Investor Presentation May 2014 Chris Reed, Managing Director
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Disclaimer Summary information: This document has been prepared by Reed Resources Ltd (“Reed” or “the Company”) to provide summary information about the Company and its associated entities and their activities current as at the date of this document. The information contained in this document is of general background and does not purport to be complete. It should be read in conjunction with Reed’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. Forward-looking information: This document includes certain statements, opinions, projections, forecasts and other forward-looking information which, while considered reasonable by Reed, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results included in this document. Recipients of this document are cautioned that forward-looking statements are not guarantees of future performance – they must make their own independent investigations, consideration and evaluation of the opportunity to invest in the Company. By accepting this document, recipients agree that if they proceed further with their investigations, consideration or evaluation of the opportunity to invest in the Company, they will make and rely solely upon their own investigations and enquiries and will not in any way rely upon this document. Any statements, opinions, projections, forecasts and other forward-looking information contained in this document do not constitute any commitments, representations or warranties by Reed and its associated entities, directors, agents and employees, including any undertaking to update any such information. Except as required by law, and only to the extent so required, directors, agents and employees of Reed shall in no way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatsoever nature arising in any way out of, or in connection with, the information contained in this document. Financial data: All figures in this document are in Australian dollars (AUD) unless stated otherwise. Not financial product advice: This document is for information purposes only and is not financial product or investment advice, nor a recommendation to acquire securities in Reed. It has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making any investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Investment risk: An investment in securities in Reed is subject to investment and other known and unknown risks, some of which are beyond the control of Reed. The Company does not guarantee any particular rate of return or the performance of Reed. Investors should have regard to the risk factors outlined in this document. Competent Persons Statement: The information in this document that relates to “Barrambie Scoping Study Results”, “Mt Marion test work results”, “Barrambie Mineral Resource Estimates” and “Mt Marion Mineral Resource Estimates” is extracted from ASX Releases set out below. The Company confirms that it is not aware of any new information or data that materially affects the information included in the ASX Releases set out below, and in the case of estimates of mineral resources, that all material assumptions and technical parameters underpinning the estimates in those ASX Releases continue to apply and have not materially changed.
The Company confirms that all the material assumptions underpinning the production target and the forecast financial information derived from the production target in the Barrambie Scoping Study continue to apply and have not materially changed.
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Company Strategy
01
Focus on advanced mineral assets www.reedresources.com
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Demonstrate low-cost competitive advantage
03
Co-venture with strong partners to reduce operating and financial risk 3
Advanced materials Lithium
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AM Assets are inherently valuable 175
Mt Marion
Barrambie
Meekatharra
Market Capitalisation A$m
150
125
100
75
GFC
50
25
0 Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
RDR Goldindex (XGD)
www.reedresources.com Source: Datastream
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Mount Marion Lithium Project RDR 70%, MIN 30% (Fund and operate) www.reedresources.com
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Flythrough
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Captive Resource www.reedresources.com
Strategic Location
Mine Ready 8
Development strategy: de-risk with strong partners Target 30-40% RDR X%
RDR 70%
+ Mine Spodumene with Mineral Resources as operators www.reedresources.com
Low upfront capital
= Value add into Lithium Battery Materials
Integrated lithium producer
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Strong Partner for upstream Mineral Resources Ltd
are an ASX100 Listed Company worth +A$2 Billion (ASX: MIN)
Fund ‘sunk’ costs to Final Investment Decision (“FID”) and operate project from mine-to-port
Construct processing plant on Build-Own-Operate (“BOO”) basis, no upfront cost to Reed
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Whole of mine lifecycle services 10
Downstream Strategy
Demonstrate Technical Feasibility
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Demonstrate Consistent Quality
Partner Qualification
Commercialisation
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Scaling Up a New feed for a Mature Technology Chlor Alkali
Conventional process produces NaOH
RIM Process
Our new process produces Li OH
Li OH
Na OH POWER H2O
Li20 H2
+
Na Cl
+
POWER H2
H Cl
Li Cl Cl2
Cl2
Na Cl
Proof of concept ďƒž Semi-pilot in progress
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Chlor-alkali Cell
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Comparison Results Battery grade specifications with leading lithium hydroxide monohydrate producer Items
FMC
RIM Results
LiOH.H2O % Min Fe ppm Na ppm K ppm Cl ppm Ca ppm Al ppm Ni ppm Si ppm
56.5 ≤5 ≤20 ≤10 ≤20 ≤15 ≤10 ≤10 ≤30
57 3 8 3 15 9 1 10 <30
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Source:http://www.fmclithium.com/Portals/FMCLithium/content/docs/DataSheet/QS-PDS-1021%20r1.pdf
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Flowsheet cost process Operating advantage Competitors
Input Price US$5,000/t x1
Lithium Brine
Lithium Carbonate Technical Grade
Lithium Carbonate Battery Grade
Cost US$5,700/t
Input Price US$350/t x 7.5 Final Product LiOH Battery Grade
Spodumene
Chlorination Purification Electrolysis
Final Product LiOH (BG)
Cost US$3,900/t
www.reedresources.com Sources: SQM (Brine Flowsheet) and Reed internal analysis including 2012 Pre-feasibility Study. All prices are FOB Basis.
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Capital cost advantage Capital Efficiency (US$/ Production tonne LCE per annum) 25,000 US$/MT
20,000
LiOH Plant
15,000
10,000
Li2CO3 Plant
5,000
LiOH Li2CO3
0 Brine-based expansion
Brine-based new project
Spodumene-based new project
www.reedresources.com Sources: FMC Corporate Presentation 2011, Reed Pre-feasibility Study 2012, Reed management analysis
RIM Capex 2012 PFS
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Leverage to a Megatrend rechargeable Li batteries Li2CO3 LI2CO3
11,000
350,000
10,000
300,000
9,000
250,000
8,000
Current Price US$7,500
200,000
7,000
150,000
6,000
100,000
5,000
50,000
0
Demand in metric tonnes of lithium carbonate equivalent (LCE)
LiOH Price US$ per tonne
LiOH
0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
LiOH: Lithium hydroxide Li2CO3: Lithium carbonate
www.reedresources.com Demand & Price Forecast Source: signumBOX
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Near-term milestones
Proof Of Concept
Commence Semi Pilot Plant Testwork
Complete Semi Pilot Plant Testwork
March 2014
Operating & Capital Costs Anticipated
Attract LiOH JV Partner
Continue to prove technical feasibility, product quality
Nov 2013
Commence Engineering Cost Study
June Q2014
Dec Q2014
Subject to RIM board approval
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Barrambie Titanium Project
100% RDR www.reedresources.com
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Flythrough
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Development strategy: de-risk with strong partners Target 30-40% RDR X%
RDR 100%
+ Mine, Crush, Truck Very low capex
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Low upfront capital
= JV with Ti industry partner High capex
Integrated titanium producer
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99.9% Pure TiO2 from Ground Ore Competitors
Rutile or Synthetic Rutile
Chlorination & Purification
Final Product Fine Pigment
www.reedresources.com Source: Snowden Scoping Study 2013 and Reed management analysis
ROM Ore
Chlorination & Purification
Final Product Fine Pigment
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Flowsheet
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Potential lowest quarter operating costs Competitors Input Price US$1,000/t X1.2t
Rutile
Chlorination & Purification
Input Price US$150/t X 4t Final Product Fine Pigment
Cost US$1,900 2,100/t
ROM Ore
Chlorination & Purification
Final Product Fine Pigment
Cost US$1,214/t
Proof of concept ď&#x192;ž Mini-pilot in progress www.reedresources.com Source: Snowden Scoping Study 2013 and Reed management analysis
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Scoping Study Results Annual Production
13,000t TiO2 300t V2O5
Life of Mine (LOM)
27 years
Life of Mine (LOM) Revenue Pre-tax Cashflow Pre-tax NPV (12% discount rate) Pre-tax Internal Rate of Return Average Net Operating Cost per tonne of recovered TiO2
A$ 1,143 million A$ 516 million A$ 87 million 24% A$ 1,214
Total initial capital costs
A$ 109 million
Payback of capital costs
4 years
Assumes US$3,000/t TiO2 and US$11,000t V2O5 and AUD:USD parity CAUTIONARY STATEMENT The Scoping Study referred to in this report is based on low-level technical and economic assessments, and is insufficient to support reporting of Ore Reserves using recognised codes or guidelines or to provide definitive assurance of an economic development case, or to provide certainty that the conclusions of the Scoping Study will be realised. www.reedresources.com
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Strong Ti Demand and Price 12000
4000 3500
10000
3000 8000
2500 TiO2 Price
6000
2000 1500
TiO2 Demand
4000
1000 2000
500
0
TiO2 Price US$ per metric tonne
TiO2 Global Demand ()volume tonnes
TiO2 Demand vs Price
0 1980
1985
1990
www.reedresources.com Source: US Geological Survey, Industrial Minerals and TZMI Data
1995
2000
2005
2010
2013
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Strong long term fundamentals Developing Economies Pigment Use Growing with GDP 5
Pigment (Kg) Person
4
North America
3
Europe 2
Japan China
1
Global India
Asia
0 5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
REAL GDP/CAPITA (US$)
www.reedresources.com Source: Iluka
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Commercialisation timeline Test Work
Evaluation
2012
2013
2014
2015
1.
3.
5.
Bench scale
Mini-pilot
Pilot
2.
4.
6.
Scoping Study
Pre Feasibility Study
Definitive Feasibility Study
Subject to Board Approval www.reedresources.com
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Near-term milestones Scoping Study +/- 35% accuracy
Obtain technology licence
Mini-pilot plant
Commence Prefeasibility
Pre Feasibility Study
Study
Results
Attract JV Partner
Nov 2013
Dec 2013
Aprâ&#x20AC;&#x201C; Jul 2014
Aug 2014
Dec 2014
Subject to board approval
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Financial Resources
www.reedresources.com www.reedresources.com
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Rebuilding the Balance Sheet
Cash at Bank
Comet Vale
Market Cap
Meekatharra
$8.7M [31 March 2014]*
$15M @ 3¢ per share
$2M cash sale, majority settlement before end June 14
$3.4 M cash + cancellation of 24M RDR shares**, settlement est 30 June Mt Finnerty Iron next
* Includes $6.2M of restricted access term deposits www.reedresources.com
** Subject to shareholder approval
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Focus www.reedresources.com
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Objectives for CY2014
01
Demonstrate technical feasibility www.reedresources.com
02 Demonstrate economic viability
03 Obtain Strong partners to commercialise 33
AM Assets are inherently valuable 175
Mt Marion
Barrambie
Meekatharra
Market Capitalisation A$m
150
125
100
75
GFC
50
25
0 Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
RDR Goldindex (XGD)
34 Source: Datastream
Thank you www.reedresources.com www.reedresources.com
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