pure energy - corp presentation 120117 compressed · chief financial officer paul has more than 35...
TRANSCRIPT
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CORPORATEPRESENTATIONDECEMBER2017
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Certainstatementscontainedinthispresentation,includingallstatementsthatarenothistoricalfacts,containforward-lookingstatementsandforward-lookinginformationwithinthemeaningofapplicablesecuritieslaws(“forward-lookinginformation”).Suchforward-lookinginformationincludes,butisnotlimitedto,statementsorinformationwiththerespecttotheoverallobjectivesandstrategicplans,workprograms,explorationbudgetsandtargetsandmineralresourceestimatesofPureEnergyMineralsLimited(“PureEnergy”orthe“Company”).ReadersshouldreviewalloftheCompany’spublicdisclosureincludingitsmostrecentAnnualInformationFormandtheriskfactorscontainedtherein,thetechnicalreportsonitsproperties,anditsauditedfinancialstatementsandManagement'sDiscussionandAnalysis (MD&A),allasfiledonwww.sedar.com fromtimetotime.
Forward-lookinginformationincludes,butisnotlimitedto,statementsrelatedtoactivities,eventsordevelopmentsthattheCompanyexpectsoranticipateswillormayoccurinthefuture,including,withoutlimitation;statementsrelatedtotheCompany'sreleaseofthePEATechnicalReport(“PEA”)fortheClaytonValleyLithiumProject(“Project”);theeconomicanalysisoftheProject;themineralresourceestimatefortheProject;theestimatedannualproductionofLiOH-H2OandLCE;theavailabilityanddevelopmentofmoresustainabletechnologiesforuseattheProject;theexpectedminelife;theestimatedNPVoftheProject;theestimatedIRRoftheProject;estimatedaverageoperatingcosts;estimatedcapitalcosts;estimatedEBITDA;theestimatedpaybackperiodfortheProject;theestimatedtimelineforconstructionoftheProject;theestimatedproductionscheduleattheProject;anticipatedchemistryofbrinesattheProject;expectedgrowthinthemarketforlithiumhydroxide;anticipatedchangesinbatteryformulationtechnologies;estimatedmarketpricesforlithiumhydroxide;anticipatedlithiumrecoverylevelsattheProject;expectedpilotplanttestingattheProject;designworkattheProject;andthedevelopmentofatimelineforcompletionofafeasibilitystudyfortheProject.Forward-lookinginformationisoftenidentifiedbytheuseofwordssuchas"plans","planning","planned","expects"or"lookingforward","doesnotexpect","continues","scheduled","estimates","forecasts","intends","potential","anticipates","doesnotanticipate",or"belief",ordescribesa"goal",orvariationofsuchwordsandphrasesorstatesthatcertainactions,eventsorresults"may","could","would","might"or"will"betaken,occurorbeachieved.Forward-lookinginformationisbasedonanumberoffactorsandassumptionsmadebymanagementandconsideredreasonableatthetimesuchinformationisprovided.Forward-lookinginformationinvolvesknownandunknownrisks,uncertaintiesandotherfactorsthatmaycausetheactualresults,performance,orachievementstobemateriallydifferentfromthoseexpressedorimpliedbytheforward-lookinginformation.
AnumberofotherfactorsmayadverselyimpactPureEnergyandtheProject,including:theCompany’sinabilitytocompletefurthermineralresourceandmineralreserveestimates;theinabilitytocompleteasubsequentfeasibilitystudy;theinabilitytoanticipatechangesinbrinevolumeorgradedueanumberoffactors;changestotheeconomic analysis;thefailuretoobtainnecessarypermitstoexploreanddeveloptheProject;environmentalissuesordelays;inabilitytosuccessfullycompleteadditionaldrillingattheProject;andinabilitytoobtainfinancingforfutureexplorationanddevelopmentworkandconstructionofaplantattheProject.AlthoughPureEnergyhasattemptedtoidentifyimportantfactorsthatcouldcauseactualactions,events,orresultstodiffermateriallyfromthosedescribedintheforward-lookinginformation,theremaybeotherfactorsthatcauseactions,events,orresultsnottobeasanticipated,estimated,orintended.Therecanbenoassurancethatforward-lookinginformationwillprovetobeaccurate.Theforward-lookinginformationcontainedhereinispresentedforthepurposeofassistinginvestorsinunderstandingtheCompany'splan,objectives,andgoalsandmaynotbeappropriateforotherpurposes. Accordingly,readersshouldnotplaceunduerelianceonforward-lookinginformation.PureEnergydoesnotundertaketoupdateanyforward-lookinginformation,exceptinaccordancewithapplicablesecuritieslaws.
CAUTIONARYSTATEMENT
2Mineralresourceswhicharenotmineralreservesdonothavedemonstratedeconomicviability.Thecategoryofinferredresourceistheleastreliableresourcecategoryandissubjecttothemostvariability.Untilmineralreservesandresourcesareactuallyminedandprocessed,thequantityofmineralreserveandresourcegradesmustbeconsideredasestimatesonly.PatrickHighsmithMSc.,CPG.,isaqualifiedpersonasdefinedbyNI43-101,andhassupervisedthepreparationofthescientificandtechnicalinformationthatformsthebasisforthispresentation.Mr.HighsmithisnotindependentoftheCompanyasheisadirector.
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ThePEAisbaseduponaprocessflowsheetthatmaychange,whichwouldimpactallcostsandestimates.OperatingcostsfortheProjectwerebaseduponassumptionsincludingfutureenergycosts,watercosts,labor,regulatorycostsandothervariablesthatarelikelytochange.Capitalcostswerebaseduponplantequipmentandotheritemsthoughttobenecessaryforproduction.Lithiumhydroxidemonohydratepriceforecastswerebaseduponthird-partyestimatesandmanagementassumptionsthatmaychangeduetomarketdynamics.Changesinestimatedcoststoacquire,construct,install,oroperatetheequipment,orchangesinprojectedpricing,mayadverselyimpactProjecteconomics.
TheeconomicanalysisincludedinthePEAisbaseduponinferredmineralresourcesonly.Mineralresourcesthatarenotmineralreservesdonothavedemonstratedeconomicviability.ThePEAispreliminaryinnatureandincludesinferredmineralresourcesthatareconsideredtoospeculativegeologicallytohave theeconomicconsiderationsappliedtothemthatwouldenablethemtobecategorizedasmineralreserves.ThereisnocertaintythattheProjectenvisionedbythisPEAwillberealized.Themineralresourceestimates,uponwhichthePEAisbased,relyuponassumptionsoutlinedinthe“ResourceEstimate”sectionofthetechnicalreportrelatingtothePEA.Somefiguresintheresourceestimatemayhavebeencalculatedusingafactortoconvertshorttonstometrictonnes.
CAUTIONARYSTATEMENT(cont.)
3Mineralresourceswhicharenotmineralreservesdonothavedemonstratedeconomicviability.Thecategoryofinferredresourceistheleastreliableresourcecategoryandissubjecttothemostvariability.Untilmineralreservesandresourcesareactuallyminedandprocessed,thequantityofmineralreserveandresourcegradesmustbeconsideredasestimatesonly.PatrickHighsmithMSc.,CPG.,isaqualifiedpersonasdefinedbyNI43-101,andhassupervisedthepreparationofthescientificandtechnicalinformationthatformsthebasisforthispresentation.Mr.HighsmithisnotindependentoftheCompanyasheisadirector.
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ANEWMANAGEMENTTEAMWITHTHERIGHTEXPERIENCETODELIVER
PAULZINKChiefFinancialOfficerPaulhasmorethan35yearsexperienceinprojectfinance,financialanalysis,strategicplanning,royalties,mergersandacquisitions,andbusinessdevelopment.BeginninghiscareerininvestmentbankingwithJ.P.Morgan&Company,hehasheldseniormanagementpositionsatInternationalRoyaltyCorporation,RareElementResourcesLtd.,EurasianMineralsInc.,PegasusGoldInc.,andKochIndustriesInc.
PaulholdsaB.A.inEconomicsandInternationalRelationsfromLehighUniversity.
WALTERWEINIGMSc,CPG,PPMVPProjects&PermittingWalterhasnearly30yearsofexperienceinmininghydrogeology,permitting,andprojectmanagementatsitesaroundtheglobe.Hehasmanagedmulti-disciplinaryengineeringandscientificteamstoaccomplishcomplexdesignandpermittingprojectsinsurfaceandundergroundminingandenvironmentalarenas.
WalterhasaBScingeologyfromtheUniversityofWisconsinandanMScinhydrologyandwaterresourcesfromtheUniversityofArizona.
PATRICKHIGHSMITHMSc,CPG;CEO,Director
Seniorminingprofessionalwithover25yearsmulti-commodityexperience,includingexploration,operations,andbusinessdevelopmentwithBHPBilliton,RioTinto,andNewmont.FoundingCEOofLithiumOneInc.andco-engineeroffriendly2012mergerwithGalaxyResources.
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LITHIUMDEMANDISDRIVINGEXPLORATION…ANDANEXPLOSIONOFCOMPANIES!
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CONSENSUSISGATHERINGAROUND500KTPABY2025…BATTERIESAREDRIVINGDEMAND
77BenchmarkMineralIntelligence,LithiumHydroxideMarketForecast,April,2017
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GLOBALEVBUSINESSISJUSTSTARTINGTOMAKEWAVES
GlobalAutoSalesin2016at88MVehicles:~$2Trillion
AreWeReadyfora$300BEV
Industry?
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$0
$200
$400
$600
$800
$1,000
$1,200
2010
2011
2012
2013
2014
2015
Source:BloombergNewEnergyFinance 99
AverageBatteryPackPrice(BEV&PHEVBatteryPacks)
$/kW
h
$0
$200
$400
$600
$800
$1,000
$1,200
2010
2011
H12012
H22012
H12013
H12014
H22014
H22015
AverageEVBatteryPricePercentageChangeBetweenPeriods(2010– H22015)
$/kW
h
-20% -14% -7% -7% -5% -5% -35%
WHYISTHISFORREALTHISTIME?BATTERYCOSTSAREPLUMMETING
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1010
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World-ClassInfrastructurePowerLines,Roads,andNorthAmerica’sOnlyLithiumProducer…
CLAYTONVALLEYNEVADA– APRODUCTIVEDISTRICTCLAYTONVALLEY,NEVADA– HOMETOANOLDPRODUCERANDNEWPOTENTIAL
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THECLAYTONVALLEYPROJECTCONTINUESTOGROW
EXPANDEDPUREENERGYCLAIMS:
ExistingClaims: 24,600ACRES
ClaytonNE: 1,060ACRES
Triton: 390ACRES
TOTAL:26,050ACRES
ExistingClaims
AlbemarleSilverPeakMine
AdvantageClaimAreas
Wells
TRITONCLAIMBLOCK CLAYTONNECLAIMBLOCK
NewAcquisitionsfromAdvantageLithium:- AdjoinsAlbemarle’sSilverPeakMine- Includes6ExplorationWellsonEastSide- AverageLithiumGrade:204mg/L- MaximumLithiumValues:322mg/L- AllShareTransactionfor100%Interest
AREASOFEXPLORATIONFOCUSIN2018
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CLAYTONVALLEYPROJECT– SUMMARYOFPRELIMINARYECONOMICASSESSMENT(PEA)
KeyEconomic Indicators(CurrencyinUS$)
AfterTax - Net PresentValue(8%Discount) $264million
AfterTax- InternalRateofReturn(IRR) 21%
Average AnnualProduction(LithiumHydroxide) 10,300 tonnes
AverageAnnualProduction(Lithium CarbonateEquivalent) 9,100 tonnes
MineLife 20 year
Production Royalties 3%
Steady-State AnnualEBITDA*(nameplateproduction) $100million
PaybackPeriod(fromcommencementofproduction) 4.4 years
*- EBITDAisanon-IFRSearningsmeasurewhichdoesnothaveanystandardizedmeaningprescribedbyIFRSandthereforemaynotbecomparabletoEBITDApresentedbyothercompanies.EBITDArepresentsearningsbeforeinterestexpense,incometaxes,depreciationandamortization.Investorsarecautionedthatthisnon-IFRSfinancialmeasureshouldnotbe construedasanalternativetoothermeasuresoffinancialperformancecalculatedinaccordancewithIFRS. 1313
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DescriptionofCapitalCosts US$
BasinActivities $29M
PlantFacilities&Equipment $100M
Infrastructure&Utilities $30M
DirectCosts $159M
IndirectCosts* $34M
Contingency $56M
Owner’sandOtherCosts** $48M
TotalInitialCapitalCosts $297M
SustainingCapitalCosts(LoM) $62M
*- IndirectCostsarethosecoststhatcannotbedirectlyattributedtotheconstructionofthephysicalfacilitiesbutarerequiredtosupporttheconstructioneffort.Itemsincludedinthiscategoryinclude,butarenotlimitedto:spareparts,freight,EPCMservicesandstart-upservices.
**Owner'sCostsencompassallthosecostsspecificallyattributabletotheOwnerthatarenotincludedelsewhereintheestimate.Typicalitemsincludedinthiscategoryinclude,butarenotlimitedto:landownershipcosts,feasibilitystudycosts,legalfees,permittingcostsandfees,Ownerprojectsupportstaff,specialistconsultants,andoperationsorganizationestablishment(includingtraining,etc).OtherCostsincludeinitialpurchaseandchargingoftheplantwiththeproprietarysolvent.
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AFIRSTPASSESTIMATEOFCONSTRUCTIONCOSTS
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DescriptionofSteadyStateOperatingCosts(US$)UnitCostLiOH·H2O
UnitCostLCE
%ofTotal
Labor $427/t $485/t 14
Power $394/t $447/t 12
OperatingSupplies&Services $2,227/t $2,528/t 69
MaintenanceSupplies $169/t $192/t 5
Total $3,217/t $3,652/t 100%
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FIRSTPASSESTIMATEOFDIRECTOPERATINGCOSTS– VERYENCOURAGING
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KEYASSUMPTIONS:
100%EquityFinancing
ProductionRamp-upover~15months:
4,100tonnesLiOH�H2Oin2021
10,800tonnesLiOH�H2Oin2022
11,400tonnesLiOH�H2Oin2023
ConstructionCommencingin2019
EffectiveTaxRateof20%
Theeconomicanalysisisbaseduponinferredmineralresourcesonly.Mineralresourcesthatarenotmineralreservesdonothavedemonstratedeconomicviability.ThisPEA is preliminaryinnatureandincludesinferredmineralresourcesthatareconsideredtoospeculativegeologicallytohavetheeconomicconsiderationsappliedtothemthatwouldenablethemtobecategorizedasmineralreserves.ThereisnocertaintythattheProjectenvisionedbythisPEAwillberealized
NEWTECH=HIGHMARGINS
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0
20
40
60
80
100
120
140
160
180
200
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
MILLIONS(USD
)
YEAR
REVENUE
DIRECTCOSTS
NON-OPERATINGCOSTS
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LITHIUMHYDROXIDEBASECASEPRICINGMODELFORCLAYTONVALLEYPROJECT
ADynamicPricingModelBasedonRealMarketAnalysis
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BaseCasePricingusedinPEAFinancialModel
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VERYCOMPETITIVEDIRECTPRODUCTIONCOSTS
PUREENERGYEstimatedDirectCosts$3,217/tonne
18SlideborrowedfromNemaska Lithium
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PHASE3DRILLPROGRAM– IMPORTANTINPUTSTONEWRESOURCE
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Li=209mg/L
StrongPumpTest
HigherGradeat
Depth
Li=70mg/L
Li=175mg/L
Li=134mg/L
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Variabledrainableporositywithgeologyanddepth;assignedaconservative6%tothemodel
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CLAYTONVALLEYPROJECT:HOSTAQUIFERS
Porosity10– 20%
Porosity4– 10%
PorosityHighlyVariable
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Magnesium*toLithiumRatio:2.9
Avg CalciumContent(mg/L)*:1,536
Sulfate*toLithiumRatio:18.2
WORLD-CLASSCHEMISTRY
RESOURCES&KEYTECHNICALPARAMETERS
NOTE:Mineralresourcesthatarenotmineralreservesdonothaveanydemonstratedeconomicviability.Inferredresourcesaretheleastreliableresourcecategoryandaresubjecttothemostvariability.PleaseseetheCompany’sfulltechnicalreportatwww.sedar.comorwww.pureenergyminerals.com fordetailsonhowtheresourcewasderivedandforthereportingdetailsintermsoflithiummetal(Li)andlithiumhydroxidemonohydrate(LiOH�H2O).
HIGHERCONFIDENCE,BETTERUNDERSTOODIN3D,POISEDFORGROWTHINFY2018
Lithium Resource LCE
(metric tonnes)Average Lithium Grade
(mg/L)
816,000
TOTAL INFERRED SOURCES
102
TOTALINFERREDRESOURCES
218,000 123
*Chemistryderivedfromglobalaveragecalculationsfromdatabase,June2017
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LiP™ LiSX™ LiEL™
NoEvaporation
Ponds
RealTimeRecovery
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THEREISABETTERWAY:PRELIMINARYFLOWSHEETFORNEWLITHIUMPROCESS
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THEREISABETTERWAY:MAKINGITAREALITYWITHAPILOTPLANT
Preliminary3DPerspectiveDrawingofClaytonValleyPilotPlant
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CLAYTONVALLEYEXECUTIONSCHEDULE
ClaytonValleySouthExecutionSchedule 2017 2018 2019 2020 2021 2022
ProjectActivity Duration Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4EnvironmentalBaselineStudies 12monthsPermittingforPilotPlant 12monthsDesignofPilotPlant 9monthsProcurementofPilotPlant 9monthsConstructionofPilotPlant 6monthsOperationofPilotPlant 6monthsEnvironmentalImpactAssessmentorStudy 12monthsPermittingforProjectExecution 12monthsFeasibilityStudy- BasinActivities 15monthsFeasibilityStudy- PlantActivities&FeasibilityReport 9monthsProjectFinancing 3monthsDesign&Engineering- ProjectExecution 9monthsProcurement&Delivery- ProjectExecution 12monthsConstruction 15monthsCommissioning 6monthsRamp-Up 9months
RealisticandAggressive - It’sallaboutthePilotPlant
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FÉNIXMINE
SALARDEATACAMA
LITHIUMTRIANGLE
TERRACOTTAPROJECT,ARGENTINA
LITHIUMTRIANGLE
TERRACOTTAPROJECT,ARGENTINA– WORLDCLASSDISCOVERYPOTENTIAL
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Pocitos Salar
Largeanddeepclosedstructuralbasinwithmultipleaquifers
Majorstructures– faultsandfolds
Recentvolcanismandactivehydrothermalsystems
Complexmetasedimentary andvolcanicrocksinbasin
Lithiumindicatedinnear-surfacebrinesanddeepergeophysicaltargets
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TERRACOTTAPROJECT– FAVORABLEGEOLOGYANDNEWGEOPHYSICALTARGETS
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TERRACOTTAPROJECT– VESRESULTS:“THERE’SSALTWATERDOWNTHERE”
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Interpretedconductivematerial(red)istheprimedrilltarget
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NEXTSTEPS
SurfaceSamplingUnderway:Lithiumanomalies
ZonationofbrinechemistryGeologicalmapping
EnvironmentalImpactReportUnderway
Planningfor5to10drillholes:Mixtureofcoreandrotary
SchedulingwithDrillingCompanies
DrillingExpectedtoCommenceinQ12018
TERRACOTTAPROJECT– THEANOMALYHASHUGESCALE
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www.PureEnergyMinerals.com
PatrickHighsmith,President&[email protected]
303.317-6857
OTCQB:PEMIFTSXV:PE
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