RESERVES of 790,000 ounces Gold (43-101) RESOURCES of 4.2 million ounces Gold (43-101) PRODUCTION rate of 65,000 ounces/annum 2012 TARGETING 100,000 ounces per annum 18 APRIL 2012 PROACTIVE INVESTOR PRESENTATION KIRAN MORZARIA FINANCE DIRECTOR www.vatukoulagoldmines.com info@vgmplc.com +44(0)207 440 0643
DISCLAIMER The information contained herein and in the relating presentation (together the information ) has been provided by Vatukoula Gold Mines Plc ( VGM or the Company ). No representation, express or implied, or warranty as to the accuracy or completeness of the information is made by any party and nothing contained herein is or shall be relied upon as a promise or representation as to the future. In all cases, recipients should conduct their own investigation and analysis of VGM. Except as otherwise indicated, the information is stated as of 16 April 2012 and should not, under any circumstances, create an implication that there has been no change in the affairs of the Company, market conditions or regulations since such date. The Company does not assume any obligation to update the information contained herein, including forwardlooking statements. Neither this document nor the presentation constitutes an offer to sell nor a solicitation of an offer to buy any securities. The information is confidential and must not at any time by recipients be copied, published, reproduced or distributed in whole or in part to any other person. The information is provided to recipients on the basis that they keep confidential the information and any other information otherwise made available, whether oral or in writing, in connection with the Company. The information contains forward-looking statements relating to VGM that are based on management s current expectations, estimates and projections about the VGM. Words such as expects, intends, plans, projects, believes, estimates and similar expressions are used to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Further, some of these forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements including rise in production capabilities and timetables; financials projections; production costs; and economic predictions. Forward-looking statements in the information are subject to known and unknown risks, uncertainties and other factors that may cause VGMs' actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: geopolitical uncertainty, political and economic instability, uncertain legal enforcement and risk of corruption where mining operations are located; changes in, and the effects of, the laws, regulations and government policies affecting VGMs' mining operations, uncertainties related to raising substantial additional financing to make all necessary investments and complete proposed mining projects; uncertainties related to the accuracy of VGMs estimates of mineral reserves and mineral resources and VGMs' estimates of future production and future total cash costs of production; uncertainties and costs related to exploration and development activities, feasibility studies that provide estimates of expected or anticipated economic returns from a mining project; uncertainties related to expected production rates, timing of production and the total cash costs of production; changes in general economic conditions, the financial markets and the demand and market prices of precious metals and diamonds. 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No document in relation to the issue of securities in the Company has been, or will be, lodged with, or registered by, The Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance in relation to the issue of securities in the Company. Accordingly, subject to certain exceptions, securities in the Company may not, directly or indirectly, be offered or sold within Canada, Australia, Japan, South Africa or the Republic of Ireland or offered or sold to a resident of Canada, Australia, Japan, South Africa or the Republic of Ireland. The securities in the Company have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the US Securities Act ) or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, any US Person as that term is defined in Regulation S under the US Securities Act. The Company has not been registered and will not register under the United States Investment Company Act of 1940, as amended. 2
CONTENTS 1. Overview of VGM 2. Strategy 3. Operating performance 4. Optimisation opportunities 5. Growth opportunities 6. Summary 3
VATUKOULA - OVERVIEW Owns and Operates the Vatukoula Gold Mine, Fiji Historic production of 7 million ounces of gold over 74 years Underground high grade narrow vein underground gold mine All required infrastructure 2 vertical hoisting shafts 1 decline Other access / ventilation shafts Processing plant rated at 600,000 tonnes per annum Labour live locally or in surrounding community Experienced Management Ian Colin Orr-Ewing EXECUTIVE CHAIRMAN 35 years experience in Sector David Paxton CHIEF EXECUTIVE OFFICER Mining Engineer Goldfields Kiran Morzaria FINANCE DIRECTOR Engineer / Geo & FD Ian Stalker DIRECTOR Ex General Manager Ashanti Goldfields David Whittle GENERAL MANAGER (FIJI) 4
FIJI Key Facts Mining Policy 18,333 sq. km Population 900,000 Western based legal system Interim Government formed 2006 elections due in September 2014 Corporate tax 20% GDP growth 1.8% (2011) Vatukoula Gold mining title held by foreign companies for over 70 years Government progressive mining policy encouraging resource development Namosi Cu/Au project Mt Kasi Au project Concessions 5 Year Tax Holiday (Dec 2014) 3% Royalty (Dec 2014) 5
OPERATIONAL OVERVIEW Geology Shallow epithermal Au deposit Multiple mineralisation episodes along fractures and faults, caused by collapse of extinct volcano (3 My) Mineralisation occurs generally as shallow dipping, 30 cm lodes Processing Well established processing plant and known mineralogy Ultimate recovery 85% Plant capacity in excess of 550,000 tonnes per annum Mining Narrow vein mining, 1.1 metre stope width Labour intensive, jack leg mining Trackless haulage to shafts Majority of ore hauled via two shafts Ore capacity in excess of 550,000 tonnes per annum Mine 700-800 metres deep (21 level) current mining between 14 level to 18 level Labour Total labour 1,150 rising to 1,400 6
CONTENTS 1. Overview of VGM 2. Strategy 3. Operating performance 4. Optimisation opportunities 5. Growth opportunities 6. Summary 7
VATUKOULA - STRATEGY Expand Targeting 100,000 ounce per annum 550,000 tonnes at 6.5 g/t head grade Targeting sub US$ 800 per ounce Optimise Improving productivity Alternative fuel source Increased plant recoveries Sustain Continued capital investment Underground infrastructure Resource drilling converting large inventory to Reserves Grow Large ore body Expansion Potential 19,700 hectares of further exploration licences adjacent to this world class deposit 8
CONTENTS 1. Overview of VGM 2. Strategy 3. Operating performance 4. Optimisation opportunities 5. Growth opportunities 6. Summary 9
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 EXPANDING PRODUCTION HISTORIC & PLANNED 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 VGM plc. 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0 0.00 Gold Produced (ounces) - LHS Head Grade (grams / tonne) - (RHS) Planned Gold Production (ounces) LHS (Year End: August) 10
PRODUCTION SUMMARY 2009 2010 2011 2012 H1 Development Meters 5,755 8,720 24,453 13,238 Tonne Processed 220,439 438,691 498,123 243,284 Grade Processed (g / tonne) 6.27 4.98 3.77 4.77 GOLD Produced (ounces) * 33,426 56,214 52,157 29,999 COST per ounce shipped (US$) 883 814 1,377 1,415 COST per tonne processed (US$) 133 101 144 166 (Loss)/profit for the period 000 (9,381) 4,523 (2,315) 1,231** Cash (used)/generated (Opex) 000 (4,138) 4,119 (2,312) 4,403** Lowering Cash Costs This will be achieved by completing development programme and therefore increasing grade delivered to the mill Double the grade / halve the cash cost per ounce, * includes gold which has been partially processed, but not produced as gold dore or shipped ** unaudited 11
US$ CURRENT QUARTERLY PRODUCTION PROFILE 20,000 2,000 18,000 1,800 16,000 1,600 14,000 1,400 12,000 1,200 10,000 1,000 8,000 800 6,000 600 4,000 400 2,000 200 - Sep 2010 - Nov 2010 Q1 Dec 2010- Feb 2011 Q2 Mar 2011 - May 2011 Q3 June 2011- Aug 2011 Q4 Sep 2011- Nov 2011 Q1 Dec 2011- Feb 2012 Q2 - Gold shipped (oz) Total Cash Cost / Ounce Shipped (US$) 12
CURRENT QUARTERLY PRODUCTION PROFILE 2,000 10.00 1,800 1,600 8.00 1,400 1,200 1,000 4.53 4.19 4.55 5.01 6.00 800 3.28 3.19 4.00 600 400 2.00 200 - Sep 2010 - Nov 2010 Q1 Dec 2010- Feb 2011 Q2 Mar 2011 - May 2011 Q3 June 2011- Aug 2011 Q4 Sep 2011- Nov 2011 Q1 Dec 2011- Feb 2012 Q2 - Total Cash Cost / Ounce Shipped (US$) Total Cash Cost / Tonne Mined and Milled (US$) Average ore head grade (g/t) 13
US$ QUARTERLY OPERATING COSTS 25,000,000 250 20,000,000 15,000,000 117 173 166 128 159 170 200 150 Overhead Mineral Processing Other Mining Costs Mining Engineering Costs 10,000,000 100 Mining Labour Mining Power Explosives 5,000,000 50 Cash Cost per Tonne - 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2-14
OPERATING COSTS FIRST HALF FEBRUARY 2012 Variable Costs Power 25% Mining Variable 23% Fixed Costs Other Mining 14% Engineering 12% Milling 8% Mining Labour 7% Milling Variable 11% 243,284 tonne, 29,999 ounces gold produced Cash costs US$ 1,415 / ounce produced 15
OPERATING COSTS COST PER TONNE US$ 166 / tonne (US$ 141) GLOBAL MINING INCREASES IN INPUT COSTS Heavy Vehicle Costs Power Explosives 16
FORECAST COSTS US$ 800 per ounce CURRENT OPERATING COST US$ 166 per tonne Operating Cost / ounce from - Current Mining - 50% ore from stopping / 50% ore from Development Mining Grade - 4.77 grams gold per tonne - US$1,415 / ounce Proposed Mining Ratio - 70% stopping / 30% Development Operating Cost per tonne Grade (ounce per tonne) x Recovery % 17
CONTENTS 1. Overview of VGM 2. Strategy 3. Operating performance 4. Optimisation opportunities 5. Growth opportunities 6. Summary 18
OPTIMISE Short term Improved labour productivity Long term supply contracts Improved inventory management Long term Biomass power station JV with FSC 18-24 month construction Commercial Operation 2014 Potential saving of up to US$150/oz. Project financed in separate SPV Contribution from VGM JV proportion of equity 19
OPTIMISE Biomass Power Station Feasibility Study Complete July 2011 Lead Consulting Engineer December 2011 Detailed Project Bank Feasibility April 2012 Tendering and Financing Appointment of Contractors and engineering, procurement, construction contracts Consturtion 18-24 months Commissioning EOY 2014 20
CONTENTS 1. Overview of VGM 2. Strategy 3. Operating performance 4. Optimisation opportunities 5. Growth opportunities 6. Summary 21
EXPLORATION STRATEGY Resource Drilling Reserve and resource drilling to focus on Matnagata NE and Prince William flatmakes 22
EXPLORATION STRATEGY RESULTS TO DATE & TARGETS Expanding Resource Surface Oxide 5.14 g/t Au over 17.55 m 12.09 g/t Au over 5 m 3.45 g/t Au over 19 m Prince William 23.19 g/t Au over 1.3 m Matanagata 9.61 g/t Au over 0.77 New Discoveries Nilsen Orebody 124.7 g/t Au over 0.46 m 33.5 g/t Au over 2.86 m 35.46 g/t Au over 1.07 m New Targets Nilsen Matangata Nilsen R-1 Zone Prince William MA699 Deeps 23
CONTENTS 1. Overview of VGM 2. Strategy 3. Operating performance 4. Optimisation opportunities 5. Growth opportunities 6. Summary 24
VATUKOULA GOLD MINE, SUMMARY 2012 2013 2014 65,000 ounces (US$ 1400 / ounce) 75,000 ounces (US$ 1,200 / ounce) 100,000 ounces (US$ 800 / ounce) With Biomass (US$ 700 / ounce) Growth Reserve and Resource Drilling Exploration Drilling Optimise Biomass Power Tender / Financing Construction & Commissioning Operation 25
CAPITAL STRUCTURE Major Shareholders Sprott Asset Management 15.81m 17.9% Canadian Zinc Corporation 12.57 m 14.3% Zesiger Capital Group 8.04 m 9.1% Black Rock Investment Management 4.24 m 4.9% Rex Harbour 3.46 m 3.9% Capital Research and Management 3.21 m 3.6% Issued Share Capital Issued and fully paid Current Price Market Capitalisation Warrants and Options (Directors) Fully Diluted 88.56 million 54 pence 47.8 million US$ 75.5 million 6.30 million 4.20 million 94.86 million Cash (approx) Debt Gold Hedging 4.5 million (Feb) Zero Zero 26
Producing Gold Mine Large Exploration Potential Value US$95 per ounce Reserve Dave Paxton www.vatukoulagoldmines.com info@vgmplc.com +44(0)207 440 0643