The Evolving Specialty Metals Landscape

Richard Karn

Managing Editor, The Emerging Trends Report Pty Ltd (ABN: 59149144963)

MD & Exec Director, Strategic Specialty Metals Pty Ltd (ABN:29149028188)

CEO, Scandium Developments International Pty Ltd (ABN: 71121053736)

Mines & Money, October 2012

What is the fundamental difference between these elements?

GEOLOGY FOR LIBERAL ARTISTS elements having a higher atomic number than iron (Z>26) cannot be formed by nuclear fusion processes in stars

created by neutron or proton absorption of already existing bigger nuclei & occur exclusively in massive stars during the end of their life cycle

a supernova explosion both creates these elements and distributes them through space as 'ash' in an interstellar cloud

solar system formed by condensation, contraction and subsequent collapse of an interstellar cloud

> 99% of the matter of the solar system was concentrated in the sun

the rest is contained in planets, meteorites and comets

Planetesimals were formed out of dust and ice particles; consequently, planets were built up by collisions of planetesimals.

The material remaining outside the sun has undergone one or more of the following processes: oxidation, accretion, melting, segregation, and fractional crystallisation.

Various transportation and concentration mechanisms over countless cycles create accumulations of these elements in compounds that sometimes are economic to mine—most are not The probability of elements > 26 forming then, is low--as is their relative abundance

Source: USGS

Specialty Metals Experiencing Supply Threat

48 Specialty Metals Experiencing Supply Threat (number of threats)

8

antimony (5) beryllium (3) bismuth (3) cobalt (3)

fluorspar (2) gallium (3) germanium (3) graphite (3)

hafnium (2) indium (3) lithium (2) magnesia (3)

manganese (2) molybdenum (2) niobium (4) 6 PGMs (5)

15 REEs (4) rhenium (3) scandium (3) selenium (4)

silicon (2) silver (3) tantalum (2) tellurium (4)

tin (3) titanium (2) tungsten (3) vanadium (2)

zirconium (3)

Sovereign Risk Scarcity No Substitute By-product Dissipative Use

Specialty Metal Demand Drivers Endless pursuit of higher quality, ever more efficient devices at ever

lower prices

Technology-enabled explosion in material science R&D

Unique performance characteristics in tech alloys

Limited substitution + trace amounts used = price inelastic

Scarcity or byproduct sourcing = supply inelastic Many have dissipative uses because there are no recycling protocols

Specialty metal demand trajectory is discovery-driven and largely

independent of GDP (unlike oil, base metals, lumber etc)

…cycle back to top and repeat—faster.

www.emergingtrendsreport.com

Ruthenium HDD example

(Note that the vertical axis is logarithmic, so the ‘fit’ to reflect growth in HDD capacity reflects exponential growth. )

The Great Stabilizer: - 3G and 4G super alloys (Ni, Co, V, W, Mo + Re/Ru) - perpendicular bit stacking HDDs - solar/artificial photosynthesis - nano-lattice for targeted drug delivery

HDD Capacity Growth

73%

44%

58%

27%

56%

42%

Total Resources Production 2006 Production 2011

Nickel Laterite and Sulphide Global Resources and Production (2006 & 2011)

Laterites Sulphides

Global Transition from Sulphides to Laterites

Resource constraints driving move to Laterites: Sulphide deposits in decline

Laterites are currently more expensive to process than Sulphides

Australia has a myriad of low grade Ni (laterite) deposits: Micro Nickel renders them economic

Source: Inco, Cru Analysis October 2006, AME Group Nickel Market Report 2012

11

New Nickel (Ni) Laterite Processing Technology with potential to: Render low grade nickel deposits economic

Improve economics of existing nickel laterite operations (HPAL/ Heap Leach)

Robust Economics:

Dramatically reduced CAPEX & OPEX

3 Revenue Streams: Produce and market nickel concentrate directly to smelters

Potential to turn dirt (low grade Ni-Co) into economic nickel deposits

Royalty stream from retrofitted HPAL plants

Small environmental footprint with no emissions

Patent protection in major jurisdictions, including USA and Australia

Proof of concept demonstrated at ANSTO (2012) and Queenstown Univ (2005)

12

In physics, the higher the frequency of microwave energy, the shorter the wavelength and the higher the energy density

process uses millmeter wave energy to selectively heat and break the oxygen bonds joining Ni & Co to the Fe matrix in laterite ore

Aided by a reductant, process converts metallic oxides of Ni & Co to metals

The process to convert metallic oxides to metals requires < 1 minute

<5% of laterite ore responds, resulting in low energy consumption

Ni & Co metals recovered via magnetic separation and sold as concentrate

Recovery of >95% of contained nickel expected

Gangue material is largely unresponsive & consumes little/no energy

No wet chemistry, no re-agents & reduced emissions

Small footprint, no tailings storage facilities & immediate remediation

Technology Basics

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Corroboration by Professor Pickles (2005) (being replicated by ANSTO today)

Source: Challenges in Extraction & Production 2005 14

Q&A

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