2ng Geologist previously with Alcoa Inc and Cambior Inc, 40+ years experience in the geology and explora2on of bauxite and precious, base and rare metals.
• David Shaw, PhD, PGeo—Consul2ng Geologist, Director of Talison Lithium Limited, former Chairman Salares Lithium Inc, 30+ years in explora2on and mining finance with exper2se in South America.
• Bob Roe, MS Geosciences—Consul2ng mineral-‐explora2on geologist, formerly with Rio Algom, Phelps Dodge, Essex Interna2onal and Kerr McGee Corpora2on, 30+ years experience in heavy-‐mineral-‐sands deposits.
World-Class Talent
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Looking Forward 2013-2015
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Investment Summary
• Medallion possesses significant intellectual horsepower in a complex industry. • Race outside of China — Medallion does not have any significant technological or
financial challenges. • The Gulf States offer an ideal loca2on; modern infrastructure and governments
who see rare-‐earth processing as a key industry in a post-‐petroleum world. • Medallion’s selected regional partners — Takamul Investment Company and Arab
Mining Company, represent significant financial and development capabili2es, and a shared vision to create a rare-‐earth processing facility in Oman.
• Produc2on is all that maVers — Medallion has clear advantages with a unique, economical, and short-‐term rare-‐earth strategy.
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