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Day 1- Session 2: Speciality Metals Objective Capital Global Mining Investment Conference 2010 Stationers' Hall, City of London 28-29 September 2010 Speakers: Christoph Eibl - Tiberius Asset Management Ron Coombes - Columbia Yukon Explorations Inc Mark Sumich - Globe Metals & Mining
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GLOBAL MININGINVESTMENT CONFERENCE 2010
STATIONERS’ HALL ● CITY OF LONDON ● TUESDAY-WEDNESDAY, 28-29 SEP 2010www.ObjectiveCapitalConferences.com
Investment Conferences
Outlook for commodity prices Christoph Eibl – Managing Partner, Tiberius Asset Management
Outlook for MolybdenumRon Coombes – President, Columbia Yukon Explorations Inc.
Outlook for NiobiumMark Sumich – Exec Chairman, Globe Metals & Mining
DAY 1 - SESSION 2: SPECIALITY METALS
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
Global Mining Investment Conference 2010
CommoditiesMarket Outlook
A Swiss firm specialized in commodity management, with its headquarters in Zug as well asoffices in Geneva and Stuttgart.
Expertise in fixed-income management on the basis of institutional funds.
33 employees with wide-ranging experience in commodity trading, portfolio management and research.
A model-supported, quantitative investment philosophy with a structured and transparent investment process.
The firm’s core competence lies in the active management of long- only and long/shortportfolios.
Total assets currently under management by the Tiberius Group: 2.2 billion USD
Tiberius is regulated by FINMA (Swiss Banking Supervisory Authority)
Tiberius Group
Introduction
I. Tiberius Group
4
Tiberius Leading Indicator Index - despite slight decline at a very high level
5
Market OutlookCyclical trend
Region Sharpe Weight
Tiberius Leading Indicators 0,7 100,0%
1. North America 0,3 46,5%2. Europe 0,4 10,0%3. Asia 0,3 33,5%4. Rest Of World 0,3 10,0%ISM Manufacturing (New Orders) 1. North Am. 0,6 11,1%US Initial Jobless Claims (4W Avg) 1. North Am. 0,6 5,0%Johnson Redbook Sales Weekly YoY1. North Am. 0,2 5,3%Conference Board Consumer Confid1. North Am. 0,6 9,8%Conference Board Ratio Coincidenta1. North Am. 0,3 4,9%ISM Manufacturing Report 1. North Am. 0,5 10,4%IFO Pan Germany Business Exp. 2. Europe 0,4 4,7%France Business Confidence 2. Europe 0,2 0,5%Italy Business Confidence 2. Europe 0,4 3,0%European Business Climate 2. Europe 0,2 1,7%Japan Economy Watchers Survey 3. Asia 0,7 13,0%Japan Small Business Confidence 3. Asia 0,5 8,4%Japan Tankan Business Conditions 3. Asia 0,1 0,4%OECD India Composite Leading Ind. 3. Asia 0,6 11,7%OECD Total Composite Leading I. 4. Rest 0,4 2,8%OECD Russia Composite L. Ind. 4. Rest 0,5 4,2%MSCI World (Local Currency) 4. Rest 0,2 2,9%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
1970
1972
1974
1976
1978
1980
1982
1984
1986
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1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Tiberius Leading Indicators signal (long/short)
S H O R T
L O N G
Forward curves have improved steadily since Q2 2009
Market OutlookEvaluation of forward curves
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50
100
200
-40,0%
-30,0%
-20,0%
-10,0%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Model signal avg. term structure (combined)
Backtesting performance avg. term structure (combined)
Speculative sentiment has improved again
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Market OutlookShort term capital flows
-$20.000
-$10.000
$0
$10.000
$20.000
$30.000
$40.000
$50.000
$60.000
$70.000
$80.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Net Long Position Non Commercials in Mio. USD (nom.)
Net Long Position Non Commercials, 52-week Average
Net Long Position Non Commercials in Mio. USD 2001 prices (real)
Net Long Position Non Commercials 2001 prices, 52-week Average
Continued buying interest of institutional market participants
8
Market OutlookLong term capital flows
Market OutlookConclusion
9
The Lights for commodity investments mainly give positive signals
2. Forward Curves- Gradual improvement
3. Spot Price Level- After correction many markets at attractive entry level
4. Short Term Speculative Capital Flows- Sentiment has turned especially in the agricultural sector
5. Long Term Insitutional Capital Flows- Sustained Interest in Commodities
1. Ecomomic Cycle- Uptrend in industrial production is intact
6. Market Technicals- Lately first technical buy signals
Conclusion: Outlook has recently improved significantly
Our yearend forecast is still the same
10
Market OutlookLong term market analysis
100
150
200
250
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450
500
Dow Jones UBS Commodity Index Total ReturnPrognose
2010
Cruide Oil globally attractive; in the US, especially in Cushing, still high excess inventories
Market OutlookCrude oil
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-50000
-40000
-30000
-20000
-10000
0
10000
20000
30000
40000
50000 -40,00%
-30,00%
-20,00%
-10,00%
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
1989
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2010
Convenience Yield 1 Year and Excess Stocks Crude Oil
Convenience Yield Nearby to 1 Year contract in% (left scale)
Spread US-crude-stocks to 5 year average (right scale, inverted)
Dez. 2004
Despite constant demand high increasing excess inventories
Market OutlookCrude Oil
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0,00
5,00
10,00
15,00
20,00
25,00
30,00
35,00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Crack Spread 3:2:1 in USD per Barrel
US Gasoline consumption is now at the level of 2008
Market OutlookGasoline
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8400
8600
8800
9000
9200
9400
9600
9800
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53
1000
b/d
Calendar Week
US Gasoline - Seasonal Demand (Product Supplied)
2007
2008
2009
2010
Enhanced storage capacity and high short-exposure argue against a price decline;
like in 2009 sudden price reversal is expected in 2010
Market OutlookNatural Gas
14
0
2
4
6
8
10
12
14
16
-100000
-50000
0
50000
100000
150000
200000
250000
US Natural Gas: Non-Commercial Net Position in Contracts (incl. Swap adjusted to NYMEX Contract Size) (left scale)
NYMEX Natural Gas: Nearby Futures Price in USD per mmBtu (right scale)
US distillate consumption is disappointing given the economic upswing
Market OutlookDistillates
15
3000
3200
3400
3600
3800
4000
4200
4400
4600
4800
5000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53
1000
b/d
Calendar Week
Seasonal US Distillates Demand (Product Supplied)
2008
2009
2010
High correlation of industrial metals based on a constant demand;
average of the six at the LME trated metals approximantely +0.69 in 2010
Market OutlookIndustrial Metals
16
Copper Alum. Nickel Lead Zinc Tin S&P 500 USD IndexCopper 1,00 0,81 0,67 0,80 0,84 0,59 0,40 -0,37Aluminium 1,00 0,66 0,70 0,78 0,56 0,44 -0,42Nickel 1,00 0,70 0,68 0,52 0,30 -0,31Lead 1,00 0,81 0,58 0,41 -0,45Zinc 1,00 0,58 0,35 -0,34Tin 1,00 0,37 -0,37S&P 500 1,00 -0,42USD Index 1,00
Correlation Table (based on daily returns, 31.12.2009 - 31.08.2010)
Rolling correlation of base metals and stock market currently near top
Market OutlookBase Metals
17
-0,6
-0,4
-0,2
0,0
0,2
0,4
0,6
0,8
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Rolling Correlation (26W) between Base Metals and Stock Market (S&P 500)
DJUBS Industrial Metals
Tin and copper - the only base metals showing market deficit in 2011
Market OutlookBase Metals
18
-6,00%
-4,00%
-2,00%
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
Zinc Nickel Aluminium Lead Copper Tin
in %
of Y
earl
y D
eman
d
Market Balance 2007
Market Balance 2009
Market Balance 2010 (estimate)
Market Balance 2011 (estimate)
Surplus
Deficit
Structural deficit of copper since turn of the millennium
Market OutlookCopper
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0
2000
4000
6000
8000
10000
2003 2004 2005 2006 2007 2008 2009 2010
Copper, 3-Months-Forward (USD / Tonne)
Copper, 63-Months-Forward (USD / Tonne)
Price ratio between platinum and palladium again on a long-term average
Market OutlookPrecious metal
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0
1
2
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100
1994
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2010
Gold/Silver Ratio (left scale)
Platinum/Palladium Ratio (right scale)
Gold benefited by the end of Q2 2010 from excessive risk aversion
Market OutlookGold
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98
100
102
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95
100
105
110
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140
Performance of Various Risk Aversion Indicators (01.01.2010 = 100)
Gold in Euro / Ounce (left scale)
Yen / Euro - Exchange Rate (left scale)
German Bund Future (generic, right scale)
The original selling points for gold have disappeared
Market OutlookGold
In the year of 2000 In the year of 2010
1. Physical market balance High surplus
2. Strategic positions 30% of production hedged
Mines are unhedged
3. Spekulative positions Net-short Extreme net-long
4. Sentiment/Market penetration Extremely negative Excessively positive
5. Relative Value (CPI, Commod.) Too low Too high
6. Macro-environment
Low/middle Low/middle- Inflation risks
- Deflation/systemic-risk Middle High
Gold market in comparison
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Market deficit
Seasonal tendence of gold purchase at the futures market and ETFs in the last years
Market OutlookGold
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-15.000
-10.000
-5.000
0
5.000
10.000
15.000
Jan
07
Apr 0
7
Jul 0
7
Oct
07
Jan
08
Apr 0
8
Jul 0
8
Oct
08
Jan
09
Apr 0
9
Jul 0
9
Oct
09
Jan
10
Apr 1
0
Jul 1
0
Oct
10
in m
oz
Gold - ETF Flows and Futures Positions
Change CFTC Net Long Position (Non-Commercials + Non-Reportables)
Change in ETF Volumes
Rolling 4-Week Flow
Increasing Net-Long volume of the Non-Commercials in grain sector
Market OutlookSofts
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0
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-5.000.000.000
0
5.000.000.000
10.000.000.000
15.000.000.000
20.000.000.000
25.000.000.000
Aggregate Net Long Position Non Commercials CBOT Wheat, Corn, Soybeans, Soybean Oil in USD (left scale)
DJ UBS Subindex Grains Excess Return (indexed to 100, right scale)
Significant production losses compared to previous year caused by extreme weather events
Market OutlookWheat
25
-20 -15 -10 -5 0 5
Russland
Kasachstan
Ukraine
EU 27
Kanada
USDA: Erwartete Rückgänge bei Weizenproduktion und -exporten in Mio. Tonnen
Exporte
Produktion
USDA: expected declines in wheat production and exportsin million tonnes
Production
Exports
Wheat stocks are still well above critically low level of 2007/08
Market OutlookWheat
26
0
10
20
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50
60
70
80
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
USDA: Wheat Ending Stocks of the Major Export Nations in Million Tons
USA
Australia
Canada
EU 27
Ukraine
Kazakhstan
Russia
Expected decline in the spread soybean vs. corn
Market OutlookSoybeans/ Corn
27
•Substitution of wheat by corn as animal feed
• Expected acreage shift in the U.S.: Growth of double-cropping (wheat followed by soybeans)
• Potential for higher U.S. corn exports
• Global corn market tighter than soybeans
100
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1.000
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Sojabohnen vs. MaisDifferenz Nearby-Kontrakte in US-Cents per Bushel
Soybeans vs. CornDifference nearby-contracts in US cents per bushel
Continuous improvement of the fundamental data due to rising demand
Market OutlookCotton
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10
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18
19
20
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
USDA Cotton Estimates for USA: Stocks to Use Ratio vs. Domestic Demand and Exports
(in the respective current marketing year)
US Stocks to Use Ratio (left scale)
Demand for US-Cotton in mn 480 lbs bales (right scale)
29
Metals will stay in contango in the course of the next 12 months
Market OutlookConclusion
Backwardation
Contango
Market surplusHigh inventories
Market deficitLow inventories
Tiberius Asset Management AG
Baarerstr. 53
CH-6300 Zug
Schweiz
+41 41 560 00 81 (Phone)
+41 41 560 00 82 (Fax)
www.tiberiusgroup.com
Contact
Disclaimer
© CopyrightThis publication is copyright-protected. All rights appertaining thereto, even in case of only partialuse, shall remain reserved, particularly with regard to the following: translation, reprinting, recital,use of images and graphics, broadcasting, duplication via microfiche or other means, and/orstorage in data processing equipment. Any duplication of this publication or portions thereof, evenin isolated cases, shall be subject to the limitations set forth by the legal provisions of theCopyright Act of the Federal Republic of Germany of September 9, 1965 (in its most currentversion). Any breaches may be subject to the penalties provided for under law.
Liability exclusionThe information in this publication was compiled from data assumed to be accurate. Nonetheless,we assume no liability or guarantee for said information. This publication is not to be seen as asales offer, nor as a solicitation for an order to purchase securities. The representations made inthis publication may be changed at any time without prior notice.
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
Presented by Ronald A. Coombes, President
Columbia Yukon Explorations Inc.
THESE PRESENTATION MATERIALS INCLUDE CERTAIN STATEMENTS WHICH MAY BE DEEMED TO BE “FORWARD LOOKING STATEMENTS” WITHIN THE MEANING OF SECTION 21E OF THE UNITED STATES SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT, INCLUDED HEREIN ARE FORWARD- LOOKING STATEMENTS THAT INVOLVE VARIOUS RISKS AND UNCERTAINTIES. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL PROVE TO BE ACCURATE AND ACTUAL RESULTS AND FUTURE EVENTS MAY DIFFER MATERIALLY FROM THOSE FORWARD- LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY’S EXPECTATIONS INCLUDE (BUT ARE NOT LIMITED TO) MARKET PRICES, EXPLOITATION AND EXPLORATION SUCCESSES, CONTINUED AVAILABILITY OF CAPITAL AND FINANCING, AND GENERAL ECONOMIC, MARKET OR BUSINESS CONDITIONS. ADDITIONAL INFORMATION ON FACTORS THAT MAY AFFECT THE COMPANY’S RESULTS ARE DISCLOSED IN THE COMPANY’S DOCUMENTS FILED FROM TIME TO TIME WITH THE BRITISH COLUMBIA SECURITIES COMMISSION.
THIS IS NOT TO BE CONSTRUED AS AN OFFER TO BUY OR SELL SECURITIES OF COLUMBIA YUKON EXPLORATIONS INC.
What exactly is Molybdenum (“Moly”)? What is “Moly” used for? And why is this important in today’s
economy? Supply/Demand and price projections
The China factor Pure Moly Mines vs. By-product Mines
The Storie Molybdenum Project
Molybdenum is a naturally occurring element Molybdenum has one of the highest melting
points of all the elements yet its density is only 25% greater than that of iron.
Molybdenum is contained in various ores, but only Molybdenite (MoS2) is used in the production of marketable molybdenum products.
Molybdenum’s coefficient of thermal expansion is the lowest of the engineering materials.
Molybdenum increases the strength of alloy steels
Molybdenum increases the corrosion resistance of stainless steels
Alloying in iron, steel and super-alloys accounts for 80% of all Mo use
A wide range of high-technology products, including catalysts, jet engines, medical equipment and semi-conductors, rely on molybdenum metal and chemicals
The principal molybdenum mines are found in Canada, USA, Mexico, Peru and Chile - with the largest mines capable of moving over 50,000 tonnes of ore per day.
About 20% of new molybdenum produced from mined ore is used to make molybdenum grade stainless steel.
Engineering steels, tool and high speed steel, cast iron and superalloystaken together, account for an additional 60%.
The remaining 20% is used in upgraded products like lubricant grade molybdenum disulfide MoS2), molybdenum chemical compounds and molybdenum metal.
Ore reserves: In 2008 the ore reserve base totaled 19,000,000 tonnes (source: US Geological Survey). China has the largest reserves followed by USA and Chile.
Molybdenite can occur as the sole mineralization in an ore body, but is often associated with the sulfide minerals of other metals, notably copper.
There are two classes of molybdenum mines:
Primary mines – molybdenum recovery is sole objective
By-product mines – recovery of copper bearing ores is prime objective and recovery of molybdenite adds value
The Storie Molybdenum Project
Columbia Yukon Explorations Inc.TSX- V: CYU Frankfurt: VOR
Current Trading Price $0.135
Issued & Outstanding 42,095,606
Options & Warrants 3,639,000
Fully Diluted 45,734,606
Market Capitalization(based on fully diluted)
$6,174,171
As at September 22, 2010
Molybdenum Fundamentals • Exceptional
The Property • Just off Highway
Management Team • Experienced
Milestones • Surpassing Plans
Strategic Partner Negotiations • Underway
Current fair value of equityExpected value C$14.6 mValue per share C$0.38Derisked upside potential*Our core scenario C$0.91Our optimistic scenario C$2.54Maximum potential C$3.26*potential assuming projects reach permitting
Company detailsTSX CYU.VPinksheets CYUXF.PKHi-Lo last 12 mos. (p) 0.48 - 0.10Shares issued 38.8 mFully diluted 42.5 mMarket capitalization C$8.8 m
Our base-case core valuation for Columbia Yukon is lowered to C$0.38 per share from our August 2008 estimate of C$0.92 per share, but it remains substantially above the company’s recent share price of C$0.20 per share, which appears to be a reflection of the markets lingering pessimism for the resource sector in the wake of the recession, which we believe is an over-reaction.
Source: Will Purcell, Research Director, Objective [email protected] T +44 (0) 870-080-2965
Our lowered valuation is entirely the result of the dramatic and sudden drop in the price of molybdenum since our initiation note and the weakening US dollar, rather than some inherent negative change in the underlying geology of the Storie deposit.
Molybdenum Market - TSX-V:CYU
USD/lb – 12 months (Aug 15/09 – Aug 10/10)
CYU Cdn$ – 12 months (Aug 18/09 – Aug 16/10)
• Molybdenum trading on the London Metals Exchange (LME)
Company Highlights• Sept 21, 2010: Columbia Yukon Conducts Further
Exploration at the Storie Property Moly Deposit• July 6, 2010: Columbia Yukon announces non brokered
private placement• June 30, 2010: Columbia Yukon acquires additional
properties near its Storie Molybdenum property• June 3, 2010: Columbia Yukon submits draft project
description to Federal & • Dec 2, 2009: Columbia Yukon significantly increases the
exploration potential for its Storie Property moly deposit• Nov 27, 2009: Columbia Yukon reports on exploration work
completed on its Storie Property in 2009• Nov 2, 2009: Columbia Yukon signs Traditional Knowledge
Protocol with First Nations • Mar 4, 2009: Columbia Yukon releases 2009 updated NI 43-
101 mineral resource estimate• Nov 18, 2008: SGS reports that “10 KG sample flotation
tests on variability composites produced very good moly grades and recoveries in the batch testing”
Charting for S&P/TSX Venture Composite Index
Assay reports commence and continue to Q4 2008 at the rate of approximately ten to fifteen holes a month Initial Metallurgical Scoping
Study from SGS (Lakefield)Begin 21,000 metre drilling
program Reclassified NI 43-101 ReportNormal Course Issuer Bid in
place
Q3 & Q4 2008 2009
Advanced Metallurgical Scoping Study in Q1Reclassified NI 43-101
Report in Q2Traditional Knowledge
Protocol signedSEPA negotiations begin with
First Nations in Q4Exploration program
2010Completed • Objectives
EA Permitting Applications –Provincial and Federal Completion of Traditional
Knowledge Study• Preliminary Economic
Assessment by AMEC• Q4 complete SEPA agreement• Development of an end user
agreement
• Measured Resource of 30.8 million tonnes grading 0.075% Mo at 0.035% cutoff grade
• Indicated Resource of 89.7 million tonnes grading 0.068% Mo at 0.035% cutoff grade
• Inferred Resource of 48.4 million tonnes grading 0.065% Mo at 0.035% cutoff grade
• Past two years most significant results • Discovered higher grade zone
Power on the way!Northwest Power Line underwayEst. $90 million to complete fromBob Quinn to Dease Lake (Cassiar)
Molybdenum Fundamentals • Exceptional
The Property • Just off Highway
Management Team • Experienced
Milestones • Surpassing Plans
Strategic Partner Negotiations • Underway
Ronald A. CoombesPresidentColumbia Yukon Explorations
Inc.Vancouver, BC Canada Tel 604 922 2030www.columbiayukon.com
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
Globe Metals & MiningInvestor Update
Global Mining Investment Conference – London28 September 2010
DisclaimerThe views expressed in this presentation contain information derived from publicly available sources that have not beenindependently verified. No representation or warranty is made as to the accuracy, completeness or reliability of theinformation. Any forward looking statements in this presentation have been prepared on the basis of a number of assumptionswhich may prove incorrect and the current intentions, plans, expectations and beliefs about future events and are subject torisks, uncertainties and other factors, many of which are outside Globe Metal & Mining Limited’s control. Important factors thatcould cause actual results to differ materially from the assumptions or expectations expressed or implied in this presentationinclude known and unknown risks. Because actual results could differ materially to the assumptions made and Globe Metal &Mining Limited’s current intentions, plans, expectations and beliefs about the future, you are urged to view all forward lookingstatements contained in this presentation with caution. This presentation should not be relied upon as a recommendation orforecast by Globe Metals & Mining Limited. Nothing in this presentation should be construed as either an offer to sell or asolicitation of an offer to buy or sell shares in any jurisdiction.
Competent Person: The contents of this report relating to geology and exploration results are based on information compiledby Dr. Julian Stephens, Member of the Australian Institute of Geoscientists and Non-Executive Director for Globe Metals &Mining Limited. Dr. Stephens has sufficient experience related to the activity being undertaken to qualify as a “CompetentPerson”, as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources & OreReserves, and consents to the inclusion in this report of the matters compiled by him in the form and context in which theyappear.
58
Investor Highlights
Kanyika Niobium Project (GBE: 100%) Production of ferro-niobium (FeNb) to commence in 2013
(+Ta credits) Updated financial forecast (Sept. 2010) confirms project
economics
Machinga Rare Earth Project (GBE: up to 80%) 7 REE targets over 935sqkm EPL 1,500m maiden drill program underway – results due
mid – Sept. 2010
Mount Muambe Flourite Project (GBE: up to 90%) Ultra high-grade flourite target – 6km diameter
carbonatite crater 1,000m drill program to commence Sept. 2010
Corporate Overview 94 million shares on issue – market cap. A$17m A$2.9m cash @ 30 June 2010
59
60
1. “Niobium Demand, Price Stays High, Despite Steel Weakness”, Mining Weekly.com, 7 November 2008
4kg of niobium used in the manufacture of a mid-sized vehicle would save 100kg of steel, which would translate into fuel savings of half a litre per 100km¹
Niobium
61
Source: 1,2. IAMGOLD, “Niobec Tour Presentation”, June 2009; 3. Metal Pages, 7 January 2010.
Niobium Market Size and Growth
CBMM announces pre-crisis production levels to return by early 2011 (Jan. 2010)³
Niobec forecast 15%p.a. growth for next 4 years:• 5% steel volume growth• 10% consumption intensity growth²
62
Steel Growth
Metal consumption and GDP per capita, 1965-2005
Aluminium Steel
63
Niobium Key Facts
>90% niobium consumed by the steel industry (as FeNb)
Niobium a micro-alloyer; standard addition of 3.5 - 5.0 grams/tonne to molten steel acts as a grain refiner, encouraging the formation of a micro-structure that adds toughness, corrosion resistance, tensile strength, formability, and strength
Increasing “consumption intensity” of niobium in steel:“The growth in consumption of niobium…has resulted from both the overall growth in total steel consumption and ashift from mild steels to higher quality steels, which often contain niobium. Worldwide, in 2008 the unit consumption ofniobium in steel was around 55-60g/t of steel produced. In the most highly developed countries the figure was100g/t or more, whereas in China only around 40g/t were consumed. There would appear, therefore, to besignificant potential for the increased use of niobium in this end-use market. ““In 2008, ferro-niobium was used in about 10% of total steel production. There is good potential for that figure to grow,perhaps to as much as 20%, as higher-quality steels continue to replace mild steel in a number of applications.”(Roskill)
FeNb price historically very stable – benefits suppliers and consumers
FeNb a small % cost input to steel mills
Globe’s production of 3,000tpa niobium to represent 3-4% market share (or 4 months of one year’s growth in market size)
“The best substitute for steel is better steel”
64
Kanyika Niobium Project
Grade targeted for first ~7 years mining 4,700ppm Nb2O5
100-110Mt exploration target (incl. 40-50Mt high grade @ 3,700-4,000ppm)
Production: 3,000tpa Nb (70-85% revenue); and 192tpa Ta2O5 (15-30%)
1.5-2.5Mtpa mill feed; open cut with low strip ratio
Project currently in feasibility stage
Commencement of production scheduled for 2013
>20 years mine life potential
Updated JORC resource estimate released June 2010 - total 60Mt: 5Mt Measured, 18Mt Indicated and 37Mt Inferred (@ 1,500ppm Nb2O5 cut-off)
Clause 18 of the JORC Code requires inclusion of a statement that the potential quantity andgrade of the Exploration Target (excluding that portion already drilled and classified into JORCIndicated and Inferred Resource categories) is conceptual in nature, that there has beeninsufficient exploration to define additional Mineral Resources and that it is uncertain if furtherexploration will result in the determination of any additional Mineral Resources.
21Mt High-Grade (3,000ppm cut-off)
Category Mt Nb2O5 Ta2O5 U3O8
Measured 3 5,400 250 160
Indicated 7 4,400 200 110
Inferred 11 3,600 160 90
Total 21 4,100 180 110
Kanyika Section
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Updated Financial Forecast
Completed September 2010, incorporating new JORC resource
Confirms positive economics and project viability: US$187 NPV (@ 10% discount rate) IRR 27% Capex. US$155m (+ US$31m contingency) Capital payback period 3 years (including yr.1 production ramp-up to name plate volumes) Annual revenue US$170m
Key assumptions: Fixed 3,000tpa niobium metal output, plus tantalum credits Same “deal” with Government of Malawi as Paladin/Kayelekera: 15% GoM project equity for fiscal
trade-offs incl. VAT and fuel excise exemption and income tax and royalty reductions FeNb price of US$44.5/kg ctd. metal (current spot China “60-B”) Ta2O5 price US$180/kg (current spot US$230/kg) Blended diesel/hydro power @ $0.21/kwh (12-14MW) Uranium revenue and expense excluded
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Project Upside
Price: FeNb historically stable, with incremental rises. Major producers planning significant capacity expansion to meet growing demand, which must be funded.
Products: Within existing flowsheet: niobium oxide Additional potential products: high-grade magnetite, zircon, uranium and feldspar
Power: Reduction in total usage Access to reliable grid power (via Mozambique interconnector or Malawi hydro expansion)
Capex: third party estimates for downstream refinery built in China less US$20m Process Flowsheet: major opportunity from optimisation program to significantly improve
recoveries and reduce operating costs Exploration: additional high-grade material (~4,000ppm Nb2O5) from within the identified
exploration target will further enhance economic returns Pit Optimisation: existing financial forecast does NOT include fully optimised pits,
maximising the mining of high-grade material in the initial years
Clause 18 of the JORC Code requires inclusion of a statement that the potential quantity andgrade of the Exploration Target (excluding that portion already drilled and classified into JORCIndicated and Inferred Resource categories) is conceptual in nature, that there has beeninsufficient exploration to define additional Mineral Resources and that it is uncertain if furtherexploration will result in the determination of any additional Mineral Resources.
Machinga Rare Earth Project
Globe earning up to 80% from Resource Star Ltd (ASX: RSL)
7 REE targets over 935sqkm EPL
1,500m maiden drill program underway – results due mid-Sept. 2010
China dominates REE production: >95%
China continually reducing export quotas to protect domestic demand
High ratio of HREO: TREO (up to 34%) – HREO prices up to 100x LREO prices
Main HREO is dysprosium
Significant niobium and tantalum values
Eudialyte identified as main REE mineral – common HREO ore mineral
Malawi one of the few recognised REE provinces
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Machinga Targets
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Machinga Trench Results
7m @ 1.26% TREO & 0.63% Nb2O5 (T1)
33m @ 0.71% TREO & 0.40% Nb2O5 (T2)
Inc.11m @ 1.00% TREO & 0.46% Nb2O5
10m @ 1.00% TREO & 0.50% Nb2O5 (T5)
15m @ 0.45% TREO & 0.75 Nb2O5(T3)
Inc. 5m @ 0.54% TREO & 1.34% Nb2O5
First 5 trenches in Machinga North 2.7km strike length
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Heavy Rare Earths
Sources: Jack Lifton, “North America Doesn’t Need China’s Rare Earths”, The Gold Report, August 2010;
“…the most important of all the rare earths are the magnet metals – the bigfour: neodymium and praeseodymium (light REEs) and dysprosium andterbium (heavy REEs). These four metals, in varying proportions, make upthe critical materials in 90% of rare earth permanent magnets made andused today.”
“… in Beijing…at the Chinese Society for Rare Earths 6th Annual RareEarths’ Summit stated that a goal of the next two five-year plans, to becompleted in 2020, was to have 330 GW of wind-turbine-generatedelectricity installed by that time…I will estimate that at most it would be onethousand tons of terbium and three thousand tons of dysprosium.
As to electric and hybrid cars, they require neodymium, dysprosium andterbium for the magnets in the rare earth permanent magnet electric motors– both that drive them and that power their accessories… The real issue forthe future of rare earth utilization and therefore of mining, is the continuedgrowth of the use and need for the heavy rare earths, terbium anddysprosium. These “heavy rare earths” are believed by the Chinese to bein short supply domestically. China today is the world’s only producer ofheavy rare earths …China believes that its own domestic supply of theheavy rare earths has between five and 30 years remaining at presentlevels of use.”
Prices for dysprosium oxide, the most economically important HREO at Machinga, have risen dramatically over the past 12 months to ~US$290/kg
Jack Lifton “The Green Revolution in China”, Resouce Investor, August 2010
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Southern Malawi REE Province
Mount Muambe Flourite Project
Globe earning up to 90%
Very high-grade flourite potential: Peak rock chip grade > 71% CaF2
Average grade of 26 samples 56% CaF2
Maiden 1,000m drill program to commence Sept. 2010
Area serviced by major power, road and rail infrastructure
Historical metallurgical work demonstrates that concentrates of >97% CaF2 can be produced
Project area also prospective for REE, Nb and Ta
China the largest producer and consumer of flourite –seeking to protect its supply for domestic demand
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Project Location
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Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
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