ASX:SVM ASX:SVM MAY 2017
TARGETING A SIMPLE & PROFITABLE FLAKE GRAPHITE OPERATION. 1.Very low operating costs. 2.Very low capital costs. 3.Entry to existing and developing markets. 4. A simple mining & processing strategy. 1
TARGETING VERY LOW OPERATING COSTS Saprolite is the very soft, graphite-bearing, clay-rich oxide material that is formed from intense weathering of the original bedrock. Malingunde is the world’s largest reported saprolite-hosted graphite resource: Total: 28.8Mt @ 7.1% TGC (4.0% TGC cut-off) High-grade: 8.9Mt @ 9.9% TGC (7.5% TGC cut-off) Near surface with free dig mining, low strip ratios and a simple flow sheet will equate to low cost production. Almost all graphite peers are hosted in hard rock. 2
TARGETING VERY LOW CAPITAL COSTS Low strip ratio and high grades will enable small mining fleet and process plant. The very soft material allows a very simple process plant. No requirement for primary crushing or grinding circuit. All plant and equipment is “off the shelf”. 3
ENTRY TO EXISTING AND DEVELOPING MARKETS as the benchmark in quality. FLAKE SIZE & PURITY Source: Canaccord Genuity, Company estimates, Magnis company presentation attractive upside. Entry to Li-ion battery markets retained as OVERALL NATURAL GRAPHITE DEMAND (kt) Magnis Resources; considered by many analysts industrial) account for ~80% of existing market. Very high quality product is comparable to Traditional uses (refractory, expandable & other risk; not reliant on Li-ion battery demand. Entry to existing traditional markets reduces 2,500 Batteries ~40% Traditional 2,000 1,500 ~20% ktpa 1,000 500 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Ave. 98.6% Ave. 98.9% conc. grade conc. grade 100% Flake size distribution <150µm 80% 60% >150µm 40% 20% >300µm 0% Malingunde Nachu (Sovereign) (Magnis) 4
PURSUING A SIMPLE MINING & PROCESSING STRATEGY. ~30% $100M $50M - CAPEX PROCESSING MINING & ~70% NPV SPHERICAL PLANT OPERATE CONSTRUCT & PEERS SPHERICAL OF NPV SVM OF NPV 100% PROCESSING MINING & Source: Macquarie Research, Company Announcements PROCESSING STRATEGY focused pathway to development. Strategy provides a clear investment case and class margins. Low cost and high quality products achieve best in technical and financing risk. No downstream capital requirement reduces Sole focus on profitable mining & processing. ! 5
SOVEREIGN'S HIGH QUALITY PRODUCT LIMITS THE IMPACT OF POTENTIAL NEW SUPPLY. SVM FLAKE SIZE DISTRIBUTION HIGH LOW Source: SVM and SYR Company Announcements 31% 71% SYR SVM PRODUCT % HIGH VALUE 6% AMORPHOUS 46% 23% SMALL 23% 7% MEDIUM 11% 27% LARGE 12% 28% JUMBO 8% 9% SUPER JUMBO 0% SYR PRODUCT VALUE 6
MALINGUNDE PROJECT DETAIL
DOMINANT GROUND POSITION IN THE WORLD-CLASS EAST AFRICAN FLAKE GRAPHITE PROVINCE. Immense upside for further discoveries of saprolite-hosted flake graphite across the large (3,788km 2 ) and 100%-owned tenement package. 8
MALINGUNDE: A LONG-LIFE, LOW-COST, TIER-1 ASSET. Saprolite Mineral Resource Estimate: 28.8Mt @ 7.1% TGC (4.0% TGC cut-off) High Grade Component: 8.9Mt @ 9.9% TGC (7.5% TGC cut-off) 80% indicated; 20% inferred 3.4KM STRIKE 9
INITIAL METALLURGY RESULTS. Jumbo Super jumbo Small Amorphous Results from the initial flotation test (µm) Mesh Tyler Category Flake (wt. %) Distribution (%) C PARTICLE SIZE MALINGUNDE 2017 FLOTATION RESULTS – TEST #F18 hard-rock crushing and milling. operational cost benefits over traditional Potential for significant capital and crush or grind. grading above 98% C(t). flake size fractions, consistently High grade concentrate across all jumbo and large size fractions (i.e. concentrate in the super jumbo, Large flake ~55%-78% of the program on this material showed: Large-Medium + 149µm). Simple process flowsheet – no primary +32 +500 99.0 9.1 + 48 + 297 98.8 27.5 98.2 34.1 -48 + 100 - 297 + 149 99.0 23.1 -100 + 200 - 149 + 74 98.3 6.2 -200 - 74 TOTAL 98.6 100.0 10
MALINGUNDE: A TIER 1 GRAPHITE DEPOSIT. IMAGE CENTRE: Mining of saprolite-hosted graphite deposits in Madagascar. Source Stratmin/Bass Metals (ASX:BSM) IMAGE BOTTOM: Attrition scrubber of the type that could be used for a saprolite-hosted graphite operation. Simple processing with no primary crushing and grinding – substantial capital and operating cost advantages. Excellent quality concentrates produced via a simple flowsheet – metallurgical consistency & processing simplicity. World’s largest reported saprolite resource – including a significant high grade component. Free-dig mining and low strip ratios with mineralised material at or near surface – very low overall mining costs expected. 11
Capitalisation * VOLUME (M) Current Shares on Issue * CAPITAL STRUCTURE Cash (31 March 2017) Unlisted Options Source: ASX as at market close 3 May 2017 PRICE (AUD) * As at 3 May 2017 Performance Rights ASX : SVM SHARE PRICE MOVEMENT MARKET INFORMATION. SHAREHOLDERS Un-Diluted Market 217,329,083 0.16 16 15,216,667 ($0.10 to $0.47) 1,400,000 0.14 14 $4M PLACEMENT TO MAIDEN RESOURCE SOPHISTICATED ANNOUNCEMENT A$21.7 m INVESTORS 0.12 12 ~A$2.8 m 0.10 10 0.08 8 Director and 0.06 6 Vendors 20% 0.04 4 7% Funds and institutions 0.02 2 28% 0.00 0 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr HNW 12
COMPANY Source: ASX Scoping Feasibility Development Conceptual (ASX CODE) MASSIVE VALUATION UPSIDE. As at market close 3 May 2017 Feasibility Undiluted Market Capitalisation (A$M) Mozambique Tanzania Country Tanzania Malawi Australia Mozambique $650 $307 SIGNIFICANT NEWSFLOW AHEAD – SCOPING STUDY DUE SHORTLY $41.2 $39.5 $37.0 $21.7 SVM HXG TON KNL MNS SYR 13
RESOURCE STUDY Ongoing Commenced FOR MALINGUNDE. FORWARD PLAN AND NEWS FLOW and Vale) have commenced. concessionaire (consortium including Mitsui & Co Discussions with Nacala Corridor port & rail LOGISTICS activities ongoing. well advanced. Further product marketing Discussions with potential offtake partners are OFFTAKE Malingunde JORC resource estimate delivered. Nature and scope of next phase of study to be assessed at completion of Scoping Study. NEXT PHASE OF TEST-WORK Complete SCOPING STUDY To examine initial economic parameters for producing graphite from soft saprolite ore at potential offtake partners. DOWNSTREAM Malingunde. Spherical graphite test-work program for Li-ion battery anode suitability. Development of expandable graphite products. FURTHER METALLURGY Bulk scrubber test-work and production of larger quantities of concentrates for evaluation by Ongoing 2017 Q1 Q2 Q3 Q4 14
MANAGEMENT TEAM WITH A with over 20 years projects within Western roles on gold and uranium resource development various exploration and exploration. He has held experience in mineral Mr Wheeler is a Geologist Philippines. Mr Wheeler Flake Graphite Projects. discovered the Malawi led the team that flake graphite projects. He and secured the Malawi Malawi. Julian identified Australia and the was a co-discoverer of the spent 10 years working on LLC. Mr Allen previously transactions. and industrial several major resource Services, completing Transaction Advisory worked for Ernst & Young Limited and Oyu Tolgoi Malawi Flake Graphite senior roles with Rio Tinto experience, including years commercial Accountant with over 10 Mr Allen is a Chartered Project. minerals projects in commodity types who has PROVEN TRACK RECORD OF SUCCESS. Business Development Mining for more than ten Executive for Normandy was a Senior Group Chartered Accountant and Mr Middlemas is a Manager DOMINIC ALLEN Australia’s largest gold Technical Manager MATTHEW WHEELER Managing Director JULIAN STEPHENS Chairman IAN MIDDLEMAS years, which was miner (+2m ounces per exploration across many previously Chairman of experience in mineral with over 20 years Dr Stephens is a Geologist Resources Limited. Limited and Mantra Papillon Resources Mr Middlemas was also annum) before merging listed resource companies. and a number of other Berkeley Energia Limited Salt Lake Potash Limited, is currently Chairman of with Newmont Mining. He 15
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