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Confidential
Large Scale Bauxite Project in Guinea
30 April 2015
Confidential
Disclaimer
THIS PRESENTATION IS FOR INFORMATION ONLY AND NEITHER CONSTITUTES NOR FORMS NOR SHOULD BE CONSTRUED AS CONSTITUTING OR FORMING PART OF A PROSPECTUS RELATING TO THE COMPANY, OR ANY OFFER OR INVITATION TO SELL OR ANY SOLICITATION OF ANY OFFER TO PURCHASE, TO UNDERWRITE OR TO SUBSCRIBE FOR ANY SECURITIES IN THE COMPANY OR TO ADVISE PERSONS TO DO SO, IN ANY JURISDICTION IN WHICH SUCH SOLICITATION OR SALE WOULD BE UNLAWFUL OR AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY UNDER SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT THEREFORE.
THIS PRESENTATION IS NOT DIRECTED TO, OR INTENDED FOR DISTRIBUTION OR USE BY, ANY PERSON OR ENTITY THAT IS A CITIZEN OR RESIDENT OR LOCATED IN ANY JURISDICTION WHERE SUCH DISTRIBUTION OR USE WOULD BE CONTRARY TO ANY LAW OR REGULATION OR WOULD REQUIRE ANY REGISTRATION, LICENSING OR OTHER PERMISSION. BY ATTENDING THE MEETING WHERE THIS PRESENTATION IS MADE, OR BY READING THIS PRESENTATION, YOU AGREE TO BE BOUND BY THE LIMITATIONS CONTAINED IN THIS NOTICE.
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Executive summary
▪ 4 billion tonnes of established bauxite resource (M+I) with average Al2O3 content at 40%, comprehensively explored
▪ Target rate of export - 10 MTPA of bauxite at 46-48% Al2O3 grade, with life of mine (LOM) ~ 200 years
▪ Located in well-known bauxite province in Guinea
▪ High-grade, low silica, consistent ore bodies, negligible overburden
▪ simple geological setting
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Executive summary
▪ Short term goal – to establish mining and to build transportation infrastructure to export up to 10MTPA of bauxite of 46-48% grade
▪ Middle term goal – to implement an alumina refinery in a region with low energy costs to produce Smelter Grade Alumina (SGA) and Non-metallurgical Grade Alumina (NMGA), including low cost alumina monohydrate
▪ Long term goal – implement red mud processing to extract rare earths and other hi-tech materials using new technologies
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Project background
▪ Eloft Group owns Telimele license through 100% subsidiary - Eurasian Resource, incorporated under the Laws of Guinea in 2010
▪ Eurasian Resources has obtained exploration license (2,003 km2) in June 2010 in Telimele Prefecture, Guinea
▪ In accordance with Guinean Mining Code, Eurasian Resources has exclusive rights to obtain mining license
▪ Eurasian Resources has good track record in Guinea and has consistently delivered on its obligations before the authorities
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Telimele License Area Location
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Geography and infrastructure
Telimele bauxite project is situated in Telimele Prefecture, Guinea, where other major bauxite operations are present Fria, 40 km from the project:
▪ Rusal Alumina plant 0.618 Mtpa (now suspended)
▪ 105 km Railroad Fria to port Conakry (max 35,000 t vessels)
Sangaredi, 60 km from the project:▪ CBG mine 12 Mtpa of bauxite
production▪ 136 km railway from Sangaredi to
port Kamsar(up to 60,000 t vessels )
Kindia, 100 km from the project: ▪ Rusal mine 3 Mtpa of bauxite
production▪ 90 km railway from Kindia to Conakry
(max 35,000 t vessels)
Boffa , 100 km from the project: ▪ Small mooring near Boffa city (Rio
Pongo river)
Sea ports infrastructure is represented by ports of Conakry and Kamsar
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Location of main infrastructure objects in Guinea and mining companies
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Geology
▪ Telimele bauxite deposit consists of 32 individual deposits (bowals or plateau)
▪ Average thickness of ore body is 6-8 meters, with practically no overburden, except for topsoil
▪ Average silica - 2%, reactive silica - 1.1%
▪ Bauxite composition: gibbsite (60.89%), goethite (19.66%), hematite (9.20%), kaolinite (2.32%), illite (1.95%), rutile (1.39%), quartz (0.82%), anatase (0.57%), with 3.20% amorphous material
▪ The ore is suitable for processing using low temperature Bayer process
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JORC Mineral Resource Statement, by SRK Consultants Ltd., 2012
Plateaux Tonnage (kt) Al2O3
(%)
SiO2
(%)
Measured 2,104,000 40.9 2.17
Indicated 1,877,000 39.5 3.10
Sub-Total 3,981,000 40.2 2.6
Inferred 144,000 38.7 1.98
Total 4,125,000 40.2 2.6
Mineral Resources Map, 2012, by SRK Consulting Ltd.
Source: Mineral Resource Statement, 2012, SRK Consulting Ltd
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Mining
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Proposed mining using a surface miner
▪ Proven good practice for bauxite mining in Guinea is to use surface (continuous) miners, such as Wirtgen SM2500, with no blasting
▪ The method is especially suitable for relatively thin (2-10m) sedimentary ore bodies, with high cutting precision and minimal dilution
▪ One machine sustains 700-1000 t/hr throughput
▪ No primary crushing of run of mine (ROM) is needed before dry bulk transportation
▪ Surface miner can be used for mine site roads building
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Logistics
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Proposed transportation route for the Project
Guinea has poor roads infrastructure and shallow coastal waters except for two small port areas
Combined transportation scheme is envisaged from mine to FOB cape size:
▪ 100 km overland haulage from mine to a river jetty
▪ 5000t payload barges to an offshore deep water transhipment facility loading onto cape size ships
Overland transportation options include:
▪ Trucking▪ Rail transportation ▪ Slurry pipeline▪ Conveyor belt▪ Any combination of the above
Multi modal transportation will avoid necessity to build a sea port and, in the same time, will help to keep operating costs down
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Exports Development Strategies
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▪ The hilly part of the terrain will be crossed by a dirt road, first 37km from mine site
▪ In order to accommodate 10MTPA bauxite, a railroad will be built in the part of the route located in more gradual terrain, down to river jetty, 83km
▪ From river jetty a barging operation will deliver bauxite to a transshipment facility loading cape size vessels
▪ The cheap rail transportation for the part of the road will keep mine-to-FOB costs to moderate level
▪ Expensive building of railroad in hilly terrain will be avoided, as railroad will not have many bridges and viaducts
▪ Construction times will be kept within 3 years
10MTPArail+truck
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Exports Development Strategies
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▪ In order achieve low cost haulage of 10MTPA bauxite from the mine site, the large scale logistics system should be built
▪ Potential modes of transport include:
▪ Railroad
▪ Slurry pipeline
▪ Conveyor belt system
▪ The transportation cost expected to be lower as compared to combined haulgage
▪ Higher CAPEX will be compensated by higher margins
▪ Rail option scoping study has been completed
▪ Slurry pipeline scoping is underway, as it requires certain metallurgical tests of the mineral
▪ To double the throughput to 20MTPA will require only fractional investment increase
10MTPArail only
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Development Strategies
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Staged 10MTPA moderate
cost product
10MTPA low cost product
3MTPA 10MTPA
Time to develop, years 1 3 3 4
CAPEX, $ ’000,000 103.5 356.7 434.3 644
Mine 26.2 22.9 49.1 49.1
Overland 39.5 274.5 288.0 498
River Jetty and Barges 19.5 34.1 53.7 53.7
Transhipment 18.3 25.2 43.5 43.5
OPEX at FOB, $/t 24.5 14.4 14.4 10.5
Mining 6.0 5.3 5.3 5.3
SG&A 1.5 0.8 0.8 0.8
Transportation to FOB 17.0 8.3 8.3 4.4
Freight to China, $/t 24.0 14.0 14.0 14.0
Margin, $/t 11.5 31.6 31.6 35.5
EBITDA, $ ’000,000 34.5 316 316 355
Development Strategies’ Comparison
Source: scoping studies by WBHO
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Bauxite Markets
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Global demand and value of bauxite has been increasing last 2 years by 5.3% per annum (see the picture “supply-demand”)
Bauxite is globally plentiful, but of various quality, and mines development and financing is becoming slower/more difficult:
▪ Governments ban bauxite exports unless refinery is built in-country
▪ Capital costs and lack of available infrastructure make investment size steep
▪ National policies and taxes comprise hurdles
Source: 20th MetalBulletin Bauxite & Alumina Conference, 2014, Miami
Chinese domestic bauxite supply is decreasing (quality, depletion, allocations): Strong increase in bauxite imports to China is forecasted from 2019*
Conclusions: Chinese bauxite import volumes are expected to keep growing Numerous bauxite projects will be needed to meet future demand
* Group Executive Strategy & Development Alumina Limited, as of beginning of 2014
China’s imported bauxite sources, volumes and prices
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Bauxite Markets
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China’s Bauxite Import GapSource: CRU Market Report, 2015
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Middle & Long Term Strategy
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Bauxite Processing Economics
NMGA SGASGA+Red Mud
Processing
Output, kt 288,5 2,800 5,000
Initial CAPEX, USD millions 370 2,352 2,854
EBITDA, USD millions 274 560 1,072
NPV, USD millions 1,158 373 3,065
IRR, % 52.91 13.8 24.11
▪ The alumina refinery should be built in regions with low power costs, such as Namibia, to reduce bauxite logistics costs
▪ Target products should include Smelter Grade Alumina (SGA), Non Metallurgical Alumina (NMGA), and high dispersed alumina hydrates
▪ NMGA market is growing faster than other sectors
▪ ELOFT has access to a new technology producing low cost alumina monohydrate
▪ Red mud, waste of bauxite processing, should be processed using new high technologies to extract high value rare earths
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Work done
Works Year Contractor
Drilling works with total volume 140,000 mAuger drilling: 600x600 grid: 11,646m 300x300 grid: 52,054m
150x150 grid: 69,948m 75x75 grid: 2,860m
Diamond drilling: 3,550m
2010-2012
Geoprospects Ltd (Guinean Company) supervised by SRK Consulting Ltd
Lab XRF survey 2011-2012
ALS Global (Ireland office)
Geotechnical studies of bauxite ore 2011-2012
Polytechnic University of Conakry (Guinea)
Metallurgical studies of bauxite 2012-2013
Austalian Labs (Amdel and CSIRO)
Mineral Resource Estimation 2012 SRK Consulting Ltd
Alumina Refinery Scoping Study 2012 SRK Consulting Ltd
Pre Feasibility Study of Alumina and Non-metallurgical Alumina product
In Progress
SRK Consulting Ltd
Scoping Study of Bauxite Export (10MTPA) 2015 WBHO
Reconnaissance study of Rio Pongo River 2015 WBHO and Eurasian Resources
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Project team and contacts
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Eloft Group LtdKazakhstan, 050059, Almaty, 19 Al Farabi ave, Nurly Tau business center, 2b block, 8th floor, office 801-802,tel. +7-72-7-311-01-30Managing partner: Kruglyak [email protected]
Eurasian ResourcesRussia, 119019, Moscow, Bolshoi Afanasyevskiy, 8, building 3tel. +7-495-374-51-29Managing partner:Zotov [email protected]
