1. business and industrial
2. chemicals industry
3. dyes and pigments

Investor presentation
January 2011
E
Nordic Mining ASA | N-0250 Oslo | Norway | Tel +47 22 94 77 90 | Fax +47 22 94 77 01 | Org. no 989 796 739 | [email protected]
1
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Outline
1.
Company background and overview
2.
Engebø - Titanium project
3.
Keliber - Lithium project
4.
Gudvangen Stein - Anorthosite production
5.
Summary
3
Company background and overview
Strategic position in high-end minerals
Engebøfjellet (100%)
Titanium
Rutile/Garnet
Resource estimate
383 mill. tons
Mineable ore estimate
250 mill. tons
Lifetime
50 years
Si
¾ Will be Europe’s largest producer
of natural rutile (TiO2)
Gudvangen Stein
(100%)
Anorthosite
Resource estimate
>500 mill. tons
Mineable ore estimate
>400 mill. tons
Current production
200 000 tpa
Mo
Coal
Iron ore
Keliber Oy (68%)
Lithium
Resource estimate
>3 mill. tons
Mineable ore estimate
>1.8 mill. tons
Lifetime
>10 years
¾ Will be Europe’s first producer of
lithium carbonate
¾ Mine in operation – upside potential
in new applications
Aggregates,
sand and gravel
Ni, PGM
Industrial
metals &
minerals
Low-end
Industrial
metals &
minerals
High-end
Precious
metals
Diamonds
Future projects; High-purity quartz deposit in western Norway being analyzed – Molybdenum project at Kleivan/Vest-Agder Norway Nickel, PGE project in Finnmark Norway
Company background and overview
Why Nordic Mining?
•
Global push in demand for strategic resources (minerals and metals)
•
Norway and the Nordic region is underexplored and contain world class deposits
•
Excellent logistics from the Nordic region to EU, Middle East and US east coast
•
L
Long
term
t
cash
h flow
fl
potential
t ti l th
through
h attractive
tt
ti
iindustrial
d t i ld
developments
l
t
Mining
g exploration
p
in Nordic countries
5
Company background and overview
Solid team and shareholder structure
Management team
Largest shareholders
As per 15 December 2010
Ivar S. Fossum, CEO
20 years experience
i
from
f
managementt positions
iti
iin
Hydro, Yara and FMC Technologies
Lars K. Grøndahl, CFO
More than 20 years experience from industrial
management positions, i.a. Aker Group, Scancem Group
and Heidelberg Cement
Ottar Nakken, VP Commercial
Former Vice
F
Vi President
P
id t H
Hydro
d A
Agrii N
North
th A
America
i and
d
COO of Jebsen Management
Paul I. Norkyn, VP Mining Operations
Former R&D Manager in Titania (Kronos Group), 30 years
experience from the Titania, Sydvaranger, Bleikvassli
and Grong mining operations
Mona Schanche, Exploration Manager
Resource geologist from University in Trondheim, former
project geologist in Titania (Kronos Group)
Number of
shares
%
Rank
Name of shareholder
1
DAG DVERGSTEN AS
8 469 145
6,7 %
2
SKAGEN VEKST
7 915 000
6,3 %
3
HOLBERG NORGE
7 118 400
5,7 %
4
FINNISH INDUSTRY INVESTMENT LTD.
6 000 000
4,8 %
5
JP MORGAN C HASE BANK NORDEA
5 040 454
4,0 %
6
NORDNET BANK AB
3 836 941
3,1 %
7
DYBVAD C ONSULTING
3 539 788
2,8 %
8
MP PENSJON
3 270 000
26%
2,6
9
GRØNDAHL LARS K.
2 544 851
2,0 %
10
SOLON AS
2 242 333
1,8 %
11
SNATI AS
2 201 628
1,8 %
12
NORDEA BANK PLC FINL C LIENTS
1 831 066
1,5 %
13
DNO INVEST AS
1 806 442
1,4 %
14
DYBVAD AUDSTEIN
1 798 184
1,4 %
15
VPF NORDEA SMB
1 747 000
1,4 %
Top 15 shareholders
Others
Total
59 361 232
66 108 859
125 470 091
Share price 14.01.11
NOK 1.75
Market cap. 14.01.11
MNOK 220
47,3 %
52,7 %
100,0 %
6
Outline
1.
Company
p y background
g
and overview
2.
Engebø - Titanium project
3.
Keliber - Lithium project
4.
Gudvangen Stein - Anorthosite production
5
5.
Summary
7
Engebø titanium project
Engebø, a unique titanium rutile project
KEY ADVANTAGES:
• Will be Europe’s largest producer of natural
rutile
l ((Titanium d
dioxide
d TiO2)
• 50 years mine life
• NPV > USD 350 million
• Confirmed attractive deposit:
International interest from industrial and
financial companies incl. funding/ownership
proposal
¾ High grade product (can deliver up to 97%
titanium dioxide)
¾ Natural rutile is the preferred titanium
feedstock over the different ilmenite
sources
¾ Low on radioactive elements (high
radioactive content is a problem with many
of the other rutile deposits)
¾ Located next to deep sea port
¾ Short distance to large European
market
MoU signed with long term industrial partners on rutile and garnet
8
Engebø titanium project
A well defined deposit
D ill d
Drilled
Pl
Planned
d
Exploration and analysis
• 15,000
meters/50 holes
• 1,129
surface samples
• >50,000
sample analysis
• Block model – ordinary kriging
Resource class
JORC
Indicated
Inferred
Million tons
TiO2% @
3% cut-off
31 7
31.7
3 77
3.77
122.6
3.75
Proven resource, class upgrade by drilling
9
Engebø titanium project
Efficient mine plan; first open pit, then underground
Open pit:
10 - 15 years
Total mineable ore :
45 million tons
Underground:
35 years
Total mineable ore :
200 million tons
Products:
Rutile and garnet
50 years mine life
Standard open pit/glory hole design
Reduced visual impact
Underground mining by Longwall stoping
10
Engebø titanium project
Existing infrastructure, well known technology
Proven process steps
• Crushing and grinding
• Milling
g
• Magnetic separation
• Gravity separation
• Flotation
• Dewatering and drying
• High intensity dry separation
Production
- Ore:
3 – 6 mill. ton/y
- Rutile:
70 – 100,000 ton/y
- Garnet:
ca. 100,000 ton/y
Employees
150 - 170
11
Engebø titanium project
Environmentally friendly products, expanding markets
Rutile (Titanium dioxide/TiO2)
Garnet
• Superior properties
• Broad range of application areas
• Advanced abrasive mineral
• Health legislation on silica drives demand
Main markets:
Main markets:
Health care
Sandblasting
Consumer/Pigments
Aircraft
Waterjet cutting
Industry/Aerospace
Various filtration and abrasives
Green tech
Price range: 300 – 500 USD/ton
Increasing price premium for natural rutile *
*
Engebø
g
g
garnet has tested favourably
y with
existing top quality waterjet products
Source: IBMA, Roskill, USGS
12
Engebø titanium project
Long sea freights underpin new production in Europe
Il
Ilmenite
i
Ilmenite + Rutile
Rutile
Major TiO2 feedstock
producers
Iluka
QIT
TiWest
DuPont
Ticor
Namakwa
Kronos
Irshansk
Volnogorsk
Aus
Can
Aus
US
SA
SA
US
Ucr
Ucr
Ti feedstock producers
Feedstock distribution
Ti feedstocks
14 %
42 %
15 %
Ukraine
5%
Vietnam
5%
USA
5%
India
5%
Other
3%
Canada
22%
Norway
Zimbabwe
Norw ay
8% 8%
29 %
Ilmenite
South Africa
20%
%
China
8%
Slag
Synrutile
Rutile
Australia
19%
E
13
30
Source: IndMin
Engebø titanium project
European titanium majors are future customers
Large pigment plants for high-grade feedstock:
• Huntsman Tioxide
Greatham
UK
• Kronos Inc.
Ghent
Leverkusen
Belgium
Germany
• Tronox
Rotterdam
Netherland
• Cristal
Stallingborough UK
9 Substantial commercial interest confirmed by
pigment,
i
t metal
t l and
d welding
ldi
rod
d producers
d
9 Several European customers can each take
Engebø’s annual production
9 Simple logistics improves working capital,
capital
storage and planning
9 80% freight reduction, single shipments
9 10 vs.
vs 50 USD/ton freight (current freight is
10% of feedstock price)
Supply/demand pattern in Europe secures off-take of rutile
14
Engebø titanium project
Commercial partnerships established on all products
Rutile
(titanium dioxyde)
G
Garnet
t
MoU signed with major pigment producer Cristal
Global, product development and off-take
Sep 2010
MoU signed with international player in industrial
minerals,
i
l development,
d
l
t distribution
di t ib ti
and
d off-take
ff t k
Feb 2010
MoU signed with ARCADIS, on soil improvement
Host minerals
MoU signed with concrete producer on product
trials and off-take
2009/2010
15
Engebø titanium project
MoU signed with global pigment major,
major Cristal Global
Key facts Cristal Global
• Owned by TASNEE, a private
listed company in Saudi
Arabia
• No two in the world in
titanium pigments
• 8 production facilities in 6
countries on 5 continents
• Appr. 4,000 employees
16
Engebø titanium project
Good p
profitability
y – with significant
g
p
potential
Key figures
Revenue
$160
CAPEX:
MUSD 210
Annual revenue:
MUSD 100 – 200
$120
EBITDA-margin:
>50%
$100
NPV @ 10% WACC:
>MUSD 350
Payback
ay ac time:
e
<5
5 years
yea s
Mine life:
50 years
$140
$
$80
$44
$46
$37
$42
$32
$35
$39
$33
$70
$72
$74
$77
$ 9
$79
$81
$84
$68
$60
Large return on equity with typical 60+% loan
financing
$40
$15
$20
$33
$0
2014 E 2015 E 2016 E 2017 E 2018 E 2019 E 2020 E 2021 E 2022 E
TiO2 revenues (mill.)
Significant upside in price of rutile
Garnet revenues (mill.)
Aggregates revenue
Large upside in increased recovery
1000
550
900
500
700
NPV MUSD
NPV, MUSD
800
600
500
400
300
200
450
350
300
Base case
Target
400
Realistic
Base case
250
100
0
200
5%
7%
Annual rutile price increase
Based on 55% recovery
9%
55 %
60 %
% Recovery
65 %
Based on 5% annual rutile price increase
Further upside potential
Further growth in markets for garnet (currently assuming selling only 20% of output)
Off-take of waste rock and tailing material, e.g. for construction fundament and filling
17
Engebø titanium project
Significant work completed, near term milestones
• Over 40 MNOK invested in pre-studies, analysis and
verification
• Most comprehensive Environmental Impact Assessment (EIA)
in Norwegian mining industry: 34 different special reports,
12 research institutions
• Two rounds of public hearing completed
• Local/regional politicians in favour of project
• Due for final permits: - Industrial area permit (Municipality)
- Waste disposal permit (State)
Official
permits
Resource
model and
classification
2011
Pilot plant
production
Pre-feasibility
study
2012
Bankable
feasibility
study
Construction
and
commissioning
2013 / 2014
18
Engebø titanium project
Permitting process moving forward
Nov 07
√
08/09
√
Finalisation of Industrial area plan and EIA
June 09
√
Second hearing
g of industrial area p
plan completed.
p
Sep
p 10
√
“Remark” received from Directorate of Fisheries
Sep 10
√
Positive resolution from Sogn og Fjordane County
Sep 10
√
Discussion and resolution by technical committee
Jan 11
Discussion/resolvement by the county governor
Feb 11
EIA program resolved by municipality
EIA analysis and Industrial area plan development
Resolution
R
l ti
b
by
the Naustdal
Municipality board
Discussion
Di
i
and
d
resolution by
Ministry of Environment
Grant of waste disposal permit from the Norwegian
Climate and Pollution Agency
19
Engebø titanium project
Criteria established for deep sea tailings disposal
Resource group:
• SINTEF
• NIVA
• Norges Naturvernforbund
g
• Havforskningsinstituttet
• Bellona
• Klif
• NGU
• DNV
• Multiconsult AS
• NTNU
Engebø fulfils all criteria outlined in the report
20
Engebø titanium project
Good dialogue with governmental politicians
Firda, January 3 2011
21
Outline
1.
Company
p y background
g
and overview
2.
Engebø - Titanium project
3.
Keliber - Lithium project
4.
Gudvangen Stein - Anorthosite production
5
5.
Summary
22
Keliber lithium project
Keliber, prosperous opportunities in high-grade lithium
Finland
Kaustinen
• First producer of lithium carbonate in Europe
KEY ADVANTAGES:
• Li - key element in mobile power and energy
storage
g +99.9%
99 9% purity
pu ty Li-product
p oduct
¾ High
• Positive project NPV with existing resource
base
¾ Excellent quality to be used for battery
applications, the fastest growing lithium
segment
• Ongoing exploration is evidencing significant
upside potential based on additional deposits
¾ Processing
i
plant
l
with
i h potential
i l ffor ffurther
h
refining directly to battery chemicals
• Discussions with industrial partners for highend battery materials and other advanced
applications ongoing
¾ Strong lithium/battery/electric vehicle (EV)
focus in Finland
¾ Attractive independent supply alternative
23
Keliber lithium project
Large growth market driven by automotive demand
Consumption of Lithium
Price of Lithium carbonate
14
12
1 000 000
USD / kg
Tonnes per year
T
1 200 000
800 000
600 000
400 000
10
8
6
4
200 000
2
0
0
2006
Minimum demand
2010
2016
Maximum demand
2020
Expected supply
Lithium carbonate consumption
Jan.
04
Jan.
05
Jan.
06
Jan.
07
Jan.
08
Jan.
09
Market price standard lithium carbonate
Battery grade lithium carbonate premium
premium, company estimate
Electrification of transport sector
Pharmaceuticals,
1%
Continuous
Other, 1%
casting, 6%
Glass-ceramics,
6%
Batteries, 37%
Glass, 14%
Ceramics, 16%
Aluminium, 18%
Lithium is core material and brings unique properties to batteries
Li-battery market forecasted to grow 15% p.y.
____________________
Sources: MiR, NREL, IndMin, Roskill, Mark Lines, J.P.Morgan
24
Keliber lithium project
Abundant resource base for long-term production
First phase production from proven
deposit at Länttä
Expansion possibilities in regional
lithium resources
ƒ
Mining concession and permits for processing
and environment in place
• Several identified prosperous deposits
within 20 km range from processing site
ƒ
Approx. 50 drill holes of a total of 5,500 meters
ƒ
Exploration work by Keliber and GTK (Geological
Survey of Finland)
• Promising exploration results and new discoveries
in 2010 field season
ƒ
Current resource estimate is in process of being
revised according
g to JORC code
ƒ
Probable direction of the revision:
-
Verification of mineable ore in open pit
Upgrade of volume in Measured and
Indicated categories (JORC code)
I
Increased
d mill
ill feed
f d grade
d (Li2O-%)
O %)
• Drilling program ongoing; well-defined additional
deposits identified and expansion of resource
estimation
a o ongoing
o go g
• Good probability for significant (min. 3 – 5x)
increase of minable ore volume in low cost
open pit resources
Länttä deposit
Process plant
25
Advanced and awarded processing method
Keliber lithium project
Ore mining, crushing, milling and flotation
Spodumene concentration and conversion
Chemical plant; Li-carbonate production
Capacity:
4,000
4
000 tpy battery grade lithium
carbonate
By-products: Tantalum concentrate,
quartz/feldspar concentrates,
crushed rock aggregates
Production:
18 – 20 months from
construction start-up
• Processing method developed in cooperation
with Outotec; process guarantees
• Keliber awarded Finnish innovation prize for
processing method and environmentally
friendly profile
• New test batch in process
Award winning processing method based on proven technology - potential for
refining directly into higher margin battery chemicals
26
Keliber lithium project
Profitable base case – significant upside potential
Key figures
Revenue
40 000
CAPEX:
35 000
MEUR 40 – 50
Annual revenue:
MEUR 30 – 35
EBITDA-margin:
40 - 55%
EUR 1000
E
30 000
25 000
20 000
15 000
Payback time:
3 - 4 years
Ownership
68%
10 000
5 000
0
2 013
Upside potential
Increased lithium recovery
¾
Increased price for lithium carbonate
¾
Increased price for by-products
¾
Expansion/extension based on new
deposits
¾
Vertical integration in battery chemicals
2 015
2 016
2 017
2 018
2 019
NPV at realistic 2x resource volume
140
120
100
M
MEUR
¾
2 014
80
60
40
20
0
9
11
13
Price per kg Li2CO3
27
Outline
1.
Company
p y background
g
and overview
2.
Engebø - Titanium project
3.
Keliber - Lithium project
4.
Gudvangen Stein - Anorthosite production
5
5.
Summary
28
Gudvangen Stein anorthosite
Enhanced value opportunity in vast anorthosite resource
Gudvangen
Stein
•
•
•
Anorthosite
29 % Al2O3
48 % SiO3
14 % CaO
Gudvangen is one of Europe’s largest anorthosite massifs estimated to more than 500 mill. tons
Current production of approximately 200,000 tons per year
Reserves for 1000+ years at current production level
Main applications:
pp
Asphalt aggregates (unique white properties)
Mineral wool insulation
29
Gudvangen Stein anorthosite
Significant opportunities in product development
•
•
•
•
Glass related industries
Ceramics
Filler (paint)
Abrasives
•
Aluminium feedstock
New products
by simple
processing
Same plant used
for several
products
Sales
MNOK
New small scale plant for high value
products
¾ CAPEX processing plant 5 – 7 MUSD
¾ Product price range 100 – 400 USD/ton
¾ Up to approx. 50 000 ton/y
¾ Long
g term energy
gy advantage
g
¾ 2 year paydown on plant
Trial and testing campaigns ongoing with international industrial partners
30
Gudvangen Stein anorthosite
Ongoing research program with IFE/Gassnova,
mineral enhancement and CO2 binding
Anorthosite
Natural gas
5 mill. tpa
CO2
29 % Al2O3
48 % SiO3
14 % CaO
Carbonatisation
0 5 mill.
0.5
ill ttpa
process
Silica
2.45 mill. tpa
Alumina
1.5 mill. tpa
800’ tpa Al met.
Calcium carbonate
0 7 mill.
0.7
mill tpa
Tailings
p
X mill. tpa
31
High purity quartz in Western Norway
• Hydrothermal quartz deposit
• Low in critical elements such as Ti, Al, Fe, P, Na, K, Li and B
• Under exploration
Mineral resources at seafloor
• Norway has front-end exploration technology
• Norway is world leader on deep sea operations
• Nordic Mining aim to be a long term pioneer in exploration for minerals
on the Norwegian continental shelf
Summary and discussion
Financing strategy for large projects
Nordic Mining ASA
•
•
•
•
Financing
g strategy
gy well anchored with
large shareholders
Step-wise approach based on company/
project milestone achievements
Projects
•
Financing based on commercial solutions
(off-take agreement, industrial partnership or
similar)
•
Forward sales?
Flexibility for financing at top level or
directly in projects/subsidiaries
•
Loans from banks and other credit institutions
•
Supplier credits and equipment leasing
Priority to expand institutional/industrial
shareholding
•
Equity, tentatively estimated in the range of
40%
34
Summary and discussion
Summary
y
9
Large resources of high-end forward looking strategic minerals:
Titanium, lithium and anorthosite
9
Stable price development compared to commodity metals and minerals
9
European deficit and demand for strategic minerals
9
P t ti l triggers
Potential
t i
going
i
forward
f
d
9
Political approval for Engebø development
9
Upgrade of lithium mineral resources
9
Industrial cooperation agreement for Keliber (lithium)
9
Successful industrial testing of new anorthosite concentrates
9
Industrial market agreements for anorthosite concentrates
Large value potential compared to current company value
35