EHR HR R Resou ources es Ltd (AS ASX:EHX) Un Unleas ashin ing V Valu lue f from om the W Wor orld ld’s Best Diamond P Projec ects Peter Ravenscroft Managing Director March 2020 1
Forward L d Looking ng S Statemen ents Certain information contained herein regarding EHR Resources Ltd, including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks, including but not limited to risks associated with mining exploration, operating costs, production costs, volatility of share prices, currency fluctuations, imprecision of resource and reserve estimates, environmental risks and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in any forward looking statements. Plans, intentions or expectations disclosed in any forward-looking statements or information should not be read as guarantees of future results or events, and will not necessarily be accurate indications of whether or when or by which such results or events will be achieved. Except as required by law, EHR Resources Ltd expressly disclaim any intention and undertake no obligation to update any forward looking statements or information as conditions change. 2
An ideal al t time f for investment i in a severel ely stressed s sector Share price trends show diamond company valuations at 3 year low Diamond exploration companies unable to function: market cap 70-90% down from 3-year high • capital raising at impractical level of dilution • unable to fund projects and no news flow • no relief from downward spiral • 3
Diamon Di ond s sector f or fundamentals An industry needing significant investment over next ten years Global Revenue 2019 US$ billions ($160B total) 2019 World Production – Total 142 Million Carats by country and by company Rough Exploration, 12 Other Production, Sales Diamonds Angola 9 9 Polished Cutting and Polishing, South 19 ALROSA Sales Russia Africa Diamonds Other 31 39 8 47 Diamond DRC Design and 51 17 manufacturing Jewelry De Beers Australia Canada 33 Rio Retail 13 24 Petra Botswana 78 Jewelry and Watches Tinto 4 Sales 25 19 Dominion 9 Significant Forecast Supply Shortfall • 2019 global production of 142 million carats for total revenue of ~US$12 billion Optimistic demand • Forecast supply shortfall in 2030 varying between 20% and 35% of world demand Base demand Optimistic • Need for additional 35-75 million carats per year from future mine supply projects Base supply • Current project pipeline forecast to add only 10-20 million carats by 2030 3x increase in exploration spend required now to meet industry demand Source: The Global Diamond Industry 2019 , Bain & Company 4
Value ue c creation o n opportun unity in u unloved i d indus dustry Exploiting a unique upside opportunity in an underfunded high-value sector Strong • A high growth commodity sector with forecast significant supply shortfall in next ten years fundamentals • Diamond project evaluation more complex than other minerals Unresolved opportunities • Historical funding models impatient and inappropriate awaiting • Premature curtailment commonly results in under-estimation of harvest project value • Many decades of large-company diamond project experience World-class management • Industry leading expertise on advanced valuation methods team • Backed by board with exceptional track record in value creation • New source of investment capital to diamond sector • Asset ownership of leading diamond projects via earn-in deals Breakthrough • Building of diverse portfolio providing risk-balanced pure-play strategy diamond investment vehicle • Formation of powerful new player in diamond industry 5
Emerging ng E EHX S Strateg egy A bold new strategy to transform the diamond sector • Identify incomplete evaluation programs on promising discoveries in Canada, Botswana, Australia Incubation funding • Carefully targeted funding will prove real value in many cases focused on • Project entry after discovery, at least microdiamond identification missed opportunities • Initial investment at relatively low cost (<$5-10M per project) • A portfolio of hand-picked 5-10 projects across different localities, development stages and varying risk profiles Managed risk through balanced • Dynamic portfolio management optimizes value and limits stagnation of pipeline portfolio • Project selection, portfolio management and investment governance based on extensive large company experience • Project selection and rigorous evaluation by industry-leading experts Leverage global • Comprehensive global project database for project benchmarking industry knowledge and technical • Clear understanding of risks/opportunities expertise • Leveraging uncertainty by superior knowledge and expertise • Asset-level earn-in to control position Patient capital • Focus on in-ground expenditure and low overhead invested in asset • Maximized investor returns by early asset sale or staged funding to PFS and beyond ownership • Ultimate evolution into pure-play diamond mining mid-cap 6
Bala lanced P Port rtfolio lio Managing risk through a diverse portfolio of hand-picked projects Bulk sampling of more advanced projects earn-in incubation funding of • stalled projects Project style JV partnerships with select owners • target deposits with high value control ownership of asset • • diamonds larger sized stones, colored • stones, higher qualities Core strategic Location focus, with higher/lower risk traditional diamond elephant • supporting country (Canada, Botswana, Australia) investments no high-risk jurisdictions • Scale mid-tier deposits that are not in • focus for majors Earlier stage generative Potential early cashflow potential district scale for future exploration • small low capex/opex development • value generation opportunities green/brown fields projects in • areas of unresolved opportunities continual monitoring of distressed • current operations project generator model with • leading diamond explorers equity positions or partnerships • 7
Nanuk nuk D Diamonds nds First project investment in Canada Recent • Acquisition of 100% of Nanuk Diamonds Inc Acquisition approved by shareholders 9 March 2020 • Abloviak Fjord, Torngat Peninsula, Quebec Remote • 1,650 km NNE of Montreal Location • Access by helicopter from Kangiqsualujjuaq (formerly George River, 100km) • 625 Mining Claims over 274 km 2 in Category III lands of New Quebec Territory 100% • Mining projects may be developed subject to Ownership environmental and social impact assessment and review • Several occurrences of diamond-bearing kimberlitic Known dykes Diamond • Originally found in early 2000’s but left unexplored Occurrence for last 15 years 8
Nanuk nuk D Diamonds nds An unresolved diamondiferous district 2018/2019 Nanuk Diamonds Inc • Sporadic exploration until 1999 work identified a number of new • Significant work by Twin Mining 1999- dykes and other targets of interest 2004 including mapping, sampling, bulk sampling. Exploration • Large microdiamond programs showing relatively coarse size distribution History • Bulk sampling (340 tonnes) in 2000 known pre 2018 produced 13 carats, largest stone 0.7 dykes in green carats, but relatively flat size new dykes distribution in purple • Apparent low grade, but no diamond price established 2019 surface • 2018 remote sensing showed expanded samples as red dots dyke potential and larger blows, Nanuk possible kimberlites Diamonds • Several circular features; targets Work identified 2018-19 • Results from 44 surface samples collected in 2019 expected Q2 2020 • Establish potential for greater scale Planned • High-definition airborne mag program Work and further surface sampling 2020 Program • Future drilling/sampling pending ongoing results 9
2020 Ou Outlook ook Steady implementation of strategy and early results anticipated • Already evaluating opportunities in Canada, Additional Botswana and Australia investments • Expect announcements of incremental transactions under evaluation over coming months Early drilling and • Summer work program planned at Nanuk sampling results • Other investments will include immediate drilling and expected bulk sampling • Initial investments will provide impetus to short-term growth in EHR Capital raising being considered • Additional funding required for ongoing investments in 2020 • Existing 18% JV holding in primary gold epithermal La Victoria target Project, Peru • Likely to continue to hold pending drilling permits An exciting new entrant into the diamond space 10
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