Download - Ambatovy Site Tour
-
5/25/2018 Ambatovy Site Tour
1/41
AMBATOVY SITE TOUR
March 28 and 29, 2014
-
5/25/2018 Ambatovy Site Tour
2/41
FORWARD LOOKING STATEMENTS
This presentation contains certain forward-looking statements. F
be identified by the use of statements that include such words as believe , e
intend , plan , forecast , likely , may , will , could , should
continue or other similar words or phrases. Forward-looking sta
are not limited to, statements regarding operations (including certa
transportation), mine life, mining rate and mining capacity, safety tar
sales, local laws, impact on operating results and financial reportin
based on historic facts, but rather on current expectations, assumptioevents. They are based on information available to management and/or
believes are reasonable. Many factors could cause results to differ mater
the forward-looking statements. Although the forward-looking state
management believes to be reasonable assumptions, Sherritt cannot as
will be consistent with such forward-looking statements and such for
be unduly relied upon. All forward-looking statements in this presenta
Except as required by applicable securities laws, Sherritt does not intend an
obligations to update or revise the forward-looking statements. The Co
discussed in disclosure documents filed by Sherritt with Canadian securi
be made to the management discussion and analysis in Sherritt s annual
and its annual information form for the year ended December 31, 2013 and
which are available on SEDAR at www.sedar.com.
-
5/25/2018 Ambatovy Site Tour
3/412
CONTENTS
Page Topic
3 Maps
7 Ambatovy Operational Highlights
8 General Process Overview
9 Mine Operations
16 Pipeline
17 Plant Site
25 Logistics and Marketing
30 Sustainability
36 Reporting
-
5/25/2018 Ambatovy Site Tour
4/413
MAP
Overview of the Joint Venture
-
5/25/2018 Ambatovy Site Tour
5/41
4
MAP
Toamasina Area Sites
-
5/25/2018 Ambatovy Site Tour
6/41
5
MAP
Plant Site
-
5/25/2018 Ambatovy Site Tour
7/41
6
MAP
Mine Operations
-
5/25/2018 Ambatovy Site Tour
8/41
7
AMBATOVY OPERATIONAL HIGHLIGHTS
Area Highlight
Mine Commenced operations in July 2010. Mining certificate co(1)
OPP Full capacity achieved in Q1 2013.
Pipeline Slurry was first sent down pipeline to the plant site in Q2 20
within design parameters the same quarter. Pipeline certifi
2013.(1)
PAL Commercial Production (above 70% of PAL nameplate capacit
achieved on January 22, 2014.
Refinery Highest level of nickel briquetted in one day 175 tonnes, a
tonnes.
Refinery2013 nickel extraction rate exceeded the process design crit
Marketing Quality Management System ISO 9001 registration expected in Q
Port Port operation has met design rates and the capacity certifi(1)was achieved in Q2
2013.
(1)For Project Financing completion tests.
-
5/25/2018 Ambatovy Site Tour
9/41
8
GENERAL PROCESS OVERVIEW
H
PA
L
R
E
FIN
E
RY
The Ambatovy flowsheet emphasizes
conservative design and redundancy. All
processes are proven on a commercial scale
and critical circuits have several parallel trains
for operation.
Pressure leaching is carried out by titanium
lined autoclaves. At Ambatovy, there are five
parallel process trains.
Solid-liquid separation is carried out by
Counter-Current Decantation (CCD).
Sulphide precipitation occurs in two parallel
process trains, and results in the production
of mixed sulphides.
Purifying the nickel containing-solution and
separating nickel and cobalt is carried out by
solvent extraction (SX).
Separate reduction circuits for nickel and
cobalt precipitate metal powders in
autoclaves (7 autoclaves for nickel, 3 for
cobalt).
Metal powder is washed, dried and
briquetted.
-
5/25/2018 Ambatovy Site Tour
10/41
10
MINE OPERATIONS
Moramanga, Madagascar
-
5/25/2018 Ambatovy Site Tour
11/41
10
MINE
Reserves and Resources
Reserves(1), (2)
December 31, 2013
Tonnage
(million tonnes)
Ni
(%)
Co
(%)
Proven 74.9 1.03 0.085
Probable 90.5 0.87 0.080
Proven + probable 165.4 0.94 0.082
Resources(1)
December 31, 2013
Tonnage
(million tonnes)
Ni
(%)
Co
(%)
Measured 6.1 0.88 0.070
Indicated 13.1 0.84 0.081
Measured + indicated 19.2 0.85 0.078
Inferred 41.8 1.01 0.059
1. Based on a cut-off grade of 0.6%.
2. Includes materials that have been mined and stockpiled at the mine site.
1. Based on a cut-off grade of 0.6%.
-
5/25/2018 Ambatovy Site Tour
12/41
11
MINE
Reserves and Resources
Ambatovy s reserves and resources comprise two
ore bodies (Ambatovy and Analamay) that are
about three kilometers apart.
The deposit was identified in 1960, and has been
the subject of several studies and drilling
campaigns over the years. It covers an area of
about 1,300 hectares, with a thickness from 20 to100 meters - average thickness is approximately
40 meters.
More than ninety percent of the deposit is
classified as ferralite, some of which is underlain
by saprolite.
A material type termed low magnesium saprolite
(LMS) lies below the ferralite and between the
ferralite and saprolite, where the latter is present.
Only the ferralite and LMS have been considered
in the mine plan.
-
5/25/2018 Ambatovy Site Tour
13/41
12
MINE OPERATIONS
Q3 2006 Mining permit granted valid for 40 years.
Q3 2010 Mining commences at the site in the
Ambatovy West deposit.
In 2013, over 4.0 million tonnes of ore were
mined.
To date, over 8.0 million tonnes of ore have been
mined.
Mine life is estimated to be 20 years, plus
9 years of rehandling of low grade ore, giving a
total production plan of 29 years.
Mine Site, Moramanga
-
5/25/2018 Ambatovy Site Tour
14/41
13
MINE OPERATIONS
Due to the soft nature of lateritic ore, it
is necessary to sheet the travel sections
of the benches with suitable material.
Pit slopes have been designed at a
conservative 27 degrees.
The mine plan is based on the use of
hydraulic excavators and both 40-ton
and 100-ton haulage trucks.
Truck requirements will be twenty-seven
100-ton trucks and eight 40-ton trucks
when at full production capacity.
Mine Site, Moramanga
-
5/25/2018 Ambatovy Site Tour
15/41
14
MINE OPERATIONS
Ambatovy West is expected to be mined for 18
years, proceeding to Ambatovy Southeast (in2015), followed by the Analamay deposit (in
2017).
At capacity, approximately 6.225 million
tonnes of ore are scheduled for delivery to the
ore preparation plant (OPP) annually. On
average this amounts to 17,500 t/d of ore.
The total mine capacity starts at about 20,000
t/d, which allows for a 0.2: 1 strip ratio.
The mining rate increases over time, and by
year six, the mining rate is about 50,000 t/d, orabout a 1.3:1 strip ratio.
The average strip ratio over the mine life is
about 0.73: 1.
Mine Site, Moramanga
-
5/25/2018 Ambatovy Site Tour
16/41
15
MINE OPP
Q2 2010 Construction completed.
Q3 2010 Commissioning completed.
Q2 2011 Slurry sent down pipeline to the
plant site.
Pipeline operates within design
parameters.
Q1 2013 Full capacity achieved at OPP.
Q1 2013 Mining certificate completed.(1)
Q1 2013 Pipeline certificate completed.(1)
Mine Site, Moramanga
(1)For Project Financing completion tests.
-
5/25/2018 Ambatovy Site Tour
17/41
16
PIPELINE
2013
20[09]
Transports ~7.2 million tonnes per year of slurry
from the Ambatovy mine site to terminal facilities
at Tamatave, a 30-hour journey.
The pipeline system includes:
a 220 km, 24-inch outside diameter buried
pipeline;
one pump station located at the OPP;
three pressure monitoring stations along thepipeline route;
one main valve and choke station along the
pipeline route; and
pipeline terminal facilities and choke station.
For nearly all of its length, the pipeline was buried
using standard cut and cover construction to an
average depth of 1.5 m. In certain areas, Ambatovy
drilled horizontally beneath the surface, leaving
stretches of forest untouched, and allowing the
Pipeline to pass safely below Madagascar s scenic
rivers.
Extensive rehabilitation over the cours
Pipeline is already returning the landsca
its natural state.
-
5/25/2018 Ambatovy Site Tour
18/41
-
5/25/2018 Ambatovy Site Tour
19/41
18
SAFETY
Targets
Ambatovy set a Lost Time Injury (LTI) index targetof zero and a Total Recordable Injury (TRI) index
target of less than 0.50 for 2013. The TRI index
target will be further lowered to 0.45 in 2014.
Performance
At Ambatovy, the 2013 process safety incident (PSI)frequency rate was at the industry minimum level,
as per the Centre for Chemical Process Safety s
benchmark PSI.
The TRI and LTI rolling indices for employees and
contractors were 0.22 and 0.03 respectively.
Ambatovy is working toward OHSAS (Occupational
Health and Safety Assessment Series) 18001
certification for its safety management system, the
highest international standard for occupational
health and safety.
0.00
0.25
0.50
Q1 13 Q2 13 Q3 13 Q4 13
Ambatovy TRI INDEX
0.00
0.05
0.10
0.15
Q1 13 Q2 13 Q3 13 Q4 13
Ambatovy LTI INDEX
2013 Target
Target
-
5/25/2018 Ambatovy Site Tour
20/41
19
STATUS OF THE RAMP-UP
-
5/25/2018 Ambatovy Site Tour
21/41
20
UTILITIES SYSTEMS
Key System Design Capacity
Met or Exceeded
Raw water supply
Process water
Cooling water
Compressed air
Demineralized water plant
Power plant (3 units)
Hydrogen plant
Hydrogen sulphide plant
Air separation plant
Sulphuric acid plant
Lime & limestone plant
Coal for Power Plant
-
5/25/2018 Ambatovy Site Tour
22/41
21
PAL SYSTEMS STATUS
System Design Capacity
Met or Exceeded
Slurry Thickener
PAL Leach Autoclaves (1 5)
Neutralization CCD
Raw Liquor Neutralization
Sulphide precipitation
Mixed sulphides wash
All systems in the PAL circuit met or e
their design capacity by January 201
Facilities running above namepl
indicative of future opportunity
Autoclave
-
5/25/2018 Ambatovy Site Tour
23/41
22
REFINERY SYSTEMS STATUS
Key System Design Capacity
Met or Exceeded
Mixed sulphide leach
Iron and copper impurity
removal
Zinc solvent extraction
Cobalt solvent extraction
Nickel reduction
Cobalt purification
Cobalt reduction
Sulphide stripping
Ammonium sulphate
Nickel Briquettes
-
5/25/2018 Ambatovy Site Tour
24/41
23
FINISHED METAL PRODUCTION
0%
10%
20%
30%
40%
50%
60%
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13
%
design
cap
acity
Saleable Nickel and Cobalt Productio
(% of capacity)
Refinery is continuing to ramp-
up.
Finished nickel and cobalt
production exceeded 70% of
nameplate over a 30-day
period in March 2014.
Cobalt quality exceeds the
LME specification.
Nickel quality meets LME
specification for all elements
with the exception of silicon.
-
5/25/2018 Ambatovy Site Tour
25/41
24
$0
$2
$4
$6
$8
$10
$12
50% 70% 90% 100%
Average
N
DCC
(US$
/lb)
$4 - $6
$6 - $8
$9 - $11
$ 3 - $5
% of nameplate capacity (finished produc
Range of Estimated NDCC at Various Capaci(holding current commodity prices consta
REFINERY PRODUCTION
The net direct cash cost
(NDCC) of nickel for theoperation is within the range
anticipated for the percentage
of capacity achieved.
The greatest benefits to the
unit cost structure occur when
the facilities are operating atover 85% of their design
capacity.
Key sensitivities to the costs at
Ambatovy remain:
Volume (throughput)
Sulphur pricing/use
Diesel pricing/use
Reporting of Ambatovy unit
cost data will begin in Q1
2014.
-
5/25/2018 Ambatovy Site Tour
26/41
26
LOGISTICS & MARKETING
Toamasina, Madagascar
-
5/25/2018 Ambatovy Site Tour
27/41
26
PORT & RAIL
The port of Toamasina handles 90 percent of
Madagascar s container traffic and more than80 percent of all trade traffic.
Limestone, coal and sulphur are unloaded
using ship s gear, directly for transfer by rail to
the process plant.
The products from the process plant (nickel,
cobalt, and ammonium sulphate) are trucked
to the port for export.
A rail spur, approximately two kilometers long,
was built to connect an existing rail line, which
was double tracked, to the plant site.
All rail construction was completed in Q2
2010.
-
5/25/2018 Ambatovy Site Tour
28/41
27
COMMODITY UNLOADING
Commodity Unloading 2013
(tonnes)
Start to March 15, 2014
(tonnes)
Limestone 997,188 1,856,513
Coal 416,768 1,054,822
Sulphur 281,327 616,227
Ammonia 20,400 51,060
Total 1,715,683 3,578,622
Port operation has met design rates and the capacity certificate(1)was achieved in Q2 2013.
Imported commodities required for production will total appro
nearly 13 times greater than the amount of finished goods to be ex
Ambatovy s port investments included a substantial extensionMole B, in French) an
state-of-the-art equipment for handling the import of bulk raw m
coal, sulphur, and ammonia.
(1)For Project Financing completion tests.
-
5/25/2018 Ambatovy Site Tour
29/41
28
MARKETING
Finished Nickel
Ambatovy sells all of its nickelproduction to KORES, Sumitomo and
Sherritt at market prices under nickel
offtake agreements covering full
nickel capacity for 15 years.
The Partners, in a coordinated
manner, market directly to end users.
Realized prices improving as
production volumes increase and
quality stabilizes.
Sherritt s nickel marketing is
recorded in both the revenue and
cost of the Metals Division, but its
net impact on EBITDA and earnings is
immaterial.
LME DiscountFOB Madagascar Percentage of LME
Achieved
94.8
95.0
95.2
95.4
95.6
95.8
96.0
96.2
96.4
96.6
96.8
400
450
500
550
600
650
700
750
Q1 Q2 Q3 Q4
PercentofLM
E
Achiev
ed
Netback
asDiscounttoLM
E
(U
S$
/M
T)
Realized Ni Price
(percentage of LME Ni Price)
-
5/25/2018 Ambatovy Site Tour
30/41
29
MARKETING
Africa
17%
East Asia
15%
Europe
42%
North
America
26%
Cobalt Sales by Region
Customer sales of both finished nickel
and finished cobalt are geographically
diverse with good penetration into key
markets.
Finished Cobalt
Ambatovy markets all of its cobalt and
utilizes established distribution channel
relationships in Europe, India and North
America.
Ammonium Sulphate
Ammonium sulphate is sold principally in
Southeast Asia and East Africa.
Africa
2%
Europe
33%
East Asia
55%
North
America
9%
Nickel Sales by Region
-
5/25/2018 Ambatovy Site Tour
31/41
31
SUSTAINABILIT
Mantella aurantiaca
-
5/25/2018 Ambatovy Site Tour
32/41
31
MADAGASCAR
Mining Environment
Madagascar has developed the legal and regulatory framework to su
in the country. Madagascar s Large Investments in Mining Act (
Investissements Mini res) is a main component of that framew
The LGIM features include:
Tax and legal stability guaranteed for 25 years;
International dispute arbitration and waiver of sovereiof arbitrated awards;
Ability to maintain and operate offshore bank accounts;
Reduced corporate income tax;
Reduced royalty payments (1% on value-added mineral products
Up to 75% debt financing and repayment of loan principal an
withholding tax;
10% withholding tax on dividends to foreign shareholders
elimination of value added tax (VAT) for operations and su
-
5/25/2018 Ambatovy Site Tour
33/41
32
SUSTAINABILITY
US$25 MILLION
COMMITTED TO SUPPORT
SOCIAL DEVELOPMENT PROJECTS
Including in 2013:
Infrastructure for Community of Ampitambe
Two classrooms for the Public Primary School
(EPP), construction of a Primary Health Care
Center (CSB), a football field with bleachers, hand
pumps for eight wells, and a gendarmerie
outpost.
Harenasoa Poultry Project
Construction of approximately 50 b
Creating over 100 jobs and product f
communities.
Eco-friendly School Poultry Farm Under Co
-
5/25/2018 Ambatovy Site Tour
34/41
33
SUSTAINABILITY
PROTECTION OF OVER
25,000 HECTARES
OF FOREST AND WETLANDS
(15 times the size of the mine footprint)
Ankerana Biodiversity Offset
Ankerana (6,800 ha) was chosen as an offset
because of similarities to the mine azonal forests.
Studies indicate that Ambatovy protection efforts
have successfully reduced forest loss at Ankerana.
Ambatovy Lemur Conservation Progra
With 90% of Madagascar s lemur species
considered by IUCN at risk of extincti
and the biodiversity offsets will ens
and preferably a net gain, in the popul
endangered lemurs.
-
5/25/2018 Ambatovy Site Tour
35/41
34
SUSTAINABILITY
85%
OF AMBATOVY EMPLOYEES ARE
MALAGASY PERSONNEL
(Employ an additional 6,500 Malagasy Contractors)
Both classroom and on-the-job training is
provided.
Programs include PEXT, Mentorship Program and
Advanced Leadership Development.
Training is coordinated with vario
optimize resources and methods.
Utilization of SkillMine software s
training tracking and progress mon
employees, and Supervisor verificati
-
5/25/2018 Ambatovy Site Tour
36/41
35
SUSTAINABILITY
Pipeline
650 hectares of rice fields were affected by theconstruction phase of the pipeline.
556 hectares have been fully rehabilitated, the
remaining 94 hectares will be completed in
2014.
Resettlement
Families in the mine lease area receivland in the neighouring Amboloma
In addition to the land transfer, te
training was provided aimed at impro
productivity.
MITIGATION PROGRAM
Avoid and Minimize Impact Then Repair and Restore
Pipeline Construction Ambolomaro Resettlement
-
5/25/2018 Ambatovy Site Tour
37/41
37REPORTING
-
5/25/2018 Ambatovy Site Tour
38/41
37
REPORTING IN 2014
Impact on Operating Results
Beginning February 1, 2014, Sherritt began
recognizing its share of Ambatovy operating
results.
This will be represented in a single line item,
Earnings (loss) from an associate .
For 2014, an estimated loss from Ambatovy will be
derived as follows (estimates in $ millions,
Sherritt s 40% interest):
EBITDA $ x
DD&A (170)
Net interest expense (110)
Income tax recovery 35
Estimated loss from an associate $ x 245
Worker at OPP
-
5/25/2018 Ambatovy Site Tour
39/41
38
REPORTING IN 2014
Balance Sheet Advances, Loans Receivable
The Ambatovy subordinated loans receivablerepresent a funding mechanism. The balance at
December 31, 2013 was $1.106 billion.
Prior to Commercial Production, interest income on
this receivable was fully eliminated. After
Commercial Production, only 40% of the interest
income will be eliminated. As a result, Sherritt will
recognize interest income from these loans in 2014.
Balance Sheet Investment in Associate
The net Investment in an associate is forecast to
decrease in 2014 (losses to exceed funding).
2014 Losses
from Ambatovy
February 1 December 31
(Sherritt s 40% share)
($X 245 million)
Funding for Ambatovy
Sherritt s 40% Share
(~$200 million)
Air Separation Plant
-
5/25/2018 Ambatovy Site Tour
40/41
39
REPORTING IN 2014
Net Direct Cash Cost (NDCC)
Beginning in Q1 2014, the Moa
JV NDCC will include a by-
product credit from the Fort
Site operations (utilities and
fertilizers).
Reporting of NDCC for
Ambatovy will begin in Q1
2014.
It will be presented in a
comparable manner to the Moa
Joint Venture.
Nickel
Ambatovy Nickel
-
5/25/2018 Ambatovy Site Tour
41/41
Sherritt International Corporation
1133 Yonge Street, Toronto, Ontario, Canada M4T 2Y7
Telephone: 416-935-2451
Toll-Free: 1-800-704-6698
Email: [email protected]
Website: www.sherritt.com