Magnis Resources

99.99% TGC Spherical Coated Graphite produced without Chemical and Thermal Purification

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Overview

Magnis Resources (ASX:MNS) is a near-term graphite producer with a flagship property in Tanzania. The Company’s 100-percent owned Nachu Graphite Project in Tanzania is one of the world’s most advanced and shovel-ready graphite projects.

Magnis Resources has made significant progress at Nachu as the project is now fully permitted, has a completed Bankable Feasibility Study, a power supply agreement and a favorable port authority agreement. The Nachu project is expected to come online alongside the forecast increase in graphite demand for lithium-ion batteries.

Magnis has demonstrated that Nachu represents a viable alternative for end users seeking a greener and lower cost supply chain for graphite anodes in lithium-ion batteries. No other project in the world is able to produce high performance, high purity graphite products without the use of any chemical or thermal purification methods which in turn makes Magnis the lowest cost producer in the market.

Company Highlights

  • One of the largest Mineral Resources of large flake graphite in the world: 174 million tonnes at 5.4 percent Total Graphitic Carbon for 9.3 million tonnes contained graphite.
  • Bankable Feasibility Study released in March 2016
    • Post-tax NPV (10 percent) of US$1.69 billion with 98 percent IRR:
    • Capital payback of 14 months: and
    • Capital cost estimate of US$269 million.
  • Demonstrated ability to produce a >99.95 percent purity coated spherical graphite anode product with no chemical purification processes.
  • Key environmental, mining permits and fiscal agreement in place.
  • Power contracts secured, port authority agreement nearly complete.
  • Currently arranging project financing and offtake/supply agreements.

Nachu Graphite Project

Magnis’ wholly-owned Nachu Graphite Project covers approximately 199 square kilometers and is located in southern Tanzania, west of the coastal city of Lindi and approximately 220 kilometers from the port city of Mtwara.

Magnis-Nachu-Location

First discovered in 2013, the property contains five deposits with mineralization at or near surface. The modelled resource depths vary between deposits with over 85 percent of the defined total resource less than 150 meters from surface.

In February 2016, Magnis released an updated JORC-compliant mineral resource estimate for Nachu showing 174 million tonnes at 5.4 percent graphitic carbon (Cg) at a 3 percent Cg cut-off grade. With 124 million tonnes in the Measured or Indicated categories, Nachu represents one of large, jumbo and super jumbo flake graphite in the world.

magnis1

High purity anode graphite product

Since 2Q 2015, Magnis has been working with a number of prospective end users and supply chain parties to demonstrate the company’s ability to commercially produce high performance anode graphite which meets or exceeds end user specifications.

In April 2016, the company announced that it had produced a >99.95 percent purity coated spherical graphite anode product from Nachu graphite using existing commercial scale technology. The high purity material was made from larger size flake graphite without any chemical or thermal purification or use of toxic acids. The anode product demonstrated outstanding battery cell performance comparable to leading Chinese natural and synthetic graphite anodes.

The ability to produce battery grade anode material using existing commercial scale technology in North American facilities without the use of chemicals and toxic acids demonstrates that Magnis represents a viable alternative for end users seeking a greener and lower cost supply chain for graphite anodes in lithium-ion batteries.

“Magnis has now illustrated the pathway to a supply chain that is both greener and more cost effective for sustainable industries using lithium ion batteries,” said Magnis CEO Dr. Frank Houllis. “With qualification work continuing, Magnis expects to realize further improvements in both the quality of its anode graphite and the cost efficiency of its production.”

Bankable feasibility study complete

Magnis completed a bankable feasibility study (BFS) for the Nachu Graphite Project in March 2016. The study shows that the high quality size, purity and crustal structure of the contained graphite flake at Nachu should result in robust financial returns and low technical risk. The BFS considers high purity product delivered from solely flotation and without chemical purification with a nameplate capacity of 240,000 tonnes per annum graphite concentrate over an initial mine life of 15.2 years.

magnis2“The release of the BFS is another important milestone towards the development of the Nachu Graphite Project,” commented Houllis. “It confirms that the project has outstanding projected financial returns. The BFS also details how premium graphite concentrate products of exceptional size and purity can be generated using low cost flotation processes with an exceptionally small environmental footprint. These products are targeted into fast growing graphite markets such as the lithium-ion battery sector and the BFS firmly demonstrates the commercial viability of the Nachu Project to potential end users.”

Mining license and mineral development agreements in place

In September 2015 the Ministry of Energy and Minerals of Tanzania issued Magnis a Special Mining License (SML) for the Nachu Graphite Project for a period of 16 years. The license covers approximately 30 square kilometers of the existing Nachu exploration license, containing a suitable area for mine development including the resource areas of Blocks F, FS, J and B.

In October 2015, the company finalized a Mineral Development Agreement (MDA) with the Tanzanian Government for a period of 10 years. The agreement provides the Nachu Project with necessary fiscal stability including a 30 percent tax rate and 3 percent production royalty.

“We certainly welcome our partnership with the Government in the Project and we look forward to our end goal of bringing Nachu into production in a sustainable manner for the benefit of all stakeholders, especially the local community,” stated Magnis Chairman Frank Poullas. “The Nachu Project has the potential to be of similar economic significance to Tanzania as the gold industry, which has also benefited from the political stability and degree of comfort from previous MDA agreements.”

Power supply agreement

Magnis has secured a power supply agreement with Symbion Power, a leading US-based power engineering and construction group. The agreement includes the development and operation of a dedicated 30 MW gas fired power station, associated substations and a 132 KV transmission line to connect Nachu to the main power grid. The development has the principal approval of the Tanzania Electric Supply Company.

”Magnis has closely studied a variety of power supply options for Nachu and we believe this Agreement represents the most attractive and viable pathway to provide a stable power supply for Nachu,” stated Poullas.

Port authority letter of intent

The export route outlined in the BFS calls for the graphite concentrate produced on site to be trucked 200 kilometers to a storage facility located near the Port of Mtwara. The port has 400,000 tpa capacity with current utilization between 130,000 and 140,000 tpa, and existing plans to upgrade the port to 750,000 tpa.

In June 2016, Magnis announced a Letter of Intent (LoT) from the Tanzania Port Authority (TPA) allowing the company to move to the next phase of acquiring a long-term lease at the Port of Mtwara. Under the terms of the LoT, Magnis would be allocated 25,000 square meters of land adjacent to the main wharf and berth of the port—the company’s preferred location for its concentrate storage facilities. Magnis is now working to finalize its applications for a long-term lease agreement with the TPA.

Land compensation payments 95% complete

Following an announcement to the ASX in late November 2016 regarding the completion of the land valuation process, Magnis is in the final phase of the compensation process. Those residents who are affected by the SML have been offered and accepted resettlement to a new village area to be constructed by Magnis. IFC principles and guidelines have been used throughout the process with affected residents being resettled into new accommodation to an equivalent or better standard. The new resettlement village proposed by the company will exceed these guidelines.

Offtake agreements

Magnis Resources is in advanced discussions concerning offtake agreements with potential customers from North America, Europe, Japan and Korea. End user interest has increased significantly following the continued release of stellar lithium-ion battery test results on Nachu anode product.

The Company recently signed a Memorandum of Understanding (MOU) with Russia’s ROSATOM International Network (ROSATOM) for project financing and offtake of super Jumbo and Jumbo flake graphite. ROSATOM are a highly regarded group that is a world leader in the construction and operating of nuclear reactors with flake graphite being a key material used in nuclear reactors. Both Magnis and ROSATOM will jointly progress the MOU with a view towards a Binding Agreement.

Board of Directors

Frank Poullas – Non-Executive Chairman – MAICD
Frank Poullas has spent the last 15 years working in the investment banking and engineering sectors. In his personal capacity is a professional investor specializing in the resources sector. For over 15 years he has been involved in various ventures increasing shareholder value in the resources sector.

Professor M. Stanley Whittingham – Non-Executive Director

Professor Whittingham has over four decades of experience in the Lithium-ion battery industry and is best known for being a key figure in the invention of the Lithium-ion battery technology which earned him a nomination for the Nobel Science Prize.

During his illustrious career Professor Whittingham has headed large projects for the US Department of Energy, Exxon and Schlumberger.  He has 16 US patents and has been involved in writing over 240 pieces of scientific and engineering literature.

Currently, Professor Whittingham is a professor of Chemistry and a Director of both the Materials Research and Materials Science and Engineering program at Binghamton University which is part of the State University of New York. Professor Whittingham is also Director of the Northeast Center for Chemical Energy Storage (NECCES), which is an effort being led by Binghamton University, and includes as partners Rutgers University, Argonne National Laboratory, Cambridge University, MIT, University of Michigan, University of Illinois at Chicago, University of California at Santa Barbara and University of California at San Diego.

Dr. Ulrich Bez- Non-Executive Director

Dr Bez has over four decades of experience in the automotive industry.  He is viewed as one of the key figures contributing to the future of the industry in the last 40 years.  He has held executive roles in some of the world’s most recognised luxury car brands, as well as premium and mass car manufacturers.

During his career Dr Bez was the Chairman and Chief Executive Officer for Aston Martin between 2000 and 2014.  During that period Dr Bez has been internationally acclaimed for turning Aston Martin into the global luxury brand that it is today.

Dr Bez has played an important role in shaping global powerhouses Porsche and BMW.  In Porsche, Dr Bez led the design and development of the 911 Turbo along with many other models while in BMW he created the BMW Technik GmbH division which included the design of the critically acclaimed Z1 model.

Dr Bez has also held director level roles with the likes of Daewoo and has been an advisor of some of the world’s largest automotive organisations.

Johann Jacobs – Non-Executive Director
Johann Jacobs has more than 30 years’ experience in the resource sector where he has managed established companies and acquisitions, expansions or start-up mining operations in Australia, South Africa and Indonesia. His more recent roles have included Chairman of IMX Resources Limited, Managing Director of the ASX-listed coal producer CIM Resources. In addition, he holds various directorships in private resource focused companies active in Australia and Internationally.

Peter Tsegas – Non-Executive Director
Peter Tsegas has over 15 years of experience in Tanzania (10 years as a resident). He has worked to engage both the private and government sectors on a number of projects. Tsegas was founder and Managing Director of Tancoal Energy which he successfully took from an exploration company through to a JV with the Tanzanian government and then into production. A number of consulting roles to the Tanzanian government have been undertaken, including the Ministry of Industry and Trade and the Ministry of Energy and Minerals. He has also consulted to a number of mining companies including Rio Tinto.

Marc Vogts – Non-Executive Director
Marc is a project executive with over four decades of experience in the mining industry and over 30 years’ experience as a Senior Executive in major mining projects in South Africa, Madagascar, Australia, Canada, Chile, Indonesia, Papua New Guinea and USA.

Marc has held Director roles for the likes of BHP Billiton and Rio Tinto during his career. In recent roles Marc was Project Director for the QMM Project in Madagascar for Rio Tinto, Vice President for Project Management for BHP Billiton and Vice President for all Uranium Projects including Olympic Dam for BHP Billiton.

Currently Marc is the Chief Executive Officer at the John Grill Centre for Project Leadership at the University of Sydney, a world leading project leadership executive education for value creation and realisation in large-scale projects.

Doug Richardson – Company Secretary
Doug has over 23 years of experience in the financial services and resources sectors. His experience has included investment research, analytics and client advising for various organisations including GIO Asset Management, the Australian Prudential Regulation Authority and Suncorp Investment Management.

Management

Dr. Frank Houllis – Chief Executive Officer

Dr. Frank Houllis has over 20 years of practical experience in the development and engineering of metallurgical processes. He has worked on processes for a wide range of commodities, including rare earths, base metals, precious metals, lithium, titanium and uranium. His particular area of expertise is in the application of systems engineering techniques to ensure seamless project development from concept through to commercialization in a timely and cost effective manner. Front end engineering to take into account technical, economic, regulatory and environmental considerations are central to his approach. Following completion of his doctorate in chemical engineering in 1995, Houllis has led process development teams at ANSTO (2008 – 2014), BHP Billiton (2005 – 2008) and Intec Ltd (1995 – 2005).

Travis Peluso – Investor Relations Director

Travis joined the executive team and takes on a lead role within Magnis including the accountability for the communication to both the institutional and retail investment communities. His role is the point of contact to add detail and context behind the Magnis journey, going from African Graphite miner to the world’s largest manufacturer of lithium-ion battery cells. Travis has been a supporter and significant long term investor of Magnis for the past 8 years.

Travis has spent the past 22 years immersed in the rapidly evolving Telecommunications / Technology Sector, with his last 10 years in senior management/executive roles at both Telstra and Singtel – Optus. An experienced executive and manager of large diverse teams, Travis has an aptitude for evolving technology with strong commercial and deal-making capabilities.

Brent Laws – Manager Exploration

Brent Laws has a diverse background in geology with extensive exploration and project development experience. His broader ten plus years of experience covers exploration, resource and mining projects and a variety of commodities including uranium, coal, gold, copper and zinc. Most recently he spent five years working in Botswana as a Resource Development Manager and Senior Geologist with A-Cap Resources; accountable for the development and execution of exploration and resource definition programs and mineral resource estimates. He has also been involved in project reviews of tenements and potential joint ventures or acquisitions, including graphite and gold within southern Tanzania. Prior to living in and working in Botswana Laws worked in Laos as a Resource Geologist with Oxiana developing gold and copper exploration projects and in Australia with OZ Minerals/Oxiana and Newmont on copper, zinc and gold exploration, resource development and mining projects.

Pendy Tju – Chief Financial Officer

Pendy was appointed as CFO in March 2014. He brings over 10 years Financial Management experience within construction, social housing, mining of both private and public companies. He holds a Bachelor’s Degree in Business from the University of Technology Sydney.


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