EMERGING COPPER PRODUCER. Sydney Mining Club Presentation June 2008

Transcription

1 EMERGING COPPER PRODUCER Sydney Mining Club Presentation June 2008

2 Cautionary Statement The information contained in this document ( Presentation ) has been prepared by Discovery Metals Limited ( Company ). This Presentation does not constitute an offer or invitation to any person to subscribe for or apply for any securities in the Company. While the information contained in this Presentation has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers give any representations or warranties (express or implied) as to the accuracy, reliability or completeness of the information in this Presentation, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, to the full extent permitted by law, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the Information or for any of the opinions contained in this Presentation or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any inaccuracies in, or omissions from, this Presentation which may become apparent. transaction and the right is reserved to terminate any discussions or negotiations with any person. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained in this Presentation necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. This Presentation may include certain statements that may be deemed forward-looking statements. All statements in this discussion, other than statements of historical facts, that address future activities and events or developments that the Company expects, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The Company, its shareholders, directors, officers, agents, employees or advisers, do not represent, warrant or guarantee, expressly or impliedly, that the information in this Presentation is complete or accurate. To the maximum extent permitted by law, the Company disclaims any responsibility to inform any recipient of this Presentation of any matter that subsequently comes to its notice which may affect any of the information contained in this Presentation. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looing statements. 2

3 Company Snap Shot Botswana focussed emerging copper producer without $billion capex ASX (DML), AIM (DME) & BSE (DML) listed Substantial and expanding Mineral Resource base- new mineral province NW Botswana Copper Project 1.3% Cu NW Botswana Pre-Feasibility Study expected end June 2008 Highly prospective, 100%-owned 6,400 km 2 strategic regional tenement position in NW Botswana extension of Zambian Copper Belt Operationally experienced Board and management Focused Emerging Copper Producer 3

4 Corporate Strategy Fast track progression of NW Botswana copper project Pre feasibility (PFS) - mid 2008 Open pit focus Bankable feasibility study (BFS) Q Detailed engineering & construction 2009 Targeted production commencement, late 2010 ~24,000t Cu pa Assess project expansion potential to match resource base Extensive exploration program. Current resource represents less than 5% of the potential 700 km strike length to be tested within 6,400 km 2 of tenements Fast Track Copper Production 4

5 DML Share Price & Market Capitalisation AUD/share AUD millions ~400 % Increase in Market Capitalisation 5

6 Company Structure and Shareholders Market Cap and Enterprise Value Shares on Issue at 3-June m Share Price at 3-June-08 $0.59 Market Cap $77.0m Net Cash at 3-June-08 $6.0m Enterprise value $71.0m Significant Shareholders Macquarie Bank 10.0% Taurus Fund 8.2% Investec (Botswana) 7.4% Mr R.A. Healy 6.2% Trafigura 3.6% 6

7 Project Location: Botswana A N G O L A Z A M B I A DML Copper Project Gobabis WINDHOEK Walvis Bay N A M I B I A Ghanzi Maun Jwaneng Sowa Nata Orapa B O T S W A N A GABORONE Z I M B A B W E Francistown Selebi - Phikwe S O U T H A F R I C A DML operational office PRETORIA JOHANNESBURG Strategic Tenement Position 7

8 Botswana: 11 th best location for mining investment Botswana 11th Outranked Australia Only African State in top 20 Source: Fraser Institute Survey PPI ranking 2007/8 8

9 About Botswana: 9

10 Botswana: Vision 2016 (50 years of democracy) Vision 2016: Develop into a competitive, winning and prosperous nation Seven pillars An educated and informed nation A prosperous, productive and innovative nation A compassionate, just and caring nation A safe and secure nation An open democratic and accountable nation A moral and tolerant nation A united and proud nation A Country with Vision and a Plan 10

11 About Botswana: A+ Credit Rated Economy Botswana investment rating is A+ Companies taxed 25% of their taxable income Annual capital allowances for plant and machinery range from 10% to 25% of the cost 200% employee training cost deduction Copper royalty is 3% of revenue Silver royalty is 5% of revenue The Taxation Regime is reasonable and not likely to change 11

12 Significant New Copper Province ANGOLA Zambian Copper Belt ANGOLA CRATON ZAMBIA DML Copper Project NAMIBIA BOTSWANA SOUTH AFRICA KAAPVAAL CRATON ZIMBABWE CRATON MOZAMBIQUE Poorly explored extension to the Zambian Copper Belt Extensive mineral province across north west Botswana 12

13 Exploration potential ~700 strike km of mineralisation to explore The Start of a New Cu Province 13

14 Building the Resource Base Plutus Inferred Resource % Cu & 13g/t Ag Nexus prospect Petra Inferred Resource % Cu Total Inferred Resource % Cu equiv. NE Zeta prospect Zeta Inferred Resource % Cu & 21g/t Ag Quirinus prospect 5km 14

15 Proposed 2-3Mtpa Processing Plant Plutus Inferred Resource Petra Inferred Resource 6km 6km Proposed Plant Location 3km Zeta Inferred Resource 5km 15

16 Growth in Mineral Resource Base Copper (Kilo tonnes) ,000t Copper 24 M Oz Silver Silver (Million Ounces) Jun-06 Apr-07 May-07 Dec-07 Contained Copper Contained Silver 0 Rapid Growth From Initial Estimate in June

17 Copper Mineralogy Chalcocite Copper Mineralisation From Plutus Resource Malachite Copper Mineralisation From Plutus Resource 17

18 Metallurgy Test work to date supports; Up to 95% Chalcocite recovery + 80% Malachite recovery 65-80% Silver recovery Clean premium concentrate ~ 40% Cu + 300g/t Ag Test work on oxides continues Simple processing circuit Conventional flotation Grind range p50 - p80 of 75µm 18

19 NW Botswana Copper Project Infrastructure Water : targeting deep aquifer, not used by community Power: Grid Power available late 2011, self generation of start up power provided in capital estimate Ports: Walvis Bay, Maputo, Durban, Richards Bay Transport: highway network links project to ports and smelters Potential Off-take partners Botswana: Tati, BCL Africa: Weatherly (Namibia), Palabora (RSA), Zambian smelters International: multiple options Workforce: mix of experienced operators from mines in east Botswana and local residents who will be trained Permanent workforce: (~250) in local towns, construction workforce in camp (~750) 19

20 NW Botswana Copper Project Environmental Equator Principles compliant approach Environmental Impact Study underway Includes significant community consultation Mining area not of environmental, cultural or land use significance Field camp Petra 20

21 DML Copper Project Advantages Pre-production status without $Billion capex High quality concentrate (~40%) Potential to commence production with above resource grade with strip ratio below LOM average Large regional copper play extension of Zambian Copper Belt Substantial mineral resource with significant exploration upside Politically stable mining friendly location Long mine life with potential to grow Simplicity Geology/ mineralogy/ geometry Near 100% drilling strike rate Mineral Processing Environmental 21

22 Contained Copper and Head Grade Comparison Exploration potential Exploration Potential (Tonnes x10 6 ) 22 Source: Paradigm Capital Pty Ltd Note: The values as presented ignore variables including but not limited to by-product metals, stage of development, country risk and funding constraints. As such, there is a strong likelihood that should these other factors be considered, then the ranking as displayed above may change.

23 Discovery Metals - comparison to peer group Enterprise Value per Tonne of In-Situ Copper* Enterprise Value A$ / contained resource tonne copper $1,000 $800 $600 $400 $200 $0 $950 Copperco Ltd $636 $622 Cudeco Ltd Equinox Minerals Ltd $474 Anvil Mining Ltd $394 Aditya Birla Minerals Ltd $349 Finders Resources Ltd $288 $269 Copper Strike Ltd Matrix Metals Ltd * Includes Inferred, Indicated and Measured Resources $162 Havilah Discovery Resources Metals Ltd NL $80 $73 $71 Hillgrove Resources Ltd African Copper Plc $35 Indophil Resources NL Source: RFC, Company reports, Feb Note: The values as presented on an Enterprise Value basis per contained resource tonne ignore variables including but not limited to grade, by-product metals, stage of development, country risk and funding constraints. As such, there is a strong likelihood that should these other factors be considered, then the ranking as displayed above may change. 23

24 Conclusions Simple strategy leverage off a quality project in a good location to create value for shareholders build a simple, low risk, high value, relatively low capex, expandable operation explore and grow the resource base Targeting early copper production late 2010 Excellent growth potential strategic regional tenement position with ~700 strike km to explore drilling continues to improve current resource confidence and quality mineralisation open at depth and along strike recent Quirinus discovery confirms prospectivity not in current resource base regional exploration programme identifying many additional targets 24

25 Contact Brad Sampson Managing Director Ph: brad@discoverymetals.com.au ASX:DML BSE:DML AIM:DME 25

26 Discovery Metals Limited Calculation of Copper Equivalent The Inferred mineral resources have been reported in this presentation in copper equivalent terms (ECu) which were calculated using the following criteria: Copper price US$2/lb Silver price US$12/oz Copper recovery 94% Silver recovery 83% The copper and silver recovery values have been determined from historical metallurgical test work on samples of representative copper-silver mineralisation from the Zeta, Plutus and Petra prospects. This work was completed by Outokumpu in 1978 and concentrated on determining the flotation characteristics of the copper-silver mineralisation. The metallurgical test work indicates that the copper and silver have a high probability of being able to be economically recovered. The copper equivalent value was calculated for each block within the resource models using the following formula: ECu (%) = Cu (%) + (Ag (g/t) * ) The grade and tonnage values in copper equivalent terms represent the same portion of the resource block model as was calculated by Snowden from the individual copper and silver assay values. The block model was calculated using ordinary kriging with the assay data from 70 diamond drill holes drilled by Discovery Metals and 56 historical drill holes (38 diamond and 18 RC holes). The information in this report as it relates to Mineral Resources was compiled by Mr Stefan Mujdrica and Mr. Jason Hosken, who are Members of The Australasian Institute of Mining and Metallurgy. Mr Mujdrica and Mr Hosken are full time employees of Snowden Mining Industry Consultants. Mr Mujdrica 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. The information in this report that relates to Exploration Results is based on information compiled by Stefan Mujdrica who is a Member of the Australasian Institute of Mining and Metallurgy. Stefan Mujdrica 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 Mujdrica consents to the inclusion in the report of the matters based on information provided by him and in the form and context in which it appears. 26