Challenges of Investing in Junior Mining Companies and. Sotkamo Silver

Transcription

1 Challenges of Investing in Junior Mining Companies and Sotkamo Silver

2 Life Cycle of Junior Explorer High Risk - High Potential Full value Relative Value Possible takeover Speculation Discovery Lowered risk Institutional Investment years Failure Exploration and Discovery Feasibility Construction Start Up Prod. 1

3 TO CREATE ADDED VALUE metal contents "in situ" value Waste Value-added in mining Value-added in concentrating Value-added in refining Value-added in prospecting exploration ( TEKES, MTI ) ( GSF ) Prospecting Exploration Mining Concentrating Refining Junior Mining Listed or more mature companies 2 2

4 REQUIRE PROPER INFORMATION ETHICS HONESTY - The level of the ethics of the Company comes from the entrepreneurs, owners, management and board. COMPANY'S GOVERNANCE - The stock exchange rules and legislation obliges. - Mining Industry Association s recommendations INFORMATION AND COMMINUCATION - Adequate transparency + credibility - NI ; JORC; FINNMIN; SVEMIN; CIM; NI World bank; EQUDOR PRINCPLES; etc.. 3 3

5 RULES REDUCE RISKS Ni JORC CODE SVEMIN FINNMIN CESR Committee of European Securities Regulators Increasing level of geological knowledge and confidence MINERAL RESOURCES ORE RESERVES (IN SITU) (MINEABLE) MEASURED INDICATED JORC or NI43101 CODE Consideration of economic, mining, metallurgical, marketing, and governmental factors PROVEN PROBABLE INFERRED Timo Lindborg 4 4

6 Effective implementation of the mining project The resource model is critical to exploration and mining decisions, since the resource estimate controls financial expectations at each stage. Conceptual study Pre-feasibility study stage Feasibility study stage Back to basics There are no guarantees with new technology. Planning for the unforeseeable do you have plan B or C Mining is cyclical - Volatility is the new stability. The licence to operate demands better technology and sustainability. 5 5

7 OVERVIEW OF SOTKAMO SILVER Headquarter is in Stockholm, Sweden. The Company also has an operations office in Oulu and a field office in Sotkamo, Finland The primary listing is on the NGM Equity stock exchange in Stockholm with secondary listing on the Nasdaq OMX Helsinki Current market capitalization is about 20 million The Company had 2.9 million of net cash at the end of Q

8 ORE RESERVES AND ESTIMATED MINE ECONOMICS KEY PROJECT SUMMARY Ore reserves Ore tonnage Ag Grade Ag Proven 1.19 Mt g/t oz Probable 1.78 Mt g/t oz Proven and probable ore reserves 2.97 Mt g/t oz MINE ECONOMICS Production of payable silver Operations commencement date Q million oz Ag per annum and 7.4 million oz Ag over LOM Average operating cash costs 10.5 / oz Ag over LOM (US$ 13.7) Required capital expenditure (including infrastructure) Required net financing (including contingency, working capital and guarantees) 30.7 million 40 million KPMG Corporate Finance ( KPMG ) has been retained by Sotkamo Silver as exclusive Financial and Strategic adviser in connection with the Project. 7

9 BENEFTS TO INVEST IN SOTKAMO SILVER EXPERIENCED AND PROVEN MANAGEMENT - WE DELIVER LOW TECHNICAL AND GEOLOGICAL RISK FORECASTED OPERATING CASH FLOWS ARE STRONG JORC RESERVES AND RESOURCES ADITIONAL EXPLORATION POTENTIAL (JORC) 8 8

10 PRESS RELEASE THE VOLUME OF THE EXPLORATION TARGET IS MORE THAN 20 M TON MINERAL RESOURCES TOTAL 33 M TON (resources + potential) THIS INCREASE THE TARGET SUBSTANTIALLY The result of this study shows clearly the great potential, which Silver Mine deposit has towards depth and strike. This increases the potential of the Silver Mine projektet and our expectations of the deposit quality. I am certain that the Silver Mine will have much longer life time than the actual reserves shows today. 9 Comments Timo Lindborg, CEO 9

11 INCREASED POTENTIAL DOWN TO M Open Pit Mine Decline Planned Decline Total Mineral Resource (JORC) 13 Mill.t, Ag 60 g/t Ore Reserve (JORC) 3 Mill.t, Ag 86 g/t 500 m Drill Intersections R-110: m, Ag 92 g/t R-106: m, Ag 148 g/t Exploration Target (JORC) >20 Mill.t, Ag 60 g/t 2 Km 10

12 SENIOR MANAGEMENT HAVE EXTENSIVE MINING EXPERIENCE IN THE NORDIC REGION Timo Lindborg President & CEO Doctor of Technology, MSc ( Civil Engineering) and BSc (Geology). Professor at Oulu University 35 years experience with mining projects and Nordic companies Former Chief Executive Officer of Endomines AB, Endomines Oy and Kalvinit Oy Extensive experience in silver and gold mining projects Born 1955 pic Ilkka Tuokko Managing Director Sotkamo Silver Oy MSc in Geology and mineralogy from Oulu University More than 30 years experience in mining projects, precious metals and international mining companies Competent Person status, according to Australian JORC and Swedish SveMin Former Group Geology & Mining Manager of Mondo Minerals B.V. Born

13 BOARD OF DIRECTORS HAVE EXTENSIVE MINING EXPERIENCE IN THE NORDIC REGION Mauri Visuri Chairman of the Board (since 2011) MSc in Economics from the University Of Vaasa Bachelor of Science in Machinery Engineering from Vaasa Polytechnic Extensive experience in mining and process industry Mr. Visuri is also Managing Director of Teknoventure Oy Born 1957 Joanna Kuntonen-van t Riet Board member (since 2012) MSc in Environmental Sciences from the University of Helsinki Over 13 years experience in environmental and safety management in the mining industry Presently Environmental and Safety Manager at Northland Resources Born 1974 Teuvo Jurvansuu Board member (since 2010) 35 years experience in the mining industry Worked in various mines in Finland during that period including Vihanti, Keretti, Enonkoski and Pyhäsalmi mines In 2001 he entered the position of Managing Director of Pyhäsalmi Mine Oy and at the same time, Inmet Finland Oy (retired in 2009) Born 1948 Jarmo Vesanto Board member (since March 2013) MSc (Geology and Mineralogy) Member of the Australian Institute of Mining and Metallurgy More than 30 years experience in mining and exploration including 10 years in Australia and Canada with Outokumpu Oyj Currently General Manager - Finland at Altona Mining Ltd Born

14 RAMP-UP PHASE WILL BENEFIT SIGNIFICANTLY FROM THE EXISTING WORK Mining plan The existing mine decline of 2.6 km and ramp access (25 m 2 ), as well as the vertical ventilation shaft extending 350 meters from the surface, in place and ready for operational use. The projected mine life is 9 to 10 years based on current estimated mineable ore reserves of approximately 3.0Mt Open pit Planned extension of the decline (green) Existing ventilation shaft Existing Mine Decline (brown) Backfill with waste rock Year Colour 2014 Green, Brown 2015 Red 2016 Yellow 2017 Blue 2018 Black Grey 13

15 REPUTABLE KEY SHAREHOLDERS WITH EXTENSIVE EXPERIENCE IN MINING SECTOR INVESTMENTS Top five shareholders % ownership Market value (EUR m) Teknoventure Oy Finnish Industry Investments Ltd Timo Lindborg (through a company) Jouko Jylänki Ilmarinen Mutual Pension Insurance Company Total top five shareholders Other shareholders Total 100%

16 FURTHER EXPLORATION POTENTIAL Exploration projects ongoing in the surrounding Silver Mine region, with claims made on plots covering over 3,000 hectares in the Tipasjärvi greenstone belt The map illustrates locations of the applied claims (previous Mining Act) and ore exploration permit applications Additional prospects include Hopeavuori (Vammala Migmatite Zone) in Southern Finland. Management believe there is significant potential in these zones 15

17 KEY INVESTMENT HIGHLIGHTS Short timeframe to production Completed Bankable Feasibility Study (BFS) Production Low capital expenditure Operations are expected to commence in Q and negotiations with potential off-takers are in advanced stages All necessary mining licenses and environmental permits received Extensive exploration and technical mine planning completed, including a BFS prepared by Wardell Armstrong in May 2012 Review of the final mining plan completed by Outotec in May 2012 Average silver production of 0.8 million oz Ag per annum. Silver : 7,386,148 oz; Gold : 23,166 oz (LOM) Zinc : 17,468 t; Lead : 7,564 t (LOM) Capital expenditure of approximately 30.7m required, which includes construction of a processing plant and infrastructure Contract negotiations are near complete with all suppliers 16

18 LOW RISK AND SIGNIFICANT GROWTH POTENTIAL Low risk mining and processing Significant growth potential Management team with proven track records Environment Deposit mineralogy is simple, well understood and easy to process, with standard grinding and flotation with recovery above 86%. Geophysical surveys suggest substantial extension to potential mine life and resource mineralization. Exploration mineral resource estimate in the inferred category (NI compliant) is 13 Mt of ore for 26 Moz silver at 65g/t (cutoff grade 30 g/t Ag) + the Exploration target is 20 Mt at 60g/t. Substantial pipeline of promising exploration projects in the surrounding Silver Mine region. The management team has wide experience of running mines in Finland. Both CEO Timo Lindborg and Managing Director Ilkka Tuokko are experienced mining professionals with a proven track record of exploration and production. Equator Principles Assessment received with no significant issues noted. 17

19 SILVER MINE AREA THE NECESSARY MINING LICENSE AND ENVIRONMENTAL PERMIT RECEIVED 18

20 PRIMARY CONTACT REGARDING THIS INVESTMENT OPPORTUNITY KPMG Corporate Finance contacts Rama Ayman Mikko Harju Tommi Valento Partner, Global Head Senior Manager, Senior Manager, Metals & Mining Corporate Finance Corporate Finance Head of Debt Advisory Mob Mob Mob