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The Chinese agricultural revolution and building the new potash powerhouse

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Objective Capital's Industrial Metals, Minerals & Investment Summit 2010

Objective Capital's Industrial Metals, Minerals & Investment Summit 2010
London Chamber of Commerce and Industry
3 November 2010
Speaker: Richard Poulden, Sirius Minerals

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The Chinese agricultural revolution and building the new potash powerhouse The Chinese agricultural revolution and building the new potash powerhouse Presentation Transcript

  • The Chinese agricultural revolution
    and building the new potash powerhouse
    Richard Poulden– Deputy Chairman,Sirius Minerals
  • SIRIUS MINERALS PLC
    BUILDING THE NEW POTASH POWERHOUSE
    Objective Capital Investment Summit– 3 November 2010
  • Important Notice
    This document is produced for information only and not in connection with any specific or proposed offer (the “Offer”) of securities in Sirius Exploration Plc (the “Company”). The information and opinions contained in this presentation, all of which are in draft form, are provided as at the date hereof and are subject to amendment without notice) completeness This at investment professionals defined Article 5) of the Important Notice (notice), further verification and completeness. document is directed as in 19(Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and at organizations of a kind described in and to whom Article 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (High Net Worth Companies, Unincorporated Associations, etc.) applies (all such persons together being referred to as "relevant persons"). This document must not be acted on, or relied on by, or passed on to (directly or indirectly) persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons (save as set out below). This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on directly indirectly to an published hole in for an purpose document is being provided to redistributed on, directly or indirectly, any other person or published in whole or part any purpose. This document provided recipients on the basis that they keep confidential any information contained herein or otherwise made available, whether orally or in writing, in connection with the Company. This document does not constitute an offer to buy or to subscribe for, or the solicitation of an offer to buy or to subscribe for securities in the Company in any jurisdiction in which such an offer or solicitation is unlawful and is not for distribution in or into any of such jurisdictions. To the extent this document is received or used in jurisdictions outside the UK, any such recipient or user should inform themselves about and observe any applicable legal requirements. Neither this document nor any part of this document should be copied or distributed by recipients where such distribution may lead to a breach of any law or regulatory requirement. No securities in the Company have been or are expected to be registered under the US Securities Act, or under the securities laws of any other jurisdiction. The Company's shares are traded in the United States as American Depositary Receipts and comply with all current legislation relevant to such trading. This document does not constitute or form any part of any offer or invitation or other solicitation or recommendation to purchase any securities in the Company and does not constitute or form part of a prospectus. No reliance may be placed for any purpose whatsoever on the information, representation or opinions. Any decision to purchase or subscribe for securities in the Company in connection with any offer should be made solely on the basis of the information contained in a prospectus on the Company or such other subscription document which may be published in due course and any acquisition of securities in the Company should be made on the basis of the information contained in such document. Neither the issue of this document nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this document, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this document or to correct any inaccuracies in, or omissions from, this document which may become apparent. This document should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this document is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. Information in this document must not be relied upon as having been authorized or approved by the Company. Neither the Company nor any other person makes any guarantee, representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this document, the Company any or whatsoever any loss any use of its nor does accept responsibility liability for howsoever arising from this document or contents or otherwise arising in connection therewith.
  • Potash is highly valuable and strategic
    Sirius is the only globally diversified potash development company and the only potash company quoted in London
    Multiple projects in OECD countries
    Committed to becoming a major low cost and low risk producer of potash
    2nd value horizon in related environmental technology
    Experienced development team
    Investment Overview
    Globally diversified portfolio of potash projects
  • Board of Directors
    Comprehensive spread of skills and experience
    Photo
    Photo
    Christopher Catlow, Chairman
    Richard Poulden, Deputy Chairman
    Successful companies in natural resources, healthcare, technology, venture investment. MA Oxford, MBA London/Harvard, merchant banker, Barrister.
    Former Chief Financial Officer and Business Development Director of Fortescue Metals Group during its major growth phase from start-up to multi-billion dollar iron ore producer. Previously Director of Consolidated Rutile, CFO Iluka Resources.
    Photo
    Jonathon Harrison, Finance Director
    Photo
    Derek Stonley, Director
    Intercontinental Hotels Africa and the Middle East. Management buy-in of 25 hotels from Queens Moat Houses plc with Duke Street Capital. Floatation of Top Notch Health Clubs on AIM.
    Project evaluation for Rio Tinto, Senior Geologist Exploration North America. Experience in copper, lead, zinc, gold, diamonds, iron ore across Russia, Africa, and Europe.
    Photo
    Michael Mainelli, Non-Exec Director
    Chairman Z/Yen Group. Seismology, cartography for oil & gas, then financial services. Created global oil industry cartographic standard databases Geodat and Mundocart.
  • Boyd Petrosearch
    Global geophysics leaders specialising in Potash/Salt exploration
    Seismic project management and data interpretation experts
    North Rim Exploration
    Leading geoscience and engineering group specialising in Potash development
    Assessment, verification and mine planning capabilities
    Schlumberger
    Global drilling expertise, subsurface engineering & project development
    Technical Partnerships
    World leading expertise
  • Potash is of critical importance and value
    Sirius is developing a globally diversified portfolio of potash projects
    Committed to being a large-scale, low cost, reliable supplier
    Focused on low risk countries with access to reliable infrastructure
    Strategy to Create Shareholder Value
    To become one of the world’s most important potash suppliers
  • Plants require three primary nutrients above all others:
    Nitrogen (N): promotes protein formation, growth and yield
    Phosphorus (P): helps root development, photosynthesis, and drought resistance
    Potassium (K): helps photosynthesis, strengthens cell, increases resistance, and importantly speeds the absorption of N and P
    NPK fertilizers are vital to the global food supply
    Potassium has no substitute in plant physiological function
    Potash has no commercial substitute
    Potash 101
    One of life’s basic building blocks
  • Megatrend: Food Security
    Complex problem, simple equation, simple answer
    Population Growth
    More People means More Food
    Less Land
    More Food from Less Land
    Decreasing Soil Quality
    More fertilisers needed to maintain crop yields
    = Potash Demand Growth
    WORLD
    WORLD
    ASIA
    AFRICA
    Source: United Nations
    Source: FAO Statistics Division 2009
  • Added Demand Pressure: Protein Demand
    Making the problem worse, but still a simple solution
    The global diet is changing
    Increased demand for meat as affluence rises
    Increased meat production requires increased productivity of animal feed
    Increased meat demand
    = Increased potash demand
    Source: World Bank, World Development Indicators 2009
    Source: FAO Statistics Division
    Source: FAO Statistics Division
  • Added Demand Pressure: Biofuels
    Making the problem worse, but still a simple solution
    Biofuels have emerged as a potential solution to climate change and energy security
    Debate continues on lifecycle greenhouse gas reduction
    Forecasts vary but long-term targets of between 30% and 50% of transportation fuel being replaced would significantly boost demands on biofuel crops
    Key biofuels crops – sugar cane, corn, rape seed, palm oil, and soybean are all major potash users
    Increased biofuel demand diverts further arable land away from food production
    Increased biofuel demand = Increased potash demand
  • Market Structure
    Asia and particularly China and India are key markets
    Asia represents a large growing demand market ~54%
    Production is concentrated between Canada and Russia / Belarus
    Three marketing groups control over 70% of supply
    Source: PotashCorpDataTool Markets Estimates
    • The concentration of supply over large consumers provides opportunity for Sirius
  • Sirius and Sino-Agri signed an MOU in August
    This gives an extensible 180 days for the parties to agree:
    An off take agreement for the Adavale potash
    A joint development agreement for Adavale
    Sino Agri is part of the second largest fertilizer distributor in China
    They recently placed a potash mine in Laos into first phase production
    MOU Announced with Sino Agri
  • Saskatchewan/Williston Basin
    ~33% of the world’s Potash comes from Williston Basin
    Estimates* of 50 billion tonnesof Potash in North Dakota
    Sirius holds 50km2 of claims
    Close to rail, gas, and water
    250km northwest of Bismark
    Known exploration targets
    Historic data on all properties from previous exploration
    High quality solution mining targets ready for drilling based on 2D seismic
    New drilling programme underway
    North America
    Dakota Salts Project – Williston Basin, North Dakota
    * North Dakota State Government Geological Survey: https://www.dmr.nd.gov/ndgs/mineral/nd_saltnew.asp
  • Sirius has undertaken a detailed reinterpretation of the existing seismic and analysis of the existing core
    Prairie evaporate contains significant thicknesses of salts principally:
    Halite (conventional salt)
    Sylvite (potash)
    North America
    Dakota Salts Project – Williston Basin, North Dakota
    • Initial volumetric calculations based on preliminary core:
    • 6 to 10.7 metres thickness of Potash
    • 18 to 25 % grade K2O
    • Depending on grade: 2.1 to 5.2 million metric tonnes per km2
    • 2,450m to 2,750m deep
  • Boree salt in the Adavale Basin
    602km2 of claims
    50km south of Blackall
    Rail and water available
    Data from prior exploration
    Amoseas & Phillips-Kuny 1960’s
    Esso Australia and AAR 1980’s
    Poseidon 1983/84
    Denison Resources 1988/89
    Significant Potash known to exist in Boree from previous drillings
    Drilling sites identified from recently completed seismic interpretation
    Australia
    Adavale Project, Queensland
  • Historical drilling and assay results suggested 18% KCl in the Boree
    Historical sampling and analysis not focused on potash
    Photo’s of old core show good quality potash
    Negotiations with Sino Agri progressing
    Australia
    Adavale Project, Queensland
    Historic Drilling
    Bonnie 1 Core sample from 2,244m.Sylvitematric in sylvinite interval
  • Canning Basin
    1,250km2 of claims
    200km SE of Broome
    Close to energy projects
    Existing data from prior Rio Tinto exploration
    Mallowa salts underlay the claims approx 450 metres thick at a depth of 550 metres
    Identified as prospective for economic Potash mineralisation (RTX Report No. 28456)
    Seismic and drilling targets currently being generated
    Australia
    Derby Salt Project, Western Australia
  • Barriers to Entry
    Barriers shape corporate strategy
    Sirius Strategic Response
    Common Views on Barriers to Entry
    Globally diversified portfolio of projects in place
    Limited reserves outside control of the existing producers
    1
    1
    2
    3
    4
    5
    6
    Untapped reserves often in difficult locations
    Projects in OECD countries and close to existing infrastructure
    2
    High development costs
    Build direct partnerships with major customers that can assist financing – e.g. SinoAgri MOU
    3
    Long lead times for greenfield mines
    Project pipeline, fast-track production, major long-term customer partnerships
    4
    Sirius’ 2nd horizon environmental technologies potentially add value to potash
    Environmental opposition
    5
    Use low cost techniques and low cost finance where possible
    Assumption that operating costs of new supply will exceed existing
    6
  • Sirius is developing key carbon and energy storage patents and technology through its 100% acquisitions of:
    CO2 Energy Storage Pty Ltd (QLD, Australia),
    Bicarb Sequestration Pty Ltd, and
    CO2 Energy Storage Ltd (Nevada, USA)
    North Dakota is the most prospective of US states for wind power
    The US Government has expressed broad support for wind power initiatives
    The generation of wind power requires storage to conserve energy and smooth loads
    Sirius and the Electrical Power Research Institute (EPRI) are conducting a cost-benefit analysis for a Bulk Energy Storage (BES) facility servicing a 134MW power plant
    Multiple potential value streams including load levelling – may also capture CO2 credits
    North Dakota Project is very close to significant hydrocarbon pipelines
    Salt caverns are a relatively efficient form of storage for hydrocarbons
    Queensland’s abundance of coal and emerging gasification industry also presents opportunities for Sirius’ technologies
    Environmental Technologies
    A valuable 2nd horizon of value for Sirius
  • Sirius’ Place in the Industry
    Deeply undervalued with a big opportunity
  • Acquired a portfolio of Potash projects in OECD countries
    Undertaken comprehensive seismic and drilling data review in North Dakota and Queensland, with Western Australia underway
    Advanced production protocols with Government and commenced drilling programme in North Dakota
    Advanced commercial relationship with Sino Agri
    Commenced investigations of complementary environmental value-adding technologies
    Developed an
    Building The New Potash Powerhouse
    Achievements to date
  • Globally diversified potash developer
    Committed to becoming a long-term, low-cost, low risk supplier
    Quality projects in the best locations
    Experienced Board
    Investment Proposition
    Building the New Potash Powerhouse
  • SIRIUS MINERALS PLC
    BUILDING THE NEW POTASH POWERHOUSE
    Objective Capital Investment Summit– 3 November 2010