Premier Minerals Limited

Newsletter

December - 2014

Craig Figtree

Dear Readers

We have had a positive few months and see increased enthusiasm in Bangladesh in the resources sector. I have included out latest news, our market update and an internal article of social importance and an external article of great interest to us when it comes to final separation of Zircon product.

We wish you all a happy Christmas and New Year.

We will be away from our offices on annual holiday from the 21st of December to the 4th of January. We will be out of the office but monitoring our email accounts.

We wish you a Merry Christmas and the best for the New Year.

Craig Figtree
General Manager Bangladesh

October to December news...

In November a meeting was held at BCSIR, Dhaka on the prospects of minerals sands. The BCSIR, IMMM Joypurhat, the Geological Survey of Bangladesh and the CSIRO from Australia were the government agencies that attended. The key note paper was presented from the CSIRO on the findings of economic heavy minerals at the Brahmaputra River Basin. The need of further investigations particularly pilot plant studies was emphasized. Premier participated in the discussion and also informed the meeting about its findings in the coastal areas and some river sand bars. A follow-up meeting was held in Melbourne the same month.

A lot of work was done on a presentation which we plan to present to technical institutions, Government departments and other concerned authorities and people in Bangladesh. It covers our Exploration, Mining Proposals, Development Plans, Environmental Protection, Market Potential and information about Premier. Please contact us for an email of the pdf version or to book a presentation. Work is underway for some Bengali translation.

We hope to start work with the BAEC at their bulk testing facility at Cox’s Bazar under a new collaborative MOU signed late last year. This MOU being a development of a bulk testing facility and existing Pilot Plant project.

We have very positive hopes for approval of exploration and mining applications next year. This will enable us to delineate areas of high importance and complete vital environmental studies and environmental management plans.

Market review of mineral sands

rutile and zircon market trends

Every quarter we bring you an update of the general market conditions of popular minerals that can be derived from mineral sands. The above graph indicates market conditions for the raw material we can process from the sands of Bangladesh.

Industry sources estimate that global demand is now growing at 4-6% per year.

Technological advancements are major emerging trends in the Zircon market. Other than being an opacifier in glazes the metal Zirconium can be derived from Zircon. This may be used to build nuclear grade zirconium material and develop a wide variety of components for water-cooled nuclear power projects.

According to recent analysis, the major driver of this market is increased use of Zirconium in the Nuclear Power sector for fuel cladding or the structural material for water-cooled nuclear power reactors.

Demand for TiO2 feedstock is recovering due to the reduction in inventory, with the overall market moving back into balance.

Mineral sands prices are predominantly determined by direct producer to customer arrangements, with product pricing also influenced by specific product specifications, volume and other commercial arrangements.

Industry news
Iluka has said it is preparing for a possible restart of the mothballed mineral sands operation at Tutunup South mine 200 kms south of Perth in January next year.

MZI Resources has signed a sales agreement for its Keysbrook Mineral Sands Project in Western Australia, with DuPont Titanium which is the world’s largest titanium dioxide pigment producer.

Exploration
Sri Lanka, Tanzania and Mozambique have featured recent movement in the exploration field.

Gunson Resources (ASX:GUN) has recently completed a two week mapping and pan sampling program across a number of priority target areas in its newly acquired 2000 square kilometre Tanzanian mineral sands portfolio. These projects are surrounded by some of the world’s major world-class mineral sands mines in neighbouring Kenya, Mozambique, Madagascar and South Africa.

Windimurra Vanadium Limited (ASX:WVL) is completing due diligence of 13 exploration licenses in various coastal districts of Sri Lanka that are prospective for mineral sands. A full report is available on ASX or the company website.

Follow-up drilling at Aim-listed Savannah Resources’ 180 km² Jangamo heavy mineral sands (HMS) project, in southern Mozambique, has confirmed zones of higher-grade HMS. Jangamo is located in a world-class mineral sands province, adjacent to Rio Tinto's major Mutamba mineral sands deposit

Internal Article – Economic Development

Triple Bottom Line
Triple Bottom Line

Perceived benefits to Bangladesh of developing the HM resource at Teknaf- Coxs Bazar District.

Economic development is the sustained, concerted actions of policy makers and communities that promote the standard of living and economic health of a specific area. Economic development differs from economic growth. Whereas economic development is a policy intervention endeavor with aims of economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP

After exploration activities between 2006 to 2009, Premier applied for mining leases in five areas in the Teknaf region of Coxs Bazar and believes this will provide significant economic benefits to the area and these benefits will become economically sustainable after 10 years and will be set into the economic fabric of the region after 20 years. Premiers’ policy in Bangladesh is to work where there is an “operational life” for at least 20 years and this reflects the philanthropic beliefs of our investors. Premiers’ investors hope for a profitable return on investment eventually however, in addition, they see substantial benefits to the regional area and the country

This article outlines a range of perceived benefits for discussion. Premier has not completed all studies and by nature this will be ongoing. Further work with government and agencies is due during the Environmental phase of our applications and this will be an exciting time for us.

We see the importance of this project to Bangladesh and the region. The benefits can be broadly discussed in economical, national, governmental or social terms.

A few general topic for consideration are:

High Value Added effect
“It is an economic fact that mining activities provide a larger “value added” component to an economy than any other industrial activity” This occurs because a raw material is extracted and processed to a finished product from a single source. This “Value Added Effect” can be compared with other industries where only the final manufacturing “value added” factor contributes to the economy. The added net value contribution is small in the case of garment manufacture, particularly when cloth and other materials are imported.

Import Substitution and New Industry Development
As the full potential of the heavy mineral markets and applications are developed. New industries for Bangladesh will develop. To name a few industries which may come to Bangladesh to develop products for both export and local markets because of the local availability of Zircon and Rutile are:

Ceramic porcelain, sanitary ware, tile and glaze manufacturers, Zirconium manufacturers, Pigment manufacturers, Paint companies, Computer chip manufacturers, Sporting Goods producers, Sandblasting industries, Titanium manufacturing.

National Linkage and Support Industries
In addition, linkage and support industries will be developed, these include:

Service Industries, Computer Industries, Technical Support, Consulting, Transportation

These industries can provide an additional set of work skills that can ultimately lead to competitive advantage export industries servicing the region. In this way opportunities exist to shift the dominance of some sectors of industrial growth in the region.

The new industry growth will also lead to linkages in training and education of the workforce, leading to new skill development that will help the economy in the long term.

Regional Sectoral Benefits

This is an important benefit for Premier, The Cox’s Bazar district is one of the least developed areas in the country. Work opportunities within the Teknaf community are few, mainly restricted to fishing, salt harvesting and subsistence agriculture. The project will provide for direct local employment that will lead to numerous economic linkage benefits at both family and local level.

These community benefits will be long term and will significantly improve the lifestyle of the local people.

Employment Multiplier effect
The project’s direct employment is only the estimated direct employment factor. The “real” employment benefit must include a “Multiplier factor” this factor will be large, about 10 to 20 times the direct employment.

Rehabilitation activities
Rehabilitation as per the directives of the Department of Environment have the potential to improve on the current landscape of barren sand dunes and shrubby vegetation and will be one of the largest direct employers of unskilled local labor in the region. Creation of new industry opportunities as a result of a planned rehabilitation program would be:

Coconut / avocado / coffee / banana plantations, tea tree oil plantation, fish farms, prawn farms, irrigation for agriculture, service supply industries.

A wide range of linkage industry opportunities will be created locally. These linkage industries will provide service facilities for operations, for example

Analytical laboratory services, Laboratory equipment and consumables, Provedoring, Infrastructure Servicing, Transport Services, Managerial Services, Steel Fabrication, Vehicle servicing, Specialist heavy equipment servicing and supply, Specialist Plant servicing, Mining spare parts manufacture, Security Services, Rehabilitation Services, Construction Services, Surveying.

It is an accepted fact that 20 years sustained economic activity is generally considered a minimum period for the socio-economic benefits to be secured in a community and for sufficient support industries to be established for sustainability to occur.

The monetary benefits to Bangladesh are immense. This stays in Bangladesh. In fact we see all the money that we earn stays in Bangladesh for the first 7-8 years and even when we start to see a return on investment, more than 50% will be spent on operations for production, transport, rehabilitation of land. Plus we estimate at least 20% or more will go to the government for taxes, royalties on sales being 15% percent plus other taxes due. All this stays in Bangladesh.

Premiers activities in the region should be considered as an opportunity in which the people and the environment are enriched through employment and are participating in landscaping and agricultural development and learning vital technical skills. Their families and children and neighbours too will be enriched by this opportunity and develop likewise.

Aid agencies understand how mining activities can improve an area, the Australian Government funded an AusAid Mining for development initiative in 2011. This being a focus on short-term missions to between 4 and 6 countries to meet with government geological surveys and related resource management organisations and to identify priorities and establish collaborative working relationships. The Worldbank’s sourcebook for poverty reduction strategies devotes an entire chapter to mining.

Premier will develop and fund further studies when the Ministry of Power Energy & Mineral Resources licences our applications. Once this occurs we head to the exciting phase of working with the Ministry of Environment & Forests together designing an environmental impact assessment (EIA) and environmental management plan (EMP). Then a much more detailed study of how to achieve true benefits for the environment and the community will take place. We hope for some participative work between the Bangladeshi and Australian government scientific fraternities too.

The systematic, long-term investments in transportation, housing, education, environment and healthcare are necessary to ensure sustainable economic development and Premier Minerals sees an opportunity to be part of this through its business development.

External Article

The Bangladesh Government has long been aware of mineral sands in Bangladesh, and they have promoted the research of mineral sands through the BAEC for 40 years.

The predominant economic mineral within the explored areas of Cox’s Bazar has always been Zircon. Zircon can contain high readings of U (Uranium) and TH (Thorium) these parts although minuscule render some of the Zircon useless. In fact Zircon reading above 500ppm may not be shipped internationally. Unfortunately some of Bangladesh’s Zircon is above this benchmark and would usually require disposal.

Recently the Australian Commonwealth Scientific and Industrial Research Organisation (CSIRO) have been working on a process to rid the Zircon of this contamination.
CISRO link about Zircon.

vist www.pgminerals.com see our previous newsletter