Company Presentation November 2016 Extracting maximum value from - - PowerPoint PPT Presentation

Company Presentation

November 2016

“Extracting maximum value from Bushveld Magnetite producing High Purity Iron, Vanadium and Titanium products”

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Di Disc sclaime aimer

The content of information contained in this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”). Reliance upon this Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. If any person is in any doubt as to the contents of this Presentation, they should seek independent advice from a person who is authorised for the purposes of FSMA and who specialises in advising in investments of this kind. This Presentation is being supplied to you solely for your information. While the information contained herein has been prepared in good faith, neither Ironveld plc (“Company”) nor its shareholders, directors, officers, agents, employees or advisers give, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers and liability therefor is expressly disclaimed. This Presentation does not constitute, or form part of, an admission document, listing particulars or a prospectus relating to the Company, nor does it constitute, or form part of, any offer or invitation to sell or issue,

• r any solicitation of any offer to purchase or subscribe for, any shares in the Company nor shall it or any part of it, or the fact of its distribution, form the basis of, or be relied upon in connection with, or act as any

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• fficers, partners, employees or advisers or any other person as to the accuracy or the completeness of the information or opinions contained herein and to the extent permitted by law no responsibility or liability is

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Highly hly Deliv livera erable, le, High h Grade de Project ject



Development of mine fed 15MW DC Smelter within the Northern Limb of the Bushveld Complex, South Africa



Total Project Mineral Resource contains 32 million tons of Iron in situ



Project scale is supported by excellent infrastructure of roads, rail and access to power and water



DFS (April 2014) delivered robust economics and trial testing delivered ore that requires no beneficiation beyond crushing



**$63 million capital costs, cash flow positive from full production



12 months construction timeline to commissioning



Projected annual production:



42 000 tons of High Purity Iron Powder;



381 tons of of Vanadium in slag grading 36% V; and



8 269 tons of of Titanium in slag grading 65% TiO2



High impact development with world class resource and grades in high purity iron powder (HPI), titanium and vanadium



Highly attractive indicative project economics



Attractive combination of low capital and operating costs generating near term and free cash flow positive position from year 1



By-product credits significantly reduce already low cash costs

** Rand-Dollar Rate 13.90

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Key Milestones delivered……

• Mining Right duly executed to mine magnetite
• Mining Environmental Management Program approved
• Smelter Environmental Management Program approved
• Formal letter received from ESKOM confirming power supply availability for the project
• Offtake secured for all three products for first 5 years of LOM
• Land lease being processed by the Department of Public Works
• Inclusion in 12I tax benefit scheme approved
• Critical Infrastructure Programme (CIP) grant awarded
• IDC debt and equity funding package (including BBBEE contribution) completed

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Govern ernment ment Ba Back cking ing - IDC IDC

The support of the Industrial Development Corporation is significant endorsement of the projects quality and importance to South Africa.



The IDC will provide senior loan facilities (“the Facilities”) to Ironveld Mining (Pty) Ltd and Ironveld Smelting (Pty) Ltd, subsidiaries of Ironveld plc. The total value of the facilities represents R244.08 million (approx.US$17.9 million).



The funds will form part of an approx. R871 million financing package for the development of the Project.



The IDC is providing funding for the Broad-Based Black Economic Empowerment’s (“BBBEE”) capital contribution in Ironveld Smelting (Pty) (in line with its 26% shareholding in the smelting project). The following facilities have been approved:

• 1. R100.80 million Preference Shares (BBBEE Shareholding)
• 2. R101.1 million Senior Loan to Ironveld Smelting (Pty) Ltd
• 3. R18.1 million Senior Loan to Ironveld Mining (Pty) Ltd
• 4. R24.08 million capitalized interest

Backgro ground und of the Indus ustrial ial Develop

• pment

ent Corporat atio ion n (IDC)



Established in 1940 to develop domestic industrial capacity and owned by the South African Government



Objective is to be the primary source of commercially sustainable development and innovation to benefit both South Africa and the rest of Africa



Facilitate sustainable direct and indirect employment



R11.5 billion overall funding approvals last year



Examples of successful projects funded by the Mining and Minerals Strategic Business Unit include Kalagadi Manganese, Tendele Coal Mine, Matla Diamond, Sudor Coal (Pty) Limited, Hernic Ferrochrome and Freda Rebecca Gold Mine Limited.

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Em Empo powerment ment Par Partner tners

Zolani Mtshotshisa

Zolani holds a Masters Degree in Communication from Leipzig, Germany and MSc in International Relations from University of Zimbabwe in Harare. Upon his return from 12 year exile worked in different sectors of the South African economy including – banking, fishing, insurance and investments. He was a director of listed and unlisted companies and a senior executive at Mvelaphanda Group of companies. He is the sole shareholder and director of Zemkinkomo Holdings and non-executive Chairman of Lukhanji Leisure, owner of Queens Casino and Hotel.

Pinky Ngxulelo, Managing Director

Pinky is a director of Epibex Pty Ltd. She has worked for Thebe Investments, a company that came into being shortly before South Africa’s formal political transformation. She has also worked as National Peace secretariat which was tasked with Democratising public participation in peace-making. This was in preparation for the first democratic elections. She serves as a consultant to Ironveld in regard to Municipal and Government engagements as well as co-ordinating the local communities in the project area. She serves as the Managing Director of Ironveld’s B-BBEE partner companies.

B-BBE E Par Partner r Comp mpani nies es

• Sequon – Harriets Wish, Cracouw and Aurora communities
• Cucrat – Nonnenwerth, Lapucella and GaTshipana communities
• Luplus – GaRamela community
• Ironveld Smelting BBBE Company

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Ma Manag ageme ement nt

Keneilw eilwe Ndala la, CEO Mining ing Keneilwe holds a BTech Engineering (Mining) from the University of Johannesburg. She is the holder of a South African Mine Managers Certificate of Competency (Metal Mines). She started her carrer as a Learner Offical at Hotazel Manganese Mines in Kuruman. In 2003, she joined Samancor as a Junior Mining Engineer. In 2007 she was appointed as Mine Planner (opencast and underground) at Exxaro. Keneilwe joined Ironveld in 2012 and is appointed as CEO Mining with responsibility for the mine design, planning, scheduling and mining operations. Thamaga ga Mphahlele ahlele, CEO (designat ignate) e) Smelt lting ing Thamaga is a registered professional Electrical Engineer and a member of the South African Institute of Electrical Engineers (SAIEE). He holds a BSc Engineering (Electrical) from the University of the Witwatersrand. Thamaga joined Ironveld in 2015 as a Senior Electrical Engineer and is the designate CEO Smelting. Thamaga started his career at Eskom as an Engineer-in-Training being appointed in 2010 as an Electrical Engineer for overhead distribution technologies. Tariro Chitap apa, Manager ger: Marketing, eting, Logis isti tics & CSR CSR Tariro holds a BCom in Marketing Management from the University of South Africa and a qualification in Logistics and Supply Chain Management from the University of Witwatersrand. Prior to joining Ironveld in 2012, Tariro was employed as a marketing and public relations manager. At Ironveld, Tariro’s responsibilities include, in addition to marketing and logistics, corporate social responsibility (CSR).

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Pr Project ject Loca cation tion

Excelle llent nt infras astruc uctur ure e of roads, rail il & access ess to power & water Eskom

• m and Power
• South African power supply situation is progressively improving with Eskom raising power capacity
• Eskom has indicated that through Knobel Substation located approximately 30 km from Ironveld Smelter site that 20 MVA will be made available for Ironveld’s 15MW

Smelter

• Ironveld Smelting has opted for the “self-build” project option. This way Ironveld Smelting will be able to ensure build quality of the network to standards that will not only

meet Eskom LOU’s requirements but will also ensure that our operations are stable to excellent levels.

• Pre heating and hot charging furnace reduces power requirements

Water

• Sufficient water will be sourced from boreholes within the licence area

Logis istic ics

• 80km of road to rail siding
• Transport of high purity iron powder can be containerised allowing use of container facilities at Richards Bay and Maputo which are being upgraded

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High gh Qu Qualit lity y Ass sset t wi with th Up Upsi side de

MML Mineral Resources* for the Ironveld Project, <120 m at 20% Fe cut-off, as at 04 Jul, 2013

Farm Cut-off Million Densit y Fe Fe2O3 Fe Metal TiO2 V2O

SiO2 P2O5 S Name Fe% Tonnes g/cm3 % % millions % % % % % Measured Mineral Resources Altona 20 2.18 4.55 51.7 73.9 1.13 16.3 1.15 2.9 0.01 0.08 Total Measured 20 2.18 4.55 51.7 73.9 1.13 16.3 1.15 2.9 0.01 0.08 Indicated Mineral Resources Nonnenwerth 20 22.64 4.20 45.2 64.7 10.24 13.8 1.06 8.5 0.01 0.16 La Pucella 20 5.61 4.50 50.3 72.0 2.83 15.5 1.16 4.4 0.01 0.08 Altona 20 7.48 4.54 51.4 73.6 3.85 15.9 1.15 3.2 0.01 0.08 HACRA Farms 20 12.12 4.31 48.1 68.8 5.83 14.5 1.14 6.0 0.01 0.05 Total Indicated 20 47.85 4.31 47.5 68.0 22.74 14.5 1.11 6.6 0.01 0.11 Inferred Mineral Resources HACRA Farms 20 6.31 4.45 50.1 71.7 3.16 15.4 1.21 4.2 0.01 0.03 Total Inferred 20 6.31 4.45 50.1 71.7 3.16 15.4 1.21 4.2 0.01 0.03 Measured, Indicated and Inferred Mineral Resources Project Total 20 56.35 4.34 48.0 68.6 27.03 14.7 1.12 6.1 0.01 0.10

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Products ducts

High Purity Iron Powder

• South Africa imports all its HPI powder
• Iron powders (atomized and reduced) are widely used in

powder metallurgy (PM), in magnetic materials and in the manufacture of welding rods.

• Iron powder products are classified by purity, production

method, grain and density.

• The PM market is a growing market driven by the

continuous introduction

• f

new materials and technologies

Vanadium

• Vanadium redox flow battery (VRB) systems for grid energy

storage applications are under development with high potential to have a significant impact on future vanadium demand.

• Vanadium-flow batteries (VFBs), are being heralded as an answer

to the “missing link” in clean energy production – i.e. the lack of volume storage for electricity generated by solar and wind power installations.

• The battery stores electrons in its anode, which potentially turns

it into a reliable and consistent source of electricity, despite the intermittency of its renewable energy source.

• Scientists from Nanyang Technological University,

Singapore (NTU) have developed a new battery that can be recharged up to 70 percent in only 2 minutes. This new battery technology also has a longer projected lifespan of over 20 years.

• NTU’s scientists replaced the traditional graphite

used for the anode (negative pole) in lithium-ion batteries with a new gel material made from titanium dioxide

Titanium

72% 25% 3%

Market Share

Atomized Iron Powder 71.95% Reduced Iron Powder 25.25% Other 2.80%

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Of Offta take/Ma /Marketing ting Agreements eements

High Purity y Iron Powder er & Titani nium um Slag

 A contract has been signed with Oreport for the offtake of the High Purity Iron powder and

the Titanium slag for five years.

 Oreport is an established marketing and related services company with expertise in

commodities, steel and stainless steel. A South African based, majority black owned, global trading company with long standing relationships in the International market built

• ver more than twenty years.

Vanadiu dium m Slag

 A five year offtake agreement was signed for the Vanadium slag with an established

international company.

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Const

• nstruction

ruction Timeline: meline: 15MW MW DC Sme melt lter er

Detailed Design Earthworks and Civils Construction Power Line Commissioning Production 12 months 12 months 9 months 3 months 4 months

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Defin init itiv ive Feasib ibil ilit ity y Study dy

USD million 2017 2018 2019 2020 2021 2022 2023 2024 Capital expenditure 27 35 Sales 14 56 59 64 68 72 81 Profit before tax (PBT) 4 23 25 27 28 30 32 Tax 4 8 9 9 Profit after tax (PAT) 4 23 25 23 20 21 22 Free cash flow (27) (30) 25 26 23 22 23 24 Based d on Defini niti tive e Feasi sibility Study udy carri ried d out by T Tenova Pyromet et and the comp mpany y updat ated d for:

• R/GBP 17.2
• R/U$ 13.90

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Summ mmar ary: y: Val alue-driv driven en growth wth



World Class project, supported by South African Government and institutions



Debt funding negotiations nearing completion



Free cash flow generative early with early debt pay back



Security of payment through 5 year offtake agreements



Low capex and highly deliverable project

Appendix

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Met Metallu allurgical rgical Test est Work



Trial smelt conducted at Mintek produced 70 tons of Pig Iron



With high recoveries of Titanium and Vanadium



Conversion of Pig Iron to High Purity Iron



Product produced used for marketing trials

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Simple, le, Mo Moder dern n Pr Process cess

MINING OPERATION

Openpit mining of Main Magnetite Layer

BENEFICIATION

Crush ore to -1mm

15 Mw DC Smelter

Preheat and Melt ore Titanium Slag Product Vanadium Alloy Reductant addition Offgasses Ore transport Crushed ore feed

Convertor

Vanadium Slag Product Liquid High Purity Iron

Atomiser

High Purity iron Powder

Offtake

Oxygen

Offtake Offtake

Water

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Group up Str tructure cture including cluding B-BB BBEE EE

Ironveld Holdings HW Iron Ironveld Smelting Lapon Mining Ironveld Mining Luge Prospecting and Mining 74% 74% 68% 100% 100% Ironveld Vanadium 74% Luplus 26% Zemkinkomo Holdings Cucrat Sequon Ironveld Employees Company Ironveld Smelting B-BBEE 21% 5% 27% 12.5% 26% 5% 12.5% 72.5% 2.5% 87.5% Ironveld Mauritius Ironveld plc 100% 100%

Group Companies B-BBEE HDSA

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Bo Boar ard

Giles les Clark rke, e, Chairm rman an

Giles is President of the England and Wales Cricket Board and Chairman of the Finance & Commercial Affairs committee of the International Cricket

• Council. He is also Chairman of Westleigh Investments Holdings Limited, Amerisur Resources plc, Kennedy Ventures plc and of several private
• rganisations. He founded Majestic Wine in 1981 and built it into a national chain of wine warehouses. He also co-founded Pet City in 1990, which he

expanded nationwide before it was listed and subsequently sold in 1996 for £150 million and co-founded Safestore which was sold in 2003 for £40 million.

PJ PJ Cox

• x, Chief

ef Executiv tive Offic icer er

Peter started his career in the mining industry 40 years ago as a learner surveyor. After studying mining engineering as a JCI bursar, he worked for that company in various positions at gold and platinum mines, ending as a senior section manager. In 1987, he joined a privately owned mining and exploration company, Severin Southern Sphere Mining, as consulting engineer and general manager. Since mid-1991 he has been the managing director of Goldline Global Consulting (Pty) Ltd, an engineering consulting company which serves the mining industry worldwide. He holds a Mine Surveyor's and a Mine Manager's Certificate of Competency. He has a number of achievements to his name, including being the youngest certificated surveyor in South African mining history and designing the country's narrow reef opencast mining method.

Vred vo von Ketelhodt, lhodt, Chief Finan ancial ial Offic icer er

Vred has over 30 years experience in the global metals and mining sector working as both a Mining Engineer and Corporate Finance professional. He has extensive corporate and project finance experience and has negotiated the provision of significant project debt and acquisition finance facilities for metals and mining ventures globally. He has also worked for a number of years in the investment banking sector managing venture capital and private equity investment funds.

Nick Harrison,

• n, Direc

ector

• r

Nick qualified as an accountant with Arthur Andersen and subsequently held a number of senior positions with other professional services

• rganisations. He was Finance Director of Pet City and has held finance director and chief executive positions in a number of private businesses. He is

currently a director of Amerisur Resources plc, Kennedy Ventures plc and of a number of private organisations.

Rupert Fraser er, Direc ector

• r

Rupert has over 20 years of experience in the investment banking industry. Rupert was a Senior and founding Partner at Kildare Partners. Previously he was head of Equities at Evolution Securities from 2009 to 2011, prior to which he spent 16 years at Dresdner Kleinwort, where in 2005 he was appointed Managing Director, Global Head of Equity Distribution.

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Consu

• nsultant

ltants

Sipho ho Mkhiz ize, e, Consultin ulting Enginee ineer

Sipho holds a BSc Engineering (Mechanical) from the University of Natal, an MDP in General Management from Unisa (SBL) and a Bachelor of Business and Administration (Honours) from the University of Stellenbosch (USB). He started his career at Mobil Oil Refining in Durban as a Junior Engineer (1985–1989). He then worked for Alusaf Bayside Smelter (1989–1997) as a Project Engineer, Maintenance Engineer and Production Manager. He later joined the Industrial Development Corporation (1998–2003) as Head of Mining and Beneficiation. He was seconded as CEO to PetroSA (2003–2010). He serves an executive and non-executive director for a number of companies. At Ironveld he is responsible for the Social and Labour Plan (SLP), infrastructure and logistics studies.

Doug Timmer erman, an, Projec ect Manager ger

Doug is an independent Project Manager and Consultant. He was engaged by Ironveld from the inception of the Ironveld

• project. He consults to a number of industrial businesses with a focus on engineering projects. He enjoyed a 32 year career at

Hulamin Limited, retiring in 2011 as Operations Director. Doug is experienced in manufacturing operations, project management and engineering from conceptual phases to fully operational hand over, maintenance engineering, international procurement and managing complex business systems. Doug holds a T4 Diploma in Mechanical Engineering, a South African Government Certificate of Competency (Factories) and completed a Management Development Program at the University of Durban Westville.

Nic Barc rcza, Consulti lting ng Metallu allurgis rgist

Nic has a PhD in Metallurgical Engineering and is a registered Professional Engineer. He is an Executive Consultant to Mintek, South Africa. He was the Chairman of Mintek's wholly-owned subsidiary Mindev (Pty) Ltd, until the end of 2005 and has served on a number of Boards including Mogale Alloys (Pty) Ltd, a ferroalloy and stainless steel dust/alloy recycling operation near Johannesburg. He is a past-President and Honorary Life Fellow of the Southern African Institute of Mining and Metallurgy (SAIMM), immediate past chairman of the International Committee on Ferroalloys (INFACON), a Fellow of the South African Academy of Engineering (SAAE) and has served on several academic advisory Boards. Nic has worked on several titaniferous magnetite, ferrochrome and ferronickel projects. Nic advises and consults to several other projects in South Africa and abroad.

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Corporat porate e Socia cial l Respon sponsibil sibility ity

The Social ial Labour ur Plan (SLP) P)



Includes the following projects:



Dairy Farming



Local Economic Development Projects



Adult Basic Education and Training, Learnerships & Internships



Bursary Scheme



Career Progression Plan for the employees sourced from local communities

Curren ent Social ial Acti tivit vities ies



"Keep a Girl Child in School” Project:



This is a menstrual hygiene project to keep the girls in school by providing them with sanitary towels quarterly. 

“Keep a Boy Child in School” Project:



This is a project where the company provides back packs and stationary to the boys quarterly



These projects will be accompanied by monitoring academic performance to ensure that school grades improve



These project are done in partnership with the Imbumba Foundation and the Nelson Mandela Foundation 

Amat ateu eur Cricket



The company in partnership with Limpopo Impala Cricket will be introducing Amateur cricket in all the six schools starting Q1 2017