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SYDNEY MINING CLUB PRESENTATION “The voice of the Customer”. MARK CUTIFANI, Managing Director SONS OF GWALIA LTD 6 September 2001. AGENDA. Introduction Business context Tantalum - A case study Sons of Gwalia - Strategic directions Summary - Portfolio position. GOLD Core business

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sydney mining club presentation the voice of the customer

SYDNEY MINING CLUBPRESENTATION“The voice of the Customer”

MARK CUTIFANI, Managing Director

SONS OF GWALIA LTD

6 September 2001

agenda
AGENDA
  • Introduction
  • Business context
  • Tantalum - A case study
  • Sons of Gwalia - Strategic directions
  • Summary - Portfolio position
sons of gwalia ltd an australian miner

GOLD

Core business

Profitable, Significant

ADVANCED MINERALS

Core business

Profitable, Significant Growth

SONS OF GWALIA LTD - AN AUSTRALIAN MINER

MINERAL SANDS

Low risk

opportunity

sons of gwalia operations

WA

SONS OF GWALIA OPERATIONS

Gold

Advanced Minerals

Port Hedland

Wodgina

Laverton

Region

Leonora

Region

Kalgoorlie

Southern Cross Region

Perth

Murray Basin JV

Greenbushes

major gold companies 2000 roic
MAJOR GOLD COMPANIES - 2000 ROIC

Sons of Gwalia - 24%

Source: Merrill Lynch, May 2001

relative performance
RELATIVE PERFORMANCE

Sons of Gwalia

business context
BUSINESS CONTEXT
  • Changing the rules
  • Implications of change
  • Tantalum - A case study
business context a changing world
BUSINESS CONTEXT - A CHANGING WORLD
  • Information and Communication
  • Faster / Higher - Focus on performance
  • Life cycle costs
  • Technology obsolescence
  • Environment - Energy efficiency

THE CUSTOMER IS LOOKING FOR NEW SOLUTIONS

TO OLD PROBLEMS

business context implications
BUSINESS CONTEXT - IMPLICATIONS
  • A new world - Looking for new solutions
  • Material Sciences - Identifying possibilities
  • Light Metals - The new wave
  • Base Metals - Future position?

HOW DOES THE MINERALS INDUSTRY MEET THESE

CHALLENGES?

tantalum a case study
TANTALUM - A CASE STUDY
  • Properties - A competitive edge
  • Applications - An emerging position
  • Market Growth - What can we see
  • Gwalia’s response to the customer
what is tantalum
WHAT IS TANTALUM?
  • Grey-blue metal
  • Soft, ductile
  • High melting (2,997ºC) and boiling points (5,425 ºC)
  • Low co-efficient of thermal expansion
  • Excellent capacity to store and release electrical charge
  • Exceptional resistance to corrosion
tantalum applications
TANTALUM APPLICATIONS
  • Electronics
    • PCs, Palm Pilots
    • Video Cameras, Sony Playstations
    • Automotive electronics
  • Telecommunications
    • Mobile Phones
    • Base Stations
  • Alloys
    • Turbine blades in powerstations
    • Aerospace
tantalum usage 2000

CHEMICALS

6%

METAL CUTTING

8%

SUPER ALLOYS

10%

MILL PRODUCTS

15%

ELECTRONICS

61%

TANTALUM USAGE - 2000

TANTALUM DEMAND - 2000

5 million lbs Tantalum

6.3 million lbs Ta2O5

global tantalum reserve base 2001

OTHER- 12%

BRAZIL - 5%

CANADA - 8%

GLOBAL TANTALUM RESERVE BASE - 2001

Sons of Gwalia - 75%

Source: US Geological Survey - January 2001

major tantalum mines post expansions
MAJOR TANTALUM MINES POST EXPANSIONS

Canada

Brazil

China

Ethiopia

China

Brazil

tantalum organic growth
TANTALUM - ORGANIC GROWTH
  • Dominant Resource position
  • Regional positions / Established infrastructure
  • Low cost production
  • Take or Pay Contracts
    • Growth profile
    • Revenues protected
  • Multiple options for growth

FOCUS ON STABILISING THE MARKET AND DELIVERING VALUE TO OUR CUSTOMERS

managing the market
MANAGING THE MARKET
  • Customer needs
  • Value Chain
  • Supply Chain Integration
  • Product Research
  • Promotion
strategic development
STRATEGIC DEVELOPMENT
  • Business model
  • Core skills
  • Core values
  • Objectives
  • Portfolio assessment
strategic directions business model
STRATEGIC DIRECTIONS - BUSINESS MODEL
  • Commodity - Growth potential

- Resource positions

  • Capital Intensity - Establishment

- Risk profile

  • Margin Potential - Cost structures

- Revenue risks

DOES THE INDUSTRY STRUCTURE GIVE AN OPPORTUNITY TO MANAGE RETURNS?

sons of gwalia core skills
SONS OF GWALIA - CORE SKILLS
  • Geology - Regional exploration

- Working-over ground

  • Mining - Low Capital intensity

- No frills

  • Process - “Breakers” and “Shakers”

- Infrastructure hubs

UNDERSTANDING OUR SKILLS BASE KEEPS US FOCUSSED ON WHERE WE CAN ADD VALUE

strategic development objectives
STRATEGIC DEVELOPMENT OBJECTIVES

GOLD - Secure production base

- Improve quality of returns

- Establish industry relevant position

TANTALUM - Secure resource position

- Establish critical mass and low cost growth platform

- Increase market penetration

MINERAL - Establish Resource base

SANDS- Establish product quality and market potential

- Promote Murray Basin brand

POSITION FOR EXCEPTIONAL RETURNS

AND PROFITABLE GROWTH

gold a core business
GOLD - A CORE BUSINESS
  • Profitable, high cash flow business
  • Underwrite revenue through hedging
  • Focus on capital efficiency & total returns
    • Infrastructure hub
    • Flexible ore sources
    • Rationalise to reduce costs
  • 3 strategic regions
    • Leonora
    • Southern Cross
    • Laverton
pacmin bid rationale
PACMIN BID - RATIONALE
  • Strengthen Regional Positions
  • Secures Production / Cost Base
  • Enables more Effective Capital allocation
  • Improves Industry Gold Position
  • Strengthens Balance Sheet / Cash Flows

EARNINGS ACCRETIVE WHILE STRENGTHEN BASE TO MANAGE PROFITABLE GROWTH

tantalum production sales

‘000LBS

TANTALUM PRODUCTION & SALES

Forecast

GROWTH SECURED BY CONTRACTED

TAKE OR PAY SALES

murray basin titanium
MURRAY BASIN TITANIUM
  • First mineral sands producer
  • Commissioned March 01
  • Sales contracts in place
  • First shipments June 01
  • Production:
    • 30,000tpa rutile
    • 10,000tpa zircon
    • 30,000tpa ilmenite
  • Total Resources: 15.4Mt HMC
  • 156% increase in Resourcesin 12 months
  • Excellent exploration potential
murray basin 2002 business objectives
MURRAY BASIN 2002 BUSINESS OBJECTIVES
  • Ramp production to full capacity
  • Establish Murray Basin Titanium Brand
    • Rutile
    • Zircon
  • Consolidate Resource base to underwrite Stage II potential
  • Confirm ilmenite processing & market quality

POSITION FOR NEXT DEVELOPMENT PHASE

sons of gwalia opportunities
SONS OF GWALIA - OPPORTUNITIES
  • TITANIUM - The third wave?
  • LITHIUM - The fourth wave?
  • OTHER - New technologies

- New applications

FOCUS ON CUSTOMER NEEDS WILL PLAY A SIGNIFICANT PART IN DIRECTING OUR

FUTURE DEVELOPMENT

sons of gwalia asset portfolio
SONS OF GWALIA - ASSET PORTFOLIO
  • GOLD - Long-term sustainable profits
  • TANTALUM - Growth profile
  • MINERAL SANDS - Seeding an Opportunity
  • OPPORTUNITIES - Identifying strategic fit

PORTFOLIO STRUCTURED TO DELIVER

RETURNS AND PROFITABLE GROWTH

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SONS OF GWALIA

www.sog.com.au

SONS OF GWALIA LTD

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