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DEVELOPMENT OF A WORLD CLASS ZINC-COPPER OXIDE PROJECT
November 2011
Forward Looking Statements This presentation may contain "forward-looking" statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or the anticipated performance of the Company and reflect management's expectations or beliefs regarding such future events and anticipated performance. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur" or "be achieved", or the negative of these words or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual performance of the Company to be materially different from any anticipated performance expressed or implied by the forward-looking statements. Such factors include various risks related to the Company's operations, including, without limitation, fluctuations in spot and forward markets for zinc, copper and other metals, fluctuations in currency markets, changes in national and local governments in Mexico and the speculative nature of mineral exploration and development, risks associated with obtaining necessary exploitation and environmental licenses and permits, and the presence of laws that may impose restrictions on mining. A complete list of risk factors are described in War Eagle's management information circular for its special meeting to approve the reverse-takeover transaction with the Company and will be detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which will be available, for review on SEDAR at www.sedar.com.
This presentation uses the terms "measured resources", "indicated resources" and "inferred resources". The Company advises readers that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101")), the United States Securities and Exchange Commission does not recognize them. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted in to reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a Preliminary Assessment as defined under NI43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
Although the Company has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking statements, there may be other factors that cause its performance not to be as anticipated. The Company neither intends nor assumes any obligation to update these forward-looking statements or information to reflect changes in assumptions or circumstances other than required by applicable law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those currently anticipated. Accordingly, readers should not place undue reliance on forward-looking statements.
Unless otherwise indicated, financial amounts are denominated in Canadian dollars (“$”). Amounts expressed in United States dollars are indicated by “US$” or “US¢”.
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Investment Highlights
World-class zinc project
Recently formed private company focused on the commercialization of the Terrazas Zn-Cu oxide project near Chihuahua City, Mexico
One of only a few world-wide zinc oxide projects that has the economies of scale to support a standalone hydrometallurgical facility Comparables include Skorpion, Boleo and Jabali
High grade open-pittable
resource
NI 43-101 compliant M&I resource of 2.6 billion lbs Zn and 638 million lbs Cu Discrete M&I resource of 1.9B lbs Zn at 3.17% Zn and 189 M lbs Cu at 0.30%
Cu at the high grade Cerro Verde zone All to be mineable by open pit
Significant low-cost zinc production
Expected zinc cathode production between 100 and 125 M lbs per year Expected copper production between 8 and 10 M lbs per year Potential for a +40 year mine life with known additional sources of feed Cash costs expected to be <US$0.30/lb Zn due to copper credit
Major milestones
ahead
Completing an RTO with War Eagle Mining Andromeda’s immediate focus is to continue optimization of the Terrazas
Project followed by the completion of a feasibility study Progressing towards production
Project Location
Easy access to rail, power lines, and water
No ejidos on the property Surface rights on the Cerro Verde ore body are under purchase rights
option agreements with Andromeda
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Project Infrastructure
Significant infrastructure in place
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Terrazas Project History
Early 20th century
1980s
2000
2002
2004
2007
2008
Historical copper producer, including an on-site
smelter in the early part of the 20th century
Shallow zinc mineralization defined
Optioned by Constellation Copper
Constellation completed a pre-feasibility study
based on an acid heap leach
Discovered high grade zone at Cerro Verde
The discovery of the high-grade Cerro Verde deposit and further studies indicated improved
economics with an agitated leach, and a scoping study was completed in 2007
Constellation Copper was embarking on a feasibility study on Terrazas, when it went into
receivership in 2008, due to its Lisbon Valley operations, and the project reverted back to the
project vendor due to the final missed property payment. Total project expenditures by
Constellation Copper exceeded US$15 million
2010 Andromeda entered into agreement to acquire Terrazas for cash consideration of US$5.0
million payable in installments over two years and a 2% NSR, sliding up to 3% at US$2.00/lb Zn
Past-producing mine with extensive economic analysis completed
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Terrazas Project Overview
Located close to the city of Chihuahua
Project site has extensive infrastructure in
place, including railway, power, water, and
a nearby four-lane highway
Allows low cost delivery of acid or sulfur
for manufacture of acid
Contains the high grade Cerro Verde zone
M&I resource of 1.9 billion lbs Zn at
3.17% and 184 million lbs Cu at 0.30%
Looking west from Cerro La Gloria towards Terrazas Demonstrated resource, no exploration risk
Project was previously optioned to Constellation Copper
Spent ~US$15 million on exploration and economic studies over
an 8 year period to 2008
Although a 2007 Constellation Copper scoping study was never
formally published, the agitated sulfuric acid leach study was
positive enough to lead Constellation Copper directly into a
feasibility study
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Terrazas Project Overview The mine life at Cerro Verde and the Main
Zone is likely to exceed 20 years Could exceed 40 years with the addition
of satellite deposits and slag piles
Extensive testwork shows zinc recovery at ~90% and copper recovery at ~75% using conventional sulphuric acid leaching
Final products would be Zn cathode and an intermediate Cu product
100 – 125 M lbs Zn / year
8 – 10 M lbs Cu / year
Long-life, low cost production potential
Potential for low pre-production and operating costs
Cash costs expected to be low at <US$0.30/lb Zn due to the copper credit
Capital costs are expected to be manageable for a junior to solely finance
into production
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Terrazas Acquisition Terms Title transfer after US$5.0 million in payments
US$1.2 million paid to date.
2.0% NSR, sliding up to 3.0% at US$2.00/lb Zn
2Q-2010 Payment of US$1.0 million
Dec. 15, 2011 US$2.0 million payment
($200,000 advance payment paid Sept. 30)
May 31, 2012 US$2.0 million payment on second anniversary
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Terrazas NI 43-101 Resources Andromeda completed an updated NI 43-101 resource estimate in October 2011
The resources are contained in a floating cone pit shell, developed only to satisfy the criterion of potential recoverability
The expected strip ratio for Cerro Verde is between 3:1 and 4:1
At US$1.00/lb Zn and US$3.15/lb Cu, the Zn Eq Cerro Verde M&I grade is 4.0%1 or US$88/tonne ore
1. Also considers difference in recovery. At 4:1 Cu:Zn price ratio, in situ Zn eqiv grade for M&I is 4.36%
2. 0.89% Zn Eq Cut-off using US$1.00/lb Zn and US$3.15/lb Cu
3. 0.94% Zn Eq Cut-off using $1.00/lb Zn and US$3.15/lb Cu
Cerro Verde Zone2
Tonnes Zn Grade (%)
Cu Grade (%)
Zn Eq Grade (%)
Cu Eq Grade (%)
Zn (M lbs)
Cu (M lbs)
Measured 3.9 3.66 0.31 4.5 1.21 311 27
Indicated 23.9 3.09 0.30 3.9 1.07 1,628 157
Total M&I 27.8 3.17 0.30 4.0 1.09 1,939 184
Inferred 4.3 1.99 0.34 2.9 0.84 189 32
Main Zone3
Tonnes Zn Grade (%)
Cu Grade (%)
Zn Eq Grade (%)
Cu Eq Grade (%)
Zn (M lbs)
Cu (M lbs)
Measured 23.5 0.60 0.41 1.8 0.56 313 211
Indicated 29.2 0.61 0.38 1.7 0.53 393 243
Total M&I 52.7 0.61 0.39 1.7 0.54 705 454
Inferred 2.3 0.77 0.40 1.9 0.59 39 20
Section 100NW
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Section 850NE (Cerro Verde)
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Terrazas NI 43-101 Block Model
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Drill Highlights
Cerro Verde Drill Results
Significant drill hole oxide intersections
Significant oxide intersections have been drilled at the Cerro Verde zone
Exploration upside exists, including additional skarns and possible “hidden” porphyry
Hole ID From (m)
To (m)
Intercept (m)
Copper (% Cu)
Zinc (% Zn)
MT04-16 79 103 24 0.23% 5.02%
MT04-17 19 169 150 0.49% 5.67%
MT04-18 58 223 165 0.35% 4.25%
MT04-73 22 160 138 0.38% 7.46%
MT04-76 130 295 165 0.44% 7.60%
MT04-77 64 229 165 0.36% 3.43%
MTDD04-11 45 105 60 0.60% 7.12%
and 213 297 84 0.31% 4.17%
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Terrazas Site from the West
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Predominant Mineralogy
All mineralization on the Terrazas property is almost entirely comprised of
oxide minerals of zinc and copper.
Zinc Minerals Copper Minerals
• Hemimorphite
• Willemite
• Smithsonite
• Sphalerite
• Malachite
• Chrysocolla
• Tenorite
• Chalcopyrite
ZINC MINERALS COPPER MINERALS
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Simplified Terrazas Flow Diagram The following flowsheet was developed by Constellation Copper as a basis
for conceptual capital and operating cost estimates
Tecnicas Reunidas S.A., which designed Anglo American/Vedanta’s Skorpion Zinc Refinery in Namibia provided significant input for this estimate and offered metallurgical
Although the flowsheet shows a viable process, Andromeda believes that there is significant optimization potential
Project Development and Optimization
Andromeda will focus on optimizing the Terrazas Project in advance of completing a definitive feasibility study.
Optimization will include:
1. Flowsheet optimization
2. Investigate the use of pre-concentration such as optical sorting techniques, flotation and dense media separation
3. Identification of other potential high-grade satellite deposits including skarns, carbonate replacement and a porphyry as possible targets
4. Identification of additional sources of metal (e.g. slags)
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Project Timeline
Multiple near-term milestones
3 months PEA based on current and historical data
7 – 9 months Lab testwork and prefeasibility study to define
project economics after optimization
12 – 15 months Process pilot plant and feasibility engineering
COMPLETE Update 43-101 resources report
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Valuation Comparable zinc exploration and development companies are currently trading at Market Cap /
Resource multiples of US¢2.05/lb Zn and US¢1.24/lb Zn Eq.
Implies a market cap for Andromeda of between US$33 and US$40 million based on Terrazas’ high grade M&I resource only, and between US$59 and US$70 million based on the total MI&I Terrazas resource
Market Cap / Resource – Comparable Zinc Companies Attributable Resource
Company Market Cap1Key Project Location Stage Zn Zn Eq. Market Cap / Resource
(US$M) (M lbs) (M lbs) (US¢/lb Zn) (US¢/lb Zn Eq.)
Selwyn Resources Ltd. $90 Selwyn Project Yukon, Canada Feasibility 21,634 26,722 0.41 0.34
Silver Bull Resources, Inc. $77 Sierra Mojada Mexico Adv. Exploration 6,437 10,671 1.20 0.72
Canadian Zinc Corporation $87 Prarie Creek NWT, Canada Feasibility 3,032 6,828 2.86 1.27
Canada Zinc Metals Corp. $78 Akie British Columbia Adv. Exploration 3,953 4,695 1.97 1.66
Zazu Metals Corporation $60 Lik Alaska, US PEA 2,312 3,300 2.59 1.82
Zincore Metals Inc. $52 Accha Peru Pre-Feasibility 2,184 3,113 2.38 1.67
Chieftain Metals Inc. $41 Tulsequah B.C., Canada Pre-feasibility 1,084 3,456 3.78 1.19
Foran Mining Corp. $39 McIlvenna Bay Saskatchewan, Canada Adv. Exploration 1,737 2,915 2.27 1.35
Donner Metals Ltd. $35 Bracemac-McLeod Quebec, Canada Feasibility 542 852 6.51 4.14
Tamerlane Ventures, Inc. $11 Pine Point NWT, Canada Feasibility 2,311 2,975 0.48 0.37
Messina Minerals, Inc. $4 Tulks South Newfoundland, Canada Adv. Exploration 312 746 1.16 0.49
Minco plc $17 Pallas Green Ireland Adv. Exploration 1,012 1,142 1.65 1.46
Firestone Ventures Inc. $7 Torlon Hill Guatemala Pre-Feasibility 331 432 2.18 1.67
Average (excluding high/low) 2.05 1.24
Implied Market Cap of Andromeda Resources
Terrazas High Grade MI&I Resources (M lbs) 1939 2,674
Applied Market Cap / Resource Average (US¢/lb) 2.05 1.24
Implied Market Cap of Andromeda (US$M) $40 $33
Total Terrazas MI&I Resources (M lbs) 2872 5,633
Applied Market Cap / Resource Average (US¢/lb) 2.05 1.24
Implied Market Cap of Andromeda (US$M) $59 $70
*1. Based on share prices as of October 31, 2011 2. Zn Eq. calculated using US$1.00 /lb Zn and US$4.00/lb Cu
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Case Study: Skorpion Zinc Mine On-site production at Terrazas will be
very similar to the successful Skorpion
Zinc Mine in Namibia Terrazas and Skorpion are two of the
few zinc oxide projects in the world
that have the economies of scale to
support a standalone
hydrometallurgical facility
Formerly operated by Anglo American,
the Skorpion Zinc Mine commenced
commercial production in May 2004 and
had achieved 95% of its design capacity
by year-end Tecnicas Reunidas S.A, who desgined
Skorpion’s zinc refinery, provided
significant input into the Terrazas
design
Skorpion Zinc Mine in Namibia, southern Africa
Vedanta Resources acquired the Skorpion Zinc Mine from Anglo American
in 2010 for approximately US$707 million
Only 5.5 years after initial production
Comparable total metal content, proved the process, and sold at a
significant value
Zinc Market Environment Zinc is well-positioned to outperform over the next three to five years
Continued growth in demand, scheduled closure of several globally significant zinc operations, and a lack of investment in new projects capable of filling the widening supply gap
Supply deficit expected in 2014 → will apply significant upwards pressure on zinc prices
Zinc industry will need to develop 7 Mt by 2020 and 14 Mt by 2025 to meet expected demand
(6.0)
(5.0)
(4.0)
(3.0)
(2.0)
(1.0)
0.0
1.0
2.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Consumption (Mt) Production (Mt)
(442) Kt
(716) Kt
(1,310) Kt
(1,720) Kt(1,884) Kt
2013 2014 2015 2016 2017
Supply Deficit on the Horizon Significant Production Coming Offline
Major Mine
Closures
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Share Structure
Current Share Structure
Shareholder # Shares Value at $3.00/share
Founders 2,000,000 $6,000,000
Private Placement 325,000 $975,000
Consideration to Vendor 75,000 $225,000
War Eagle Investment 500,0001 $1,500,000
TOTAL 2,900,000 $8,700,000
Post-RTO and Financing Share Structure
Shareholder # Shares Value at $0.45/share
Current Andromeda
Shareholders
16,000,000 $7,200,000
War Eagle Shareholders 7,442,272 $3,349,022
Financing2 22,222,222 $10,000,000
TOTAL 45,664,494 $20,549,022
Financing
$7- $10 million equity raise to progress Terrazas
Financing will cover the balance of
acquisition costs
Financing will be completed in Andromeda
shares resulting in free trading stock
Andromeda’s vision is to use the most
reputable engineering and environmental
firms, and develop a strong management,
board and advisory group
Budgets
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Size $7 - $10 million
Cash Requirement to
Feasibility
$12 - $15 million
Use of Proceeds Feasibility study,
permitting, pilot plant
construction
Financing
To Process and Cost Definition Stage
~$4.25M
To Feasibility and Permitting Stage
~$9.00M
Management and Directors
Chris Davie | CEO and Director
Mining engineer and metallurgist with 40 years experience in the mining industry. Background includes process development, project management and investment fund and corporate management. Extensive junior mining experience including finance, mergers, acquisitions and IPO’s. Managed a number of juniors including Queenstake Resources, Virgin Metals and Quia Resources.
Andres Tinajero | CFO
15 years of experience across a broad range of industries including mining, manufacturing, not-for-profit and retail. He has served in a number of leadership roles in the extractive industries
Rene Mladosich | Mexico Manager and Director
20 years + experience in mine and project management in Mexico. Experience includes permitting, environmental and community relations management. Former positions include logistics manager for the Dolores project, general Manager of the Starcore project in Queratero and Country manager for Alamos de Sonora
David Winfield | Director
Canadian diplomat specialized in trade and economic affairs. 30 years experience including Canadian Ambassador to Mexico 1989 to 1995. International experience in leadership and corporate governance in financial services. Served on boards of directors of not-for-profit organizations, a mining company in Mexico and Mexico’s largest bank, Bancomer.
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Management and Directors
Anthony Dutton | Director
A seasoned business executive and entrepreneur with a successful track record as an early stage investor and business founder. His areas of expertise are corporate finance, business development and strategic management.
Brian Murray | Director
Mr. Murray has over 15 years of experience in both the resources and investment markets. Mr. Murray is the president and a director of Nebu Resources Inc., a TSXV listed company exploring for gold in Ontario and president and a director of Rainbow Resources, a company exploring for silver and gold in British Columbia. Mr. Murray has also been the President of Murcon Ltd., a private financial consulting company involved in merchant banking, since 1990. He is a Chartered Accountant and holds a Masters degree in Business Administration
Gary Parkison | Advisor
A QP with 30 years experience in exploration, project evaluation and project development for base and precious metals, primarily in US and Mexico. Chief geologist for Cambior, USA and VP exploration for Constellation Copper Corporation. Discovered the Cerro Verde ore body and was responsible for ongoing economic studies on Terrazas.
Rick Moscone | Corporate Secretary
A partner with Fogler Rubinoff LLP specializing in financing and M&A for mining companies and investment dealers. A founding director of Andromeda and has served as director and secretary for several TSX and TSXV listed companies.
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Summary
Potential for annual production of 100 – 125 M lbs Zn and 8 – 10 M lbs Cu
Mine life of +/– 20 years with additional known sources of feed that could extend it to 40 years
Significant
production
potential
World-class
opportunity
Extraordinary opportunity to invest in an advanced property with a proven resource and excellent infrastructure
PEA within 3 months
Process optimization ongoing
Prefeasibility study within 7 to 9 months
Major
near-term
milestones