BUILDING A COPPER COMPANY IN BRAZIL. PDAC Feb TORONTO

Transcription

1 BUILDING A COPPER COMPANY IN BRAZIL PDAC Feb TORONTO

2 CORPORATE & GOALS Shares on Issue 1.355B Significant Shareholders Share Price ~Au$0.07* Glencore 15% Market Cap ~Au$95m* BlackRock 5% Cash ~Au$16m** 1. Build Stage 1 for ~12,000tpa Cu +7,000ozpa Au 2. Develop Stage 2 targeting >28,000tpa Cu + Au 3. Discover next project via regional exploration * Late Feb 2014 ** End of Dec Qu 2

3 AVANCO IN WORLD CLASS CARAJAS Ø Major IOCG Copper-Gold province situated in northern Brazil Ø Existing Sossego & Salobo copper mines Ø Vale dominates the district in Fe & Cu Ø Avanco owns 2nd largest tenure in the region very prospective for new copper discoveries Ø Regional upgrade c/o $20B Serra Sul biggest global Iron ore development 3

4 PROJECTS - STAGE 1 & 2 STAGE I STAGE 2 SMELTER WITHIN TRUCKING DISTANCE 4

5 DEPOSIT PEDRA BRANCA STAGE 2 JORC RESOURCES Category Million Tonnes Cu (%) Au (ppm) Copper Metal (T) 965,000t of contained Copper at 1.42% Cu Equivalent* Gold Metal (Oz) Inferred , ,000 Total , ,000 Indicated ,000 98,000 ANTAS NORTH Inferred ,000 38,000 STAGE 1 Total , ,000 Measured ,000 3,000 Indicated ,000 49,000 ANTAS SOUTH Inferred ,000 13,000 Total ,000 65,000 TOTAL , ,000 *See slide #27 for Cu Equivalent derivation 5

6 STAGE 1 ANTAS COPPER MINE A RAPID DEVELOPMENT OPPORTUNITY 6

7 STAGE 1 ROBUST STUDY OUTCOMES 2013 Feasibility Study Analysis Items Value Remarks Sulphide Ore Production Rate ktpa Mine Life - Years NPV 7 $m IRR % Payback Period Months Preproduction Capital $m First 3 Years Av. Cu Production Tonnes First 3 Years Av. Gold Production Oz First 3 Years Av. C1 Cost $/lb First 3 Years Av. "On Site" Cost $/lb First 3 Years Average Headgrade %Cu First 3 Years Average Headgrade Au g/t First 3 Years Av. Strip Ratio X:1 Mine Life Av. C1 Costs Mine Life Av. "On Site" Costs $/lb Cu Mine Life Av. Strip Ratio X:1 Mine Life Av. Headgrade Cu Mine Life Av. Headgrade Cu $224 94% 9 $ $0.84 $ % $1.10 $ % 2.72% Including Low Grade Treatment Before Contingency and Owner's Cost inc TC's, RC's, Royalties, Freight less Gold credits Mine Gate Costs inc TC's, RC's, Royalties, Freight less Gold credits Mine Gate Costs Excluding Low Grade Treatment Including Low Grade Treatment * Refer to slide 26 for provisions and notes 7

8 STAGE 1- COSTS Area US$M % Field Work, Eng & Studies Land Purchase & Surface Plant & TMF Open Pit & Mining Fleet Working Capital ~$70m incl. $10m of contingency 8

9 $70m FINANCING Ø Banco Votorantim (Brazil) $58m Senior Debt Key commercial terms agreed Conditions standard for a transaction of this nature Progressing to definitive term sheet Ø Blackrock World Mining Trust (UK) $12m Royalty Transaction 2% & 25% NSR on Cu & Au respectively at Stage 1 & 2 Conditional on JORC Reserves & Mining License Detailed terms being drafted 9

10 RESERVE DRILLING EXCELS 25m x 25m drilling confirms Stage 1 as hosting near surface High Grade Copper Mineralisation 10

11 DRILLING HIGHLIGHTS* Ø 31m at 2.72% Cu, 0.65g/t Au from 25m AAND-067 Incl. 18m at 3.95% Cu, 1.07g/t Au, from 37m Ø 54m at 3.03% Cu, 0.33g/t Au from 25.00m AAND-068 Incl. 4m at 9.31% Cu, 0.67g/t Au, from 47m Ø 27m at 1.89% Cu, 0.78g/t Au, from 54m Incl. 15m at 3.03% Cu, 0.48g/t Au, from 59m AAND-070 Ø 22.3m at 3.70% Cu, 0.23g/t Au from 20.7m AND-071 Incl. 2m at 15.40% Cu, 0.19g/t Au, from 27m *Refer ASX Announcement Quarterly Activities Report dated 30 January 2014 and Exceptional Intersects in Reserve Drilling dated 17 February Avanco Resources confirms that it is not aware of any new information or data that materially affects the information included in this announcement. 11

12 Ø 28m at 3.24% Cu, 1.06g/t Au from 21m Incl. 3.65m at 10.56% Cu, 4.70g/t Au, from 41m Ø 33m at 3.97% Cu, 1.05g/t Au, from 86m Incl. 2.85m at 18.16% Cu, 1.53g/t Au, from 95.4m AAND-072 AAND-073 Ø 26.1m at 5.35% Cu, 0.86g/t Au from 47.9m AAND-074 Incl. 6.1m at 14.87% Cu, 2.35g/t Au, from 47.9m Ø Hole AAND-082 enters low grade sulphide ore at ~11m a True Depth of less than 8m before intersecting higher grade material which is much shallower than expected Ø AAND-082 indicates that Pre-Stripping maybe be a fraction of that budgeted in the FS *Refer ASX Announcement Quarterly Activities Report dated 30 January 2014 and Exceptional Intersects in Reserve Drilling dated 17 February Avanco Resources confirms that it is not aware of any new information or data that materially affects the information included in this announcement. 12

13 Ø Avanco has the in-house experience & Brazilian expertise to build Antas BUILD STRATEGY Ø Board with 150 years in the industry & >10 mine developments Ø To engage the best available freelance specialists for strong A Class Owner's Team with international & Brazilian knowhow 13

14 Supply comprises new & used equipment's, local & International Area PROCUREMENT UPDATE Scope Defined Supplier Selected Crushing Yes Yes pending Grinding Yes 3 options to evaluate Price Agreed Initial Payment made Flotation Yes Yes Yes Yes Regrind Yes Yes Yes Yes Buildings Yes Yes Yes Yes Filter Yes Yes Yes Above refers to principle equipment's only 14

15 IMPLEMENTATION Ø Four refurbished OK38 flotation mechanisms, ready for dispatch Ø Selected for Rougher-Scavenger unit operation 15

16 DEVELOPMENT PRIORITIES Ø Access & TMF - Site investigations complete. Proposals under review for design/construction of access road & Tailings Management Facility Ø Pit Geotechnical - Pit geotechnical drill holes completed, core is being dispatched for testing visual observations support the view that rock quality is very good Ø Metallurgical Fresh samples of each ore type will be sent to an internationally recognised laboratory to commence definitive testing Ø Regulatory Mining Licence expected in Q2, environmental approvals already well advanced 16

17 STAGE 1 SCHEDULE ACTIVITY BEST TIME LINES* 3 months - JORC Reserves, complete studies Q1/Q2 6 months - Met/Civil/Eng & secure long lead items Grant of Mining License Satisfy Financing CP s Secure long lead items Q1/Q2 6 to 9 months Trigger Debt & Start Construction Q2/Q3 15 to 18 months Start Commissioning End Q *May change as the project advances/new information becomes available 17

18 STAGE 2 - PEDRA BRANCA 18

19 STAGE 2 - ACTIVITIES Ø High grade, inclined, strong rocks, minimal cover, simple metallurgy, favourable access & infrastructure Ø An appropriate U/G cut-off grade in the Eastern Deposit may deliver a production grade ~2.5% Cu with a healthy gold credit Ø Studies are progressing and infill is being planned Ø Objective to reach a "Decision to Mine" at Pedra Branca in 2015 Ø On reaching a positive decision, management anticipate opening a Box Cut in the East and commence the ramp attack Ø Potential to develop Stage 2 from cashflow from Antas 19

20 STAGE 2 - UNDERGROUND West East East Ramp Development Longitudinal SLOS* Access *Sub Level Open Stoping 20

21 PEDRA BRANCA EXTENSIONS East West Pedra Branca Deposit Ore body Cu in Soil Anomalies East West Pedra Branca Deposit Ore body Cu in Soil Anomalies

22 REGIONAL EXPLORATION Antas North S11D (Fe) 118 (Cu) Sossego (Cu) Cristalino (Cu) Vemelho (Ni) Pedra Branca Buzios(Ni) Structural Corridor Of Preference

23 AVANCO SUMMARY ü Avanco is an emerging mid-tier copper company ü Near Term ~12,000tpa Copper, rapid, low risk opportunity ü Financially strong ü 800,000t Cu + 700,000Oz Au in JORC Resources ü 100% of multiple projects in major copper province ü Ability to deliver cost effective exploration 23

24 SUMMARY Continued ü Infill drilling very encouraging, Reserves expected Q2 ü Key terms agreed for $70m Capex progressing nicely ü Stage 2 potential to increase output to >40,000tpa Cu ü Glencore & BlackRock highly supportive ü Avanco is well positioned to:- Build a Copper Company in Brazil 24

25 Disclaimer The announcement may contain certain forward- looking statements. Words an:cipate, believe, expect, forecast, es:mate, likely, intend, should, could, may, target, plan, and other similar expressions are intended to iden:fy forward- looking statements. Indica:on of, and guidance on, future earnings and financial posi:on and performance are also forward- looking statements. Such forward- looking statements are not guarantees of future performance, and involve known and unknown risks, uncertain:es and other factors, many of which are beyond the control of Avanco, its officers, employees, agents and associates, which may cause actual results to differ materially from those expressed of implied in such forward- looking statements. Actual results, performance, or outcomes may differ materially from any projec:ons or forward- looking statements or the assump:ons on which those statements are based. You should not place any undue reliance on forward- looking statements and neither Avanco nor its directors, officers, employees, servants or agents assume any responsibility to update such informa:on. 25

26 STAGE 1 - Associated notes to slide 7 Stage I Feasibility Study relates to Antas North Deposit Copper Sulphide ore. See ASX Announcement Stage 1 Assessment Supports Fast Track Development, March The objective of the study was to develop a preliminary view as to the economic performance of the project, to support the decision to undertake further studies and consequently a decision to mine. The Feasibility Study is and will be ongoing and values shown are best estimates as of early 2013 and are likely to vary with continued work. The pit design was based on JORC compliant resources only with pit slope estimation and basic early Whittle pit design completed by independent consultants. Cash costs include offsets from gold credits. Copper and gold recoveries are based on Avanco s interpretation of flotation test work, and performance at a proximal mine treating similar ores. Capital Expenditure estimate is for preproduction expenditure, excluding contingency, owner s costs and working capital. The Capital cost estimate may change as studies are progressed. LOM time excludes potential additional life arising from other resources (such as Antas South sulphide ore), new resources, underground mining, treatment of lower grade ore, and or oxide ores. Avanco Resources confirms that all material assumptions underpinning the production target and the forecast financial information derived from the production target continue to apply and have not materially changed. 26

27 REFERENCES Grade Tonnage Reported above a Cut-off Grade of 0.4% Cu for Sulphide Resources, and 0.3% Cu for Oxide resources. All project costs in US$ The Copper Equivalent (Cu Eq) Calculation represents the total metal value for each metal, multiplied by the conversion factor, summed and expressed in equivalent copper percentage. These results are exploration results only and no allowance is made for recovery losses that may occur should mining eventually result. However it is the company s opinion that elements considered here have a reasonable potential to be recovered as evidenced in similar multi-commodity natured mines elsewhere in the world. The Copper equivalent conversion factors and long-term price assumptions used are as follows: Copper Equivalent Formula = Cu % + (Au(ppm) x ) Price Assumptions: Cu (US$3.20/lb), Au (US$1,375/oz) Competent Persons Statement The information in this report that relates to Mineral Resources and Exploration Results is based on information compiled by Mr Simon Mottram who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Mottram is an Executive Director of Avanco Resources Limited, in which he is also a shareholder. Mr Mottram 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 (CP) as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Mottram consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Mineral Resources is based on information compiled by Dr. Bielin Shi, who is a member of the Australasian Institute of Mining and Metallurgy and Australian Institute of Geoscientists. Dr. Shi is an employee of CSA Global Pty. Ltd. Dr. Shi has sufficient experience 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. Dr. Shi consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The JORC compliant resource information was prepared and first disclosed under the JORC Code It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. 27

28 Directors Matthew Wood Tony Polglase Simon Mottram Scott Funston Wayne Phillips Colin Jones Luis Azevedo Tony Polglase Managing Director 28