AVANTI MINING INC. Kitsault: A Moly Asset Timed to Economic Recovery. Analyst Tour, August 2009

Transcription

1 AVANTI MINING INC. Kitsault: A Moly Asset Timed to Economic Recovery Analyst Tour, August 2009

2 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This presentation contains certain forward-looking information concerning the business of Avanti Mining Inc. (the Corporation ). All statements, other than statements of historical fact, included herein including, without limitation; anticipated dates for receipt of permits and approvals, construction and production, and other milestones; anticipated results of drilling programs, feasibility studies and other analyses; estimated timing and amounts of future expenditures, and the Corporation s future production, operating and capital costs, operating or financial performance, are forward-looking statements. These forward-looking statements are based on the opinions of management at the date the statements are made and are based on assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events to differ materially from those projected in forward-looking statements. Important factors that could cause actual results to differ materially from the Corporation s expectations include fluctuations in commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies and native groups in the exploration and development of properties and the issuance of required permits; the need to obtain additional financing to develop properties and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals; and other risks and uncertainties disclosed in the Corporation s prospectus dated July 31, 2007, which is available at www. Sedar.com. The Corporation is under no obligation to update forward-looking statements if circumstances or management s opinions should change, except as required by applicable securities laws. The viewer is cautioned not to place undue reliance on forward-looking statements. This presentation may also contain future-oriented financial information ( FOFI ) and information which could be considered to be in the nature of a financial outlook. Such FOFI or financial outlook was approved by Management as of September 18, 2008 for the purpose of providing Management s reasonable estimate of what return investors might expect to earn based on the assumptions set forth in such estimates and the information may not be appropriate for other purposes. Management cautions that such FOFI or financial outlook reflects the Corporation s current beliefs and are based on information currently available to the Corporation and on assumptions the Corporation believes are reasonable. Actual results and developments may differ materially from results and developments discussed in the FOFI or financial outlook as they are subject to a number of significant risks and uncertainties. Certain of these risks and uncertainties are beyond the Corporation s control. Consequently, all of the FOFI or financial outlook are qualified by these cautionary statements, and there can be no assurances that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effect on, the Corporation. 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 Standards of Disclosure for Mineral Projects ( NI )), 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 into 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 NI Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. THIS PRESENTATION IS NOT AN OFFER TO PURCHASE SECURITIES AND DOES NOT CONSTITUTE AN OFFERING DOCUMENT UNDER SECURITIES LEGISLATION. ANY UNAUTHORIZED DISSEMINATION OR USE OF THIS PRESENTATION IS STRICTLY PROHIBITED. 2

3 COMPANY OVERVIEW Listed on TSX-V: AVT 152 million shares outstanding 167 million fully diluted 7.1 million options at Cdn$.10 - $ million warrants at Cdn$.90 expiring November 27, % owned Kitsault Moly Mine Purchased for US$20 million in Oct 2008 Past producer, located in British Columbia New PFS due in Oct 2009 Warrants exercised (99.3% of total) prior to August 17, 2009 Current (Aug ) cash balance C$5.2 million Strong board and management team 3

4 Management Craig J Nelsen President & CEO 30 years exploration and development experience Previously with Gold Fields, Metallica Resources and Lac Minerals Director of New Gold A J Ali CFO 35 years mining financial experience Previously with Denison Mines, Vista Gold, EuroZinc and Centenario Copper Cheryl A Martin VP Investor Relations & Corporate Secretary 30 years Investor Relations experience Previously with Gold Fields, Canyon Resources, Wharf Resources and various oil and gas companies Robert Blair VP Exploration Thomas Gunthardt Project Manager 40 years Exploration and Development experience Previously with Cyprus - Amax, Climax, Getty Minerals and Coeur d Alene Extensive international experience managing development projects from Prefeasibility studies to construction Worked for Newmont 1996 to 2009, recently as project manager for an iron ore Prefeasibility study in Guinea Previously with Bechtel, Kilborn & Minproc 4

5 Directors & Advisors Board of Directors Strategic Advisors 5

6 Kitsault Acquisition Financing Kitsault acquired on October 17, 2008 Financed with US$20 million bridge loan from RCF that converted to a convertible debenture on July 15, 2009 Interest rate > of 8% or LIBOR plus 3% Payable quarterly in cash or common shares Term four years to July 15, 2012 Lender has right to convert loan into Units at any time during the four-year term Unit consist of one common share and one half of one common share purchase warrant Conversion Price is lower of 30 day VWAP on the date RCF chooses to convert and $0.24 per share (min $0.10) Warrants are for four years with conversion at 35% premium to Conversion Price If converted at today s exchange rate at $0.24 RCF would own 50.4% (I&O) or 55.4% (FD) assuming no other equity issues

7 Key Project Highlights High-grade Resource One of the top five primary moly development assets in the world Existing Infrastructure Past Producer Support of Local Communities Rapid Development Plan 7

8 Kitsault and Other British Columbia Moly Locations Kitsault discovered in 1916 Produced for two periods & Prince Rupert Produced 30 mm lbs of Mo from 13.4 mm tonnes milled 8

9 Kitsault Historical Production mm Mo lbs recovered head grade Historical Production: 30.0 mm lbs Mo Average Grade: 0.111% % % % % % 0.126% % * Calculated Head Grade at 90% Historic Mill Recovery - BC Minfile data 9

10 Resources Kitsault Deposit Compliant Resources* March 31, 2009 Resource Classification Ore Grade Contained Metal Mo Ag Lead WO3 Mo Ag Lead WO3 mm tonnes % g/t % % mm lbs mm ozs mm lbs mm lbs Measured** Indicated** Measured** and Indicated** Inferred** *Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures have been rounded to reflect the relative accuracy of the estimates. The cut-off grades are based on metal price assumptions of US$20.00/lb of molybdenum, and a metallurgical recovery of eighty-nine percent of molybdenum. Silver, Lead and WO3 were not used in the pit optimization. **Reported as a cut-off grade of 0.04% Molybdenum contained within a potentially economically mineable open pit. Historical Resources Deposit Resource Classification Ore Grade Contained Metal Mo Mo Source mm tonnes % mm lbs Kitsault Mine Proven and Probable Reserve % Amax K and BC Minfile Report Bell Moly Unclassified Amax Resource % Amax Jan 1979 report Roundy Creek Unclassified Resource % 16.9 Woodstock and Carter, CIM Sp 15, 1976 Included in Roundy Creek Sunshine Zone % 0.3 Woodstock and Carter, CIM Sp 15, 1976 Sunlight Zone % 6.2 Woodstock and Carter, CIM Sp 15, 1976 Note: Historic resource estimates do not comply with the CIM terminology under Canadian Securities Administrators NI guidelines. The reader is cautioned that these estimates are not mineral reserves and should not be relied upon. Avanti considers these resources as relevant and they were reported by Dr. Roger C. Steininger, CPG an independent qualified person (QP) under , in the above report. Dr. Steininger is responsible for the technical aspects of these historical resources and all other information excluding resources in the Aug 5, Technical Report on Resources. 10

11 Kitsault Land Map 11

12 Regional Geology Western part of Bowser Basin lower Jurassic to upper Cretaceous sediments and volcanics Within 1-3 km of contact with Coastal Plutonic Complex (70 Ma) Numerous Alice Arm intrusives most show Mo mineralization (50 55 Ma) Cut by Lamprophyre Dikes (36 Ma) Overlain by plateau-type basalt flows (1.8 Ma)

13 District Geology

14 Lime Creek Intrusive Complex

15 Kitsault Deposit Surface Geology

16 Kitsault 450 m Level Plan Geology

17 450 m Level Plan Block Model

18 Section N - Geology

19 Section N Block Model

20 Mine Site In 1998 Road to Clary Dump Pit Shop Area Lower Grade Ore Stockpile Overburden Stock Piles Patsy Dump Central Core Open Pit Area Orange Pond Lime Creek Mill Area Sediment Pond Patsy Creek 20

21 PEA Site Plan

22 PFS Alternative TSF Site

23 Preliminary Economic Assessment 190 million tonnes of Resources High-grade mine with a 15 year life Grading 0.096% Mo 363 million pounds of Molybdenum (25.6 million pounds/yr) Strip Ratio of 0.85:1 Averaging 40,000 tpd Recovery rate of 90% 23

24 Preliminary Economic Assessment Capital Costs of $424 million Positive Economics at an average LOM moly price of $17.45 Operating Costs of $5.97/lb After tax NPV (8%) = $681 million IRR of 29.7% After tax net cash flow of US $1.7 billion Less than three year pay back 350 direct jobs to provide economic benefit 24

25 NPV Sensitivity Analysis Based on Long Term price of $17.00 Mo NPV 8% (US $000s) 25

26 Project Price Sensitivity to Moly Price Robust Returns LOM Moly Price NPV (After Tax) IRR (After Tax) CPM Base Case 1 $17.45 $681 million 30% Analyst Consensus 2 $15.33 $471 million 25% CPM April 2009 Update $14.67 $374 million 21% Flat Price $12.50 $138 million 13% 1 CPM Group is a leading commodities market research, consulting, asset management, and investment-banking firm. 2 Consensus derived from over 18 commodity analysts taken in October

27 The Right Team of Contractors / Consultants Environmental Assessment ) Prefeasibility Lead Engineer Proposed Working Group Project Consultation Indigenuity Consulting Group Incorporated Strategic Planning First Nations Consultation TSF Design Site Water Balance RoR Hydro Resource Audit Geotechnical Reclamation ARD Assessment Metallurgy Permitting Socio-Economic Study 27

28 Permitting/Approval Strategy Two approaches have been identified and reviewed with BC EAO: 1. Amendment to existing M-10 Mines Act Permit MEMPR Lead Agency 2. Environmental Assessment under BC EA Act New facility - > 75,000 t/year Modification - >750 ha or > 50% of previous unpermitted development BC EAO has advised that the project does not trigger the Provincial EA process and that either approach can be used. Avanti has decided to pursue the Mines Act Permit Amendment route. 28

29 Nisga a Neighbors One of Canada s few modern-day First Nation Treaties Communication Protocol Signed December 2008 The Nisga a Treaty clearly demarcates the land and mineral title ownership Kitsault creates high paying jobs, providing economic benefit to the local communities 29

30 Near-term Project Objectives Pre-feasibility Pre-feasibility Study Study (Oct (Oct 2009) 2009) Updated mine plan Updated mine plan Tailing alternatives Tailing alternatives Complete ARD assessment Complete ARD assessment Preliminary plant design and infrastructure Preliminary plant design and infrastructure Permitting Application (Mar 2010) Bankable Bankable Feasibility Feasibility Study Study (Q3 (Q3 2010) 2010) Advancing toward development Updated Updated Resources Resources (Mar (Mar 2009) 2009) Based on 10,000 meter drill Based on 10,000 meter drill program completed in 2008 program completed in 2008 Estimated Start of Construction Initial Permit Submission (Aug 2009) Commercial Production 30

31 Development Project Comparison Project Name Development Resource Infrastructure Location Decision Tonnes Grade Strip Access Power Comments Climax (Freeport-McMoRan) 2007 Colorado % n/a Shelved until market improves Mt. Hope (General Moly) 2008 Nevada 1, % 1.8 Construction Financing stage Spinifex Ridge (Moly Mines) 2008 Australia 1, % 1.3 Reduced capacity plans by 50% Ruby Creek (Adanac) 2008 B.C % 1.0 Bankrupt Malmbjerg (Quadra) 2010 Greenland % n/a Lucky Jack (US Energy Corp.) 2012 Colorado % n/a Creston (Creston Moly) n/a Mexico % 1.0 Kitsault (Avanti) 2009 B.C % 0.85 Delayed until market improves Environmental/permitting concerns Feasibility study delayed due to low moly prices Prior mining operation, pre-feasibility stage All assets shown on a 100% basis 31

32 Timing the Start-up Molybdenum Supply/Demand Model World Molybdenum Supply & Demand Consumption Trends (million of pounds) E 2010E 2011E 2012E Total World Supply Total World Consumption Balance (23) (4) (2) Molybdenum Price $26.31 $31.50 $28.73 $8.65 $11.00 $16.45 $20.50 Source: CPM Group, April 2009 Kitsault Timeline 32

33 Conclusion High-quality, world class deposit that can be quickly developed Catching up to major projects that are currently curtailed Robust economics Mining friendly jurisdiction Community support Proven Management and Board of Directors 33

34 TSX-V: AVT