Thunderbird

The Thunderbird Mineral Sands Project is located on the Dampier Peninsula about 60km west of Derby, and 25km north of the sealed Great Northern Hwy approximately half way between Derby and Broome.

The Thunderbird deposit is the first major mineral sands deposit to be discovered in the Canning Basin and one of the largest mineral sands deposits to be discovered in the last 30 years.

A Pre-Feasibility Study (PFS), delivered in October 2015, highlighted zircon as the key value driver of the project representing approximately 60% of forecast revenue, with the remainder of revenue generated from substantial amounts of high grade sulfate ilmenite and lesser amounts of HiTi 88. The high proportion of zircon in the product suite sets Thunderbird apart from many of the world’s operating and undeveloped mineral sands projects which are dominated by lower value ilmenite.

In March 2017, Sheffield released its Bankable Feasibility Study (BFS) on Thunderbird which demonstrated a financially robust and technically strong project, folrecast to generate EBITDA of A$5.1 billion over a 42-year mine life.

Since the completion of the BFS, solid progress has been made on offtake, financial due diligence and early engineering works.

Offtake agreements


Sheffield has completed zircon offtake agreements to secure 100% of Stage 1 forecast zircon revenue.  The Company also signed a maiden binding low temperature roast (LTR) ilmenite offtake agreement for the minimum annual supply of 150,000 tonnes of LTR ilmenite.  The agreement represents 50% of the estimated total volume of LTR ilmenite to be produced from Stage 1 of Thunderbird.

More than 75% of forecast Stage 1 revenue is under binding agreement, which demonstrates strong demand for Thunderbird products.  Sheffield is targeting the conclusion of offtake agreements for its remaining LTR ilmenite and Hi-Ti88 (leucoxene) products during 2018.

Finance

During the December 2017 quarter, Sheffield announced the execution of a US$200M debt financing mandate with Taurus Mining Finance Fund.  Due diligence processes continue to progress well, with the parties aiming to finalise a debt facility agreement and related financing documentation in the near future.

Early Engineering Works

GR Engineering Services Limited (GRES) has been named preferred engineering, procurement and construction (EPC) contractor for Thunderbird.  The group has advanced a range of deliverables contained in the Early Works Agreement.

The EWA has been carried out in two phases, with Phase 1 focused on the engineering design requirements relating to nameplate plant throughout and plant operability, whilst Phase 2 considered several optimisation considerations initiated by the Company.  Engineering is approximately 30% complete with no material changes to the Bankable Feasibility Study (BFS) flow sheet.

Site access and approvals

Site access and infrastructure arrangements for Thunderbird are progressing in accordance wit the State Government approved Minor or Preliminary Works (MoPW).  The early works program has also enabled Sheffield to advance Aboriginal training in readiness for construction activities at Thunderbird.

The Environmental Protection Agency (EPA) recommended the approval of the Thunderbird Project during the December 2017 quarter.  The Western Australia Minister for the Environment (Minister) has since provided a favourable determination for the Thunderbird Mineral Sands Project, after considering appeals to the Environmental Protection Authority (EPA) recommendations published in October 2017.  The approval process and conditions have underscored the low environmental impact of the Thunderbird project.

In regards to the Native Title process, the National Native Title Tribunal (NNTT) reconsidered a previous good faith finding in May 2018 and determined (28 August 2018) that Sheffield acted in good faith in its negotiations with the Traditional Owners.  Sheffield has remained willing to seek a mutually acceptable Native Title Agreement with Traditional Owners.

Sheffield has successfully negotiated a co-existence agreement with Walalakoo Aboriginal Corporation (WAC), the prescribed body corporate for the Nyikina Mangala native title holders, over miscellaneous licenses that secure road access to Thunderbird.

The Company has secured access to the Derby Port.  Sheffield has executed a minimum 20-year lease agreement with the Shire of Derby-West Kimberley encompassing the Derby Port and bulk handling facility.

Thunderbird Resource

Thunderbird has a Mineral Resource of 3.23 billion tonnes @ 6.9% HM (Measured, Indicated and Inferred @ 3% HM cut-off), including 18.6 million tonnes of zircon, 5.9 million tonnes of high-titanium leucoxene, 6.5 million tonnes of leucoxene and 61.7 million tonnes of ilmenite. The resource includes a coherent and minable high grade zone (@ 7.5% HM cut-off) of 1,050 million tonnes @ 12.2% HM (Measured, Indicated and Inferred) containing 9.7 million tonnes of zircon, 3.0 million tonnes of high-titanium leucoxene, 2.7 million tonnes of leucoxene and 35 million tonnes of ilmenite. The high in-situ valuable heavy mineral (VHM) grades for this zone of 0.93% zircon, 0.28% high-titanium leucoxene, 0.26% leucoxene and 3.3% ilmenite place Thunderbird within the top tier of HMS deposits globally.

Thunderbird is a thick and consistent surface outcropping deposit providing for a low LOM ore:waste strip ratio of 0.7:1.0. The PFS indicates the initial 7 year mine life strip ratio is below 0.2:1.0 further supporting low initial capital and mining costs. The dimensions of the deposit are approximately 6 km down dip, 4 km across strike and from 12m to 48m thick. These dimensions are very favourably to large scale mining. The deposit remains open down dip.

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