December 2014 Half Year Results Presentation Doray Minerals Limited Creating a leading mid-tier high-grade WA gold company
Disclaimer and Forward Looking Statements This presentation has been prepared by Doray Minerals Limited ( Doray ) to provide an update regarding the company to investors. Presentation information: This presentation is for information purposes only and does not constitute a prospectus or prospectus equivalent document. The information in this presentation is provided in summary form, has not been independently verified, and should not be considered to be comprehensive or complete. It is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase or otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, nor shall there be any offer, sale, issuance or transfer of securities in any jurisdiction in contravention of any applicable law. Not financial product advice: This presentation is not financial product or investment advice, nor a recommendation to acquire Doray securities. It has been prepared without taking into account the objectives, financial situation or needs of individuals and is not intended to be relied upon as advice to investors or potential investors. Before making an investment decision, investors or prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Doray is not licensed to provide financial product advice in respect of its securities or any other financial products. Cooling off rights do not apply to the acquisition of Doray securities. Doray assumes that the recipient is capable of making its own independent assessment, without reliance on this document, of the information and any potential investment and will conduct its own investigation. Disclaimer: Doray and its related bodies corporate and each of their respective directors, officers, employees, agents and contractors disclaims, to the maximum extent permitted by law, all liability and responsibility for any direct or indirect loss or damage which may be suffered by any person (including because of fault or negligence or otherwise) through use or reliance on anything contained in or omitted from this presentation. In particular, this presentation does not constitute, and shall not be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of Doray. Forward looking statements: This presentation contains forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", target, "anticipate", forecast, "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. Indications of, and guidance on, future expected production or earnings and financial position and performance are also forward looking statements. The forward looking statements in this presentation are based on current expectations, estimates, assumptions, forecasts and projections about Doray and the industry in which it operates as well as other factors that management believes to be relevant and reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. The forward looking statements relate to future matters and are subject to various inherent risks and uncertainties. Many known and unknown factors could cause actual events or results to differ materially from the estimated or anticipated events or results expressed or implied by any forward looking statements. Such factors include, among others, changes in market conditions, future prices of gold and exchange rate movements, the actual results of production, development and/or exploration activities, variations in grade or recovery rates, plant and/or equipment failure and the possibility of cost overruns. Neither Doray, its related bodies corporate nor any of their directors, officers, employees, agents or contractors makes any representation or warranty (either express or implied) as to the accuracy, correctness, completeness, adequacy, reliability or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this presentation reflect views held only as at the date of this presentation. Other than as required by law and the ASX Listing Rules, Doray disclaims any duty to update forward looking statements to reflect new developments. Reserve and LOM : This presentation refers to both Reserve and LOM (Life of Mine) Inventory in reference to Mutiny. LOM metrics include inferred resources. Unless otherwise stated the metrics presented in this presentation refer to LOM Inventory. The financial metrics quoted in this presentation are those determined before any hedging, gold streaming, gearing or taxation. Gold Equivalent Ounces: This presentation also refers to Gold Equivalent Ounces (AuEq). The Resource oz (AuEq) shows estimated AuEq ounces which relates specifically to the time the resource estimate was done and the metal prices quoted in those estimates. Slide 30 and slide 31 of this presentation shows a graph of Mine Peers, Reserve Grade and Production. This graph uses AuEq oz for comparative purposes only against gold only mines. Doray advises that the use of metal equivalents is not recommended for detailed financial analysis. 2
December 2014 Half Year Summary Gold Production Exceeds Expectations Zero LTI s (Andy Well >500 days LTI free) Record gold production from underground in Dec Quarter Improvements in head grade, costs and margin Upgraded full year guidance (85,000-90,000oz @ A$600-700/oz) Solid Financial Performance Revenue A$60.1M (Gross Profit A$8.5M) Cashflow from operations A$27.1M EBITDA $24.3M Net Profit after Tax A$4.0M Cash and gold on hand A$18.8M Debt reduced to A$12M Exploration and Business Development delivers results Recommended Takeover Offer for Mutiny Gold Ltd Near-mine exploration success at Andy Well High-grade drilling results from Horse Well JV Farm-in Agreement with Iluka Resources 3
Two high-grade WA gold projects Andy Well High-grade low-cost WA gold mine 2014FY - 77koz produced @ 10.8g/t 2015FY - Guidance 85koz - 90koz ~3 year mine life with significant nearmine exploration upside Deflector High-grade, development-ready Au-Cu-Ag project New underground mine plus gravity/flotation processing plant LOM production of 63kozpa Au, 2,600tpa Cu, 60kozpa Ag 6 year mine life plus exploration upside Combined Targeting 160kozpa production (AuEq) @ AISC <A$1,000/oz +1Moz Resource base @ 7.7g/t Au* Regional exploration portfolio 4
Comments on Dec 14 HY Performance As expected, the Sept 14 and Dec 14 Quarters saw: Increased mining costs due to introduction of CRF/in-situ sills Production from lower grade parts of the Wilber Lode orebody Lower gold price received as A$1,620oz hedge ran out On the Positive side, the Dec 14 Half Year saw: Increased gold production, sales and revenue Reduced depreciation and amortisation charges Reduced finance charges due to significantly reduced debt Increased exploration spend Reduction in unplanned dilution Monthly improvements in grade, costs and margin 5
Operational Summary Units 6 months to Dec 14 6 months to Jun 14 Tonnes mined t 158,194 122,884 Tonnes milled t 148,352 128,715 Head grade g/t 8.4 9.4 Gold produced ounces 39,228 38,821 2015FY Guidance 85,000-90,000 C1 cash cost A$/oz 698 577 600-700 All-in sustaining cost A$/oz 1,238 1,125 Gold sold ounces 40,545 37,211 Average gold price A$/oz 1,477 1,518 Average margin A$/oz 239 393 6
Evolution of mining methods Reduction in unplanned dilution through: Reduction in sub-level interval Increased drive heights Change from island pillars to CRF and in-situ sills Introduction of Reverse Avoca mining method backfilling reduces the likelihood of break back to foliation and fracture planes Step 1 - drill and backfill Step 2 blast and bog Improvements in grade, cost and profit margin 7
Wilber Lode - Stage 2 open pit 67% increase to high-grade open pit Reserve 23,500oz @ 16.1g/t Highway realignment completed and mining commenced Processing ore from Mar-Sept 8
Financial Performance Units Dec 14 Jun 14 Dec 13 Revenue A$M 60.1 56.7 53.9 Mining and processing A$M -29.9-19.7-17.5 Deprec./Amort. A$M -19.4-25.8-12.7 Royalties A$M -2.1-1.5-1.9 Expl. Write off A$M -0.2-0.4 - Gross Profit A$M 8.5 9.3 21.7 Corporate expenses A$M -2.9-2.7-2.4 Finance expenses A$M -0.5-1.0-1.4 Underlying net profit before tax A$M 5.1 5.6 18.0 Impairment A$M - -32.0 - Net Profit before Tax A$M 5.1-26.4 18.0 Tax expense/benefit A$M -1.1 8.2-5.4 Net Profit after Tax A$M 4.0-18.2 12.5 Cashflow from operations A$M 27.1 27.3 30.5 Earnings per share Cents /share 2.9-11.6 8.8 9
Cashflow Summary Units Dec 14 Dec 13 Receipts from gold/silver sales A$M 60.1 53.9 Payments to suppliers A$M -32.3-22.5 Net interest paid/received A$M -0.5-0.9 Net cash flow from operating activities A$M 27.1 30.5 Purchase of property, plant and equip. A$M -4.1-1.0 Payments for exploration and eval. A$M -4.7-2.7 Payments for mine development assets A$M -14.0-18.3 Purchase of minority JV partner interest A$M -4.0-4.0 Net cash used in investing activities A$M -26.8-26.3 Repayment of borrowings A$M -2.1-6.1 Proceeds from issue of shares/options A$M 0.7 - Net cash provided from financing activities A$M -1.4-6.1 Net increase/decrease in cash and cash equivalents A$M -1.0-2.0 Cash and cash equivalents at 1 July A$M 15.7 25.7 Cash and cash equivalents at end of period A$M 14.6 23.7 10
Balance Sheet Dec 14 Jun 14 Dec 13 Cash and Receivables 14.7 16.5 24.0 Inventories 4.2 6.1 3.5 Gold Hedge 1.0 4.7 7.5 Current Assets 20.4 27.4 35.5 Property plant and equipment 55.5 56.8 61.1 Exploration Assets 15.1 10.7 7.4 Mine Development Assets 14.1 13.9 46.9 Deferred Tax 5.8 5.9 - Non-Current Assets 90.6 87.4 115.5 TOTAL ASSETS 111.0 114.8 150.9 Payables 16.5 20.1 15.5 Current borrowings 12.9 14.7 49.9 Current Liabilities 30.3 36.1 65.8 Non-current Liabilities 1.8 1.9 5.0 TOTAL LIABILITIES 32.1 38.0 70.8 NET ASSETS 78.9 76.7 80.1 EQUITY 91.1 90.4 73.9 11
Second Half Outlook Upgraded full year guidance Production increased to 85,000-90,000 oz C1 cost reduced to A$600-700/oz Set to benefit from: Increased size of high-grade Stage 2 open pit Potential for additional high-grade Suzie open pit Higher AUD gold price A$250/oz increase since Oct 2014 Significant reduction in diesel price WA average retail diesel price (pre-rebate) 12
Doray Minerals - Corporate Objectives Debt reduction - capital management Sustainable production Exploration success Shareholder returns 13
www.dorayminerals.com.au Creating a leading mid-tier high-grade WA gold company 14
Corporate Overview ASX Code : DRM Experienced Board/Management Shares on Issue 234.9M Listed Options (DRMO) 8.5M Unlisted Options 6.3M Market Cap (@ $0.50) $117M Cash and gold (Dec 2014) Debt: Project Finance Sandstorm Loan Strong Institutional Support Substantial Shareholders $16.7M/23.7M* $22M* $9.8M + SG Hiscock 6.9% Colonial 5.3% Allan Kelly - 5.0% Directors/Management 5.7% Shareholders ~5,000 Top 20 shareholders ~53% Peter Alexander Allan Kelly Jay Stephenson Leigh Junk Peter Lester Allan Brown Peter Bamford Mark Cossom Jon Latto Iain Garrett Analyst Coverage Argonaut Bell Potter Commsec Evans and Partners GMP Macquarie Patersons PCF Non Exec. Chairman Managing Director Non Exec. Director Non Exec. Director Non Exec. Director Non Exec. Director GM, Operations GM, Growth Chief Financial Officer Fin. Controller/Co Sec. Average daily volume 610K * To be updated post-westpac refinancing + repayable Oct 2015 or converts to a metal stream from Deflector 15
6 month share price vs ASX Gold Sector 55M shares issued to MYG holders DRM-MYG transaction announced XGD ASX All Ordinaries Gold (Sub Industry) 16