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


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Duncan van der Merwe delivered the presentation at the 2014 Mining the Territory Conference. …

Duncan van der Merwe delivered the presentation at the 2014 Mining the Territory Conference.

With record year on year investment in mining developments and exploration in the Northern Territory, the 8th Annual Mining the Territory Conference is perfectly placed to hear latest information on this booming region.

For more information about the event, please visit:

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  • 1. 1 Industrial Minerals Tellus Group Storage Industrial and Edible Salt Storage / Isolation Renewable Energy Salt Mine Tourism Chandler Project (NT) Complementary Sandy Ridge Project (WA) Kaolin Industrial Minerals Tellus Holdings Limited Storage / Isolation Storage Chandler Salt Mine Update – Adding Value to Salt Group MD Duncan van der Merwe Mining the Territory Conference 21 August 2014
  • 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, mineral resource estimates, and feasibility results can be found in Tellus’ publically released media announcements. Exploration target statements and mineral resources estimations are appended to comply with ASX guidelines but investors are urged to read supporting information in full available on the company’s website, and available in their data room. 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, and independent third party expertise. 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 – Chandler Project The information in this presentation that relates to Mineral Resources - Chandler Project - is based on information compiled by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (‘ERCOSPLAN’). Jana Neubert is a senior geologist and employee of ERCOSPLAN and a member in good standing of the European Federation of Geologists registered as “European Geologist” (Registration Number 1033). Ms Neubert has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Dr Henry AM Rauche is a senior geologist and Managing Director & C.E.O. of ERCOSPLAN and a member in good standing of the European Federation of Geologists registered as "European Geologist" (Registration Number 729). Dr Rauche has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Competent Person Statement – Sandy Ridge Project The information in this presentation that relates to Mineral Resources - Sandy Ridge Project - is based on information compiled by Terra Search Pty Ltd. Mr Jenkins is Principal Geologist of Terra Search and a Member of the Australian Institute of Geoscientists. Mr Jenkins has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. The information in this presentation that relates to exploration targets is based on information reviewed by Dr. Simon D. Beams, a full time employee of Terra Search Pty Ltd, geological consultants employed by Tellus. 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 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’). All statements as to exploration targets of Tellus salt and kaolin, and statements as to potential quality and grade are conceptual in nature. There has been insufficient exploration undertaken to date to estimate a resource and identification of a resource will be totally dependent on the outcome of further exploration.
  • 3. 3 Contents Summary Team Strategy Chandler Project (NT, Australia) Opportunities for the NT Sandy Ridge Project (WA, Australia) 1 2 3 4 5 6
  • 4. 4 Summary 309 M t JORC Measured1 Resource Chandler Salt Mine Project (100%, 4+25 year LOM) Ave 508k tpa salt & minerals sales Storage sales2 41 M t JORC Inferred1 Resource Sandy Ridge Kaolin Project (100%, 1+25 year LOM) Ave 28k tpa kaolin clay sales Storage sales 2 Tellus strategy Project developer – mineral / backfill business Dual revenue business Mine salt and kaolin (creates voids) and backfill with waste (fills voids) – proven global model Portfolio World class assets - regulated, long life business Chandler status JORC, MLA pending, EIS/ DFS (S2- FEL3) commencing Sandy Ridge status JORC, MLA pending, PER / PFS commencing ClayVault status WA Gov. IWDF proj. mg’t contract (5 year term 50/50JV) Advantages First to market in Asia, high barriers to entry, strong industry dynamics 1 Refer to Sandy Ridge JORC ( 20 June ’14) and Chandler – JORC (1 July 14) media releases 2 Photo of German salt/backfill mine, photo of West Australian clay backfill project 1
  • 5. 5 Experienced Board Experienced commodity team Experienced waste team 40 years experience in mine projects engineer BHP, Rio, Xstrata, Anglo Coal Ex Bus. Dev. Coffey Environmental, IBM, Unilever, Aust Defence Forces. Ex Global Head of Infrastructure AMP Capital, CEO Tenix Infrastructure, CEO Lend Lease Capital Philip Garling Group Non Executive Chairman Ron Sifton Group Non Executive Duncan van der Merwe GroupManagingDirector Brett Boynton Group Finance Director Joe Luxford Chandler Underground Advisor Mining (Ex Gencor/Billiton, Blue Energy), waste & infrastructure, Ex Bank of Scotland, Noble Group Ex UBS, FBR Capital, Credit Suisse, investment banking, M&A, Director Signature Gold Ex CFO Newalta, Canada’s largest salt cavern waste storage operator – 30 years direct experience Project Manager EPMS, Ex Technical Director WA Kaolin Holdings, HBH Consultants, GMA Garnet Ex GM Dampier Salt, Ex CEO of Albany Port, Wesfarmers, Rio Tinto, Hamersley Iron Mark Shepherd Tellus RockVault NED John Cook Tellus RockVault Chairman Mike Ingram Sandy Ridge PM / Technical Advisor Bob Emery Tellus Salt Chairman Ex NSW Chief Mining Engineer (Minerals – NSW), Ex MD Waste Services NSW, Founder WMAA Ex MD Coffey WA, Manager Mt Walton IWDF - Australia’s only Class V waste facility   Highly experienced board and management team with key individuals having a direct and proven track record in developing salt and kaolin mines, and heavily regulated waste projects Ex Wiltshire Geological Services, Schlumberger Information, Terra Search Jaime Livesey Senior Geologist Steve Reece Chandler PM / Technical Advisor Reg. Manager Golders. Ex Mine Manager (15 yrs) at Winsford UK’s largest under ground salt/ backfill mine Team - Organisational Structure2 MD Michels Warren Munday, 35 years in media, com. engagement & communications in VIC & NT Jane Munday Communication Advisor Fmr CEO Aust. Coal Assoc & NSW Minerals Council, Trustee AusCoal Super, Snr Mngr Shell Oil and Gas Dr Nikki Willams Group Non Executive Company Secretary, CFO for a number of ASX listed & pre-IPO companies Anne Adaley Company Secretary/ CFO Robert Charter Marketing Corporate/ Advisory Ex WA Environmental Regulator, Managed only Class V waste facility Noel Davies Tellus RockVault NED
  • 6. 6 1 Compilation and evaluation of bedded salt deposits - SMRI -KBB: Table 3,4 & 5, 2006 4 GRS report for UNEP – Options for environmentally sound management of surplus mercury, 2011 Clay Strategy - In Line With International Best Practice3 Proven and profitable global business model Region Underground Salt Caverns & Mines 1 North America >100 projects (incl. 400 solution mined salt caverns) Europe 49 Projects (Germany leader - 30 salt/backfill mines) Asia 13 projects (China 6) Russia 9 projects Africa 1 project in Morocco South America 1 project in Brazil Total > 150 projects Region Near Surface Clay Storage Facilities 4 North America Canada Europe France, Spain, Switzerland Asia Australia (NSW closed 1M ton facility, WA open IWDF) Regions with salt caverns/ mines and clay storage projects Underground salt caverns and mines Near surface clay storage facilities
  • 7. 7 Strategy – Pit to Port3 Vast asset, easy to mine, scalable, technically / commercially sound business, dual revenue
  • 8. 8 Strategy - Salt Products3 Salt - Tellus’ competitive advantage ▪ Strong position to meet Asian demand by providing a guaranteed volume and quality ▪ Darwin – closest port to Asian buyers ▪ Large scale resource – easily scalable ▪ Reliable supplier - not influenced by climate ▪ Associated minerals – e.g. fertilisers ▪ Cross selling storage solutions (domestic) Cyclone map World: Forecast demand for salt by region, 2012 and 2018 (Mt) 1 World: Forecast demand for salt by end-use, 2012 and 2018 (Mt)1 Tellus opportunity Drilling salts used in the oil and gas industry, salt fluxes used in the smelting and mining industry To Shanghai : Darwin is ~4,100 km closer than Indian ports, ~5,900km closer than Mexican ports ~13,300 km closer than Chilean ports
  • 9. 9 Strategy – Oil & Gas Industry Service Provider3 On shore liability Off shore liability Every up-, mid-, and downstream operation produces waste 15 salt cavern facilities servicing the Gulf’s O&G industry Tightening regulation and limited cost effective solutions Government & industry want best practice facilities 2, GRS UNEP Mercury report1 Map- Based on Australian Gov. Dept of Resources, Energy and Tourism 2008 report Chandler has the potential to connect Central Australia to the booming on and offshore O&G industry
  • 10. 10 Waste Acceptance Criteria Chandler Liquid waste in barrels, lined & bunded Dry waste multiple lined and bagged Nuclear waste (Defence, Energy) Uranium mining waste Infectious (Medical) Waste Uncertified waste Tellus is bringing “worlds best practice” solutions and recognized high development standards Industry Waste Sources Oil & Gas Mining Heavy Industry / Power Generation Manufacturing Agricultural Government/SES       X X1 X Strategy – Tellus Service Offering   X Best Practice Systems Certified Management System Strict acceptance criteria Packaging and transport criteria Safety case – man made engineering Safety case – natural engineering (geology) Insurance, bonds, Permanent Isolation Certificates       3 1 Tellus plans to accept NORM’s (naturally occurring radioactive material as found in oil and gas, mining, and heavy industry processed waste etc) Tellus’ certifications and values
  • 11. 11 Strategy - Rediscovering the Chandler Salt Source: McGraw HillImage: 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 Tellus drilling - 98% pure halite at 795mFlat thick salt bed ~ 18km wide (CH003 ~ 300m)145km seismic, 6.6km core 3 Potentially Australia’s largest commercially viable salt bed
  • 12. 12 Project location Drilled 1,937m Field work Grade Analysis Expert analysis 370 samples Dual business FEL 2 Engineering DFS/ EIS Commercial Site investigations Customer visits Chandler - Progress4 Study categories: 17 DFS /15 EIS Study contributors: 22 companies Country of study contributors: 5 Site visits to other salt mines: Trade trips Project technically feasible, commercially viable, no fatal flaws
  • 13. 13 Chandler - Resource Estimate4 1 Refer to Tellus Media Release ‘2014 Chandler – JORC Estimation’ 1 July for further details, JORC Table 1, Proximate and Competent Person Statement 2. JORC statement prepared by Ercosplan (Germany) Flat Salt Bed ~ 18km wide (hole CH003 ~ 300m thick salt bed), sedimentary rock suitable for low cost decline 309 Mt Measured Resource = 525 year mine life. Mineral resource covers 8% of EL 29018
  • 14. 14 Chandler - Design4 *Not to scale – underground workings not directly under surface plant Salt dry processing plantStorage processing plant Wet processing ponds (evaporation, crystallization, bittern ponds) 2 MW solar plant Vertical ventilation shafts Portal and decline Traffic management – blue line salt traffic, orange line – waste traffic Ventilation management – intake (2nd egress) and exhaust air Isolation management – store like with like Room dimensions – 240m L, 15m W 4.5m H, 11 rooms pa Water management – decline stops above salt bed, with sump
  • 15. 15 Chandler - Summary Mine life – 29 years (4 + 25 years), rolling terms Production -salt 0.5 M tpa salt and associated minerals, Scale up on demand Mining method Underground, room and pillar design, Continuous miner Room dimensions 240mL x 15mW x 4.5mH, 15m support pillar Processing – Dry (crush, bag, ship), some wet, backfill Management Core business - owner operator, Non core - contractor Jobs Build (280-350), operational (180), indirect (>540-720) Historic spend: General area 41.5km (>$18.5M) Project area: 6.6km, 15 lines seismic (145km) – (A$6.5M) Capex – A$464 M Opex – Labour, transport, utilities, services Taxes – Corporate tax, GST, levies, royalties Could potentially be Australia’s longest life mine Could potentially be one of central Australia’s largest employers 4
  • 16. 16 Chandler – Power requirements 2 MW solar plant Could potentially be Central Australia’s largest solar power station 4
  • 17. General - archives Licensed - disposal Licensed - storage K+S-German salt Mine Compass Minerals – Deep Storage 4 Chandler - Underground design Salt mining K+S-German salt Mine K+S-German salt Mine Tellus is planning to develop the safest mine in Australia
  • 18. 18 Opportunities for the Alice Springs region and NT Category Pre mine Mine build Mine operations Jobs Limited Mine & plant build Mine & plant operations Training Limited work experience Apprenticeships, traineeships, work experience Apprenticeships, traineeships, work experience Investment Studies, approvals, team & internal & customer processes Capex (civils, plant &equip), team & internal & customer processes Investment (sustaining capex & opex) team & internal & customer processes Business opportunities Contractor labour, drilling, studies, equip. & supplies Mine contractor services, equipment & supplies Mine contractor services Equipment & supplies Salt related spin off businesses Sponsorships & trust Sponsorships Sponsorships Sponsorship Community benefits trust Environmental Work exp. (rangers) Work exp. (rangers) Offset program (ranger programs) Infrastructure Industrial shed/ office Improved roads, bridges, power, comm’s Improved roads, bridges, power, comm’s, training & visitor centre Royalties Taxes & rates Exploration Agreement CLC Exploration Agreement CLC Federal, NT , Local taxes/ rates Royalties - Mineral Federal, NT , Local taxes and rates Tellus has a commitment to local employment, training and supply of equipment and services 5
  • 19. 19 Opportunities – Local contracts awarded during DFS 1 Category Service / equipment provided Local Industrial real estate Shed/ office rental & utilities  Studies - environmental contractors & TO’s Field surveys  Station / Landholder Earthworks machinery, accommodation  Mining service providers Camp and equipment supply  Wholesale fuel distributor Diesel supply  Vehicle rental supplier Vehicle rental  Freight provider Freight service  Geotechnical contractors Personnel  Camping & safety equipment supplier Field equipment supply  Helicopter charter service Charter flights  Accommodation & food and beverage Hotels, taxis, catering, room hire  5 How to engage with Tellus Initial engagement is via registration with: Industry Capability Network (ICN) or contact ICNNT 08 8922 9422 ICNmatches projects with potential suppliers Tier I Primary contract –overarching contract Tier II Secondary/ sub contracts
  • 20. 20 Chandler - Community and Stakeholder Engagement Community consultation Supporting jobs (WA TO’s) Supporting jobs (NT TO’s) Pot. buyers (pit-to port visits)Community sponsorship NT Gov. & Regulator (site visits) TO meetings & site visits Supporting local business (20+) Over 30 months - 118 face to face meetings 5
  • 21. 21 Chandler – Next steps Category Detail Approvals - next steps Next round of community engagement Lodge Mineral Lease Application Complete Environmental Impact Study (EIS) and lodge (Federal and NT) Complete all regulatory approvals, licences and agreements Project - next steps Complete stage 2 drilling and seismic Complete dry/wet salt processing pilot, geotechnical tests and analysis Complete definitive feasibility study (FEL3) Complete off take, supply, and finance agreements Expand team and appoint Tellus consortium partners 5 Dry / wet salt processing pilotDrilling (mine planning) Planning for build / S1 operationsRegulatory approvals & offtake
  • 22. 22 Drilled 1,864 m Field work Grade analysis Expert analysis 915 samples (1,700kg) Dual business FEL 1 Engineering DFS/EIS Commercial Site investigations Trade trips Sandy Ridge - Project Update6 Country of study contributors: Site visits to other kaolin mines: Project technically feasible, commercially viable, no fatal flaws
  • 23. Sandy Ridge – Next steps6 15 ton kaolin pilot and analysis40 tonne bulk sample collection Stage 1 buildRegulatory approvals & offtake Detail Next round of community engagement Lodge Mineral Lease Application Complete PER and lodge (Federal and WA) Complete all regulatory approvals, licences and agreements Complete stage 2 drilling Complete pilot, geotechnical tests and analysis Complete definitive feasibility study (FEL3) Complete off take, supply, and finance agreements Expand team and appoint Tellus consortium partners
  • 24. 24 Any questions? Duncan van der Merwe Group Managing Director E: T: +61 2 9241 7678