Low Cost Tungsten & Tin Producer
Building one of the world’s largest tungsten mines AIM : WRES February 2019
Low Cost Tungsten & Tin Producer Building one of the worlds - - PowerPoint PPT Presentation
Low Cost Tungsten & Tin Producer Building one of the worlds largest tungsten mines AIM : WRES February 2019 Disclaimer This presentation was prepared by and is the property of W Resources Plc (W Resources or the Company) . No
Low Cost Tungsten & Tin Producer
Building one of the world’s largest tungsten mines AIM : WRES February 2019
This presentation was prepared by and is the property of W Resources Plc (“W Resources” or “the Company”). No reproduction or distribution this material is permitted to companies or individuals outside of those for whom this is intended. No agents, brokers or investment banks are authorised to present this material to other parties for the purpose of soliciting potential clients or transactions of any kind without prior consent to do so. While the Company is not aware of any inaccuracies, no warranty or representation is made by the Company or their respective employees and representatives as to the completeness or accuracy of the information contained herein. The Company, JLSI and their respective employees and representatives expressly disclaim any liability for damages, direct or consequential, arising out of or related to this presentation or omissions there from, or any other information provided in writing, orally or
representations, warranties and/or covenants set forth in a fully-executed, definitive written agreement with the Company relative to the transaction. Certain matters discussed in this presentation are “forward-looking statements”. These forward-looking statements can often but not always be identified because the context of the statement will include words such as “the Company expects,” “anticipates” or words of similar import. Similarly, statements that describe the Company’s capabilities, future plans, objectives or goals are also forward-looking statements. Such forward looking statements are subject to significant risks and uncertainties, including the financial performance of the Company and the viability of its technology. These risks could cause actual results to differ materially from those currently anticipated. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained. Potential investors, customers, suppliers and other readers are urged to consider this factor carefully in evaluating any forward-looking statements. Forward-looking statements made herein are only made as of the date of this presentation and the Company undertakes no obligation to update such forward looking statements to reflect subsequent events or circumstances. Technical information in this presentation has been prepared and approved for inclusion by Mr Fernando de la Fuente, who is a “qualified person” in respect of the AIM Rules for Companies with over 44 years experience in the Exploration and Mining Geology industry. Mr de la Fuente holds a B.Sc. in Geology and a MSc in Geology from the University of Granada in Spain. He is also a member of the Spanish College of Geologists (Number 49), the Spanish Society of Mineralogy, founder member
Exploration, Inc., member of PDAC. The press releases relating to the initial announcements of the technical disclosures in this presentation can be found on the Company website (www.wresources.co.uk). The relevant announcement dates are La Parrilla (25 August 2017, with full FID report on website), Régua (27 October 2015) and São Martinho (8 June 2016).The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.
2
La Parrilla Régua Tarouca CAA / Portalegre / São Martinho
SPAIN PORTUGAL
Madrid Lisbon Porto Seville Monforte- Tinoca
Monforte-Tinoca, Portugal: Two former copper mines with prospective tungsten Tarouca, Portugal: Former tungsten / tin mine advanced exploration progressing
La Parrilla Mine, Spain: Open-pit tungsten mine development – 2,700 tpa (“T2”) expanding to >4,000 tpa (“T3.5”) JORC Resource of 49mt @ 0.100% WO3 JORC Reserves of 29.8mt total
0.0995% WO3
0.0928% WO3
0.0931% WO3
Régua, Portugal: Underground tungsten mine development - 1,300 tpa JORC Resource of 5.46mt @ 0.28% WO3 Portalegre, Portugal: CAA - Advanced exploration São Martinho - 111,987oz contained gold; significant upside
Michael Masterman - Chairman
Founding Shareholder & GM - Fortescue Metals Group 8 Years - McKinsey & Company CEO - Po Valley Energy and CFO - Anaconda Nickel
Fernando de la Fuente - Country Manager Spain
Anglo American Corporation Rio Algom (Rio Tinto) Phelps Dodge
Aaron Szumilak - Metallurgist & Process Engineer
Fortescue Metals Group Syncrude Composites Innovation Centre
Juan Garcia Valledor - La Parrilla Operations Manager
Rio Tinto Imerys Groups
W Resources Management Team +130 years of experience
Focus:
Tungsten & tin - production, development & exploration in Spain & Portugal
Major Projects:
Tungsten - La Parrilla, Régua, Tarouca Copper Gold - São Martinho, Monforte-Tinoca
3
La Parrilla (T2 mtpa)
4
Mar 2019
2Q 2019
LP Expansion (T3.5 mtpa)
Doubles EBITDA to US$40m p.a.
Tungsten Tin Growth
3Q 2019
2H 2019
2019
2019
5
Low Cost
Large Scale
Long Life
Simple Low
First Ore
European / USA
6
Source: ITIA – Tungsten End Use Analysis 2017
7
Primarily used to make tungsten carbide for cutting tools such as drill bits and machining tools One of the hardest man made materials when mixed with carbon to form cemented tungsten carbide Auto industry is a heavy tungsten user - tire studs ball joints, brakes, crank shafts & other parts that see hard usage Highest melting point, lowest vapour pressure of any naturally occurring metal
(1) Source: International Tungsten Industry Association (2) Source: Roskill
China consumed 60%
2016, up from 30% in 1996 (2) Current global tungsten demand is approximately
Supply shortages are expected resulting in
Demand for tungsten has grown 4% per year for the past 10 years
8
Source: Metal Bulletin
European Tungsten APT Price LME Tin Price
9 Dec16 to Nov18 US$ per mtu
17,500 18,000 18,500 19,000 19,500 20,000 20,500 21,000 21,500 22,000 22,500
Aug16 to Dec18 US$ per tonne
180 200 220 240 260 280 300 320 340 360
47 75 250 450 La Parrilla Barruecopardo Drakelands Núi Pháo
50 100 150 200 250 300 % of total output
China Molybdenum China by-product La Parrilla Nui Phao† China China Drakelands Los Santos Minmetals Jiangxi Tungsten Ind Group Mittersill Chongyi Zhangyuan Xiamen Tungsten Panasquiera China China China
2018 Average WO3 Concentrate Price ($325 / mtu) (1)
Source: Argus
Global Tungsten Production Cost Curve Capital Costs - US$m
85 94 117 155 Núi Pháo La Parrilla Barruecopardo Drakelands
Unit Operating Costs - US$ / mtu Low Cost Drivers
Power connection 7km to main highway Quality water supply
(1) Assuming a 20% discount to the 2018 average European APT tungsten price of US$325 / mtu (Source: Metal Bulletin)
La Parrilla
10
SPAIN SPAIN UK VIETNAM VIETNAM SPAIN SPAIN UK
Seville / Madrid highway
Process Plant Infrastructure Initial Mining Area Operational Tailings Dam
Madrid / Seville Highway
11
12
Crushing Circuit
Open Pit Mining 600tph contracted Crushing & Screening 350tph - €3.2m to be installed Pre-Con Stockpile 6000t - €300k installed Jig & Mill Pre-Concentration 350tph - €5.5m Shaking Table Cleaning 12tph Spiral Concentration 155tph Sulphide Flotation 3tph Electrostatic Separation 0.5tph
13
Production Start
14
First two Shipments & Payments
15
Crusher Completion
16
First Ore to Crusher
17
February 2019 Mined ore fed to concentrator
18
LNG power station commissioned & delivering power
19
20
21
22
23
Production Start Crusher Completion First Shipments Crusher First Ore March 2019 Jig Completion March 2019 Jig Commissioning April 2019 Concentrator Completion From 2Q 2019 Large Scale Production
Source: Financial Investment Decisions Report summary as announced on 25 August 2017. Note: Assumes Argus Forecast for tungsten APT price; Note that all debt figures and related coverage ratios are for illustrative purpose only
PRODUCTION 2018 2019 2020 2021 2022 2023 2024 RoM Feed Rate (kt)
2,004 3,200 3,477 3,500 3,489 WO3 production (MTU)
181,496 236,051 279,409 252,073 253,274 SN production (t)
138 363 274 272 241 Tungsten price - APT (US$ / MTU) 230 245 263 288 313 313 313 Tin price (US$ / t) 18,000 18,500 19,500 20,000 20,000 20,000 20,000 INCOME STATEMENT 2018 2019 2020 2021 2022 2023 2024 Net revenue
36,055 53,819 66,480 60,326 60,152 Opex
( 17,445) ( 30,360) ( 24,261) ( 20,517) ( 21,160) ( EBITDA
18,610 23,460 42,219 39,808 38,992 Depreciation
( 2,493) ( 3,149) ( 4,427) ( 4,600) ( 32,014) (
24
(US$000’s)
4.9x 4.0x 3.2x 13.6x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x Year 1 Year 2 Year 3 Year 4 Year 5 CFADS / Interest Expense
Key Financials Leverage Interest Coverage Operating Cash Flow
($ in millions)1.8x 1.4x 1.1x 0.0x 0.0x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x 1.8x 2.0x Year 1 Year 2 Year 3 Year 4 Year 5 Total Debt / EBITDA $17.6 $20.0 $24.2 $42.8 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 Year 1 Year 2 Year 3 Year 4 Year 5 Operating Cash Flow
Source: Financial Investment Decisions Report summary as announced on 25 August 2017. Note: Assumes Argus Forecast for tungsten APT price; Note that all debt figures and related coverage ratios are for illustrative purpose only
25
38.0 40.3 60.1 74.2 67.4 15.2 18.6 23.5 42.2 39.8 10 20 30 40 50 60 70 80 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Gross Revenue EBITDA
Low cost mining
26
directions and at depth
west extension
27
2 underground mine adits access 100kt of high grade ore @ 0.4% WO3 Utilising existing crushing & screening infrastructure close to the mine Simple gravity concentrator using spirals and shaking tables
ROM Feed Grade 0.4% - Production 1,300 tpa
28
São Martinho Gold Project
29
%
16.10 Hansource Investments Ltd 5.76 Beronia Investments Pty Ltd (B. Pirola)** 5.13
3.57 Miton Group 3.53
Substantial Shareholders (31 Dec 2018)
30 Michael Masterman – Chairman Byron Pirola – Non Executive Director David Garland – Non Executive Director Jim Argalas – Non Executive Director Pablo Neira – Non Executive Director
Board of Directors Share Price Performance (1 Jan 18 to 31 Dec 18) Financial Information (31 Dec 2018)
Share price 0.535 GBX 52 week high / low 0.645 - 0.405 GBX Number of shares (undiluted) 5,784,197,054 Market Capitalisation £30.95m / US$37.31m Cash US$7.40m Debt US$38.65m Enterprise Value US$68.56m
* Includes Symmall Pty Ltd ** Includes related party interests Price GBX Volume (k) 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
31
Celestino Parejo Government Relations / Mining Mining engineer with over 30 years’ experience in the technical direction
in the Extremadura region of Spain and internationally Fernando de La Fuente General Manager Geologist with more than 43 years’ experience in the exploration and mining geology industry in Europe, Africa and North America and Latin America Mechanical process engineer with 10 years’ experience in mineral processing and resource
has worked for Fortescue Metals Group, Syncrude and Composites Innovation Centre. Aaron Szumilak Metallurgist & Process Engineer Michael Masterman Chairman Mr Masterman has an exceptional track record in establishing and financing new resources companies. He has been a founding shareholder at Fortescue Metals Group, Po Valley Energy & Atacama Metals Juan Garcia Valledor Operations Manager Mining Engineer with 25 years of experience in management of industrial processing plants and design, planning, management and rehabilitation of open pit mines
Large low
completion (early 2019) Skilled can do team Significant earnings growth from 2019 Broker valuations
32
33
34
La Parrilla Proven and Probable Mineral Reserves - JORC 2012 (RNS 14 June 2017) Category Tonnes Grade Metal Content Grade Metal Content ‘000 WO3 (ppm) WO3 (t) Sn (ppm) Sn (t) Proven 1,177 995 1,171 251 295 Probable 28,577 928 26,511 111 3,156 Total 29,754 931 27,683 116 3,451 Régua JORC Compliant Mineral Resource Estimate (RNS 27 October 2015) Category Tonnage (Mt) WO3 % Cut-off (WO3 %) Indicated 3.76 0.304 0.1 Inferred 1.70 0.227 0.1 Total 5.46 0.280 0.1 São Martinho Maiden JORC Compliant Mineral Resource Estimate (RNS 8 June 2016) Category Tonnage (Mt) Au (g/t) Au Content (Oz) Cut-off (g/t Au) Indicated 0.48 1.03 17,363 0.5 Inferred 2.56 1.05 94,624 0.5 Total 3.04 1.04 111,987 0.5 LaParrilla JORC Compliant Mineral Resource Estimate (RNS 11 May 2017) Category Tonnage (Mt) WO3 (ppm) Sn (ppm) Measured 1 1,115 278 Indicated 35 1,004 110 Inferred 13 974 97 Total 49 998 110
(US$ in millions)
Development ROM Tungsten Capital EBITDA* T2 2 Mtpa 2,700 tpa $27.8m $20m T3.5 3.5 Mtpa 4,000 tpa $20m $40m Finance T2 $35m term loan financing
$28m
$2m
$5m Total Term Loan $35m Equity Capital Invested to date $16m Total Capitalisation $51m La Parilla Grant
TOTAL $44m
* FID Study 3 Year Average published 25 August 2017
35
year interest is PIK and 50% is payable in cash
36
Michael Masterman Chairman Mr Masterman has an exceptional track record in establishing and financing new resources companies. He completed the US$1.15bn sale of a 31% interest in the Fortescue Metals Group’s majority-owned FMG Iron Bridge iron ore company to Formosa Plastics Group. Following 9 years at McKinsey, and 8 years as an Executive Director of Anaconda Nickel, he has been a founding shareholder at Fortescue Metals Group, Po Valley Energy and Atacama Metals. Byron Pirola Non-Executive Director Director of Port Jackson Partners Limited, a Sydney based strategy management consulting firm. Prior to joining Port Jackson Partners in 1992, Byron spent six years with McKinsey working out of the Sydney, New York and London offices and across the Asian region. He has extensive experience in advising CEOs and boards of both large public and small developing companies across a wide range of industries and geographies. Byron is a Non-Executive Director of Po Valley Energy Limited. David Garland Non-Executive Director David is the former General Counsel, Secretary and Chief Compliance Officer of Dominion Petroleum Limited (an oil and gas exploration company then listed on the LSE). Before joining Dominion, he had practiced as a barrister for 18 years from Brick Court Chambers, a leading commercial barristers’ chambers in London. David was a founder, and is currently General Counsel and a director, of Atacama Metals Holdings Limited, a private Hong Kong registered copper exploration company, with mining concessions and interests, in the Atacama Desert in Chile. James Argalas is the founder of Presidio Union, LLC, a company that specialises in providing financial analysis and corporate advisory services. Prior to founding Presidio Union, James was a Principal at Watershed Asset Management and NM Rothschilds, an Associate Principal with McKinsey & Company and an Associate at Goldman Sachs. Pablo Neira currently works with Casa Grande de Cartagena, family office of several members of Del Pino family, involved with direct investments. Pablo is former CEO of Urbar, a Corporate Services General Manager at Valdepesa Textil and Finance Director at Global Steel Wire Group. Prior to joining Global Steel Wire Group, he was Manager at A.T. Kearney in New York and at the Swedish group Mölnlycke as Controller for southern Europe.
37
James Argalas Non-Executive Director Pablo Neira Non-Executive Director
Current Mining Lease
T2 Mining Approvals
T3.5 Mining Approvals *
LP team has submitted an initial application for the T3.5
*All required approvals (environmental, water, heritage, etc.) fall under the single mining lease application
38
Favourable Geology and Proven Metallurgy
Low Cost Producer
Existing Infrastructure and Regulatory Approvals in Place
Conventional yet Efficient Process
Industry Leading Equipment Suppliers
production
Strong Offtake Agreements with Investment Grade Companies
1 - Tungsten is typically priced according to metric ton units (“mtu”) of Ammonium Paratungstate (APT), which is equal to 10 kg. 1 mtu of APT contains approximately 7.93kgs of tungsten 2 - Assuming a 20% discount to the current tungsten APT price of US$250/mtu
39