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Constance Iron CEO takes the mic to discuss their path to listing on the LSE, focusing on magnetite and collaboration with the London Stock Exchange.

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Read the Conversation:

Hello and welcome to the AIS Exhibitor Showcase, a podcast of which us here at Barclay Pierce Capital are proud to present. My name is James Whelan, Managing Director of the
Barclay Pierce Capital Wealth Management Team, and I am joined here by the Executive
Director and CEO of Constance Iron, Dave McKenzie. Dave, how are you now? Yeah, good
morning, James.

How are you? I'm very well, thanks. Fantastic. Thanks for the first question.
You got it right. Thank you for joining us on this one today, coming in Queensland. No,
you came from up north, didn't you? Came from up north, New South Wales.

We're just going to have a really quick run through of what's coming up ahead in the
schedule for Constance, yourself, with regards to some big things that are happening in
London. We're going to talk about the listing timeline, which is pretty exciting as well,
and we're also going to talk about why magnetite is one of the most exciting minerals at
the current stage, especially for us as it is. Okay, so you ready to get into it? Yeah.

So we've got the Australian Investment Summit coming up in London, July 10th. You're
going to be going over in what role? We'll be going over there as an exhibitor, and we
will present at the Australian Investment Summit in London. That's our plan to promote
the company and the IPO that we're going to carry out over there in the short term.
We'll get into the IPO really, really quickly on this one, but so you're presenting two
brokers to two people, and that's at the LSE? Correct. We'll be listing on the standard
board of the LSE. So we'll be speaking to investors, institutional investors, sophisticated
investors around the investment into the IPO.

Yeah. Unfortunately, I won't be able to go over there, but I was looking forward to getting
over and seeing how you do it. There's so much exciting news that's coming out of
what's happening in London, especially for you over there.

So first off, why the London Stock Exchange? A couple of reasons for that is I think
there's a bigger capital spread to start with than here in Australia for this particular size
project. The other thing is the environmental impact of magnetite, which I'll probably
bang on about a little bit during our conversation as we are a magnetite producer or
explorer producer, as opposed to just an iron ore miner. I think it's fairly common in
everybody's vocabulary.

I know it is here in Australia and more so probably in the UK and Europe around
magnetite is the green iron to make green steel. And so it's a much more sophisticated
attitude in the UK and Europe around those particular facets of what is the magnetite
story than what is here in Australia. Now, do you want to sort of go further into that
magnetite? Let's just go straight into magnetite and talk about what's brought you to
this stage now.

What have you got under the ground? Okay. So we have two assets. We have one in
Queensland, exploration target potential of 700 million tonnes at probably a 58% FE grade.
It's Jorc 2004 to 270 million tonnes at 53% FE. I think we have to twin nine more holes with that
particular project and it becomes a Jorc 2012. That's our Queensland asset.

We also have an asset in southern Western Australia at Norseman. That asset was given
an exploration potential tonnage of 360 to 930 million tonnes. We are at present carrying out our maiden Jorc resource drilling at the project, which will give us somewhere in the range
of 50 million tonnes, which will be our first three years production from the asset.

And there is some hematite associated with that as well. So we'll have some direct
shipping or in hematite, but mostly we'll concentrate on the magnetite portion of that. So
why magnetite? Yeah, that's my next question.

You got it. I'm just going to sit back and listen to the magic of magnetite. So magnetite
as a rule, and I'll compare hematite and magnetite quite a bit in this conversation as
well.

Hematite comes out of the ground at a higher iron ore grade. So typically 58% to 63% or
64%. Magnetite deposits generally in situ are somewhere between 25% and 45%.
There are higher grade deposits around the world, but I'm just generally speaking within
Australia. Hematite is almost a direct ship. It's dig, crush and throw it on a boat and
that's your export.

It has levels of phosphorus, aluminium, sulphur, just to mention a few deleterious
elements which are quite difficult, and silica, which are quite difficult to take out of that
particular product when it's exported. So they're at high levels. Magnetite is a processed
material when it comes out of the ground.

So it's susceptible to magnetics. So the two ways that you can process the magnetite are
dry magnetic separation and obviously a wet beneficiation plant. So in the first instance,
we'll do dry magnetic separation at Norseman, which will give us the first three years of
production and going on to install a wet beneficiation plant to give us a higher grade
product.

Because the magnetite is processed, it has very few of the deleterious elements that the
blast furnaces, and I'll just use China for instance, don't like. So it has less phosphorus
because it's processed and it's treated. It has less phosphorus, it has less aluminium and
it has usually less silica.

So it gets a premium pricing as well for those things. It also has a unique difference in
the blast furnace than the hematite because it has a different exothermic reaction within
the blast furnace. So therefore requires less energy, so less carbon emissions as well
from the blast furnaces.

So less phosphorus going into the atmosphere, less aluminium, all of those things that
go towards the commitment for the 2030 environmental targets at China and in fact,
everybody around the world has said. So to the steel mills, it's a very attractive, I guess,
cargo for them to get to put through their blast furnaces. And as we move forward and
we can see the impetus now of everyone saying it's the green iron for green steel, then
magnetite is definitely moving into the future. What steel makers are going to require. Is that why it usually trades at a higher price?

It does. Yeah. That's correct. And that's the premium. So if you could imagine, if you're a steel mill, you would say, well, it's got less phosphorus, less of all these things that we're putting into
the atmosphere that we get penalized for by our governments.

And we're using less energy to turn a ton of magnetite into steel within the blast furnace
itself. So therefore we have a saving in our process. And so we get a percentage as a
magnetite producer, you would get a percentage of that saving that they have.
That's where the potential premium comes in. So it's assisting the world socially or
environmentally in some way, because we still need to produce steel. And there is quite
a sizable holding that's there as well in Norseman.

That's correct. So it's an asset of perhaps up to a billion tons and has longevity. It's a
good grade.

So it's got a global resource grade in situ at the moment of 35% FE, which puts a smack
bang in the middle of what magnetite deposits are supposed to look like. We're doing, as
I said, our maiden Jorc, 2012 Jorc for the asset in our first stage production will be dry
magnetic separation moving into wet beneficiation in perhaps year four or five. I guess
the other great thing about the Norseman asset is it's got infrastructure which would
cost hundreds of millions of dollars already installed.

So there's 15 kilometers from where we plan to do the mining and processing to a rail
line, which goes to the deep water port of Esperance, which has existing iron ore storage
facilities and shiploading facilities. So all that sort of infrastructure is just, I guess that's
the cream on the cake for the Norseman asset because we've got Esperance right there.

Which I haven't been to, but it seems lovely on the photos that I've seen of it down
there.

Yeah, it's nice. Okay, so let's go back to London now. You're going over there, you're
presenting, meeting with lots of brokers and funds that we've got prepared over there as
well.

Do you want to run us through the path to listing, what that actually looks like? It's a
fascinating concept. It is. So we will be in a position in the very near future to go across
and start some pre-marketing conversations and do some pre-marketing presentations
with investors over there and our brokers in the UK.

So a very exciting two to three months coming up. So at all times you've got an asset
which is better for the environment listing in London because there is better fund flow on
that environmental side and you're going over as well to present at the Australian
Investment Summit. It all marries up quite well.

Yeah, it does. I think it's a really exciting opportunity for anybody that wants to get
involved in the magnetite scene and be connected with something that's very
environmentally sought after and it's going to be into the future. People talk about
copper and electric vehicles.

This is the green iron to make the green steel to go with the environmentally friendly
vehicles and all sorts of things into the future. Well, it does make a lot of sense. So good
luck over there working with the LSE.

They've been amazing to work with. I know from my side, it's been sensational to work
with. Are you finding that same situation? Yeah.

So we've met with a couple of representatives of the LSE here in Australia. They took the
time to come across and have a look and talk to us and I think they're going to be of
enormous assistance and be very beneficial in our process going forward, given just
some of their connections with the FCA, the regulatory bodies and everyone else over
there. I think they'll make the process much smoother for us to go through the UK
process.

Yeah. Well, good luck when you're over there. Thanks very much for joining us.
David McKenzie, CEO of Constance Iron, and this has been our AIS Exhibitor Showcase
brought to you by Barclay-Peirce Capital. I'm James Whelan. Thanks for joining us.