www.conicmetals.com | TSXV: NKL
Investor Presentation
April 2020
Conic Metals Corp.
Investor Presentation Conic Metals Corp. April 2020 0 - - PowerPoint PPT Presentation
Investor Presentation Conic Metals Corp. April 2020 0 www.conicmetals.com | TSXV: NKL Conic Metals 8.56% JV interest Royalty Portfolio Other Assets in Ramu Ni-Co Operation Low cost open-pit nickel- 11 royalties focused on nickel
www.conicmetals.com | TSXV: NKL
Investor Presentation
April 2020
Conic Metals Corp.
1 www.conicmetals.com | TSXV: NKL
Conic Metals
Royalty Portfolio 8.56% JV interest in Ramu Ni-Co Operation
Low cost open-pit nickel- cobalt mine and HPAL plant located in Papua New Guinea Operating since 2012, capex
Mine generates substantial free cash flow 11 royalties focused on nickel and cobalt in Canada and Australia 1.75% NSR on Dumont in Quebec 2.0% NSR on Turnagain in British Columbia
Other Assets
US$5.0M in cash with no corporate debt 7% equity stake in Giga Metals 3% equity stake in Minerva Intelligence
World-Class Nickel-Cobalt Mine in Production w/ Upside Through Royalty Portfolio
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Ramu Cash Flow to Conic
Nickel Price: $6.50/lb Cobalt Price: $20.00/lb
Cash Flow (US$ Millions)
Significant Near Term Cash Flow
increases to 11.3%
$0.0 $0.0 $7.0 $7.0
5 10 15 20 25 30 35 40 452020 2021 2022 2023 Debt Free Nickel Price: $8.00/lb Cobalt Price: $30.00/lb
Cash Flow (US$ Millions) $0.0 $0.0 $11.1 $11.1
5 10 15 20 25 30 35 40 452020 2021 2022 2023 Debt Free
8.56% JV Interest 11.3% JV Interest 8.56% JV Interest 11.3% JV Interest $26.3 $41.7
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2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 2014 2015 2016 2017 2018 2019 2020 Price (US$/lb) Nickel Copper Zinc Lead
40 60 80 100 120 2015 2016 2017 2018 2019 2020
200 300 400 500 2014 2015 2016 2017 2018 2019 2020
Nickel Market Dynamics
Historical Base Metal Prices
US$lb
LME Nickel Inventory Levels
kt
Shanghai Nickel Inventory Levels1
kt
Source: Bloomberg (1) Reported data starts in April 2015
Nickel Inventory is Still Low and Fundamentals are Strong
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Nickel’s Importance in the Electric Vehicle Industry
EV Nickel Demand: +1.3 Mtpa by 20301
Contained Nickel in EVs (Mt)
EV Nickel Demand as a % of Supply
% of 2018 Ni Supply
Source: Glencore estimates, Wood Mackenzie, CRU, BNEF (1) Does not include the nickel required for other parts of the EV supply chain including energy storage systems
3% 5% 18% 59%
2018 2020E 2025E 2030E
0.06 0.11 0.40 1.30
2018 2020E 2025E 2030E
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Lithium Ion Megafactory Capacity Growth
Source: Benchmark Mineral Intelligence
Growth in Lithium Ion Megafactory Capacity by Region Global Lithium Ion Megafactory Capacity
GWh
60 80 100 140 300 420 580 760 1,140 1,220 1,420 1,580 1,760 1,900 2,020 2,100
1,000 1,500 2,000 2,500 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F
China, 68% Asia, 15% North America, 11% Europe, 7%
2018: 292 GWh
China, 73% Asia, 6% North America, 8% Europe, 12% Other, 0.3%
2023: 1,222 GWh
China, 71% Asia, 5% North America, 8% Europe, 16% Other, 0.7%
2028: 2,020 GWh
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Substantial Long-Term Supply Challenge
Source: Wood Mackenzie
Significant Investment Required to Build New Nickel Production
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Nickel Capital Intensity
capacity
Source: Company Reports
Nickel Laterite Capital Intensity
US$/t Ni | Capex (US$B) HPAL FeNi
40,000 60,000 80,000 100,000 120,000 140,000 160,000 Goro Ambatovy Taganito Ramu Ravensthorpe Murrin Murrin Koniambo Onça Puma Barro Alto
Captial Intensity (US$/t Ni)
+$6B +$6B $1.7B $3.0B $2.5B $1.3B $6.3B $2.8B $1.9B
Investment of $50 - $100 Billion Required to Supply 1 – 1.5 Mtpa By 2035
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Electric Vehicle Metal Requirements
Source: CRU “Mobility and Energy Futures – Perspectives towards 2035
Current Market EV Needs by 2030 % ∆ Ni 920 1,300 140% Co 115 314 270% Cu 20,000 4,080 20%
Ni Co Ni Co
Generation + Grid Structure (kt) Grid Storage (kt) Charging infrastructure (kt) Electric vehicles (kt)
EV Demand will Require Significant New Sources of Nickel, Cobalt and Copper
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Conic’s Global Portfolio
Turnagain Ni-Co (Royalty) % NSR 2.0% Operator Giga Metals Stage Exploration Acquisition Cost US$10M (2018) Ramu Ni-Co Operation (Direct Interest) % Ownership 8.56% Operator Metallurgical Corporation of China Stage Producing Acquisition Cost US$68M1 (2019) Flemington Ni-Co (Royalty) % GRR 1.5% Gross Revenue Royalty Operator Australian Mines Stage Exploration Nyngan Co-Sc-Ni (Royalty) % GRR 1.7% Gross Revenue Royalty Operator Scandium International Stage Construction-Ready Dumont Ni-Co (Royalty) % NSR 1.75% Operator RNC Minerals Stage Construction-Ready Acquisition Cost US$15M (2018)
(1) Highlands transaction value adjusted for the PanAust buyback and Highlands’ adjusted cash balance (2) Other royalties acquired for ~C$0.9M in aggregate in 2017
Acquired from Jervois Mining for US$4.5M (2019) Other Ontario Royalties2
North Canol Properties: 2% Co NSR2,3 Sunset: 2% Co NSR2
(3) Two separate mineral properties to which a Co NSR applies
Conic’s Investment Portfolio Acquired at a Cost of C$130 million (C$1.55/share)
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Ramu Highlights
potential
(1)
As reported by Wood Mackenzie
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Papua New Guinea: Incredible Resource Potential
Misima – 2.8Moz Woodlark – 1.6Moz Panguna – 19.3Moz Au 5.3 Mt Cu Lihir – 56.6Moz Simberi – 3.9Moz Hidden Valley – 3.3Moz Wafi-Golpu – 18.6Moz Au 8.6 Mt Cu Gold Mine Copper-Gold Mine Kainantu– 2.8Moz Porgera – 5.4Moz
Ok Tedi – 13.5Moz Frieda River – 19.5Moz Au 13 Mt Cu LNG Fields LNG Export Plant PNG LNG Papua LNG Elk/Antelope Kuru P’Nyang Juha Angore Gobe
Ramu Nickel / Cobalt
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Map of Ramu Nickel-Cobalt Integrated Operation
Kurumbukari Mine Site
Madang
Basamuk Plant
Lae Usino
Ramu Nickel-Cobalt Operation
100 Kilometres
Ramu Nickel-Cobalt Operation Madang Port Morseby Basamuk Plant Lae
Exploration Licence All Weather Roads Highway Pipeline (134 km) City
MADANG PROVINCE
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Metallurgical Corporation of China (MCC)
Metallurgical Engineering Infrastructure Mine Construction & Development
development
mining projects in Asia Pacific
Tremendous Partner at Ramu Mine for Over 13 years
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Ramu Performance
Production in Mixed Hydroxide
000s of Tonnes
Ramu Historical Cash Costs and LME Nickel Price
Ramu Production Has Exceeded Design Capacity for Each of the Last 3 Years
production in excess of currently defined 14 year life of mine
Nickel Cobalt 5.3 11.4 21.0 25.6 22.3 34.7 35.4 33.0 33.0 0.5 1.0 2.1 2.5 2.2 3.3 3.3 3.2 3.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.02012 2013 2014 2015 2016 2017 2018 2019F 2020F LME Nickel Price (US$/Lb.) Ramu Cash Costs(1)
(1)
Cash Costs are net of by-product credits and unaudited
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019
17 www.conicmetals.com | TSXV: NKL Royalty Name Operator Location Stage Primary Metal(s) Royalty Type Stream ROFR Dumont RNC Minerals Québec Construction-ready Ni-Co 1.75% NSR
Giga Metals British Columbia Exploration Ni-Co 2% NSR Yes Nyngan Scandium Int’l Mining Australia Construction-ready Ni-Co-Sc 1.7% GRR1
Australian Mines Australia Exploration Ni-Co-Sc 1.5% GRR1
New Found Gold Ontario Exploration Co-Ag 2% Co NSR Yes Rusty Lake New Found Gold Ontario Exploration Co-Ag 2% Co NSR Yes Professor & Waldman Properties2 New Found Gold Ontario Exploration Co-Ag 2% Co NSR Yes North Canol Properties2 Golden Ridge Resources Yukon Exploration Ag-Pb-Zn-Co 2% Co NSR Yes Sunset Private Individuals British Columbia Exploration Cu-Zn-Co 2% Co NSR Yes
Growth Through Portfolio of Streams and Royalties
(2) Two separate mineral properties to which a Co NSR applies (1) Gross Revenue Royalty
Optionality on Fully Paid For Royalty Portfolio on Some of the World’s Largest Undeveloped Nickel-Cobalt Reserves & Resources
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6.4 2.8 2.4 1.7 1.7 1.7 Taimyr Penninsula Dumont Weda Bay Onca Puma Jinchuan Soroako
Overview of the Dumont Project and Royalty
Dumont Highlights
reserves in the world
negotiated with local First Nation
lbs Co
ramping up to 50kt Ni and 1.5kt Co in Phase II
at $3.22/lb of payable nickel Royalty Highlights
Royalty
2020
ASSET OVERVIEW LOCATION MAP NICKEL RESERVES BENCHMARKING (MT NI)
Producing Asset Development Asset RNC Dumont Property FS Pit Extent Airports Highways Roads CNR Cities / Towns Amos Amos Municipal Airport 395 111 109 Villemontel Launay
Lac La Motte Lac Figuery Lac Obalski
N
5 10km
QC
Amos Water Aerodrom e Val-d’Or is 90 km southeast from Dumont and 57 km away from Amos
Source: RNC Minerals (1) Mineral Reserves Statement (Penswick, May 30, 2019)
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Overview of the Turnagain Project and Royalty
MINING FRIENDLY LOCATION TURNAGAIN HIGHLIGHTS
sulphide deposits
2023 CONIC INVESTMENT
and cobalt production
− Measured & Indicated: 1,073 million tonnes @ 0.22% Ni
& 0.013% Co (5.2 billion lb of Ni & 312 million lb of Co)
− Inferred: 1,100 million tonnes @ 0.22% Ni & 0.013% Co
(5.5 billion pounds of Ni & 327 million pounds of Co)
drilled to date
TURNAGAIN MINERALIZATION NICKEL SULPHIDE OPERATIONS
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Trading Comparables
Source: As at April 21, 2020. S&P Capital IQ, Company filings (1) EV calculation includes adjustments for minority interest and equity investments
CAPITALIZATION P / NAV P / CF Market Cap Cash Debt EV1 2020 2021
(US$M ) (US$M ) (US$M ) (US$M ) (ratio) (ratio) (ratio)
Royalty & Streaming Companies Franco-Nevada $25,411 $205 $3 $25,067 3.1x 35.4x 32.1x Wheaton Precious $17,416 $103 $879 $17,999 2.3x 25.4x 23.7x Royal Gold $8,076 $293 $305 $8,106 2.3x 23.0x 20.2x Osisko Gold Royalties $1,545 $151 $271 $1,520 1.1x 19.1x 14.2x Sandstorm Gold $1,404 $5 $28 $1,418 1.6x 21.2x 19.5x Maverix Metals $554 $26 $76 $605 1.5x 17.1x 15.8x Metalla Royalty & Streaming $250 $5 $3 $248 1.5x nmf nmf Altius Minerals $238 $23 $110 $387 0.7x 11.1x 9.8x Abitibi Royalties $167 $1
n.a n.a. n.a. EMX Royalty Corp. $156 $47
n.a n.a. n.a. Tanzanian Royalty Exploration $86 $3 $2 $85 n.a n.a. n.a. Average 1.8x 21.8x 19.3x Base Metal Companies OZ Minerals $1,750 $84 $139 $1,796 0.8x 8.0x 4.5x IGO $1,709 $267 $36 $1,428 0.9x 5.6x 5.8x Nickel Mines $502 $50 $65 $660 0.4x 4.1x 3.1x Western Areas $366 $116 $2 $252 0.7x 4.3x 4.6x Mincor Resources $123 $39 $0 $88 n.a. n.a. n.a. Panoramic Resources $64 $9
0.7x 5.2x 2.7x Jervois Mining $57 $10 $35 $84 n.a. nmf n.a. Metals X $44 $28 $28 $43 0.5x 3.3x 1.9x Average 0.7x 5.1x 3.8x Conic Metals $11 $4 $99 $104 0.1x 1.6x 0.8x
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0.80 1.20 1.60 2.00
$0.20 $0.30 $0.40 $0.50 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 Volume (Millions) Price (C$/share)
Market Summary
Capitalization (as at April 21st, 2020) Share Price Performance & Ownership Board of Directors
Anthony Milewski, Chairman of the Board
been a director, advisor, founder, or investor in multiple mining companies Justin Cochrane, President, CEO & Director
finance experience
Sandstorm Gold Ltd. Philip Williams, Director
roles in corporate development, research, fund management and investment banking
Candace MacGibbon, Director
markets
development and exploration of Loma Larga in Ecuador Maurie Swan, Director
years with wide ranging experience, including debt capital markets, securitization, corporate finance, and M&A
mining and metals sector
Source: S&P Capital IQ, Company Filings
Share Price (C$) $0.18 Basic Shares Outstanding (M) 83.5 Basic Market Cap (C$M) 15.0 Total Debt (C$M) 140.0 Cash & Equivalents (C$M) 6.0 Equity Investments (C$M) 0.8 Enterprise Value (C$M) 148.2
Substantial Holders Board & Management 12.5%
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$4.00 $6.00 $8.00 $10.00
$50 $75 $100 $125 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19 Aug-19 Nov-19 Feb-20
Highlands Pacific
Historical Market Capitalization of Highlands Pacific and Conic Metals vs. Nickel Price
US$ Millions | US$/lb
Historical Market Capitalization and Nickel Price
Source: Bloomberg, Company filings, S&P Capital IQ May 17, 2019: Cobalt 27 completes acquisition of Highlands Pacific November 15, 2019: Conic Metals commences trading on the TSX Venture Exchange
Conic Metals Nickel Price
January 1, 2019: Cobalt 27 announces acquisition of Highlands Pacific
Conic is Trading with a Significant Valuation Disconnect from Previous Years
23 www.conicmetals.com | TSXV: NKL
Leadership Team Overview
Justin Cochrane President & Chief Executive Officer
and Executive VP and Head of Corporate Development for Sandstorm Gold Ltd.
Anthony Milewski Chairman of the Board
investor in multiple mining companies
Conor Kearns Chief Financial Officer
Martin Vydra Head of Strategy
a leader in nickel and cobalt mining Craig Lennon Head of Asia Pacific
CEO of Highlands Pacific Limited
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Conic Investment Highlights
ᅳ Potential doubling of capacity at no cost to Conic if we choose to be diluted ᅳ Significant exploration upside ᅳ JV interest increases from 8.56% to 11.3% when JV loan is repaid to MCC
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Ramu Joint Venture Structure
80.0% 11.3% 8.7% Ramu Nickel Project Structure Ramu Nickel Project RNML
Ramu NiCo Management (MCC) Limited
Ramu Nickel JV Manager RNL (Ramu Nickel Limited) MRML
(Mineral Resources Madang Limited)
MRRL
(Mineral Resources Ramu Ltd)
MCC – Ramu
(MCC Ramu Nico Ltd)
Highlands Pacific MRDC
(Mineral Resource Development Corporation)
MCC – JJJ
(MCC-JJJ Mining Development Ltd)
JinChuan
(Jinchuan Group Ltd.)
JIEN
(Jilin Jien Nickel Industry Co., Ltd.)
JISCO
(Jiuquan Iron & Steel (Group) Co.)
MCC
(China Metallurgical Group Corporation)
8.56% 2.50% 3.94% 85.00% 100% 100% 100% 100% 6.98% 13.00% 67.02% 13.00% Operator Pro Forma Ramu Ownership Effective JV Interest %
Chinese Consortium RNL PNG Interests(1)
Source: Ramu Ni-Co website, Highlands Pacific 2017 Annual Report (1) PNG post-loan interest assumes repayment of partner loans by MRML and MRRL
Pre-Loan Repayment Post-Loan Repayment
(1)
85.0% 8.6% 6.4%
27 www.conicmetals.com | TSXV: NKL
Ramu Reserves and Resources
Ore Reserves
As at December 31, 2018
Nickel Cobalt (Mt) (%) (%) Proven 22 0.9 0.1 Probable 31 0.8 0.1 Total Reserves 53 0.9 0.1
Mineral Resources
As at December 31, 2018
Nickel Cobalt (Mt) (%) (%) Measured 45.2 0.82 0.08 Indicated 49.9 0.85 0.09 Measured & Indicated 95.2 0.83 0.09 Inferred 43.6 0.93 0.11
Notes:
1.
The Ni cut off grade is at 0.5% Ni, and the minimum mineable thickness is at 0.5m
2.
Any computational inconsistences are due to rounding
3.
Ore Resources (dry) represent the -2mm economic portion of resource mineralization in the rocky saprolite
4.
The productive exploration in 2018 is not completed, and its exploration result is not included
5.
The resource estimation is updated up to December 31, 2018
6.
Mineral resources are reported inclusive of ore reserves
28 www.conicmetals.com | TSXV: NKL
Nickel Supply Chain
Sulphide Ore (~35%) Concentrator (~35%) Laterite Ore (~65%) Smelter Refinery / Hydromet Ni Chemical (Chemical) Batteries Alloy / Plating / Foundry / Others Stainless Steel Concentrates Ni Matte Ni Metal (Class I) Oxide Sinter (Class II) FerroNickel (Class II) Pig Nickel Iron (Class II) Mixed Sulphide / Hydroxide HPAL Plant (~10%) FerroNickel Plant (~20%) Ni Pig Iron Plant (~35%)
Class 1 Supply Class 2 Supply
Source: Company reports, Canaccord Genuity estimates
29 www.conicmetals.com | TSXV: NKL
Forward-Looking Statements & Qualified Person This presentation contains certain information which constitutes ‘forward-looking statements’ and ‘forward-looking information’ within the meaning of applicable Canadian securities laws. Any statements that are contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Forward looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative of these terms and similar
to statements with respect to: the business and assets (including their implied value) of Conic and its strategy going forward; statements pertaining to the adoption of electric vehicles and battery storage globally; the timing for trading commencement of Conic common shares on the TSX-V; developments at the Ramu mine and the expected impact thereof on future operations, product and sales; and statements pertaining to future events or future performance. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, most of which are beyond the Company’s control. Should one or more
the risks
uncertainties underlying these forward-looking statements materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements. With respect to the forward-looking statements contained in this presentation, assumptions have been made regarding, among other things: future cobalt and nickel market prices; future global economic and financial conditions; future commodity prices, demand for cobalt and nickel and the product mix of such demand and levels of activity in the battery metals industry and in such other areas in which the Company may supply cobalt and nickel and the product mix of such supply; the accuracy and veracity of information and projections sourced from third parties respecting, among other things, future industry conditions and demand for cobalt and nickel; and, where applicable, each
forward-looking statements. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in its forward- looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward- looking statements will materialize or prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The forward- looking statements contained in this presentation are expressly qualified by this cautionary statement. Readers should not place undue reliance on forward-looking
may be required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements or information whether as a result of new information, future events or otherwise. Disclosures of a scientific or technical nature in this presentation have been reviewed and approved in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) by Dr. Qingping Deng, a “qualified person” as defined in NI 43-101. For additional scientific and technical information regarding Conic’s portfolio, readers are encouraged to review additional materials available on the Company’s website and profile on SEDAR at www.sedar.com
Disclaimer