Investor Presentation

Report
Investor Presentation
May 2012
www.talisonlithium.com
Forward Looking Information

Certain information contained or incorporated by reference in this document, including any information regarding Talison Lithium Limited’s (“Talison” or the
“Company”) strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance, constitutes
“forward-looking statements” within the meaning of Canadian securities laws. All statements, other than statements of historical fact, are forward-looking
statements. Forward-looking statements can often, but not always, be identified by the use of words such as “plans”, “expects”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates”, “predicts”, “potential”, “continue” or “believes”, or variations (including negative variations) of such words; or statements that
certain actions, events or results “may”, “could”, “would”, “should”, “might”, “potential to”, or “will” be taken, occur or be achieved or other similar expressions
concerning matters that are not historical facts. The purpose of forward-looking statements is to provide the reader with information about management’s
expectations and plans for the 2012 financial year and subsequent financial years. Forward-looking statements are necessarily based on a number of factors,
estimates and assumptions that, while considered reasonable by Talison, are inherently subject to significant business, economic and competitive uncertainties and
contingencies. While Talison considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual
results may vary.

Readers are cautioned that forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Talison and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied
by the forward-looking statements. These risks, uncertainties and factors are discussed in the unaudited condensed consolidated interim financial statements of
Talison and the related notes thereto as at March 31, 2012 (collectively, the “Financial Statements”) dated May 10, 2012, which can be found on Talison’s SEDAR
profile at www.sedar.com, and in the Company’s annual information form for the year ended June 30, 2011 dated September 23, 2011 (the “Annual Information
Form”), which can be found on Talison’s SEDAR profile at www.sedar.com. Readers are cautioned that forward-looking statements are not guarantees of future
performance. All of the forward-looking statements made or incorporated in this document are qualified by these cautionary statements.

Although Talison has attempted to identify statements containing important factors that could cause actual actions, event or results to differ materially from those
described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Forward-looking information contained herein are made as of the date of this document based on the opinions and estimates of management on the date
statements containing such forward looking information are made. Except as required by law, Talison disclaims any obligation to update any forward-looking
information, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking
information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers
should not place undue reliance on forward-looking information.

An investor should read this document and the documents to which Talison refers to in this document completely and with the understanding that Talison’s actual
future results may be materially different from its expectations. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any
securities.
www.talisonlithium.com
2
Talison Lithium Overview: TSX-TLH
Established pure play lithium producer positioned to take advantage
of expected market growth
Sales Volume & Pricing
15%
price
increase
H2 FY12
60
50
40
20
$100
10
$0
FY2004
Clear Growth Strategy
Strong Financial Position
•
•
•
•
Sales price increase of 15% for H2 FY12
Declining Cash Operating COGS
Cash reserves A$85m at Mar. 31, 2012
Market Cap C$340m (May 2012)
www.talisonlithium.com
FY2006
FY2008
Sales Volume (LHS)
FY2010
FY2012
Price (RHS)
EBITDA & EBITDA Margin
30
EBITDA (A$ million)
•
Current expansion nearing completion
Down-stream lithium carbonate plant:
FID late 2012
Salares 7: Chilean brine exploration project
$300
$200
30
-
•
•
$400
24%
EBITDA
Margin
H1 FY12
25
20
30%
25%
20%
15
15%
10
10%
5
5%
0
EBITDA Margin (%)
Lithium producer in Australia for >25 years
Over 30% global market share
Track record of growth:
Sales volume 15% CAGR (10yrs)
Sales Volume (kt LCE)
•
•
•
70
Average sales price
(US$ t/ conc.)
Largest Global Lithium Producer
0%
FY2008
FY2009
FY2010
EBITDA (LHS)
FY2011
FY2012
EBITDA Margin (RHS)
Source : Talison, See “Disclosure Regarding Financial Information”.
Sales Volumes & Pricing excludes sales of crushed ore.
LCE denotes lithium carbonate equivalent.
3
Lithium Market
www.talisonlithium.com
4
Conventional Lithium Applications
Key Uses
Accelerates melting of glass,
reducing energy requirements
Hardens ceramic glazes
Strengthens glass cook tops
Enables high working
temperature greases
Pharmaceuticals
Growth Outlook
Currently 70% of global market
GDP growth globally
Faster growth in Asia and BRICs
www.talisonlithium.com
5
Emerging and Growth Applications
Key Uses
Energy dense consumer
batteries
Strengthens wind turbine blades
Lightweight aerospace alloys
Large format batteries for
electricity grid stabilization
Growth Outlook
20%+ annual growth since 2000
Currently 30%+ of global market
Rapid development of new applications
15%+ annual growth expected to 2020
www.talisonlithium.com
6
Transport of the Future
Wide Range of EVs using Lithium
Electric bikes / scooters
Passenger electric vehicles
Electric buses/ taxis / trucks
Market Drivers
Energy security
Reducing oil dependence
Decreasing carbon emissions
Growth Outlook
Currently <1% of global market
Significant growth accelerator
from 2015
Government mandated
Asia driving growth
www.talisonlithium.com
7
Strong Demand Outlook for all Applications
400,000
Future
Transport
High Case
Future
Transport
Base Case
LCE (tonnes)
300,000
200,000
100,000
2010
2011
2012
2013
Conventional
2014
2015
2016
Emerging and Growth
2017
2018
2019
2020
Future Transport
Source: Talison, based on current market conditions and pricing.
Future Transport: EVs as a proportion of global passenger vehicle sales in 2020: Base Case 3.5%, High Case 6.0%.
www.talisonlithium.com
8
Existing Producers Dominate Global Supply
Talison Lithium
32%
Others
6%
Company C
22%
Company A
29%
Company B
11%
Lithium Supply by Company, 2011.
Source: Talison
www.talisonlithium.com
9
Existing Producers Expanding to Meet Demand
Existing producer advantages
Highest quality lithium deposits
Economies of scale
Existing infrastructure & logistics
Experienced technical capabilities
New projects difficult
Lower quality lithium deposits
High capital costs
Technical challenges
Longer development timelines
Substantial ramp up period
www.talisonlithium.com
10
Capturing Rapid Market Growth
Demand from new technologies growing
quickly
Comparison of sales of iPhones and iPads
220
200
67 million iPads sold in first 2 years of sales
iPad sales growing significantly faster than
iPhones – required over 3 years to reach 67
million iPhone sales
For the quarter January to March 2012

Apple sold 35 million iPhones globally

Samsung estimated to have sold 44 million
smartphones globally
Cumulative unit sales (millions)
180
160
iPad
iPhone
140
120
100
80
60
40

Total smartphone sales in China estimated to
have grown by 20%
20
0
Global smartphone sales expected to grow
to over 700 million in 2012
www.talisonlithium.com
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quarter since sales commenced
New model released
Source: Apple Inc.
11
Lithium Prices Increasing
• Global supply tightening since mid
2011 has impacted prices
• Talison secured 15% price increase
for H2 FY2012 across its entire
product range
$400
15% price
increase
agreed for
H2 FY12
$350
US$/ t lithium concentrate
• Price increases announced by other
major lithium producers in mid 2011
and May 2012
Talison’s average sales price increasing
$300
$250
• Price increases support investment
in Talison’s business to meet growing
global demand for lithium
$200
FY08
FY09
FY10
FY11
H1 FY12 H2 FY12
Source : Talison, excludes sales of crushed ore.
www.talisonlithium.com
12
Talison’s Growth Strategy
Talison currently produces approximately one third of global lithium supply and the current expansion (shown in photo)
will more than double production capacity.
www.talisonlithium.com
13
Greenbushes Lithium Operations
Expansion near completion
On time and budget –
commissioning Q4 FY2012
Highly flexible and efficient
plant
Positions Talison to meet
future market growth
Chemical-grade processing facility – March 2011
High quality feedstock for
Talison’s lithium carbonate
plant
www.talisonlithium.com
Chemical-grade processing facility – April 2012
14
Greenbushes Lithium Operations
Increasing Lithium Reserves
Greenbushes Lithium Operations
Total Lithium Mineral Resources & Reserves*
Lithium Mineral Reserves
increased from 0.9Mt to 2.4Mt LCE
-
Grade 3.1% Li2O
-
Orebody open both along strike
and at depth
• Resource definition drilling in
H2 FY2012
-
To support future expansions of
lithium concentrate plants and
lithium carbonate plant
150,000
Resource
definition
drilling
H2 FY2012
5
4
LCE (mt)
-
6
100,000
3
2
50,000
1
0
0
Mar-2010
Reserves
www.talisonlithium.com
Production capacity (t LCE)
• March 2011
Mar-2011
Resources
FY2012
Production Capacity (RHS)
Source: Talison. *See “Disclosure Regarding
Mineral Resources and Mineral Reserves”.
15
Lithium Carbonate Plant
• Conversion of lithium concentrate to produce 20,000 tpa lithium carbonate
• Provide additional secure supply of lithium carbonate to global markets
• Kwinana Industrial Area, Western Australia selected as preferred location
Synergies with surrounding industries
Availability of infrastructure
Close to Fremantle Port for
container exports
• Accelerating the formation of customer
relationships
Talison
Operations
Kwinana
MOUs with Sojitz and Mitsui & Co.
to discuss marketing and
distribution opportunities in Japan
www.talisonlithium.com
16
Lithium Carbonate Plant
2012 Objectives*
Complete engineering study
Commence regulatory approval
process
Provide product samples to
potential customers
Final Investment Decision
anticipated end calendar 2012
Targeting production 2015
Lithium carbonate test facility at the Greenbushes Lithium Operations
* 2012 Calendar Year
www.talisonlithium.com
17
Salares 7 Project
• Located in the Atacama Region III, Chile
• Outstanding results for both lithium and
potassium from initial drilling at Salar de
la Isla in 2011
Up to 1,080 milligrams per litre
(“mg/l”) lithium, with an average of
863 mg/l lithium
Up to 9,830 mg/l potassium, with an
average of 7,979 mg/l potassium
• Focus in H2 FY2012 on environmental
approvals
www.talisonlithium.com
18
Financials
www.talisonlithium.com
19
Strong Operating Results
(Unaudited)
Q3
2012
Q2
2012
Q1
2012
Q4
2011
Q3
2011
Q2
2011
Q1
2011
Sales Volume (tonnes lithium concentrate)
111,896
75,221
80,315
92,416
97,001
97,559
52,525
16,600
11,200
12,000
14,000
14,400
14,500
7,800
340
310
330
302
303
315
313
36,965
22,686
25,879
26,412
29,207
32,810
21,072
195
187
207
184
195
208
221
3,235
3,203
3,159
3,680
3,937
3,566
2,003
11,964
5,387
6,126
5,755
6,308
7,233
4,770
32%
24%
24%
22%
22%
22%
23%
16,269
11,973
8,214
10,462
8,149
(4,292)
8,010
Sales Volume (tonnes LCE)
Average sales price (US$/tonne lithium
concentrate)
Revenue (A$’000)
Cash operating cost of goods sold (A$/tonne
lithium concentrate)
General/Administration/Other (A$’000)
EBITDA (A$’000)
EBITDA as percentage of sales revenue (%)
Operating Cashflow (A$’000)
See “Disclosure Regarding Financial Information”.
www.talisonlithium.com
20
Summary Balance Sheet
Statement of Financial Position (A$’000)
As at March 31, 2012
(Unaudited)
As at June 30, 2011
(Audited)
Assets
Cash and cash equivalents
85,057
102,605
Trade and other receivables
12,879
21,543
Inventories
17,808
11,182
Other assets
3,891
10,205
Property, plant and equipment
142,314
95,215
Exploration and evaluation assets
62,982
61,714
324,931
302,464
Trade and other payables
12,954
12,380
Interest-bearing liabilities
27,647
29,243
Provisions
15,182
14,668
Deferred tax liabilities
9,136
10,622
Tax payable
6,781
-
Total liabilities
71,700
66,913
Shareholders’ equity
253,231
235,551
Total assets
Liabilities
See “Disclosure Regarding Financial Information”.
www.talisonlithium.com
21
Proven Management Team
Peter Oliver
CEO / MD
Lorry Mignacca
CFO & Company Secretary
Frank Wheatley
Executive Director Corporate
Affairs & Strategy
Paul Wallwork
Marketing Manager
Pat Scallan
General Manager
Greenbushes Lithium Operations
www.talisonlithium.com
•
•
Over 20 years of lithium mining and production experience
Former COO of Talison
•
Over 25 years experience as a Chartered Accountant, the bulk of which is with Talison or
its predecessor
Previous finance roles with Normandy Mining (formerly ASX:NDY) and Barrack Mines
(formerly (ASX:BRM)
•
•
•
Over 25 years of public Canadian company experience
Former VP and General Counsel of Gabriel Resources (TSX:GBU)
•
•
Over 20 years sales experience in the chemicals/mineral resource industries
Variety of technical, sales and marketing management roles for companies including Iluka
Resources (ASX:ILU) and ICI Australia (formerly ASX:ICI)
•
•
General Manager at Greenbushes since 1997
Previous senior roles with Gwalia Consolidated and various mineral sands operations in
Western Australia
22
Greenbushes Lithium Operations
Greenbushes Lithium Operations - Lithium Mineral Reserves as of March 31, 2011
March 31, 2011
Previous - March 31, 2010
Tonnage
(Mt)
Li2O Grade
(%)
LCE
(Mt)
Tonnage
(Mt)
Li2O Grade
(%)
LCE
(Mt)
Proven Mineral Reserves
0.2
3.9
0.02
0.1
3.9
0.01
Probable Mineral Reserves
31.3
3.1
2.38
9.5
3.9
0.92
Total Proven and Probable Mineral Reserves
31.4
3.1
2.39
9.6
3.9
0.93
Category
Notes:
(1) There may be some rounding errors in totals.
(2) For the updated calculation (as of March 31, 2011) a 2% Li2O cut-off grade has been applied.
(3) Proven Mineral Reserves comprises the Run of Mine and Fine Ore stockpiles. All the Probable Mineral Reserves are contained within the Indicated Mineral Resources.
(4) Mineralization was classified according to the definitions in National Instrument 43-101 and the guidelines published by the Council of the Canadian Institute of Mining, Metallurgy and Petroleum (the
CIM Standards).
Greenbushes Lithium Operations - Lithium Mineral Resources as of March 31, 2011
March 31, 2011
Previous - March 31, 2010
Tonnage
(Mt)
Li2O Grade (%)
LCE (Mt)
Tonnage
(Mt)
Li2O Grade
(%)
LCE (Mt)
Measured Mineral Resources
0.2
3.9
0.02
0.10
3.9
0.01
Indicated Mineral Resources
70.2
2.6
4.55
21.9
3.7
2.00
Total Measured and Indicated Mineral Resources
70.4
2.6
4.56
22.0
3.7
2.01
Total Inferred Mineral Resources
2.0
2.2
0.11
2.7
3.5
0.23
Category
Notes:
(1) There may be some rounding errors in totals.
(2) For the updated estimate (as of March 31, 2011) the lithium Mineral Resources are within lithium domains drawn at a 1% Li2O grade boundary, and above 1,000RL; and Measured Mineral Resources
comprises the Run of Mine and Fine Ore stockpiles. For the previous estimate (as of March 31, 2010) the lithium Mineral Resources are within lithium domains drawn at a 2.8% Li2O grade boundary.
(3) Mineral Reserves are included in Mineral Resources. Mineral Resources are not Mineral Reserves and, as such, do not have demonstrated economic viability.
(4) Mineralization was classified according to the definitions in National Instrument 43-101 and the guidelines published by the Council of the Canadian Institute of Mining, Metallurgy and Petroleum (the
CIM Standards).
www.talisonlithium.com
23
Disclosure Notice
Disclosure Regarding Mineral Resources and Mineral Reserves
Mineral Resource estimation was performed using Ordinary Kriging into 20mNx20mEx5mRL parent blocks, with each variable Li2O, calcium oxide
(CaO), ferric oxide (Fe2O3), potassium oxide (K2O), manganese oxide (MnO), sodium oxide (Na2O), phosphorus oxide (P2O5), tin (Sn), and tantalum
oxide (Ta2O5) being estimated independently. This work was overseen by Andrew Purvis, a full-time employee of Talison, who is a “Qualified Person”
in accordance with National Instrument 43-101 and a ‘‘Competent Person’’ as defined by the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves 2004 Edition (the JORC Code).
Talison does not consider that the estimate of lithium Mineral Resources and Mineral Reserves will be materially affected by any known environmental,
permitting, title, mining, infrastructure or metallurgical issues. For further information refer to the technical report in respect of the Greenbushes Lithium
Operations titled “Greenbushes Lithium Operations, Located in Western Australia – Australia” dated June 15, 2011, a copy of which can be found on
Talison’s SEDAR profile at www.sedar.com.
NI 43-101 - Technical Report
Readers are cautioned not to rely solely on the summary of the Mineral Resources and Mineral Reserves contained in this presentation, but should
read the Greenbushes Technical Report.
The Mineral Resource estimates were prepared by Mr. Scott Jackson (BSc (Hons), CFSG, MAusIMM, MAIG), Director and Principal Consultant, of
Quantitative Group Pty Ltd (“Quantitative Group”) of Perth, Western Australia, in accordance with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves 2004 Edition (the JORC Code), which is comparable with the requirements of National Instrument 43101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. Quantitative Group undertook statistical analysis, block
estimation, validation and classification of the Mineral Resource, constructed the Mineral Resource block model and reviewed the QA/QC data. The
Quantitative Group work was undertaken or supervised by Mr. Jackson, who also reviewed data collection and data quality. Mr. Jackson is
independent of Talison and a “Qualified Person” in accordance with National Instrument 43-101.
The Mineral Reserves were prepared by Messrs. Andrew Purvis (BSc (Hons), MSc, MAusIMM), General Manager Geology, Talison, and Stephen
Green (B. Eng, MAusIMM), Manager, Mining and Environment at the Greenbushes Lithium Operations each of whom is a full-time employee of Talison
and a “Qualified Person” in accordance with National Instrument 43-101. The lithium Mineral Reserves were calculated based on a 2% Li2O cut-off
grade and the costs and recoveries for the second stage expansion of the Greenbushes Lithium Operations. The Mineral Reserve calculations were
reviewed by Mr. Peter Ingham (MSc, BSc, FAusIMM, MIMMM, Cen), General Manager Mining, of Behre Dolbear Australia Pty Ltd. Mr. Ingham is
independent of Talison and a “Qualified Person” in accordance with National Instrument 43-101.
Scientific and technical information in this presentation was reviewed by Andrew Purvis, General Manager Geology, Talison.
www.talisonlithium.com
24
Disclosure Notice
Disclosure Regarding Financial Information
Information in this presentation is in relation to the financial condition and results of operations of Talison Lithium Limited (“Talison” or the “Company”)
as at March 31, 2012 and for the three and nine months ended March 31, 2012. This presentation should be read in conjunction with the unaudited
condensed consolidated interim financial statements of Talison and the related notes thereto as at March 31, 2012 and for the nine months ended
March 31, 2012 (collectively, the “Financial Statements”). The financial information contained in this presentation is derived from the Financial
Statements, which were prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts in this presentation are
expressed in Australian dollars (“A$”) unless otherwise identified. References to “C$” are to Canadian dollars and references to “US$” are to United
States dollars.
Prior to acquiring the Greenbushes Lithium Operations on August 12, 2010 (the “Reorganization”), Talison was a dormant entity and did not trade in
any capacity. However, the acquisition of the Greenbushes Lithium Operations has been determined to be a common control transaction which the
Company has elected to account for on a continuity of interest basis. While continuity of interest accounting is not required by IFRS, it is also not
prohibited by IFRS. Continuity of interest accounting is common practice under Canadian generally accepted accounting principles for such
transactions. As a result of Talison’s election to use continuing of interest accounting, the results of the Greenbushes Lithium Operations prior to the
date the Company acquired the Greenbushes Lithium Operations (being, from July 1, 2010 to August 11, 2010) have been included as comparatives in
the Financial Statements. The results of the Greenbushes Lithium Operations prior to the Reorganization have been extracted from the group financial
statements of Talison Minerals Pty Ltd (“Talison Minerals”), which became a wholly-owned subsidiary of Talison on August 12, 2010.
Readers of this presentation are cautioned that certain statements in this presentation may relate solely to the debt and capital structure of Talison
Minerals before the Reorganization and may be of no consequence to the ongoing operations of Talison. For further information refer to Management’s
Discussion and Analysis of the financial condition and results of operations of Talison Lithium Limited as at March 31, 2012 and for the nine months
ended March 31, 2012 (which can be found on Talison’s SEDAR profile at www.sedar.com).
Disclosure Regarding Non-IFRS Performance Measures
This presentation uses EBITDA as a key metric in assessing Talison’s operating performance without the effect of interest, taxes and depreciation and
amortization, as it reflects the cash generated by Talison’s business. This term is not a defined financial measure according to IFRS and does not have
any standardized meaning prescribed by IFRS. Therefore, this measure may not be comparable to a similar measure used by other enterprises. This
measure should not be considered an alternative to net profit / (loss) cash flow from operating activities or other measures of financial performance
calculated in accordance with IFRS. Rather, EBITDA is provided as additional information to complement IFRS measures by providing further
understanding of the results of operations from management’s perspective. EBITDA is calculated by adding net interest expense / (income), income
tax expense / (benefit) and depreciation and amortization to net profit / (loss). For further information refer to “Non-IFRS Performance Measures” in
Management’s Discussion and Analysis of the financial condition and results of operations of Talison Lithium Limited as at March 31, 2012 and for the
nine months ended March 31, 2012 (which can be found on Talison’s SEDAR profile at www.sedar.com).
www.talisonlithium.com
25

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