Oxiana and Zinifex merger. Strength Diversity Growth March 2008

Transcription

1 Oxiana and Zinifex merger Strength Diversity Growth March 2008 Page 1

2 Important notice The purpose of this material is to provide general information about the proposed transaction between Oxiana Limited ( Oxiana ) and Zinifex Limited ( Zinifex ). This material is not and does not constitute an offer, invitation or recommendation to subscribe for, or purchase any shares. Neither this material nor anything contained in it shall form the basis of any contract or commitment. Reliance should not be placed on the information or opinions contained in this material. This material does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Any decision to purchase or subscribe for shares should only be made after undertaking an independent assessment and determination as to the information to be contained in the Scheme Booklet to be subsequently issued and after seeking appropriate financial advice. 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 material. To the maximum extent permitted by law, Oxiana, Zinifex and their affiliates and related bodies corporate, and their respective officers, directors, employees, agents and advisers disclaim any liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or its contents, including any error or omission therefrom, or otherwise arising in connection with it. Any forecasts and other forward-looking statements set out in this material are based on a number of estimates, assumptions and pro forma adjustments that are subject to business, economic and competitive uncertainties and contingencies, with respect to future business decisions, which are subject to change and in many cases outside the control of Oxiana and Zinifex. Any forecasts contained in this material may vary from actual financial results, and these variations may be material and, accordingly, neither Company nor their Directors can give any assurance that the forecast performance in any forecasts or any forward-looking statement contained in this material will be achieved. Neither Company undertakes to revise the material to reflect any future events or circumstances. This material may not be lawfully published in some jurisdictions or may only be provided to certain persons and you must not view this material if to do so would be unlawful in your jurisdiction or may otherwise place either Company under obligations which it has not complied with. All figures are expressed in Australian dollars unless stated otherwise. Page 2

3 Presenters Mr Owen Hegarty Mr Andrew Michelmore Chief Executive Officer and Managing Director Oxiana Chief Executive Officer and Managing Director Zinifex Page 3

4 Agenda 1. OPENING REMARKS 5 2. MERGER SUMMARY 6 3. TRANSACTION RATIONALE 7 4. QUESTIONS & ANSWERS Page 4

5 1 Building a platform for growth Combined vision to build a major diversified mining company A true 50 / 50 merger of equals equal sharing of benefits Zinifex Scheme of Arrangement Oxiana shares per Zinifex share Combines two highly complementary asset portfolios, growth profiles, cash flow and balance sheet profiles, market positions and management teams Strategically positioned to capture continued strong demand growth Financial strength and management capability to accelerate growth Page 5

6 2 Merger summary Merger terms Oxiana shares for every Zinifex share Ownership Oxiana 50% / Zinifex 50% Structure Company name and headquarters Conditions Indicative timetable Merger unanimously recommended by both Boards Implemented via Zinifex Scheme of Arrangement Approximately 3,101 million shares outstanding upon completion Mutual break fee of $55 million New name for the combined entity to be determined Corporate headquarters in Melbourne Zinifex shareholder vote (75% of shares voted and 50% of shareholders voting) Other customary conditions and Court approval Scheme Booklet dispatched April 2008 / May 2008 Zinifex shareholder vote May 2008 / June 2008 Page 6

7 3 Creating a major diversified mining company A strong platform to deliver superior growth A B C D E F G H I Enhanced market position Complementary portfolios High quality assets A diversified company Strong cash flows and balance sheet Sustainable demand for commodities Strategic focus Strong and complementary development pipeline Experienced Board and management team Page 7

8 A Enhanced market position Top 25 ASX company and 3 rd largest Australian diversified mining company S&P/ASX 200 (Resources companies¹) Global mining peers * BHP Billiton Grupo Mexico 19.3 * Rio Tinto Teck Cominco 18.6 Fortescue Metals Newcrest * Combined Lihir Gold Alumina Oxiana Zinifex Aquarius Platinum Paladin Energy Antofagasta Vedanta Combined First Quantum Oxiana Zinifex Ivanhoe Inmet Mount Gibson 2.8 Lundin 3.6 Kagara Zinc 1.1 Equinox 3.5 Independence 1.1 HudBay (A$ billion market capitalisation) (A$ billion market capitalisation) Source: Bloomberg and Datastream as at 29 February 2008 Note: 1. * Denotes diversified mining companies Page 8

9 B Complementary portfolios Complementary asset portfolios with leverage to continued global growth Operations Australia 1. Century (zinc/lead) 2. Golden Grove (zinc/copper/gold/silver) 3. Rosebery (zinc/lead/copper/gold/silver) Laos Sepon Copper (copper) 5. Sepon Gold (gold) Projects under development Australia Prominent Hill (copper/gold) Indonesia 7 7. Martabe (gold/silver) Laos Sepon Copper expansion (copper) Project pipeline Australia Oxiana assets Zinifex assets Oxiana exploration focus Zinifex exploration focus 9. Dugald River (zinc/lead/silver) Canada 10. High Lake (zinc/copper) 11. Izok Lake (zinc/copper) Laos 12. Sepon Gold expansion (gold) Page 9

10 C High quality assets Diversified portfolio with attractive asset characteristics Significant scale World s second largest zinc producer by mine production 200kt pa copper producer post Prominent Hill High grade mines High quality / low impurities concentrate Copper cathode production at Sepon Long mine life Significant reserve and resource base Further exploration upside Cost competitive Large scale zinc and copper producer with competitive cost position Page 10

11 D A diversified company Broader operational and geographic footprint provides stability gross revenue by metal 2 Copper 53% Silver 4% Zinc 30% Gold 10% Lead 4% + Gold 1% Lead 7% Silver 4% Copper 1% Zinc 87% = Silver 4% Gold 5% Lead 6% Copper 23% Prominent Hill development Zinc 63% gross revenue by geography Laos 22% Laos 55% + = Indonesia and Canada Australia 45% Australia 100% Australia 78% Oxiana Zinifex Combined Note: 1. Pro forma for the year ended 31 December Zinifex revenue split based on production for the year ended 31 December 2007 multiplied by average London Metal Exchange and Comex metals prices for the equivalent period Page 11

12 E Strong cash flows and balance sheet Financial strength to support growth strategy Combined pro forma EBITDA of $1,666 million for 2007¹ Combined pro forma NPAT of $918 million for 2007¹ Combined cash on hand of $2,474 million as at 31 December 2007 Combined interest-bearing debt of $539 million as at 31 December 2007 Combined net cash balance of $1,935 million as at 31 December 2007 Source: Company financial reports Note: 1. For the year ended 31 December Based on continuing operations for Zinifex Page 12

13 F Sustainable demand for commodities Well positioned to capture continued strong global growth in demand Market fundamentals remain attractive Growth in China remains robust Supported by increasing growth from India, Brazil, Russia and the rest of Asia Comparative copper intensity Comparative zinc intensity kg/capita/annum kg/capita/annum Japan Korea China Japan Korea China Source: Broker research Source: Broker research Page 13

14 G Strategic focus Pursue the shared vision of becoming a major global diversified mining company, with growing, competitive and sustainable operations Maintain and grow the core base and precious metals businesses and increasingly diversify the operations across different commodities and geographies Leverage the combined financial strength and management capability to capture the opportunity set presented in the global commodities market Generate superior sustainable growth in shareholder value Maintain the highest standards for health, safety, environment and community Page 14

15 H Strong and complementary development pipeline The combined company is well positioned to deliver superior growth Prominent Hill Copper / gold project Martabe Gold / silver project Rosebery Upgrade Sepon Copper Copper expansion Prominent Hill UG expansion Stage 1 Izok Lake Zinc / copper Prominent Hill UG expansion Stage Golden Grove Oxide pit Sepon Gold Primary gold project Dugald River Zinc / lead / silver Golden Grove Copper sulphide pit High Lake Zinc / copper Selective acquisition strategy to accelerate growth Oxiana project Zinifex project Page 15

16 I Experienced Board and management team Highly experienced Board Innovative and experienced management team Extensive global and domestic mining expertise Proven track record in operating global assets and implementing development projects A history of delivering long term growth All Oxiana and Zinifex directors invited to join the Board Senior management will be drawn from existing management teams Limited overlap of roles given complementary operations Board of Directors and CEO Barry Cusack, Chairman Combination of two individual Boards Andrew Michelmore, Chief Executive Officer and Managing Director Owen Hegarty, Non-Executive Director and Chairman of the Board Integration Committee Senior management Andrew Michelmore, Chief Executive Officer and Managing Director Resourced to grow Page 16

17 Oxiana and Zinifex merger Strength Diversity Growth Page 17

18 APPENDIX A Pro-forma overview 1 Note: 1. Excludes impact of Allegiance Page 18

19 Pro forma reserves & resources Reserves 1 Resources 1, 2 Oxiana Zinifex Combined Oxiana Zinifex Combined Zinc (Kt) , ,235.0 Zinc (Kt) 1, , ,807.6 Copper (Kt) 1, ,878.0 Copper (Kt) 4, ,815.7 Gold (Moz) Gold (Moz) Silver (Moz) Silver (Moz) Nickel (Kt) Nickel (Kt) Lead (Kt) Lead (Kt) , ,599.1 Cobalt (Kt) Cobalt (Kt) Notes: % basis, contained metal 2. Resources are inclusive of reserves Page 19

20 Pro forma financials & production Pro forma financials (2007 calendar year) Oxiana Zinifex 1 Combined Gross revenue ($m) 1, , ,834.8 EBITDA ($m) , ,666.5 NPAT ($m) Cash on hand ($m) , ,474.1 Interest-bearing debt ($m) Notes: 1. Sum of reported results for second half 2006/7 and first half 2007/8 based on continuing operations Pro forma production (2007 calendar year) 1 Oxiana Zinifex Combined Zinc (Kt) Copper (Kt) Lead (Kt) Gold (Koz) Silver (Koz) 3, , ,261.2 Note: % basis Page 20

21 APPENDIX B Asset overviews Page 21

22 Century (Zinifex) Overview Ownership Reserves Resources 1 CY2007A production Estimated mine life Queensland, Australia 100% 11.2% Zn, 1.1% Pb, 25.0g/t Ag 12.5% Zn, 1.4% Pb, 34.1g/t Ag 527 Kt Zn 44 Kt Pb 4 Moz Ag 7+ years Note: 1. Measured, indicated and inferred Century Page 22

23 Golden Grove (Oxiana) Overview Ownership Reserves Resources 1 CY2007A production Estimated mine life Western Australia, Australia 100% 2.0% Cu, 6.1% Zn, 0.7% Pb, 0.9g/t Au, 46.2g/t Ag 1.9% Cu, 4.0% Zn, 0.4% Pb, 0.8g/t Au, 40.6g/t Ag 132 Kt Zn 15 Kt Cu 8 Kt Pb 49 Koz Au 3 Moz Ag 7+ years Golden Grove Note: 1. Measured, indicated and inferred Page 23

24 Rosebery (Zinifex) Overview Ownership Reserves Resources 1 CY2007A production Estimated mine life Tasmania, Australia 100% 11.9% Zn, 3.2% Pb, 115.0g/t Ag, 1.7g/t Au, 0.4% Cu 12.1% Zn, 3.6% Pb, 135.2g/t Ag, 1.8g/t Au, 0.4% Cu 84 Kt Zn 22 Kt Pb 3 Moz Ag 31 Koz Au 2 Kt Cu 12+ years Rosebery Note: 1. Measured, indicated and inferred Page 24

25 Sepon (Oxiana) Overview Ownership¹ Reserves Resources 2 CY2007A production Estimated mine life Sepon, Laos 90% Sepon Gold: 1.6g/t Au, 2.8g/t Ag Sepon Copper: 4.6% Cu Sepon Gold: 1.8g/t Au, 6.4g/t Ag Sepon Copper: 2.4% Cu, 12.0g/t Ag 102 Koz Au 145 Koz Ag 63 Kt Cu Sepon Gold: 2+ years Sepon Copper: 10+ years Notes: 1. 10% owned by Government of Laos; figures shown on 100% basis 2. Measured, indicated and inferred Sepon, Laos Page 25

26 Prominent Hill (Oxiana) Overview Prominent Hill Ownership Reserves Resources 1 Expected first production CY2008E production CY2009E production Estimated mine life Estimated capital costs South Australia, Australia 100% 1.3% Cu, 0.6g/ Au, 3.2g/t Ag Copper/Gold: 1.2% Cu, 0.5g/t Au, 2.9g/t Ag Gold Only: 1.1g/t Au, 1.2 g/t Ag Second half Kt Cu 15 Koz Au 75 Koz Ag 117 Kt Cu 86 Koz Au 390 Koz Ag 10 years for Stage 1 open pit. Underground expansion capable of supporting significant additional mine life $1.1 billion Note: 1. Measured, indicated and inferred Page 26

27 Martabe (Oxiana) Overview Ownership Reserves Resources 2 Project status Expected first production Estimated production Estimated mine life Estimated capital costs North Sumatra, Indonesia 100% 1 1.9g/t Au, 24.9g/t Ag 1.3g/t Au, 13.5g/t Ag Approved Koz Au 2 Moz Ag 9 year initial mine life US$310 million Martabe, Indonesia Notes: 1. 5% held in trust for local Indonesian stakeholders; figures shown on 100% basis 2. Measured, indicated, inferred Page 27

28 Dugald River (Zinifex) Overview Ownership Reserves Resources 1 Project status Expected first production Estimated mine life Queensland, Australia 100% na 12.1% Zn, 2.1% Pb, 44.0g/t Ag Development years Note: 1. Measured, indicated and inferred Dugald River Page 28

29 High Lake (Zinifex) Overview Ownership Reserves Resources 1 Project status Expected first production Estimated mine life Nunavut, Canada 100% na 3.4% Zn, 0.3% Pb, 70.1g/t Ag, 1.0g/t Au, 2.3% Cu Development years Note: 1. Measured, indicated and inferred High Lake Page 29

30 Izok Lake (Zinifex) Overview Ownership Reserves Resources 1 Project status Expected first production Estimated mine life Nunavut, Canada 100% na 12.7% Zn, 1.3% Pb, 70.5g/t Ag, 2.5% Cu Development years Note: 1. Measured, indicated and inferred Izok Lake Page 30