DREAMING DONE... HISTORY IN THE MAKING Advancing Toward Positive Cash Flow in California s Mother Lode November 2013 TSX-V : SGM OTCQX : SGMNF
The following presentation may include certain forward-looking statements within the meaning of applicable Canadian Securities Laws and the United States Private Litigation Reform Act of 1995. All statements, other than statements of historical fact, included in the presentation, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of the Company are forward-looking statements. Words such as expect, anticipate, estimate, may, will, should, intend, believe and other similar expressions are forward-looking statements. Forwardlooking statements are not guarantees of future events and are subject to risks uncertainties assumptions and other factors. Actual results and future events could differ materially from those anticipated in such forward-looking statements. There an be no assurance that such forward-looking statements will prove to be accurate. 2
We control a dominant land / mineral rights position in the most prolific portion of California s famed Mother Lode and are permitted for a scale of operation allowing for significant growth. We are nearing completion of the development of our first mine, the Lincoln Project, the first new commercial gold mine in the Mother Lode in more than 55 years. We intend to achieve steady-state production and achieve positive cash flow by the third quarter of 2014. All major permitting is in place for the Lincoln Project, and we have begun evaluating the advancement of our Keystone resource, which is included in our existing permit boundary, as our likely second mine. We will engage in a systematic, modern exploration effort to find more gold. Recent exploration and development has successfully extended known gold zones and identified new gold-bearing veins. We see long-term potential for continued growth near mine and on our other holdings. 3
Executives and Management Rick Winters Bob Hutmacher Pat Carney David Cochrane Scott Briscoe Amanda Miller Mining Construction Inc Interim President & Chief Executive Officer Chief Financial Officer Project Manager VP Environmental Health & Safety Chief Geologist Controller Mining Contractor 4
Sutter 5 Year Stock Price 5yr. Stock Price History OTCQX TSX-V 52 wk high $0.40 $0.40 52 wk low $0.10 $0.13 Avg daily volume (2013) 38,800 26,400 Capital Structure ( 2013) Prepaid Gold Facility Available Credit RMB Facility Draws Shares Outstanding Options Fully Diluted Market Cap $20 million $1 million $19 million 120.4 million 5.5 million 125.9 million 16.3 million 5
Opportunity: Put the Lincoln Mine Project into production and take advantage of strong gold price fundamentals. Leverage our continued growth by generating cash flow from operations. Realize upside potential from permitted, built in capacity to expand mining and milling rates through the upgrade and development of known resources and the discovery of new resources through exploration. Ingredients for Success: Mining-friendly Amador County, excellent infrastructure. Development on track for 2014 steady-state gold production. Management team incorporates strong cadre of narrow-vein mine experience and permitting expertise in California. Strong financial backing of 48% shareholder, with project financing through US$20M Prepaid Gold Facility and $20M bridge loan. 6
Located between the towns of Sutter Creek (the historic Lincoln, Wildman-Mahoney & Eureka Mines) and Amador City (the historic Keystone & Bunker Hill Mines) Accessible by Highways 49 and 104 45 miles southeast of Sacramento in Amador County Power, communication, and transportation infrastructure established Could not ask for a nicer location for a gold mine! LOCATED IN THE MOST PROLIFIC SECTION OF THE FAMED CALIFORNIA MOTHER LODE GOLD BELT 7
Sutter controls a significant portion of the California Mother Lode vein system 8
1848 1851 1851-1958 1983-90 1998-99 2011 2012 2013 John Sutter explored for timber in mid 1840 s and briefly for gold in 1848 along the banks of what is now Sutter Creek. First gold discovery in June 1851 by the Amador Quartz Mining Company. Leland Stanford gained control of the mine in the late 1850 s and renamed it the Lincoln. From the 1850 s to 1950 s, gold production from the historic mines on SGM s current holdings exceeded 3.7 million ounces. First modern exploration effort occurred from 1983-1990. Stringbean Alley decline and other underground workings were developed in 1989-90. Project permitted for 1,000 tpd operation in 1998-99. Preliminary Economic Assessment for 150 tpd day operation Board of Directors approved Lincoln Mine Project development. Receive final permits required for construction and initiate development of the Lincoln Mine and Mill. Complete construction of surface facilities, achieve MSHA compliance for production mining and complete development of initial mining areas. 9
Tons Uncut Grade Oz/ton Contained Ounces Indicated: Lincoln-Comet 511,700 0.37 188,481 Keystone 161,900 0.21 34,563 Total Indicated 673,600 0.33 223,044 Total Inferred 2,377,900 0.19 458,914 Total Indicated and Inferred contained ounces 681,958 Source: NI 43-101 Technical Report, February 2008, Payne The project benefits from the good metallurgy of the Mother Lode including historic district gold recoveries of +95% 10
The Lincoln Mine Project Foundation for Continued Growth NI 43-101 Preliminary Economic Assessment (PEA), released in 2011, focused only on the higher grade, upper portion of the Lincoln-Comet deposit to justify development of a permitted mill and first mine. By incorporating existing mine infrastructure, development costs were minimized. Use of contract mining reduces initial capital and takes advantage of the knowledge and skills of the local mining contractor who completed prior development and mining. We have Designed and Constructed with Operational Upside in Mind Our cut-off grade is a conservative 0.22 opt (7.5g/t), higher than the head grade of many underground mines in North America. Much of our mill equipment is oversized relative to the Lincoln Mine s needs. Our key County Conditional Use Permit allows for a 1,000 tpd operation in comparison to the Lincoln Mine s initial production rate of 150tpd. Our adjacent Keystone resource of (1.7M tons @ 0.19opt / 6.5g/t) is included in our existing permitting and will use the same processing infrastructure as Lincoln. Underground development and additional exploration is likely to result in a much greater resource base. Drilling from underground is only 1/3 the cost of drilling from surface! 11
High Grade Mine Plan First Five Years Assumed Gold Price $1,100/oz (spot ~$1,300) Current Mining Plan Cutoff Grade Mine Operating Rate Mill Operating Rate Annual Gold Production Gold Processing Total Mining Cost /T $207 Milling Cost / T $42 Cash Cost /Ounce 244,800 t material at 0.46 opt (15.8 g/t) including 20% dilution at zero grade 0.22 opt (7.5 gpt) 150 tpd (7 days / week) 210 tpd (5 days / week) 23,000 ounces 70% from Gravity Circuit 30% from Concentrate $704 before royalties 12
Existing Portal & Surface Facilities (@1200 foot elev.) ~4220 Feet View Looking East at -5 Dip ~4220 Feet View Looking East at -5 Dip Colors Identify Stope Panels/Veins Existing Decline & Workings in Brown Current Mine Design Drifts/Declines in Red Modeling and Design in Surpac software Colors Identify Stope Panels/Veins Existing Workings in Brown Current Mine Design Drifts/Declines in Red Modeling and Design in Surpac software High Grade Plan 0.46opt (15.8 g/t) Objectives: 1) Justify investment in a permitted mine and mill; 2) Recoup capital; and 3) Generate attractive RoR 13
All areas have grade. Deposits are open at depth and on strike. If cutoff grade can be lowered through repayment Existing Portal of capital, & Surface lower Facilities operating (@1200 costs foot or a elev.) higher gold price more can be mined, e.g., at a 0.15opt cutoff (5.1g/t) an additional 39,000ozs (+33%) becomes available for mine planning, nearly two years of production. Lincoln Grade-Tonnage Curve ~4220 Feet 1000 0.70 800 0.60 0.50 600 0.40 400 0.30 0.20 200 0.10 0 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 - View Looking East at -5 Dip Cutoff Grade Opt Resource Tons, 000s Grade Opt THIS REPRESENTS Colors Identify TREMENDOUS Stope Panels/Veins INTERNAL UPSIDE AT THE LINCOLN Existing PROJECT Workings in Brown WITH OUR UNDERGROUND Current Mine Design Drifts/Declines in Red DRILLING Modeling COST ONLY and Design 1/3 in ($28/FT Surpac ALL software IN) OF THE COST OF DRILLING FROM SURFACE! 14
Complete our surface facilities and set the stage for mill commissioning. Complete new raises (ventilation and secondary access) to become MSHA-compliant for production mining. Complete underground development for initial production mining areas. Set stage for initiating mine production and ramp up to full production by the 3 rd quarter of 2014. 15
We are closing out final permits & preparing the new mill for the commissioning process Underground development now ahead of schedule making the mill the key item on critical path to commercial gold production 16
Excellent Narrow Vein Mining Not So Narrow Vein Mining 900 1WXC1S on 43 vein +9 foot mining width 900 8WXC1S on 47 vein 3 foot mining width 17
Have conducted limited processing to build metallurgical baseline and begin mill optimization Rod Mill in Operation Flotation Cells in Operation Gravity Table in Operation 18
Capital Requirements Lincoln Mine Project Item Estimated Cost USD$ 000 s Prior Budget October 13 Budget Project to Date Spend Sept. 2013 Estimated Remaining Spend Mine Equipment 1,697 1,365 1,114 251 Mine Development 2,655 6,793 3,826 2,967 Process Plant 5,557 7,553 6,491 1,062 Waste Management 1,241 1,307 1,307 - Infrastructure 3,434 4,129 3,952 177 Engineering 1,188 1,652 1,644 8 Owners Costs 1,645 4,030 2,942 1,088 Working Capital 2,700 2,700 2,700 - TOTAL $ 20,117 $ 29,529 $ 23,976 $ 5,553 19
US$20 Million Prepaid Gold Facility Fully Drawn to be Repaid from Production and Reflected in Cash Flows Signed agreement with RMB Australia Holdings (RMBAH) in July 2011 Initial $6.6 million of the proceeds repaid a previous credit line, and the remaining $13.4 million was drawn down to fund the Lincoln Mine Project and other corporate expenses Repayment of the facility will work like this: When gold production begins, roughly half of the monthly production will be sold at market price, and half will be used to repay the facility. We will receive $942 per ounce for the gold to be applied toward repayment while still generating a margin above our costs on those ounces. When we drew down the $20 million facility, we were prepaid $377 per ounce for approximately 54,000 ounces included in the gold facility. Therefore, our effective realized price for the gold in the prepaid facility is $1,319 per ounce. 20
US$20 Million Bridge Facility In October 2012, the Company signed an agreement with RMB Australia Holdings (RMBAH) to implement a secured $12 million bridge facility. In June 2013 RMBAH increased the $12M facility to $20M to fund our 2013 objectives. As of October 31, 2013, the Company has drawn down $18.4 million of the total facility Amended terms of the facility: In July 2013 the interest rate has been decreased to LIBOR plus 10%; The facility matures on June 30, 2014. RMBAH Flexible in Supporting New Investment Expressed willingness to co-invest with new investors. Expressed willingness to convert Bridge to equity with new investment. Remains a very supportive lender and majority shareholder to see Sutter a success. Debt on our balance sheet is reflected in what we have built! With additional finance to achieve positive cash flow we will work with RMBAH to rationalize and strengthen our balance sheet 21
The outstanding fact that we must give credence to, is that no one mine of this entire group was ever closed because of its being worked out. D.F. Meiklejohn, 1930s, referring to historic mines in the Keystone area. Nearly all the mines in the area were forced to close during WWII. Virtually no modern, systematic exploration has occurred since beyond the efforts in the 1980s leading to the Lincoln Project discovery and subsequent limited work by SGM. 22
Bunker Hill Mine Keystone Mine & Resource Lincoln Project Deposits Lincoln & Wildman Mahoney Mines Central Eureka Mine 23 Global 43-101 Resources Indicated: 673,000 tons @ 0.33 opt for 223,044 ozs Inferred: 2,377,900 tons @ 0.19 opt for 458,914 ozs Total Resource: 3,051,500 tons @ 0.22 opt for 681,958 ozs
Current NI 43-101 indicated (10%) and inferred (90%) resources of 1.734 million tons grading 0.19 opt (6.6 g/t) over much wider widths than Lincoln veins. Requires additional drilling to expand and upgrade resource. Keystone resource is included within the existing permit boundary and is only ~2,300 feet north of the Lincoln main portal, but may require water treatment plant permitting & construction (2 year process). Preliminary development costs established from actual Lincoln development cost. Relatively low cost to increase milling capacity to 500tpd or better to accommodate potential Keystone mine production. Keystone 43-101 Resource in-situ average tons opt g/t ozs width ft Indicated Resources 161,900 0.21 7.2 33,999 8.5 Inferred Resources 1,572,800 0.19 6.5 298,832 27.0 Total Resources 1,734,700 0.192 6.6 332,831 20.0 Minable Resource Target 954,085 >0.20 6.9 190,817 15.0 24
Ability to Piggy Back off Existing Infrastructure Makes Keystone Attractive Keystone Initial Development Cost Assumptions $/ft feet Total Ramp $ 1,335 2,500 $ 3,337,500 Level $ 815 2,500 $ 2,037,500 Raise $ 760 600 $ 456,000 Scram $ 390 600 $ 234,000 Additional Drilling to Upgrade Resource $ 3,500,000 Initial Mine Development $ 6,065,000 Mill Upgrades to 500tpd $ 1,000,000 Infrastructure incl water treatment $ 3,000,000 Contingency 20% $ 2,013,000 Total $ 15,578,000 potential for < $85/oz total capital to develop is very attractive by industry standards 25 Keystone OPEX Assumptions $/ton Cont. Development $ 35 Mining (mech cut & fill) $ 95 Milling $ 30 G&A (standalone) $ 16 Operating Cost $ 176 30% Margin $ 53 Total Required $ 229 PROFITABLE cutoff opt 0.19 expected achievable grade makes sense @ $1,200 gold
Success at Keystone Changes the Picture Meaningfully 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Forecast Production Profile, ozs pa Can we find more / higher grade ozs? 2014 2015 2016 2017 2018 2019 2020 2021 2022 Lincoln Keystone Total Cash Cost $1,100 $1,000 $900 $800 $700 $600 $500 26
Keystone Resource area Samson Target: 1. intersection of 3 gold bearing structures (the Medean veins and Keystone K5 vein) 2. topographic break 3. favorable orientation change in slate contact 4. Despite these geologic features no drilling in the area Talisman Shaft String Bean Alley Decline Portal to Lincoln deposits 27
Something like this could easily fit in the Samson Target area = Upside ~2,300 feet from the existing portal to the Keystone resource area passing through the Samson Target zone, relatively low cost phased development opportunity with permits, mill & infrastructure already in place = Upside Conceptual 15 ramp to Keystone from existing decline Wildman- Mahoney Mine Past Lincoln Mine Area Lincoln Deposit Comet Deposit Samson Target Keystone Resource 28
Most of the productive mining in the District has been well below the bottom of the defined minable resources at the Lincoln Project = Upside Lincoln Deposit Comet Deposit Wildman- Mahoney Past Mine Lincoln Mine 29 Keystone Mine Bunker Hill Mine
A In Mine Potential new discovery / lower cutoff B Lack of Information Potential development / drilling C Extensional Potential drilling / development D Resource Upgrade Potential drilling / development E High Priority Geologic Potential drilling / development F Property Holdings Potential generative exploration / drilling A C B A C C C E D F 30
Potential for a three-pronged increase in per-ounce gold multiple: As we complete the historic development of the first commercial gold mine in the California Mother Lode in more than 55 years. As we complete the ramp-up to full production and positive cash flow in 2014. As we add to our near-term, minable gold resources and production / cash flow growth potential through continued development and exploration. Longer-term upside potential to grow shareholder value: Meaningful new DISCOVERY near mine and on adjacent land holdings through exploration and development. Leverage our position as the Only (permitted) Game in Town on the most prolific section of one of the most prolific but under explored gold districts in the US. Leverage our history by branding our gold and exploring value added relationships with California and other jewelry manufacturers. Eventual ability to pay a dividend in $s or gold. Other corporate opportunities using a similar model of smaller, narrow-vein, high-grade gold deposits and an experienced team. 31
Contact Information: 165 South Union, Suite 565, Lakewood, Colorado Robert Hutmacher, CFO Tel: 303-238-1438 www.suttergoldmining.com TSXV:SGM OTCQX: SGMNF 32