MTS
Mineral Transport System Webcast February 20141
Important notices This document is produced for information only and not in connection with any specific or proposed offer (the “Offer”) of securities in Sirius Minerals Plc (the “Company”). The information and opinions contained in this presentation are provided as at the date hereof and are subject to amendment without notice. This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on directly or indirectly or published in whole or part for any purpose. This document is provided to recipients on the basis that they keep confidential any information contained herein or otherwise made available, whether orally or in writing, in connection with the Company. This document does not constitute an offer to buy or to subscribe for, or the solicitation of an offer to buy or to subscribe for securities in the Company and does not constitute or form part of a prospectus. No reliance may be placed for any purpose whatsoever on the information, representation or opinions. Any decision to purchase or subscribe for securities in the Company in connection with any offer should be made solely on the basis of the information contained in a prospectus on the Company or such other subscription document which may be published in due course and any acquisition of securities in the Company should be made on the basis of the information contained in such document. Neither the issue of this document nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company, Macquarie Capital (Europe) Limited (“Macquarie”), Liberum Capital Limited (“Liberum”) or Citigroup Global Markets Limited (“Citi”) be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this document, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this document or to correct any inaccuracies in, or omissions from, this document which may become apparent. This document should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers (including, without limitation, Macquarie, Liberum, or Citi). Each party to whom this document is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. Information in this document must not be relied upon as having been authorized or approved by the Company, Macquarie, Liberum, or Citi. Neither the Company nor Macquarie nor Liberum nor Citi nor any other person makes any guarantee, representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this document. None of the Company, Macquarie, Liberum or Citi accept any liability howsoever for any loss arising from this document or contents or otherwise arising in connection therewith. Investors based in the United Kingdom This document is being issued in the United Kingdom to the limited classes of person described below by the Company, namely only to persons falling within one of: Investment professionals falling within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ("FPO") namely authorised firms under the Financial Services and Markets Act 2000 ("FSMA"); persons who are exempt in relation to promotions of shares in companies; persons whose ordinary activities involve them investing in companies; governments; local authorities or international organisations; or a director, officer or employee acting for such entities in relation to investment. High value entities falling within Article 49 of the FPO, namely body corporates with share capital or net assets of not less than £5 million (except where the body corporate has more than 20 members in which case the share capital or net assets should be not less than £500,000); unincorporated associations or partnerships with net assets of not less than £5 million; trustees of high value trusts; or a director, officer or employee acting for such entities in relation to the investment. Persons who are certified sophisticated investors falling within Article 50 of the FPO, namely persons who have, within the last 3 years, received a certificate in writing from an FSA authorised person to the effect that the person is sufficiently knowledgeable to understand the risks associated with shares in an AIM quoted company and who has signed within the last 12 months a statement in relation to shares in AIM quoted companies that they accept that promotions such as this may not have been approved by an FSA authorised person and that the promotion may therefore not be subject to controls which would apply if the promotion were made or approved by an FSA authorised person. The distribution of this document to any person in the United Kingdom not falling within one of the above categories is not permitted by the Company and may contravene the FSMA. No person falling outside these categories should treat this document as constituting a promotion to him or rely or act on it for any purposes whatsoever. Any person who is in any doubt about investing in the Company should consult a person authorised by the Financial Services Authority specialising in investments including investments into listed companies.
Investors based in the United States No securities in the Company have been, or will be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”), or qualified for sale under the law of any state or other jurisdiction of the United States of America and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. This presentation is directed only at, and may only be communicated to, (i) persons that are outside the United States within the meaning of Regulation S under the US Securities Act or (ii) inside the United States to persons that are either “qualified institutional buyers” within the meaning of Rule 144A under the US Securities Act or “accredited investors” as defined in Regulation D under the US Securities Act. Neither the United States Securities and Exchange Commission (“SEC”) nor any securities regulatory body of any state or other jurisdiction of the United States of America, nor any securities regulatory body of any other country or political subdivision thereof, has approved or disapproved of the securities or passed on the accuracy or adequacy of the contents of this document. Any representation to the contrary is unlawful. To ensure compliance with United States Department of the Treasury Circular 230, recipients of this document are hereby notified that: (a) any discussion of United States federal tax issues in this document is not intended to be relied upon, and cannot be relied upon, for the purpose of avoiding penalties that may be imposed under the United States Internal Revenue Code and (b) recipients should seek advice based on their particular circumstances from an independent tax advisor. Investors based in other jurisdictions The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. QUALIFIED PERSONS The information in this document that relates to Mineral Resources is based on information compiled under the direction of Dr Mike Armitage C Eng, who is a Member of the Institute of Materials, Minerals and Mining which is a ‘Recognised Overseas Professional Organisation’ (ROPO) included in a list promulgated by ASX from time to time. Dr Armitage is a full time employee of SRK Consulting and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code) and for the purposes of the AIM Rules. Dr Armitage has reviewed this document and consents to the inclusion in the document of the matters based on his information in the form and context in which this appears. Graham Clarke, Operations Director for the Company, who has reviewed this presentation, has over 26 years’ experience in the potash mining industry. He has a Degree in Mining Engineering from the University of Nottingham, is a Fellow of the Institute of Materials, Minerals and Mining and extensive operational experience gained at Cleveland Potash Limited in the mining of the Boulby Potash seam and the exploration and development of the upper Fordon Polyhalite seam.
2
Highlights
Significant value increase and reduced risk
Reduced operating costs and increased capacity
70% reduction in surface construction footprint across project
70% reduction in new buildings in the National Park
Removal of construction from designated environments 3
Situation overview New transport system significantly reduces impact and increases project value Ongoing work to improve the York Potash Project Continued commitment to the most sustainable and low impact development Extensive analysis of improvements while preparing for new approvals application Largest area of disturbance was the construction of the pipeline Consultation on the pipeline raised queries about construction and operating parameters Opportunities to address key impacts Two solutions to the issues identified to mitigate or remove these impacts and risks: 1) Revised pipeline with additional system features and construction impacts 2) Construction of permanent underground infrastructure for the dry transportation of minerals to Teesside (Mineral Transport System or MTS)
The MTS selected as the new transport solution for the York Potash Project
York Potash Project greatly enhanced by MTS 4
Mineral Transport System (MTS) – Overview Project value significantly increased with reduced risk An
improved environmental solution 70% reduction in construction impact across whole project Major reduction of construction impact in the National Park No construction in designated sites
A major operational value enhancement Technically feasible and low risk transport solution Significant reduction in operating costs (~US$10/t); US$280m increase in the capital cost estimate for Phase 1 (pre-contingency) Increased shaft hauling capacity (Phase 1 potentially up to 6.5mtpa) Opportunity to expand product offering
Typical mine development with high capacity conveyor
Construction simplification and de-risking Reduced construction risk Reduced interface risk
Illustrative tunnel fit-out 5
Revised development plan
services
6
MTS construction overview Five access points to maintain safety, reduce impact and retain schedule
Construction utilising Tunnel Boring Machines and continuous mining equipment approximately 120 to 360 metres below ground level Tunnel constructed as a mining development “drive” for conveying of dry minerals Route has consistent geological strata from mine to port Mining equipment used could be re-tasked into mine operations – a potential synergistic capital saving Multiple access points maintain schedule for first ore from mine in mid 2018 and reduce impact at any single location
Tunnel Boring Machine (“TBM”)
Typical Continuous Miner
7
MTS access points Optimal solution to minimise impact and reduce construction period
Access points serve multiple purposes
Emergency egress and ventilation points Construction access to minimise timeline and reduce impact Removal and landscaping of excavated material Maintenance access points
Five access points, one at each end and three in between – only one additional in the National Park Each site includes a basic shaft enabling efficient access to the tunnel Shafts will be covered by a small agricultural style building, once in operations Excavated material from the shafts and the tunnel to be landscaped in close proximity to each access point to minimise impact Sites will be subject to long-term management programmes to return the land to its current use or improve biodiversity
Artists impression of tunnel access point during construction 8
MTS access points Multiple access points minimise impact of landscaping Typical access point prior to development
Same site showing re-contoured rehabilitated storage of excavated material
9
Proven low risk solution The MTS uses well understood systems and solutions Conveyor systems – proven bulk transport system Conveyor systems over similar and greater distances exist globally The largest conveyor system in the world is 98km and has been operating in Western Sahara for more than 30 years The longest single conveyor is 31km at the Boddington Bauxite Mine in Western Australia
Tunnels – the basis of all underground mines The style of tunnel to be used for the MTS is based on a mining drive and is similar to water supply / hydro tunnels Well understood engineering process – tunnels of much greater length exist around the world with the longest the Delaware Aqueduct which is 120kms long
Example tunnel with high capacity conveyor 10
MTS corridor Corridor delivers multiple options for efficient low impact construction and operations Depth of tunnel around 120 to 350 metres below surface MTS corridor overlaps pipeline route to Teesside Range of environmental work for pipeline transferable to MTS Majority of landowners along route have already entered into either existing mineral rights or pipeline agreements
11
MTS approvals The local planning system can facilitate a timely determination Mine Approval – NYMNPA New application for the mine to be submitted by July 2014 will be based on the MTS Key environmental work on the pipeline transferable to the MTS Cumulative Assessment to be submitted with the mine application will include all of the requisite information across the whole project Mitigation and moderation of a development’s environmental impacts are positive considerations for the ‘Major Development Test’
MTS Approval Approval through Town and Country Planning Act with two identical applications being submitted to NYMNPA and Redcar and Cleveland Borough Council Company will seek to enter into Planning Performance Agreements with both authorities to facilitate detailed pre-application engagement on the MTS Full applications will be submitted in November 2014 with the expectation of a decision within the statutory 16 weeks of submission
Potential for MTS approval from local authorities significantly in advance of pipeline approval timeline 12
Environmental studies and submission timeline Simplified approval process: Indicative timeline 2014 Feb
Mar
Apr
May
Jun
Mine (Application to NYMNPA)
Jul
Aug
Sep
Oct
Nov
Dec
16 week determination period pursuant to Planning Performance Agreement (“PPA”)
MTS, Materials Handling Plant and Storage (Application to NYMNPA / R&CBC)
March 2015 decision based on PPA
Teesside Berth (DCO application to PINS)
April 2016 Decision
Cumulative Assessment ES assessment
Formal consultation
Determination period
Preparation of application material and monitoring
Submission of application
Expected determination
Production of preliminary environmental report Notes: NYMNPA – North York Moors National Park Authority, DCO – Development Consent Order, RCBC – Redcar and Cleveland Borough Council, PINS – Planning Inspectorate, EIA – Environmental Impact Assessment, ES – Environmental Statement. MTS timing assumes a Planning Performance Agreement is entered into with an undertaking for a determination within 16 weeks
13
Reduced construction disturbance Dramatic reduction in temporary construction disturbance Pipeline Construction of the pipeline was one of the most significant surface impacts Working width of 45 metres and major crossings resulted in a significant area of disturbance – 350 hectares
450
400 350
MTS With only three additional sites for the shaft access points for the MTS (one in National Park and two outside), the construction disturbance is reduced by more than 70% Point based construction as opposed to the linear surface development of the pipeline dramatically reduces visual impact of construction
Hectares
300 250 200 150 100 50 0 Revised Pipeline Minehead
Mine + MTS
Transport System
14
Designated environment surface disturbance MTS removes all direct construction disturbance in “Designated Sites”. 14
Background Sites in the North York Moors National Park carry many important environmental designations: Sites of Special Scientific Interest (SSSI) Special Areas of Conservation (SAC) Special Protection Areas (SPA)
Pipeline The revised pipeline would include a reduced amount of designated site crossings with ~13 hectares needing to be excavated and restored MTS No designated environments will be directly disturbed during the construction of the MTS Potential to implement improvement programmes post construction to enhance biodiversity and achieve planning gains
10
Hectares
12
8
6
4
2
0 Revised Pipeline
MTS
15
Environmental character disturbance The underground nature of the MTS minimises surface disturbance and changes Background Features of the North York Moors National Park and surrounding agricultural landscapes include hedge rows, traditional stone walls and agricultural fences
10,000
Pipeline Due to its linear surface construction method the pipeline would result in the removal and restoration of some 4,000m of hedge rows,1,500m of stone walls and 4,000m of fences
7,000
MTS No stone walls and minimal hedge rows (around 200m) need to be removed for the construction and operation of the MTS
9,000 8,000
Metres
6,000 5,000 4,000 3,000 2,000 1,000 0 Revised Pipeline Hedges
Stone Walls
MTS Fences
16
Reduction of buildings at the mine Major reduction in the construction impact and amount of operational buildings Mine buildings 70% of the buildings at the mine related to the pipeline system Replacement with the MTS results in significant reduction in the “built environment” at the mine
4.0
3.5 3.0 2.5 Hectares
Landscaping and contouring The total excavated material at the mine is approximately the same as before with the MTS material replacing the pipeline building excavations Reduced building footprint enables better contouring and a more natural operational landscaping
2.0 1.5 1.0 0.5 0.0 Revised Pipeline
MTS
17
70% reduction in footprint of mine buildings Mine layout – revised pipeline1
Notes: 1) Building layout and site plan for revised pipeline system.
Mine layout – MTS
18
MTS development schedule MTS aligns with first ore in 2018
2014
2015
2016
2017
2018
2019+
Feasibility Study and Design Approvals
Equipment procurement Access Shaft Construction Tunnel construction
Fit out and commissioning Production
Notes: Approvals based on approval by local authorities within 16 week period of applications being made in November 2014
19
MTS project benefits MTS provides substantial long term benefits Issue
Reduced operating costs Increased production capacity Simplified commissioning programme Capital and funding optimisation Additional product options
MTS Removing the costs of slurry system and replacing with the costs of running the MTS is expected to result in a ~US$10/t reduction in relative operating costs
DFS to define complete operating cost profile based on MTS
The shorter haulage from the shaft to the unloading point to feed the MTS potentially increases Phase 1 capacity to approximately 6.5 mtpa and Phase 2 to at least 13 mtpa
Increased capacity at no material additional capital cost
Additional capacity is also possible in the second shaft of up to 3 mtpa
Commissioning and ramp-up of the MTS is relatively simple and a well understood process
Removes the relative complexities of the pipeline ramp-up and commissioning
Approximately US$250m of the MTS cost comprises mining and conveyor equipment
Potential exists to lease this equipment to reduce upfront financing requirement
Redeployment of equipment into the mine moves Capex from the mine to the MTS resulting in a potential mine Capex reduction
Dry transport enables the polyhalite particle size to be varied to alter the release profile of the nutrients in polyhalite – slow release fertilizers attract premium pricing
De-icing salt can be accessed as needed. This capacity could be used to meet the national need for supply of de-icing salt in severe winters
Potassium chloride deposit (historical non-JORC resource of 380Mt) in the vicinity of the polyhalite resource could be explored from underground and potentially mined in the future with processing in Teesside
20
Highlights
Significant value increase and reduced risk
Reduced operating costs and increased capacity
70% reduction in surface construction footprint across project
70% reduction in new buildings in the National Park
Removal of construction from designated environments 21
Important notices This document is produced for information only and not in connection with any specific or proposed offer (the “Offer”) of securities in Sirius Minerals Plc (the “Company”). The information and opinions contained in this presentation are provided as at the date hereof and are subject to amendment without notice. This document is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on directly or indirectly or published in whole or part for any purpose. This document is provided to recipients on the basis that they keep confidential any information contained herein or otherwise made available, whether orally or in writing, in connection with the Company. This document does not constitute an offer to buy or to subscribe for, or the solicitation of an offer to buy or to subscribe for securities in the Company and does not constitute or form part of a prospectus. No reliance may be placed for any purpose whatsoever on the information, representation or opinions. Any decision to purchase or subscribe for securities in the Company in connection with any offer should be made solely on the basis of the information contained in a prospectus on the Company or such other subscription document which may be published in due course and any acquisition of securities in the Company should be made on the basis of the information contained in such document. Neither the issue of this document nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company, Macquarie Capital (Europe) Limited (“Macquarie”), Liberum Capital Limited (“Liberum”) or Citigroup Global Markets Limited (“Citi”) be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this document, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this document or to correct any inaccuracies in, or omissions from, this document which may become apparent. This document should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers (including, without limitation, Macquarie, Liberum, or Citi). Each party to whom this document is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. Information in this document must not be relied upon as having been authorized or approved by the Company, Macquarie, Liberum, or Citi. Neither the Company nor Macquarie nor Liberum nor Citi nor any other person makes any guarantee, representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this document. None of the Company, Macquarie, Liberum or Citi accept any liability howsoever for any loss arising from this document or contents or otherwise arising in connection therewith. Investors based in the United Kingdom This document is being issued in the United Kingdom to the limited classes of person described below by the Company, namely only to persons falling within one of: Investment professionals falling within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ("FPO") namely authorised firms under the Financial Services and Markets Act 2000 ("FSMA"); persons who are exempt in relation to promotions of shares in companies; persons whose ordinary activities involve them investing in companies; governments; local authorities or international organisations; or a director, officer or employee acting for such entities in relation to investment. High value entities falling within Article 49 of the FPO, namely body corporates with share capital or net assets of not less than £5 million (except where the body corporate has more than 20 members in which case the share capital or net assets should be not less than £500,000); unincorporated associations or partnerships with net assets of not less than £5 million; trustees of high value trusts; or a director, officer or employee acting for such entities in relation to the investment. Persons who are certified sophisticated investors falling within Article 50 of the FPO, namely persons who have, within the last 3 years, received a certificate in writing from an FSA authorised person to the effect that the person is sufficiently knowledgeable to understand the risks associated with shares in an AIM quoted company and who has signed within the last 12 months a statement in relation to shares in AIM quoted companies that they accept that promotions such as this may not have been approved by an FSA authorised person and that the promotion may therefore not be subject to controls which would apply if the promotion were made or approved by an FSA authorised person. The distribution of this document to any person in the United Kingdom not falling within one of the above categories is not permitted by the Company and may contravene the FSMA. No person falling outside these categories should treat this document as constituting a promotion to him or rely or act on it for any purposes whatsoever. Any person who is in any doubt about investing in the Company should consult a person authorised by the Financial Services Authority specialising in investments including investments into listed companies.
Investors based in the United States No securities in the Company have been, or will be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”), or qualified for sale under the law of any state or other jurisdiction of the United States of America and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. This presentation is directed only at, and may only be communicated to, (i) persons that are outside the United States within the meaning of Regulation S under the US Securities Act or (ii) inside the United States to persons that are either “qualified institutional buyers” within the meaning of Rule 144A under the US Securities Act or “accredited investors” as defined in Regulation D under the US Securities Act. Neither the United States Securities and Exchange Commission (“SEC”) nor any securities regulatory body of any state or other jurisdiction of the United States of America, nor any securities regulatory body of any other country or political subdivision thereof, has approved or disapproved of the securities or passed on the accuracy or adequacy of the contents of this document. Any representation to the contrary is unlawful. To ensure compliance with United States Department of the Treasury Circular 230, recipients of this document are hereby notified that: (a) any discussion of United States federal tax issues in this document is not intended to be relied upon, and cannot be relied upon, for the purpose of avoiding penalties that may be imposed under the United States Internal Revenue Code and (b) recipients should seek advice based on their particular circumstances from an independent tax advisor. Investors based in other jurisdictions The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. QUALIFIED PERSONS The information in this document that relates to Mineral Resources is based on information compiled under the direction of Dr Mike Armitage C Eng, who is a Member of the Institute of Materials, Minerals and Mining which is a ‘Recognised Overseas Professional Organisation’ (ROPO) included in a list promulgated by ASX from time to time. Dr Armitage is a full time employee of SRK Consulting and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code) and for the purposes of the AIM Rules. Dr Armitage has reviewed this document and consents to the inclusion in the document of the matters based on his information in the form and context in which this appears. Graham Clarke, Operations Director for the Company, who has reviewed this presentation, has over 26 years’ experience in the potash mining industry. He has a Degree in Mining Engineering from the University of Nottingham, is a Fellow of the Institute of Materials, Minerals and Mining and extensive operational experience gained at Cleveland Potash Limited in the mining of the Boulby Potash seam and the exploration and development of the upper Fordon Polyhalite seam.
2
Highlights
Significant value increase and reduced risk
Reduced operating costs and increased capacity
70% reduction in surface construction footprint across project
70% reduction in new buildings in the National Park
Removal of construction from designated environments 3
Situation overview New transport system significantly reduces impact and increases project value Ongoing work to improve the York Potash Project Continued commitment to the most sustainable and low impact development Extensive analysis of improvements while preparing for new approvals application Largest area of disturbance was the construction of the pipeline Consultation on the pipeline raised queries about construction and operating parameters Opportunities to address key impacts Two solutions to the issues identified to mitigate or remove these impacts and risks: 1) Revised pipeline with additional system features and construction impacts 2) Construction of permanent underground infrastructure for the dry transportation of minerals to Teesside (Mineral Transport System or MTS)
The MTS selected as the new transport solution for the York Potash Project
York Potash Project greatly enhanced by MTS 4
Mineral Transport System (MTS) – Overview Project value significantly increased with reduced risk An
improved environmental solution 70% reduction in construction impact across whole project Major reduction of construction impact in the National Park No construction in designated sites
A major operational value enhancement Technically feasible and low risk transport solution Significant reduction in operating costs (~US$10/t); US$280m increase in the capital cost estimate for Phase 1 (pre-contingency) Increased shaft hauling capacity (Phase 1 potentially up to 6.5mtpa) Opportunity to expand product offering
Typical mine development with high capacity conveyor
Construction simplification and de-risking Reduced construction risk Reduced interface risk
Illustrative tunnel fit-out 5
Revised development plan
services
6
MTS construction overview Five access points to maintain safety, reduce impact and retain schedule
Construction utilising Tunnel Boring Machines and continuous mining equipment approximately 120 to 360 metres below ground level Tunnel constructed as a mining development “drive” for conveying of dry minerals Route has consistent geological strata from mine to port Mining equipment used could be re-tasked into mine operations – a potential synergistic capital saving Multiple access points maintain schedule for first ore from mine in mid 2018 and reduce impact at any single location
Tunnel Boring Machine (“TBM”)
Typical Continuous Miner
7
MTS access points Optimal solution to minimise impact and reduce construction period
Access points serve multiple purposes
Emergency egress and ventilation points Construction access to minimise timeline and reduce impact Removal and landscaping of excavated material Maintenance access points
Five access points, one at each end and three in between – only one additional in the National Park Each site includes a basic shaft enabling efficient access to the tunnel Shafts will be covered by a small agricultural style building, once in operations Excavated material from the shafts and the tunnel to be landscaped in close proximity to each access point to minimise impact Sites will be subject to long-term management programmes to return the land to its current use or improve biodiversity
Artists impression of tunnel access point during construction 8
MTS access points Multiple access points minimise impact of landscaping Typical access point prior to development
Same site showing re-contoured rehabilitated storage of excavated material
9
Proven low risk solution The MTS uses well understood systems and solutions Conveyor systems – proven bulk transport system Conveyor systems over similar and greater distances exist globally The largest conveyor system in the world is 98km and has been operating in Western Sahara for more than 30 years The longest single conveyor is 31km at the Boddington Bauxite Mine in Western Australia
Tunnels – the basis of all underground mines The style of tunnel to be used for the MTS is based on a mining drive and is similar to water supply / hydro tunnels Well understood engineering process – tunnels of much greater length exist around the world with the longest the Delaware Aqueduct which is 120kms long
Example tunnel with high capacity conveyor 10
MTS corridor Corridor delivers multiple options for efficient low impact construction and operations Depth of tunnel around 120 to 350 metres below surface MTS corridor overlaps pipeline route to Teesside Range of environmental work for pipeline transferable to MTS Majority of landowners along route have already entered into either existing mineral rights or pipeline agreements
11
MTS approvals The local planning system can facilitate a timely determination Mine Approval – NYMNPA New application for the mine to be submitted by July 2014 will be based on the MTS Key environmental work on the pipeline transferable to the MTS Cumulative Assessment to be submitted with the mine application will include all of the requisite information across the whole project Mitigation and moderation of a development’s environmental impacts are positive considerations for the ‘Major Development Test’
MTS Approval Approval through Town and Country Planning Act with two identical applications being submitted to NYMNPA and Redcar and Cleveland Borough Council Company will seek to enter into Planning Performance Agreements with both authorities to facilitate detailed pre-application engagement on the MTS Full applications will be submitted in November 2014 with the expectation of a decision within the statutory 16 weeks of submission
Potential for MTS approval from local authorities significantly in advance of pipeline approval timeline 12
Environmental studies and submission timeline Simplified approval process: Indicative timeline 2014 Feb
Mar
Apr
May
Jun
Mine (Application to NYMNPA)
Jul
Aug
Sep
Oct
Nov
Dec
16 week determination period pursuant to Planning Performance Agreement (“PPA”)
MTS, Materials Handling Plant and Storage (Application to NYMNPA / R&CBC)
March 2015 decision based on PPA
Teesside Berth (DCO application to PINS)
April 2016 Decision
Cumulative Assessment ES assessment
Formal consultation
Determination period
Preparation of application material and monitoring
Submission of application
Expected determination
Production of preliminary environmental report Notes: NYMNPA – North York Moors National Park Authority, DCO – Development Consent Order, RCBC – Redcar and Cleveland Borough Council, PINS – Planning Inspectorate, EIA – Environmental Impact Assessment, ES – Environmental Statement. MTS timing assumes a Planning Performance Agreement is entered into with an undertaking for a determination within 16 weeks
13
Reduced construction disturbance Dramatic reduction in temporary construction disturbance Pipeline Construction of the pipeline was one of the most significant surface impacts Working width of 45 metres and major crossings resulted in a significant area of disturbance – 350 hectares
450
400 350
MTS With only three additional sites for the shaft access points for the MTS (one in National Park and two outside), the construction disturbance is reduced by more than 70% Point based construction as opposed to the linear surface development of the pipeline dramatically reduces visual impact of construction
Hectares
300 250 200 150 100 50 0 Revised Pipeline Minehead
Mine + MTS
Transport System
14
Designated environment surface disturbance MTS removes all direct construction disturbance in “Designated Sites”. 14
Background Sites in the North York Moors National Park carry many important environmental designations: Sites of Special Scientific Interest (SSSI) Special Areas of Conservation (SAC) Special Protection Areas (SPA)
Pipeline The revised pipeline would include a reduced amount of designated site crossings with ~13 hectares needing to be excavated and restored MTS No designated environments will be directly disturbed during the construction of the MTS Potential to implement improvement programmes post construction to enhance biodiversity and achieve planning gains
10
Hectares
12
8
6
4
2
0 Revised Pipeline
MTS
15
Environmental character disturbance The underground nature of the MTS minimises surface disturbance and changes Background Features of the North York Moors National Park and surrounding agricultural landscapes include hedge rows, traditional stone walls and agricultural fences
10,000
Pipeline Due to its linear surface construction method the pipeline would result in the removal and restoration of some 4,000m of hedge rows,1,500m of stone walls and 4,000m of fences
7,000
MTS No stone walls and minimal hedge rows (around 200m) need to be removed for the construction and operation of the MTS
9,000 8,000
Metres
6,000 5,000 4,000 3,000 2,000 1,000 0 Revised Pipeline Hedges
Stone Walls
MTS Fences
16
Reduction of buildings at the mine Major reduction in the construction impact and amount of operational buildings Mine buildings 70% of the buildings at the mine related to the pipeline system Replacement with the MTS results in significant reduction in the “built environment” at the mine
4.0
3.5 3.0 2.5 Hectares
Landscaping and contouring The total excavated material at the mine is approximately the same as before with the MTS material replacing the pipeline building excavations Reduced building footprint enables better contouring and a more natural operational landscaping
2.0 1.5 1.0 0.5 0.0 Revised Pipeline
MTS
17
70% reduction in footprint of mine buildings Mine layout – revised pipeline1
Notes: 1) Building layout and site plan for revised pipeline system.
Mine layout – MTS
18
MTS development schedule MTS aligns with first ore in 2018
2014
2015
2016
2017
2018
2019+
Feasibility Study and Design Approvals
Equipment procurement Access Shaft Construction Tunnel construction
Fit out and commissioning Production
Notes: Approvals based on approval by local authorities within 16 week period of applications being made in November 2014
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MTS project benefits MTS provides substantial long term benefits Issue
Reduced operating costs Increased production capacity Simplified commissioning programme Capital and funding optimisation Additional product options
MTS Removing the costs of slurry system and replacing with the costs of running the MTS is expected to result in a ~US$10/t reduction in relative operating costs
DFS to define complete operating cost profile based on MTS
The shorter haulage from the shaft to the unloading point to feed the MTS potentially increases Phase 1 capacity to approximately 6.5 mtpa and Phase 2 to at least 13 mtpa
Increased capacity at no material additional capital cost
Additional capacity is also possible in the second shaft of up to 3 mtpa
Commissioning and ramp-up of the MTS is relatively simple and a well understood process
Removes the relative complexities of the pipeline ramp-up and commissioning
Approximately US$250m of the MTS cost comprises mining and conveyor equipment
Potential exists to lease this equipment to reduce upfront financing requirement
Redeployment of equipment into the mine moves Capex from the mine to the MTS resulting in a potential mine Capex reduction
Dry transport enables the polyhalite particle size to be varied to alter the release profile of the nutrients in polyhalite – slow release fertilizers attract premium pricing
De-icing salt can be accessed as needed. This capacity could be used to meet the national need for supply of de-icing salt in severe winters
Potassium chloride deposit (historical non-JORC resource of 380Mt) in the vicinity of the polyhalite resource could be explored from underground and potentially mined in the future with processing in Teesside
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Highlights
Significant value increase and reduced risk
Reduced operating costs and increased capacity
70% reduction in surface construction footprint across project
70% reduction in new buildings in the National Park
Removal of construction from designated environments 21
