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Dacha Strategic Metals - Corp. Presentation

Dacha Strategic Metals - Corp. Presentation






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    Dacha Strategic Metals - Corp. Presentation Dacha Strategic Metals - Corp. Presentation Presentation Transcript

    • Corporate Presentation TSX-V:DSM OTCQX:DHCAF April 25 2011A Forbes & Manhattan Group Company
    • Forward Looking StatementsCaution regarding forward-looking information:This presentation contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes without limitation, statements regarding the proposed use of the proceeds of the financing, the receipt of all necessary approvals, the issue of permits, progress in development of mineral properties, future production and sales volumes, capital and mine production costs, demand and market outlook for rare earth metals, future metal prices and treatment and refining charges, the financial results of the Company, the future financial or operating performance of the Company, and terms and the availability and likelihood of future acquisitions. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; market risks; risks related to leverage; acquisition risks; and other risks of the mining and trading industries. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.This presentation does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. 2
    • Investment Objectiveso Hold Physical Inventory of Heavy Rare Earth Elements without any mining risko Diversified basket of metals eliminates single element exposure risko Generate profits from trading individual elements to downstream customerso Inventory located LME approved warehouses located off-shore near end-userso Tax effective corporate structure to maximize inventory and trade gains 3
    • Capital Structure Capital Structure Key Institutional Shareholders Goodman & Co ~10%Stock symbol: DSM – TSX:VShares issued: 73.1 M AGF Management ~ 6%Fully diluted: 99.5 M RAB Capital ~ 4%Price (04/25/11): $0.46 Aberdeen International Inc ~ 3%Market Cap: $33 M52-week High/Low: $.98-$0.32 Management & Insiders ~ 4% Rare earth Metals ValueMetals ~$46.2 millionCash ~$2.0 millionLiquid Securities ~ $4.5 millionHard Asset Value ~ $.72/shareCurrent Share Price ~ $.46/share 4
    • ManagementScott Moore, MBA, President & Chief Executive Officer Mr. Moore is an experienced capital markets executive with 20 years experience in the resource sector. Former CEO of Franc-Or Resources Corp and VP Corporate Development for Aberdeen International. Former Director of Sulliden Gold and Avion Gold. He has raised in excess of $250 million in resource companies in the last 3 years. He holds a Bachelor of Arts degree from the University of Toronto and an MBA from the Kellogg School of ManagementAlastair Neill, P.Eng., MBA, Executive Vice-President Mr. Neill is the former GM, Rare Earth Division and VP Business Development for Neo-Material Technologies (TSX:NEM) and brings over 15 years of direct Rare Earth experience. Mr Neill lives full time in Beijing. He holds a MBA from York University and a Bachelor of Engineering in Material Science from the University of Western OntarioBrad Boland, C.M.A., Chief Financial Officer Mr. Boland was the CFO of Consolidated Thompson Iron Mines Limited until July 2009 From May 2005 to September 2007, he was at Kinross Gold Corp., most recently serving in the position of Vice President, Corporate Controller. Prior to that, from August 1998 to February 2005, Mr. Boland was at Goldcorp Inc., as Corporate Controller and the Vice President, Finance.Jihong Gan, BA, MA, Manager Contracts and Administration Ms. Gan is an accomplished administrator with a specialization in East Asian languages. Ms. Gan has a Bachelor of Arts (Major: Japanese) from the Shanghai International Studies University in Shanghai and a Masters of Arts in East Asian Language studies from Osaka University of Foreign Studies. 5
    • BUSINESS MODEL 2010 Achievements300,000 + kilograms of Heavy Rare Earth Oxides Acquired in F2011202,000 kilograms of Heavy Rare Earth Oxides in Inventory at April 2112 acquisition trades executed totaling $33.84 million5 Sales contracts with 4 different customers executed in Q3 2011$15.65 million in gross sales and $5.2 million in gross profit in Q3 2011 6
    • Attractive Value PropositionParticipate in the expected price appreciation of rare earths and strategic industrial metals Metals Inventory Grades* Quantity Spot Price/kg Market Value Market Value 4/21/2011 (Kg) (US$) (US$millions) (C$millions) US$1.00=C$0.9537 Busan, South Korea Dysprosium Oxide 4N 15,000 $699 $10.5 $10.0 Dysprosium Fe Santoku 12,000 $653 $7.8 $7.5 Gadolinium Oxide 4N5+ 10,000 $185 $1.9 $1.8 Lutetium Oxide 4N+ 3,000 $800 $2.4 $2.3 Neodymium Oxide 4N+ 18,000 $221 $4.0 $3.8 Terbium Oxide 4N+ 14,000 $1,195 $16.7 $16.0 Yttrium Oxide 5N 10,000 $160 $1.6 $1.5 Shanghai, China Yttrium Oxide 4N5+ 120,000 $29 $3.5 $3.3 Total: 202,000 $48.5 $46.2*Grades:4N = 99.99%4N+ = 99.99+%5N = 99.999% No Exploration or Mining Risk4N5+ = 99.99%/99.999+% 7
    • China - Guarding the Supply • Produces +95% of Global Supply • Export Tariffs of 25% imposed to drive manufacturing to China • Export Quotas reduced every year for last 5 years • China reduces Quotas for second half 2010 by 70% CHINA REDUCES QUOTAS FOR H1-2011 BY 35% “Chinese adamant on rare-earth metal cuts”- Aug 30-2010 8
    • Rare Earths in the Limelight “China Tightens Grip on Rare Minerals”“China slashes first batch of rare earth export quotas by 35.17%”- Dec 30-2010 “China Cuts Rare Earth Exports” Japan rare earths imports from China plunge in Nov December 27, 2010 -- TOKYO (Source: Reuters) “China Cracks Down on Illegal Mining of Rare Earth Metals” – Dec 2010 9
    • A Paradigm Shift in the REE IndustrySecurity of supply no longer just a commercial Issue It is now a Political Issue Rare Earth Supply Technology and Resources Transformation Act [RESTART] introduced to both the U.S House of Representatives and the U.S. Senate in 2010 Japanese Industry Minister asked Chinese Minister of Industry and Information for reductions to this years export quota to be reversed. “We are concerned that rare-earth metals will not come to Japan in the future”. “ China Defends Rare Earth Quotas as inline with WTO” Bloomberg Dec 30-2010 10
    • “What Are Rare Earth Elements”Rare Earth Element or REE are Lanthanide series elements and are found at the bottom ofthe Periodic Table15 elements plus Yttrium are classified as REE and have specific magnetic, fluorescent andchemical propertiesSome are classed as Light, Medium or Heavy REE and have varying applications in laptops,LCD’s , cellular phones and hybrid vehicles.Heavy REE such as Europium, Terbium and Dysprosium command the highest value 11
    • Rare Earth Elements Industry Primer Lighter Weight Product Miniaturization Enhanced Performance and Functionality Enhanced Control and Measurement Energy Efficiency / Environmental Compliancen Essential inputs for virtually all electronic productsn No substitutes exist that have the same characteristics and provide the same benefits 12
    • Rare Earth Applications Toyota PriusBiggest User of Rare Earths of any Object in the World 1kg Neodymium 15kg Lanthanum 0.1kg Dysprosium Top-selling car in Japan 100 g of Dysprosium is worth approximately $10 Without Dysprosium you don’t have a Prius 13
    • The Largest User of Rare Earths Tomorrow1mt Neodymium needed for every 3 MW of wind power generated 14
    • Current State of the Rare Earth MarketsSource: Rhodia 15
    • Supply Side ResponseMolyCorp Inc AMEX- Lynas Corporation ASX-MCP LYCRe-opening the Mountain Pass Starting Mt Weld mine withmine closed since 1998 with announced production in late 2011production in 2013 Primarily a Light Rare EarthPrimarily a Light Rare Earth Deposit with 96% of 2012Deposit with 86% of 2013 production in Cerium, Lanthanumproduction in Cerium, and Neodymium and PraseodymiumLanthanum and Neodymium First production is 11,000 tonnesExpected to produce per year.approximately 40,000 Tonnes peryear No production of Heavy Rare Earth Elements ( DY,Tb,Yt)No production of Heavy RareEarth Elements ( DY,Tb,Yt) 16
    • SUPPLY/Demand Gap IncreasingIMCOA Rare Earth Oxide Forecast 17
    • SUPPLY/Demand Gap IncreasingRare Earth Oxide Forecast 18
    • Current State of the Rare Earth Markets No significant commercial stockpile exists globally No buffer to volatile pricing or actions from China No ability to hedge against future price increases Limited supply-side response Most advanced Rare Earth mining projects are 2-5 years away from delivering product to market with substantial financial and technical hurdles to overcomeDacha has the inventory today and the ability to grow its stockpile quickly 19
    • Risk MinimizationInventory Insuredat Market Value Pacorini Metals Pacorini Metals Shanghai LME Warehouse Warehouse Korea 20
    • Why buy DACHA? Rising Commodity Prices For Rare Earth forecast in next 3-5 years Only Rare Earth Company that actually owns the finished product Focused on high value Heavy Rare Earths Demonstrated Ability to acquire REE in China despite reduction inexport quotas No new supply of Heavy Rare Earths till 2015 at the earliest Demonstrated Ability to trade with downstream customers 21
    • A Forbes & Manhattan Group Company Forbes & Manhattan A Private Merchant Bank Dacha Strategic Metals Inc. Management Team Scott Moore Alastair Neill Brad Boland President and CEO Executive VP CFO Board of Directors Jean-Guy ClaudeStan Bharti Scott Moore Alastair Neill Gen. Ron Hite George Faught Lambert Blanchet Strategic Metal Advisory Board Dr. Allen Alper Alastair Neill Don Bubar 22
    • TSX:DSM OTCQX:DHCAF China Office Toronto Office 11th Floor, Kerry Centre G. Scott Moore65 Queen St west, Suite 800 North Tower President and CEO Toronto, Ontario 1 Guanghua Rd Tel: 416-861-5903 M5h 2M5 Beijing, China smoore@dachametals.com 1000020