MANAGING DIRECTOR & CEO S PRESENTATION TO THE 2010 ANNUAL GENERAL MEETING

Transcription

1 28 May 2010 MANAGING DIRECTOR & CEO S PRESENTATION TO THE 2010 ANNUAL GENERAL MEETING Perilya (ASX:PEM), a full copy of the Managing Director & CEO s presentation to the Company s Annual General Meeting is attached. Ends For further information: Investors & Media: Paul Arndt Managing Director Inquiries: Paul Marinko Company Secretary Perilya Limited 1

2 ANNUAL GENERAL MEETING 28 May 2010

3 Board Members Non-executive Chairman Mr. Zhang Shuijian Managing Director & CEO Mr. Paul Arndt Non-executive Directors Mr. Patrick O Connor (Non-executive Deputy Chairman & Chairman of the Remuneration & Nominations Committee) Mr. Minzhi Han Mr. Peter Harley (Chairman of Audit & Risk Management Committee) Mr. Wang Wen

4 Today s proceedings Chairman s Introduction Formal Business Items 1. Consider and receive the annual financial statements 2. Adoption of the Remuneration Report 3. Re-election of Mr. Patrick O Connor 4. Approval of Issue of Options to Mr Paul Arndt under the Employee Share Option Plan Close of Formal Business Business Overview by Managing Director & CEO Questions Refreshments

5 Chairman s address by Mr. Zhang Shuijian

6 Formal Business

7 Annual Report 31 December 2009 To receive and consider the Annual Financial Statements, the Directors Report and the Audit Report of Perilya for the financial year for the period ending 31 December Proxy Votes no vote required

8 Resolution 1: Adoption of Remuneration Report To consider and receive annual remuneration Report for the Company (which h is contained in the Directors Report) for the financial year for the period ending 31 December 2009 Proxy Votes For 347,530,465 Against 2,131,905 Open 872,953

9 Resolution 2: Re-election of Mr. Patrick O Connor To re-appoint Mr. Patrick O Connor, who retires by rotation, as a director of the Company. Proxy Votes For 348,418,163 Against 12,426,523 Open 878,003

10 Resolution 3: Issue of Options to Mr. Paul Arndt To approve, for the purposes of ASX Listing Rule 10.14, Chapter 2E of the Corporations Act and for all other purposes, the issue of 1,089,092 Options under the Employee Share Option Plan to the Managing Director & CEO, Mr. Paul Arndt (or his nominee). Proxy Votes For 333,428, Against 16,396,248 Open 782,145

11 MANAGING DIRECTORS PRESENTATION 28 May 2010

12 Agenda Safety Performance Operating Performance Financial Performance Our Performance Relative to Peers Zinc Market Update Investment in our Future Growth

13 Safety Performance Key Highlights Lost time and Medical treatment injury frequency rates well below the industry average All injury frequency rate the lowest in Perilya s history at Broken Hill Significant increase to our highest level of proactive safety indicators Jan-09 Feb-09 Number of Incidents Mar-09 Apr-09 Safety Meetings Task Observations Hazards & Near Miss Reports Safety Lead Indicators All Injury Incidents and Frequency Rate May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Safety Interactions Inspections Lowest recorded AIFR 24.9 Frequency Rates Jan-09 Feb-09 M Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 All Injuries All Inj. FR

14 Mar-10 Mar-10 Operating Performance (A$) Cost / Tonne Ore Milled (A$) 3,000 2,500 2,000 Cost / t Payable Metal ,500 1, Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Actual Linear (Actual) Actual Linear (Actual) (t) Tonnes Hoisted per Employee Employee Manpower Trend Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Actual Linear (Actual) Actual 2 per. Mov. Avg. (Actual)

15 Financial Performance 6 Mths to Dec 09 Financial Results Summary 6 Months to 6 Months to 12 Months to Dec-09 Jun-09 Jun-09 Revenue Net Profit / (Loss) for the period (75.1) EBITDA (60.3) Shares on Issue (M) Simple EPS (annualised) (0.19) Cashflow from Operations 50.4 (12.9) (59.5) (*) Cash Net Cash / (Debt) Total Assets Shareholders Equity (*) Prior to $60.3 million hedge book closure in FY09 Operating Results Summary Metal Production - Broken Hill: - Contained Zinc (tns) 35,100 35,200 75,300 - Contained Lead (tns) 29,200 27,700 48,100 Combined Zn + Pb (tns) 64,300 62, ,400 - Contained Silver (Moz) Beltana Sales (contained Zn) 26,180 17,320 32,602 Broken Hill (all in US$/lb payable Zn) - Average Price C1CashCosts Cash Costs Cash Margin 0.51 (0.01) (0.19) Highlights Significant boost in NPAT & EPS Higher metal prices & lower unit costs over past 6 months Solid metal production from Broken Hill; in line with guidance of combined Zn+Pb of kt contained. Cash costs of US$0.44/lb continue positive trend. Pre capital cash generation from Broken Hill of US$0.51/lb zinc over the period Record 6 month period of Beltana sales Strong balance sheet, with full support of Zhongjin Lingnan 52.0% shareholder Transitional Year to Calendar Year reporting for 2010 onwards

16 Production Relative to Peers Exposure to zinc, lead and silver 80,000 70,000 Contained Metal Production CY Tonnes (Zinc & Lead) 60,000 50,000 40,000 30,000 20, Million Ounces (Silver) 10, Perilya (*) Kagara JML CBH Terramin CY 2009 Zinc (LHS) Lead (LHS) Silver (RHS) 0.0 (*) Excludes an additional 43,500 tonnes of zinc sold in 2009 from Beltana Project Source: ASX Release for respective companies

17 Zinc Market - Overview Fundamentals remain strong, despite current supply surplus China and India remain large, g,growing gsources of demand Mine supply falls away significantly in 3 5 years No major mine supply to replace No Super Giants have been found (e.g. Broken Hill, Mt Isa, Red Dog) Cost profiles increasing structural shift to lower grade / higher cost mines Consensus forecasts predict stable prices for increasing in subsequent years

18 Metal Prices Trends (since Jan 09) AUD Metal Prices ($/tn) (Zn + Pb) 3,000 2,800 HEDGING 50% Pb prodn at A$2,829/tn to June ,600 2,400 /tonne A$/ 2,200 2,000 1,800 1,600 1,400 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 AUD Zn AUD Pb 2009 saw strong recovery in AUD metal prices for both zinc and lead. Recent sovereign risk fears in Europe early in 2010 have led to a sell off in all commodities, despite solid fundamentals. Prudent hedging strategy meant lead prices locked in near the peak late in 2009, for 50% protection to Jun 11 (@A$2829/tn)

19 Zinc Producers: Top 15 Who will fall? Annual Zinc Production Forecast: Rampura Agucha Red Dog Century Antamina Long term producer: short term environmental risk? CLOSED by 2015 Production output to reduce by 55% by 2015 Mt Isa San Cristobel Production output to reduce by 25% by 2015 Lanping Brunswick CLOSED by 2013 Tara McArthur River Lisheen Skorpion CLOSED by 2015 CLOSED by 2016 Vazante Zyryanovsk Source: Brook Hunt Kidd Production output to reduce by 30% by 2015

20 Zinc Producers: New Supply? Smaller and higher cost Brook Hunt Probable Ozernoye Dugald River Paragsha Super Pit Sardana Lady Loretta Dairi Project Mehdiabad Gamsberg Annual lzinc Production Status? Financing. Lundin recently exited JV. Feasibility Feasibility. Change of Ownership Feasibility/Permitting Financing/Feasibility. Iranian Political Risk Mt Isa Super Pit Selwyn Feasibility. Brook Hunt Possible Source: Brook Hunt Kipushi Citronen Izok Lake Hilarion Hacket River Feasibility. Feasibility Feasibility

21 Investing for Future Growth Broken Hill +10 Year Mine Life at Southern Operations (JORC Reserves) Strong EM target at Southern Operations. Extensional drilling underway. Development decision pending for Potosi/Silver Peak deposit Zinc, Lead & Silver North Mine development potential (North Mine + Junction North) Reliance study being updated for current DSO terms Flinders Significant potential from current resources (Reliance, Moolooloo, Aroona) Long term potential for beneficiation of lower grade material 224,000 tonnes of contained copper; at an average grade of 1.3% Mt Oxide GM Study Development appointed; Drilling program re-designed Development decision by end of 2010 Copper Tampang (50%) Large Cu/Au porphyry potential Exploration permitting underway with JV partner Subject to permit, drilling to commence later in year

22 Southern Extension - Long Section - EM Targets 17.8% Pb+Zn over 0.6m 11.5% Pb+Zn over 0.2m 7240A 14.7% Pb+Zn 100x100m 75m from hole N4270A (1,387m) Currently drilling EM 21.9% Pb+Zn over 0.4m anomalies N4970 (2,309m) 2010 Modelled EM Plates (approximate) 1km >400x400m 150m from hole

23 Potosi / Silver Peak Potosi Pit Silver Peak Shaft Portal Silver Peak Project Current Development Potosi Extended Project Evaluations into the Potosi & Silver Peak deposits have been undertaken including finalisation of mining plan and detailed costings for the project now completed. Mining Inventory of % Zn, 3.9% Pb and 43 g/t Ag Additional drilling in 2010 to add to existing resources & improve project economics. Drivers for development go-ahead are:- Stronger metal price environment. Project does not generate adequate returns at current metal prices. Appropriate p approvals received with respect to ore haulage routes. Understanding Resource Super Profits Tax. Uncertain taxation regime makes investment decisions difficult.

24 Broken Hill - North Mine Moderate results for Sands Project but encouraging intersections in the North Mine Zinc Lodes and at Junction North. New zones are close to existing decline further drilling program budgeted for Hole and and and and Length (m) Pb (%) Ag (g/t) Zn (%) Junction North #3 Lens m #2 Lens Decline Surface Drillholes Underground Drilholes High Grade Target for 2010

25 Flinders Regional Exploration & Development In the past 12 months have shipped 121,041 tonnes of ore at a grade of 30.1% from Beltana exploration program of $3 million to test for additional discoveries and increase known resources. There are a number of untested zones currently being drill tested. Success should deliver highvalue, low-cost Zn tonnes Recent success at Moolooloo (see graphic); positive indications for new project; more drilling required. Reliance deposit marginal at current metal prices. A strengthening g zinc market will enable project development decision. North Moolooloo section. Significant Potential in favourable Zinc price environment

26 Mt Oxide Copper Project Copper resources of 1.3% for 224kt Cu. Development study commenced with experienced General Manager appointed Technical, environmental and financial analysis underway. Resource Definition drill program of 13,000 meters now underway to upgrade existing resources to higher confidence ( Indicated & Measured ). Extensional drilling immediately north of the old pit targeting additional tonnes & higher grades within the optimized pit shell. Testing of high grade extensions at depth for possible transition from open cut to UG. Development Decision: Dec 10

27 Mt Oxide Development Schedule Activity Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Resource Definition Geology Mining Processing Infrastructure Site Services Environment External Relations Legal Financial Evaluation Study Management Board Submission Approximately $9.87 million budgeted for 2010 for drilling and development studies. Development decision in December 2010.

28 Tampang JV (50%) Outstanding opportunity for discovery of a large Cu-Au porphyry deposit below and southwest of the current drilled area at Bongkud with area also having epithermal potential. Bongkud is a copper gold porphyry deposit with a strong clay-pyrite-sericite overprint. Appears only partially unroofed. Initially tested t in 1999 by 16 angled RC holes averaging 158m of which one was deepened by diamond drilling to 331m (TRD003). TRD003 intersected 0.37% Cu and 0.89g/t Au. Drilled deeper in 2000, 6 more diamond holes and 2 more RC holes mostly to the northeast of TRD m TRD017 TRD030 TRD003 Location of drill section TRD003 Chargeability anomaly Bongkud Hill Hole TRD030 (the last hole, to only 150m) was to the southwest and intersected 0.73% Cu and 0.52g/t Au TRD030 supergene Re-invigorate potentially significant Copper / Gold Project 200mRL > 0.6% ecu 200m % C > 1% ecu

29 External Growth Looking for Value:- Perilya & Zhongjin have a stated desire to acquire new, long life assets. Preferred commodities are zinc, lead, copper & precious metals Large resource base Long life potential (> 10 years) Will consider both onshore and offshore projects Strong operational & financial capability Ability to access competitive debt via parent support

30 Perilya Investment Proposition Long Life Asset in Broken Hill Leverage to Zinc, Lead and Silver Prices Supportive Major Shareholder Strong Balance Sheet Proven Management Team Significant Organic Development Potential Financial Capability to Acquire New Projects

31 Attribution Statement The information in the AGM Presentation that relates to Ore Reserves for Southern Operations at Broken Hill is based on information compiled by Mr. Noel Carroll who was at the time of compiling the report a fulltime employee of Perilya and is a member of the Australian Institute of Geoscientists. Mr. Carroll 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. Mr. Carroll consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The information in the AGM Presentation that relates to Mineral Resources comprises: Mineral Resource estimates for Broken Hill s: Southern Operations, Southern Extensions, Silver Peak, Central Blocks, Flying Doctor, Pinnacles (1130 and Henry George deposits), North Mine Uppers, North Mine Deeps and Potosi and is based on information compiled by Mr. Noel Carroll who is a full-time employee of Perilya and is a member of the Australian Institute of Geoscientists. Mr. Carroll 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. Mr. Carroll consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. Mineral Resources estimates for the South Australian: Reliance, Aroona, Aroona 2, Moolooloo and Aristotle deposits and is based on information compiled by Mr. Dean Rogers. Mr. Rogers who is a full-time employee of Perilya and is a member of the Association of Professional Geoscientists of Ontario, a recognised Overseas Professional Organisation included in a list promulgated by the ASX from time to time. Mr. Rogers has sufficient experience whichis 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. Mr. Rogers consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. Mineral Resources for Mount Oxide project and is based on information compiled by Mr. Martin Jones who is a full time employee of Perilya and is a member of the Australian Institute of Geoscientists. Mr. Jones 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. Mr. Jones consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.