Strata Minerals Inc. Corporate Overview and Diamond Mountain Project - - PowerPoint PPT Presentation
Strata Minerals Inc. Corporate Overview and Diamond Mountain Project - - PowerPoint PPT Presentation
TSX-V: SMP Strata Minerals Inc. Corporate Overview and Diamond Mountain Project Option June 2014 Disclaimer This presentation contains certain statements which constitute forward-looking information within the meaning of
- Disclaimer
This presentation contains certain statements which constitute “forward-looking information” within the meaning of Canadian securities legislation. Forward-looking statements are based on the estimates and opinions of the management of Strata Minerals Inc. (“SMP”) on the date the statements are made and SMP does not undertake any obligation to update forward-looking statements should conditions or management’s estimates or opinions change, whether as a result of new information, future events or other factors, except as required by law. All statements other than statements of historical fact herein are forward-looking statements and include, but are not limited to: (i) estimates and projections of future phosphate prices; (ii) estimates and projections of future phosphate production and demand; (iii) estimates and projections of reserves and resources; (iv) estimates and opinions regarding geologic and mineralization interpretation; and (v) estimates of exploration investment and scope of exploration programs. When used in this presentation, the words “plans”, “expects”, “anticipates”, “budgets”, “forecasts”, “strategy”, “goals”, “objectives”, “could”, “should”, “may”, “potential” and other similar expressions relating to matters that are not historical facts are forward-looking statements. All forward-looking statements herein are based on SMP’s current beliefs, as well as various assumptions and information currently available to them. These assumptions include, but are not limited to: (i) continued growth in world population; (ii) continued increase in personal incomes; (iii) continued increase in grain-intensive meat diets; (iv) continued decline in the global agricultural land base; (v) commercial discoveries of phosphate on the properties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements, in particular, the estimates do not include input cost increases or phosphate price variations that could occur in the future. The forward-looking statements herein are subject to risks, uncertainties and other factors. The risk factors may be generally stated as the risk that the assumptions and estimates expressed herein do not occur, and include, but are not limited to: (i) phosphate and other commodity price volatility; (ii) political and operational risks; (iii) government regulation of mining activities; (iv) environmental risks; (v) title disputes and claim; and (vi) risks associated with early stage exploration mining companies including, but not limited to, the risk that such companies may not make any commercial discoveries, take any discoveries into production, or obtain sufficient funding to carry out their work plans. We caution potential investors not to place undue reliance on the forward-looking statements herein, as a number of important assumptions could cause the actual outcomes to differ materially from the beliefs, plans, expectations and estimates expressed herein. Potential investors are cautioned that there has been insufficient historical exploration to define a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
- 50
100 150 200 250 50 100 150 200 250 300 2000 2050 Fertilizer Application (kg/ha) Million Tonnes Fertilizer Per Annum (N,P,K) World Developed Countries Developing Countries
132 kg/ha 191 kg/ha
100 200 300 400 500 World Developed Countries Developing Countries Arable Land (HA / 1,000 people) 2006 2030 2050 50 100 150 200 250 300 350 World Developed Countries Developing Countries Consumption of Meat and Dairy (kg per capita) 2000 2006 2030 2050 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2000 2006 2015 2030 2050
Population (millions)
Developed Countries CAGR +0.18%
- Macro Drivers to Global Fertilizer Demand
Source: Food and Agriculture Organization - UN, World Agriculture Towards 2030/2050
1) Increasing World Population 3) Increasing Meat and Diary in Global Diets Increase in Fertilizer Demand 2) Decreasing Arable Land Per Capita
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- Global Phosphate Industry
(in mt) Production Consumption
Surplus/
2010 2017 Growth pa 2010 2017 Growth pa
Deficit
Europe
15.5 19.6 3.4% 23.8 28.1 2.4% (8.5)
Africa
46.7 47.6 0.3% 26.9 30.5 1.8% 17.1
North America
29.2 28.5 (0.4%) 32.1 31.3 (0.4%) (2.8)
Latin America
9.2 16.3 8.5% 12.8 17.2 4.3% (0.9)
Middle East
12.1 19.5 7.0% 7.0 15.8 12.4% 3.7
Asia-Pacific
68.3 84.6 3.1% 78.2 93.2 2.5% (8.6)
World
181.1 216.0 2.6% 180.8 216.1 2.6% (0.1)
- Phosphorous is an essential to plant growth (root and
stem development), photosynthesis and seed development
- Phosphorous typically makes up 25% of mass in
fertilizer (N,P,K) mixes
- There are no substitutes for phosphate
- A balanced diet results in depletion of approximately
3.2 kg/yr phosphorous (22.5 kg/year of phosphate rock concentrate)
DAP/MAP TSP Phosphoric Acid Phosphate Ore deposit Phosphate Rock
United States 17% Australia Brazil China 35% Egypt Israel Jordan Morocco and Western Sahara 15% Russia Tunisia Others
SSP
Phosphate Production and Consumption1 From Mine to Fertilizer
Note
1 British Sulphur Consultants, Phosphate Rock, 10 Year Outlook Report 2United States Geological Survey, 2009.
Key Phosphate Producers2
- 80% of global production comes from the MENA region
- Global Market for Phosphate Rock
Global trade of phosphate rock represents approximately 15% of total phosphate production Total global trade of rock phosphate estimated at 29 mt in 2012 with Morocco being the largest exporter of rock at 9.5 mt Further vertical integration, most notably by OCP in Morocco, may reduce phosphate rock available for export in the future
Global Phosphate Rock Production and Exports Phosphate Rock Export by Country (2011)
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- US Market for Phosphate Rock
US mine production has declined over the past decade leaving the US fertilizer industry increasingly reliant on imports
9 Over the last 10 years, US phosphate mine production has declined by 19% to 29 million tonnes in 2012 (an average of 2% per annum) 9 Over the same period, US phosphate imports have held steady at approximately 3 million tonnes per annum
Many US mines are coming to the end of their life
- ver the coming decade
9 There are currently 11 operating phosphate mines in the US with an estimated combined capacity of 34 mtpa 9 Approximately 50% of US mine capacity has a mine life of 10 years or less, resulting in the need for an additional 16 mt of new capacity to maintain current production levels US Production vs Imports Current US Operating Mines
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- Historic Phosphate Prices
Source: Fertilizer Week; Fertilizer International; World Bank Phosphate Rock Concentrate Price is for 30-32% P2O5 Concentrate FOB Morocco. DAP price is for Diammonium Phosphate (DAP) FOB US Gulf
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- Strata Minerals
An emerging fertilizer company focused on advancing phosphate projects in the USA and Australia Key Assets: Diamond Mountain Project – Utah, USA
- Recently optioned to earn 80% interest
- Exploration drilling commencing June 2014,
with target to confirm historic US Steel phosphate resource and delineate additional
- pen cut resources
Cardabia Project – WA, Australia
- Strata owns 80% interest
- Located in Western Australia, 35km from the
coast Experienced management team and board Positive long-term outlook for phosphate prices: Critical ingredient in boosting crop yields Growing phosphate deficit in the USA Capital Structure
Shares Outstanding (million) 21.41 Insider Ownership 22% Institutional Ownership 25% Recent Share Price ($)(1) 20 cents Market Capitalization ($ million) (2,3,4) $4.3 Net Cash ($ million) (5) ~$0.8
Notes:
1. Share price as at 10 June 2014 2. Excludes warrants - 700,000 mature September 2014, strike price $1.20; 6,250,000 mature September 2015, strike price $0.12 3. Excludes 1,867,500 options Average remaining term of approx. 4.5 years; strike prices of $3.00, $1.50, $1.20, $0.13 and $0.12 4. Basic market capitalization. 5. Approximate Cash and Receivables net of Payables at May 31, 2014.
- Diamond Mountain Project, Utah
Recently executed Option Agreement to acquire 80% with expenditure of $2.5MM and payments of $375,000 (cash and shares) Located in North-East Utah; adjacent to regional center of Vernal License area of 4,000 hectares Historic work outlined a large mineralized horizon averaging 4 to 5 metres thick (US Steel, 1974) Open pit and underground potential
- Active Regional Setting in Utah
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- Historic Work at Diamond Mountain
Work completed by US Steel in 1974 included: 23 diamond drill holes (20,000 feet) The US Steel work included resource estimation, metallurgical test work and preliminary economic evaluation US Steel estimated a historic resource of 53 mt at an average grade of 20% P2O5 on what is approximately 20% of the current Diamond Mountain mineral leases (see Note 1 below). Mineralization occurs in two seams Upper Bench – 7 feet thick Lower Bench – 7 to 9.5 feet thick including a high grade zone of 7.5 feet thick
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- Diamond Mountain Potential Resources
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- Diamond Mountain – Potential Resources
- Diamond Mountain – 2014 Exploration Plan
Norwest Corp (“Norwest”) have been appointed as technical advisors to Strata Minerals on the Diamond Mountain Project. Major Drilling Corporation (“Major Drilling”) have been appointed as exploration drilling contractors with drilling startup to commence early June. A total of 20 diamond core holes are planned for completion during June – July (out of a total 33 holes that are permitted) The key targets for the 2014 exploration programme are: Confirmation of the historical US Steel resource estimate and the delineation
- f additional open cut resources.
Completion of a NI43-101 Technical Report on the initial resource at Diamond Mountain
- Diamond Mountain – 2014 Exploration Plan
To date, approximately 1,000 metres of the 2,000 metre core drilling program has been completed. The drill program is scheduled to be complete mid July 2014.
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- Phase One - 2014: Targeting to establish a 43-101 resource at Diamond Mountain
Preliminary Estimate ($US)
- Recon, surface and sub-surface mapping
$50,000
- Drill program of up 20 core holes (2,000 meters)
$600,000
- Permitting, reclamation bonding, community relations
$150,000
- Acquisition of additional private mineral rights
$125,000
- NI 43-101 Technical Report completed by Q4-2014
$75,000 Estimated Total US$1.00 million
Phase Two - 2015: Targeting to expand any resource and complete a PFS
Preliminary Estimate ($US)
- Environmental, permitting, community relations
$300,000
- Licenses and leasing
$400,000
- Drill program of up to 20 core holes (2,000 meters)
$600,000
- Updated NI 43-101 Technical Report completed by Q3-2015
$50,000
- Pre-Feasibility Study (by Q4-2015)
$150,000 Estimated Total US$1.50 million
Diamond Mountain – 2014/2015 Exploration Budget
:
- Diamond Mountain – Access to Market
The Diamond Mountain Project is located within close proximity of a major highway network and is approximately 200 km from rail access There are four major phosphate fertilizer plants within a radius of approximately 300 km of the Diamond Mountain Project Potential to access international markets through export ports on west coast
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- Cardabia Project, Australia
80% owned project located in Western Australia License area of approximately 2,230 km2 Excellent logistics position, 35 km from coast Known strike length of mineralization of 21km Initial geological work done by CRA Exploration in 1989-1991 Strata Phase 1 Exploration Program completed in south-east (September 2012 to June 2013):
- 74 holes, 2,300 m drilled in south-east
Results demonstrate presence of an extensive shallow sedimentary unit hosting P2O5 with average thickness of 1 metre; insufficient quality to warrant further work in south-east However, desk-top study suggests the potential for thicker mineralized horizons elsewhere on the property
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- Board and Management
Hugh Agro, Chairman - Toronto Previously: Executive VP, Kinross Gold, VP Corporate Development, Placer Dome, and VP, Investment Banking, Deutsche Bank Holds an MBA (UBC, Canada and London Business School, UK) and B.Sc. Mining Engineering (Queen’s University, Canada) Jason Bahnsen, President & CEO, Director – Vancouver 25 years in the global resource sector including10 yrs operating experience (Rio Tinto, Redpath) and over 10 years spent as a mining investment banker (Deutsche Bank, Macquarie Bank) Holds an MBA (University of New England, Australia) and a B.Sc. Mining Engineering (Queen’s University, Canada) Peter Kozicz, Director - Toronto Co-founder of Associated Proteins LP (sold to Viterra Inc. in 2009); experienced public company executive Holds a B.Sc. Civil Engineering and an MBA (Queen's University, Canada) Richard Kelertas, Director - Montreal Former top-ranked equity analyst (UBS, Dundee), currently Senior VP, Corporate Development at Allana Potash Graduated from the University of Toronto with two science degrees, including a Masters of Science degree Kal Malhi, Director – Vancouver Mining entrepreneur and director of Utah Minerals, a private company and vendor of Diamond Mountain Project Adam Rochacewich, CFO – Toronto CA, CPA with over 12 years financial experience within the international resource sector (Falconbridge, Xstrata, Polar Star Mining) Holds a B.Comm (Queen’s University, Canada)
- Completed Financing
Strata Financing Key Term Summary Financing Structure Non Brokered Private Placement of Units Placement Terms Issued 12.5 million units at a price of $0.12 per unit. Each unit consists of one (1) Strata common share and
- ne half (1/2) of one share purchase warrant, with each
warrant entitling the holder to acquire an additional Strata common share for a period of eighteen (18) months for $0.12 per share Gross Proposed Placement Proceeds $1.5 million Issued Shares Pre Financing (after 10:1 consolidation basis) 8,080,662 Issued Shares Post Financing 21,413,996 Closing Date March 18, 2014 On March 18, 2014 Strata closed a $1.5 million placement financing Proceeds from the financing are being used to fund the exploration and development of the Diamond Mountain Project and for general corporate purposes
- Value Proposition
Stonegate Agricom is an illustrative example:
- Acquired Paris Hills project in Oct ‘09 for
consideration of $4 million (resource at the time of 121MM ton at 23.6% P2O5)
- Dec ‘12 announced feasibility on a
reserve of 16.7MM tons at 29.5% P2O5
- Current market cap of ~$31.1MM
Strata’s current market capitalisation is approximately $4.3 million There is considerable scope for value enhancement as the Diamond Mountain Project is progressed.
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0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0
SMP JOR MON GBL ST GQ DAN MBC
Market Cap (C$m)
- Why Strata Minerals?
Experienced management team and board High quality advanced exploration project portfolio with drill ready project in Utah Targeting a large scale phosphate resource in the needy US domestic market Positive long-term outlook for phosphate Attractive valuation
- Appendix
- Diamond Mountain Option Agreement
Definitive Option Agreement with Utah Mineral Resources (“UMR”) announced November 13, 2013 Key terms:
- Upon completion of initial equity raise for Diamond Mountain Project and payment to UMR of US$75,000
(paid March 2014) cash and C$100,000 (issued March 2014) in Strata shares, Strata will have option to acquire up to an 80% interest in Diamond Mountain Project
- Upon completion of Phase 1 Exploration Program (US $1.00MM in expenditures), Strata will have a 51%
vested interest in Diamond Mountain Project (vesting date targeted for December 2014)
- Upon election to continue to Phase 2 and payment to UMR of US$100,000 cash and C$100,000 in Strata
shares, Strata will have the right to earn an additional 29% interest in the Diamond Mountain Project
- Upon completion of Phase 2 Exploration Program (additional US $1.50MM in expenditures), Strata will have a
80% vested interest in Diamond Mountain Project (vesting date targeted for December 2015)
- Thereafter, UMR to have an equity free carry to NI43-101 Pre-Feasibility study, Strata to have first right of
refusal over UMR equity, UMR to contribute pro-rata following Pre-Feasibility study subject to its interest, if reduced below 5%, being converted to a 2% net profit royalty
- Listed Junior Phosphate Universe
Notes: 1 All prices and Market Capitalization ($m) as of June 13, 2014 converted to C$ based on exchange rate as of June 13, 2014. 2 Calculated using basic shares outstanding. Source: Company Reports, Capital IQ
Market Valuation vs. Development Stage
Strata Development Advanced Development Const.
$44.7
The “Majors” Mkt Cap ($b CDN)
BHP $193 Vale $72 Potash Corp $33 Mosaic $20 Agrium $14
Large potential consolidators
Share Market Grade Development Ticker Price1 High Low Cap1,2 Res.+M&I Total Range Location Stage
Under Construction MBAC Fertilizer Corp TSX:MBC $0.45 $2.48 $0.44 $68.4 58.8 119.0 5.01%-5.27% Brazil Production target 2013 Advanced Development Arianne Resources Inc. TSXV:DAN $1.05 $1.69 $0.95 $91.4 754.0 827.8 4.6% - 7.2% Quebec Pre-Feasibility Completed Stonegate Agricom Ltd. TSX:ST $0.17 $0.44 $0.13 $26.5 29.8 34.4 30% Idaho Feasibility Completed Minemakers Limited TSX:MAK $0.11 $0.16 $0.02 $24.8 399.5 1,561.8 18%-20% Australia Feasibility Completed Development Rum Jungle Resources ASX:RUM $0.09 $0.19 $0.09 $32.1 178.0 238.0 15% Australia Resource Announced Great Quest Metals Ltd. TSXV:GQ $1.00 $2.54 $0.53 $46.8 – 50.0 24.3% Mali Resource Development Legend International OTCPK:LGDI $0.05 $0.09 $0.01 $20.2 202.8 516.1 14-15% Australia Feasibility Completed Aguia Resources Limited ASX:AGR $0.05 $0.09 $0.04 $7.5 – 21.3 15-16% Brazil Resource Development Sunkar Resources Plc LSE:SKR $3.69 $16.62 $1.83 $12.5 293.0 475.4 11% Kazakhstan Feasibility Study underway DuSolo Fertilizers Inc. TSXV:DSF $0.20 $0.31 $0.13 $20.5 – – ~5-22% Brazil Resource Development
Strata Minerals TSXV:SMP $0.20 $0.50 $0.05 $4.3 – – – USA/Australia Resource Development 52-week1 Ore Resources (mt) $23.2 $4.3 $68.4
0.0 20.0 40.0 60.0 80.0 100.0 SMP DSF LGDI SKR AGR GQ RUM MAKDAN ST MBC Market Cap (C$m)
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- STRATA MINERALS INC.
Suite 1110-1111 West Georgia Street Vancouver, British Columbia V6E 4M3 Tel: +1 866 377 1172