unlocking the worlds lateritic ores to address the shortage of both - - PowerPoint PPT Presentation

– unlocking the world’s lateritic ores to address the shortage of both nickel and cobalt. The Metals Extraction/Recovery Process for the Future

The DNi Process™ is Enabling Technology: A low cost, efficient and environmentally sympathetic route to the production of nickel, cobalt and transitional products for the EV battery and stainless steel markets

patented, unique, game changing

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• Nickel production is already being
• utstripped by demand
• Cobalt production soon will be

Where will all the nickel and cobalt required to supply the EV battery market come from? The DNi Process™ provides a solution…

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Nickel-Cobalt Laterite Projects – an abundant source of both metals

Ø Nickel-cobalt laterite deposits are typically located in “humid tropical climates”, according

to the USGS;

Ø Without new nickel mines, there are not going to be a lot of new cobalt mines; Ø “Cobalt is the element that makes up for the lack of stability of nickel. There isn’t a better

element than nickel to increase energy density, and there isn’t a better element than cobalt to make the stuff stable. So (while) you hear about designing out cobalt, this is not going to happen in the next three decades. It simply doesn’t work.” Umicore Chief Executive Marc Grynberg;

Ø Nickel laterites make up around 73 percent of the global Nickel resource; Ø “With the success of the DNi hydrometallurgical process, Ni-Co laterites may be a much

larger contributor to the world’s production of Nickel.”: Marsh & Anderson, USGS 2011.

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The DNi Process™ unlocking the world’s lateritic ores

The DNi Process™:

Ø treats the entire lateritic profile (limonite, saprolite and the transition zone); Ø uses nitric acid to dissolve and recover any saleable metal found in lateritic ores; Ø applies simple chemistry; Ø operates at standard atmospheric pressure and, for a hydrometallurgical process, low

temperatures;

Ø recycles and reuses 95% of the nitric acid through a unique and patent-protected

technology;

Ø produces a mixed-hydroxide product for direct sale into the stainless steel market or, after

refining, products for the EV battery industry.

How are laterites currently being processed?

Ø The British Geological Survey estimates that 73% of the continental world nickel resources

are lateritic;

Ø High Pressure Acid Leaching (HPAL) is the dominant extraction process for lateritic ores and

is a hydrometallurgical process;

Ø Other processes such as the Ferro-Nickel process and the Nickel Pig Iron process are

designed to supply the stainless steel industry only and are pyrometallurgical processes; But…None of these processes can treat the full lateritic profile; And…HPAL is technologically challenging and costly, requiring titanium-lined autoclaves and sulphuric acid generation – leading to massive cost overruns and delays on HPAL projects in recent years (Goro and Ambatovy, for example).

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The DNI Process™ is not an HPAL process

The DNI Process™:

Ø processes the full lateritic ore profile – HPAL can only process the limonite; Ø operates at 1 atmosphere – HPAL operates at up to 44 atmospheres; Ø operates at 100 degrees C – HPAL operates at temperatures above 230 degrees C; Ø uses common construction materials such as stainless steel tanks – HPAL requires

sophisticated, titanium-lined autoclaves, each the size of a small submarine;

Ø Consumes very little acid with 95% being recycled and reused – HPAL uses 200-520

kg/tonne of ore processed;

Ø Produces relatively little, environmentally inert waste which is nitrogen-rich – HPAL

produces over twice as much waste which requires neutralisation and disposal.

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Other unique features of the DNI Process™

Ø It can process mine tailings or waste material from other processes including, potentially, slag

produced by ferro-nickel plants.

Ø

It is a flexible process able to adapt to changing market demands and can produce nickel metal or battery precursors (such as nickel sulphate, cobalt sulphate and cobalt oxide), a mixed hydroxide product or a mixed oxide product both of which can be sold into the stainless steel market

Ø It will extract any metal which will dissolve in nitric acid. Ø It produces a number of other saleable products such as haematite for the steel or pigment industry

and magnesium oxide, without the creation of CO2 – the only process to do that.

Ø The DNi Process™ uses continuous, rapid tank leaching to achieve high metal recovery rates

(90-95%), particularly of nickel and cobalt but also of haematite, magnesium oxide, scandium or any

• ther metal which will dissolve in nitric acid.

Ø With a minimum threshold plant size of around 5,000 tonnes per annum nickel output the capex

commitment is significantly less than that required to implement competing technologies. 9

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Pyrolysis/calcination Sulphuric Leach Solvent Extraction Electrowinning Scrubbing or to NOX recovery Residue recycled to leaching circuit Electrowinning Nickel Cathode Cobalt Cathode Nickel strip solution Mixed Oxide Product MHP

Proposed possible refinery flowsheet for the DNi MHP

OPEX and CAPEX

Ø A plant utilising the DNi Process™ has a very low operating cost - for example, for a plant, producing

20,000 tonnes of contained nickel, the plant operating cost would be $2.27 per lb of nickel before co- product credits are taken into account (from the sale of cobalt, haematite, MgO or other metals contained in the ore) - with G&A excluded. The operating cost will approach zero as the value of the co-products, particularly cobalt, increases.

Ø A plant processing 1.37 million dry tonnes of ore per annum (equivalent to a 20,000 tpa nickel output

plant assuming 1.46% Ni contained in the ore) is estimated to cost from $500 million to build (depending on site-specific parameters). 11

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Environmental

The DNi Process™ is environmentally sympathetic – setting it apart from any other hydrometallurgical

• r pyrometallurgical processes:

Ø with around half the tailings footprint of an HPAL plant (the only other hydrometallurgical process

currently in use) of the same capacity (principally due to the recycling of the nitric acid and the addition

• f fewer neutralising agents);

Ø produces inert, nitrogen-rich tailings (nitrates in processed residue break down to usable nitrogen

for plant growth) - this may prove to be a major advantage in nitrogen deficient, high-rainfall tropical environments, boosting local agriculture;

Ø lowers production costs and efficiently reduces associated environmental issues; Ø produces magnesium oxide (MgO) without the creation of CO2 - a significant greenhouse gas.

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Background

The DNi Process™ - initiated by an inventor, developed by experts and now being led by entrepreneurs:

Ø

DNP’s technical partners include Drinkard Metalox Inc (the inventor of nitric acid recycling), Teck Resources Ltd and Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO), all of which have considerable experience in mining and minerals processing and recognise the distinct advantages of the DNi Process™ when compared to existing technologies

Ø

The DNi Process™ has been significantly de-risked with the assistance of these partners and through rigorous testing and development at the one tonne per day (input) pilot plant in Perth, Western Australia which occupies over around 450 square metres (almost 5,000 square feet) at CSIRO’s Australian Minerals Research Centre located on the campus of Curtin University

The 1 tonne/day (input) DNP Pilot Plant has proven that the DNi Process™ is simple and safe to operate on a continuous basis, with metal recoveries and reagent recycling meeting and, in many cases, exceeding expectations The DNi Process™ is protected by registered patents

Mixed Hydroxide Product Iron Oxide (as Hematite) Co-product Magnesium Oxide Co-product

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15 Now controlled by Windward Prospects Ltd (a UK-based venture investment company), Direct Nickel Projects Pty Ltd is being driven to commercialise the DNi Process™ by DNP’s directors: Ø Andrew Vickerman, Chairman - ex Rio Tinto, Lihir Gold and a current director of Trafigura; Ø James Proudlock, CEO – over 30 years experience in commodity-related banking, trading and trade finance with Swire Pacific, Man Group, UBS, JPMorgan, the London Metal Exchange and Hong Kong Exchanges ; Ø Christopher Gower, Exec. Director & Deputy Chairman - Managing Director of Windward Prospects Ltd; Ø Stephen Stout, NED - most recently responsible for the Asian expansion of the DMGT group; and Ø Vincent Sweeney, NED & Co. Sec. - a principal of Sydney Capital Partners Pty Ltd.

Acquiring the right to use the DNi Process™

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DNP has identified battery manufacturers, electric vehicle manufacturers and owners of stainless steel mills as those most likely to wish to licence the technology due to their need for a sustainable, long-term supply of raw materials.

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DNP will provide the processing technology and full technical support to its licencees who will build,

• wn and operate the processing facility with ongoing support provided by DNi.

Ø

In return, DNP will receive a combination of licence fee, profit share and/or equity share, to be negotiated on a case-by-case basis. 16

APPENDICES

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APPENDIX 1 – GLOBAL NICKEL SUPPLY AND DEMAND

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Nickel demand – Stainless Steel

According to the International Nickel Study Group, world primary nickel production was 1.99 million tonnes in 2016 and it is projected to increase to 2.05 million tonnes in 2017. Meanwhile, world primary nickel usage was 2.04 million tonnes in 2016, but should increase to 2.15 million tonnes in 2017. 2017 was the second consecutive year of deficit between production and demand. “We estimate 2017 primary Ni demand in stainless will increase by almost 9% to more than 1.5Mt. We forecast continued growth for 2018 and beyond. “: Glencore, November 2017

20 Nickel & Cobalt demand – the EV Battery Market As Glencore asked in a presentation delivered in November 2017: “Where will all the primary nickel needed come from?” In the same presentation, Glencore stated “We conservatively estimate more than 10M EVs will be sold a year in 2025 and that will generate net additional primary nickel requirements of over 400Kt Ni in 2025 only. Battery demand will very likely be a transformational demand event, which will turbo charge primary nickel demand in the next decade.”

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Nickel market balance

Nickel market balance (Kt Ni)

1'700 1'800 1'900 2'000 2'100 2'200 2'300 2015 2016 2017F 2018F Supply Demand 2015 2016 2017 2018

Global Supply (Kt) 1,985 1,964 2,059 2,153

• 2.5%
• 1.1%

4.8% 4.6%

Sulphide 804 785 752 700 Laterite 1,181 1,179 1,307 1,453

Hydro-metallurgical

306 273 263 261

Pyro-metallurgical

874 906 1,043 1,192

China NPI

403 361 395 480

Indonesia NPI

29 91 178 228

Other FeNi/Matte

442 453 471 484 Global Demand (Kt) 1,896 2,036 2,226 2,293

• 0.2%

7.4% 9.3% 3.0%

China 1,013 1,125 1,210 1,226 Indonesia 2 53 191 Europe 334 336 353 329 US 120 114 137 121 Japan 133 141 146 152 Korea 79 86 82 68 Taiwan 69 70 74 56 India 50 68 77 65 Other 99 94 93 85 Global Balance / Surplus (Kt) 89

• 72
• 167
• 140

Source: Glencore

APPENDIX 2 – GLOBAL COBALT SUPPLY AND DEMAND

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DRC 60% Australia 4% Cuba 3% Philippines 4% Canada 6% Zambia 3% Russia 3% New Caledonia 3% Other 14%

MINED COBALT OUTPUT 2016

Source: Macquarie Research Report, October 2017

Cobalt applications can be subdivided into two categories, chemical and metallurgical:

Ø Chemical applications are dominated by the rechargeable batteries segment - in 2016, this

segment represented ~78% of chemical cobalt demand and ~50% of global cobalt demand;

Ø Metallurgical cobalt is mainly used to produce high-temperature alloys - in particular “super-

alloys” 24 EVs 4–14 kg Up to ~US$1,146 PHEVs <1–4 kg Up to ~US$327 Laptop 30–50 g Up to ~US$4 Tablets 20–50 g Up to ~US$4 Smartphones 5–20 g Up to ~US$2

Cobalt Content by Device

Amount Cost1

Consumer battery 39% Superalloys 18% EV Battery 10% Hard Metals 8% Ceramics/Pigments 6% Catalysts 5% Hard Facing 4% Tyres/Paint 4% Magnets 3% Others 3%

TOTAL DEMAND BY SECTOR

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Ø The majority of cobalt’s expected demand growth is attributable to rechargeable batteries with

robust demand expected and 6.9% CAGR forecasted from 2016 to 2020.

Ø Cobalt demand in Li-ion batteries is expected to grow at an 11.7% CAGR from 2016 to 2022. Ø When cobalt was a niche market for super-alloys, no-one worried too much about it coming

predominantly from the Democratic Republic of Congo, a country plagued by armed insurgency and “artisanal” miners who are often children.

Ø Lateritic ore provides a more politically and ethically acceptable source of cobalt.

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APPENDIX 3 – EV BATTERIES

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The value of the DNi Process™ - Ni, Co, MgO, Fe2O3, Sc…

Because the DNi Process™ is simple but elegant chemistry, made commercially viable by the recycling of the acid utilised to dissolve the ore, it is very adaptable and able to deliver products from lateritic ores and other feedstock (e.g. tilings), unlike any competing technology Nickel: Ø is widely used in over 300,000 products for consumer, industrial, military, transport, aerospace, marine and architectural applications Ø is mostly used in alloying - there are approximately 3,000 nickel-containing alloys – about two-thirds of these are utilised in stainless steel

Ø Stainless steel represents the single largest use of nickel and typically contains 8-12% nickel - some nickel-based alloys with higher nickel contents are used for more demanding applications such as gas turbines and some chemical plants

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Ø

The Paris Declaration on Electro-Mobility and Climate Change has set a target of 100 million EVs by 2030 which could require an increase of over 4x the current annual cobalt production.

Ø

Governments are responding by banning the sales of petrol and diesel vehicles;

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Norway and Netherlands by 2025; India and Germany by 2030; UK and France by 2040; and China is working with regulators to set a timeline.

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Volvo has pledged to manufacture only electric and hybrid vehicles by 2019.

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At least 39 automakers have invested in electric and plug-in hybrid electric vehicles with the vast majority of these utilising battery technology involving nickel and cobalt.

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China has set a target that would see zero emission vehicles represent 10% of new car sales by 2019 and 12% by 2020.

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Currently, most EV batteries contain roughly equal amounts of nickel, manganese and cobalt, called NMC 111. By 2025 the dominant composition will be 80 percent nickel and 10 percent cobalt, according to UBS AG forecasts. 29

APPENDIX 4 – COMPETITIVE PRICE METRICS

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• RBC Capital Market’s cost curve for the nickel industry reveals that the 75th percentile of the

industry’s cash cost is $5.05 USD/lb, meaning that 25% of the world’s nickel producers will have negative cash flows as a result of $5.05 USD/lb spot price.

• Generally, for a healthy market, analysts look to the 90th percentile of the cost curve to

suggest an sustainable price. In terms of the nickel market, the 90th percentile represents a cost of production of $7.85 USD/lb.

• Compared to the current nickel spot price of around $5.80 USD/lb, that is a 35% increase to

reach a level at which 90% of producers will be able to produce nickel at a profit.

• By comparison:
• for a plant producing 20,000 tonnes of contained nickel, the operating cost would be

$2.27 per lb of nickel before taking into account co-product credits - from the sale of cobalt, hematite, MgO or other metals contained in the ore and with G&A excluded;

• the operating cost for a 5,000 tpa Ni plant is estimated to be around $4.85/lb before the

same credits and with G&A excluded. 31

Main Area 20,000 tpa Ni (US$-M) 5,000 tpa Ni (US$-M) Treatment Plant 225.5 98.5 Reagents & Plant Services 96.7 46.6 Nitric Acid Plant/Storage 43.6 1.3 Infrastructure 18.5 9.7 Power and Steam Generation Plant 252.1 85.7 Mining 1.0 0.5 Contractor and Construction Distributables 31.2 13.5 Subtotal 668.6 255.8 Management Costs (Inc. Vendor Reps) 82.6 40.0 Owners Costs (incl spares) 99.2 43.8 Subtotal 850.4 339.6 Contingency 212.6 84.9 Project T

• tal

1,063.0 424.5

Process Plant – Capital Costs The estimated capital costs for constructing a 20,000 tpa Ni and a 5,000 tpa Ni plant are shown below. It should be noted that these are indicative costs and have been prepared before a feasibility study has been completed. The actual costs will be developed during the FS and will be site specific. It is highly likely that the commercial plant will be constructed at a cost significantly less than those shown in the table. 32

The Hydrometallurgical Process for the future

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