tellus’s chandler salt mine project
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Commercial in ConfidencePage 1
Chandler Salt Mine Project
6th Mining the Territory Conference - Darwin Convention Centre
19th September 2012
Commercial in ConfidencePage 2
Important Notice
Disclaimer This conference presentation (Presentation) has been prepared by Tellus Holdings (ABN 97 138 119 829) (Tellus). The Presentation and information contained in it is being provided to conference delegates for information purposes only.
Summary information This Presentation contains summary information about Tellus and its subsidiaries and their activities current as at the date of this Presentation. The information in this Presentation is of general background and does not purport to be complete. Delegates are advised that by their nature as visual aids, presentations provide information in a summary form. The key information on detailed Exploration Target statements and feasibility results can be found in Tellus ’s media releases. Exploration Targets statements are appended to comply with ASX guidelines but investors are urged to read supporting information in full on the website.
Not financial product advice This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Tellus shares and has been prepared without taking into account the objectives, financial situation or needs of individuals.
Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.
Future performance This Presentation contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could ”, “may”, “plan”, “will”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements, opinions and estimates are not guarantees of future performance.
Not an offer This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment.
Competent Person Statement The information in this presentation that relates to exploration results is based on information reviewed by Dr.Simon D. Beams, a full time employee of Terra Search Pty Ltd, geological consultants employed by Tellus Holdings Limited. Dr. Beams has BSc Honours and PhD degrees in geology; he is a Member of the Australasian Institute of Mining and Metallurgy (Member #107121) and a Member of the Australian Institute of Geoscientists (Member # 2689). Dr Beams has sufficient relevant experience in respect of the style of mineralisation, the type of deposit under consideration and the activity being undertaken to qualify as a Competent Person within the definition of the 2004 Edition of the AusIMM’s “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.
Exploration Target Note All statements as to exploration targets of Tellus salt and statements as to potential quality and grade are conceptual in nature. There has been insufficient exploration undertaken to date to define a salt resource and identification of a resource will be totally dependent on the outcome of further exploration. Any statement contained in this document as to exploration results or exploration targets has been made consistent with the requirements of the Australasian code for reporting of exploration results, mineral resources and ore reserves (“JORC Code”).
Commercial in ConfidencePage 3
Contents
A. Strategy and People
B. Salt Market
C. Salt Mining in the NT
D. Lessons Learnt to date
Commercial in ConfidencePage 4
A. Tellus Strategy
Tried, tested and profitable business model overseas Tellus first to market with this model in Australia
Salt / minerals
Tellus Group
Complementary business
Industrial & edible salt Minerals -fertiliserUnderground
warehouse storageHybrid diesel/solar salt
battery
Mine tourismApprentice trainingSpin off salt business
Commercial in ConfidencePage 5
Ex BD Director Penrice Soda, roles
ICI Australia, Merck, Ajax Chemicals
Mine development engineer BHP, Rio, Xstrata, Anglo Coal
Ex BD Coffey Environmental
Ex GM Dampier Salt, Ex CEO of Albany Port (WA)
Chairman Realm Resources & Sylvania, ex Macquarie, JP Morgan
A. Tellus People
Richard RossiterGroup Chairman
Mark ShepherdTellus RockVault NED
John CookTellus RockVault Chair
Ron SiftonTellus RockVault NED
Duncan van der MerweGroup MD
Brett BoyntonGroup FD
Noel DavisMD ClayVault WA
Robert CharterBusiness Development
Michael CarterTellus Salt Sales
Bob EmeryTellus Salt Chair
Joe LuxfordTellus Mining
Fergus HerbertTellus Holdings NED
Mining (GencorCSM Energy), waste & infrastructure (BOS)
Ex UBS, FBR Capital & Credit Suisse, Signature Gold
Director, Driftwood Capital,
Ex NSW Chief Mining Engineer, Ex MD Waste Service NSW
Ex MD Coffey WA, managed Australia’s only Class V waste facility.
Ex FD Newalta, Canada’s largest salt cavern waste storage operator
Ex WA Environmental Regulator, Managed only Class V waste facility
Experienced international mining, storage and logistics team supported by ex -government regulators
Commercial in ConfidencePage 6
A. Tellus Assets - NT
State Leases Area Status Own.
NT 9 EL’s 1,432km2 Granted 100%
High grade asset - thick, shallow, flatHot dry climateClose to infrastructure & markets
Tellus has consolidated the best available underground salt targets in Australia
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B. Salt Market – Domestic and Export
South. Solar ponds transport costs high for Asian markets
Eastern Solar ponds prone to flooding
Western Solar ponds prone to flooding 95%
1%
Cyclones (25 years)
4%
Global salt trade routes
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B. Salt Market- Tellus Salt / Mineral Products
Product mix strategy –Targeting higher value salts and minerals
Water treatment salts
Edible -livestock salts
Minerals (Mg) – fertilizer, industrial uses
Soda ash salts – glass
Edible – food & food processing salts
Chloralkali salts -soaps
Commercial in ConfidencePage 9
C. Salt Mining in NT – Rediscovering the Chandler Salt
Source: McGraw Hill
Source: xx
Image: Victoria Museum, Source: Colorado Plateau GeosystemsSource: Colorado Plateau Geosystems
Cambrian -580myo lifeless land teeming ocean Salt trap for oil and gasGillen 700myo-Chandler 500myo-Late Cambrian
Mt Charlotte 1 Well – 95% haliteMt Charlotte 1 and Magee 1 (6.6km)145km seismic, 6.6km core
Source: Ambrose and Young (2007)
Commercial in ConfidencePage 10
C. Salt Mining in NT– PFS Study Results
Asset Description
Historical exploration Gen. area - 29 km of drilling, 14 wells -$17.5 MStudy area - 145km seismic (15 lines),6.6 km drilling $6.5 M
JORC - exploration target(1)
Charlotte North site (ELA29018)200-500 Mt2% of lease area
Mt Charlotte site (EL27972) 4,000-4,500 Mt 40% of lease area
Geology (Charlotte North site ) First class salt depositFlat, 375 m thick salt bed, 450 m deep
Grade (export quality) High quality salt - 80-95% in situ halitePost processing 97%+ halite (NaCl)
Next step - JORC Resource Drilling and seismic (mine planning)
Fatal flaw analysis No fatal flaws identified
(1) Refer to Exploration Target and Competent Person Note (p.1 –Important Notice)
PFS confirmed the technical and economic feasibility of the project
Commercial in ConfidencePage 11
C. NT Chandler Project – PFS Study Results
Mining Profile
Mining method Underground, room and pillar design, cut and blast mining
Room dimensions 140mL x 10mW x 6mH plus 10mW pillars
Processing Dry and wet
Implementation –contracting strategy
Owner operated - core businessAlliance & contractor - non-core business
Implementation –human resources
Construction jobs - 267 contractors)Operational jobs - 66 FT employees / con.Indirect jobs - 264 jobsSpin off business - ?
Mine layout
Underground room & pillar 750m deep,
Production Profile
First salt sales 2015 – target 1M tpa
Ramp up 3 years (salt)
Potential project life 25 years initially, (then many generations)
Market - salt 80% export (Asia), 20% domestic
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C. NT Chandler Project - Design
Chandler Project - underground salt mine, proven room & pillar design and simple cut & blast mining techniques
Stage 2Stage 1
Stage 2Stage 1
Stage 2Stage 1
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Blasting after shift end Auger drilling
Muck pile load and dump
Roof scaling
Roof bolting
Cleaning
Drilling
Loading with explosives
0
2
3
4
5
6
7
1
C. NT Chandler Project – Cut and Blast
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Darwin East Arm Logistics Precinct
4
3
12
Infrastructure to service Asian salt markets & Australian storage markets
Chandler Salt & Mineral Processing Plant
Alice – Speciality Salt Processing Plant
Chandler Salt Mine
1
3
Chandler rail siding (25km)
1
2
C. NT Chandler Project – Supply Chain
4
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D. Lessons Learnt to Date
Integrated technical and commercial team – best team with track record
Understand your market - get the best sales team that understands product supply and demand and that has a good track record closing deals
Understand your asset – constantly challenge all assumptions - the best geologist is the drill bit
Front end load feasibility studies - to identify as quickly as possible the potential project fatal flaws, technical and commercial feasibility
Sensitivity analysis – conservative but realistic – life cycle economics - take care of the worst case because upper case takes care of itself
Financing options - Understand costs and benefits of different financing tools during whole project/ funding lifecycle
Community stakeholder engagement - Early engagement benefits the project and starts to build “social licence”.
Commercial in ConfidencePage 16
Contact
Duncan van der Merwe (CEO)duncan@tellusholdings.com.au
+61 02 9241 7678
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