Transcript Industrial Minerals Canada

Industrial Minerals Canada
The Power of Graphite
June, 2009
FORWARD LOOKING STATEMENTS
This Presentation may contain “forward-looking information” which may include,
but is not limited to, statements with respect to: timing of the receipt of
governmental approvals and/or acceptances; targets, estimates and assumptions
in respect of production and prices; amount and type of future capital
expenditures and capital resources; mineral reserves and mineral resources;
anticipated grades; recovery rates; future financial or operating performance;
costs and timing of the development of new deposits; costs, timing and location of
future drilling; production decisions; costs and timing of construction; operating
expenditures; costs and timing of future exploration; and environmental and
reclamation expenses. There can be no assurance that future required regulatory
approvals will be obtained or that anticipated transactions or proposed work and
construction programmes will be completed satisfactorily. Often, but not always,
forward-looking statements can be identified by the use of words such as “plans”,
“expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates”, or “believes” or variations (including negative
variations) of such words and phrases, or state that certain actions, events or
results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company and/or its subsidiaries and/or its affiliated companies to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Although the Company
has attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended. Forward-looking statements
contained herein are made as of the date of the applicable public record document
which the information is derived from and the Company has disclaimed any
obligation to update any forward-looking statements, whether as a result of new
information, future events or results or otherwise. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements due to the inherent uncertainty therein.
Investment Highlights
• Growing industrial demand (BRIC)
• Developing strategic applications-green initiatives
• Supply issues in China (70% of world production)
• Only major North American producer closing
• Large, high quality 43-101 graphite resource
• Good location, low stripping ratio, simple metallurgy
• Letters of intent for > 200% of annual production
What is Graphite?
• A natural form of carbon (e.g coal, diamonds)
• Excellent conductor of heat and electricity
• Highest natural strength/stiffness
• Lightest weight of all reinforcements
• Maintains stability over 3,600 degrees C
• Resists chemicals
• High Lubricity
What is it used for?
Traditional Applications
REINFORCING COMPONENT
•
•
•
•
•
Steelmaking
Refractories (high temperature liners)
Brake and clutch materials
Gaskets
Plastics
ELECTRICAL AND THERMAL CONDUCTIVITY
• Batteries
• Semiconductors
• Carbon brushes and bearings
LUBRICATION
• Oils and greases, powdered metals, foundry
What is it used for?
Hi Growth Strategic Applications
• Lithium ion batteries in electric vehicles
• Fuel cells
• Nuclear reactors
• Solar technology
• Semiconductors
• LCD and LED displays
Lithium Ion Battery Demand
• LIBs used in cell phones, lap tops
• Graphite key component in battery electrodes
• Lighter and smaller than NiMH batteries
• Higher voltage, more power, longer life
• 11kg of graphite in a hybrid electric vehicle (HEV)
• Over 60M cars/yr and less than 2.5% are HEVs
HEV Market Share
Source: greencarcongress.com
Li Ion batteries in the news….
Congressional stimulus bill includes tens of billions of dollars in loans, grants, and
tax incentives for battery and HEV research and manufacture to jump-start US
industry…
Toyota has a goal of reaching global annual sales of 1M hybrid vehicles after
2010…battery joint venture with Matsushita Electric will start producing longerlasting lithium-ion batteries in 2009 as it aims to roll out more electric cars…
Sanyo plans to start two auto-use lithium-ion battery plants in Japan by July
2010 …
No matter where you are in the world, lithium-ion batteries are seen as a huge
part of the future of the automotive industry and companies are clamoring to
invest in their future…
Boston Power pursuing $100M in Federal Funds for Li-Ion Plant in Massachusetts
Michigan awards $544M in tax credits to four battery companies with plans to
invest more than $1.7 billion in Li-ion manufacturing facilities in the state…
The National Alliance for Advanced Transportation Batteries has selected a site in
Kentucky to build a more than $600M automotive lithium ion battery plant…
Pebble Bed Modular Reactors
• Small scale, high temperature reactors
• Less costly to build and operate
• Water cooling system not required
• No large containment building
• Fuel is uranium embedded in graphite balls
• Each requires 100t of graphite plus 20-30 tpa
• China committed to nuclear, first prototype built
• 30 PBMR plants (6GW) by 2020
• 300GW of nuclear by 2050 including PBMR
Graphite Prices
1600
1400
$ per tonne
1200
1000
Large +80
800
Medium +100 to -80
Fine -100
600
400
200
0
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
• No standard spot price, negotiated between buyer and seller
• Quoted prices represent longer term averages
• Prices increase with flake sizes and carbon content
The Market
• 1 million tonnes per year demand
• 70% of production from China
• Increasing costs (labor/environmental issues)
• Declining quality (high grading and smaller flake sizes)
• Exports restrictions and export taxes
• Security of supply issue
• Lack of new mine development
• Only North American producer to close
“As a result of increasing regulation in China and a
corresponding shortage of the raw material, the market for
natural graphite is dramatically changing. Demand is
increasing and significant price increases can be observed. “
Graphit Kropfmühl AG
Bissett Creek Property
• 100% owned
• Proximity to markets, good infrastructure
• 8,400m of drilling in 242 holes
• Full feasibility completed in 1989
(Kilborn, Bacon Donaldson, Comminco Engineering)
• 43-101 Preliminary Assessment in 2007
Bissett Creek Resources
•
Indicated Resources
14.6Mt @ 2.24%C at 1.5% cutoff
•
Inferred Resources
18.0 Mt @ 2.21%C at 1.5% cutoff
•
40 Year Mine Life
•
Only 10% of property drilled to date
Bissett Creek Resources
Flake size
% of Production
Mesh Size
Micron range
Grade
designation
30
>35
>500
Super large
40
<35>48
300-500
Extra large
20
<48>80
180-300
Large
10
<80
<180
Medium
A human hair is 100 microns thick. A dime is 1400 microns thick
Bissett Creek Economics
• $60M Capital Cost
• 94% recovery with standard flotation
• 2,500tpd processing rate
• 19,000 tonnes of graphite produced per year
• 0.66 waste to ore ratio
• 10% mining dilution
Bissett Creek Economics
43-101
NPV
$88.1 million (10%)
IRR
28%
Payback
4 years
Financing Requirements
MCP permitting and monitoring
Pilot plant
Drilling
Feasibility
Metallurgical testing
Public company costs
Payables/loans
TOTAL
$350,000 FT
$1,500,000 ?
$750,000 FT
$500,000
$300,000 FT
$1,000,000
$500,000
$4,900,000
Directors/Management/Advisors
Gregory Bowes
B.Sc. (geology), MBA
Iain Scarr
B.Sc. (geology), MBA
George Hawley
Research chemist/physicist
Chris Crupi
CA
John Carter
Project Manager
Bob Dinning
CA
Senior VP, Orezone Gold Corporation
30 years with Rio Tinto, Commercial Director and VP Exploration, Industrial minerals
division
40 years of experience in Industrial Minerals in research, process and product
development, market analysis and development
President/Director of Paramount Gold & Silver (PZG:TSX, NYSE.A)
30 years of experience in design, fabrication and installation of mineral processing
equipment, former President of Minpro International
Management consultant with 35 years of experience with various public and private
companies
Summary
• Large, established resource, close to markets
• Hi quality, low strip ratio, simple metallurgy
• Growing demand (BRIC plus LiI batteries)
• Supply concerns with China
• Will be only major North American producer