Annual General Meeting 3 November 2010 Chairman s Presentation 11/3/2010 1

Transcription

1 Annual General Meeting 3 November 2010 Chairman s Presentation 11/3/2010 1

2 Annual General Meeting 3 November 2010 CEO s Presentation 11/3/2010 2

3 Disclaimer Purpose of this document This presentation has been prepared by Citadel Resource Group Limited ("Citadel") for general information purposes only using the information available to Citadel at the time of publication. No reliance The information contained in this presentation is not investment, tax, accounting, legal or financial product advice and is not intended to be used as the basis for making any investment decision. The presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Exclusion of representations or warranties No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Citadel's directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies. Before making any investment decision, you should consider whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance. You should seek professional advice from your accountant, financial adviser, stock broker, lawyer or other professional adviser before making any investment decision. Forward looking information Certain statements in this presentation constitute forward looking information that is based on expectations, estimates and projections as of the date of this presentation. These statements are subject to risks and uncertainties. The forward looking information should not be relied upon as representing the view of Citadel after the date of this presentation. Citadel has attempted to identify important factors that could cause actual actions, events or results to differ materially from those current expectations described in the forward looking information. However, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended and that could cause actual actions, events or results to differ materially from current expectations. There can be no assurance that the forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place undue reliance on the forward looking information. These factors are not intended to represent a complete list of the factors that could affect the forward looking information. Events after the date of this document Statements in this presentation are made only as of the date of this presentation unless otherwise stated and the information in this presentation remains subject to change without notice. Citadel is not responsible for updating nor undertakes to update this presentation. 3

4 Citadel Resource Group ASX Code: CGG Indices: S&P/ASX 300 Ord shares : 2,367M Options : 58.3M Price: 12 Month Price range: Market Cap: A$0.50 A$0.26 to A$0.505 A$1.2B Cash on hand: A$203M at 30 September 2010 Directors and Management 8% Shareholder base Sept 2010 AQM 8% Retail Investors 22% Transamine 5% Institutional Investors 57% A$M Project Acquisitions EQN Offer Absolute performance 2010 YTD Jabal Sayid PFS released Jabal Sayid DFS released Mining license Equity Raise 4

5 Equinox Takeover Offer Equinox and Citadel have agreed to combine the two companies, with Citadel shareholders to receive: 1 Equinox share for every 14.3 Citadel shares; and A$0.105/share in cash The implied offer price of A$0.522c per Citadel share (as at the date of announcement of the offer based on Equinox s 10 day VWAP to 25 October 2010), which represents: a 21% premium to Citadel s 10 day VWAP to 25 October 2010; a 27% premium to Citadel s Enterprise Value over the same period; and 80% premium to A$262m equity offer to all shareholders completed in June / July Citadel shareholders to own 19% of combined group Transaction unanimously supported by Citadel Board of Directors Directors and other key shareholders, together representing 19.9% of Citadel s shares, have agreed to accept into the offer in the absence of a superior proposal 5

6 Transaction Highlights Creates a portfolio of high quality long life copper mines Copper production objective of >260ktpa within 4 years A strong pipeline of organic growth projects Cements market position as a leading pure play copper producer Opportunity to benefit from Equinox s development expertise and financial strength to maximise value of Citadel s assets Greater ability to leverage first mover advantage in the highly prospective and underexplored Arabian shield 6

7 Overview of Equinox Overview of Equinox Listed on both the TSX and ASX (Code: EQN) Market capitalisation of ~A$4.2bn based on EQN s 10 day vwap of A$5.96 per share as at 22 October At 30 June 2010: Cash reserves: US$212m Debt: US$451m Lumwana Snapshot Resources: M & I: 358 Mt of 0.76% Cu Inferred: 564 Mt of 0.63% Cu Contained: 6.3 Mt Cu Uranium: 16.6 Mlbs U 3 O Production guidance: 140,000 tpa Cu 2010 C1 Cash Cost guidance: $1.35/lb Cu Estimated Mine Life: 37 years For H1 2010: Gross Revenue: US$425m Operating Profit: US$173m Operating Cash Flow: US$205m Main project is the 100% owned Lumwana copper mine in Zambia the 4th largest new copper mine developed in the world over the last decade. 7

8 Combined Entity Jabal Sayid, Saudi Arabia Copper mine under construction: Target copper production of +60ktpa 687kt of copper M&I resources +140kt Inferred resources 0.4Moz of gold resources 10 year mine life Excellent potential for expanding resources and additional deposits Toronto Exploration First mover status in Saudi Arabia Lumwana, Zambia Major copper mine in operation: Outstanding exploration portfolio 2010 copper production of 140ktpa Copper production of +200ktpa if expansion project is implemented 2.7Mt of copper M&I resources + 3.6Mt Inferred Lusaka + Lumwana Jeddah Perth Melbourne 8

9 Combined Entity Production Profile Copper production objective of >260ktpa once Jabal Sayid is in production and the proposed Lumwana expansion is completed. Copper production growth (kt) Copper production objective of >260ktpa once Jabal Sayid is in production and the proposed Lumwana expansion is completed Lumwana at 2010 guidance Jabal Sayid DFS Potential Lumwana expansion e 2011e 2012e 2013e 2014e 2015e 2016e 2017e 9

10 Transaction Timetable 25 October Announcement of recommended merger Early November Equinox to dispatch Bidder s Statement Mid November Citadel to dispatch Target s Statement (~15 days after Bidder s Statement dispatched) Late December Offer close (unless extended) 10

11 Minerals Rich Region 11

12 Saudi Arabia A favourable investment location First foreign invested base metal exploitation license granted to Bariq Mining Ltd Saudi Arabia a member of the World Trade Organisation since 2005 Tenure of mining license secure with 100% foreign ownership permitted Profits can be repatriated in full Low corporate tax rate of 20% and 5% withholding tax No mineral royalties Highly competitive energy costs Established local banking sector Developed infrastructure, roads and ports Significant in country construction expertise Saudi Arabia a favourable investment location Ranked 13th position in the World Bank s Ease of Doing Business Index Ranked 1st position in the Middle East Jeddah foreshore on the Red Sea 6 lane highway on way to Jabal Sayid 12

13 Jabal Sayid Project Status Moving to 100% and construction activities underway 24 May Jul Aug Sep 2010 May to Present Mining license granted Major equity raising successfully completed Shareholders approve move to 70% of project Agreement to move to 100% of project, subject to shareholder approval Permitting underway including environmental, site security and explosives September 2010 EPCM contractor mobilising Engineering ~ 35% complete Vendor packages let: o Mills, flotation cells, filters and thickeners contracts signed and orders placed Power supply secured and water supply term sheet agreed Camp construction started with Saudi contractor Mining contractor mobilising for decline rehabilitation and start of the main underground contract Mine design optimisation completed Recruitment of key project personnel moving ahead 13

14 Construction at site Existing infrastructure being upgraded Established camp 14

15 More Construction 15

16 Key Project Activities Forecast as at mid Sept Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 DFS complete Mining license granted Mobilisation for mining Underground construction Ongoing underground development for future production Stope production Fabrication & delivery Surface construction Plant commission First concentrate Commercial Production 16

17 Capital and Operating Cost Update As at the September 2010 Update Pre Production Capital Costs US$M Mine 68 Process Plant 59 Infrastructure, Services & Reagents 69 Field Indirects 11 EPCM Services 26 Owners Costs 39 Total 272 Contingency & Escalation 33 Total (Including Contingency) Assumed TC/RC of US$70 / Assumed gold price of US$850/oz and silver price of US$12/oz Cash Operating Costs US$ Per Tonne Ore Per lb Payable Per lb Produced Mining Concentrator Administration Logistics TC/RC (1) Cash Cost By product Credits (2) (6.30) (0.14) (0.13) Cash Cost (Net of By product Credits)

18 Lode 1 Showing Increasing Promise Scoping Study Progress Lode 1 Resource released 6.4Mt at 1.8% Cu, 0.44g/t Au and 28g/t Ag Total Lodes 1, 2 and 4 in Measured, Indicated and Inferred is 37.5Mt at 2.2% Cu for 827KCuT Lode 1 Resource now domained into upper copper rich zone and lower zinc rich zone Study focussed on copper Open pit mining studies complete New copper zone Resource near Met testing focus on Cu recovery and commercial concentrate potential Recent results give confidence for potential for additional feed to mill from Lode 1 18

19 Arabian Shield Vastly Underexplored Arabian Shield Mineral rich Oil & gas rich Geology 575,000km 2 of prospective Neo Proterozoic Shield Over 1,000 recorded ancient copper and gold mines in Arabian Shield Wide variety of mineral systems WA Shield (same scale) 1000km Source : U.S. Geological Survey Under explored Exploration expenditure in Arabian Shield over the last 40 years is less than 1 year expenditure on the WA Shield BRGM identified and progressed the shields prospectivity In late 1970 s/early 1980 s Over 6,000 defined prospects and occurrences identified, many of which have not been progressed beyond rudimentary first pass exploration 19

20 Shayban Resource estimate 467,000oz gold equivalent Numerous outcropping gossans +600m long and open along strike and down plunge High grade gold zones open and still to be fully defined Significant alteration halo still to be explored Jabal Shayban and Baydan An extensive VMS system Jabal Baydan VMS Zn/Cu/Au/Ag 5km south Baydan Follow up BRGM high grade zinc drilling One of 3 major trends south of Shayban with two still to be explored Significant intersections announced High grade zinc/copper/gold/silver zones open and drilling continuing Significant alteration halo still to be explored 20

21 Wadi Kamal Targeting intrusive Ni, Cu, PGE Disseminated sulphides observed throughout the intrusion The layered complex is essentially flat lying with only minor undulations on the basal contact Virtually unexplored gossans after massive sulphides mapped over a 10km trend within Citadel s tenement New drill program started Wadi Kamal and Bari Larger systems needing significant exploration Bari Large program of detailed mapping, ground magnetic surveying and sampling completed Proximal indicators of a porphyry system identified Hydrothermal Breccias Argillic alteration assemblages identified in DD Biotite/magnetite alteration Initial drilling program completed and interpretation underway 21

22 Lode 1 Resource Estimates Category Resource (Mt) Cu % KCuT Zn% Au g/t Ag g/t Upper Cu Rich Sulphide Orebody (@0.5%) Measured Indicated Measured + Indicated Inferred Lower Zn Rich Sulphide Orebody (@1.5% Zn) Inferred )Resources are reported at 0.5%Cu and 1.5%Zn cut off grades respectively and inclusive of reserves. 2)Minor rounding errors may occur. 22

23 Lodes 2 and 4 Mineral Resource Estimates (0.8% Cu cut off) Deposit Category Resource (Mt) Cu % Au gpt Ag gpt Contained Cu Metal ( 000t) Lode 2 Measured Indicated Total Lode 2 Measured + Indicated Lode 4 Measured Indicated Total Lode 4 Measured + Indicated Total Lodes 2+4 Measured + Indicated Lode 2 Inferred Lode 4 Inferred Total Lodes 2+4 Inferred Total Resources Lodes 2 &

24 Lodes 2 and 4 Ore Reserve Proved Probable Total Contained Metal Tonnes (Mt) Cu (%) kt Au (g/t) Moz Ag (g/t) Moz The information in this presentation that relates to Mineral Resources is based on information compiled by Geoff Booth, Resources Manager and Neil Inwood Specialist Consultant Resources. Geoff Booth is a full time employee of Citadel Resource Group Limited and a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Geoff Booth consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Neil Inwood is a consultant working for Coffey Mining Pty Ltd and a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Neil Inwood consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this presentation that relates to Ore Reserves is based on information compiled by Peter Wade who is an employee of Coffey Mining Pty Ltd and a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Peter Wade consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 24