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Tms 2013 presentation 1435

  1. 1. Namibia Rare Earths Inc.1The Rare Earth Playing FieldWhy the Lofdal Discovery in Namibia Can CompeteTechnology Metals Summit - TorontoApril 21-22, 2013
  2. 2. Forward Looking StatementsThis presentation contains forward-looking statements that relate to the Companys current expectations and views of future events.In some cases, these forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "anticipate", "aim", "estimate", "intend", "plan","seek", "believe", "potential", "continue", "is/are likely to" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. TheCompany has based these forward-looking statements on its current expectations and projections about future events and financial trends that it believes may affect itsfinancial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things, statements relating to (i)the Companys strategy, growth, development and acquisition opportunities, return on existing assets, operational excellence and financial management; (ii) theCompanys expectations regarding its revenue, expenses and operations; (iii) the Companys anticipated cash needs and its estimates regarding its capital and operatingexpenditures; (iv) capital requirements, needs for additional financing and the Companys ability to raise additional capital; (v) the Companys estimates of future cashflows, financial condition and operating performances of the Company and its subsidiaries; (vi) the estimation of any mineral resources and the realization of mineralreserves based on mineral resource, estimates and estimated future development, if any, and possible variations of ore grade or recovery rates; (vii) estimated results ofplanned exploration and development activities; (viii) the Companys competitive position and its expectations regarding competition from other companies globally; (ix)the Companys ability to maintain customer and supplier relationships; (x) anticipated trends and challenges in the Companys business and the markets in which itoperates, including with respect to potential new rare earths projects, supply outlook and growth opportunities; (xi) limitations of insurance coverage; (xii) the future priceof and future demand for rare earths elements and their derivative products; (xiii) economic and financial conditions; (xiv) interest rates and foreign exchange rates; (xv)performance of counterparties in fulfilling their obligations; (xvi) government regulation of mining operations, accidents, environmental risks, exploration risks, reclamationand rehabilitation expenses; (xvii) title disputes or claims; and (xviii) the timing and possible outcome of pending regulatory and permitting matters.Forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, currentconditions and expected future developments and other factors it believes are appropriate. These assumptions include continued political stability in Namibia, thatpermits required for the Companys operations will be obtained in a timely basis in order to permit the Company to proceed on schedule with its planned drillingprograms, that skilled personnel and contractors will be available as the Companys operations continue to grow, that the price of rare earths will remain at levels that willrender the Companys projects economic and that the Company will be able to continue raising the necessary capital to finance its operations. Forward-lookingstatements involve a variety of known and unknown risks, uncertainties and other factors, including those listed under the heading "Risk Factors" in the prospectus of theCompany dated April 7, 2011 (filed on SEDAR, which may cause the Companys actual results, performance or achievements to be materially differentfrom any future results, performances or achievements expressed or implied by the forward-looking statements.The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made in the presentation.Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, afuture event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.There can be no assurance that such forward looking information will prove to be accurate, as actual results and future events could differ materially from thoseanticipated in such information. Accordingly, potential investors should not place undue reliance on forward-looking information.2
  3. 3. Corporate Summary – April 15, 2013Listings Toronto Stock Exchange (“NRE”)OTCQX in the United States (“NMREF”)Head Office Halifax, Nova ScotiaIssued 77,828,500 sharesOptions 5,200,000 (priced at $0.41 - $0.80)Fully Diluted 83,028,500 shares52 Week High/Low $0.50/$0.17Current Price Range $0.18 - 0.20Market Capitalization $15 millionCash Balance $15 millionDebt Nil3
  4. 4. Management and DirectorsGERALD J. MCCONNELL, QC – DIRECTOR AND CEOLawyer. Founded NovaGold Resources in 1984 (currently Director).Former President and Chief Executive Officer of Etruscan Resources to2010. Partner with the law firm Patterson Palmer from 1971 to 1987.DONALD M. BURTON, MSc, PGeo - PRESIDENTProfessional Geologist with over 30 years’ international experience inexploration for gold, uranium, base metals and rare earths. Former VPExploration of Etruscan Resources oversaw all acquisitions anddevelopments in West Africa (1994-2010) and Namibia (2005-2010).Former VP Exploration NovaGold Resources Inc. from 1987 to 1998.FRANCK BIZOUERNE – EXPLORATION MANAGERGraduate geologist with over 15 years’ experience in Africaspecializing in gold and uranium exploration. Project Geologist withBRGM and AREVA (1997-2006) in Madagascar, Côte dIvoire, Mali, andNiger. Country Manager for Etruscan Resources (2006-2011) inBurkina Faso.JANICE A. STAIRS, LLB, MBA - GENERAL COUNSEL AND CORPORATESECRETARYLawyer with over 25 years’ experience in the resource sector. GeneralCounsel to Endeavour Mining 2010-2011 following Endeavour’sacquisition of Etruscan Resources. Former Vice President and GeneralCounsel with Etruscan 2004-2010). Partner with the law firm ofMcInnes Cooper (formerly Patterson Palmer)TERI ANDERSON, BSc, CA, MBA – CHIEF FINANCIAL OFFICERChartered Accountant providing contract services to both public andprivate companies since 1999. Also CFO for Mountain Lake ResourcesInc. and Buchans Minerals Corp. Management positions in thecorporate finance group of Nova Scotia Power (1994-1999).Accountant with Ernst & Young LLP (1989-1994).KALIDAS V. MADHAVPEDDI – CHAIRMANEngineer. President of Azteca Consulting LLC, Aurizon Resources Ltd andForex Investment Group Limited. 30 years in the mining industry, formerSenior VP for Phelps Dodge Corporation and President of Phelps DodgeWire and CableADRIAN T. HICKEY - DIRECTORPrivate developer and financier, focusing on early stage mining prospectsthroughout Sub Saharan Africa. Former Chairman and CEO of Minas deRevuboe Limitada (coal in Mozambique), MD of NAB Mining Group Africa(coal in South Africa) and founder and MD of Swiss Chrome InternationalAG, (developed the fourth-largest ferrochrome producer in the world).DOUGLAS J. JACKSON - DIRECTOREngineer. Executive Vice President of Chemical and Oxides withMolycorp. Former President and CEO with Dyno Nobel the largestoperating subsidiary of Dyno Nobel ASA, and Engineer with Union OilCompany of California.GREGORY S. JOHNSON - DIRECTORExploration geologist with more than 20 years experience. President andCEO of Prophecy Platinum, former President and CEO of South AmericanSilver; VP, Strategic Development of NovaGold Resources.BILL KOUTSOURAS - DIRECTORChartered Accountant. President of Kouts Capital, a consulting companyproviding strategic advice, introduction to capital providers andtransaction structuring and implementation. Former Executive VP andCFO of Endeavour Mining.GLENN R. WILLIAMS - DIRECTORChartered Accountant. Former managing partner for Grant ThorntonLLP, director in the Canadian Institute of Chartered Accountants. Fellowof the Institute of Chartered Accountants of Nova Scotia.4
  5. 5. The Rare Earths – Heavies and Lights15 elements with atomicnumbers from 57-71(lanthanides) + scandium andyttrium which frequently occurwith the lanthanides and havesimilar propertiesImportant to define whereyou put the split betweenLREE and HREECommon convention is tosplit between samarium andeuropiumNOTE: Yttrium is considereda HREE5
  6. 6. Why Does Everyone Want Heavies? Part I – Supply Concerns• Rare earth elements are essential for high-tech applications (computers, cell phones, hybridcars, wind turbines and defence industry applications)• The US Department of Energy has identified 5 critical elements that are at a serious supply risk overthe next 15 years – dysprosium (Dy), terbium (Tb), neodymium (Nd), europium (Eu) and yttrium (Y)• >90% of the value in Lofdal lies in dysprosium, yttrium, terbium and europium6
  7. 7. Oxide January 2010 January 2011 July 2011 Feb 2013 % Change 20 mo % Change 3 yr(US$/kg) (US$/kg) (US$/kg) (US$/kg) (July 11-Feb 13) (Jan 10 - Feb 13)Lanthanum 6 61 154 10 -94% 67%Cerium 4 64 157 11 -93% 175%Praseodimium 23 92 247 83 -66% 261%Neodymium 24 93 328 78 -76% 225%Samarium 5 49 127 23 -82% 360%Europium 480 630 5560 1550 -72% 223%Terbium 350 618 4260 1250 -71% 257%Dysprosium 121 325 2591 615 -76% 408%Yttrium 10 75 180 36 -80% 260%Why Does Everyone Want Heavies? Part II - Pricing• Decision to IPO Lofdal was made in early 2010 after which rare earth oxide prices rosedramatically to a peak in July 2011. Prices have fallen back dramatically in the past 18 monthsbut still remain robust.• Prices have dropped 70-95% from 2011 peaks but prices are still up over 248% from 2010prices, and heavies have maintained their value relative to lights.Price sources: Technology Metals Research derived from for 99% REO FOB ChinaLREEHREE7
  8. 8. Heavy Rare Earth Enrichment - Material Grades1Most rare earth deposits have a preponderance of light rare earths. The relative proportion of heavies to the total gradeexpressed as a percentage defines the degree of heavy rare earth enrichment. Deposits with >10% enrichment (far rightcolumn indicated with below) are considered to be “enriched” in heavies. No consideration to tonnage or economics.TREO grades range from 0.24% to 11.65% and H:T range from 0.6% to 52.7%Rare ElementNavigatorAlkaneGWGLynasStansGreenlandLynasMolycorpAvalonArafuraTasmanHudsonGWGQuestFrontierMatamec1 Source: Technology Metals Research Company Report February 2011 8
  9. 9. Heavy Rare Earth Enrichment - REO Distribution11 Source: Technology Metals Research Company Report February 2011<5%HREE5-20%HREE20–53%HREE0.6%Molycorp3.3%Rare Element5.4%Lynas7.7%Great Western7.8%Frontier15.5%Avalon23.3%Alkane43.2%Quest52.7%Tasman2.2%Hudson3.7%Great Western36.9%Matamec9REE deposit grades are expressed as %TREO but the relative proportions of the 15 individual rare earth oxides (REO) withineach deposit is referred to as REO distribution. Knowing the distribution allows you to calculate tonnages of individual REOs.For example, a 10,000 t REO/year operation with a Dy distribution of 2% could produce 200 tonnes of dysprosium oxide a year.
  10. 10. Why is Lofdal Unique? Extraordinary HREE EnrichmentEXPLORATION REPORTED FROM AREA 4 IN 2011Hole NLOFDH015 intersected 16 m of 1.28% TREOwith 94.5% HREE enrichment (including 2 m of6.18% TREO with 98.4% HREE enrichment)It is this exceptional HREE enrichment which makesLofdal so unique. The discovery of a viable REEdeposit with such a distribution would be verysignificant.La2O3 Ce2O3 Pr2O3 Nd2O3 Sm2O3 LREO Eu2O3 Gd2O3 Tb2O3 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 Y2O3 HREO TREO HREO:TREOppm ppm ppm ppm ppm % ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm % % Ratio as %151 282 32 131 110 0.07 93 510 157 1,248 281 833 121 721 108 8,070 1.21 1.28 94.5NLOFDH4015 from 27- 43 m = 16 m with94.5% HREE enrichment10
  11. 11. Namibia Overview• Mining friendly operating jurisdiction (4th largesturanium producer in the world)• Excellent infrastructure• Major mine operators and developers include:– Rio Tinto (Rossing)– Paladin Energy (Langer Heinrich)– Areva (Trekkopje)– Forsys Metals (Valencia)– Bannerman Mining (Etango)– Extract (now Swakop Uranium)– AngloGold Ashanti (Navachab)– De Beers (Namdeb)• A dedicated and highly organized approach to supportthe exploration community from the Ministry of Minesand Energy, and from the Geological Survey of Namibia11
  12. 12. Lofdal Rare Earth ProjectSource Geological Survey of Namibia (2006b)12EPL 3400 –Lofdal (573 km2)Carbonatite Complex(200 km2)The Lofdal carbonatite complex covers 200 km2within Exclusive Prospecting Licence 3400450 km northwest of Windhoek
  13. 13. Rare Earth Deposit Exploration Model (Carbonatites)• Carbonatites and related rocks typically are anomalous in rare earths, Ba, Nb, Sr, Ta, Th and U- Important deposits of this type are Mountain Pass, Mt. Weld, Bear Lodge, Palabora and Bayan Obo• Level of erosion at Lofdal has exposed the top of the Main Intrusion, a carbonatite pipe at Emanya Intrusionand hundreds of dykes• We are walking across the top of the magma chamber and everything we are looking for should bepreserved underneathLevel of ErosionEmanya IntrusionCarbonatite DykesMain Intrusion13
  14. 14. District Scale Potential Demonstrated by Rock SamplingMain IntrusionEmanya IntrusionRegional rock sampling has confirmed the district scale potential of Lofdal. Approximately 4,000outcrop samples covering 80 km2 analyzed for REEs between 2008-2010. Carbonatite dykes displayboth LREE and HREE enrichment. Main Intrusion weakly anomalous in REE and Emanya Intrusion showsmoderate LREE enrichment. Where would you start drilling?14
  15. 15. Clear Structural Controls on HREE MineralizationMain IntrusionEmanya IntrusionClassification of same 4,000 rock samples by level of heavy rare earth enrichment shows 4 majorstructures where HREE fluids have migrated. Area 4 was discovered in late 2010 by mapping during thepre-IPO work program and was selected for the initial 43-101 resource targetMain IntrusionEmanya Intrusion% HREEEnrichment>50>75>90AREA 415
  16. 16. • IPO April 20119,500 m exploration drillprogram tested 16 of 18targets• HREEs targets confirmed bydrilling in Areas 2, 4 and 5• LREE targets confirmed inAreas 6 and 8• Area 4 selected as firstresource target inDecember 2011• 43-101 HREE resourcecompleted in September2012• 200 km2 to exploreSummary of Exploration Drilling from 2011Lofdal Carbonatite Complex from Airborne Geophysics16
  17. 17. Area 4 Initial 43-101 Resource – High Quality DatabaseTrenches (green) = 870 mDiamond drill holes 2011(black) = 3,100 mDiamond drill holes 2012 (blue) = 6,000 mMetallurgical holes (pink) = 310 m10,280 mDH409217
  18. 18. Summary Resource Statement Area 4Source: NI 43-101 Technical Report and Mineral Resource Estimate for Area 4 of the Lofdal Rare Earth Element (REE) Project, Khorixas District, Republic ofNamibia, July 31, 201218
  19. 19. TMR Advanced Rare Earth Projects – Now on Radar ScreenLofdal is now one ofthe 49 REE projectsbeing tracked by TMRResearch.The high HREE makesLofdal the mostvaluable REE depositin terms of basketprice19
  20. 20. Where Does the Lofdal Resource Fit in the Playing Field?• Exceptional HREE enrichment at Lofdal (85%) is very competitivein value position with well known deposits in the 1-2% TREO graderange• In situ values (US$/tonne) reflect grade and distribution of REOs interms of resource in the ground• No consideration given to tonnage, recoveries or economics – itis just a yardstick(1) Calculated as the sum of the oxide grades of Lanthanum, Cerium, Praseodymium, Neodymium, Samarium, Europium, Gadolinium, Terbium, Dysprosium, Holmium, Erbium,Thulium, Ytterbium, Lutetium, and YttriumSOURCE: REO value per unit mass of mineral resource (US$/tonne) and TREO grades from Technology Metals Research using February 2013 average REO FOB China pricesTREOGrade:(1)Pricing and grades as of February 201316.5 7.9 6.6 3.0 2.2 1.4 0.6 0.9 0.7 0.6 0.4 0.3 0.220$6,295$3,254$1,614$1,223$945$715 $621$518 $515 $485$264$227 $203
  21. 21. 93% of the Value is in the 4 Most Critical Heavy Rare EarthsDistribution1Value11 Source: Technology Metals Research using REO FOB China prices December 2012DOE Criticality Index21Lofdal resource at 0.3% TREO cut-off
  22. 22. Resource Only Drilled to 100-150 Vertical Meters -Potential to Double Area 4 ResourceNovember 13, 2012 -Announced intersection ofArea 4 deposit at 350 verticalmeters22Simple and predictable = low costopen pit mining
  23. 23. Every REE Deposit Must Demonstrate Amenability toExtractionNext project milestones will come from the metallurgical test program on representativesamples of HQ core being carried out by Mintek laboratories of South Africa.Mineralogy has confirmed xenotime as the major HREE mineral. Xenotime has beensuccessfully “cracked”. Focus of the Mintek program is on fine grain size and removal ofthorium. Preliminary, un-optimized results released April 3 produced 8-10% TREOconcentrates with 94-96% heavy rare earth enrichment from -38 µm grind. Potential for>50% Th removal by magnetic separation and further >90% from concentrate by leaching.Fine grained xenotime in crystal aggregates and disseminations.showing individual crystals to >50µ and xenotime aggregatescan exceed 100 microns (Clarke, 2011)23Coarse grained xenotime (green) in calcite matrix with iron oxides.Cathodoluminescence image by Mariano, 2012.
  24. 24. Sorting Tests Completed in GermanyCommercial scale sorting machine used for Lofdaltest work at Tomra Sorting Solutions in GermanyInitial scan showingvariations in densitySorting can eliminate waste in the 10-50 mm size range BEFORE they enter the mill for costly grindingand separation processes. By reducing the volume of the run-of-mine after crushing, and eliminatingwaste you will also increase the grade of ore that would be delivered to the mill.Tomra testwork concludes potential for 50% mass reduction recovering >90% REE at LofdalNear perfect sort from XRT scanner tests. Computerenhanced images of mineralized pieces in lower right.24
  25. 25. Significance of Lower Cut-Off Grade at LofdalSource: NI 43-101 Technical Report and Mineral Resource Estimate for Area 4 of the Lofdal Rare Earth Element (REE) Project, Khorixas District, Republic ofNamibia, July 31, 201225
  26. 26. Conceptual Development of the Area 4 Resource “As Is”Assumptions:Positive outcomes of metallurgical studies provide a 0.1% TREO cut-offEstablish a reserve of 6.5 MT @ 0.3% TREO with 75% HREE (20,000 t REO)Target production of 2,500 tonnes REO per annumScale of Mining Operation:850,000 tpa mining (2,500 tpd)Mine life of 7.5-8 yearsAnnual Outputs of Critical HREO1 World Supply 2011 % of World Supply175 tonnes dysprosium oxide 1,167 tonnes2 15%1250 tonnes yttrium oxide 8,900 tonnes3 14%25 tonnes terbium oxide 209 tonnes2 12%20 tonnes europium oxide 203 tonnes2 10%Note 1: assumes 100% recovery Sources: 2 = Byron Capital and 3 = USGSAll these metals are projected to be in supply deficit to 202026
  27. 27. Significance of Conceptual Production from Lofdalwith respect to Global Production (China)27• Chinese supply of HREE is averaging about 18,000 tpa• 2,500 tpa REO from Lofdal @ 75% heavy enrichment = 1,875 tpa of HREE• Lofdal would represent about 10% of global production of HREE* but theChinese limit supply outside of China through export quotas* Assumes 100% HREE supply from China.Source: Chinese Ministry of Land and Resources from ProEdge Wire website January 8, 2013
  28. 28. Significance of Conceptual Production from Lofdalwith respect to ROW Supply (Chinese Export Quotas)28Chinese Production and Export Quotas for Rare Earths 2012 and H1 2013*LREE M/HREE TotalTotal Production from China 2012 75,900 17,350 93,250 tonnesChinese Export Quotas 2012 27,122 3,874 30,996 tonnesProduction from China H1 2013 37,950 8,950 46,900 tonnesChinese Export Quotas H1 2013 13,561 1,938 15,499 tonnesChina produces 18,000 t of M/HRE but only allows 3,800 t out* Source: Chinese Ministry of Commerce from TMR website December 28, 20122,500 tpa REO @ 75% heavy enrichment = 1,875 tpa of HREELofdal would represent about 50% of ROW supply of HREE
  29. 29. Exploration Continues over 200 km2 Carbonatite ComplexArea 4 ResourceREE OccurrenceNovember 13, 2012 -Announced discoveryof new zone 1.5 kmnortheast of Area 4resourceExploration drill resultsfrom Area 2, Area 6and Area 8 are pendingArea 629Nb-U OccurrenceArea 8Area 2Area 4
  30. 30. Namibia Rare Earths - Key Drivers for Success30New District – 100% control of 200 km2 Lofdal carbonatite complex (identified in 2001 by Marianoand Siegfried; first regional prospecting by NRE from 2008-2010)New Discovery – Initial 43-101 compliant resource announced September 2012, open at depthHeavy Rare Earth Deposit – Over 90% of the value of the initial resource lies in Dy, Y, Tb and EuMetallurgical Studies On-going – First xenotime concentrates grade 8-10% TREO with 94-96%heavies; current focus is on optimizing concentrates (not a PEA or FS)Modest Scale Mining Operation – Not a “megaproject” but at 2,500 tpa REO could provide 10-15%of global supply of the 4 most critical heavies. 50% of Chinese export quotas for heavies.Corporate Strategy – Not looking to build or finance a separation plant; we are explorers and willseek a qualified industry partner for separation and end usersWell Financed – $15M in cash and no debtUpside – Could be the first sustainable supply of heavy rare earths outside of China, and thedistrict scale opportunity can deliver more discoveries (HREE, LREE, NB, U and Ta)