Gold Miner. Community Builder.

Transcription

1 Gold Miner. Community Builder. Fruta del Norte A new gold mine is coming Investor Update - January 2017

2 Disclaimers Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of Forward-looking statements relate to future events or the anticipated performance of Fortress Minerals Corp. (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, vision, budget, scheduled, estimates, forecasts, potential, 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, risks and uncertainties relative to the completion of the transaction described herein and the ability to realize the anticipated benefits thereof, fluctuations in spot and forward markets for gold, silver and other metals, fluctuations in currency markets, changes in national and local governments in Ecuador 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 the Company s offering memorandum 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 are, or will be available, for review on SEDAR at 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 Economic 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. The technical information contained in this presentation relating to the Fruta Del Norte Project is based on an NI Technical Report, prepared for the Company entitled Technical Report on the Mineral Resource Estimate, Fruta del Norte Project, Ecuador dated October 21, 2014 (the FDN Technical Report (October 21, 2014) ) by Roscoe Postle Associates Inc. and authored by independent qualified persons (within the meaning of NI ) Luke Evans, P.Eng., David Ross, P.Geo., and Brenna Scholey, P.Eng. Ron Hochstein, the Chairman of the Company, who is a qualified person has reviewed and approved the technical information in this presentation. 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, all dollar values herein are in US$. U.S. Securities Law Disclaimer This presentation is not an offer of securities for sale in the United States or in any other jurisdiction. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state of the United States and, subject to certain exceptions, may not be offered or sold within the United States. The securities have not been approved or disapproved by the United States Securities and Exchange Commission or by any state securities commission or regulatory authority, nor have any of the foregoing authorities passed on the accuracy or adequacy of the information included in this presentation 2

3 Fruta del Norte is a large gold deposit located in Ecuador Bonza Alejandro Puente Princesa Rio Blanco Robles Emperador Fruta del Norte is within a major mineralized trend 3

4 We are comfortable and confident working in Ecuador Favourable and robust agreements signed with the government Ecuador is a much improved mining jurisdiction Local communities are in favour of the Fruta del Norte development 4

5 Agreements for FDN Development are Signed Exploitation Agreement for La Zarza Concession signed December 14, 2016 Investment Protection Agreement signed December 19,

6 A lot of gold at Fruta del Norte Resources of 7.4 million ounces Indicated million ounces Inferred Reserves of 4.8 million ounces Resource estimates are reported inclusive of Reserves. Source: 2016 Fruta del Norte Technical Report 6

7 Compact Orebody South Domain (mostly inferred resources), not fully defined to South FDN - Main Area of Reserves and Resources Grade of Ore Blocks ppm Au ppm Au >10 ppm Au 7

8 Average grade much higher than the majors Source: Metals Focus Data, Company Presentations 8

9 Reserves, Resources and Grade Contained Reserves (000 oz Au) Contained Reserves & Resources (000 oz) Gold Grade, Reserves (g/t) THOUSAND OUNCES Au ITH PVG SSP NGD LUG CNL SBB BSX MAX VIT TMR ORE G LYD CAS:AU YRI ELD Fruta del Norte is among the highest grade gold projects in the world Source: Company Filings; SNL Source: Company Filings, SNL and 2016 Fruta del Norte Technical Report 9

10 And we ve just scratched the surface 70,000 ha of prospective exploration acreage including the Bonza Las Peñas trend which hosts FDN Pull-Apart Basin extended 16 km south of FDN doubling most prospective trend Numerous key targets with epithermal geochemical signatures along the trend have yet to be drilled 10

11 Fruta del Norte will be an underground mine producing about 340,000 ounces per year for at least 13 years 11

12 Low Tonnage / High Production Source: Company Filings, SNL and 2016 Fruta del Norte Technical Report 12

13 Construction start expected mid 2017 with first gold anticipated early 2020 Capex: $669 million (includes contingency) 13

14 Fruta del Norte will produce both gold doré and gold concentrate 14

15 Low cost per ounce of gold $623 per ounce AISC AISC is All-In Sustaining Costs (total cash costs plus other expenses) 15

16 Our AISC is amongst the lowest Base case gold price $1,250/oz $623/oz AISC Source: Metals Focus Data, Company Presentations 16

17 Significant investment by government in infrastructure such as power, roads, ports and communications Agreements for power supply are being finalized 17

18 Key Environmental approvals and licenses are in hand 18

19 Project Milestones Phase Change Application Approved (07.16) EIS & Environmental License Granted (11.16) Exploitation Agreement Signed (12.16) Investment Protection Agreement Signed (12.16) Early Works Program Initiated (11.16) Project Financing (Present 3 rd qtr 2017) Start of Construction (Mid 2017) First Gold Production (Early 2020) 19

20 Early Works Program Field investigations (Mine, TSF, Process Plant, Aggregate Quarry) Environmental biotic rescue, deforestation & monitoring Earthworks for north portal, mine dump, site roads & ponds Start of new access road and bridge Basic engineering of process and surface facilities Optimization program Award mine development contract 20

21 Building a Team for Next Phases Engineering resources in place Ausenco plant and surface NCL, SRK, Patterson Cooke mine & geotech Klohn Crippen Berger tailings & surface Geotech SRK water management G Mining engaged to augment Company project and construction team Same team that just completed the Newmont Merian project Independent engineers engaged for project financing 21

22 We re not just miners, we are part of the community Lundin Gold s vision for community investment is to create shared value for host communities in coordination with local and national governments 22

23 Lundin Family is investing in Fruta del Norte Lundin Gold Inc. 118 million shares outstanding 122 million shares fully diluted Lundin Family is the largest shareholder at 30.4% 23

24 Fruta del Norte one of the last of the great gold discoveries Large, high grade gold resources, low cost Significant resource and development upside 24

25 Investment timing is right LUG TSX LUG Nasdaq Stockholm Thank You 25

26 Appendix 26

27 Feasibility Study Details Optimization Program is underway Source: 2016 Fruta del Norte Technical Report 27

28 Resource and Reserve Details 28

29 Fruta del Norte General Social Context Zamora-Chinchipe is among the least developed provinces of Ecuador There is little existing industry. Prominent economic activities are coffee, plantains, cocoa, dairy, and artisanal mining There are strong levels of community support for the development of FDN, as evidenced in annual perception surveys Los Encuentros (population 1,200) is the nearest large community. Several small communities exist on the current road to Las Peñas No communities within the area of direct influence Significant expectations around employment, community investment, and economic opportunities 29

30 PRIMARY AXIS ANNUAL PRODUCTION SECONDARY AXES INITIAL CAPEX 700 LOM ANNUAL PRODUCTION AND INITIAL CAPEX LOM Yearly Production (oz Au) CapEx (US$M) 2500 LOM ANNUAL GOLD PRODUCTION (koz) INITIAL CAPEX (US$M) 0 0 Source: Company Filings; SNL 30

31 Low capex per ounce gold 250 CAPITAL COST PER GOLD OUNCE IN THE GROUND Source: Company Filings; SNL INITIAL CAPEX PER OUNCE Au, R&R (US$/oz) $71/oz DEVELOPMENT STAGE PROJECTS FdN Capex= $669 million FdN Reserve and Resource = 9,480,000 ounces Capex/Ounce = $669million/9.48million oz = US$71/oz 31

32 Sensitivities 5% ($US MILLION) SENSITIVITY OF 5% AFTER TAX 1,400 1,200 1, % -20% -10% 0% 10% 20% 30% IRR (%) SENSITIVITY OF IRR AFTER TAX 20% 15% 10% 5% -30% -20% -10% 0% 10% 20% 30% Capital Costs Operating Costs Au price Labour Capital Costs Operating Costs Au price Labour 25% Delta NPV Increase (US$ M) IRR Improvement in Au Price $50/oz % Reduction in Initial Capital -$25 Million % Reduction in Opex -$5/tonne % Improvement in Au Recovery 1% % Reduction in Construction Schedule -3 months 9 0.4% 32

33 Mining Design and Engineering Mine infrastructure to the east of the deposit due to better geotechnical conditions. Ore Production Mining methods dependent on geotechnical conditions Transverse Open Stoping with paste backfill Drift and Fill mining with cemented rock fill (CRF) Water focus on minimizing contact water and draining mine workings ahead of development. Dewatering wells Dewatering galleries 33

34 Production Plan LOM = gpt Au (4.8 MMoz) 12 month plant ramp-up First 3 yrs ~3200tpd k tonnes Processing Plant Feed gpt Au Steady state ~3500tpd MMoz produced in the first 5 years Ore processed (kt) Au grade (gpt) LOM mill production of 4.4 MMoz LOM annual average gold production = 340 koz k tonnes Gold Production Profile gpt Au Gold (koz) Au grade (gpt) 34

35 Offsite Infrastructure - Access Road 35

36 Offsite Infrastructure Power Supply Agreement in principle with CELEC Proceeding with basic engineering EIA Baseline started Defining execution strategy (EPC/EPCM) 36

37 Capital Cost Breakdown Description Amount (000 s USD) Underground Mine 120,471 Ore Handling 7,477 Process Plant 74,331 Tailings / Reclaim Water Facilities 30,792 On-Site Infrastructure 121,746 Off-Site Infrastructure 71,219 Sub-Total - Direct Costs 416,037 Indirect Costs 126,095 Owners Costs 49,340 Contingency 67,261 Total 668,733 Initial Capital: VAT/taxes: Total: P80 US$668.7 million US$91.2 million (mostly recoverable) US$759.9 million 37

38 Operating Cost Breakdown G&A, 13% Surface Infrastructure, 8% Process, 28% Mining, 51% Opex by Area Total Cost ($ per tonne processed) Mining 60 Process 34 Surface Infrastructure 9 G&A 15 Total 118 Expenses 4% Services 7% Maintenance 11% Fuel 2% Power 9% Freight 3% Taxes & Lease 2% Labour 25% Consumables 37% Area Cash Cost ($ per oz Au) On site operating costs 422 Treatment & refining 78 Royalties & production taxes 75 Silver by-product (22) Cash Costs 553 Sustaining Capital 61 Closure 10 All-in Sustaining Costs (AISC) 623 NOTE: Numbers may not add due to rounding. AISC are presented as defined by the World Gold Council. Costs are estimated in Q dollars. 38

39 Analyst Coverage Broker Rating (CAD) Date Target Price (CAD) Rating CAPEX ($M) LoM Avg. Au Production (koz) Mine Life (years) Cash Cost ($/oz) AISC ($/oz) ABG* 29-Jul-16 $7.38 Buy $ $413 $512 $752 BMO 10-Aug-16 $8.00 Buy $ $543 n/a $1,080 CIBC 31-Oct-16 $7.30 Buy $ $435 $590 $1,053 Cormark 8-Jun-16 $8.50 Buy $ $459 $535 $1,353 GMP 11-Aug-16 $8.25 Buy $ $431 $513 $1,320 Haywood 1-Sep-16 $7.25 Buy $ $541 $641 $1,289 National 19-Aug-16 $7.20 Buy $ $575 $629 $837 Nordea* 11-Nov-16 $7.23 Buy $ $553 $623 $620 Paradigm 8-Jun-16 $9.00 Buy $ $586 $660 $1,075 Pareto 11-Oct-16 $7.10 Buy $ $578 $673 $861 RBC 7-Jun-16 $6.50 Buy $ $546 $627 $563 Scotia 15-Aug-16 $8.00 Buy $ $402 $475 $1,470 Swedbank* 24-Aug-16 $7.38 Buy $ $543 $604 $778 TD 24-Nov-16 $8.50 Buy $ $585 $706 $1,455 Consensus $7.69 Buy $ $514 $599 $1,036 * Note: ABG, Nordea, and Swedbank price target converted from SEK to CAD (6.5 SEK = 1 CAD) USD to CAD 1.31 CAD to SEK 6.5 Modeling (USD) NAV ($M) 39