SYDNEY MINING CLUB 5 DECEMBER 2002 Outline of
SYDNEY MINING CLUB 5 DECEMBER 2002
Outline of Presentation 4 the answer 4 the question 4 the explanation: 4 How we got here 4 Coal cash flow leverage 4 Gold exploration leverage 4 Value adding to coal and to gold 4 value today and target value 4 the plan
1996 to 2002 - Corporate 4 Chopped H. O and divested non-core 4 Acquired coal infrastructure and consolidated gold ownership at low cost 4 Started gold and coal production 4 Used a range of debt & equity finance 4 Minimised shareholder dilution 4 Built teams and backing 4 Formed strategic alliances
1996 to 2002 - Gold 4 Bought out partners 4 Started profitable small mine 4 Built great exploration and mining teams 4 Established resources 780 K oz at 7. 6 g/t 4 Installed large exploratory decline 4 Launched exploration of Goldfield 7/02 4 Already having significant hits Leverage to exploration upside
1996 to 2002 - Coal 4 Purchased infrastructure and land in 1998 4 Built great team with a halved workforce 4 Production ramping-up to > 1. 5 Mtpa 4 Sufficient development put in place 4 Diversified customer & product base 4 Commenced mining in thick-seam zone 4 Positive consequences for coal quality 4 Some lessons being learnt for mining Leverage to emerging coal cash flow
Coal – Production 4 00 -01 0. 5 Mt 4 01 -02 1. 0 Mt 4 1 st half 0. 8 Mtpa 4 2 nd half 1. 8 Mtpa 4 1. 2 Mtpa rate triggers profits
Coal – Marketing Southland is diversifying its customer & product base in preparation for production at capacity of >2 Mtpa
Coal- Strengths 4 Long-life mine 4 Most surface lands our freehold 4 Strong community support 4 Strong environmental control 4 Prolific historic coal seam 4 High quality = high margin 4 Infrastructure in place for +2 mtpa
Gold - Production Cash Cost = $317/oz 4 4 Production from one zone of Inglewood Structure Production doubled over 5 years Profitably mining at high-grades of 8 g/t Targeting much larger production if exploration succeeds
Gold 2002 -03 Status 1. Current production is efficient 2. Decline connects deeper mine in Dec 3. Major Goldfield targets being drilled 4. Decline will extend to discoveries 1. Still drilling Partridge to the west 2. 1 st cab off the rank will be Inglewood north 3. Last week hit Inglewood 1 km to the south
Exploration Potential 4100% controlled Goldfield and region 4 Prolific high-grade 4 million oz field 4 Potential for a further 6 million ozs 4 Strong community support 4 Low environmental risks 4 Established geological expertise
Mary Valley sediments (5 -20 m thick) River sand & cover rock concealment GEOLOGICAL KEY How gold formed at Gympie INGLEWOOD LODE
Exploration Technology is Working 4 Targeting a new 2 million oz Inglewoodstyle ore system 4 Drilled through the river sands & sampled fresh rock below 4 Lo-level geochemistry identified anomalies 4 High hit rate in followup drilling of + 65%
Inglewood Lode – A Major Goldfield Feeder? 1. 5 million oz gold produced 2 million oz gold produced Ore Feeder ?
Gold - Development North More Ore Shoots 4 Deep Monkland Mine has +3 years reserves. 4 Lewis Decline is accessing ore zones and opens up the goldfield potential. TIME TO EXPAND EXPLORATION
Inglewood Lode - north 4 New ore shoots north of current mine 4 Can access by extending Lewis Decline
Inglewood being traced 4 2 km zone mined to date on/near Inglewood has yielded 2 million ounces at +8 g/t 4 Length of Inglewood extended by >8 km by geophysical survey interpretation 4 Drilling yielding good early results to north 4 We’ve hit it last week to the south, uplifted!!!
Gold - Gemstone
The starting point, mkt cap $160 M Gold Coal $68 Million Company Production Market Cap (000 oz) ($millions) Troy Triako Sipa 50 46 56 152 77 48 47 172 Gympie Production Imputed Value $100 Million Market Cap (per prod oz) 1. 54 1. 04 0. 84 1. 13 = 60, 000 ounces = $68 million Sold 10% for $11 million In May 01
The plan is to achieve 20%pa for next 6 years 4 GYM share price > 230 cps in 2008 ? 4 Need value growth $240 M ? 4 Discover/exploit > 2 M oz au, @ 8 g/t ? 4 Coal to 2. 5 Mtpa…$15/t profit & FCF ? 4 Add legs to each table, corporate ? 4 Separate the tables?
emerging coal cash flow with the exploration leverage of a high-grade goldfield
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