1 Heemskirk Canada Oilfield Minerals Outlook Conference June 2012 Moberly Sand Development Re-examination and Opportunity
2 Important Notice & Disclaimer The information contained in this presentation is current as at June 2012. All statements are based upon the Company s best information as at June 2012. This presentation includes forward-looking statements regarding future events and the future financial performance of Heemskirk Consolidated Limited ( HSK or Heemskirk ). All forward looking statements are based on the beliefs of Heemskirk management. These statements reflect Heemskirk s current views with respect to future events and are subject to various risks, uncertainties and assumptions. Heemskirk makes no representation or gives any assurance that these statements will prove to be accurate as future circumstances or events may differ from those which have been anticipated by the company. No representation or warranty, express or implied is given to the accuracy of the information or opinions contained in this document and no liability is accepted by Heemskirk or any of its directors, members, officers, employees, agents or advisers for any such information or opinions. This presentation is being supplied to you, in whole or in part, for information purposes only and not for any other purpose. This presentation and the information contained in it do not constitute a prospectus and do not form any part of an offer of, or invitation to apply for, securities in any jurisdiction. Potential investors should not rely solely on the information contained herein prior to making any investment decision. Investors should seek independent advice from a properly qualified advisor, giving due regard to their own personal circumstances, prior to forming any investment decision.
Canada Operations 3
4 Heemskirk Canada 100% owned by Heemskirk Consolidated Regional office in Calgary Two operational sites and leases (Moberly & Lethbridge) Geographically well placed and leveraged for western Canadian oil, oil sands and gas sectors
Heemskirk Canada Locations 5
6 Lethbridge HCA Mountain Minerals (Lethbridge) Limited Lethbridge: Operating Since 1940 s Processing facility Barite: drilling mud for oil & gas industry Gypsum: environmental & agriculture industries Zeolite: cementing additive and other applications Supplier of Products to Oil and Gas applications across a variety of industrial minerals in Western Canada for over 60 years.
7 Moberly HCA Mountain Minerals (Moberly) Limited Full Operations established in 1983 High purity silica 99.5% Moberly operation developed in partnership with customer to: Improve Logistics / Supply Chain Improve quality of their products Variety of step-out markets developed over the subsequent years.
8 Strategic Objective Purchased by Heemskirk in 2005 World Class Geological Resource Very Large Size High purity levels +99.5% purity insitu Challenge: development and identification of new, larger markets
Moberly Location Diagram 9
Local Detailed Location 10
Geology Ordovician Mt Wilson Quartzite, originally quartz arenite +99.5% SiO 2 Folded to vertical attitude; 200m thick, +2km strike, depth extent large Friable deposit with variability of cementation Rock becomes friable sand
12 The Trigger 2008 (more or less) Hydraulic Fracturing Technology becomes widely accepted in Horizontal Drilling applications. Shale Gas Exploitation becomes possible, attractive and lucrative. Tight Supply of Proppant Receipt of Requests Do you have frac sand
13 Question Do you have frac sand? 2008 and Prior Are we sure about that? Why did we answer no? Requirements for Frac Sand Size Range 12-20 mesh o Golf Course Bunker Size Range Round and Spherical o We were selling materials into golf course bunkers and we needed to have that answer. When we submitted our bunker sand for testing we were advised that we had Sub-angular to angular particles. We do not have frac sand thanks for calling and good luck
14 Are you sure you don t have frac sand? Customers can be a very persistent. Forced us to re-examine the question what do you need for frac sand? Results of re-examination Particle size range desired had changed to 20-40, 30-50, 40-70, 100 mesh o Much finer size range than what we had looked at previously Particle shape and roundness? o Sub-angular shape result was Post-processing for glass sand manufacturing Glass Sand manufacturing target was to produce a product -40/+140 size range Oversize yield was reprocessed using aggressive technology to make the particles smaller.
Glass Sand Products 15
16 Starting From a Blank Sheet of Paper Systematic Process Start from the Mine Does run-of-mine have proppant material? If yes - How do we process it to preserve performance characteristics?
Moberly Frac Sand Project 17
Geological Starting Point Pit mapping Sampling & thin section analysis, by ore type Grain size distribution Grain roundness and sphericity Geological control of samples for testing Geological control of end use sand products
Moberly open pit looking south-east along strike 19
20 Existing resource is large project not resource constrained Contained within a Measured and Indicated Resource of 43 million tonnes (2010: 36.2 million tonnes) of silica suitable for glass making, silica flour and related uses, is an estimated Measured and Indicated Resource of 32.4 million tonnes of 64% frac sand
SEM Images Moberly Pit Sampling
Thin Section Moberly Pit Sampling
Friable ore
24 Run of Mine Testing Rudimentary Processing at Bench Scale 3 rd Party Crush Testing Good Crush Testing results better than some currently used not as good as the best Conclusion Process refinements will result in better fines control Proceed with Process Design and Testing
Initial Process Trial Vendor #1 (Moberly 40/70) 25
Initial Process Trial Vendor #2 (Moberly 40/70) 26
Process Refinements Moberly 40/70 with Breakage 27
Secondary Process Trial Vendor #2 (Moberly 20/40) 28
29 Process Development Preserve Integrity of Particles Balance Cluster Breakdown with Over-processing and Breakage Effective Finished Product Quality Control Wet Process Required Existing Plant is not suitable New, Improved Processing Technology New, Improved Drying Technology New, Improved Dust Control Technology New Plant is Required
Finalize and Process Validation Testing Moberly Pit Samples Processed with Final Flow Sheet Sieved in 10 mesh intervals
16/20 (1.19 0.84mm) 1 2 3 4
20/30 (0.84 0.59mm) 1 2 3 4
30/40 (0.59 0.42mm) 1 2 3 4
40/50 (0.42 0.297mm) 1 2 3 4
50/60 (0.297 0.25mm) 1 2 3 4
60/70 (0.25 0.21mm) 1 2 3 4
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38 Engagement Process Customers Service Companies the pumpers Production Companies E&P s Who to engage with? BOTH Road Map for Technical Approval Independent and Recognized 3 rd Party Testing of Process Material Stim-Lab a Core Laboratories Company PropTester Inc.
39 Market Demands Growing Major Influencing Factors of Demand Capital Development Programs affected by Commodity Pricing Export Markets for Canadian Energy Products sourced in WCSB USA ASIA (natural gas export facility development) Targeted commodity and formation to be exploited affects proppant size fraction demand
Proximity to Markets 40
41 Technical Verification Crush Testing (3 rd party) All product grades have been tested to APIRP-19C and ISO 13503-2 standard. Conductivity Testing (3 rd party) Conductivity Test ISO 13503-5, APIRP-19D Customer recommended product can be used deeper than 2500m tvd. Letter of Intent has been received for significant portion of initial production capacity Product Offerings 20/40 30/50 40/70 100 mesh
42 Next Steps The Board gave approval to: move to the Detailed Engineering Stage; review potential marketing arrangements; and present funding options for the Project Engineering group, AECOM, appointed Funding discussions underway
Current Plant Concept 43
Heemskirk Canada 44
Resources and Reserves Australian JORC Code compliant Similar to N.I. 43-101 Resources of 64% yield of 20# to 140# frac sand 11.7 million tonnes of Measured+Indicated Limited by current exposure Reserves of 64% yield of 20# to 140# frac sand 3.2 million tonnes of Proved+Probable Limited by current pit design Within a global silica M+I resource of 43.2 mt Open at depth, to the north and along strike See Heemskirk (ASX:HSK) 2011 Annual Report for additional details and qualifications