NWM MINING CORP. SONORA, MEXICO PRODUCTION EXPANSION & RESTRUCTURING

Transcription

1 CORP. SONORA, MEXICO PRODUCTION EXPANSION & RESTRUCTURING JULY 2014

2 Forward Looking Statements NWM MINING Cautionary Statements Proposed Financing, Restructuring and Expansion This presentation contains information concerning proposed events in respect of NWM Mining Corporation, including debt restructuring. These events and transactions will be subject to various terms, conditions, including applicable regulatory and shareholder approvals, and are subject to definitive agreements being entered into by relevant persons. There is no assurance that these events and transactions will occur. Forward Looking Information This presentation includes certain "forward-looking information" within the meaning of the Securities Act (Ontario), including without limitation statements relating to mineral reserve estimates, mineral resource estimates, realization of mineral reserve and resource estimates, capital and operating cost estimates, project and life of mine estimates, expansion of the mine and related infrastructure, the timing and amount of future production, costs of production, success of mining operations, success of exploration programs, economic return estimates and potential upside and alternatives. Readers should not place undue reliance on forward looking statements. There can be no assurance that actual costs will be in line with forecasted budgets, that the mines will achieve production as anticipated or that the mines will produce the revenue and earnings forecasted. Important factors that could cause actual results to differ materially from these forward-looking statements include: exploration results that do not meet with the expectations of management, shortage of skilled labour, shortage of appropriate equipment, inability to raise the funds necessary to complete restructuring and development; general business, economic, competitive, political and social uncertainties; future prices of metals accidents, labour disputes and other risks of the mining industry; political instability, terrorism, insurrection or war; and other factors disclosed under the heading "Risk Factors" and elsewhere in NWM Mining documents filed from time to time with the Ontario Securities Commission and other regulatory authorities available on SEDAR at NWM Mining management has provided project modelling by making assumptions about mining costs to make inferences relating to geological material available for mining calculations. These project models are for informational purposes only and cannot be relied upon. Forward looking statements contained herein are made as of the date of this presentation and NWM Mining disclaims any obligation to update any forward looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws NI Compliance The technical information in this presentation is based on the UPDATED TECHNICAL REPORT AND MINERAL RESOURCE AND MINERAL RESERVE STATEMENT, LLUVIA DE ORO PROPERTY, SONORA STATE, MEXICO PREPARED FOR NWM MINING CORPORATION dated February 15, 2014, by NEIL N. GOW, P.GEO. and DARREN KONINGEN, P.ENG, each of who is a Qualified Persons as set out in National Instrument Standards of Disclosure for Mineral Projects ("NI "). The Updated Technical Report has been filed on NWM Mining s profile on SEDAR at All currency references in Canadian dollars, unless otherwise stated. 2

3 Executive Summary 1. Experienced Management Team New team has proven past experience with open pit, heap leach gold mining and exploration 2. Production Ramp-Up Increase from ~20,000 ounces of gold to over 60,000 ounces per year in 18 months 3. Highly Attractive Valuation Enterprise value of $40 per ounce of current reserves while comparables trade at $200 per ounce (median) (1) 4. Significant Exploration Potential Current reserves of 577,000 ounces (2) Target resources/reserves of +1 million ounces (12 months) 2013 discovery cost of less than $3 per ounce Potential multi-million ounce deposit 5. New Capital Structure Clean capital structure post financing and debt conversion TSX-V: NWM (1) Based on public financial statements, reports and corporate presentations of comparable companies. (2) Based on most recent NI technical report by Neil Gow and Darren Koningen, dated February 15,

4 Corporate Team Darren Koningen P.Eng - President and CEO, Director +20 years of engineering/metallurgical experience Founding member of Castle Gold Corporation (merger of Aurogin Resources and Morgain Minerals) which was sold to Argonaut Gold Designed, constructed, commissioned, and operated two gold heap leach operations successfully with in-house development work and low capital costs: El Sastre (Guatemala) and El Castillo (Mexico) that remain operational Ability to develop successful processes for challenging metallurgical problems Chris Chadder CA - CFO 20 years experience as business advisor and senior officer to junior resource companies Put Island Gold Mine in Wawa, ON into commercial production as President and CEO of Patricia Mining Corp Subsequently completed successful sale to Richmont Mines Inc Lenny Foreht - VP Corporate Development VP Operations & Corp. Dev, Castle Resources Partner, Linear Capital Corp. raised over $120 million for junior resource companies Mark Selby - Chairman & Director Currently President and CEO of Royal Nickel Corporation Previously Vice President, Business Planning & Market Research, at Quadra Mining ( ), Assistant Vice-President, Strategic Planning & Business Development ( ) and Director, Marketing, Business Planning & Development with Inco Limited ( ) Over 20 years experience in finance and corporate development at various mining companies 4

5 Corporate Team Darren Koningen P.Eng - President and CEO, Director +20 years of engineering/metallurgical experience Founding member of Castle Gold Corporation (merger of Aurogin Resources and Morgain Minerals) which was sold to Argonaut Gold Designed, constructed, commissioned, and operated two gold heap leach operations successfully with in-house development work and low capital costs: El Sastre (Guatemala) and El Castillo (Mexico) that remain operational Ability to develop successful processes for challenging metallurgical problems Federico Alvarez P.Eng - COO, Director 30 years of mine management experience, widely recognized within Mexico as one of the top mining professionals in the country Exceptional record of achievements as a senior operations manager at operations that include: Castle Gold s El Castillo Mine in Mexico and El Sastre Mine in Guatemala, Nukay gold mines (open pit and underground operations), Piedras Negras coal mine, Minera Autlan manganese operations Miguel Cardona - Manager Exploration 20 years mining & exploration geologist Managed expansion of know heap leach resource at El Castillo project for Castle Gold from initial value of approximately 400,000 ounces to 1.2 million ounces prior to sale of company in 2009 Key member of teams involved with discovery of a number of significant deposits including: Los Filos (1.5 million ounces 0.85 g/t) and El Limon (3.0 million ounces 1.2 g/t) This team founded and ramped up production at Castle Gold (two operating mines) for < $10 million. Sold to Argonaut Gold for $112 million in Pedro Delgado P.Eng - General Manager 20 years general & mine management, including extensive open pit expertise General Manager at Castle Gold (then with Argonaut after acquisition in 2009) from initial project construction stages to final operations Proven capabilities to manage in-house all mine development activities including mine planning, environmental permitting, mine and plant construction. 5

6 Project Highlights Lluvia de Oro Mine currently produces ~20,000 ounces of gold per year $12 million of capital required to ramp up production to 60,000 ounces per year (2015/16) $60 million of assets in place Operating heap leach/gold recovery facilities at Lluvia de Oro 5,700 hectare contiguous land position around known deposits Excellent location 15 minute drive from town of Magdalena in Sonora, Mexico (population: 26,605) Lluvia de Oro Mine U.S.A. MEXICO 6

7 Excellent Mining Jurisdiction NWM MINING Most secure mining state in Mexico One hour from US border along State Highway 15 Lluvia de Oro Mine NWM Mining 577K oz Gold Reserves (2013) Dolores Gold Mine MineFinders Corporation 2.0M oz Gold Reserves La Herradura & Noche Buena Fresnillo & Newmont JV 4.1M oz Gold Reserves El Chanate Gold Mine Aurico Gold 1.3M oz Gold Reserve U S A M E X I C O La India Gold Mine Agnico-Eagle 900k oz Gold Reserves Mulatos Gold Mine Alamos Gold 2.2M oz Gold Reserves San Francisco Mine Timmins Gold Corp 1.3M oz Gold Reserves Mercedes Gold Mine Yamana Gold 1.0M oz Gold Reserves Province of Sonora Pinos Altos Gold Mine Agnico-Eagle 3.1M oz Gold Reserves La Cienega Gold Mine Fresnillo Plc 3.1M oz Gold Reserves Note: Based on public financial statements, reports and corporate presentations of comparable companies. 7

8 Mine Layout Ponds and Plant Lluvia 1 Pads to Jojoba Lluvia 2 Pads Future Pads 8

9 Overview of 2013/14 Mining Operations Q Gold produced 5,117 ounces 19,688 ounces Average grade 0.41 g/t 0.48 g/t Strip ratio 1.13:1 0.97:1 Leach recoveries +70% ~65% Cash costs $1,284 $1,264 Average realized gold price $1,293 $1,411 Revenues $6.8MM $28.9MM EBITDA $0.0MM $0.3MM Net income ($1.2MM) ($10.1MM) 9

10 Site Infrastructure Mining at Gold Ridge/Creston Leach Pad Carbon Columns and Assay and Metallurgical Facilities Pregnant Solution Pond Permitted Leach Pad Expansion SART Plant 10

11 Production Ramp-up Capital Requirements NWM MINING Low High Capital expenditures $4MM $4MM Working capital $6MM $9MM Exploration $2MM $3MM Debt repayment $0MM $4MM Total $12MM $20MM Ramp up from a mining rate of approximately 12,000 tpd to 40-45,000 tpd by Q Expand leaching capacity to accommodate ramp-up in production Bring in new mining contractor and larger fleet Intend to expand gold reserves/resources to +1 million gold ounces Conduct regional exploration program with target to delineate further resource potential Complete comprehensive metallurgical test work and leach pad optimization program to improve recoveries and cash costs 11

12 Forecasted Production 80K oz Forecasted Production and All-In Cash Costs* (USD) $1,200 60K oz $1,100 40K oz $1,000 20K oz $900 0K oz Production Total All-in Cash Costs $800 *Note: Based on most recent NI technical report by Neil Gow and Darren Koningen, dated February 15, Total All-in Cash Costs per gold ounce are Non-GAAP measures that do not have any standardized meaning prescribed by International Financial Reporting Standards ( IFRS or GAAP ) and should not be considered on an isolated basis. 12

13 Forecasted Annual Cash Flows $40MM After-Tax Free Cash Flow from Operations* (USD) Sensitivity to Gold Price $30MM $20MM $10MM $0MM $1,200 Gold $1,300 Gold $1,400 Gold $1,500 Gold *Note: Based on most recent NI technical report by Neil Gow and Darren Koningen, dated February 15,

14 Comparable Company Analysis EV/Reserves (CAD) $250 / oz Publicly Traded Comparables Emerging Producers * All-in Cash Costs* (USD) $1,500 / oz $200 / oz $150 / oz $100 / oz Expected reduction in all-in cash costs after ramp-up $1,300 / oz $1,100 / oz $900 / oz $50 / oz $700 / oz $0 / oz NWM Mining Timmins Gold Argonaut Gold* Aurico Gold EV/Reserves Total All-in Cash Costs Projected All-in Cash Costs after Ramp-up $500 / oz *Note: Chart as of July 8, All information is based on public financial statements, reports and corporate presentations of comparable companies. Total All-in Cash Costs per gold ounce are Non-GAAP measures that do not have any standardized meaning prescribed by International Financial Reporting Standards ( IFRS or GAAP ) and should not be considered on an isolated basis Argonaut Gold s all-in cash costs were not reported. The cash costs illustrated above are calculated using the company s financial statements 14

15 Ramp-Up Comparable to Current Producers Mine Comparison Lluvia de Oro El Castillo Mesquite Company NWM Mining Argonaut Gold New Gold Location Sonora, Mexico Durango, Mexico California, U.S.A Reserves 577,000 ounces 1.2 million ounces 2.2 million ounces Reserve grade 0.44 g/t 0.36 g/t 0.60 g/t M&I resources (inclusive of reserves) 589,000 ounces 3.2 million ounces 4.9 million ounces M&I resource grade 0.44 g/t 0.31 g/t 0.49 g/t Annual production (2013) 19,688 ounces 94,804 ounces 107,000 ounces Cash costs (2013, USD) $1,190 $699 $907 Historical acquisition price of company N/A $112 million (2009) $315 million (2009) Castle Gold (same operating team currently at NWM) acquired the El Castillo mine, ramped-up production significantly and sold to Argonaut Gold Inc. Western Goldfields acquired the Mesquite mine, which ramped up to its current production level and is now a flagship project for New Gold Inc. Note: Based on public financial statements, reports and corporate presentations of comparable companies. 15

16 Current NI Reserves Realistic resource upside potential land package underexplored Creston and Gold Ridge are open at depth and along strike Note: Based on most recent NI technical report by Neil Gow and Darren Koningen, dated February 15,

17 Multiple Exploration Targets NWM MINING 17

18 Resource Expansion Potential Recent In-Fill Drilling (Creston Mine) New drilling supports expansion potential of known reserves at Creston Excellent potential for strike extensions in both directions 18

19 Resource Expansion Potential Gold Ridge Mineralization Extensions Current Mining Operations Mining at Gold Ridge began in the second half 2013 Remains open along strike (+1.5km), to east and at depth 2014 drill program planned to confirm depth and strike extensions of current reserves Gold Ridge April

20 Cross Section of Mineralization NWM MINING Gold Ridge Creston Pit Pozo/Este Gold-Bearing Fluids 20

21 RC NWM MINING Representative Section: Gold Ridge SECCION SGR 28, N 60 W, NE Current mining zone only drilled to a depth of 40 m gr/tn Au gr/tn Au

22 Resource Expansion Potential Gold Ridge East (Pozo/Este) 22

23 Multiple Exploration Targets NWM MINING 23

24 Increase Gold Reserves Current reserves are 577,000 ounces of gold 20,000 metre RC drilling program to target +1 million ounce gold reserve base by Q NWM has consolidated all land around the La Jojoba & Lluvia de Oro Deposits 5,700 hectare property Since acquiring the land, the company has focused on production, and minimal exploration drilling has been done to date Target Areas: RC Drilling (Metres) Drill Program Current Reserves (1) (oz) Targeted Increase (2) (oz) Low High Creston 6, , , ,000 Goldridge 8,000 31, , ,000 Jojoba 1, , , ,000 Campamento 3, , ,000 Pozo/Este 2, , ,000 Total 20, , , ,000 (1) Based on most recent NI technical report by Neil Gow and Darren Koningen, dated February 15, (2) Targeted increase is a projection only, and is not based on NI compliant technical reporting. 24

25 Current Capitalization $0.08 Share Price Capitalization Market Capitalization $2.8 million $0.06 Debt Outstanding $21.5 million (USD) Recent Share Price $0.005 $0.04 Basic Shares Outstanding 554,101,777 $0.02 $0.00 Aug-'12 Dec-'12 Apr-'13 Aug-'13 Dec-'13 Apr-'14 Options 500,000 ($0.10 Weighted Average Exercise Price) Warrants 13,976,000 ($0.10 Weighted Average Exercise Price) Fully Diluted Shares Outstanding Note: As of July 22, ,577,777 25

26 Executive Summary 1. Experienced Management Team New team has proven past experience with open pit, heap leach mining and exploration 2. Production Ramp-Up Increase from ~20,000 ounces to over 60,000 ounces per year in 18 months 3. Highly Attractive Valuation Enterprise value of $40 per ounce of current reserves while comparables trade at $200 per ounce (median) (1) 4. Significant Exploration Potential Current reserves of 577,000 ounces (2) Target resources/reserves of +1 million ounces (12 months) 2013 discovery cost of less than $3 per ounce Potential multi-million ounce deposit 5. New Capital Structure Clean capital structure post financing and debt conversion TSX-V: NWM (1) Based on public financial statements, reports and corporate presentations of comparable companies. (2) Based on most recent NI technical report by Neil Gow and Darren Koningen, dated February 15,

27 CORP Richmond Street West Toronto ON, Canada M5H 2K1 Phone: (416) Fax: (416)