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Dacha strategic metals_-_march_2011
 

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    Dacha strategic metals_-_march_2011 Dacha strategic metals_-_march_2011 Presentation Transcript

    • Corporate Presentation, March 2011 TSX-V:DSM OTCQX:DHCAF A 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 thefinancing, 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 earthmetals, future metal prices and treatment and refining charges, the financial results of the Company, the future financialor 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 notanticipate", 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 knownand unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance orachievements of the Company to be materially different from those expressed or implied by such forward-lookinginformation, 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. Althoughthe Company has attempted to identify important factors that could cause actual results to differ materially from thosecontained 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 andfuture events could differ materially from those anticipated in such statements. Accordingly, readers should not placeundue reliance on forward looking information. The Company does not undertake to update any forward-lookinginformation, 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 UnitedStates. The securities have not been and will not be registered under the United States Securities Act of 1933, asamended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United Statesor to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemptionfrom such registration is available. 2
    • Investment Objectiveso Ownership of physical stockpiles of Rare Earth Elements without any mining risko Diversified basket of metals eliminates single element exposure risko Demonstrated ability to source and export Rare Earth Elements from Chinao Current inventory stored in LME approved warehouses located off-shore near end-userso Generate profits from trading individual elements to downstream customerso 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:V AGF Management ~ 6%Shares issued: 73.1 MFully diluted: 99.5 M RAB Capital ~ 4%Price (03/03/11): $0.39 Aberdeen International Inc ~ 3%Market Cap: $28 M52-week High/Low: $1.05-$0.32 Management & Insiders ~ 4%Inventory Value (Mar 14, 2011)$0.58 per Share (Basic)$0.52 per Share (FD) 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 Achievements289,000 kilograms of Heavy Rare Earth Oxides Acquired in 2010199,000 kilograms of Heavy Rare Earth Oxides in Inventory at Dec 3111 acquisition trades executed in 2010 totaling $30.84 million5 Sales contracts with 4 different customers executed in Q4 2010$15.65 million in gross sales and $5.2 million in gross profit in Q4 2010 6
    • Attractive Value Proposition Participate in the expected price appreciation of rare earths and strategic industrial metals Metals Inventory Grades* Quantity Cost Market Value as at March 22, 2011 (Kgs) ($millions) ($millions) Busan Korea Dysprosium Oxide 4N 15,000 $4.60 $7.70 Dysprosium Fe Santoku 12,000 $3.50 $6.70 Gadolinium 4N5+ 10,000 $0.70 $1.30 Lutetium Oxide 4N+ 3,000 $0.90 $1.20 Neodymium Oxide 4N+ 10,000 $1.00 $1.70 Terbium Oxide 4N+ 13,000 $6.60 $11.00 Yttrium Oxide 5N 10,000 $0.40 $1.20 Shanghai China Europium Oxide 4N5+ 6,000 2.2 3.1 Yttrium Oxide 4N5+ 120,000 0.9 2.5 Total: 199,000 $20.80 $36.40*Grades:4N = 99.99%4N+ = 99.99+%5N = 99.999%4N5+ = 99.99%/99.999+% No Exploration or Mining Risk 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 of the Periodic Table 15 elements plus Yttrium are classified as REE and have specific magnetic, fluorescent and chemical properties Some 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 Compliance Essential inputs for virtually all electronic products 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 Response MolyCorp Inc AMEX-  Lynas Corporation ASX- MCP LYC Re-opening the Mountain Pass  Starting Mt Weld mine with mine closed since 1998 with announced production in late 2011 production in 2013  Primarily a Light Rare Earth Primarily a Light Rare Earth Deposit with 96% of 2012 Deposit with 86% of 2013 production in Cerium, Lanthanum production in Cerium, and Neodymium and Praseodymium Lanthanum and Neodymium  First production is 11,000 tonnes per Expected to produce year. approximately 40,000 Tonnes per year  No production of Heavy Rare Earth Elements ( DY,Tb,Yt) No production of Heavy Rare Earth 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
    • An Actively Managed Physical Portfolio Fundamental Research Asset Allocation DynamicPhysical Portfolio of Rare Earths + Trading Operations First Mover Advantage 20
    • Risk MinimizationInventory Insuredat Market Value Pacorini Metals Pacorini Metals Shanghai LME Warehouse Warehouse Korea 21
    • 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Diversification into other strategic metals 22
    • 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 23
    • 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