investor briefing 1 billion tonne pilbara iron, page-3

PO Box 833 Subiaco WA 6904
T + 61 8 9212 9888
F + 61 8 9212 9800
[email protected]
www.epsilonenergy.ABN 87 089 531 com.au
082
ASX/MEDIA RELEASE
21 May 2008
INVESTOR BRIEFING:
1 BILLION TONNE PILBARA IRON ORE TARGET
Please find attached the latest investor briefing being delivered by Epsilon, highlighting:
• Clearly enunciated board strategy to diversify commodities with a focus on bulk mineral
commodities including Iron and Mineral Sands, while continuing Uranium exploration at
its NT and SA based Uranium projects, and maintaining an active low cost interest in its
WA and QLD based Uranium projects.
• The Mardie Iron Ore Project; with an exploration target of 1 Billion Tonnes Iron Ore,
generated via internal and independent geophysical data analysis and computer
modeling, demonstrating an extensive BIF (Banded Iron Formation) anomaly interpreted
to be the Brockman Formation.
• The Balladonia Mineral Sands Project; with a strike zone of over 400km, along both
Eocene and Miocene fossilized shorelines. Previous work included an underexplored
outline of a non-JORC multi-million tonne deposit, with HM content of between 3.6% and
24%, including Zircon average of 25% and Leucoxene average of 70%.
• The Balladonia Uranium Project; completion of 5778 line km of TEMPEST Airborne EM,
successfully mapping approximately 1500km2 of palaeochannels, as well as the
completion of 4439m of air core drilling, successfully identifying uranium mineralization.
Kind Regards
Matthew Gauci BSc. MBA.
Managing Director
Epsilon Energy Ltd
T: +61 8 9212 9888
F: +61 8 9212 9800
M: +61 (0)417 417 907
E: [email protected]
W: http://www.epsilonenergy.com.au
The geological information in this report that relates to Exploration is based on information compiled by Stefan Gawlinski who
is a member of Australian Institute of Geoscientists. Stefan Gawlinski is Exploration Manager of Epsilon Energy Limited.
Stefan Gawlinski has appropriate qualifications and sufficient knowledge and experience that is relevant to the style of
mineralisation and type of deposit under consideration, and to the exploration activity that he is undertaking. Stefan Gawlinski
consents to the inclusion in this report of the matters based on his information in the form and context that it appears.
Epsilon Energy - Update
May 2008
ACN: 089 531 082
Disclaimer
This presentation has been prepared by the management of Epsilon Energy Limited (Company) for the benefit of brokers,
analysts and investors and not as specific advice to any particular party or person. The information is based on publicly
available information, internally developed data and other sources. No independent verification of those sources has been
undertaken and where any opinion is expressed in this document it is based on the assumptions and limitations mentioned
herein and is an expression of present opinion only. The Company makes no representation or warranty (express or
implied) as to the accuracy, reliability or completeness of the information. The Company and its respective directors,
employees, agents and consultants shall have no liability (including liability to any person by reason of negligence or
negligent misstatement) for any statements, opinions, information or matters (express or implied) arising out of, contained
in or derived from, or for any omissions from this presentation, except liability under statute that cannot be excluded.
This presentation may contain references to certain intentions, expectations and plans of the Company. Those intentions,
expectations and plans may or may not be achieved. Furthermore, such expectations are subject to risks, uncertainties
and other factors which could cause actual results to differ materially from such expectations. Such risks include, but are
not limited to, exploration success, product price volatility, changes to assumptions for capital and operating costs as well
as political and operational risks and governmental regulation outcomes. No representation or warranty, express or implied,
is made by the Company or any of its respective directors, officers, employees, advisers or agents that any intentions,
expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved.
Furthermore, the Company does not have any obligation to advise any person if it becomes aware of any inaccuracy in or
omission from any expectation. This presentation does not purport to contain all the information that a prospective investor
may require. In all cases, before acting in reliance on any information, you should conduct its own investigation and
analysis in relation to the Company and should check the accuracy, reliability and completeness of the information and
obtain independent and specific advice from appropriate professional advisers.
Nothing in this presentation should be construed as financial product advice, whether personal or general, for the purposes
of Section 766B of the Corporations Act. This presentation does not involve or imply a recommendation or a statement of
opinion in respect of whether to buy, sell or hold a financial product.
Contents
• Background
• Company Snapshot
• Company Portfolio
• Iron Ore Project
• Mineral Sands
Project
• Uranium Project
• Value
• Summary
Background
• Perth based ASX (EPS) listed public company with Iron, Mineral
Sands and Uranium exploration & development focus
• Started as a uranium explorer, successful exploration for uranium in
WA, since evolved under clearly enunciated board strategy to a
diversified explorer, building a strong portfolio in underexplored
regions, focus on high value super-cycle (bulk) commodities
• Experienced commercial team in commodity portfolio
• Experienced technical team in stage of project
• 10,000km2 land holding of both early stage and more advanced targets
with careful consideration given to geological suitability to economic
mineral systems
• Working with Centre for Exploration Targeting (CET) centre of
excellence in science and innovation to generate, explore and manage
project exploration
Company Snapshot
Capital Structure
Ordinary Shares on issue 42m
Vendor & Management Options 22.5m
Escrow Ordinary Shares (Dec 08) 20%
Top Shareholders
Founders, Directors & Associates ~30%
ANZ NOMINEES ~8.16%
Vale (CVRD) ~4.0%
Top 40 shareholders ~55%
Share Price Performance
12 Month high $0.56
12 Month low $0.10
Current Share Price $0.25
Market Capitalisation
Full Diluted @ ~ 25 cents: $16.0m
Cash in Bank
As at 31/03/08 $1.4m
Board of Directors
Bruce Larson Chairman
Matt Gauci Managing Director
Mike Dentith Non-Executive Director
Dean Felton Non-Executive Director
Board of Advisors
CET Technical Advisors
Oyster Consulting Corporate Advisors
Project Location
Focus on Pilbara & Eucla
Mardie Iron Ore – ideal location
• Coastal Location (224km2)
– no major railway or slurry
required for export
• Adjacent to north west gas
field – access to energy
requirements
• Adjacent to robe river delta
– access to water
requirements
• Close to north west
township – access to labor
& services
• Close to markets – port site
options with potential public
access port 20km north
east
Mardie Iron Ore – right qualities
• Large Tonnage Magnetite, High Grade Hematite (DSO & CID)
• Value accretive deal, 100% ownership, low comparative entry level cost
• Brockman and Marra Mamba Formations interpreted to occur within and to the
north east of the tenement
• Magnetite geophysical signature interpreted to be comparable in size to
Australasian Resources Balmoral South Deposit (1.1b tonnes)
• Independent report suggests Magnetite signature to be the Brockman Formation
and of comparable magnetite quality to Mineralogy’s Balmoral Deposits (~31% Fe)
given geology and location
• Potential for Hematite (DSO) in North West Trending Fault that intersects and
disrupts main magnetic body
• Exploration plan to run 50km2 ground gravity survey over magnetic signature &
150km2 Airborne Magnetic Survey for accurate tonnage target.
• Followed by appropriate RC and Diamond drill program over magnetite and
hematite targets
• Commence scoping study, PFS and Development
Mardie Iron Ore – Project Geology
Targets on Geology
Epsilon Hematite Target
(DSO) in North West
Trending Fault
Australasian Resources
Balmoral South Iron Ore Project
(1.1b tonnes iron ore defined)
CITIC Pacific Iron Ore Project,
Plant and Port Development
(2-4b tonnes iron ore)
Epsilon Magnetic
Anomaly (8 X 2 X 0.4km)
Target > 1b tonnes iron
Mardie Iron Ore - Extensive Target
Epsilon Hematite (DSO) Target
in North West
Trending Fault
Australasian Resources
Balmoral South Iron Ore Project
(1.1b tonnes iron ore)
Epsilon Magnetic Anomaly
(8 X 2X 0.4 km)
Target >1b tonnes iron
CITIC Pacific Iron Ore
Project, Plant and Port Development
(2-4b tonnes iron ore)
The new entrants are coming
Limited access to large scale, high quality
reserves and the significant capital required to
develop new capacity has ensured that the
industry is characterised by its high barriers to
entry. In recent times, however, high prices for
iron ore, the market’s willingness to accept lower
quality products and previously unimaginable
access to captial has ensured that a raft of new
projects are either on the drawing board or in
construction.
Iron Ore Market – new players
• Alternative quality projects
• Record high prices
• Backward Integration
(investment) from steel co’s
• PRC backed investment
• Technological progress
• Competition encouraged
• Barriers to entry lowered
• New projects, new players
Macquarie Equities Research
Iron Ore Report
“
”
1
1
Balladonia Min Sands – location
• Eucla Basin an emerging world class
Zircon and TiO2 province – Iluka
recent Jacinth/Ambrosia discovery
• Close to Goldfields-Esperance
township – access to labor & services
• 1200km2 land holding covering the
western Eucla Basin interpreted
shoreline
• Numerous under-explored zircon rich
deposit targets
• ~200km from the port of Esperance
• Value accretive proposition, earning
70% for $350K spend over 2 years
Balladonia Min Sands – qualities
• Independent reports suggest superior value & mineralogy to typical
Capel HMS deposits and marginal to Eneabba HMS deposits, both
large scale long life Mineral Sands Operations
• Four broad target deposits at Balladonia South, Central and North,
seeking Zircon (Tiles, Ceramics) and Rutile, Ilmenite, Leucoxene -
Titanium input – (Pigment)
• Balladonia South deposit contains non-jorc multimillion tonne deposit,
with HM content of between 3.6% and 24%, including Zircon up to
39% and Leucoxene up to 70%
• Three additional target deposits along 2 levels of fossil coastal zone
that stretches 200km (hence 400km strike zone)
• Drill plan to define and upgrade high grade mineralized zone at
Balladonia South and test further deposits at Balladonia Central and
North
Balladonia Min Sands – targets
• Balladonia North
includes strike zone of over
20km of fossil coast line; +20
holes with >1% HM
• Balladonia Central
includes strike zone of over
40km of fossil coastline; several
palaeo-rivers; no drilling
• Balladonia South
includes: deposit zone of 800m
X 400m X 10m HM; including
7m av 7.6% HM
8m av 4.2% HM
10m av 4.0% HM
12m av 3.6% HM
1m av 24% HM
AV Leucoxene = +60%
AV Zircon = +20% (up to 39%)
Zircon & TiO2 Market – 2nd cycle
• Zircon & TiO2 Market
buoyant
• Zircon and TiO2 prices
increased 175% over
previous 5 years, forecast
growth of 15% for next 5
years
• Driven by Chinese internal
consumption
• Tiles and Paint
(Residential Development)
…titanium and zircon will be beneficiaries of
the inward-looking phase of China’s
economy…demand for (zircon and titanium)
products is more consumer driven, and that’s
accelerating in China…are we about to catch
the second wave? In my opinion, yes
“
” David Robb – CEO Iluka
Balladonia Uranium - +ive results
• Eucla and Gunbarrel Basin an
emerging uranium province –
Mulga Rock, Ponton Creek
• Close to Goldfields-Esperance
township – access to labor &
services
• 7500km2 land holding covering
the western Eucla Basin and
Gunbarrel Basin
• Numerous under-explored
uranium targets
• ~200km from the port of
Esperance
Balladonia Uranium – +ive results
• Geological & geophysical
mapping of potential
source, transport and
depositional sites
• Commenced research
project on province
comparatives
• Successfully mapped >
1500km2 of
Palaeochannels
• Completed > 4439m
Aircore drilling &
identified extensive
uranium mineralization
• Generated > 20 more
targets
Heartbreak & Balladonia N.
AEM and Drilling Focus
Uranium Market – long term value
• Long Term prices maintain
exploration & development of
uranium V other commodities a
compelling proposition
• Step change in global energy
requirements continues
• 350% increase over past 5
years with forecast stabilized
price between $60-90/lb
• Recent backward integration
(investment) by utilities
highlights tight market We forecast medium-term uranium oxide
deficits out to 2010, supporting a uranium price
of greater than $US70/lb over this period. The
surpluses from 2011-2013, as mine supply
continues to expand strongly, which should see
spot uranium ease to a long term nominal price
in 2015 of $US65/lb
“
Merrill Lynch – May 2008 ”
Value Proposition - next 5 years
YEAR 0 – 2
• Explore, Discover and Generate
appropriate company maker
• Company value drift around $20m
market cap range
• Company maker crystallizes through
drilling & resource estimation
• Company value re-rates
YEAR 2 – 5
• Resource drilling and scoping study
• Company value steadily increases to
~$50m market cap range
• Economic assessment and project
funding crystallizes proposition
• Company value re-rates
Currently here
Advancing to here
Summary–foundations for growth
• Strategy to focus on Iron, Mineral Sands and Uranium
• 1B Tonnes Pilbara Iron Ore Target, Zircon rich Eucla Basin
Mineral Sands target
• Experienced commercial team in commodity portfolio
• Experienced technical team in stage of project
• 10,000km2 Australian land holding
• Tight capital structure – maximize shareholder growth
• 100% material equity in projects
• Industry player partnerships
• Hot commodity exposure
• Strong drilling focus; moving rapidly to scoping stage
ENJOY THE JOURNEY…….