INDUSTRIAL METALS, MINERALS AND MINEABLE ENERGYINVESTMENT SUMMIT 2010
LONDON CHAMBER OF COMMERCE & INDUSTRY ● WEDNESDAY, 30 NOV 2010
www.ObjectiveCapitalConferences.com
The Chinese agricultural revolution
and building the new potash powerhouse Richard Poulden – Deputy Chairman, Sirius Minerals
BUILDING THE NEW POTASH POWERHOUSEObjective Capital Investment Summit– 3 November 2010
SIRIUS MINERALS PLC
Important NoticeThis document is produced for information only and not in connection with any specific or proposed offer (the “Offer”) of securities in Sirius Exploration Plc (the “Company”). The information and opinions contained in this presentation, all of which are in draft form, are provided as at the date hereof and are subject to amendment without notice) completeness This at investment professionals defined Article 5) of the Important Notice (notice), further verification and completeness. document is directed as in 19(Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and at organizations of a kind described in and to whom Article 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (High Net Worth Companies, Unincorporated Associations, etc.) applies (all such persons together being referred to as "relevant persons"). 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• Potash is highly valuable and strategic• Sirius is the only globally diversified potash development
company and the only potash company quoted in London• Multiple projects in OECD countries• Committed to becoming a major low cost and low risk
producer of potash• 2nd value horizon in related environmental technology• Experienced development team
Investment OverviewGlobally diversified portfolio of potash projects
Board of DirectorsComprehensive spread of skills and experience
Former Chief Financial Officer and Business Development Director of Fortescue Metals Group during its major growth phase from start-up to multi-billion dollar iron ore producer. Previously Director of Consolidated Rutile, CFO Iluka Resources.
Christopher Catlow, Chairman
Successful companies in natural resources, healthcare, technology, venture investment. MA Oxford, MBA London/Harvard, merchant banker, Barrister.
Richard Poulden, Deputy Chairman
Project evaluation for Rio Tinto, Senior Geologist Exploration North America. Experience in copper, lead, zinc, gold, diamonds, iron ore across Russia, Africa, and Europe.
Derek Stonley, Director
Chairman Z/Yen Group. Seismology, cartography for oil & gas, then financial services. Created global oil industry cartographic standard databases Geodat and Mundocart.
Michael Mainelli, Non-Exec Director
Photo Photo
Photo
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Intercontinental Hotels Africa and the Middle East. Management buy-in of 25 hotels from Queens Moat Houses plc with Duke Street Capital. Floatation of Top Notch Health Clubs on AIM.
Jonathon Harrison, Finance Director
Photo
• Boyd Petrosearch– Global geophysics leaders specialising in Potash/Salt
exploration– Seismic project management and data interpretation
experts
• North Rim Exploration– Leading geoscience and engineering group specialising
in Potash development– Assessment, verification and mine planning capabilities
• Schlumberger– Global drilling expertise, subsurface engineering &
project development
Technical PartnershipsWorld leading expertise
• Potash is of critical importance and value
• Sirius is developing a globally diversified portfolio of potash projects
• Committed to being a large-scale, low cost, reliable supplier
• Focused on low risk countries with access to reliable infrastructure
Strategy to Create Shareholder ValueTo become one of the world’s most important potash suppliers
• Plants require three primary nutrients above all others:– Nitrogen (N): promotes protein formation, growth and yield
– Phosphorus (P): helps root development, photosynthesis, and drought resistance
– Potassium (K): helps photosynthesis, strengthens cell, increases resistance, and importantly speeds the absorption of N and P
• NPK fertilizers are vital to the global food supply
• Potassium has no substitute in plant physiological function
• Potash has no commercial substitute
Potash 101One of life’s basic building blocks
Population Growth• More People means
More FoodLess Land• More Food from
Less LandDecreasing Soil Quality• More fertilisers needed to
maintain crop yields= Potash Demand Growth
Megatrend: Food SecurityComplex problem, simple equation, simple answer
WORLD WORLD
ASIA
AFRICA
1920 1940 1960 1980 2000 2020 20400
2000
4000
6000
8000
10000
AFRICAAfrica Africa Africa Africa Africa Africa
ASIA
Asia AsiaAsia Asia Asia Asia
WORLD
World WorldWorld
WorldWorld
World
World Population Growth Projectionpop.millions
1980 1983 1986 1989 1992 1995 1998 2001 2004 20070
0.050.1
0.150.2
0.250.3
0.35Arable Land per Personha/p
Source: United Nations
Source: FAO Statistics Division 2009
19811983
19851987
19891991
19931995
19971999
20012003
20052007
20090
1000
2000
3000
4000
5000
6000
7000
INDIAIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndiaIndia
CHINA
ChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChina
GNI per Capita Growth in Asia(USD)• The global diet is changing• Increased demand for meat as
affluence rises• Increased meat production requires
increased productivity of animal feedIncreased meat demand
= Increased potash demand
Added Demand Pressure: Protein DemandMaking the problem worse, but still a simple solution
Poultry Pork Beef0
2
4
6
8
Common Feed Conversion RatiosApproximate kg Grain Required
per kg Meat
Source: FAO Statistics Division
1980 1985 1990 1995 2000 2005 2010 2015 20200
10
20
30
40
50
60Global Meat Consumptionkg/p
Source: World Bank, World Development Indicators 2009
Source: FAO Statistics Division
• Biofuels have emerged as a potential solution to climate change and energy security
• Debate continues on lifecycle greenhouse gas reduction• Forecasts vary but long-term targets of between 30% and 50% of
transportation fuel being replaced would significantly boost demands on biofuel crops
• Key biofuels crops – sugar cane, corn, rape seed, palm oil, and soybean are all major potash users
• Increased biofuel demand diverts further arable land away from food production
Increased biofuel demand = Increased potash demand
Added Demand Pressure: BiofuelsMaking the problem worse, but still a simple solution
Rest of World
USA
China
India
Indonesia
Malaysia
Brazil
North AmericaEastern Europe
Western Europe
Latin America
Middle East
East Asia
Global Supply and Demand for PotashThe brown charts show global percentage of supply from key exportersThe blue charts show global percentage of demand from key importers
• Asia represents a large growing demand market ~54%
• Production is concentrated between Canada and Russia / Belarus
• Three marketing groups control over 70% of supply
Market StructureAsia and particularly China and India are key markets
• The concentration of supply over large consumers provides opportunity for Sirius
Source: PotashCorp DataTool Markets Estimates
• Sirius and Sino-Agri signed an MOU in August• This gives an extensible 180 days for the parties to
agree:– An off take agreement for the Adavale potash– A joint development agreement for Adavale
• Sino Agri is part of the second largest fertilizer distributor in China
• They recently placed a potash mine in Laos into first phase production
MOU Announced with Sino Agri
Saskatchewan/Williston Basin• ~33% of the world’s Potash
comes from Williston Basin• Estimates* of 50 billion tonnes
of Potash in North Dakota• Sirius holds 50km2 of claims• Close to rail, gas, and water• 250km northwest of Bismark• Known exploration targets
– Historic data on all properties from previous exploration– High quality solution mining targets ready for drilling based on 2D seismic– New drilling programme underway
North AmericaDakota Salts Project – Williston Basin, North Dakota
* North Dakota State Government Geological Survey: https://www.dmr.nd.gov/ndgs/mineral/nd_saltnew.asp
• Sirius has undertaken a detailed reinterpretation of the existing seismic and analysis of the existing core
• Prairie evaporate contains significant thicknesses of salts principally:
– Halite (conventional salt)– Sylvite (potash)
North AmericaDakota Salts Project – Williston Basin, North Dakota
• Initial volumetric calculations based on preliminary core:
– 6 to 10.7 metres thickness of Potash– 18 to 25 % grade K2O– Depending on grade: 2.1 to 5.2 million
metric tonnes per km2
– 2,450m to 2,750m deep
Boree salt in the Adavale Basin• 602km2 of claims• 50km south of Blackall• Rail and water available• Data from prior exploration
– Amoseas & Phillips-Kuny 1960’s– Esso Australia and AAR 1980’s– Poseidon 1983/84– Denison Resources 1988/89
• Significant Potash known to exist in Boree from previous drillings • Drilling sites identified from recently completed seismic interpretation
AustraliaAdavale Project, Queensland
• Historical drilling and assay results suggested 18% KCl in the Boree
• Historical sampling and analysis not focused on potash
• Photo’s of old core show good quality potash
• Negotiations with Sino Agri progressing
AustraliaAdavale Project, Queensland
Historic Drilling
Bonnie 1 Core sample from 2,244m.Sylvite matric in sylvinite interval
Canning Basin• 1,250km2 of claims• 200km SE of Broome• Close to energy projects• Existing data from prior
Rio Tinto exploration• Mallowa salts underlay the
claims approx 450 metres thick at a depth of 550 metres
• Identified as prospective for economic Potash mineralisation (RTX Report No. 28456)
• Seismic and drilling targets currently being generated
AustraliaDerby Salt Project, Western Australia
Barriers to EntryBarriers shape corporate strategy
Globally diversified portfolio of projects in place
Sirius Strategic Response
Limited reserves outside control of the existing producers
Common Views on Barriers to Entry
1 1
Untapped reserves often in difficult locations
2
High development costs3
Long lead times for greenfield mines
4
Environmental opposition5
Assumption that operating costs of new supply will exceed existing
6
Projects in OECD countries and close to existing infrastructure2
Build direct partnerships with major customers that can assist financing – e.g. SinoAgri MOU3
Project pipeline, fast-track production, major long-term customer partnerships4
Sirius’ 2nd horizon environmental technologies potentially add value to potash5
Use low cost techniques and low cost finance where possible6
• Sirius is developing key carbon and energy storage patents and technology through its 100% acquisitions of:
– CO2 Energy Storage Pty Ltd (QLD, Australia), – Bicarb Sequestration Pty Ltd, and – CO2 Energy Storage Ltd (Nevada, USA)
• North Dakota is the most prospective of US states for wind power– The US Government has expressed broad support for wind power initiatives– The generation of wind power requires storage to conserve energy and smooth loads– Sirius and the Electrical Power Research Institute (EPRI) are conducting a cost-benefit analysis for a Bulk Energy
Storage (BES) facility servicing a 134MW power plant– Multiple potential value streams including load levelling – may also capture CO2 credits
• North Dakota Project is very close to significant hydrocarbon pipelines– Salt caverns are a relatively efficient form of storage for hydrocarbons
• Queensland’s abundance of coal and emerging gasification industry also presents opportunities for Sirius’ technologies
Environmental TechnologiesA valuable 2nd horizon of value for Sirius
Sirius’ Place in the IndustryDeeply undervalued with a big opportunity
Company Sector Focus Location Status ‘08 Prodn Market Cap
Sirius (AIM:SXX) 2 potash Australia, USA Exploration, No
resources N/A £51m
Western Potash (TSX:WPX) 2 potash Canada 1 Exploration , 1
Resource N/A C$66m
MagIndustries (TSX:MAA)
1 potash & Magnesium Republic of Congo Resource, EPC & Funding N/A C$140m
Potash One (TSX:KCL) 1 potash Canada 2.5Mtpa PFS N/A C$306m
Intrepid Potash (NYSE:IPI) 3 potash USA Production ~ 1Mt US$2bn
Kali & Salz (XETRA:SDF)
Multiple potash & Magnesium Europe Diversified ~ 3.6Mt €8.4bn
ICL(TASE:ICL)
Multiple potash & Phosphate
Israel, Europe, N/S America & China Diversified ~ 5Mt US$67bn
Mosaic Group (NYSE:MOS) Diversified N-P-K Canada, USA Diversified ~ 7.1Mt US$27bn
PotashCorp (NYSE:POT) Diversified N-P-K Canada, USA Diversified ~ 8.7Mt US$43bn
• Acquired a portfolio of Potash projects in OECD countries
• Undertaken comprehensive seismic and drilling data review in North Dakota and Queensland, with Western Australia underway
• Advanced production protocols with Government and commenced drilling programme in North Dakota
• Advanced commercial relationship with Sino Agri
• Commenced investigations of complementary environmental value-adding technologies
• Developed an
Building The New Potash Powerhouse Achievements to date
• Globally diversified potash developer
• Committed to becoming a long-term, low-cost, low risk supplier
• Quality projects in the best locations
• Experienced Board
Investment PropositionBuilding the New Potash Powerhouse
BUILDING THE NEW POTASH POWERHOUSEObjective Capital Investment Summit– 3 November 2010
SIRIUS MINERALS PLC
