Leading Producer of Halloysite Clay

Leading
Global Producer of
Leading Producer of Halloysite Clay
Halloysite Clay Investor Presenta,on November 2012 1 Safe Harbor Statement and SEC Cau3onary Note Informa(on provided and statements contained in this presenta(on that are not purely historical are forward‐
looking statements within the meaning of Sec(on 27A of the Securi(es Act of 1933, as amended Sec(on 21E of the Securi(es Exchange Act of 1934 as amended and the Private Securi(es amended, Sec(on 21E of the Securi(es Exchange Act of 1934, as amended, and the Private Securi(es Li(ga(on Reform Act of 1995. Such forward‐
looking statements only speak as of the date of this presenta(on and the Company assumes no obliga(on to update the informa(on included in this presenta(on. Such forward‐looking statements include informa(on concerning our possible or assumed future results of opera(ons, including descrip(ons of our business strategy. These statements oMen include words such as “believe,” “expect,” “an(cipate,” “intend,” “plan,” “es(mate,” or similar expressions. These statements are not guarantees of performance or results and they involve risks, uncertain(es, and assump(ons. For a further descrip(on of these factors, see Item 1A, Risk Factors, included within our Form 10‐K/A for the year ended December 31, 2011, which was filed on August 9, 2012. Although we believe that these forward‐looking statements are based on reasonable assump(ons, there are many factors that could affect our actual financial results or results of opera(ons and could cause actual results to differ materially from those in the forward‐looking statements. All future wriWen and oral forward‐looking statements by us or persons ac(ng on our behalf are expressly qualified in their en(rety by the cau(onary statements contained or referred to above. Except for our ongoing obliga(ons to disclose material informa(on as required by the federal securi(es laws, we do not have any obliga(ons or inten(on to release publicly any revisions to any forward‐
looking statements to reflect events or circumstances in the future or to reflect the occurrence forward looking statements to reflect events or circumstances in the future or to reflect the occurrence of unan(cipated events. Cau(onary Note to U.S. Investors ‐ The United States Securi(es and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this website (or press release), such as “measured,” “indicated,” and “inferred” “resources,” which the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10‐K which may be secured from us, or from our website at hWp://www.sec.gov/edgar.shtml. 2 Mission Statement To develop the highest and best uses of our unique Halloysite resource to deliver value‐added, eco‐friendly solu3ons to industries in need Address applica3ons where we feel our product is, or has the poten3al to be, the best available solu3on to the market based on three criteria: performance, pricing, and environmental sustainability 3 Applied Minerals Products 4 Benefits and Key Applications
Solutions to Current Industry Needs
Reducing raw materials use Scientific Research in Halloysite
•  Makes plas3cs stronger so less material is needed Replacing toxic chemicals •  E.g. Brominated flame retardants Light weigh3ng •  Increases strength and modulus by 20% without affec3ng density •  Improves foaming giving 25% weight reduc3on and virgin resin proper3es Improving Produc3vity •  Increases throughput in extrusion, reduces injec3on molding cycle 3me by 25% •  Reduces energy consump3on, emissions and cost Environmental remedia3on/ Catalysis •  Waste water / drinking water (removes heavy metals) •  Flue gas emissions (removes mercury and other metals) 5 Markets Source: External data and internal company es3mates. 6 Leading Global Producer of
Halloysite Clay
Focus Applica3on 7 Focus Applica3on: Non‐Halogenated Flame Retardant Flame Retardancy Market Overview Market is currently 1.96 million metric tonnes ($5.4B) growing at 6.0% per annum to 2.2 million metric tonnes by 20141 Heavily driven by govt. regula3on, building/industry codes and environmental awareness Current phase‐out of brominated products Mineral‐based flame retardants represent 65% of total market volume Benefits of Dragonite to Compe,ng Minerals Lower required loadings prevents bri`leness caused by ATH and MDH Superior reinforcement ability ‐ ideal for high performance plas3cs Applicable as a synergist in conjunc3on with other agents or as a stand‐alone product One of the few minerals in existence usable in transparent and engineering polymers, an area where the market need is great 8 (1) Freedonia Group and BCC Research
Focus Applica3on: Non‐Halogenated Flame Retardant Commercial developments Announced supply agreement with Samsung Cheil Industries as a char forming synergist in April 2012 Validated by over five end‐users as an FR product •  Commercial scale‐ups in progress •  Approved supplier Exploring strategic partnership opportuni3es 9 !"#$%&'()*% +
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ATO Market Price per tonne2
Focus Applica3on: Flame Retardancy: Replacement of ATO Price of ATO has increased 5‐fold in past ten years 90% of supply controlled by mines in China End‐users ac3vely searching for effec3ve replacements Benefits of Dragonite versus ATO ATO Price History
Commercial Developments Nontoxic 50 to 75% ATO replacement Validated by two major ATO end‐users Commercial scale‐ups in progress Significantly lower cost Equivalent FR (V0) Commercializa3on planned in early 2013 Approved as a supplier by both companies Significant mechanical improvement Less smoke density Lower lead, arsenic and an3mony content Increased produc3vity (1) USGS data
(2) ATO Pricing based on London Metal Bulletin Rotterdam price for 5 metric tons 99.6% metal and other external data
10 Focus Applica3on: Flame Retardancy Quan,fica,on of Flame Retardancy Opportunity Flame retardancy market is 1,960,000 metric tonnes per annum AMNL is targe3ng a modest 2.0% penetra3on of the global FR market, which, if successful, would translate to 39,200 metric tonnes of Dragonite sales per annum, a $166.6mm revenue opportunity Cost effec3ve at $3,000 ‐ $5,500 per tonne http://www.freedoniagroup.com/brochure/27xx/2709smwe.pdf
11 (1) Freedonia Group
Leading Global Producer of
Halloysite Clay
Nuclea3on and Lightweigh3ng of Polymer Composites 12 Focus Applica3on: Nuclea3on and Lightweigh3ng of Polyethylene Nuclea,on and Lightweigh,ng Market Overview Injec3on molding industry driven by reduced cost, improved quality and reduc3on in weight •  Dragonite delivers on all three through the nuclea3on of polyethylene (PE) PE is the largest resin market in the world Currently 0% of PE market is pre‐nucleated versus 50% of polypropylene (PP) market Only one compe3ng nuclea3ng product for PE, costs $15‐30 per lb. Lightweigh3ng driven by high fuel costs and govt. regula3ons, ie, automobile CAFE standards 13 Source: External data and internal company es3mates. Focus Applica3on: Nuclea3on and Lightweigh3ng of Polyethylene Benefits of Dragonite Through Nuclea,on of PE PHASE 1: Significant cycle ,me reduc,on Virgin HDPE + 1% HDPE Dragonite HP Savings Cycle 3me reduced by 25% Mechanicals increase by +20% and surface appearance improved Cycle 3me per part (seconds) 107 80 25% Parts per hour 34 45 32% Cost savings: 11% reduc3on in the effec3ve cost of HDPE for an end‐user Cost per part ($) 8.07 7.53 7% Effec,ve cost of HDPE ($/lb) 0.85 0.76 11% Thin‐walling of products made possible to enable addi3onal cost reduc3on Also validated in Polypropylene copolymer and homopolymer PHASE 2:
Addi,onal savings through thin‐walling 14 Focus Applica3on: Nuclea3on and Lightweigh3ng: Polyethylene Foam Foaming Market Overview Foaming conducted to produce lighter parts, use less resin, and save money Tradeoff has always been a sacrifice in strength and other mechanical proper3es Current strong industry demand •  Automo3ve and aerospace industries in par3cular Benefits of Dragonite in Foaming 10‐15% weight reduc3on while retaining mechanical proper3es of an unfoamed part Improves surface finish Increases produc3on speed by up to 30‐40% Reduces need for blowing agent by 30% 15 Focus Applica3on: Nuclea3on and Lightweigh3ng of Polyethylene Commercial developments Current nuclea3ng customer is a leading manufacturer of lawn and garden tools in the U.S. Several customer valida3ons during 2012 Mul3ple molding companies in commercial manufacturing scale‐up trials Validated by a major polyethylene resin producer •  In planning process of a commercial scale trial Teamed up with KibbeChem Inc., an industry leader in foaming •  Offer a combina3on of Dragonite with KibbeChem foaming agent •  Recorded first commercial sale in this applica3on in 2012 •  Product sampled to several customers currently in different stages of tes3ng 16 Focus Applica3on: Nuclea3ng and Lightweigh3ng of Polyethylene Quan,fica,on of Nuclea,on and Lightweigh,ng of Polyethylene Opportunity The polyethylene market is 50 million tons per year Dragonite loading rates for nuclea3on and lightweigh3ng of PE would be 1.0% •  50 million tons x 1.0% loading rate = 500,000 tons addressable market If AMNL were to achieve 5% market penetra3on, it would result in 25,000 tons of Dragonite sales per annum, a $100.0mm revenue opportunity 17 Customer Trials 18 Leading Global Producer of
Halloysite Clay
Resource Development 19 Construc3on of New Processing Plant New state‐of‐the‐art processing facility at Dragon Mine •  Due online Q1 2013 •  Up to 45,000 tons process capacity for Halloysite products •  Ability to surface treat clay and tailor to meet addi3onal customer specifica3ons •  Supported by adjoining quality control lab staffed by Ph.D. R&D Manager Manufactured by industry leader Hosokawa Alpine !
•  Collaborated with AMNL technical team for 12+ months to op3mize system for Dragonite product line Complemented by tolling arrangement with KaMin LLC (1) Estimated
20 Construc3on of New Processing Plant 21 Exis3ng Process Plant Exis3ng processing plant at Dragon Mine to be devoted to iron oxide products •  Approximately 10,000 tons of capacity (1) Estimated
22 Halloysite Stockpiles 23 Update on Iron Oxide Pigments Products From the U.S. Geological Survey: 2012 US is net importer = $1,470 per tonne Prepared by Arnold O. Tanner, USGS h`p://minerals.usgs.gov/minerals/pubs/commodity/iron_oxide/mcs‐2012‐fepig.pdf 24 Update on Iron Oxide Pigments Products Dragonite‐IO Mineralogy In‐Situ Resource
from Western Mine
Resource from Pit Area
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(wt.%) done by by the James Hutton Institute
25 Update on Iron Oxide Pigments Products Western Mine Area Hema3te grade Used to make red and black color pigment Pit Area Goethite grade Used to make brown, yellow, orange and ochre pigments 26 Update on Iron Oxide Pigments Products Dragonite-IO meets the globally accepted ASTM D3722 specifications
for the pigment and coatings market in-situ Total iron as Fe 2 O 3 , min, %
Moisture and other volatile matter, max, %
Organic cooling matter - none
Total sulfates expressed as SO 3 , max, %
Matter soluble in water, max, %
Matter soluble in water, max, % (primer pigments)
Coarse particles (total residue retained on a
No.325 (45-!m sieve) max, %
ASTM
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Pigment Grade: Dragonite‐IO Rich in hema3te Fe203 and goethite FeO(OH) Benefits of Dragonite‐IO High dispersibility, fine par3cle size achieved by microniza3on to eliminate agglomerates; chemical resistance; color, weather and thermal stability Excep3onally pure mineralogical content – 95% avg Ability to become low cost producer  High purity = high yields and low waste  U.S. loca3on reduces shipping costs Poten,al end markets Paints and coa3ngs, plas3cs and coloring construc3on materials, water purifica3on (1) USGS data.
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Company has explored 11 of 230 acres to date with further drilling planned in the future * Tonnages are classified as resources, not reserves, under JORC Code. The process and consequences of conver(ng resources into reserves are explained in the JORC Code at hWp://www.jorc.org/jorc_code.asp (1) USGS (2) Industrial Minerals Magagzine. Indicates pricing to end user. The Company has not yet determined whether it will market directly or through distributors. 31 2012 Exploratory Drill Program Exploratory drill program down to 2,000 r level in progress •  Explora3on of Halloysite, Iron Oxide, and poten3al copper/gold deposit •  Currently at 900 foot level •  Plan to release results upon comple3on 32 Capital Structure Ticker: AMNL OTC:BB Current Market Capitaliza,on of $145.2mm Fully Diluted Capital Structure(1) Fully diluted shares outstanding (mm) 96.8 Price per share $1.50 Market capitaliza,on (mm) $145.2 Cash balance (mm)2 Enterprise value $4.2 $141.0 Note: Capital structure does not include an estimated $35.4mm NOL available to the company as of 9/30/12 – for further information regarding the NOL, refer to Note-12 Income taxes, of the
Company’s 2011 Form 10-K/A.
(1) Pro forma as of November 2012 for exercise of all outstanding “in the money” options vested and unvested, exercised on on a cashless basis using closing price at November 19, 2012.
(2) Cash balance as of 9/30/12
33 Investment Highlights $141.2mm enterprise value – Ticker: AMNL Industry‐leading producer of halloysite clay and related technologies •  Own 100% of the Dragon Mine – one of two known resources of halloysite globally Halloysite’s unique proper,es improve performance at a lower cost in many applica3ons compared to conven3onal alterna3ves •  Sizable opportunity in key sustainable markets, including: polymer addi3ves, flame retardants and environmental remedia3on •  Very low breakeven for Free Cash Flow posi3ve Minimal future growth capital expenditure needs (already in produc,on) Track record of success •  Transi3oned from explora3on to commercializa3on in less than three years •  In commercial scale trial with several Fortune 500 companies Technical Exper,se •  Company has four Ph.D’s with over 100 years collec3ve commercial experience Aligned management interests: ~30% insider ownership 34 Thank you for your agen,on Q & A 35