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Victory Mines Limited ABN 39 151 900 855 Principal Place of
Business: Unit 1, 249 Balcatta Road, Balcatta WA 6021
Telephone +61 8 9240 7110 | Fax +61 8 9240 7117 Registered
Office: Level 11, 216 St George’s Terrace, Perth WA 6000
Telephone +61 8 9481 0389 |Fax +61 8 9463 6103 |
www.victorymines.com
Broker & Investor Presentations Victory Mines Limited (ASX:
VIC) is pleased to advise the commencement of broker presentations
in relation to the acquisition of South American Tin (SAT). The
Managing Director of SAT, Mr John Kelly, is in Sydney to provide
technical presentations on the exploration assets held by SAT’s 80%
owned local Bolivian entity that holds contracts over seven
large-scale tin hard rock, tailings and alluvial tin projects
located in the North of Potosi region of Bolivia. The presentations
will be made with the support of Leading Australian stockbroking
and corporate advisory firm BBY. A copy of the presentation is
attached. The transaction between VIC and SAT has been approved by
the ASX and is subject to the completion of satisfactory due
diligence by both parties, and shareholder approval by Victory. Due
diligence is now underway and the shareholder meeting will take
place on 8 May 2014. - ENDS - Enquiries Elizabeth Hunt Company
Secretary Media Enquiries Sam Burns Six Degrees Investor Relations
+61 8 9322 8288
About Victory Mines Limited Victory Mines Limited is a
Perth-based exploration company with a portfolio of copper, base
metals, rare earth elements, uranium, gold and platinum group
element prospects throughout Western Australia. The company listed
on the ASX in October 2012 and is seeking to maximise shareholder
wealth through the successful exploration of its prospects.
a
ASX ANNOUNCEMENT
Date: 1 May 2014
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Investor Presentation
Quarter 2 2014
South American Tin Limited
Near-term hard rock tin mining projects in Bolivia
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• Mining rights over one of the world’s largest hard rock tin
deposits and tailings projects in Bolivia – 80% share
• Contracts with 4 Cooperatives that control the Siglo XX tin
mine – once the world’s largest hard rock tin mine
• SAT’s operating model mirrors Coeur Mining (NYSE: CDE)
approach – CONTRACTS WITH MINING
COOPERATIVES
• Plan to construct & operate small scale production plants
with Cooperative partners
• Multiple stockpiles of tin ore and additional mineralisation
available for immediate processing – multi-year
supply
• Good infrastructure / power / roads /water / workforce support
the Siglo XX mine and surrounding region
• Commence small-scale tin processing at Siglo XX– US$2.58m
spend for 150 tpd toll treatment plant.
• First plant selected at San Pedrito prospect - 4 additional
plants planned ranging in size from 150 tpd to 450
tpd
• Global tin market continues to see robust price forecast and
sustained demand
• SAT working in partnership with FENCOMIN, Bolivia’s peak
mining cooperative body
• Strong social programme with local communities - mitigates
risk and generates significant goodwill
• Victory Mines (ASX: VIC) finalising transaction with SAT where
VIC acquires SAT in all-scrip transaction.
Executive summary
SAT Investor Update Q2 2014
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Company Project
Coeur Mining (NYSE & TSX)
San Bartolomé Project mines & treats Cooperative waste
stockpiles & alluvials at Cerro Rico. 5.9Moz Ag in 2012 @
US$11.76/oz. World’s 8th largest primary Ag mine. US$240m invested
to construct the project in 2007.
Pan American Silver (TSX)
San Vicenté Ag/Pb/Zn u/g Mine. 2013 production 3.8Moz Ag, 550t
Pb & 6,000t Zn, plus US$11.5M in capital. US$72m invested in
2008/09.
Sumitomo (Japan)
San Cristobal Ag/Pb/Zn Mine. 45-50,000 tpd plant producing
600,000t of concentrates pa all exported to Japan via Chile.
US$1.4B invested to-date. Largest mining investment in Bolivia.
US$300M invested in 2013.
Orvana Minerals (TSX)
Don Mario Au/Cu/Ag Mine, an IOCG deposit. US$350/oz Au historic
cash cost. 9 years production from HG u/g gold mine. Now mining
Cu/Ag cap. 9 years of reserves.
Glencore (LSX)
Glencore’s Bolivian subsidiary Sinchi Wayra which operates 3 tin
and zinc mines. Also has its minerals trading arm operating in
Bolivia. Trafigura is also in Bolivia and is the major trader.
LionGold Corp (SSX)
Developing 1.8Moz Amayapampa Gold Project. Initial development
currently underway is a 1,500tpd plant to cost ~US$25M plus O/C
& small U/G mine.
Apogee Silver (TSX-V)
70,000m of DD. Completed NI43-101 BFS in 2013. Ore Reserve of
3.6Mt at 239 g/t Ag, 1.1% Pb & 1.9% Zn.
Major foreign-owned mining projects in Bolivia
SAT Investor Update Q2 2014
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How SAT has secured project tenure
• SAT’s model mirrors that of Coeur Mining (NYSE: CDE) • CDE has
been mining the flanks of the Cerro Rico silver mine for 5+ years
in partnership with Cooperatives
Bolivia’s national mining company COMIBOL is underlying owner of
many mining concessions in Bolivia
COMIBOL leases the mining rights for mineral deposits on
projects to local mining Cooperatives • Lease agreements are
typically 20 year terms & renewable • Cooperatives at Siglo XX
& at Kenko all have contracts with COMIBOL
Cooperatives contracts with SAT’s Bolivian subsidiary • SAT has
80% ownership of Bolivian subsidiary • SAT has preliminary
contracts with Cooperatives for exploitation of mineral rights •
Timeframes match Cooperative’s lease agreements with COMIBOL - 20
years + option to renew • SAT provides employment for mine workers
on better terms than current returns from artisanal mining
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SAT Investor Update Q2 2014
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Strong support for SAT at multiple levels
• Constitution - §s 351, 369 & 370. • Draft new Mining Code
- §s5, 31, 33, 99, 102 & 151. • New Cooperatives Code - § 19. •
New Investment Code - §s 1 to 11 and 16-19.
• FENCOMIN – National Mining Cooperative representative body -
+160,000 individual miners; § 6.
• Regional Cooperatives Federation representing local mining
Cooperatives (16 in the North of Potosi).
Bolivian Law
FENCOMIN
Local Municipality & Civic Committees
Local Communities
• A Civic Committee in Bolivia is a powerful local body that can
direct policy for its Municipality.
• The Municipality will receive 15% of the total royalty from
any mining project. In poor areas this can be a major contribution
to revenues.
• SAT’s various projects offer the opportunity for the
Cooperative miners to have a safe, well-paid job, providing
significant community support.
SAT Investor Update Q2 2014
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Project locations
Hard rock projects Tailings projects
SAT Investor Update Q2 2014
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Global undeveloped tin deposits - ITRI
ITRI = International Tin Research Council. Probably the World’s
foremost authority on Sn
SAT Investor Update Q2 2014
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Summary of projects HARD ROCK PROJECTS: CONTRACTS WITH
COOPERATIVES OVER SIGLO XX MINE WHICH HAS 4 PROSPECTS
Each of the four hard rock projects has significant existing
production and artisanal treatment which will be channelled to the
toll treatment plants
TAILINGS PROJECTS: CONTRACTS OVER 2 LARGE TAILINGS DUMPS
ADJACENT TO SIGLO XX:
Kenko Catavi
SAT Investor Update Q2 2014
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San Pedrito
• 150 tpd plant • Grade 1% Sn + Zn & Ag • Process existing
ore
stockpiles, tailings & u/g ore
Siglo XX
• 450 tpd plant • Significant stockpiles
of +1% Sn bagged LG ore in the mine
• 5%-15% Sn ore previously mined from this adit
XX de Octubre
• 400 tpd plant • +1% Sn ore stockpiles • Secure u/g ore
supply
via Cancañiri & Patiño Adits on two sides of the mine
Dolores
• 300 tpd plant • Large stockpile at
entrance of Dolores Adit ready for immediate processing
• 7,000tpd plant • Large scale tin tailings
project with a BFS well advanced
• SAT drill rig at Kenko
• 14,000 tpd plant • Immediately adjacent
to Kenko • BFS work commenced • Artisanal treatment at
Coop XX de Octubre
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Planned timeline & mineralisation
Plant Build Processing commences
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Daily
Capacity (Tonnes)
San Pedrito 150
Siglo XX 450
XX de Octubre 400
Dolores 150
Catavi BFS 14,000
Kenko BFS 7,000
Planned processing facilities will provide sustained processing
capacity through to 2020
SAT Investor Update Q2 2014
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• Currently there is significant existing production from the 4
Cooperatives at Siglo XX, which have been producing from the mine
for nearly 30 years
• Approximately 3,000 Cooperative members work underground and
at surface “treatment” plants • Surface treatment plants are
artisanal and the great majority of ore treated is done by hand •
SAT’s toll treatment plants will significantly improve treatment
efficiencies and introduce “technology” to
the Cooperatives.
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Summary of Siglo XX mine • Siglo XX mine regarded as world’s
largest historic hard rock tin mine • Historic production estimate
of >60Mt ore producing ~1Mt Sn in metal & tailings •
Significant quantity of Sn mineralisation available to be processed
from hard rock & stockpile sources –
existing forecasts based on historic work combined with limited
sampling performed by of David Jones, Independent Geologist
• SAT plans to confirm the Exploration Target* through a
drilling program commencing in Q3 2014 (funding dependent)
“(Siglo XX) is reported to be the largest tin vein deposit in
the world, with a production to date in excess of 1 million tonnes
of tin metal, according to the Bolivian government. Past production
has come from the mining of narrow high-grade veins ranging from 12
to 15% Sn content. The ‘porphyry-style tin’ described by Sillitoe
(1975) which comprises the bulk of the La Salvadora Stock has
barely been touched. Limited sampling suggests a target grade of
0.2-0.3% Sn within a body at least 1600m wide by 1200m long
extending from the summit to at least the level of the valley floor
900m below, suggesting a tonnage target between 1 and 3 Billion
tonnes.” (SAT independent geologist David Jones April 2012)
SAT Investor Update Q2 2014
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*The potential quantity and grade of this exploration target is
conceptual in nature. There has not been sufficient exploration to
estimate a Mineral Resource and it is uncertain if further
exploration will result in the estimation of a Mineral
Resource.
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Long section of Siglo XX mine
• Siglo XX had 47 major veins (up to 5m in width) & 1,500
rich veinlets. Early head grades were 12-15% Sn
• Up to 65 million tonnes of tailings have been extracted from
Siglo XX mine historically
• Mineralisation is within the stock over an area of 1.6 km x
1.2 km meters at surface
• Underground target is potential continuation of these
veins/veinlets beneath Siglo XX Adit
SAT Investor Update Q2 2014
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Sink & Float Tails
Kenko Tails
Catavi Tails
Kenko Plant Rio Andavillque
Siglo XX Adit
Scale Bar – 1.3Km
San Pedrito Project • SAT will equip the Juan del Valle
cooperative to
mine in a series of adits at San Pedrito where the Cooperative
is currently working.
• Very large zone at San Pedrito over 1,800 x
1,100 metres and over 500 metres of vertical extent.
• More than 30 veins known in the area, plus indications of
disseminated mineralisation.
• Small-scale toll treatment plant (150tpd) flow
sheet designed– can be scaled up to 500 tpd - estimated Sn grade
of 1.1% based on current Cooperative mining.
• 100% of the components of small-scale plants can be
manufactured in Bolivia – local foundry selected.
• Flexible plant flow sheet designed to recover Sn and/or Ag/Zn
- metallurgical recovery for Sn estimated conservatively by SAT’s
Bolivian metallurgist with ~40years of experience. A concentrate of
+50% Sn is targeted.
SAT Investor Update Q2 2014
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San Pedrito capex model Item Cost
TREATMENT PLANT
Treatment plant – major equipment $610,400
Treatment plant – design, electricals, minor equipment and
construction $467,300
Power line $12,400
Tailings dam and pipeline $153,400
Process water dam, pumps and pipelines $30,200
Plant earthworks, roads and land purchase $15,000
Plant first fill $73,100
Contingency 15% $204,300
Sub-Total Treatment Plant $1,566,100
MINING EQUIPMENT
Underground mining equipment Year 1 $126,500
Contingency 10% $12,700
Sub-Total Mining $139,200
Administration $4,000
GRADE CONTROL PROGRAMME
Callaperia Adits $96,100
San Pedrito B $112,000
Stockpiles $22,700
Sub-Total Grade Control Programme $230,800
PRE-PRODUCTION COSTS
Mining $58,300
Stockpile Movement $4,900
Treatment $74,200
Administration $68,400
Sub-Total Pre-Production Costs $205,800
PROJECT WORKING CAPITAL – two months of operations $436,900
GRAND TOTAL – CAPITAL $2,582,800
SAT Investor Update Q2 2014
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Kenko • RSG Global of Australia estimated an inferred resource
in 2005
based on one drilling programme. • SAT has an Exploration Target
at Kenko of 9.0-9.3M tonnes at 0.38-
0.40% Sn for 34,200-37,000 tonnes Sn. The potential quantity and
grade of this exploration target is conceptual in nature. There has
not been sufficient exploration to estimate a Mineral
Resource and it is uncertain if further exploration will result
in the estimation of a Mineral Resource
• 3 drilling programmes have been done since 2005, including one
by SAT with 11 holes drilled with average grades confirming
previous work. SAT also analysed for Ag
• A resource upgrade is to be done • SAT completed Kelsey jig
pilot plant test gave a Sn recovery of
52.73% to a concentrate grading 56.79% Sn with optimisation work
will aim at a 59% Sn recovery. Flotation test work to be tried to
improve recoveries above 60%.
Catavi • COMIBOL records indicate Catavi contains 19-20Mt @
0.29-0.31%
Sn for 55,000-62,000t Sn. The potential quantity and grade of
this exploration target is conceptual in nature. There has not been
sufficient exploration to estimate a Mineral Resource and it is
uncertain if further exploration will result in the estimation
of a Mineral Resource.
• SAT holds 50% share with potential for other 50% to be granted
when processing commences
• SAT drilled Catavi with 3 holes which confirmed the COMIBOL
records, plus indicated Ag
• SAT completed a 7-tonne pilot plant test with recovery of
49.4% Sn for good quality concentrate.
Tailings projects
SAT Drilling at El Kenko tailings
SAT Investor Update Q2 2014
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Catavi Arenas tailings
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SAT acquisition & pro-forma capital structure
Shares Current Shares on Issue of Victory Mines Ltd
522,610,689
Acquisition of SAT 1,000,000,000
Proposed shares on issue post acquisition 1,522,610,689
SAT Investor Update Q2 2014
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Pro-forma capital structure
Victory Mines acquisition of South American Tin: • 100% of SAT
shares to be acquired by Victory Mines (ASX:VIC) • All scrip
transaction • Final shareholder approval due VIC EGM 8th May
2014
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• SAT plans to construct and operate 4 small-scale plants with
Cooperative partners with combined processing capacity of 1,300
tonnes per day
• Early cash-flow from first 150 tpd hard rock toll treatment
processing plant at San Pedrito project • 3 additional hard rock
plants to progressively enter production between Feb 2015 & Jun
2016 - funding
dependent: • Siglo XX – 450 tpd plant • XX de Octubre – 400 tpd
plant • Dolores – 300 tpd plant
• Two additional tailings toll treatment processing facilities
planned to deliver additional cash flow from early
2016 – funding dependent: • Catavi – 14,000 tpd plant • Kenko –
7,000 tpd plant
• Multiple ore stock piles and mineralisation for immediate
processing – multi-year supply • Capacity to significantly ramp up
production at Siglo XX through large-scale underground mining of
potential
high-grade zones – previously mined veins up to 5m contained
10-15% Sn • Further upside exists to treat and process world-scale
tailings stockpiles at Kenko & Catavi projects • Strong
Government and community support for SAT
Summary
SAT Investor Update Q2 2014
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Caution on Forward-Looking Statements
This presentation contains "forward-looking information" which
may include, but is not limited to, statements with respect to the
future financial or operating performances of South American Tin
Limited (“SAT”), its 80%-owned subsidiary (CM Gondwanaland SA) and
its projects, the future price of tin and other minerals, the
estimation of ore reserves and mineral resources, the realisation
of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, capital, operating and
exploration expenditures, costs and timing of the development of
new deposits, costs and timing of future exploration, requirements
for additional capital, Bolivian government regulation of mining
operations, environmental risks, reclamation and rehabilitation
expenses, title disputes or claims, limitations of insurance
coverage and regulatory matters. Often, but not always,
forward-looking information statements can be identified by the use
of words such as "plans", "expects", "is expected", "budget'',
''scheduled", "estimates", "forecasts'', ''intends",
''anticipates'', or "believes", or variations (including negative
variations) of such words and phrases, or state that certain
actions, events or results "may'', "could", "would", "might", or
"will" be taken, occur or be achieved.
Forward-looking statements involve both known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of SAT and/or its subsidiaries to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Although SAT has attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or intended.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
This presentation contains information, ideas and analysis which
are proprietary to SAT. By agreeing to receive this information you
also agree to respect the confidential nature of the information,
ideas and analysis and of this presentation.
JORC Compliance Statement
Information in this presentation that relates to Exploration
Targets and Mineral Resources for SAT is based on information
reviewed by John Kelly, SAT’s Managing Director, and a Fellow of
the Australasian Institute of Mining and Metallurgy. John Kelly has
a minimum of five years experience in the estimation, assessment
and evaluation of Mineral Resources and Ore Reserves and has
significant experience that is relevant to the styles of
mineralisation and types of deposit under consideration and to the
activity which they are undertaking to qualify as a Competent
Person as defined in the 2012 edition of the “Australasian Code for
Reporting of Mineral Resources and Ore Reserves”. John Kelly
consents to the inclusion in this report of these matters based on
the information in the form and context in which it appears. The
use of the term “exploration target” in this presentation does not
infer a Mineral Resource estimate and exploration targets are
conceptual in terms of potential tonnes and grade.
Disclaimer
SAT Investor Update Q2 2014
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Contact Details:
Elizabeth Hunt, Victory Mines Company Secretary
[email protected]
+618 9481 0389
John Kelly – Managing Director
[email protected]
+591 671 97541 (Bolivia)
Ben Jarvis, Six Degrees Investor Relations
[email protected]
+61 413 150 448 or +61 2 9230 0661 (Australia)
Adam Blumenthal, Director Corporate Finance, BBY Australia
[email protected]
+61 405 111 100
South American Tin Limited
SAT Investor Update Q2 2014
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