Providing future US niobium/ rare earth supplies


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Objective Capital's Rare Earths, Speciality & Strategic Metals
Investment Summit 2012
Ironmongers' Hall, City of London
13-14 March 2012
Speaker: Peter Dickie, Quantum Rare Earth Devs

Published in: Economy & Finance, Business
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Providing future US niobium/ rare earth supplies

  1. 1. RARE EARTHS, SPECIALITY& STRATEGIC METALSINVESTMENT SUMMIT Providing future US niobium/ rare earth supplies Peter Dickie – CEO, Quantum Rare Earth Developments IRONMONGERS’ HALL, CITY OF LONDON TUESDAY-WEDNESDAY, 13-14 MARCH 2012
  2. 2. March 2012 2
  3. 3. DisclaimerThis presentation contains forward looking statements. These statements include, but are not limited to, statements with respect to the completion of an updated resource estimate, the commencement of a preliminary economic assessment study and management’s expectation that the results of these studies will confirm the potential of the Elk Creek Project. Specifically, any statements regarding the potential increase of the Company’s inferred resource at the Elk Creek Project and the goals and objectives of the Company are by their nature forward looking information. Resource estimates, unless specifically noted, are considered speculative. The Company has filed a National Instrument 43-101 report on the Elk Creek Project. Any and all other resource or reserve estimates are historical in nature, and should not be relied upon. By their nature, forward looking statements involve known and unknown risks and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Other factors may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statementsSpecific risk factors include risks associated with the ability obtain any necessary approvals, waivers, consents and other requirements necessary or desirable to permit or facilitate the development of the Company’s properties, risks associated with project development; the need for additional financing; operational risks associated with exploration activities and results, mining and mineral processing; environmental liability claims and insurance; reliance on key personnel; tax consequences; and other risks and uncertainties.The business of exploring for minerals involves a high degree of risk.Cautionary Note to US investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as "reserves" unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions. 3
  4. 4. About QuantumQuantum Rare Earth Developments Corp. is an exploration and developmentcompany that focuses on identifying and acquiring potentially economic depositsof Niobium and Rare Earth Elements located in stable mining jurisdictionsthroughout the world.Quantum’s premier project is the Elk Creek Carbonatite in Nebraska. Thisproject is considered more advanced due to development in the 1970s and 1980sby Molycorp, Inc., including over 150,000 feet of drilling. The primary focus of thisproperty is niobium, with substantial intercepts of both rare earth elements andphosphate also encountered.Archie Lake, Saskatchewan, is a rare earth exploration play with excellent surfaceresults, with exploration underway.In Australia, Quantum has a carried interest in two exploratory rare earth projectsin the vicinity of Mount Weld. 4
  5. 5. Why Niobium?• High Strength Low Alloy (HSLA) steel (FeNb)• Oil and Gas Pipelines – Superior ability to withstand increased pressure and volumes over greater distances• Steel Mega-Projects – Larger and leaner – significant cost and weight savings• Automotive Industry – Stronger and lighter – improved fuel efficiency due to weight reductions• Superalloys – used in the aerospace industry (jet turbines) – MRI machines (super conducting NbTi Alloy magnets)• “Green” technologies• Niobium is considered a “strategic metal” by U.S., yet U.S. imports 100% of its supply 5
  6. 6. The Niobium Market• “Niobium demand has grown at a 10% compound annual growth rate over the last 10 years and is forecast to increase steadily going forward.” - Carol Banducci, Executive Vice-President and CFO, IAMGOLD (May 4, 2011)• Only 10% of worldwide steel production contains niobium – expected to rise to as much as 20%.• 60% of the ferro-niobium growth will come from increased intensity usage (g FeNb / t), the balance from increased steel production.• China produces over 40% of world steel, yet uses much lower intensity usage of FeNb (about 33% of Western Producers). 6
  7. 7. The Niobium Market• Overall, world FeNb market forecast to double in next 8 - 10 years.• Current spot price is $43/kg Nb (source: Metal-Pages Ltd.)• Roskill forecasts price closer to $50/kg Nb by 2015.• FerroVanadium is the closest substitute, but requires double the intensity usage – current FeV price is $25/kg.• Japan and India have all announced large steel growth production forecasts. Indian FeNb usage is still very low.• At current and projected growth rates, world market anticipated to be 180,000 – 200,000 tpa by 2020Data from Roskill, Metal-Pages, Iamgold, CBMM websites 7
  8. 8. The Niobium Market – the players• CBMM – the private “800 lb gorilla in the closet” • Produce 85% of world production • 30% of company acquired by Asian steel companies in 2011 for $3.95 BILLION • Published figures show a maximum capacity of 150,000 tpa• Niobec – currently 8.5% of world production • Operating margin of $15 - $20 per kg in recent years • Operating grade has been dropping, current reserves at 0.44% • Moving forward with plans to TRIPLE production.• Development projects: • Elk Creek, Nebraska • Aley deposit in B.C. • Mrimba Hills in Kenya Data from Roskill, Metal-Pages, Iamgold, CBMM websites 8
  9. 9. Elk Creek Carbonatite in Nebraska Nebraska: • Stable mining regulations • Excellent infrastructure • Excellent community, county and state support 9
  10. 10. Elk Creek Carbonatite Mineralized ZonesNiobium and Rare-Earths Assay Results Niobium (Nb2O5) Highlights: - EC-11 (historic – re-assayed): •71.6m @ 1.19% -EC-16 (historic – re-assayed): •67.1m @ 0.91% - EC-29 (historic – re-assayed): •201.2m @ 0.99% - EC-30 (historic – re-assayed): •36.6m @ 1.12% - NEC-11-001 (new drilling): •235.2m @ 0.73% •Incl 54.3m @ 1.17% - NEC-11-002 (new drilling): Elk Creek •179.18m @ 0.87% Niobium •Incl 131.03m @ 1.02% Deposit - NEC-30 (new drilling): •130.37m @ 0.58% •Incl 34.16m @ 0.94% Rare Earth (REO) Highlights: •EC-93 (historic – re-assayed): •155m @ 2.70% •incl. 54.9m @ 3.30% •EC-55 (historic – re-assayed): •211.8 m @ 1.12% •incl. 36.6 m @ 1.76 - NEC-11-004 (new drilling): •236.19m @ 2.10% •Incl 68.18m @ 3.32% - NEC-11-005 (new drilling): •433.97m @ 0.92% •Incl 164.85m @ 1.21% 10
  11. 11. Elk Creek Carbonatite Drill Hole Locations NEC11-01: 235.22 m of 0.73% Nb2O5 and 0.43% TREO*, including 54.13 m of 1.17% Nb2O5 and 0.46% TREO 11
  12. 12. Elk Creek Carbonatite Mineralization – Main Niobium Zone – view from the north 12
  13. 13. Elk Creek CarbonatiteProject Status• March 31, 2011 NI 43-101, Wardrop calculated an inferred resource: 80.1 million tonnes @ 0.62% Nb2O5, containing almost 500 million kgs of niobium!• Q1 2012 – NEW 43-101 resource report to be published • Will include historic data and Quantum data from 2011 drill program;• Q1 – Q2, 2012 Results of metallurgical testing anticipated.• Q2-Q3 (est) 2012 Results of metallurgy together with the updated 43-101 will beused to produce a Preliminary Economic Assessment (PEA) report. 13
  14. 14. Peer ComparisonCompany Location World Reserves (*) Demand forecast demand 180-200,000T (by 2020)CBMM Brazil 85% 8-900 MT M & I @ 2.5% 150,000 T limit (private company)Niobec Quebec 9% 450 MT M & I @ 0.42% Expanding to (0.20% cutoff) 15,000 TCatalao Brazil 6% 33 MT M & I @ 1.24% (0.70% 4 – 5,000 T cutoff)Elk Creek Nebraska -Developing 80 MT inferred @ 0.62% (100%) (0.40% cutoff) (update Q1 2012)Aley B.C. -Developing 159 MT inferred @ 0.43% (100%) (0.20% cutoff)Mrimba Hills Kenya -Developing 105 MT inferred @ 0.65% (70%) (0.20% cutoff)* Information obtained from owner-company websites 14
  15. 15. Elk Creek CarbonatiteSummary – Niobium & Elk Creek ProjectNiobium market• CBMM planning to increase capacity from 90,000 tpa FeNb to 150,000 tpa by 2015• Global market estimated to reach 180,000 - 200,000 tpa by 2018 - 2020• CAGR (Compounded Annual Growth Rate) for next 5 years should be at least 10%  Based on expected CAGR, current producers (including CBMM) will not be able to meet demand for FeNb by 2018• CBMM have stated they welcome production increases by current producers• CBMM will continue pricing FeNb based on the advantage generated by the Nb in steels  Forecast intensity usage increases expected to correlate to similar price reaction** information from CBMM presentation in NYC, June, 2011Elk Creek Niobium Project• New 43-101 resource report underway• Metallurgical test work underway• Metallurgical results and 43-101 to be used in PEA, 2012 15
  16. 16. Management and Board of DirectorsPeter Dickie - President, CEO and Director• Over 20 years of business experience with both public and private companies holding numerous senior management positions;• Graduate of both the University of British Columbia, and the University of Victoria (B.C.);• 4 years in the Securities industry with Jones, Gable & Co.;• Sits on the board of several public companies in a fiscal and management advisory capacity.David C. Beling, P.E. – Director• Over 47 years of experience in the global precious metal, base metal and energy mineral sectors;• Has significantly reviewed or was directly involved with 84 underground mines, 127 open pit mines and 163 mineral processing plants;• Has worked with Phelps Dodge, Union Oil, Fluor, United Technologies, Westinghouse, and several Canadian and US junior mining companies;• Served as a senior executive and member of the Board of Directors of eight public mining companies;• In addition to developing and managing operations, he initiated or strongly contributed to the marketing and closing of several debt and equity financings, commodity and asset sales, mergers, acquisitions and joint ventures.Jody Dahrouge, P.Geo – Director• Since 1998, he has been the President of Dahrouge Geological Consulting Ltd. a company he founded;• Has worked on a variety of early stage through development projects worldwide including coal, industrial minerals, rare metals, base and precious metals, and uranium projects. 16
  17. 17. Management and Board of DirectorsDavid R. Shoemaker, Mining Engineer – Technical Advisor• Over fifty years experience in the base metals, precious metals, and energy metals sectors;• Extensive experience in large open pit, block caving, and cut and fill operations;• Has held the positions of Mining Engineer, Chief Engineer, Operations Superintendent at caving and open pit mines, and Manager and Vice President of Molycorp Inc. Molybdenum Group;• Involved in the evaluation of over 100 mineral properties while working for Molycorp Inc., Hecla Mining Company, Phelps Dodge Corporation, Inspiration Consolidated Copper Co., Utica Mines Ltd., Homestake Mining Company, and as a Mining Consultant;• Extensive experience in mine operations, mine planning, and mine evaluation.James E. Reynolds, Chemical Engineer – Technical Advisor• Over 50 years experience as a chemical engineer in metallurgical and chemical operations in research, hydrometallurgical process development and chemical plant management;• Has 30 patents issued during his 28 years of consulting activities on over 80 world-wide projects;• Has worked with American Potash, Kerr McGee Corporation and Hazen Research;• Specialized in light and heavy metals processing, recycle of secondary metals, and industrial electro-chemicals.Mr. Claude Dufresne, Mining Engineer – Technical Advisor• Began his career with Cambior as a metallurgist in 1991;• After Cambiors acquisition by Iamgold Corp, Mr. Dufresne collaborated with Iamgolds Corporate Development group while continuing with its Sales & Marketing activities;• Is a member of the Ordre des Ingenieurs du Quebec, and of the Tantalum & Niobium International Study Center (TIC).• Started Camet Metallurgy Inc, a joint venture company with Iamgold, which is responsible for the worldwide Sales and Marketing of Iamgolds niobium from the Niobec mine. 17
  18. 18. Management and Board of DirectorsJames Allan, M.Sc. P.Eng – Director• Queen’s University MSc (Geology, Engineering) graduate with over 45 years of experience with several major mining and petroleum companies and as an independent consultant in mining exploration and exploration management, mineral property evaluation and mining geology• Registered Professional Engineer, belonging to the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA).• has extensive experience in the exploration for, and evaluation of, rare earth deposits both as manager of exploration in Canada for a large rare earth company (Molycorp Canada) from 1982 to 1990 and as an independent consultantErin Chutter – Director• President and Founder of Global Cobalt (formerly Puget Ventures Inc.);• Active in politics since the late 1980s, Erin has managed and advised campaigns at three levels of government, as well as party leadership races;• Served on staff to federal and provincial ministers and leaders;• Appears often as a political commentator on television and radio;• Serves on the national board of the Canadian Taxpayer’s Federation and the Macdonald Laurier Institute.Casey Forward – CFO• Independent CGA with over 20 years of experience in both private and public companies involved in mining and business development;• Currently serves as a director or officer of several public companies involved in the mineral resource sector. 18
  19. 19. Website: Transfer Computershare Vancouver, BC, Auditors: Davidson & CompanyCorporate Office: Vancouver, BC, CanadaSuite 1510 - 1050 West Pender StreetVancouver, BC V6E 3S7 Canada Legal Counsel: Boughton Law CorporationTelephone: 604.568.7365 Vancouver, BC, CanadaToll Free: 1.877.385.0345Facsimile: 604.688.4215 Bankers: TD BankShares Issued: Vancouver, CanadaCurrent: ~ 86,000,000Fully Diluted: ~ 110,700,000Cash: ~ $0.6 million 19
  20. 20. March 2012