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SYDNEY MININGSYDNEY MINING
CLUBCLUB
5 DECEMBER 20025 DECEMBER 2002
Outline of PresentationOutline of Presentation
the answer
the question
the explanation:How we got here
Coal cash flow leverage
Gold exploration leverage
Value adding to coal and to gold
value today and target value
the plan
1996 to 2002 - Corporate1996 to 2002 - Corporate
Chopped H.O and divested non-core
Acquired coal infrastructure and consolidated gold ownership at low cost
Started gold and coal production
Used a range of debt & equity finance
Minimised shareholder dilution
Built teams and backing
Formed strategic alliances
Bought out partners
Started profitable small mine
Built great exploration and mining teams
Established resources 780K oz at 7.6g/t
Installed large exploratory decline
Launched exploration of Goldfield 7/02
Already having significant hits
1996 to1996 to 2002 - Gold2002 - Gold
Leverage to exploration upside
1996 to 2002 - Coal1996 to 2002 - Coal
Purchased infrastructure and land in 1998
Built great team with a halved workforce
Production ramping-up to > 1.5Mtpa
Sufficient development put in place
Diversified customer & product base
Commenced mining in thick-seam zonePositive consequences for coal qualitySome lessons being learnt for mining
Leverage to emerging coal cash flow
00-01 0.5Mt
01-02 1.0Mt
1st half 0.8Mtpa
2nd half 1.8Mtpa
1.2Mtpa rate triggers profits
Coal – ProductionCoal – Production
Coal – MarketingCoal – Marketing
Southland is diversifying its customer & product base in preparation for production at capacity of >2Mtpa
Coal- StrengthsCoal- Strengths
Long-life mine
Most surface lands our freehold
Strong community support
Strong environmental control
Prolific historic coal seam
High quality = high margin
Infrastructure in place for +2 mtpa
Gold - ProductionGold - Production
Cash Cost = $317/oz
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
Current production is efficient
Decline connects deeper mine in Dec
Major Goldfield targets being drilled
Decline will extend to discoveriesStill drilling Partridge to the west
1st cab off the rank will be Inglewood north
Last week hit Inglewood 1 km to the south
Gold 2002-03 StatusGold 2002-03 Status
100% controlled Goldfield and region
Prolific high-grade 4 million oz field
Potential for a further 6 million ozs
Strong community support
Low environmental risks
Established geological expertise
Exploration PotentialExploration Potential
GEOLOGICAL GEOLOGICAL KEYKEY
How gold How gold formed at formed at GympieGympie
River sand & cover rock
concealmentMary Valley sediments
(5-20m thick)
INGLEWOOD LODE
Targeting a new 2 million Targeting a new 2 million oz Inglewood-style ore oz Inglewood-style ore systemsystem
Drilled through the river Drilled through the river sands & sampled fresh sands & sampled fresh rock belowrock below
Lo-level geochemistry Lo-level geochemistry identified anomaliesidentified anomalies
High hit rate in follow-up High hit rate in follow-up drilling of + 65%drilling of + 65%
Exploration Exploration Technology Technology is Workingis Working
Inglewood Lode – A Major Goldfield Feeder?Inglewood Lode – A Major Goldfield Feeder?
1.5 million oz gold produced
2 million oz gold produced
Ore Feeder ?
Ore Feeder ?
Deep Monkland Mine has +3 years reserves. Deep Monkland Mine has +3 years reserves. Lewis Decline is accessing ore zones and Lewis Decline is accessing ore zones and opens up the goldfield opens up the goldfield
potentialpotential. TIME TO EXPAND EXPLORATION. TIME TO EXPAND EXPLORATION
Gold - DevelopmentGold - Development
More Ore Shoots
North
Inglewood LodeInglewood Lode - - northnorth
New ore shoots north of current mine
Can access by extending Lewis Decline
Inglewood being tracedInglewood being traced
2km zone mined to date on/near Inglewood has yielded 2 million ounces at +8g/t
Length of Inglewood extended by >8km by geophysical survey interpretation
Drilling yielding good early results to north
We’ve hit it last week to the south, uplifted!!!
1 kmC urra P late L o w er V o lc an ic s D r i l l h o le
P ro po s ed drill ho le C urra B reakP ro ductive B eds on Inglew ood - current res ourcesM ajo r body o f m ineralis ation
500m below C urra B reakP ar tr id g e Fau lt
L ew is D ec l in eL a in g S l id e
L O N G S E C T IO N O F T H E IN G L E W O O D S T R U C T U R E
S h af tW es t o f S c o t lan d
W es t P h o en ix P ro s p ec t P ro s p ec tI n g lew o o d H i l l
M in es
L ew is & M o n k lan d
P ro s p ec tD eep s
M o n k lan d
P ro s p ec tS o u th I n g lew o o d
Gold - Gemstone
The starting point, mkt cap $160M
Coal$100 Million
Sold 10% for
$11 millionIn May 01
Gold$68 Million
Company Production Market Cap Market Cap(000oz) ($millions) (per prod oz)
Troy 50 77 1.54Triako 46 48 1.04Sipa 56 47 0.84
152 172 1.13
Gympie Production = 60,000 ouncesImputed Value = $68 million
GYM share price > 230cps in 2008 ?GYM share price > 230cps in 2008 ?
Need value growth $240M ?Need value growth $240M ?
Discover/exploit > 2M oz au, @ 8g/t ?Discover/exploit > 2M oz au, @ 8g/t ?
Coal to 2.5Mtpa…$15/t profit & FCF ?Coal to 2.5Mtpa…$15/t profit & FCF ?
Add legs to each table, corporate ?Add legs to each table, corporate ?
Separate the tables?Separate the tables?
The plan is to achieveThe plan is to achieve
20%pa for next 6 years20%pa for next 6 years
emerging coal cash flow with
the exploration leverage of a high-grade goldfield
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