Finders Resources Limited. Company Update

Transcription

1 Finders Resources Limited Company Update July 2010

2 This page is intentionally blank. 2

3 Disclaimer This presentation (Presentation) has been prepared by Finders Resources Limited (Finders) based on information available to it and from third party sources. By retaining this Presentation, you (the Recipient) acknowledge and represent to Finders that you have read, understood and accepted the terms of this Important Notice. If you do not accept these terms, you should immediately destroy or delete this Presentation. This Presentation does not purport to contain all the information that a prospective investor may require in connection with any potential investment in Finders.You should not treat the contents of this Presentation, or any information provided in connection with it, as financial advice, financial product advice or advice relating to legal, taxation or investment matters. No representation or warranty is made by Finders or any of its advisers, agents or employees as to the accuracy, completeness or reasonableness of the information contained in this Presentation or provided in connection with it. No information contained in this Presentation or any other written or oral communication in connection with it is, or shall be relied upon as, a promise or representation and no representation or warranty is made as to the accuracy or attainability of any estimates, forecasts or projections set out in this Presentation. No liability will attach to Finders with respect to any such information, estimates, forecastsorprojections. Finders does not accept responsibility or liability for any loss or damage suffered or incurred by you or any other person or entity however caused (including, without limitation, negligence) relating in any way to this Presentation including, without limitation, the information contained in or provided in connection with it, any errors or omissions from it however caused (including without limitation, where caused by third parties), lack of accuracy, completeness, currency or reliability, or you or any other person or entity placing any reliance on this Presentation, its accuracy, completeness, currency or reliability. Finders does not accept any responsibility to inform you of any matter arising or coming to Finders' notice after the date of this Presentation which may affect any matter referred to in this Presentation. Any liability of Finders, their advisers, agents and employees to you or to any other person or entity arising out of this Presentation including pursuant to the Australian Securities and Investments Commission Act 2001, Corporations Act 2001, Part IVA or V (including sections 51AA, 51AB, 51AC, 52 or 53) of the Trade Practices Act 1974 or any corresponding provision of any state or territory legislation, or similar provision under any applicable law is, to the maximum extent permitted by law, expressly disclaimed and excluded. The distribution of this Presentation may be restricted by law in certain jurisdictions. Recipients and any other persons who come into possession of this Presentation must inform themselves about, and observe any such restrictions. Future matters: This Presentation contains reference to certain intentions, expectations, future plans, strategy and prospects of Finders. Those intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of Finders may be influenced by a number of factors, many of which are outside the control of Finders. No representation or warranty, express or implied, is made by Finders, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved Given the risks and uncertainties that may cause Finders' actual future results, performance or achievements to be materially different from those expected, planned or intended, Recipients should not place undue reliance on these intentions, expectations, future plans, strategy and prospects. Finders does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended. 3

4 Company Highlights g Poised for two stage, brownfields expansion to 23,000 tpa Cu cathode at Wetar Copper Project (94% and earning). ASX and AIM listed, market cap ~A$60m. High grade, low strip ratio open pit with established infrastructure % Cu Proven and Probable Ore Reserve. Technically de-risked through 5 tpd Cathode Cu Demonstration plant 17 month operating base. Long term Indonesian operating expertise and highly experienced board. Strong support for project from local community. Growth potential through: Near mine and other Wetar Cu (and Au) exploration areas; and Ojolali Advanced Epithermal Gold-Silver Project (72% plus option) in Lampung Province, Sumatra. Pending drill results for resource upgrade. Targeting pre-feasibility for Q Quality shareholder base with major support from expert institutional investors. 4

5 Corporate Overview Capital Structure Ordinary shares (ASX + AIM) Current Price Market Capitalisation 194m A$0.30 ~A$60m Options (Unlisted) 6.1m Convertible Notes (conversion 2012, 12%, $0.36 par value) Cash (at 30 June 2010) US$1.5m ~A$3.2m Ownership Percentage Resource Capital Fund 9.9 (12.8% diluted) Acorn Capital Ltd 10.5 Straits Resources Ltd 10.0 Taurus Resources Trust 9.4 Lujeta Pty Ltd 7.7 Exsolutions Pty Ltd (R. Fountain interests) 3.9 Dr C Farmer 3.1 Transitioning to production with strong support by expert investors in the sector 5

6 Experienced Board & Management Dr Russell Fountain Over 40 years of international experience in all aspects of mineral exploration, project feasibility and development of (Chairman) mining projects involving copper, gold, nickel and mineral sands. Previous senior positions include President, Phelps Dodge Exploration Corporation; Exploration Manager, Nord Pacific Ltd and Chief Geologist, CSR Minerals. Dr Chris Farmer (Managing Director) Rob Thomson (Exec. Director Development) 19 years of international experience in all aspects of exploration, with an emphasis on international joint ventures and business development. Previous positions include VP Australasia and Chief Geologist, Phelps Dodge Exploration Corporation; and Senior Geologist with both Highlands Gold (Indonesia) Pty Ltd and Billiton Indonesia BV working at the Lebong Tandai and Wetar gold mines. Over 30 years of Australian and international mining experience. He has worked on 5 Asian development projects in the last 13 years including GM Development, Chatree Gold Mine in Thailand and Project Director, Sepon Gold Mine in Laos. Mr Thomson was CEO of Climax Mining Limited from 2003 to 2006 and Asian Mineral Resources Limited from 2006 to Mike Stirzaker Chartered Accountant with more than 25 years of commercial experience, most of which have been in the mining (Finance Director) finance and mining investment sector undertaking corporate finance and investment activity, including mergers and acquisitions, divestments and capital raisings. Stephen de Belle (Non-exec. Director) Steve Lonergan (Non-exec. Director) Closely involved with the start-up and operation of iron ore, coal, base metals, gold and petroleum projects and companies, and has particular expertise in the development and financing of projects in the resources and infrastructure sectors both in Australia and overseas. He is currently managing director of a geothermal and power technology company. commercial lawyer based in Sydney with more than 25 years experience in the Australian and international mining industry, having been General Counsel of Pancontinental Mining Group, a partner at Baker & McKenzie Sydney, and General Counsel and Company Secretary of Savage Resources Limited. Mr Lonergan is currently General Counsel and Company Secretary of CBH Resources Limited. Quinn Roussel Principal of Resource Capital Funds (RCF), a mining-focussed private equity firm. Prior to joining RCF in 2006, he was (Non-exec. Director) Director of Business Development at one of RCF s portfolio companies in China. He has also worked as an engineer in both mining and the oil & gas industries. Management team with significant Indonesian experience in mine operations and government relations 6

7 World Class Mineral Province Wetar Copper Project Ojolali Gold-Silver Project World class mineral province with some of the world s largest operating mines 7

8 Wetar Project Transitioning to Production Project Overview 94% and earning through expenditure. JORC reserves - 2.5% Cu. Project location is a former Billiton gold mine: Key infrastructure advantage camp, wharf and roads in place. Much of the pre-strip already done. Long established relationship with local community. Demonstration plant in operation since February Environmental permit granted for full scale 23ktpa project. Awaiting mining permit approvals. DFS completed for 2-stage development. Project development now significantly de-risked. 8

9 Low Risk Staged Development Plan Demonstration Plant Stage 1: 7,000 tpa Stage 2: 23,000 tpa 1,800 tpa nameplate capacity. Low risk brownfield expansion of Increase to 23,000 tpa Purpose is to: existing demonstration plant Relocate Whim Creek plant to operations Measure real life Cu recovery from adjoining valley full scale heaps Within existing footprint of Billiton Commission approx. 12mths from mine operations Stage 1 completion Assess operating parameters not testable in column tests Up to 9 month construction period Build to commence as part of Stage 1 De-risk the project for obtaining Profitable copper production bank finance Reduces construction risk of Stage 2 Enabled DFS optimisation: EDP was 5,000 tpa, now 7,000 tpa Major improvements to mining schedule being made Revising earthworks strategy with proven Indonesian contractors Looking for significant reduction in indirect costs Environmental permit granted March 2010 for full scale 23,000 tpa Stage 1 & 2 subject to final mine permitting Negotiations underway for staged financing Staged development path de-risks the transition to full-scale production 9

10 Wetar Infrastructure & Logistics Infrastructure solutions in place with the advantage of existing wharf, camp and roads. 17mths of demonstration plant operations produced ~2,000t of cathode. Air services contract secured for travel between Kupang and Kisar Island removes 24hrs travel time (each way) to the project. Available labour from the local community are nearly all employed. Identified logistical issues resolved through demonstration plant experience 10

11 Wetar Ore Reserves 8.7yrs LOM JORC reserves to produce 146,000t cathode. Analysis underway for an increase in LOM grade >2.5% Cu. Exploration programme of near-mine targets to recommence during Stage 1 production targeting additional minable resources. Meron prospect has potential size of 0.5mt 1.5mt at 1-3% Cu based on historical drill results (2km from Kali Kuning). Contained Cu Contained Attributable bl to 0.5% Cu Cut off Category Tonnes (m) Grade % Cu Copper (kt) Finders (94%) (kt) Kali Kuning Pit Proved Probable Sub Total Lerokis Pit Proved Probable Sub Total Combined Proved Probable Total The tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number and total is rounded individually the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades. 11

12 Wetar DFS Summary DFS Summary Copper Price Sensitivity Based on DFS Ore Reserves 8.4mt (1) Output Strip Ratio (LOM) 1:1 Initial Mine Life 23,000 tpa 8.7 years Average Copper Grade (LOM) 25% 2.5% Average Recovery (LOM) 71% Average Operating Cost (LOM) U$1.00/lb Total lcathode Production 146,000t Stage 1 Stage 2 to 7,000tpa to 23,000tpa $400 $300 $200 $100 $0 Wetar Copper Project Pre-tax NPV (US$m) $5,000 $6,000 $7,000 $8,000 Copper price (US$/tonne) Total Funding Requirement U$118 million (3) Significant capex reductions anticipated from optimising earthworks schedule and reducing indirect costs. Stage 1 Stage 2 Notes: ~U$25 million (2) ~U$93 million 1. Ore Reserves includes 0.2mt of Inferred Resources within the pit shell. 2. Stage 1 funding reflects increase in capacity from 5,000 to 7,000 tpa cathode 3. Stage 1 & 2 funding estimate includes Working Capital Term sheets for debt financing under review from multiple parties. 12

13 Wetar Development Programme Prefeasibility Studies Demonstration Plant (17mths operation) Environmental Permit Approval (AMDAL) Definitive Feasibility Study Detailed Engineering Stage 1 Complete Complete Complete Complete Complete Mine Development Permit Target Q Stage 1 Financing Target Q Detailed Engineering Stage 2 Target Q Stage 2 Financing Target Q Stage 1 Production Target Q Construction Completion Stage 2 Target Q Stage 2 Production Target Q

14 Project Development Significantly De-risked Successful Demonstration Plant Cumulative Copper Recovery Proof of concept achieved. Producing five 9 s cathode at nameplate 5 tpd (> LME grade). 100% 80% 60% Heap 3 Demonstration plant enabled testing of every aspect of operation. 40% 20% Heap 2 Very stable heaps, unaffected by wet season; zero clay content. Initial teething issues rectified. 0% Jan-2009 Apr-2009 Jul-2009 Oct-2009 Jan-2010 Apr-2010 Jul-2010 Leaching as expected when operating at normal parameters. Producing more acid than originally anticipated neutralisation plant now retrofitted. Copper sales generating useful cashflow to fund ongoing detailed design. Demonstration plant delivering LME grade A cathode 14

15 Wetar Demonstration Plant Layout Operational demonstration plant has enabled resolution of all technical issues prior to full scale production 15

16 Project Layout for Full Scale Production 16

17 Exploration Targets to Extend Project Beyond Stage 2 Meron Potential size % Cu Batu Duri 9 drill holes, incl 4.5% Cu Pantai Merah Identified Au barite sand One hole in copper Ilwaki 8 drill holes in gold cap only 17

18 Strong Local Community Support Sign-off from all local villages has enabled full environmental approval. Completed compensation and access agreements for full scale projects. Local employment priority. ~125 people (almost 100% of workable age engaged). Yayasan (social charity) for each village. Initial focus: new supply businesses, sustainable projects, health and skills training. 18

19 Ojolali Gold-Silver Project Project Overview Gold-Silver project located in the Sumatran gold belt (5,921 Ha) Over 20 named targets. Bulk Au oxide potential. Testing for identified epithermal gold-silver vein systems. 72% with an option to increase to 100% on completion of a feasibility study. Target to define ~300,000oz Au Eq open pit oxide resources to support a viable start-up mining operation. 37 hole 4,000m RC drill programme completed June 2010 results pending. Resource Estimate Jambi Oxide Cut off Indicated Inferred Total Contained Au g/t Mt Au g/t Ag g/t Mt Au g/t Ag g/t Mt Au g/t Ag g/t Au koz Attrib. FND (72%) Au koz

20 Ojolali Exploration Programme Underway Current Exploration Programme Tambang Section 37 hole (3,800m) RC drill programme completed June Assay results due July/August Tambang Supergene Silver-Gold Target 18 holes (1,800m) over 600m strike length targeting near surface, high grade (+200g/t Ag) supergene enriched silver grades in the major Tambang vein system. Tonnage potential for the zone tested about 2-3 million tonnes. Jambi Oxide Gold Target 19 holes (2,000m) - mainly infill drilling within and adjacent to existing resource. Aimed to upgrade existing resource, through better definition of vein structures and continuity. Test for a newly interpreted north-easterly trending major structural control, with potential for both lateral and depth extensions of the known mineralization. Plan to complete a new resource estimate, and targeting Jambi prefeasibility completion Q as a basis for a start-up mine development. 20

21 Undervalued Emerging gcopper Producer Attractive Valuation One of the few listed junior copper companies with near term production. Attractively priced on a EV/t resource basis relative to peer group. High grade copper project de-risked for production. Strong copper price fundamentals underpinning project valuation. Valuation upside from Ojolali Gold-Silver exploration success and regional growth opportunities. EV/t Resource (A$) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $ TGS DML RXM ABY FND JML CDU EQN PNA SRL CGG OZL SFR SWN Source: IRESS, Company Reports 5-year Copper Spot Cu Grade (%) 10,000 8,000 6,000 4,000 2,000 LME Copper Price (USD/lb) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan % PNA EQN RXM SWN OZL DML CDU TGS SRL JML CGG ABY FND SFR Source: IRESS Source: Company Reports 21

22 Investment Highlights g Robust Project Economics Strong copper price fundamentals underpinning project valuation 8.7yr mine life based on existing 8.4mt Proven and Probable Reserves DFS operating costs at US$1.00/lb (LOM) Experienced Management With Strong Community Relations De-Risked Transition to Production Wetar to Fund Regional Growth Opportunities Collective 80 years mining experience across the Board and Management Extensive mining experience in Indonesia and previous operations of the Wetar project Strong local community relations with support for full-scale mining operations Management successfully converted 98% of resources to reserves Low risk staged development plan 17mths operating demonstration plant enabled testing of every aspect of the Wetar operation Demonstration Plant currently producing LME A grade copper cathode Exploration of near-mine targets with potential for mt at 1-3% Cu Ojolali exploration programme targeting gold-silver targets to support start-up open pit mining operation Near term free cash flow generated from Wetar will be used for exploration, acquisitions and dividends Regional greenfield growth opportunities under review Attractive Valuation One of the few ASX listed junior copper companies in transition to production Attractively priced on a EV/t resource basis relative to peer group Strong backing from institutional investors recognising g the long term value propositionp 22

23 Appendices 23

24 Wetar - Whim Creek SX-EW Plant 18,000 tpa facility. Purchased from Straits Resources for A$5m in FND shares providing considerable cost and time savings. Dismantled by Finders contractor, containerised and awaiting shipment approvals to Wetar. Contractor retained for installation. Components of the plant to be used in both Stages 1 & 2. 24

25 SX-EW Process SX-EW technology is used to produce ~22% of the world s copper production 25

26 Demo Plant & Operations 26

27 Statements The information in this report that relates to exploration potential, mineral resource and ore reserve estimation is the responsibility of Dr Russell Fountain. Dr Fountain is a Director of Finders and a Fellow of the Australian Institute of Geoscientists. Dr Fountain has sufficient experience that is relevant to the styles of mineralisation and types of deposits under consideration and to the activity that he is undertaking to qualify as Competent Person in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) and as a Qualified Person as defined in the AIM Rules. He consents to the inclusion in this report of the matters based on his information in the form and context in which they appear. All assaying of drill core samples was undertaken by the ITS laboratory in Jakarta. ITS is one of the world s largest product and commodity testing, inspection and certification organizations. The Jakarta laboratory is ISO accredited and employs a Laboratory Information Management System (LIMS) for sample tracking, quality control and reporting. 27