CASE STUDY - INVESTMENT DECISION (August 2018)

NAIF’s loan will help bring online the Thunderbird deposit which is one of the largest mineral sands deposits to be discovered in the last 30 years globally.

LOCATION: Dampier Peninsula, south west of Derby, Western Australia

PROPONENT: Sheffield Resources Limited

NAIF LOAN: Up to $95m

CO-FINANCIERS: Taurus Funds Management $250m

TOTAL PROJECT VALUE: $562m

PUBLIC BENEFIT: Approx. $487m over a 42-year mine life, 400 construction jobs, 200 operational jobs

Thunderbird Mineral Sands project

About the Project

The mine and mineral processing facility to develop the Thunderbird deposit owned by Sheffield Resources will produce zircon and titanium oxide type mineral sands products in Western Australia’s north west Kimberley region. The deposit is the first major mineral sands deposit to be discovered in the Canning Basin. With ore reserve of 680.5Mt @ 11.3% heavy minerals, it supports a mine life of 42 years.

Mineral sands are used in a broad range of everyday products such as mobile phones, x-ray screens, sunscreen, artificial joints, fibre optics, paint and plastics.

The company plans to export mineral sands products to markets in China, Spain, India and the UK through the ports of Derby and Broome.

Now fully permitted and construction ready, Sheffield Resources continues to progress the Thunderbird Mineral Sands Project through a strategic partnering process to raise construction equity and jointly develop the project.

Infrastructure

• LNG power generation facility.
• Upgraded roads.
• Ship loading and storage infrastructure at Derby.

The Value NAIF Brings

NAIF’s loan accelerates the development of important infrastructure elements of the Thunderbird project as well as fills a gap in Sheffield Resources’ finance that it could not obtain from private sector debt and equity markets at this point in its corporate development. The nature and risk of the mineral sands industry limits Sheffield Resources’ ability to tap the debt markets, leaving this to be covered by equity. Without NAIF’s funding, the higher equity task and decreased internal rate of return would make the equity raising even more uncertain and potentially delay the project.

Through the support of NAIF, Sheffield Resources is able to build and own a number of infrastructure assets which would otherwise be sourced through third parties at a much higher cost. This assisted Sheffield Resources in avoiding additional operating costs by an estimated $7.5m pa and ultimately makes its capital structure more efficient.

Indigenous Engagement

• Sheffield’s Our Pledge to the Kimberley Community includes Aboriginal jobs (building to 40% in first eight years of operation) and Aboriginal business content (minimum of $5m/year from year five) plus Aboriginal training fund.
• Cash royalties to exceed $100m over four decades.
• Cross cultural awareness training by Traditional Owners for all employees and contractors.

Economic Impact and Public Benefit

• Independent consultant Deloitte Access Economics has forecast net public benefit outside the proponent to the broader WA community of approximately $487m over 42-year mine life.
• Drive in/drive out jobs will provide local employment, training and business opportunities and lift the economy and lifestyles of the Derby and Broome communities.
• 400 construction jobs and 200 direct jobs during operations, plus support services and training opportunities.

Bruce McFadzean​ Sheffield Resources Managing Director​:

"Working with NAIF has been very beneficial for Sheffield Resources. We have had a lot of wonderful support and comments from investors both globally and within Australia about the NAIF government support. It has been a great journey. I encourage prospective proponents to work with NAIF."