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SYDNEY MINING CLUB 5 DECEMBER 2002

SYDNEY MINING CLUB 5 DECEMBER 2002. Outline of Presentation. the answer the question the explanation: How we got here Coal cash flow leverage Gold exploration leverage Value adding to coal and to gold value today and target value the plan. 1996 to 2002 - Corporate.

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SYDNEY MINING CLUB 5 DECEMBER 2002

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  1. SYDNEY MINING CLUB 5 DECEMBER 2002

  2. Outline of Presentation • the answer • the question • the explanation: • How we got here • Coal cash flow leverage • Gold exploration leverage • Value adding to coal and to gold • value today and target value • the plan

  3. 1996 to 2002 - Corporate • Chopped H.O and divested non-core • Acquired coal infrastructure and consolidated gold ownership at low cost • Started gold and coal production • Used a range of debt & equity finance • Minimised shareholder dilution • Built teams and backing • Formed strategic alliances

  4. 1996 to2002 - Gold • Bought out partners • Started profitable small mine • Built great exploration and mining teams • Established resources 780K oz at 7.6g/t • Installed large exploratory decline • Launched exploration of Goldfield 7/02 • Already having significant hits Leverage to exploration upside

  5. 1996 to 2002 - Coal • Purchased infrastructure and land in 1998 • Built great team with a halved workforce • Production ramping-up to > 1.5Mtpa • Sufficient development put in place • Diversified customer & product base • Commenced mining in thick-seam zone • Positive consequences for coal quality • Some lessons being learnt for mining Leverage to emerging coal cash flow

  6. Coal – Production • 00-01 0.5Mt • 01-02 1.0Mt • 1st half 0.8Mtpa • 2nd half 1.8Mtpa • 1.2Mtpa rate triggers profits

  7. Southland is diversifying its customer & product base in preparation for production at capacity of >2Mtpa Coal – Marketing

  8. Coal- Strengths • Long-life mine • Most surface lands our freehold • Strong community support • Strong environmental control • Prolific historic coal seam • High quality = high margin • Infrastructure in place for +2 mtpa

  9. Gold - Production • Production from one zone of Inglewood Structure • Production doubled over 5 years • Profitably mining at high-grades of 8 g/t • Targeting much larger production if exploration succeeds Cash Cost = $317/oz

  10. Gold 2002-03 Status • Current production is efficient • Decline connects deeper mine in Dec • Major Goldfield targets being drilled • Decline will extend to discoveries • Still drilling Partridge to the west • 1st cab off the rank will be Inglewood north • Last week hit Inglewood 1 km to the south

  11. Exploration Potential • 100% controlled Goldfield and region • Prolific high-grade 4 million oz field • Potential for a further 6 million ozs • Strong community support • Low environmental risks • Established geological expertise

  12. River sand & cover rock concealment Mary Valley sediments (5-20m thick) GEOLOGICAL KEYHow gold formed at Gympie INGLEWOOD LODE

  13. Exploration Technology is Working • Targeting a new 2 million oz Inglewood-style ore system • Drilled through the river sands & sampled fresh rock below • Lo-level geochemistry identified anomalies • High hit rate in follow-up drilling of + 65%

  14. 1.5 million oz gold produced 2 million oz gold produced Ore Feeder ? Ore Feeder ? Inglewood Lode – A Major Goldfield Feeder?

  15. Gold - Development North • Deep Monkland Mine has +3 years reserves. • Lewis Decline is accessing ore zones and opens up the goldfield potential. TIME TO EXPAND EXPLORATION More Ore Shoots

  16. Inglewood Lode - north • New ore shoots north of current mine • Can access by extending Lewis Decline

  17. Inglewood being traced • 2km zone mined to date on/near Inglewood has yielded 2 million ounces at +8g/t • Length of Inglewood extended by >8km by geophysical survey interpretation • Drilling yielding good early results to north • We’ve hit it last week to the south, uplifted!!!

  18. Gold - Gemstone

  19. Coal $100 Million Sold 10% for $11 million In May 01 Gold $68 Million The starting point, mkt cap $160M Company Production Market Cap Market Cap (000oz) ($millions) (per prod oz) Troy 50 77 1.54 Triako 46 48 1.04 Sipa 56 47 0.84 152 172 1.13 Gympie Production = 60,000 ounces Imputed Value = $68 million

  20. The plan is to achieve 20%pa for next 6 years • GYM share price > 230cps in 2008 ? • Need value growth $240M ? • Discover/exploit > 2M oz au, @ 8g/t ? • Coal to 2.5Mtpa…$15/t profit & FCF ? • Add legs to each table, corporate ? • Separate the tables?

  21. emerging coal cash flow with the exploration leverage of a high-grade goldfield

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