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Duncan van der Merwe, Tellus Holdings - Tellus Chandler Salt Mine Project Briefing


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Duncan van der Merwe, Tellus Holdings delivered the presentation at the 2013 Mining the Territory Conference. …

Duncan van der Merwe, Tellus Holdings delivered the presentation at the 2013 Mining the Territory Conference.

Mining the Territory Conference is part of the Northern Territory Resources Week. It provides the perfect platform for stakeholders in the NT mining industry to hear the latest information on this booming region.

For more information about the event, please visit:

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  • 1. Tellus Chandler Salt Mine Project Briefing 11th September 2013 - 7th annual Mining the Territory I Darwin Convention Centre Duncan van der Merwe - Group Managing Director Salt / Minerals Tellus Group Storage Industrial & Edible Salt Minerals -Fertiliser Storage / Disposal Renewable Energy Salt Mine Tourism Spin Off Salt Business Chandler Project (NT) Complementary
  • 2. 2 Important Notice and Disclaimer Summary information This presentation (Presentation) has been prepared by Tellus Holdings Ltd (ABN 97 138 119 829) (Tellus) and is for information purposes only. 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. It should be read in conjunction with other periodic announcements on 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. 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 Contents About Tellus Holdings Limited Project Locations Tellus Salt and Associated Mineral Products Situation, challenge and solution Chandler Project Overview Appendix 1 2 3 4 5 A
  • 4. 4 About Tellus Holdings Limited1 • Public unlisted company • Founded July 2009 • Exploration company with portfolio of rock salt and kaolin clay deposits • 70M shares • Strong Board and management team • Proven track record of developing and operating mines and storage projects • Chandler salt mine • JORC Exploration Target • 4.5-5 Billion tons halite+ • Sandy Ridge Kaolin • JORC Exploration Target • 57 Million tons kaolin • Commercial opportunities from Australia to Asia • Commercial opportunities from Asia to Australia • Chandler Project • Developing an underground rock salt mine - Northern Territory • Sandy Ridge Project • Developing a kaolin clay mine - Western Australia • Use voids left from mining for storage • First mover in Asia to implement integrated salt mining and storage business • Proven, profitable and long term business model + Refer to Important Notice and Disclaimer and Media Release 26 March 2013 for Competent Person Statement and Exploration Target Definition
  • 5. 5 Project Locations - Tellus2 State Leases Area Status Own. Project NT 7 EL’s 879km2 Granted 100% Chandler salt mine WA 1 ELA 59km2 Granted 100% Sandy Ridge kaolin mine Office Chandler Salt Mine Project Sandy Ridge Kaolin Mine Project ClayVault WA Government Storage Project Asia – Japan Office Sydney Perth Darwin Project location and summary Tokyo Darwin – gateway to Asia
  • 6. 6 Salt/Mineral Cavern and Mine Locations - International2 Region Projects (Underground Salt Caverns and Mines in Salt Beds North America >100 projects (incl. 400 salt caverns) Europe 49 Projects (Germany leader - 30 salt mines used for backfill) Asia 13 projects (China 6) Russia 9 projects Africa 1 project in Morocco South America 1 project in Brazil Total > 150 projects incl. < 500 caverns/ mines Source: SMRI 2003-5: Table 3,4 & 5
  • 7. 7 End Market Application Synesthetic soda ash Glass, chemicals, detergents Food / food processing Taste enhancer, heath, preservation, flavoured salts Associated minerals (fertlisers) Mg rich salts (MgCl), Epsom salts (MgSO4), potash, fertilizers, dust suppressant, bath salts Chlor-alkali PVC, soap and detergents, pulp and paper Other industrial (fluxes) Aluminium fluxes, oil & gas drilling, pharmaceuticals, textiles Water treatment Water softening, swimming pool water chlorinators Animal feedstuffs Salt licks, some with dietary supplements Specialty salts (Alice Springs)(1) Flavoured gourmet salts, salt curios, building material Tellus salt and associated mineral products3
  • 8. 8 Salt - situation ▪ World salt production 38% solar, 31% rock, 31% brine with >95% Australia production via solar ponds ▪ Asia consumes 40% (137M tpa) of global supply, growing at 5% pa ▪ Australia produced 16Mt of salt in 2010 - largest producers - Rio Tinto Dampier Salt & Mitsui (14.4M tpa, 90% national total) Situation, challenge and solution Salt - Tellus’ competitive advantage ▪ Tellus is in a strong position to meet Asian demand by providing a guaranteed volume and quality of salt ▪ Large scale resource – easily scalable ▪ Reliable supplier - not influenced by climate ▪ Associated minerals – e.g. fertilisers (high value) ▪ Cross selling storage solutions to salt buyers with storage problems Salt - challenge ▪ Difficulty getting environmental approvals for new projects (3 recent failed applications for solar ponds 2.5M, 3-4M & ~1M tpa) ▪ Australian & Asian salt produced mostly by coastal solar ponds – heavy rain disrupts supply for months at a time ▪ No rock salt mining exists in Australia -yet 4 1 2 3 Source: Salt: Global Industry Markets and Industry Outlook, 2011 Cyclone map – 25 years
  • 9. 9 Experienced management team in place5 Experienced corporate team Experienced commodity team Experienced waste management team Mine development engineer BHP, Rio, Xstrata, Anglo Coal Ex BD Coffey Environmental, IBM Chairman Realm Resources, ex Macquarie, JP Morgan Richard Rossiter Group Interim Chairman Ron Sifton Tellus RockVault NED Duncan van der Merwe GroupMD Brett Boynton Group FD Noel Davis MD ClayVault WA Robert Charter BusinessDevelopment Joe Luxford Tellus Mining Mining (Gencor CSM Energy), waste & infrastructure (BOS) Ex UBS, FBR Capital & Credit Suisse, Signature Gold Ex FD Newalta, Canada’s largest salt cavern waste storage operator Ex WA Environmental Regulator, Managed only Class V waste facility Ex BD Director Penrice Soda, roles ICI Australia, Merck, Ajax Chemicals Ex GM Dampier Salt, Ex CEO of Albany Port (WA) Mark Shepherd Tellus RockVault NED John Cook Tellus RockVault Chair Michael Carter Tellus Salt Sales Bob Emery Tellus Salt Chair Ex NSW Chief Mining Engineer, Ex MD Waste Service NSW Ex MD Coffey WA, managed Australia’s only Class V waste facility Akira Harada Tellus International NED CEO MCN Corp Ex GM Okaru & Co, Japanese trading houses   Tellus consists of an exceptional board and management team with key individuals having a proven track record developing large complex mines and heavily regulated storage projects
  • 10. 10 Chandler – Rediscovering the Chandler Salt Bed 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 Source: Ambrose and Young (2007) Mt Charlotte 1 Well – 95% haliteMt Charlotte 1 and Magee 1 (6.6km)145km seismic, 6.6km core 5 Potentially Australia’s largest UG salt deposit
  • 11. 11 Chandler - Mine Site Production -salt 1M tpa salt and associated minerals (3 year ramp up) Scale up depending on market Mining method Underground, room and pillar design, cut and blast mining Room dimensions 140mL x 10mW x 6mH 10m support pillar Processing - Dry and wet Management Core - owner operator Non core - alliance & contractor Wholesaler Jobs Build (270), operational (70), indirect (240) Budget – A$219m 5 PFS results: Project technically feasible, economically viable - no fatal flaws
  • 12. 12 Chandler - Salt Mining 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 5 Simple, proven room and pillar, cut and blast mining techniques
  • 13. 13 Chandler - salt cavern storage seen as world’s best practice5 Archives DisposalStorageBulk commodity/ SES Equipment K+S-German salt MineK+S-German salt MineCompass Minerals – Deep Storage Recovery (Al flux salts) Vaults created from mining used for safe storage and disposal General Licensed Type Unloading Testing & document control Transport underground Unloading in rooms (storage) Disposal – containers backfilled Disposal – rooms closed Process flow Using international “best practice”, tried & tested techniques 1 2 3 4 5 6 1 2
  • 14. 14 Country Australia United States of America Comment Tellus Chandler Project has potential to service the oil and gas and mining sector 400 underground salt storage caverns in 27 US states and Canada servicing the local oil and gas industry Location Storage caverns Source: formations.html 15 salt storage caverns , Gulf of Mexico Darwin Darwin marine supply base – service hub for NW offshore oil and gas industry Cross selling services Drilling salts (mine to oil & gas operations) Drilling muds/waste (oil & gas operations to mine site (disposal) Sandy Ridge Chandler ClayVault 5 Chandler - potential to service oil, gas & mining industry Darwin Gulf of Mexico
  • 15. 15 Chandler – 6 skin safety case5 Tellus ISO compliant Five engineered barriers and one natural salt barrier – 200-350m thick
  • 16. 16 Chandler – Darwin port – marine supply base5 Tellus 3ha transfer station Port Railway that runs past mine
  • 17. 17 Chandler – Darwin port – marine supply base Bulk & container handling infrastructure for salt exports Darwin – marine supply base (artist impression) Darwin – main marine supply base for offshore oil fields $35billion Inpex project being built in Darwin 5 Marine supply base Large volume of upstream, midstream and downstream oil and gas waste – Chandler well suited to take it
  • 18. 18 What are the opportunities for Central Australia? Pre mine Mine build Mine operations Jobs – exploration Training - apprenticeships, traineeships, work experience Training - apprenticeships, traineeships, work experience drilling Jobs – mine & plant build Jobs – mine & plant operations ecological Jobs – Alice & Darwin plant build Jobs – Alice processing plant operations studies Business opportunities – mine contractor services Business opportunities – salt related & mine services Sponsorships Community benefits trust Sponsorship Environmental offset program – improving the land (ranger programs) Infrastructure – power, improved roads, training centre, visitor centre Tellus has a commitment to local employment and training 5
  • 19. 19 How have neighboring communities benefited from salt mines? German case study - Sondershausen Underground (UG) tourism attractions  Underground mine tours (3 hours)  UG sports events: mine marathons, mountain bike races, ten pin bowling  UG cultural events: music events, private functions (weddings, corporate)  Catering for 200 people (beer hall) Benefits • ~ 20,000 UG visitors per year • ~ $4m in local economy per year • Transport, hotels, food, souvenirs • Community pride • Renewable energy • Viable mine – salt/backfill – large local employer, intergenerational 5
  • 20. 20 Chandler - timetable approvals & agreements Chandler Completed Pre-feasibility study (FEL2) National search for best salt deposit Secured and expanded NT EL leases Expanded team Mine Management Plan – EO approved Exploration Deed signed Definitive feasibility study (FEL3) Completed desktop study (FEL1) Positive early stage commercial negotiations JORC Expl. target StudiesCommerRegulat. MMP– Operations application & EIS Extensive community & government engagement Approvals mid 14 Financial close Final engineering (FEL4) & build 2010 2011 2012 2013 2014 20152009 2016 1st salt sales Final commercial negotiations JORC Resource What has been achieved to date << >> Future milestones 5 1st storage sales DFS Stage 1 DFS Stage 2
  • 21. 21 Tellus Holdings & Tellus Salt Contacts Tellus Holdings Level 5 / 71, Macquarie Street, Sydney NSW 2000 Tel: +61 (0)2 9241 7678 Fax: + 61 (0)2 9241 7691 Corporate Duncan van der Merwe or Robert Charter Community, Alice Springs Jane Munday, Michels Warren Munday 0427 880 083 Duncan Robert
  • 22. Appendix
  • 23. 23 Chandler Project overviewA Name Chandler Salt Mine Project Location ▪ Northern Territory (120km south of Alice Springs) Asset ▪ 100% owned by Tellus – 7 granted exploration licences covering 879km2 over Chandler and Gillen salt beds in the Amadeus Basin Product ▪ Edible and industrial salts, Agricultural minerals (fertiliser) Project stage ▪ Definitive Feasibility Study (FEL3) ▪ Pre-feasibility study led by URS concluded that the Chandler Project is technically feasible and economically viable – no fatal flaws Next step ▪ Step out drilling, 2D, 3D seismic, JORC resource and reserve, mine planning, approvals, ongoing community engagement Historic exploration ▪ General area – 29km of drilling holes from 14 oil and gas wells (A$17.5m) project area – 15 seismic lines (145km) 2 wells (6.6km) cost A$6.5m JORC exploration target ▪ 4.5-5 Bt halite (refer to Media Release 26 March 2013 for Competent Person Statement Mine life ▪ 25 years – site can be expanded for generations Geology ▪ Flat, 450m – 700m deep, 200m – 375m thick salt bed Quality ▪ Export quality, post processing 97%+ sodium chloride, traces of magnesium and polyhalite (potash) Mining method ▪ Underground (500m deep) room & pillar design, cut & blast Processing ▪ Dry processing – crush, screening, mix and bag ▪ Wet processing – evaporation, crystallisation and bittern ponds, harvest, mix and bag Production ▪ 1 Mtpa industrial, edible salts (86%) and minerals (14%) scale up depending on demand Complementary businesses ▪ Storage and disposal in voids left from mining ▪ Mine technology park – renewable energy ▪ Salt mine tourism Infrastructure ▪ 25km from Adelaide/Darwin railway, export via Darwin First salt sales ▪ 2015 Processing Mining
  • 24. 24 Chandler - Complementary Storage Business Source & materials accepted Not accepted  Oil& Gas sector  Nuclear waste  Mining sector  Uranium mining waste  Manufacturing sector  Infectious wastes  State Emergency Services  Wastes that can react with salt  Agricultural sector  Waste not properly containerised or sampled A