Tellus’s Chandler Salt Mine project

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Duncan van der Merwe, Managing Director, Tellus Holdings delivered this presentation at Mining the Territory 2012. For more information on the annual event, please visit www.miningnt.com.au/

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Tellus’s Chandler Salt Mine project

  1. 1. Commercial in Confidence Page 1 Chandler Salt Mine Project 6th Mining the Territory Conference - Darwin Convention Centre 19th September 2012
  2. 2. Commercial in Confidence Page 2 Important Notice  Disclaimer This conference presentation (Presentation) has been prepared by Tellus Holdings (ABN 97 138 119 829) (Tellus). The Presentation and information contained in it is being provided to conference delegates for information purposes only.  Summary information This Presentation contains summary information about Tellus and its subsidiaries and their activities current as at the date of this Presentation. The information in this Presentation is of general background and does not purport to be complete. Delegates are advised that by their nature as visual aids, presentations provide information in a summary form. The key information on detailed Exploration Target statements and feasibility results can be found in Tellus ’s media releases. Exploration Targets statements are appended to comply with ASX guidelines but investors are urged to read supporting information in full on the website.  Not financial product advice This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Tellus shares and has been prepared without taking into account the objectives, financial situation or needs of individuals.  Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.  Future performance This Presentation contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could ”, “may”, “plan”, “will”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements, opinions and estimates are not guarantees of future performance.  Not an offer This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment.  Competent Person Statement The information in this presentation that relates to exploration results is based on information reviewed by Dr.Simon D. Beams, a full time employee of Terra Search Pty Ltd, geological consultants employed by Tellus Holdings Limited. Dr. Beams has BSc Honours and PhD degrees in geology; he is a Member of the Australasian Institute of Mining and Metallurgy (Member #107121) and a Member of the Australian Institute of Geoscientists (Member # 2689). Dr Beams has sufficient relevant experience in respect of the style of mineralisation, the type of deposit under consideration and the activity being undertaken to qualify as a Competent Person within the definition of the 2004 Edition of the AusIMM’s “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.  Exploration Target Note All statements as to exploration targets of Tellus salt and statements as to potential quality and grade are conceptual in nature. There has been insufficient exploration undertaken to date to define a salt resource and identification of a resource will be totally dependent on the outcome of further exploration. Any statement contained in this document as to exploration results or exploration targets has been made consistent with the requirements of the Australasian code for reporting of exploration results, mineral resources and ore reserves (“JORC Code”).
  3. 3. Commercial in Confidence Page 3 Contents A. Strategy and People B. Salt Market C. Salt Mining in the NT D. Lessons Learnt to date
  4. 4. Commercial in Confidence Page 4 A. Tellus Strategy Tried, tested and profitable business model overseas Tellus first to market with this model in Australia Salt / minerals Tellus Group Complementary business Industrial & edible salt Minerals -fertiliser Underground warehouse storage Hybrid diesel/solar salt battery Mine tourism Apprentice training Spin off salt business
  5. 5. Commercial in Confidence Page 5 Ex BD Director Penrice Soda, roles ICI Australia, Merck, Ajax Chemicals Mine development engineer BHP, Rio, Xstrata, Anglo Coal Ex BD Coffey Environmental Ex GM Dampier Salt, Ex CEO of Albany Port (WA) Chairman Realm Resources & Sylvania, ex Macquarie, JP Morgan A. Tellus People Richard Rossiter Group Chairman MarkShepherd Tellus RockVault NED John Cook Tellus RockVault Chair Ron Sifton Tellus RockVault NED Duncan van der Merwe GroupMD Brett Boynton Group FD NoelDavis MD ClayVault WA Robert Charter BusinessDevelopment Michael Carter Tellus Salt Sales Bob Emery Tellus Salt Chair Joe Luxford Tellus Mining Fergus Herbert Tellus Holdings NED Mining (Gencor CSM Energy), waste & infrastructure (BOS) Ex UBS, FBR Capital & Credit Suisse, Signature Gold Director, Driftwood Capital, Ex NSW Chief Mining Engineer, Ex MD Waste Service NSW Ex MD Coffey WA, managed Australia’s only Class V waste facility. Ex FD Newalta, Canada’s largest salt cavern waste storage operator Ex WA Environmental Regulator, Managed only Class V waste facility Experienced international mining, storage and logistics team supported by ex -government regulators
  6. 6. Commercial in Confidence Page 6 A. Tellus Assets - NT State Leases Area Status Own. NT 9 EL’s 1,432km2 Granted 100% High grade asset - thick, shallow, flat Hot dry climate Close to infrastructure & markets Tellus has consolidated the best available underground salt targets in Australia
  7. 7. Commercial in Confidence Page 7 B. Salt Market – Domestic and Export South. Solar ponds transport costs high for Asian markets Eastern Solar ponds prone to flooding Western Solar ponds prone to flooding 95% 1% Cyclones (25 years) 4% Global salt trade routes
  8. 8. Commercial in Confidence Page 8 B. Salt Market-Tellus Salt / Mineral Products Product mix strategy – Targeting higher value salts and minerals Water treatment salts Edible -livestock salts Minerals (Mg) – fertilizer, industrial uses Soda ash salts – glass Edible – food & food processing salts Chloralkali salts - soaps
  9. 9. Commercial in Confidence Page 9 C. Salt Mining in NT – Rediscovering the Chandler Salt Source: McGraw Hill Source: xx Image: Victoria Museum, Source: Colorado Plateau GeosystemsSource: Colorado Plateau Geosystems Cambrian -580myo lifeless land teeming ocean Salt trap for oil and gasGillen 700myo-Chandler 500myo-Late Cambrian Mt Charlotte 1 Well – 95% haliteMt Charlotte 1 and Magee 1 (6.6km)145km seismic, 6.6km core Source: Ambrose and Young (2007)
  10. 10. Commercial in Confidence Page 10 C. Salt Mining in NT– PFS Study Results Asset Description Historical exploration Gen. area - 29 km of drilling, 14 wells - $17.5 M Study area - 145km seismic (15 lines), 6.6 km drilling $6.5 M JORC - exploration target(1) Charlotte North site (ELA29018) 200-500 Mt 2% of lease area Mt Charlotte site (EL27972) 4,000-4,500 Mt 40% of lease area Geology (Charlotte North site ) First class salt deposit Flat, 375 m thick salt bed, 450 m deep Grade (export quality) High quality salt - 80-95% in situ halite Post processing 97%+ halite (NaCl) Next step - JORC Resource Drilling and seismic (mine planning) Fatal flaw analysis No fatal flaws identified (1) Refer to ExplorationTarget andCompetent Person Note (p.1 –Important Notice) PFS confirmed the technical and economic feasibility of the project
  11. 11. Commercial in Confidence Page 11 C. NT Chandler Project – PFS Study Results Mining Profile Mining method Underground, room and pillar design, cut and blast mining Room dimensions 140mL x 10mW x 6mH plus 10mW pillars Processing Dry and wet Implementation – contracting strategy Owner operated - core business Alliance & contractor - non-core business Implementation – human resources Construction jobs - 267 contractors) Operational jobs - 66 FT employees / con. Indirect jobs - 264 jobs Spin off business - ? Mine layout Underground room & pillar 750m deep, Production Profile First salt sales 2015 – target 1M tpa Ramp up 3 years (salt) Potential project life 25 years initially, (then many generations) Market - salt 80% export (Asia), 20% domestic
  12. 12. Commercial in Confidence Page 12 C. NT Chandler Project - Design Chandler Project - underground salt mine, proven room & pillar design and simple cut & blast mining techniques Stage 2 Stage 1 Stage 2 Stage 1 Stage 2 Stage 1
  13. 13. Commercial in Confidence Page 13 Blasting after shift end Auger drilling Muck pile load and dump Roof scaling Roof bolting Cleaning Drilling Loading with explosives 0 2 3 4 5 6 7 1 C. NT Chandler Project – Cut and Blast
  14. 14. Commercial in Confidence Page 14 Darwin East Arm Logistics Precinct 4 3 12 Infrastructure to service Asian salt markets & Australian storage markets Chandler Salt & Mineral Processing Plant Alice – Speciality Salt Processing Plant Chandler Salt Mine 1 3 Chandler rail siding (25km) 1 2 C. NT Chandler Project – Supply Chain 4
  15. 15. Commercial in Confidence Page 15 D. Lessons Learnt to Date  Integrated technical and commercial team – best team with track record  Understand your market - get the best sales team that understands product supply and demand and that has a good track record closing deals  Understand your asset – constantly challenge all assumptions - the best geologist is the drill bit  Front end load feasibility studies - to identify as quickly as possible the potential project fatal flaws, technical and commercial feasibility  Sensitivity analysis – conservative but realistic – life cycle economics - take care of the worst case because upper case takes care of itself  Financing options - Understand costs and benefits of different financing tools during whole project/ funding lifecycle  Community stakeholder engagement - Early engagement benefits the project and starts to build “social licence”.
  16. 16. Commercial in Confidence Page 16 Contact Duncan van der Merwe (CEO) duncan@tellusholdings.com.au +61 02 9241 7678

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