Canyon Resources LTD (CAY - ASX) : Equity Research

EQUITY RESEARCH
Materials
25th June 2021
Canyon Resources Ltd (CAY.ASX)

Developing a Tier 1 bauxite asset
Event:
• We initiate research coverage on Canyon Resources (CAY).
Disclosures
Investment Highlights: The analyst, Foster Stockbroking and associated entities,
and Cranport Pty Ltd, do not own CAY securities.
• CAY’s major asset is its 100% interest in the Minim Martap bauxite project in Refer details end of report.
Cameroon, containing 1.0bt JORC Resource at 45.3% Al2O3 and 2.7% SiO2, and Foster Stockbroking provides corporate advisory services to
Reserves of 99Mt at 51.6% Al2O3 and 2.4% SiO2. CAY and may receive fees for this service.
Recommendation Speculative Buy
• PFS shows long-life project with attractive metrics. Minim Martap PFS revealed Previous n/a
20-year LOM at 4.9Mtpa of DSO bauxite, with post-tax NPV10 real of US$291M Risk High
and pre-production capex US$119M. IRR is 37% and NPV/capex ratio of 2.4x. Price Target $0.32
C1 cash costs are $35.2/t, with high transport cost (800km rail to port) offset by Previous n/a
Share price (A$) $0.12
no beneficiation required and low mine strip of 0.4x. CAY estimates the project
ASX code CAY
to sit in the middle of landed quality adjusted Wood Mackenzie cost curve, based
52 week low-high $0.099-$0.185
on the Wood Mackenzie pricing model. Valuation - risked (A$/share) $ 0.32
• A tier 1 asset comparable to Cape York and Guinea bauxites in quality and size. Methodology risked NPV
Capital structure
Minim Martap is a gibbsite low-temperature bauxite. Our report shows it
Shares on Issue (M) 624
possesses one of the highest Available Alumina and lowest Reactive Silica of Market cap (A$M) 75
global bauxite projects and mines. Both are key parameters for enabling low Net cash (debt) (A$M) 5
cost production of alumina. Performance rights (M) 3
Options (M) 9
• A low cost and green bauxite for refiners. Minim Martap’s high Available
Diluted EV (A$M) 72
Alumina and low Reactive Silica means greater alumina recovery, lower caustic Ave daily volume ('000) 1,344
soda consumption, less red mud waste, and lower energy consumption for Earnings FY20a FY21e FY22e FY23e
alumina refiners. The long-life and Cameroon location also provides refiners a Sales 0 0 0 0
diversification option vs Guinea, the dominant global seaborne exporter. EBITDA adj -8 -8 -9 -10
NPAT reported -9 -8 -9 -10
• ESIA submitted, Mining Convention and Feasibility Study required for Mining NPAT adj -8 -8 -9 -10
Permit. We expect CAY to receive its Mining Permit 4Q CY21e, after negotiating EPS adj. $* -0.02 -0.01 -0.01 -0.01
a Mining Convention with the Government and submitting its application. CAY PE x nm nm nm nm
is also aiming to finalise binding offtake and rail and port access agreements. EV/EBITDA x nm nm nm nm
* Adj =underlying
• Rail and port access and funding key to FID. In addition to the US$119M capex Board
to be borne by CAY, US$122M is required mostly for rail upgrades and rolling Cliff Lawrenson Non-Executive Chairman
stock, which CAY assumes will be funded by a third party. CAY has been in Phillip Gallagher Managing Director
negotiations with various parties, including the Government and port and rail David Netherway Non-Executive Director
operators as part of developing an appropriate PPP model for the infrastructure. Steve Zaninovich Non-Executive Director
Peter Su Non-Executive Director
Earnings and Valuation: Share price graph
• We estimate first revenues and earnings for CAY in FY24 from Minim Martap.
We forecast NPAT of $11M in FY24e rising to $52M in FY28e as bauxite prices
rise and Guinea supply growth subsides.
• We value CAY at $0.32/share, based on 0.5x NPV10. We assume equity: debt
funding of 50:50. However given the tier 1 asset, strategic/offtaker equity in
project and/or CAY are also viable. Our unrisked NPV10 of CAY is $0.66/share.
Recommendation:
• We initiate on CAY with a Speculative Buy Recommendation and 12-month
share PT of $0.32, based on 0.5x NPV10.
• Catalysts for the share price include: 1) DFS; 2) Mining Convention 3) Analyst: Mark Fichera +612 9993 8162
mark.fichera@fostock.com.au
Finalisation of rail and port access agreements; 4) Binding offtake; 5) Mining
permit; 6) Financing; and 7) FID.
DISCLAIMER: Foster Stockbroking Pty Ltd does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest which it seeks to manage and disclose. Refer full disclosures at the end of this report.
Canyon Resources (CAY)

Full Year Ended 30 June
Profit and Loss A$M 2020a 2021e 2022e 2023e Company Valuation
Revenue 0 0 0 0 10% WACC, Nominal
Operating costs adj. 8 8 9 10 Unrisked Risked
EBITDA adj. -8 -8 -9 -10 Segment A$M A$/share A$M A$/share
D&A 0 0 0 0 Minim Martap Reserves (90% equity) 416 $0.50 312 $0.25
EBIT adj. -8 -8 -9 -10 Minim Martap other Resources (90% equity) 133 $0.16 80 $0.06
Net Interest exp / (income) 0 0 0 4 Corporate -103 -$0.12 -77 -$0.06
PBT adj. -8 -8 -9 -14 Future equity 100 $0.12 75 $0.06
Tax exp / (benefit) adj. 0 0 0 -4 Options-in-money at val 1 $0.00 1 $0.00
NPAT adj. -8 -8 -9 -10 Net cash 5 $0.01 5 $0.00
Non-recurring items -1 0 0 0 Total 552 $0.66 396 $0.32
NPAT reported -9 -8 -9 -10
Shares now M 624 624
EPS diluted adj. ($) -0.02 -0.01 -0.01 -0.01 Future equity M 152 577
Performance rights M 3 2
Cashflow A$M 2020a 2021e 2022e 2023e Options M 9 9
EBITDA adj. -8 -8 -8 -9 Fully diluted shares M 837 1,249
Change in WC 1 1 -1 0
Net interest 0 0 0 0 Commodity Assumptions 2020a 2021e 2022e 2023e
Tax 0 0 0 0 Prices:
Share based expense 4 4 4 4 Bauxite realised, fob US$/t - - - -
Other 0 0 0 0 A$ US$:A$ 0.69 0.74 0.74 0.75
Operating Cashflow -3 -3 -5 -5
Production - Bauxite DSO Mt - - - -
Purchase of PP&E 0 0 0 0 Costs C1 fob, US$/t - - - -
Acquisitions 0 0 0 0
Capitalised expenses -4 -4 -4 -158 Resources and Reserves
Investments 0 0 0 0 JORC Resources 35% Al2 O3 c/off grade Ore Mt Al2 O3 % SiO2 %
Other 0 0 0 0 Measured 382 47.3% 2.7%
Investing Cashflow -4 -4 -4 -158 Indicated 597 44.2% 2.7%
inferred 48 43.2% 3.7%
Equity issue 7 10 100 0 Total 1,027 45.3% 2.7%
Debt proceeds 0 0 100 0
Debt repayments 0 0 0 0 JORC Resources - High Grade: 45% Al2 O3 c/off grade Ore Mt Al2 O3 % SiO2 %
Other 0 -1 0 0 Measured 268 49.7% 2.6%
Financing Cashflow 7 9 200 0 Indicated 218 48.3% 2.5%
inferred 14 47.3% 2.8%
Net Cashflow -1 1 191 -164 Total 500 49.0% 2.6%
Balance Sheet A$M 2020a 2021e 2022e 2023e JORC Reserves - High Grade: 45% Al2 O3 c/off grade Ore Mt Al2 O3 % SiO2 %
Cash 2 2 193 30 Reserves 99 51.6% 2.4%
Receivables 0 0 0 0 Total 99 51.6% 2.4%
Inventories 0 0 0 0
PPE 0 0 0 0 Capital structure M
Capitalised expl'n 12 14 14 158 Ordinary shares pro-forma 624
Intangibles 0 0 0 0 Performance rights 3
Other 0 0 0 9 Options 9
Total Assets 15 17 208 197 Fully diluted 636
Accounts payable 1 1 1 1
Provisions 0 0 0 0
Debt 0 0 100 100
Other 0 1 1 0
Total Liabilities 2 2 102 101
Capital & reserves 58 68 168 168

Retained earnings -45 -53 -63 -73
Total Equity 13 15 106 96 Source: Company; Foster Stockbroking estimates
25th June 2021 Level 25, 52 Martin Place, Sydney, NSW 2000 | +61 2 9993 8100 | www.fostock.com.au 2
INTRODUCTION
• Canyon Resources Ltd (CAY) is an Australian resources explorer/developer headquartered in
Perth, Western Australia, with its key asset being the Minim Martap bauxite project in
Cameroon, west Africa.
MINIM MARTAP (CAY, 100%)
Background
• CAY was granted the Minim Martap project in 2018 from the Cameroon Government. The
project comprises three tenements - Minim Martap, Makan, and Ngouandal - located within
the Vina and Djerem Departments of the Adamawa region in central Cameroon. Two bauxite
deposits lie across the tenements – Ngouandal and Minim Martap - within 25km of each other.
The total area of the permits is 1,349km2.
• The Minim Martap and Ngandoual deposits were discovered in 1958 by the Cameroon
Government’s Mines and Geology Division. Historic exploration included that undertaken by
partnership between Groupe Pechiney and Cameroon Government, and Cameroon Alumina Ltd
Sarl. CAY’s drilling of the project commenced in 2018.
Figure 1: Location of Minim Martap Project
Source: Company.
Project consideration
• As part of consideration to a third party for grant of the project, CAY will issue 20M shares upon
completion and execution of a final detailed Mining Convention with the Cameroon
Government for mine and infrastructure related to the Minim Martap project; and a further
30M shares upon issue of a Mining Permit, securing and confirmation of full mine funding, and
FID by Board to commence mine construction.
Geology
• Minim Martap and Ngouandal are plateau - or tabular – bauxite deposits, occurring as dissected
flow basalt landscapes that form relatively flat plateaux rising steeply from surrounding granitic
planes, the bauxite lying as thin lateral extensive sheets at the top of plateaux. The bauxite
mineralisation is formed by the trend formation of aluminium rich rocks and sediments through
a lateritic process. 79 plateaux have been identified within the project tenements.
• The bauxite horizon typically varies in thickness from 3m to over 30m, predominantly 10m to
15m thick, and is usually hard near the surface. The bottom 2m to 3m of the horizon is moist
and friable and most affected by the fluctuating water table. Depth of the bauxite from surface
varies from 6m to 20m.
JORC RESOURCE
Over 1bt, including 500Mt at high-grade 49% Al2O3
• Minim Martap project has JORC Resource of 1,027Mt at 45.3% alumina (Al2O3) and 2.7% silica
(SiO2) at a cut-off of 35% Al2O3. 49% of the Resource comprises a high-grade component –
500Mt at 49.0% Al2O3 and 2.6% SiO2, at a cut-off 45% Al2O3, while CAY states there are
substantial zones within the resource at greater than 50% Al2O3 with very low contaminants.
The resource is near surface, between 6m and 10m thick, and contains minimal levels of lower
grade material as overburden or intraburden.
Figure 2: Minim Martap JORC Resources
JORC Resources - 35% Al2O3 c/off grade Ore Mt Al2O3 % SiO2 %

Measured 382 47.3% 2.7%
Indicated 597 44.2% 2.7%
Inferred 48 43.2% 3.7%
Total 1,027 45.3% 2.7%
High Grade JORC Resources - 45% Al2O3 c/off grade Ore Mt Al2O3 % SiO2 %
Measured 268 49.7% 2.6%
Indicated 218 48.3% 2.5%
Inferred 14 47.3% 2.8%
Total 500 49.0% 2.6%
Source: Company.
• The JORC Resource extends over 17 plateaux. Within the Minim Martap tenement the plateaux
cover an area of 20km x 20km, with individual plateaux up to 1km wide and 10km in length. In
Makan there is one plateau, 1km x 1km, while Ngandoaul contains three plateuax covering
1.5km x 1.5km. The high-grade resource lies across all plateaux within the Minim Martap
licence.
RESERVES
99Mt at 51.6% Al2O3, 2.4% SiO2
• CAY declared Proved Reserves for Minim Martap post its PFS of 99Mt at 51.6% Al2O3 and 2.4%
SiO2, which should support a 5Mtpa mine operation over 20 years. All bauxite within the
resource was considered as potential Reserves product across range of grade profiles, each with
its assigned fob price based on marketing and end user data derived from the Wood Mackenzie
pricing model. Product grade varies from 48% to 54% Al2O3, and 1.0% to 3.5% SiO2. Cut-off
grades for scheduling used in the Reserves were:
o All material >48.5% Al2O3 is ore, regardless of SiO2 grade;
o All material between 44% and 48.5% Al2O3, and <2.5% SiO2, is ore;
o All other material is waste.
Figure 3: Minim Martap JORC Reserves
JORC Reserves Ore Mt Al2O3 % SiO2 %

Proved 99 51.6% 2.4%
Source: Company.
Most plateaux still to be drill tested
• CAY believes significant opportunity exists to extend the Reserves, given only 3 of the 79 Minim
Martap plateaux are included. Many plateaux outside the Reserve are identical, with similar
altitude and characteristics, but at least 60 have not yet been drilled. CAY will target high grade
zones in future exploration, and there is reasonable probability that further high-grade mineral
resources will be identified.
PFS HIGHLIGHTS
20-year LOM at 5Mtpa bauxite production
• A PFS was undertaken on Minim Martap in 2020. Highlights included a long 20-year mine life
at 5Mtpa bauxite production yielding NPV10 post-tax of US$291M with attractive IRR 37%. Pre-
production capex was US$119M for an attractive NPV/capex ratio of 2.4x. On the deficit side,
payback was long at 4 years due to the low bauxite prices in the short term. Pricing assumed
2023 initial real bauxite price of US$43.5/t increasing to an average of US$51.2/t over 20 years.
LOM C3 costs were US$39.3/t. 99% of product was underpinned by Indicated Resources, which
have been since upgraded to Measured and converted to Proved Reserves.
MINING
Shallow open pit, low strip, and no drill and blast
• Mining of Minim Martap is proposed to begin at 4Mtpa for the first two years, ramping up to
5Mtpa thereafter. The project will comprise a series of open pit mines extracting ore from the
bauxite plateaux, with typically one to three plateaux mined at any given time. The 20-year
LOM modelled truncates the operation after development of three mining areas on three
separate plateaux - Raymonde, Danielle, and Beatrice.
• Mining will utilise contractors using conventional equipment including two surface miners,
bulldozer, front end loaders, and ten haul trucks. No drill and blast is required, and no
significant pit walls required due to the plateaux structure, resulting in a low strip ratio of 0.4x.
Mining is simple edge to edge strip, open pit along the horizontal ore from tops of the plateaux.
After cutting with surface miners, bauxite will be loaded into trucks to ROM pad where it will
be blended. Plateaux will be dewatered prior to mining and continuous waste backfill and
rehabilitation performed.
Figure 4: PFS Minim Martap PFS
Item Unit Value

LOM years 20
Production rate capacity Mtpa 5.0
Ore mined Mtpa 4.9
Production rate ave LOM Mtpa 4.9
Strip ratio x 0.4x
Product grade:
Alumina % 51.1%
Silica % 2.3%
Moisture % 10.0%
Capex pre-prod’n US$M 119

C1 cost average LOM US$/t 35.2
C2 US$/t 37.2
C3 US$/t 39.6
Price average, FOB US$/t 51.2
Free cash flow average annual US$M 49

NPV10 post-tax US$M 291
IRR post-tax % 37%
Payback years 3.9
Royalty holiday years 5

Royalty rate % 5%
Tax holiday years 5
Tax rate % 30%
Source: Company.
No Beneficiation required
• A detailed mining schedule achieves average production profile of 52% Al2O3 and 2.3% SiO2 for
the first 20 years of production. No beneficiation, screening, or washing is required to generate
product, the bauxite bulk hauled as DSO.
LOGISTICS
Road and rail – 800km to port
• Current access to the Minim Martap tenement is via an 80km public road from the village of
Makor, and by road and rail from Cameroon’s capital Yaounde. Minim Martap is also
advantaged by proximity to a rail line capable of transporting bulk material 800km to Douala
port. Mining areas of the Minim Martap and Makan tenements lie within 50km of the Makor
railway station, while the Ngaoundal tenement is within 5km of the rail head. Ngaoundal town
and railway station, and part of the rail line, also lie within the tenement. The rail currently
extends from Douala in the west to Ngaoundal in north central Cameroon, carrying both
passenger and freight daily.
Partnerships with port and rail partners assumed
• The study examined a Stage 1 export operation via rail to Cameroon’s Douala port. It envisaged
utilising a third party owner-operator rail infrastructure agreement derived from first principles
and supported by industry benchmarking and interested parties. Cooperation agreements for
rail and port partners – developed by consultants and the rail contractor - have been presented
to Government. These will be complemented by Rail and Port Concept of Operations

documents, which aim to set the foundation for formal access and commercial agreements.
• The Cameroon Government has expressed a preference for PPP regarding its key rail
infrastructure, given its PPP model is sponsored by the World Bank as part of its Public Private
Infrastructure Advisory Facility (PPIAF) initiative, which facilitates private sector participation in
infrastructure development.
RAIL
MoU with rail operator for access and upgrades
• In November 2020 CAY signed an MoU with the rail operator Camrail, outlining how both
parties will develop a solution for haulage of bauxite for Minim Martap. The MoU provides a
pathway to complete binding commercial rail access and haulage agreements, including for
finalising the Rail Concept of Operations into an agreed Plan of Operations. Under the MoU
Camrail will assist CAY in finalising a technical and commercial logistics solution, including
negotiations with Government and funding parties, and rail upgrades.
• Camrail is a subsidiary of Bollore Transport and Logistics, a French logistics company with
36,500 employees across 107 countries on five continents. Bollore is well experienced, having
been active in Cameroon for over 20 years, and operator of the rail since 1999.
• The PFS proposed Minim Martap Bauxite will be rehandled into 25-30 road trains which will
travel 50km on new road together with an upgraded existing public road to an inland rail facility
(IRF) 150m from Makor railway station. The IRF will have a stockpile area and front-end loaders
loading product into open top, lidded, rotating container boxes.
• The product will be transported by rail for 800km to Doula port, with five new passing loops to
be added (bringing the total to 30). Speed and operations upgrade will be undertaken. Rolling
stock will comprise ten trains, with each train comprising two locomotives, 38 wagons, and 76
boxes (each carrying 42t). Train lengths will align with that of existing passing loops.
• The PFS assumed unlocking latent rail capacity by scheduling improvements and equipment
upgrades, after key studies by Camrail and Portugal’s Mota-Engil Engenharia Construcao
(Mota). The latter is active globally in construction and transport, with over 70 years’ experience
in African resources and logistics projects. Mota has been involved in the Moatize coal mine,
and rail in Mozambique and Tanzania.
• While existing rail has capacity to transport >3Mtpa bauxite, current rail debottlenecking
projects are underway by Camrail and the Government, which were considered in the PFS
production profile. The ramp up from 4Mtpa to 5Mtpa is possible by integrating with an
increase in axle load capacity from 17t to 20t, currently scheduled to be completed by 2028.
Rail continuing to be upgraded
• As at September 2020, 13 rail bridges were upgraded by Camrail, with an upgrade on an

additional 55 bridges underway across the entire rail network, due for completion in 2021.
330km of track renewal, and reinforcement work on 500km of track, have been completed –
approximately 50% of the rail to be used by Minim Martap.
Figure 5: Location of proposed Minim Martap mining tenements and rail proximity
Source: Company.
• The upgrades are in line with the PFS’ project execution, and are part of a five-year
infrastructure renewal program agreed between Camrail and the Government. Financing
support has been provided by development partners World Bank, European Investment Bank,
French Development Agency, and EU.
PORT
Export through Douala
• Douala is an existing Atlantic export port, the rail line terminating on its quay. The port is
principally a container and timber facility, currently importing 7Mtpa and exporting
approximately 3Mtpa. Once Minim Martap bauxite is delivered to port, a reach stacker will
unload ore which will be conveyed 100m to a storage shed at a loading berth. Existing port
cranes will load four barges which will tranship product to a capesize vessel transhipment
location 50km from port. The vessels will arrive every 2-3 weeks in 20m water depths vs the
9m at port. Transhipping has been used in Guinea, the world’s largest seaborne exporter.
MoU with Port Authority
• CAY has executed an MoU with the Port Authority of Doula for the development of port and
transhipment infrastructure, including a framework for completing port access and operating
agreements.
OTHER INFRASTRUCTURE
• Supporting infrastructure near the Minim Martap mine will include ROM blending stockpiles
areas, workshop, warehouse, fuel farm, offices, and a 350 personnel accommodation camp.
Power will be generated from remote diesel generators. The workforce will be mix of expats
and Cameroonians to be housed at camp, while local Cameroons employees will commute
daily.
CAPEX
US$119M pre-production
• Pre-production capex is US$119M, mostly comprising mine and port infrastructure, new road,
and the IRF. Sustaining capital is US$79M over 20 years, an average of US$4M pa. Construction
will take 12 months, plus 6 months for long lead items fabrication.
Figure 6: Minim Martap Pre-Production Capex
Item US$M
Mine and site 32
Road 13
Inland rail facility 15
Douala Port 21
Project delivery 4
Owners costs 27
Contingency 7
Total 119
Source: Company.
EXTERNAL FUNDING
Additional US$122M for mostly rolling stock - to be financed by third parties

• In addition to CAY’s own capex requirements, funding of other equipment and infrastructure is
required for the project to be realised. CAY expects this to be undertaken, operated, and owned
by third parties separate to the project. The capital comprises mostly rail rolling stock, as well
as rail infrastructure upgrades and the existing public road between mine and rail.
• Rolling stock and rail infrastructure upgrades have been costed by CAY at US$122M from first
principles including benchmarking for capital returns and profit margin. The upgrades have
been integrated with Camrail’s current scheduled known rail upgrades (e.g. railway bridges).
Rolling stock is assumed to be purchased new and locomotives second hand, with CAY utilising
a portion of the current fleet of 700 flatbed wagons and locomotives. CAY will supply rotating
containers and all handling equipment.
Figure 7: Third Party Rail Rolling Stock and Public Access Infrastructure Costs
Item US$M
Locomotives 55
Flatbed wagons 49
Rail access infrastructure (incl. 68 railway bridge upgrades) 11
EPCM 1
Contingency 7
Total 122
Source: Company.
• CAY has commenced discussions with third parties including specialist African rolling stock
providers and logistic operators who have expressed interest in financing and operating the
rolling stock and associated infrastructure. These may include Camrail and Mota. The public
road upgrade is assumed to be government funded.
ENVIRONMENTAL
ESIA submitted, communities impact to be managed
• Examples of bauxite mining in Guinea and Jamaica have shown the negative impact on
resettlement of villages that the mining of extensive bauxite plateaus can have, which in some
cases have led to unrest and mining disruptions.
• CAY submitted its ESIA at the beginning of this month. The company believes land use in Minim
Martap’s area is mostly grazing and there is no known historical sites or wilderness areas.
However there are villages and regional councils which will be impacted. CAY states these will
have input into project development, and it has included costs for anticipated impact on
communities along the haul road in capex. We believe this will be need to be managed astutely
in bringing the project to successful realisation.
Minimal waste a plus
• A positive is that the development of waste dumps or large stockpiles at Minim Martap is
limited due to backfill operation and the absence of beneficiation and processing. Bauxite
mines which requires significant beneficiation have also experienced environmental and social
issues that have caused disruption and costs to operations.
PERMITTING
DFS and Mining Convention required for Mining Permit
• CAY has already submitted its ESIA for Minim Martap, and now needs to complete its DFS and
negotiate a Mining Convention with the Government to apply for and receive a Mining Permit.
We expect the Mining Permit to be issued soon after completion of the Mining agreement,
subject to legislative ratification.
• Given its scope, the Mining Convention is critical in facilitating the Mining Permit. It will include
details of tax, royalties, social and environmental conditions, local employment, state
participation, health and safety, rehabilitation, land, port, and rail access, training, and shared
infrastructure. CAY has been working with the Government to progress negotiation of the
Mining Convention, including executing a Specifications Agreement in May 2021 to help
facilitate it.
• After grant of Mining Permit the Government will be granted a 10% free carry interest in the
project in-line with the Mining Code. Up to an additional 25% may be acquired under terms
and conditions mutually consented by parties. The Mining Permit will entitle exclusive mineral
exploitation for an initial period of 20 years, renewable for successive ten-year periods
BAUXITE 101
• Bauxite is the primary raw material for alumina, from which 98% of aluminium is produced.
Bauxite is refined first to produce alumina, and alumina then smelted electrolytically to produce
aluminium metal. About 4t of bauxite is required to produce 2t of alumina, and 2t of alumina
to produce 1t of aluminium. Alumina is mostly used to produce aluminium, with the balance
used for insulation, paints, fuel, fillers, abrasives, and industrial reagents.
• About 70% of global bauxite is refined by the pressurised Bayer process, which dissolves
(digests) the alumina at high temperatures using caustic soda (NaOH). The undissolved
impurities are then filtered and discarded, and the remnant alumina in solution precipitated
and recovered.
Not all bauxite ores are the same
• Bauxite ore is aluminium rich soil composed of oxides and clays of aluminium, iron, and lesser
amounts of titanium and silicon. It develops where the Al2O3 content, usually 30%-60%,
exceeds that of iron oxide (Fe2O3), and where SiO2 in the form of a silicate – usually the clay
kaolinite (Al2O3.2SiO2.2H2O) or kaolin (rock rich in kaolinite) - does not occur at deleterious
levels.
• Most bauxite minerals mostly fall into three types depending on the primary composition of
the aluminium oxides: 1) Gibbsite - Al2O3.3H2O (tri-hydrate); 2) Boehmite - Al2O3.H2O
(monohydrate); and 3) Diaspore - also Al2O3.H2O but denser and harder. The ore mineralogy is
critical in determining recoverable alumina and refining conditions such as temperature and
amount of caustic soda required.
Gibbsite bauxite is most economic for alumina extraction
• Gibbsite is the most desirable bauxite ore for extracting alumina, requiring the lowest
temperature (140-150oC) Bayer plants for digestion. In contrast higher temperatures are
required to extract alumina from boehmite (200-260oC) and diaspore (235-280oC).
Unsurprisingly low temperatures are most economical due to lower capital and energy
requirements. However Gibbsite ore can be used in high temperature plants, especially to
blend with higher temperature boehmite and diaspore ores.
• Most gibbsite ores form in lateritic plateaux in tropical climates, and are found in equatorial
Africa (Guinea, Cameroon, Ghana, Sierra Leone), South America (Brazil, Guyana, Venezuela,
Surinam), Central America (Jamaica, Dominican Republic), northern Australia (Queensland),
India, and South East Asia (Indonesia, the Philippines, Vietnam, Laos, Solomon Islands).
Diaspore and boehmites are mostly found in the former Soviet states, Europe, and China.
Available Alumina and Reactive Silica
• Even within gibbsite ores there can be mineralogical differences, not only due to varying grade
of alumina and silica, but the degree of gibbsite purity, level of boehmite and diaspore
presence, and type of silicates. All impact alumina recovery. Consequently the industry uses
Available Alumina grade (as opposed total grade) to measure Al2O3 recovery at a standard
temperature (145oC) in the Bayer process, providing a uniform comparison between ores.
Higher Available Alumina grade usually means lower digestion temperature and less waste.
• Another economic determinant of alumina recovery is Reactive Silica. It refers to SiO2 which is
not free in the bauxite ore, usually locked up in kaolinite, which consumes caustic soda also at
the standard 145oC temperature. More Reactive Silica means it robs caustic soda for Al2O3
recovery, meaning greater loss of the latter to waste.
• Higher Reactive Silica also requires higher plant capex and generates greater waste – known as
red mud, Bayer sodalite, or desilication product (DSP). This adds to environmental impact and
disposal costs. Red mud is especially problematic for the industry as its high alkalinity poses
challenges for it to be recycled for applications. About 1-1.5t of red mud is produced for 1t of
alumina.
• For non-gibbsite ores (boehmite, diaspore), Total Available Alumina and Total Silica are
measured at high temperatures (200-280oC). At these high temperatures all silica reacts, hence
Reactive Silica is Total Silica.
• Given the importance of Available Alumina and Reactive Silica, some major bauxite product and
pricing assessments adopt a value-in-use measure, usually a function of Available Alumina less
Reactive Silica.
MINIM MARTAP – HIGH AVAILABE ALUMINA & LOW REACTIVE SILICA

• Metallurgical tests show Minim Martap bauxite is a gibbsite ore, possessing minimal boehmite,
high Available Alumina, low Reactive silica, and low contaminants. Digestion tests at low
temperatures (148oC) on ore with varying grades from the three plateaux to be mined achieved
an average 90.5% conversion of alumina to Available Alumina, and 75.2% conversion of silica
to Reactive Silica. Applying these conversion ratios to the Minim Martap Resources and
Reserves results in Available Alumina of 41.0%-46.7% and Reactive Silica of 1.8%-2.0%.
Figure 8: Minim Martap Available Alumina and Reactive Silica
Al2O3 Available SiO2 Reactive

grade Conversion Alumina grade Conversion Silica
Resource - 35% c/off 45.3% 90.5% 41.0% 2.7% 75.2% 2.0%
Resource - 45% c/off 49.0% 90.5% 44.3% 2.6% 75.2% 2.0%
Reserves 51.6% 90.5% 46.7% 2.4% 75.2% 1.8%
Source: Company; Foster Stockbroking estimates.
Minim Martap comparable with Tier 1 bauxites in quality and size

• We have compared Minim Martap Resources and Reserves’ Available Alumina and Reactive
Silica with peer bauxite products where such data have been disclosed, including both
producing mines and development projects.
• Figure 9 is a Resource bubble chart plotted against Available Alumina and Reactive Silica. In
terms of JORC Resource size, Minim Martap is comparable or greater than major Guinea bauxite
mines and projects such as Chalco’s Boffa, AXIS’ Koniokhoure, AMC’s Koumbia, and Alufer’s Bel
Air, as well as Brazil’s Trombetas. Importantly, Minim Martap lies in the desired upper LHS
quadrant where most projects have low Reactive Silica (<2.5%) and high Available Alumina
(>40%). Note MRN’s Trombetas possesses high reactive silica (<4%) necessitating beneficiation,
but compensated for by high Available Alumina of 50%.
Figure 9: Comparison of Bauxite JORC Resources Available Alumina and Reactive Silica
Available Alumina %
55%
Trombetas (MRN: S32/Rio/Vale/CBA/Alcoa/Norsk Hydro)
Bubble size represents JORC Resource
50%
Koniokhoure (AXIS)
45% Koumbia (AMC)

Minim Martap (CAY)
Bauxite Hills (MMI)

40%
Port Loko (SierraMin)
Guyra (ABX)
Bald Hill (ABX)
35%
Bel Air (Alufer)
Boffa (Chalco)
Taralga/Penrose (ABX) Toondoon (ABX)
Inverell (ABX)
30%
25%
0% 1% 2% 3% 4% 5% 6% 7%
Reactive Silica %
Source: Company reports and websites; Foster Stockbroking estimates.
• In a similar vein, Figure 10 is a JORC Reserves bubble chart. In terms of Reserves size, Minim
Martap is at comparable to major Guinea bauxite mines and projects such as GBT/AXIS’ AGB2A
and CBG’s Boke, as well as Alcoa’s Darling Range and AWAC’s Juruti. Minim Martap also lies in
the desired upper LHS quadrant for high Available Alumina and low Reactive Silica, alongside
the Guinea deposits, and superior to major producing mines such Darling Range and Trombetas.
Figure 10: Comparison of Bauxite JORC Reserves Available Alumina and Reactive Silica
Available Alumina %
55%
Boke (CBG: Alcoa/Rio/Dadcan/Guinea Gov)
Trombetas (MRN: Rio/Vale/S32/CBA/Alcoa/Norsk Hydro)

50% Minim Martap (CAY)
45%
Juruti (AWAC: Alcoa/Alumina)
40%
GBT/Axis (AGB2A)
Poco Des Caldas (Alcoa)

35%
Bauxite Hills (MMI)
30%
Darling Range (Alcoa)
25%
0% 1% 2% 3% 4% 5% 6% 7%
Reactive Silica %
• Given not all companies report Available Alumina and Reactive Silica we also compared Minim
Martap with other deposits on total Al203 and SiO2 grade. Again, the results show Minim Martap
to be attractive when compared to peers on both a Resource and Reserves basis.
Figure 11: Comparison of Bauxite JORC Resources Total Alumina and Silica grades
Total Alumina %
55%
Minim Martap (CAY)
Bubble size = Resource size
53%
Dian Dian (Rusal)
Boke
51% Gaoul (Lindian)
(CBG) Trombetas (MRN)
Boke Koumbia (AMC) Timan (Rusal)
49% (SMB) Kimbo (Rusal) Bauxite Hils (MMI)
Koniokhoure (AXIS)
Bel Air (Alufer) Tayan (PT ANTAM)
47%
Las Mercedes (Dovemco)
Aceitilar
45% Lelouma (Lindian)
Panchpatmali (NALCO)
Boffa (Chalco) BARI (Marc Ventures)
43% Kindia Bon Ami (Dynamic Mining) Mempawah (PT ANTAM)
(Rusal) Toubal (Anglo Africa Minerals)
Bald Hills (ABX)
41% Guyra (ABX) Inverell (ABX)
AMPI (Marc Ventures)
Toondoon (ABX)
39% Taralga (ABX) FAR (Anglo Africa Minerals)
Woula (Lindian)
37% Somalu (Anglo Garafiri (SGB) Binjour (ABX)
Africa
Minerals) Telemele-Eurasian (ELOFT)
35%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Total Silica %
Figure 12: Comparison of Bauxite JORC Reserves Total Alumina and Silica grades
Total Alumina %
53%
Bubble size = Reserves size

52%
Minim Martap (CAY)
51%
50%
Source: Company reports
Boke (CBG: and websites; Foster
Alcoa/Rio/Dadco/Guinea Gov) Stockbroking estimates. Bauxite Hills (MMI)
49%
48%
GBT/AXIS (AGB2A)
47% Tayan (PT ANTAM)
46%
Landak (PT ANTAM)
45%
Mempawah (PT ANTAM)
44%
Boke (GDM: Consolidated Mining/Boma Trans)
43%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Total Silica %
• We summarise Cameroon bauxite in the matrix below, based on that initially used by SRK, to
compare bauxite deposits. We rate Cameroon alongside Cape York and Guinea as the most
attractive source to mine and export.
Figure 13: Comparison of Major Global Bauxite Sources
Deposit Type/Bayer Available Reactive

Location size Temperature Alumina Silica Strip Infrastructure Market
Cape York Large Gibbsite/Low High Medium Low Good Global
Cameroon Large Gibbsite/Low High Low Low Moderate Global
Guinea Large Gibbsite/Low Medium Low Low Moderate Global
Brazil Large Gibbsite/Low High Medium Low Moderate Global
Darling Range Large Gibbsite/Low Low Low Low Good Regional
China Large Diaspore/High High Medium High Good Local
Indonesia Small Gibbsite/Low Medium High Low Moderate Global
Source: Foster Stockbroking estimates; SRK.
MARKETING
Minim Martap offers refiners green credentials and low costs
• We expect Minim Martap product to be attractive on four key areas:
o High Available Alumina, Low Reactive Silica. The high quality ore can be used by low
capex/low cost low temperature refineries, or alternatively blended with lower quality
ore (such as that from China or India) by higher temperature refineries to reduce costs.
o Green credentials. Minim Martap characteristics can reduce energy and caustic soda
consumption, and generate less red mud waste. This is welcome for both existing
refineries and new ones being planned. While 50% of China’s alumina production
cost is bauxite, 30% is caustic soda and 15% is energy. Lower energy consumption and
less waste is supportive in achieving ESG objectives, as governments, consumers, and
investors place demands on the industry.
o Diversification of supply risk. Minim Martap offers an alternate source of supply to

Guinea, the world’s largest seaborne exporter, diversifying geopolitical risk, especially
in context of Guinea’s past supply disruptions.
o Long-term Reserves. 20-year mine life based on nominally truncated Reserves only,
suggesting potential for a longer life. This is attractive for alumina refiners planning
new capacity, who wish to secure long-term supply of higher-grade bauxite.
• CAY has shipped bulk samples to third parties for testing to support offtake, strategic, equity
and development discussions. Parties are located in Europe, China, Middle East, SE Asia, Russia,
and North Africa.
Aluminium industry push to reduce GHG emissions
• The aluminium industry is estimated to generate 4.2% of nations’ total emissions. Alumina Ltd
(AWC) estimates 87% of China’s alumina production is based on coal and oil (vs 68% for the
world). The pressing need to reduce energy consumption is made challenging by China’s
declining alumina grades of domestic ores. There has been speculation that China could limit
low grade bauxite imports to tighten environmental impact of alumina refining. China’s two
leading aluminium producers – Chalco and China Hongqiao – are leading the industry to reduce
carbon emissions.
• Major aluminium and alumina producers have tilted to low carbon initiatives. Rusal and Alcoa
are promoting low carbon aluminium product, including zero carbon aluminium. RIO, Alcoa,
and the Quebec government have launched a JV to develop and commercialise technology that
eliminates all direct GHG emissions from traditional aluminium smelting.
COSTS
Middle of cost curve
• The PFS estimated Minim Martap C1 cash cost of US$35.1/t, placing the project approximately
in the middle of a 2028 landed Available Alumina content cost curve for low temperature
bauxite (approximately US$120/t). The cost curve was based on quality adjusted landed basis
utilising Wood Mackenzie’s pricing model.
Figure 14: Landed Available Alumina Equivalent Cost Curve
Source: Company; Wood Mackenzie.
• Figure 15 shows the Minim Martap’s costs breakdown. Importantly, costs include both the
operating and capital repayment costs for third party owned-operated new rolling stock fleet.
Rail is the most significant cost, 47% of C1, unsurprising given the distance to port and relative
simple mining operation.
Figure 15: Minim Martap Operating Costs
Costs US$/t of DSO

Mine and site 2.7
Road 2.5
Rail 16.5
Port 5.8
Transhipping 5.0
Other 2.7
C1 35.2
Depreciation and other 2.0
C2 37.2
Royalties and other 2.4
C3 39.6
Source: Company; Foster Stockbroking estimates.
PRICE
Premium pricing should be achieved
• Pricing of bauxite usually accounts for value-in-use which principally recognises Available
Alumina and Reactive Silica, and to a lesser extent contaminants such as iron, and moisture.
The pricing used in the PFS reflects the product characteristics of Minim Martap, which assumes
Available Alumina of 90% of total and Reactive Silica 75% of total. As with other bulks (iron ore,
coal), FOB pricing is also influenced by shipping distance to customers.
• We believe Minim Martap’s favourable Tier 1 attributes should enable it to attract premium
pricing. This in turn can compensate for the project’s high transport costs to the coast. No
clear single benchmark price dominates the industry. Wood Mackenzie benchmark pricing uses
44% total Al2O3 and reactive SiO2 3%; CM Group uses its value-in-use CBIX CIF reference price
index, normalised at 50% Available Alumina and 5% Reactive Silica, while CRU uses the same.
Fastmarkets quotes 48.5%-53% total Al2O3, 1.2-2.1% total SiO2, and reactive SiO2 3.2%.
• We expect Minim Martap Reserves, would be a par-to-premium to most benchmarks, and

approximately par on Available Alumina but superior on Reactive Silica. This is supported by
our product peer comparison charts.
Figure 16: Bauxite Benchmark Pricing
Index/Product Total Al2O3 Avail Al2O3 Total SiO2 Reactive SiO2

Wood Mackenzie 44% - - 3%
CM Group – CBIX - 50% - 5%
CRU - 50% - 5%
Fastmarkets Guinea 48.5%-53% - 1.2%-2.1% 3.2%
Fastmarkets Brazil 50.5%-55% - 4.3%-5.6% 4%-5%
Minim Martap Reserves 51.6% 46.4% 2.4% 1.8%
Source: Company; Wood Mackenzie; CM Group; Fastmarkets, CRU.
PROJECT GROWTH OPTIONS
Stage 2 potential to double production via deepwater port
• CAY has expressed ambitions for a Stage 2 of Minim Martap in which production would double
to 10Mtpa, supported by potential export of higher volumes through Kribi deepwater port.
Kribi has 16m-18m water depths, and is suitable for loading post Panamax and Capesize bulk
vessels via transhipping at depths of 25m within only 1km of the port - in contrast to 50km for
Douala. Kribi is 100km south of Douala and 130km from the existing rail line, and CAY has
already engaged with the Government regarding extension of the existing rail line to Kribi. Kribi
is operated by Bollore, which until 2019 was the concessionaire at Douala.
• An independent feasibility study was completed in 2019 for the Government examining the
Kribi port extension, and the Government has since started clearing land for the rail corridor
and constructing highway access, while undertaking another study on stockpiling and direct
loading of bauxite. Mota is also working with CAY to provide a funding solution for design,
construction, and operation of the Kribi rail link to be presented to the Government. The rail
link will be a multi user line with CAY intending to be the cornerstone customer.
• In 2020 the Kribi Port Authority proposed a cape size vessel berth and storage location for
Stage 2 of Minim Martap. CAY believes Stage 1 Douala port equipment can be transferred to
Kribi, and rail capacity can be increased to 14Mtpa with 20 additional passing loops, which
would bring the total to 50, or one every 20km. 10Mtpa of the 14Mtpa capacity would be
reserved for Minim Martap’s bauxite.
Long-term - alumina refinery opportunity
• In the long-term, following successful establishment of bauxite mining - CAY may contemplate
an integrated alumina refinery development. This echoes the experience in Guinea, where
following the establishment of major bauxite mines, alumina refineries began being planned
and developed. This may entail a strategic alliance with an existing and experienced
downstream processor of bauxite or alumina. Cameroon already has a hydro-powered
aluminium smelter - Alucam’s Erdea – which has capacity of 100ktpa and 600 employees. The
smelter has sourced alumina mostly from Guinea, and is 67km from Douala.
TIMELINE
We expect first production end CY23
• The table below lists our expectations for key milestones ahead for Minim Martap. We expect
Mining Permit in 4QCY21e; FID 1QCY22e; and first production 3QCY23e.
Milestone Time
BFS 3Q CY21e
Mining Convention 3Q CY21e
Mining Permit 4Q CY21e
Binding offtake 4Q CY21e
Rail and port access 4Q CY21e
Financing 4Q CY21e
FID 1Q CY22e
Long lead items fabrication 1Q CY22e
Construction start 3Q CY22e
First production 3Q CY23e
Source: Company.
OTHER CAY PROJECTS

• Birsok. Birsok (CAY earning 100%) is CAY’s first bauxite project, contiguous to Minim Martap
and shares some of the same plateaux. The completion of the Mining Convention on Minim
Martap is required for CAY to earn 100% interest in Birsok, CAY will also pay a US$1.50/t royalty
on ore mined from Birsok. However CAY has focussed exploration and development on Minim
Martap once it acquired the latter, given its higher grade.
• Gold. CAY has varied interests in a number of early stage exploration gold projects in Burkina
Faso. We believe these are immaterial at this stage to CAY.
• Kaolin/HPA. The Mayouom project (CAY 100%) in Cameroon his an early stage potential HPA
and kaolin deposit. We believe it immaterial to CAY at this stage.
COUNTRY SNAPSHOT
• Cameroon has a population of 28M, is a democracy, and a member of the Commonwealth and
Central African Economic And Monetary Union. It is bilingual in French and English. The capital
city Yaounde has a population of 2.5M. GDP is US$35b and main industries are agriculture, oil,
and gas, with major exports including aluminium, crude oil, lumber, cocoa beans, coffee, and
cotton. Cameroon has no commercial mine production, but does have a number of resource
projects in country including Mbalam-Nabeba iron ore; Geovic Mining’s Nkamouna-Moda
cobalt—nickel-manganese; International Mining And Infrastructure’s (IMIC) Nkout iron ore;
and Jindal Steel and Power’s Ngovayang iron ore.
BAUXITE AND ALUMINIUM MARKETS
Supply – Seaborne market dominated by Guinea
• Global 2020 seaborne bauxite production was 160Mt, dominated by Guinea which exported
77Mtpa and forecast to comprise 65% of global production to 2028. About 75% of Guinea’s
production is exported to China. Other seaborne suppliers are Australia, Brazil, and Indonesia.
Indonesia is a major exporter but implemented legislation in which will restrict exports from
CY23. Vietnam also has restrictions on exports and Malaysia has strict environmental controls.
Demand – Mostly driven by China
• CAY estimates the global bauxite market is 370Mt. China imports about 112Mtpa, or 60% of its
demand, representing approximately two-thirds of global seaborne supply. About 50% of its
imports are from Guinea. Due to greater reliance on imports, major China refiners such as
Chalco are expanding alumina capacity on the coast to minimise transport costs.
• The dependency of China on imports is expected to increase from 52% in 2019 to 69% in 2035
(Wood Mackenzie). The major factor driving growth of the seaborne market is the decline in
quality and quantity of domestic China bauxite supply - mostly high temperature diaspore
bauxite – and the ensuing increased environmental restrictions.
• Wood Mackenzie (2019) forecast 100Mtpa of bauxite is required to fill aluminium demand by
2028. China accounts for 73% of growth by 2025, with the transport sector expected to see
largest gain due to both increased vehicle production and aluminium components per vehicle,
followed by packaging (especially sustainable), and consumer goods. Aluminium attributes of
low density, corrosion resistance, ductility, high conductivity, durability, and recyclability make
it a desired metal in the low-carbon global shift.
Oversupply in short to medium term
• Rick Smith is Director General of Camalco, CAY’s Cameroon subsidiary, and was previously a
senior executive with Guinea Alumina Corporation (GAC) for six years. Mr Smith, Wood
Mackenzie, and AWC, believe that the bauxite market will be in oversupply for short to medium
term, due mostly to expansion of existing, and commissioning of new, mines in Guinea. AWC
expects a bauxite surplus in CY21. Both Mr Smith and Wood Mackenzie expect a return to
balanced market in 2030 once demand catches up with supply. Minim Martap’s PFS
acknowledged this thesis, using suppressed prices at bottom of cycle between 2020 and 2030.
Figure 17: China Imported Bauxite
Source: AWC, CM Group.
EARNINGS FORECASTS
First revenues and earnings in FY24e
• We forecast first revenues and earnings for CAY in FY24e of $232M and NPAT of $15M. For
FY24-FY27e we forecast bauxite realised prices of US$44-46/t, then rising to US$54/t in FY28e
as the bauxite market moves into deficit. We forecast revenues of $361M and NPAT of $74M
in FY28e.
Figure 18: CAY Earnings A$M
Y/e Jun FY24e FY25e FY26e FY27e FY28e

Commodity assumptions
Bauxite price realised fob US$/t 44 44 45 46 54
Bauxite production Mt 4 4 5 5 5
C1 US$/t 35 36 37 37 38
AISC US$/t
CAY P&L:
Minim Martap 232 237 302 308 361
Other 0 0 0 0 0
Revenue 232 237 302 308 361
Minim Martap 188 191 244 249 254
Other 11 12 12 12 12
Costs 199 203 256 261 266
Minim Martap 44 45 58 59 107
Other -11 -12 -12 -12 -12
EBITDA 33 34 46 47 95
Minim Martap 11 12 13 14 16
Other 0 0 0 0 0
D&A 11 12 13 15 16
Minim Martap 34 33 44 44 91
Other -11 -12 -12 -12 -12
EBIT 22 22 33 32 79
Net interest expense 7 7 6 6 5
PBT 15 15 26 27 74
Tax 0 0 0 0 0
NPAT 15 15 26 27 74
CAY Cash Flow:

EBIT 22 22 33 32 79
Chng in WC -4 -1 -1 0 -4
Share expenses 4 4 4 5 5
Net interest -7 -7 -6 -6 -5
Tax 0 0 0 0 0
Capex -6 -6 -6 -7 -7
Net Free Cash Flow 10 12 23 25 68
Source: Foster Stockbroking estimates.
VALUATION
We estimate NPV10 of US$360M for Minim Martap Reserves
• We use similar assumptions as per CAY in its PFS (Figure 4, page 6), with the key exception being
our use of a 10% WACC on nominal cash flows, as opposed to CAY’s 10% on real which we think
is conservative. This is the main reason why we derive a greater NPV (unrisked) NPV10 for Minim
Martap based on the PFS assumptions: US$360M (FSBe) vs US$291M.
CAY valuation: $0.32/share risked
• For our company valuation, we have valued Minim Martap Reserves, as well as Resources ex-
Reserves, assuming probability that these Resources will be mined after Reserves end. We
assume that the Government is free carried for 10%, meaning CAY funds 100% of capex but will
have 90% interest. We have risked the Minim Martap Reserves valuation by 75% and that of
Resources ex-Reserves by 60% to account for risks at stage of the project (eg offtake, operating,
construction, funding, permitting, time etc.).
Tier 1 nature opens up funding options
• We assume CAY will fund Minim Martap 50:50 debt and equity. Our risked valuation assumes
equity to be raised at the current shareprice, while our unrisked assumes equity issued at non-
dilutive price. Our risked valuation of $0.32 is 0.45x NPV10/share. However given the Tier 1
nature of Minim Martap, we believe CAY has a number of options are available, including
strategic/offtaker equity in the project and/or company.
Figure 19: CAY Valuation
Unrisked Risked Risk

Segment A$M A$/share A$M A$/share Factor
Minim Martap Reserves (90% equity) 416 $0.50 312 $0.25 75%
Minim Martap other Resources (90% equity) 133 $0.16 80 $0.06 60%
Corporate -103 -$0.12 -77 -$0.06 75%
Future equity 100 $0.12 75 $0.06 75%
Options-in-money at val 1 $0.00 1 $0.00 75%
Net cash 5 $0.01 5 $0.00 100%
Total 552 $0.66 396 $0.32 48%
Shares now M 624 624

Future equity M 152 577
Consideration shares 50 38
Performance rights M 3 2
Options M 9 9
Fully diluted shares M 837 1,249
Source: Foster Stockbroking estimates.
RECOMMENDATION & PRICE TARGET
Speculative Buy, 12-month PT $0.32/share
• We initiate on CAY with a Speculative Buy and 12-month share price target of $0.32 based on
0.5x NPV10.
• We expect catalysts for the share price to be 1) DFS; 2) Mining Convention agreement; 3) Mining
Permit grant: 4) Finalisation of port and rail access agreements; 5) Binding offtakes; 6) financing;
and 7) FID.
DIRECTORS
• Cliff Lawrenson. Non-Executive Chairman. Non-Executive Chairman of Paladin Energy Ltd,
Australian Vanadium Ltd, and Caspin Resources Ltd, as well as Non-Executive Chairman of
private companies Pacific Energy Ltd (acquired by GIC) and Onsite Rental Group. Previously MD
of Atlas Iron Ltd from 2017 until acquisition by Hancock Prospecting Pty ltd, as well as of number
of ASX listed companies. Previously senior executive of CMS Energy Corporation, and earlier
had investment banking roles.
• Phillip Gallagher. B.Bus Managing Director. Appointed 2009. Extensive experience in senior
commercial and operation roles. Founder of CAY and MD since inception.
• David Netherway. B.Eng (Mining). Non-Executive Director. Appointed December 2020,

previously Non-Executive Chairman 2014-2020. Mining engineer with 40 years’ experience in
mining including in Africa. Was CEO of Shield Mining Ltd until its takeover by Gryphon Minerals
Ltd, and Chairman of Affero Mining, UK listed iron ore developer in Cameroon until its takeover
by IMI plc. Currently Chairman of AIM-listed Altus Strategies plc and Director of Kore Potash.
Previously Chairman of Kilo Gold Mines Inc and Director of Avesoro Resources Inc.
• Steven Zaninovich. Non-Executive Director. Appointed 2019. Over 20 years operations and
development experience in mining, including various commodities and jurisdictions in west
Africa. Previously Project Director of Tawana Resources and COO of Gryphon Minerals before
becoming part of Executive Management Team at Teranga Gold Corp. Non-Executive Director
at Indiana Resources Ltd, Maximus Resources Ltd, and Sarama Resources Ltd.
• Peter Su. Non-Executive Director. Appointed 2020. Executive involved in property investment
and development in Australia, and strategic investor in diverse range of business in Australia
and overseas. The Su family has historically held commercial interest in bauxite and alumina
refining in China.
RISKS
The following risks may negatively impact the CAY share price:
1. Sovereign risk. Any change in government, policy, legislation, or fiscal policy of Cameroon or
Australia, may markedly impact the ownership, financing, permitting, or economics of the
company’s projects or its corporate profitability.
2. Commodity price risk. Lack of rises, or declines, in bauxite, alumina, or aluminium prices may
negatively impact the potential to develop Minim Martap, reducing the company’s earnings
potential.
3. Development risk. Problems may occur preventing CAY from developing its Minim Martap
project, including issues impacting permitting, financing, offtake, construction, or
commissioning.
4. Financing risk. To fund its Minim Martap project the company may raise equity which may dilute
shareholders, and/or borrow debt which it may not be able to service.
5. Economic and market risk. Should global economic growth decline or share markets fall, this
may reduce the appetite for both CAY’s commodity exposure and its shares.
6. Infrastructure and logistics risk. CAY will rely on third party owned and operated infrastructure
including rail and port, for the development of Minim Martap. Any delay or failure to reach
palatable agreements, or that of third parties in supplying the requisite infrastructure and access,
may hamper the project’s profitability or development.
FOSTER STOCKBROKING DISCLOSURES
Name Department Phone Email

Stuart Foster Chief Executive Officer +61 2 9993 8131 stuart.foster@fostock.com.au
Sam Christie Institutional Sales +61 2 9993 8152 samuel.christie@fostock.com.au
Chris Dorney Institutional Sales +61 2 9993 8144 chris.dorney@fostock.com.au
James Gore Institutional Sales +61 2 9993 8121 james.gore@fostock.com.au
David Salmon Institutional Sales +61 2 9993 8168 david.salmon@fostock.com.au
Carmie Olowoyo Institutional Sales │ Perth +61 401 064 237 carmie.olowoyo@fostock.com.au
George Mourtzouhos Execution & Dealing +61 2 9993 8136 george.mourtzouhos@fostock.com.au
Rob Telford Corporate +61 2 9993 8132 rob.telford@fostock.com.au
Mark Fichera Head of Research +61 2 9993 8162 mark.fichera@fostock.com.au
Matthew Chen Research +61 2 9993 8130 matthew.chen@fostock.com.au
Foster Stockbroking Pty Ltd

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Foster Stockbroking recommendation ratings: Buy = return >10%; Hold = return between –10% and 10%; Sell = return <-
10%. Speculative Buy = return > 20% for stock with high risk. All other ratings are for stocks with low-to-high risk. Returns
quoted are annual.
Disclaimer & Disclosure of Interests. Foster Stockbroking Pty Limited (Foster Stockbroking) has prepared this report by way
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Canyon Resources LTD (CAY - ASX) : Equity Research

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EQUITY RESEARCH

Canyon Resources Ltd (CAY.ASX)

Canyon Resources (CAY)

Capital & reserves 58 68 168 168

MINIM MARTAP (CAY, 100%)

Figure 1: Location of Minim Martap Project

Over 1bt, including 500Mt at high-grade 49% Al2O3

Figure 2: Minim Martap JORC Resources

JORC Resources - 35% Al2O3 c/off grade Ore Mt Al2O3 % SiO2 %

99Mt at 51.6% Al2O3, 2.4% SiO2

o All material >48.5% Al2O3 is ore, regardless of SiO2 grade;

o All other material is waste.

Figure 3: Minim Martap JORC Reserves

JORC Reserves Ore Mt Al2O3 % SiO2 %

Most plateaux still to be drill tested

20-year LOM at 5Mtpa bauxite production

Shallow open pit, low strip, and no drill and blast

Figure 4: PFS Minim Martap PFS

Item Unit Value

Capex pre-prod’n US$M 119

Free cash flow average annual US$M 49

Royalty holiday years 5

Road and rail – 800km to port

Partnerships with port and rail partners assumed

to Government. These will be complemented by Rail and Port Concept of Operations

MoU with rail operator for access and upgrades

Rail continuing to be upgraded

• As at September 2020, 13 rail bridges were upgraded by Camrail, with an upgrade on an

Export through Douala

MoU with Port Authority

Figure 6: Minim Martap Pre-Production Capex

Additional US$122M for mostly rolling stock - to be financed by third parties

ESIA submitted, communities impact to be managed

Minimal waste a plus

DFS and Mining Convention required for Mining Permit

Not all bauxite ores are the same

Gibbsite bauxite is most economic for alumina extraction

Available Alumina and Reactive Silica

MINIM MARTAP – HIGH AVAILABE ALUMINA & LOW REACTIVE SILICA

Figure 8: Minim Martap Available Alumina and Reactive Silica

Al2O3 Available SiO2 Reactive

Minim Martap comparable with Tier 1 bauxites in quality and size

45% Koumbia (AMC)

Bauxite Hills (MMI)

Source: Company reports and websites; Foster Stockbroking estimates.

Trombetas (MRN: Rio/Vale/S32/CBA/Alcoa/Norsk Hydro)

Poco Des Caldas (Alcoa)

Darling Range (Alcoa)

Source: Company reports and websites; Foster Stockbroking estimates.

Source: Company reports and websites; Foster Stockbroking estimates.

Bubble size = Reserves size

Source: Company reports and websites; Foster Stockbroking estimates.

Figure 13: Comparison of Major Global Bauxite Sources

Deposit Type/Bayer Available Reactive

Minim Martap offers refiners green credentials and low costs

• We expect Minim Martap product to be attractive on four key areas:

o Diversification of supply risk. Minim Martap offers an alternate source of supply to

Aluminium industry push to reduce GHG emissions

Middle of cost curve

Figure 14: Landed Available Alumina Equivalent Cost Curve

Source: Company; Wood Mackenzie.

Figure 15: Minim Martap Operating Costs