Sheffield Resources

EXECUTIVE INSIGHT LEADING THE PROFESSIONAL CHARGE

SUMMER 2022

SHEFFIELD

RESOURCES Strong Foundations For a Strong Future SHEFFIELD RESOURCES, FOCUSED ON THE DEVELOPMENT OF ITS FLAGSHIP THUNDERBIRD MINERAL SANDS PROJECT, THE WORLD’S LARGEST ZIRCON RESERVE, HAS SECURED KEY ELEMENTS OF THE FINANCING REQUIRED TO MOVE FROM CONSTRUCTION TO PRODUCTION

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Strong Foundations For a Strong Future Sheffield Resources, focused on the development of its flagship Thunderbird Mineral Sands Project, the world’s largest zircon reserve, has secured key elements of the financing required to move from construction to production.

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heffield Resources is an emerging mineral sands company with assets located within the state of Western Australia; it is actively progressing its Thunderbird Mineral Sands Project located midway between Broome and Derby in northern Western Australia, a low-risk mining jurisdiction with close proximity to Asian markets.

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Thunderbird is one of the largest and highest-grade mineral sands discoveries in the last 30 years and contains the largest zircon’s reserves globally. The 2022 Bankable Feasibility Study shows Thunderbird is set to generate strong cash margins from globally significant levels of production over a decades-long mine life.

Thunderbird is owned by Kimberley Mineral Sands Pty Ltd (KMS), a 50/50 joint venture between Sheffield Resources and YGH Australia Investment Pty Ltd (Yansteel), formed in 2021 to develop the project.

The joint venture is governed by a four-person Board of Directors with Sheffield and Yansteel each nominating two directors and operates as a standalone entity with its own management and employees, with key decisions requiring the unanimous approval of both shareholders.[I am not sure this adds that much. Either move it to the back or leave out?]

Long-term potential Bruce Griffin, Chairman of the Board, de4

scribes the latest developments: “We finished the latest bankable feasibility study back in March. And in April, we secured funding from the Northern Australia Infrastructure Facility (NAIF), which offered financial assistance of up to A$160 million to support the development of the Thunderbird Mineral Sands Project. Combined with the A$130m equity contributed by Yansteel when we formed KMS and a commercial debt facility currently being finalised, this will allow us to commit to full construction in 2H 2022, with the aim of delivering the first production in early 2024.”

Bruce had been familiar with the project for a long time before being asked to join as Commercial Director in 2020 and became Executive Chairman in April 2021. He explains that Thunderbird will generate a high-quality suite of mineral sands concentrate products, including a zircon concentrate and a magnetic concentrate that contains high-quality ilmenite suitable for smelting into chloride slag or for manufacturing

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titanium dioxide pigment.

“Those two are the main two sort of minerals that tend to be found in these types of deposits, and we have a little bit of rare earths as well.

Our main product by volume, i.e., about 70%, is magnetic concentrate.”

“However, the main product by value is zircon concentrate, that – at long term prices ($1,500 a tonne) – will account for about 65% of our revenue,” he says, pointing out that Thunderbird’s reserve is about 50% larger than the next largest producing mine, thus representing a globally significant zircon reserve.

Yansteel is currently building a smelter and pigment plant in China and has concluded a take or pay offtake agreement for 100% of the magnetic concentrate from Stage 1. This mitigates the potential market risk associated with producing a magnetic concentrate rather than the final ilmenite product.

Both zircon and ilmenite have a wide range of uses across a variety of industries, from foundries and construction to food and pharma and many more, with the largest markets being Europe and China.

Entwined in local environment Bruce affirms that sustainability is firmly embedded in KMS’s business strategies and decisions,

Proudly developing the Thunderbird Project with Sheffield Resources Limited

Project success at the earliest opportunity

Feasibility Studies | Engineering and Procurement Construction and Commissioning | Asset Management Project Management | Consulting Services gres.com.au careers.gres.com.au Perth +61 8 6272 6000 Brisbane +61 7 3838 8000

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Needless to say, our suppliers have played a key role in the project progression

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with a view to maximising the inter-generational local employment, business and regional development prospects arising from the project, as well as actively managing heritage, conservation, environmental and rehabilitation activities.

The project has full state and federal environmental approvals granted, and specific strategies have been identified, including Greater Bilby management plans not to disrupt the specie’s habitat, and rehabilitation throughout the mine life.

Addressing the climate change challenge has been high on the agenda: in 2017 CO2 baseline emissions were estimated at 11mt CO2e (40+ year life of the project), and there is a clear opportunity to add renewable energy to gas generation, as well as longer-term initiatives to reduce emissions being identified, including deployment electric haul trucks.

In addition to environmental matters, a

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major part of the project is the commitment to local communities. “We don’t want to remain outsiders, we want to become part of the community and contribute to its development,” says Bruce.

He explains that the company has a co-existence agreement in place with regard to the Aboriginal population living in the area, targeting 40% aboriginal employment by Year 8 of operations. An Aboriginal Training Fund has also been established to support employment.

“We have set ourselves high standards in safeguarding Aboriginal heritage. For us, the relationship with our traditional owners is very important, and we want the local community to be confident that the mine is not only about jobs for the current generation for them, but for the next one as well. Amongst other things, we aim to provide Aboriginal business support via supply and contract opportunities, and the traditional owners will be paid cash royalties over the 37-year mine life.”

On the way to production While the site is in a remote area, it is still within commutable distance from the regional centres, an important factor for employment. Stage 1 construction is anticipated to support about 350 jobs. During operations KMS is targeting a drive in, drive out workforce of 350 within the Kimberley region.

“Needless to say, our suppliers have played a key role in the project progression,” says Bruce. “Contract Power Australia and Woodside EDL will supply the energy, and of course, GR Engineering Services Limited has been awarded the Engineering, Procurement and Construction contract in March. There are far too many valued business partners that have enabled project development to mention here, but credit goes to them all.”

He reflects that overall, the project is well on schedule. Onsite activities continued throughout the first quarter of 2022, focused on village, office and site earthworks. Reflecting on the months ahead, he acknowledges that KMS is now in the final stages of putting together the financing to move into construction.

“The value of the overall project is about 1.3 billion Australian dollars, with a total rate of return of about 27.5% which is very good. Project financing activities to support a Final Investment Decision are nearing completion, which should happen in the middle of 2022. Given the Yansteel equity, NAIF debt facility and expected commercial debt, Sheffield Resources currently expects to only have to contribute A$36m in equity to enable a Final Investment Decision. By the end of this year, we want to be well on our path to being in production.”

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