A New Focus: Domestic Copper. Management Presentation November 2013

Transcription

1 A New Focus: Domestic Copper Management Presentation November 2013

2 Forward Looking Statement Contact information: Steven Dischler President & CEO Quaterra Resources Inc. Suite West Hastings Street Vancouver, B.C. V6E 3T5 Canada Phone: (604) A W. Bridge Street Yerington, NV USA Phone: (775) Investor Relations: The mining terms indicated resource and inferred resource are used in this presentation in accordance with Canadian regulations but are not recognized by the United States Securities and Exchange Commission. For clarification, the Company has no properties that contain reserves as defined by the SEC and is providing the forgoing, in part, in order to meet its requirements under National Instrument adopted by the BC Securities Commission and the Canadian Securities Administrators. A PEA should not be considered to be a pre-feasibility or feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. A PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too geologically speculative at this time to have the economic considerations applied to them to be categorized as Mineral Reserves. Thus, there is no certainty that the production profile concluded in the PEA will be realized. Actual results may vary, perhaps materially. Statements contained in this presentation that are not historical fact, such as statements regarding the economic prospects of the Company s projects, the Company s future plans or future revenues, timing of development or potential expansion or improvements, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of Such forwardlooking statements are subject to risks and uncertainties which could cause actual results to differ materially from estimated results. Such risks and uncertainties include, but are not limited to, the Company s ability to raise sufficient capital to fund development, changes in general economic conditions or financial markets, changes in prices for the Company s mineral products or increases in input costs, litigation, legislative, environmental and other judicial, regulatory, political and competitive developments in countries where the Company operates, technological and operational difficulties or inability to obtain permits encountered in connection with our exploration and development activities, labor relations matters, and changing foreign exchange rates, which are described more fully in the Company s filings with the Securities and Exchange Commission. The Company does not undertake to update any forward-looking statement that may be made from time to time except in accordance with applicable securities laws. References are made in this presentation to historic mineral resource estimates. None of these are NI compliant and a qualified person has not done sufficient work to classify these historic estimates as a current mineral resource. They should not be relied upon and Quaterra does not treat them as current mineral resources. 2

3 Quaterra: A Focus on Domestic Copper Established exploration and development team advancing a portfolio of base and precious metals projects Focused on consolidating and proving the economic potential of the Yerington Copper District supersystem in Nevada Low-cost MacArthur SX-EW project provides option to finance development of adjacent 100%-owned copper deposits Pipeline of other gold, silver and copper projects in US and Mexico for future growth or monetization Long-term joint ventures with Goldcorp and Freeport 3

4 Corporate Profile Stock Exchanges: Shares Outstanding: Fully Diluted: Market Capitalization: Shares Traded per day: NYSE-MKT: QMM / TSX-V: QTA 193 million* 246 million Cash Position: $1,900,000 Recent Share Price: $ month High: $ month Low: $0.08 Management: approximately $21.2 million NYSE-MKT: 153,000 / TSX-V: 22,000 (90-day avg.) Experienced management team with track record of success Tom Patton, Chairman of the Board** Steven Dischler, President and CEO Scott Hean, Chief Financial Officer Eugene Spiering, VP Exploration *Data as of October 15, 2013; all Dollar amounts are in USD. **See Appendix for bios of Management and Board of Directors. 4

5 Ownership & Analyst Coverage Institutional shareholders: Institutional ownership of 14% Ownership and options controlled by insiders: Management and Board ownership of 5% of outstanding shares Alignment of interests between shareholders and management team Industry ownership: Goldcorp ownership of 5.3% of outstanding shares Analyst Coverage: Dundee Securities Ltd., Joseph Gallucci AGF Investors Group Peak 6 Andreef Equity Keane Capital Royce Davenport & Co Libra Advisors UBS Dundee Securities Maple Leaf Partners *Ownership: Institutional as of June 30, 2013 Insider and industry as of October 15,

6 Quaterra s Focused Strategy Develop Yerington copper projects o o World class potential in a mining-friendly jurisdiction History of profitable production o Clear path to production Monetize portfolio of non-core assets 6

7 The Case for Copper: Universal Quality of Life Mineral Demand Uses of copper: electricity, piping, etc. Quality of life for growing middle class infrastructure Strong increase in global demand (4%/yr) Supply Supply from mining lags usage by 3.9Mt (2011) Large mines are getting harder to find and permit Copper grades are declining Resource nationalism: political instability, bureaucracy, environmental opposition, permitting, have lengthened lead times to development and production Conclusion: copper fundamentals remain strong 7

8 The Case for Copper: Universal Quality of Life Mineral there is no escape from the declining quality of remaining copper deposits. Once exploited a deposit is gone forever, and once discovered a deposit cannot be rediscovered. It is only a question of when (not if) that limitation leads to higher real copper prices to fund copper extraction and development Bernstein Research, Aug

9 Quaterra s Yerington Copper District 49 square miles of land Excellent infrastructure: power, rail, water Large water rights Property includes 3 known porphyry Copper deposits MacArthur Yerington Bear 9

10 The Yerington District: Key Attributes Historic mining camp with existing infrastructure ready for redevelopment Nevada is a mining-friendly state Project is 100% owned by Quaterra Significant resource upside through exploration and development Multiple paths to production o o o Possible sale to mining house Joint venture Develop as operator 10

11 Quaterra s Yerington District: Central Brownfield Location MacArthur Project Yerington Property Boundary Bear Deposit 2 miles Yerington Pit Produced 1.75 Billion lbs. Cu %Cu USGS 1 -defined Supersystem, and potentially world-class domestic Copper deposit Total district - 24 billion pounds of copper; significant upside with exploration and development 1 :United States Geological Survey [cite year here] 11 11

12 Quaterra s Yerington District Copper Resources Quaterra projects control approximately 1/3 of the district s copper resources Ann Mason 8.5 B lbs (36%) Pumpkin Hollow 7.6 B lbs (33%) Quaterra 7.2 B lbs* (31%) *Please see important note on historic resource estimates in forward looking statement 12

13 MacArthur Copper Project: Open Pit, Run of Mine Possible connectivity with Yerington site Previous mine with a clear path to production Independent PEA by M3 defines a largescale, low cost heap leach copper oxide project in heart of the Yerington copper district 13

14 MacArthur Economic Analysis - PEA prepared by M3 A low cost project capable of withstanding a significant decline in copper price from a base case of $3.48 / pound Base Case Economic Indicators After Tax 8% $201.6 million IRR 24.2% Payback (years) 3.1 Break even copper price of $2.56 / pound, dropping to $2.23 after 3 years Sensitive to copper price and grade Economics enhanced by adequate water and well-developed infrastructure 14

15 MacArthur Oxide Project PEA : Life of Mine Summary Project Parameters Project Capex Life of Mine (LOM) Opex Mine Life Tons per year $233 M $1.89/lb 18 years 15 M Low Strip Ratio 0.90 LOM Production Annual Production 747 M lbs 41 M lbs Copper Recovery 60%-70% Datamine resource block model 15

16 MacArthur Pre-Feasibility Study Alternatives to be considered during upcoming PFS to add value include: Integration with Yerington Mine Explore underlying sulfide system Processing of oxide residuals Additional drilling to improve the grade Mine optimization to raise grades, lower strip ratio and increase production Other oxide deposits 16

17 Yerington Mine Pit Expansion The Yerington pit is a centrally located brownfield site; strategic location with respect to other copper projects in the district resource completed Jan Measured and indicated = 508 million pounds Inferred copper = 530 million pounds Plus an oxide resource Potential integration with MacArthur Legacy environmental issues are not Quaterra s responsibility Pit dimensions appx. 6,500 ft. by 2,500 ft. across Yerington Pit MacArthur Deposit Bear Deposit 17

18 Yerington Pit Resource Model Mineralization extends > 6,000 feet and is open along strike and at depth 84 % of the known mineralization is within the original pit design Potential for much larger resource with additional drilling Datamine resource block model 18

19 Bear Copper Deposit: A Large Known Porphyry System Bear underlies Yerington site and adjacent properties 49 historical holes for 125,000 drilled feet (by Anaconda and Phelps Dodge) 4 billion pounds historic resource average 0.4% Cu* One hole has over 2,200 ft. of continuous mineralization > 0.3% Cu Significant exploration upside for much larger resource and higher grade Bear Deposit *Please see important note on historic resource estimates in forward looking statement 19

20 Yerington District: Other Exploration Targets Excellent potential for major new copper discoveries, elevating the profile of the Yerington district MacArthur sulfide system Extensions to Yerington Pit Bear Deposit expansion Ground Hog Hills (Yerington - Bear connection) Singatse porphyry target North magnetic skarn MacArthur north porphyry Many others N 20

21 Yerington Copper District: Poised for Growth and Development MacArthur Mine: a large oxide copper project with a clear path to production Yerington Mine: Central location with a oxide and sulfide resource with excellent expansion potential Bear: Large porphyry copper deposit with historic resource and significant potential Other Exploration: potential upside Excellent infrastructure already in place (power, owned water rights, rail, roads, full service community) Community Support: Strong local, state and federal support 21

22 Precious Metals Central Mexico and Alaska

23 Precious Metals in Mexico Focused on finding other Peñasquito-type deposits Strategic alliance with Goldcorp provides funding for generative work Gold and silver prospects are in the heart of the Mexican Silver Belt ( Faja de Plata ) 5 projects with land position of more than 150 sq. miles in close proximity to operating mines Favorable mining environment with long history of production and well-developed infrastructure 23

24 Quaterra-Goldcorp Alliance Agreement initiated in 2010 and extended in 2013 provides funding for generative work by Quaterra along Peñasquito trend in central Mexico Agreement combines the strengths of the teams that discovered and built Peñasquito Goldcorp has option to acquire 70% of any property by spending an additional US$1m over three years on advanced exploration and by completing a bankable feasibility study At Quaterra s option, Goldcorp will underwrite loan guarantees for mine construction 5 properties covering over 150 sq. miles included in Investment Framework Agreement 24

25 Nieves Silver Project Mexico A Large Silver Project with Open Pit Potential Large land package in one of the world s best mining jurisdictions Excellent Infrastructure/access silver resource totals 53 MM oz. (MI) and 57 MM oz (I) Substantial resource upside Deposit open at depth & laterally San Gregorio Vein (16.3 MM oz) not in mine plan Two additional vein systems remain to be explored PEA completed in 2012 N 25

26 Herbert Gold Deposit - Alaska High grade gold deposit with excellent potential to become a mine Located in historic Juneau Gold Belt between Kensington and Greens Creek Gold mines 35/65 JV with Grande Portage NI resource estimate and technical report completed April by D.G. DuPre and Associates 26

27 Herbert Gold Deposit - Alaska High grade gold mineralization hosted by quartz vein systems within a quartz diorite intrusion 18,193 meters of drilling in 127 holes Gold mineralization defined over strike length of 3700 meters in 3 parallel vein systems Gold mineralization remains open along strike and to depth Down dip extensions and additional shoots considered priority targets for additional surface and u/g drilling. Up to 88% of gold recovered through simple gravity concentration (USBM 1988 ) E OPEN OPEN OPEN OPEN OPEN W OPEN 27

28 Quaterra Freeport Joint Ventures Earn-in agreements with Freeport McMoRan Exploration Corporation on two projects with potential funding of US$10m SW Tintic, Utah: Freeport has option to acquire 70% by spending US$5m over four years. Quaterra funded to bankable feasibility study Cave Peak, Texas: Freeport has option to acquire 70% by spending US$5m over four years. Quaterra funded to bankable feasibility study 28

29 Yerington Milestones With adequate financing, opportunity to create substantial shareholder value Bear Deposit: Complete land acquisition, commence drilling MacArthur: Complete infill, metallurgical and geotechnical drilling for prefeasibility study. Drilling to expand underlying primary sulfide deposit Yerington: Additional drilling, evaluate integration with the MacArthur. Explore extension of sulfide mineralization below Yerington pit Nieves: Monetization, with additional drilling substantially add value to the project 29

30 Other Milestones Monetize other non strategic assets to fund Yerington Nieves, Herbert, Uranium assets Goldcorp - Identify and drill high-priority precious metals targets in central Mexico Freeport - Monitor and evaluate drilling at SW Tintic and Cave Peak 30

31 Appendix

32 Management Team & Board of Directors: One of the Industry s Most Successful Exploration Teams Management Tom Patton, Chairman, Former President and COO Western Silver; VP Exploration of Kennecott; Mining Director RTZ Steven Dischler, President and CEO, Director 32 yrs experience with successful permitting and development of major mining and natural resource projects. Scott Hean, Chief Financial Officer Former Sr. Vice President and Managing Director, Bank of Montreal; Corporate Finance, J.P. Morgan, New York Eugene Spiering, VP Exploration Former VP Exploration of Rio Narcea Gold Mines; Sr. Geologist of Energy Fuels Nuclear Inc. Board of Directors Tom Patton, Chairman of the Board Steven Dischler, President and CEO, Director Michael Berry - Highly respected economic and investment strategist, excellent track record in mining and natural resources Tracy Stevenson - Former Global Head Information Systems of Rio Tinto Plc; CFO and Director of Kennecott Todd Hilditch - President, CEO and Director of Terraco Gold Corp., Director of Bryant Resources, Former President, CEO and current Director of Sama Resources, former President, CEO, Director of Salares Lithium Tony Walsh - Chairman of Audit Committee, former President and CEO and Director of Sabina Gold & Silver Corp., President and CEO of Miramar, CFO and VP Finance Corona Resources, current Chairman of Stornoway Diamonds Ltd. John Kerr - Geological consulting engineer since 1970 who has held senior positions with public companies and been involved in the discovery of significant mineral deposits, including two producing mines Roy Wilkes - Former President International Mining Business Unit of The Washington Group; COO of Santa Fe Pacific Gold; Sr. VP Business Development at Anaconda Minerals 32

33 MacArthur PEA Summary Parameters Key Operating and Financial Statistics for the MacArthur PEA LOM Production Oxide ore (main pit) tons mined 000's 132,756 Oxide ore (other areas) tons mined 000's 52,537 Mixed ore tons mined 000's 85,588 Total ore mined 000's 270,881 Waste tons mined 000's 244,948 Total tons mined 000's 515,829 Strip ratio 0.90 Copper pounds produced millions Average Annual Production Mining rate (tpy) millions 15 Operating (2)12 hr shifts /day 355 Ore tons processed 000's 15,000 Waste tons mined 000's 13,500 Total tons mined 000's 28,500 Average annual copper (cathode) Production lbs millions 41 Operating Costs (LOM) Mining Cost $/lb. Cu $0.99 SX/EW $/lb. Cu $0.38 Acid $/lb. Cu $0.35 G&A $/lb. Cu $0.12 Transportation $/lb. Cu $0.05 Total $/lb. Cu $1.89 Other Operating Parameters & Assumptions Average copper grade (total ore mix) 0.21% Average recovery (depending on ore type) 60%-70% Copper price (base case) $/lb. Cu $3.48 Power/kWH $.065 Acid Consumption (lbs/ton ore) Capital for SX/EX 20% Contingency Initial Sustaining Mining millions $48.0 $83.6 SX/EW millions $114.3 $64.0 Sulfuric acid plant millions $65.4 $0.0 Owner's cost millions $5.0 $0.0 Reclamation & Closure millions $0.0 $83.0 Total capital millions $232.7 $230.6 MacArthur Economic Sensitivity Analysis Cu Price $/lb Cu NPV(8) '000s IRR Payback (yrs) Base 3.48 $201, % % 4.18 $377, % % 2.78 $9, % 8.4 Operating Cost $/lb Cu NPV(8) '000s IRR Payback (yrs) Base 1.89 $201, % % 2.26 $107, % % 1.52 $286, % 2.8 Initial Capital $000's NPV(8) '000s IRR Payback (yrs) Base 232,749 $201, % % 279,299 $167, % % 186,199 $234, %

34 MacArthur Copper Resource NI compliant resource released in May

35 Yerington Pit Copper Resource NI compliant resource released in January

36 Nieves Silver Resource NI compliant resource, Aug

37 Nieves Silver Project PEA Key Operating Parameters (100%) (1) Silver Price sensitivity assumes constant gold price of US$1,3000/oz 37

38 Herbert Gold Resource NI compliant resource released in April