Chairman s Address to 2012 AGM Gavan Farley

Transcription

1 Chairman s Address to 2012 AGM Gavan Farley Welcome and thank you for coming to the 2012 Annual General Meeting of Pilbara Minerals Limited. This past year, your Board has been focusing on maintaining the assets we have in the West Pilbara while at the same time looking at projects that will rebalance the Company s portfolio. Our West Pilbara assets are true Greenfield projects whose potential, whilst potentially very high, can take a long time to develop. We have carefully looked at over 12 different projects, ranging from coal in Mongolia, gold in South Africa, PNG and Australia, copper in Chile, and have had presentations and overviews of at least a dozen more. In many of the cases the projects were very good, but we were unable to agree on acceptable commercial terms; that is until we came across the Sturt Resources deal in late June. Proposed Sturt Resources Acquisition As a Director of Indochine Mining Limited, which has the 2Moz gold deposit at Mt Kare in PNG, I am acutely aware both of the enormous potential and of the difficulties of operating in the highlands of PNG Highlands. Looking at the Sturt assets, the Board became convinced that their projects had a unique combination of attributes. In addition to the encouraging drilling and trenching results, the projects have many other elements that we believe are essential to executing a successful project in New Guinea, such as: An already established land owner group, with equity and a desire to see projects developed; Physical accessibility by fixed wing aircraft and in the case of Tamo, barge and track; Quality data from well planned and executed exploration by past companies combined with EU funded aeromagnetics; and Established infrastructure such as an exploration camp and earth moving equipment. We agreed to acquire the assets subject to a number of conditions precedent, the first one being that the ASX agree to the transaction without the Company having to recomply under Chapters 1 and 2 of the Listing Rules. Whilst it took some time, the ASX concurred with our request in late October and we are now in the process of getting an independent experts report to opine on the deal, and subject to that, we will be calling another shareholders meeting to seek approval of the acquisition. We expect that this will happen early next year. As previously announced, the completion of this project will also require the raising of funds, which we propose to do by a combination of private placement and a rights issue, the terms of which will be announced in the near future.

2 In this proposed acquisition we believe we have found the right combination of near term viability and longer term potential all wrapped up in a commercial deal that we believe should add significant shareholder value. In addition, we think that the people assets we are gaining in the form of the two Directors and a CEO in John Young will go a long way to deliver the project. John is here today and will make a detailed presentation and take questions later in this meeting. West Pilbara We have not done any significant field work on these projects in the current licencing year. We have however, continued to do desk studies and to present to selected companies our concepts for major exploration targets in the area. These have been developed by one of our consultants Tim Blake who s ten plus year history of geological mapping the West Pilbara region and extensive research of previous work has led him to propose an exciting exploration concept that has potential for the discovery of major massive nickel sulphide mineralisation. Tim has presented to a variety of major mining and exploration companies, several of whom were interested enough to carry out a detailed analysis of Pilbara s data. Two of the companies expressed significant interest and currently we are discussing potential JV arrangements for the continuing development of the assets. My fellow director Bob Adamson will be happy to answer any technical questions on this after the formal part of the meeting. Corporate The Directors have ensured that the cash burn rate has been kept to a minimum whilst maintaining the assets in good standing and actively pursuing new projects. This concludes my remarks. There will be an opportunity for questions later in the meeting. We will now proceed to the formal part of the meeting and after that we shall hear from Mr John Young, Managing Director of Sturt Resources, and CEO designate of Pilbara Minerals who will take you through the details of the PNG projects. My fellow Director Bob Adamson will be available to discuss some of the technical details of the Company s West Pilbara projects. Thank You Gavan H Farley Executive Director 30 November 2012

3 New Horizons in New Guinea Pilbara Minerals Ltd acquisition of Sturt Resources Ltd

4 Disclaimer This presentation has been prepared by Pilbara Minerals Limited (PLS) for general information purposes only. The presentation is not and should not be considered as an offer or invitation to subscribe for or purchase any securities in PLS, or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in PLS will be entered into on the basis of this presentation. This presentation may contain certain forward looking statements which have not been based solely on historical facts but rather on PLS s current expectations about future events and a number of assumptions which are subject to significant uncertainties and contingencies many of which are outside the control of PLS and its directors, officers and advisers. Due care and attention has been taken in the preparation of this presentation. However, the information contained in this presentation (other than as specifically stated) has not been independently verified for PLS or its directors and officers, nor has it been audited. Accordingly, the company does not warrant or represent that the information contained in this presentation is accurate or complete. To the fullest extent permitted by law, no liability, however arising, will be accepted by PLS or it s directors, officers or advisers, for the fairness, accuracy or completeness of the information contained in the presentation. The information herein that relates to Exploration Results is based on information compiled by Robert G Adamson B.Sc, M.Sc.(Hons Geol), MAIMM, CP( Geo). Mr Adamson is the principal of Robert G Adamson Consultants which provides certain consultancy services to Pilbara Minerals Limited. Mr Adamson has more than five years experience which is relevant to the style of mineralisation and type of deposit being reported and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves (the JORC Code).This public report is issued with the prior written consent of the Competent Person as to the form and context in which it appears.

5 Overview Pilbara Minerals Ltd has agreed to acquire 100% of Sturt Resources Ltd with an all scrip offer of 162 million PLS shares Sturt Resources Ltd controls or has the rights to control two major copper/gold and gold projects in PNG Pilbara believes that these projects will revitalise the company and add significant shareholder value Pilbara intends to continue activities on its West Pilbara tenements directly and/or through a JV

6 Why PNG? PNG is home to some of the largestgold copper gold copper projects in the world PNG is a world class mineral province, endowed with gold, copper, silver and nickel, with proven hydrocarbon systems undergoing major development PNG has a favourable fiscal and well established legal framework particularly for mineral projects and has demonstrated government support for the minerals exploration and mining

7 Why Sturt Resources? Highly Prospective Ground Ready to drill targets Abundance of valuable data from previous explorers Excellent Mix of Projects Longer term large scale hard rock prospects Medium term large scale projects Shorter term fast production potential of Tamo project Landowner Agreements already in place Landowners have equity Landowners well organised and enthusiastic about development Manageable Logistics Fixed wing and helicopter accessibility Barge and track access to Tamo project Significant equipment already on site Experienced Hands on Management John Young MAusIMM CEO Neil Biddle MAusIMM Director

8 Malaumanda Joint Venture covers over 4600sq km in some of the most prospective underexplored terrains in the central highlands, well located between Frieda River (+16Moz Au) and Porgera (+32Moz Au) EL1989 granted: Sturt holds 60%, earning up to 80%; local landowner Development Corp (MDC) 20% Three advanced d drill ready epithermal QV targets (potential for +1Moz Au) in EL1989 Strong porphyry copper potential: 10 targets identified for follow up on granting of ELAs 1915, 1916 and 2071 Existing camp and airstrip at Malaumanda Malaumanda JV

9 Malaumanda JV Prospects Malaumanda Prospects & Geological Setting

10 Koiti Prospect Malaumanda Historic Trenching and Drilling at Koiti

11 Lodon & Millikap Prospects Malaumanda Historic Trenching and Drilling at Lodon & Millikap

12 New Malaumanda Targets New targets at Yape South & Lodon 310

13 New Malaumanda Target Lodon 310 Soil & stream sediment geochemical sampling at Lodon

14 New Malaumanda Target South Yape Soil & stream sediment geochemical sampling at South Yape

15 Malaumanda Regional Targets Magnetics

16 Malaumanda Regional Targets Geology Rank Features C-10 Yokopos Porphyry Cu-Au Target C-16 Intrusive contact/ skarn style target N-6 Porphyry Cu-Au Target N-5 Porphyry Cu-Au Target At northern, faulted margin of the 4 Karawari Batholith (Tmr), mag alteration, K anomalism, Cu, Zn prospects Enhanced K in structural zone at southern margin of Tmr. Major EW fault, NNE fault/contact and weak mag low zone Complex mag variation related to EW fracture. Local small mag dipole and Th anomalies, but overall low in radioelements. Exposed granitic intrusion with associated Cu mineralisation. k enhancement and mag anomaly N-3 Porphyry Cu-Au Target 7 Mag feature in WNW structural zone. Coincident topo high, weak rad (mainly Th) expression, mapped intrusion. W-19 Porphyry Cu-Au Target FW-28 Porphyry Cu-Au Target Milikap/Milikap North Target Intrusive vein style structural Au Mag and rad complex in NW structural 9 corridor. Mag flat zone with 2 satellite K highs at margin 10 Granitoid intrusion into segmented ultramafic sheet, controlled by EW fractures. Clear mag expression, Cu-Au min 3 Previous drilling at Milikap and Koiti Yape Target Porphyry Cu-Au LodonTops Au-Cu Target Intrusive vein style structural 1 2 Previous ground geochemistry outlines large area of anomalous Cu/Au and Mo, mag low Previous drilling on 310 structure has significant Au intersection over 1km

17 Tamo JV Early Placer Gold Production Potential Agreements with Maka Alluvial Gold Mining Limited (landowners) and with Brothers & Together Potential for alluvial gold resources in 3 environs: placers within terraced river banks, modern placers, flood plains Pilot test work along a 7 km stretch of Tupuka River has recovered nuggets ranging 0.1gm to > 30gm in size Gold resource potential in lower terraces of the Tupuka River where auriferous placer deposits average 1.5m thickness Extensive gold bearing terraces of the Clay River yet to be tested Modern mining equipment and plant on site Recoveries to be optimised with modest capital expenditure

18 Tamo JV Tamo production target of 65,000oz Au p.a. Initial cash flow from the Tupukaoperations to support ongoing exploration and development Pre production Exploration: $635K Establishment of minimum 2 years resource potential along the Tupuka river Phase 1 Tupuka River Production: $2.45M Funding for development and production aim to operate the gold recovery plant to demonstrate profitability and to establish operating data for scale up; targeting 15,000oz Au annual production in 2013/14 Phase 2 Clay River Exploration and Feasibility Exploration along the Clay River targeting a 350,000oz 000oz Au resource Phase 3 Clay River Production Establishment of second gold recovery plant on Clay River targeting 50,000oz p.a. Au for a 7 year life

19 Phase 1 (cost estimates prepared by Sturt Resources) Tamo JV Production start up based on 12hrs day 700,000 tpa Assumed head gadeo grade of 08g/bc 0.8g/bcm, recovery e 80% Secure gold room facilities, mining camp, maintenance workshop, lighting equipment Upgrade of fine gold recovery equipment, (IPJ/Falcon gravity). Purchase D7dozer, two Volvo 25 tonne 6WD Trucks BUDGET - CAPEX Items A$ Cost EIA $25,000 Plant Construction (inc PPE) $515,000 Working Capex (Initial stocking + fuel) $150,000 Site vehicles $50,000 Telecommunication $50,000 Housing & Offices $100,000 Road upgrade $50,000 Power supply and reticulation $265,000 Water for process and potable $65,000 Mining Contractor Establishment $80,000 Dozer $250,000 Trucks x 2 $400,000 Tails dam construction $50,000 Contingency $405,000 Total CAPEX $2,455,000 CASHFLOW - Summary Assumptions Year 1 Year 2 Gold Price/oz $1, Total Oz produced 15,000 15,000 SALES $22,500,000 $22,500,000 Waste (per tonne mined 0.5 strip ratio) $1.50 $630, $630, Ore (per tonne mined) $4.50 $3,780,000 $3,780,000 Rehandle (% of Ore Mined) 80% Rehandle cost/t $0.50 $336,000 $336,000 Grade control (per tonne mined) $0.10 $84,000 $84,000 Processing (per tonne of ore) $4.00 $3,360,000 $3,360,000 General & Administration (per year) $0.5 $420,000 $420,000 Total Cost of Production $11.10t $8,610,000 $8,610,000 Gross Profit before Royalty & Income Tax $13,890,000 $13,890,000 Maka Royalty 10% $2,250,000 $2,250,000 Operating Profit before Tax $11,640,000 $11,640,000

20 Tamo JV Photos of existing operation. All equipment shown belongs to the JV being acquired by Pilbara

21 Capital Structure Pilbara Minerals Ltd. Capital Structure Current Post Acquisition Shares Currently on Issue 55,475,000 55,475,000 Options ( Expiring Dec 2012) 33,000,000 Other Options Exp Dec c 1,000,000 Note Capital Raising Pacement 15% 8,321,250 Rights Issue 63,796,250 72,117,500 1 Sturt Acquisition Issue of shares to Sturt 162,000, ,000,000 2 Total Shares on Issue 289,592,500 Options 1,000,000 3 Notes 1Capital raising as part of the conditions precedent 2All 162 million shares are subject to an ASX mandated escrow for 12 months will be escrowed 3By the time transaction is complete the 33 million options will have expired

22 Proposed Board & Management BOARD Gavan H Farley Non Executive Director Mr Farley a has had over 30 years experience in Engineering and Finance throughout the world. Mr Farley is also a non executive director of ASX listed Indochine Mining Ltd., the owner and developer of the Mt Kare Gold project in PNG. Robert G Adamson - Non Executive Director Mr Adamson is a geologist who from 1966 to 1993 worked with international mining houses and junior exploration and mining companies. Since 1993, he has operated an independent mineral industry consultancy in mineral exploration and mining for gold, base metals, diamonds and semi-precious stones. He is a Member of The AusIMM and the Mining Industry Consultants Association. Tony Leibowitz it Non Executive Director Mr Leibowitz is a Fellow of The Institute of Chartered Accountants in Australia, has over 30 years professional experience and was previously a senior partner with Price Waterhouse Coopers in Corporate Finance and Investment Banking. Neil G Biddle - Non Executive Director Mr Biddle is a geologist and Corporate Member of The AusIMM with over 30 years professional and management experience in the global exploration and mining industry. Since 1987 Mr Biddle has served on the Board of several ASX listed companies. MANAGEMENT John A Young - CEO Mr Young is a geologist and Corporate Member of The AusIMM with over 25 years experience in resource project management, and has worked on a wide variety of mineral and resource projects throughout Australasia and Africa.

23 Transaction Time Table November 2012 Preparation of Independent Expert Report Pilbara AGM 30 th Nov December 2012 Notice of Meeting ~10 th Dec Rights Issue launch Completion of Due Diligence January 2013 Shareholders meeting to approve Transaction ~ late January 2013 Completion of acquisition early Feb 2013