Canadian Minerals and Metals

• Zora Toor• Tarlochan Chane

(TC)• Mel Chua• Zhilicka Sehgal

INDUSTRY OVERVIEWCanadian Minerals and Metals

Minerals and Metals Industry• Comprised of mineral exploration, mining and quarry

industries, primary metals, fabricated metal products and nonmetallic mineral products industries

• Includes Metal, nonmetal and coal mines, stone quarries, sand gravel pits, oil sands operations and manufacturing capacity (nonferrous metal smelters, refineries and steel mills)

Industry Characteristics• Extremely Capital Intensive

• Exploration cost• Operation cost• Equipment cost• Recovery cost

• Sensitive to changes in business cycle• Large, medium and small size companies

Industry Characteristics (2)• Very sensitive to fluctuations in exchange rates and

commodity prices• Hedge:

• Less speculative • Reduced exposure and uncertainty • Smooth cash flows

• No Hedge:• Volatile cash flow• Tax• Self-correction in long run

Industry Characteristics (3)• Environmental consideration:

• Noise pollution• Acid mine drainage• Changes in local water balance• Soil erosion• Disruption of animal life

• Stringent environmental regulations

The Canadian Mining Industry• A Key Feature of Canada’s Economic Landscape

• Canada is a leading producer and exporter of minerals and mineral-based products.

• Canada is one of the largest mining nations in the world, producing more than 60 minerals and metals.

• The industry employs some 388,000 Canadians

• Contributed $40 billion to Canada’s GDP in 2008 (Statistics Canada, 2009)

Capped Diversified Metals and Mining Index vs TSE Market Index (1yr)

Capped Diversified Metals and Mining Index vs TSE Market Index (5yr)

URANIUM

Uranium• About Uranium• Process• World Production• Uranium Mining in Canada• Price • Supply and Demand

About Uranium• Two uses for Uranium:

• 1) Military• 2) Civilian

• Nuclear power is a clean source of electricity, and generation capacity is growing.

About Uranium (2)• Major Stages in Production of Nuclear Fuel:• 1) Uranium Exploration• 2) Mining and Milling• 3) Refining and Conversion• 4) Enrichment and Fuel Fabrication

Uranium Enrichment and Processing

World Production

Source: Cameco, 2009

Uranium in Canada• Canada has three operating uranium mines and mill sites,

one mine site, and one new uranium mine site under construction (all in Northern Saskatchewan).

• Nuclear power provides approximately 14.7% of Canada’s electricity.

• Over 80% of the uranium shipped from Saskatchewan mines goes to non-Canadian markets for the generation of electricity.

Uranium in Canada (2)• Canada is among the top producers of uranium in the

world.• The uranium mining and milling industry is the only mining

industry in Canada licensed and regulated by the federal government.

• The Canadian Nuclear Safety Commission (CNSC) is the federal regulator for the uranium industry.

Future Uranium Demand

Future Uranium Demand (2)• China is expected to lead the world in the construction of

nuclear power plants as electricity demand continues its rapid growth.

• China is currently operating 11 reactors, building 20 and planning more. We expect it to have a net increase of 42 reactors by 2019.

• India is also planning more reactors.

Uranium Prices

ZINC

Zinc• About Zinc• World Zinc Production• Industrial Consumption

About Zinc• Zinc is most commonly used for galvanizing steel.• Other applications include:

• Construction• Transport• Consumer goods and electrical appliances• General engineering

About Zinc (2)

Zinc World Production

Production Volume

Open Pit MiningUnderground MiningCombination

Source: International Zinc Association

Zinc Spot Price (1yr)

Zinc Spot Price (5yr)

COPPER

Copper Overview• About Copper• Copper Supply and Demand• World Copper Usage• Refined Copper Usage by Region• Prospects and Price

About Copper

- Efficient conductor of electricity and heat

- Flexible, strong, durable and resistant to corrosion

About Copper (2)• Conducting electricity and heat• Communications• Transporting water and gas• Roofing, gutters and downspouts• Protecting plants and crops, and as a feed supplement• Making statues and other forms of art.

Copper Supply and Demand• Demand

• Growing demand because of:• Widespread use• Industrializing countries such as China and India

• Supply• Copper supply comes from two sources:

• Primary production (88%) ~ mine from the ground• Secondary supply (12%) ~ recycled copper scrap

World Copper Usage

Refined Copper Usage by Region, 1993-2008

Major International Trade Flows of Copper Ores and Concentrates

Leading Exporters and Importers of Copper Ores and Concentrates, 2008

Copper Prices, 1 Year Spot

Copper Prices, 5 Year Spot

Copper Prospects• Weak world economy due to financial crisis is expected to

an overall global decrease in usage of 0.7%• Surging industrial output in China

• China is the world’s largest consumer of industrial metals• Decline of 17% in the 3 major markets is partly offset by growth in

apparent usage in China of 26%• Prices expected to stabilize by 2011 (ICSG)

GOLD

Gold Overview• About Gold• Demand• Prices• Gold and the US Dollar

About Gold• Gold is used for:• Jewellery• Investment• Medium of exchange• Industrial

Gold Demand

Gold Spot Price, 1 yr

Gold Spot Price, 5yr

Gold and the US Dollar

COAL

Coal Overview• About Coal• Energy Demand• Types of Coal• World Coal Consumption• Annual Coal Prices

Energy Demand• Primary energy demand has increased 50% since 1980• Growth is forecast to continue at annual rate of 1.6%

between 2004-2030• 70% of this growth will come for developing countries• Fossil fuels projected to provide 80% of total energy

demand into the future• Coal will see the largest demand increase in absolute

terms (International Energy Agency)

About Coal• Coal is the world’s most abundant and widely distributed

fossil fuel.• Coal is carbon-rich mineral deposit formed as organic

plant matter decayed.• Coal generates the largest single source of electricity in

the world.• Electricity generation, steel and cement manufacturing

and industrial process heating.

Types of Coal

World Coal Consumption

Annual Coal Prices

Spot Prices for Coal

(TSE: TCK-B)

Market ProfileCurrent Price 41.58P/E 12.09Dividend Yield -Shares Outstanding 589 MMarket Capitalization 24,495MDaily Volume 2,027,26252 Week Price Range

4.50-42.98

EPS 3.44

Common Shares Outstanding

One Class A share has the right to 100 votesOne Class B share has the right to one vote

Current Dec. 31, 2009

Dec. 31, 2008

Class A 9.35M 9.35M 9.35M

Class B 579.8M 579.7M 477.5M

5 Year Trend of Common Shares

1 yr. Stock Price Trend – TCK.B

5 yr. Stock Price Trend – TCK.B

1 Yr. TCK.B & S&P/TSX Global Mining

5 Yr. TCK.B & S&P/TSX Global Mining

Breakdown of Business Units

Investments – Core Assets• Copper

• Highland Valley Copper (97.5%)• Antamina (22.5%)• Quebrada Blanca (76.5%)• Carmen de Andacollo (90%)• Duck Pond (100%)

• Metallurgical Coal• Teck Coal Partnership (100%)

Investments – Core Assets• Zinc

• Trail (100%)• Red Dog (100%)

• Energy• Fort Hills Project (20%)• Frontier and Equinox Projects• Other Oil Sand Leases (50%)

Non-Core Asset Dispositions• 78.8% interest in the Morelos gold project

• Disposed in November 2009, for• US$150 million cash, approximately 1.6 million common shares, and 12.4 million

special warrants of Gleichen

• 60% interest of the Agi Dagi and Kirazli gold projects in Turkey• Disposed in January 2010, for

• US$24 million, and 2.4 million shares

• Interest in future gold production from Andacollo mine sold to Royal Gold• Disposed in January 2010,

• Provided Andacollo with US$218 and 1.2 million common shares of Royal Gold Teck’s share is 90%

Other Dispositions• Sale of one-third interest in the Waneta Dam for C$825

million, closed on March 5, 2010• Total debt decreased to C$6.7 billion• Term loan is US$1.14• Cash balance C$1.3 billion

Teck

Operation Overview

Overview

History• Teck is Canada's largest diversified mining, mineral processing and metallurgical company

• Owns or has interests in 15 mines in Canada, United States, Chile and Peru

• Cominco started in 1906 as a mining and smelting company

• After a merger in 2001, became Teck Resources Ltd.

Highlights and Significant Items

(in billions) 2009 2008

Operating profit before depreciation

3.7 2.8

Net earnings 1.8 .659

EBITDA 4.1 2.0

Revenue 7.7 6.7

Geographic Segment 12/31/08

Business Segment 12/31/08

Revenues and Operating Profit by Product

Average Metal Prices and Exchange Rates

Financial Instruments and Derivatives

Management

Norman B. Keevil (B.A. Sc., Ph. D., LL.D) Joined the Board in 1963VP Exploration at Teck from 1962-1968Executive VP from 1968-1981President and CEO form 1981-2001Chairman of the Board since 2001Lifetime director of the Mining Association of CanadaInducted into the Canadian Mining Hall of Fame in 2004

Managment

Donald R. Lindsay (B.Sc., M.B.A)President and CEO of Teck since

January 2005President of CIBC world Market Inc,

Head of Investment and Corporate Banking

TECKFinancial Analysis

Debt positions and credit ratios

(in millions) Dec. 31, 2008 Dec. 31, 2009 March 5, 2010Term loan 3,937 2,325 800Bridge loan 5,284 - -Fixed rate term notes 1,181 5,086 5,086Other 167 205 205Total debt (US$) 10,569 7,616 6,091

Total debt (C$) 12,874 8,004 6,402Cash balances (C$) 850 1,420 900Net debt (C$) 12,024 6,584 5,502D/E 54% 36% 29%Net D/E 52% 31% 26%

Outlook• General economic conditions

• Base metal prices increased• Improved customer demand

• Capital expenditures• Approximately $1.05 billion for 2010

• $375 million of sustaining capital expenditures• $675 million on development projects

Outlook• Foreign exchange, debt revaluation and interest expense

• Sales of products are denominated in USD• Expenses are incurred in local currency (CAD)

Outlook• 2010 production

Recommendation: BUY

(TSE: CCO)

Market ProfileCurrent Price 28.67P/E 12Dividend Yield 0.82%Shares Outstanding 392.71BMarket Capitalization 11.55BAverage Daily Volume

984,678

52 Week Price Range

17.01 - 35.00

EPS 1.84

Market Profile• 1 Year Stock Chart

Market Profile• 5 Year Stock Chart - CCO vs TTMN

Business OverviewCameco

Uranium Fuel Services Electricity

Business Overview• Uranium

• 16% of world production• 480M lbs of U3O8 (Cameco`s share)• Low cost producer

• Fuel Services• Refines and converts uranium to UF6 for use in nuclear reactors

• Electricity Generation• 31.6% stake in Bruce Power L.P

• Gold• As of December 2009, CCO sold stake in Centerra Gold Inc.

Business Overview

• The Athabasca Basin hosts the world's richest high-grade uranium deposits

Uranium Processing

McArthur River

Key Lake

Port Hope

Blind River( UO3 )

Important Mines• McArthur River

• World's largest high-grade uranium deposit

• Milled at Key Lake

• 232.2M pounds (69.8% share)

• End product: U3O8 – 19.5% grade

Important Mines• Cigar Lake

• World's second largest undeveloped high-grade uranium deposit

• 104.7M pounds reserve (50% share)

• End product: U3O8 – 17% grade

Important Mines• Cigar Lake

• Development began 2005• 2006 and 2008 flooding• Share price dropped to $38 from $43

• Production start date mid-2013

• New Jet Boring mining method

Important Mines• Inkai, Kazakhstan

• 85.1M pounds (60% share)

• End product: U3O8 – 0.07% grade

• In Situ Mining method

• Currently test mine • Commercial production expected 2009*• Was able to produce 0.3M lbs for Cameco

Reserves• As of Dec 31, 2009

15 Year U3O8 Price History

6 Year UF6 Price History

Uranium Prices• Average realized prices

2009 2008 2007% Change

2008-2009

Uranium $US/lb$Cdn/lb

38.2545.12

39.5243.91

37.4741.68

(3)%3%

Fuel Services $Cdn/lb 17.84 15.85 14.04 13%

Electricity $Cdn/MWh 64 57 52 12%

Expected Realized Prices

• How long terms contracts would respond to changing spot prices• Assumption: current contract portfolio remains unchanged

Financial Contracts• Most contracts are long term; CCO sells directly to

nuclear utilities

• Sells uranium concentrate, UO2 , UF6 , conversion or fuel fabrication

• Current contracting strategy is to have contracts of 10+ years• Provides cash flow visibility (reduced volatility)

Financial Contracts• Contracts include embedded derivatives to protect

downside and participate with price increases• 40:60 ratio

• 40% at fixed prices based on long term indicator adjusted for inflation• 60% at spot price near delivery time

• CME contract size: 250lbs of U3O8

Foreign Exchange• Natural hedge against USD

• Cash outlays denominated in USD• $0.01 increase in USD/CAD decreases net earnings $7.1M

Revenue and Profit Segmentation

66%12%

22%

2009 Reveune

Uranium

Fuel services Electricity 64%

7%

29%

Gross Profit

Uranium

Fuel ServicesElectricity

Geographic Revenue and Asset Segmentation

Growth OrientedHighlights 2009 2008 Change %

Uranium Volume 20.8M lbs 17.3M lbs 20Revenue ($ M) 1,551 1,512 3

Fuel service

Volume 12.3M kgU 8.3M kgU 48

Revenue ($ M) 276 252 20

Electricity Output (100%) 24.6TWh 24.7TWh -

Revenue ($M) 1,640 1,409 16

EBI 224 141 59

8 Year Revenue Growth

Growth Oriented• Increasing demand for electricity by India and China

• Global clean energy movement

• 53 reactors in construction, 91 projected to come online in 2019

• Uranium demand projected to grow at 3% over next 10 years

Strengths• Low cost Canadian operations

• Largest high-grade uranium deposits

• Long-term contracts

• High capital costs and long lead times• Barriers to entry

Weaknesses• Nuclear plant construction very costly• Does not qualify for greenhouse gas emission credits• Moderate growth for uranium fuel as not many reactors

are online• Demand is cyclical due to market’s infancy• Uranium prices are volatile

Long Term Strategy• Uranium – double production to 40M pounds by 2018

from existing assets• Fuel Services – invest to support nuclear reactor growth• Electricity – maintain cash flow and look for new

opportunities

• Cigar Lake• Maintain exploration

• 70 active exploration projects

New Projects• Millennium

• Founded in Saskatchewan in 2000• 42% ownership, 19.6M lbs of U3O8

• Kintyre• Acquired from Rio Tinto in Australia in 2008 in joint venture• 70% ownership

Material Risks to Long Term Strategy• Inability to increase production at mines

• Partner and political risks

• Natural forces • Ex: flooding at Cigar Lake

ManagementGerald W. Grandey , President and CEO

• Current• Appointed CEO of Cameco January 1, 2003. • Appointed president elected as director on

Cameco's board May, 2000. • On the boards of the Canadian Nuclear Association,

the Nuclear Energy Institute, the National Mining Association

ManagementGerald W. Grandey , President and CEO

• Previous • Vice-chair and chief executive officer of The Concord Mining Business

Unit • President of Energy Fuels (an American coal and uranium mining

company)• Practiced law in the mid '70s with a major Denver law firm specializing

in mineral financing, natural resources and environmental law. • President of the Uranium Producers of America• Vice-chair of the World Nuclear Association

• Colorado School of Mines (1968), Bachelor of Geophysical engineering• Northwestern University (1973), Law Degree

Management• Tim S. Gitzel: Senior Vice-President and Chief Operating

Officer

- 16 yrs of senior management experience in uranium industry

- Executive VP of mining business unit for AREVA (France): global uranium and gold exploration

- Chief of staff to SK deputy premier and minister of economic development

Management• O. Kim Goheen: Senior Vice-President and Chief

Financial Officer - Extensive experience in domestic and international finance in transportation, petroleum, mining and energy industries

- Served in a variety of financial capacities at IPL Energy Inc. (Enbridge)

- Commerce degree from UBC 1977, MBA from U of Western Ontario.

Board of Directors• High degree of independence from management

• Only 2 of 14 individuals on Board of Directors are not independent

Financial HighlightsHighlights 2009 2008 Change %Revenue 2315 2183 6

Gross profit 750 829 (10)

Net earnings 1099 450 144

-$ per common share (diluted) 2.82 1.28 120

Adjusted net earnings (non-

GAAP)582 589 (1)

-$ per common share (adjusted

and diluted)1.49 1.67 (11)

Cash provided by continuing operations

690 530 30

Financial Analysis – Net Earnings• Net earnings higher due to sale of Centerra gold stake

• 374M of 1099M

• Mark to market gains of 179M on financial instruments

• ~50% of net earnings from one-time items

Financial Analysis – Adjusted Net Earnings

• Earnings decreased 1% • Higher uranium costs due to purchasing at higher prices • Lower gold sales• Electricity sales increased due to higher prices

2010 Sales Outlook• Uranium

• Decrease 5-10% • Lower volume

• Fuel services• Increase 5-10%

• Higher volume

• Electricity• Decrease 5-10%

• Lower prices

Outlook• Doubling production by 2018 to 40M lbs

• Exploration costs increase by over 75%

• Administration costs increase 25-30%

• Cost increases for sustaining operations

Recommendation• HOLD

• Increased exploration and costs • Weak demand for uranium• Uranium competes with other forms of alternative energy (i.e. coal

and wind)

• SPECULATIVE BUY• Market leader• Highly levered to Ux prices

GoldCorp Inc • STOCK PRICE ANALYSIS• OPERATIONS• FINANCIAL STATEMENT ANALYSIS• RECOMMENDATIONS

TSE: G

Market Profile

HIGH 42.00

LOW 40.92

52 WEEK HIGH

48.37

52 WEEK LOW

32.39

BETA 0.82

MRKT CAP

30.42B

P/E 25.02

FWD P/E 31.56

ANNUAL DIVIDEND

0.19

YIELD 0.50

as on 10th March 2010

COMMON SHARES OUTSTANDING

2009 2008

SHARES 733.5M 729.6M

1 YEAR VS MARKET & INDUSTRY

5 year

ABOUT• Leading gold producer engaged in gold mining and

related activities including exploration, extraction, and processing

• One of the top senior gold producers in the world• Produces Gold, Silver, and Copper

Operations

OPERATIONS

OPERATIONS• 2004: Goldcorp: Red Lake Mine & Wharf Mine• 2005: Acquired Wheaton River Minerals & Virginia Gold • 2006: Acquired Canadian Placer Dome assets & Glamis

Gold• 2008: Gold Eagle Mines• 2009: El Morro project• 2009: Goldcorp acquired 100% interest in the Camino

Rojo gold/silver project in Mexico

GOLD RESERVES

PRODUCTION

GOLD PRODUCED (OUNCES)

REVENUES

EARNINGS

FINANCIAL RISKS• The Company closely monitors its financial assets and does not have any significant concentration of credit risk.

• The Company ensures that sufficient committed loan facilities exist to meet its short-term business requirements

• The Company is exposed to currency risk• The Company monitors its exposure to interest rates• Price-Risk: May hedge up to 50% of its base metal sales volume to manage its exposure to fluctuations in base metal prices

FINANCIAL CONTRACTS• Sells its products exclusively to large international financial institutions

• Enters into contracts and performs business activities that give rise to commitments for future minimum payments.

• May hedge up to 50% of its base metal sales volume over the next fifteen months to manage its exposure to fluctuations in base metal prices.

Growth & Development• Peñasquito is one of the largest projects and one of the

largest new mines in the world that will be the primary driver of growth for Goldcorp in the next 5 years

• Other important projects include Red Lake, Musselwhite, and Pueblo Viejo

STRATEGIC OBJECTIVES

Goldcorp is focused on delivering long-term value and superior returns to its shareholders. Its goal is to be a low cost gold producer with geographic diversification and low political risk operating in a responsible manner with our neighbours and the environment.

STRATEGY FOR GROWTH• Strong focus on organic growth • No gold hedging• Low cost gold producer • Maintain a strong balance sheet• Focus on low political risk jurisdictions • $110 million exploration budget for 2009

FACTS• Goldcorp is the 2009 recipient of the Viola R. MacMillan

Award for company or mine development• Goldcorp announces 6th consecutive annual increase in

gold reserves• It completes acquisition of 70% interest in EI Morro project• Delivers record 2009 gold production; peer leading 5-year

growth profile extended• Its cash flow increases 35% in the 2009 3rd quarter• Goldcorp has grown from a strong intermediate player to one of

the top senior gold producers in the world

MANAGEMENTCharles Jeannes• Charles A. Jeannes was

appointed President and CEO of Goldcorp effective 1st January 2009

• Previously Executive Vice President from 2006-08

• From 1999 until the completion of the acquisition of Glamis, he was Executive Vice President, Administration, General Counsel and Secretary of Glamis

MANAGEMENTIan Telfer (Chairman) 

- President and CEO of Goldcorp from 2005 until its merger with Glamis Gold in 2006

- CEO & President of Wheaton River from 2002 until merger in 2005

- Over 20 years experience in mining industry

- Raised over $1 billion for mining exploration and development around the world

FINANCIAL STATEMENTS ANALYSIS• Balance sheets• Cash flow statement• Income statement

FINANCIAL OVERVIEW

Balance sheet Year end 2009ASSETS

LIABILITIES 2009 2008

Income statement Year end 2009

Cash flow statement Year end 2009

CASH FLOW-OPERATING ACTIVITIES

CASH FLOW-INVESTING ACTIVITIES

CASH FLOW-FINANCING ACTIVITIES

RECOMMENDATION

BUY• Increasing gold prices• Growth in GoldCorp’s operations• Increase in gold production