Corporate
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Institutional
Presentations
11-15 April 2011
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Disclaimer
Competent Person’s Statement
This report, so far as it pertains to ore and mineralisation, is based on information compiled by and as reported upon by Mr Joe Treacy, Mr Ian Hodkinson, Mr Ian Morrison and Mr Charlie Georgees, all full time employees of
Kagara Ltd; Ms Peta Libby, an employee of Digirock Pty Ltd; Mr Ingvar Kirchner, an employee of Coffey Mining Ltd; who are members of the Australian Institute of Geoscientists or the Australasian Institute of Mining and
Metallurgy and have over five years experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent person as defined in
the 2004 Edition of the ‘Australian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Messrs Treacy, Hodkinson, Anderson, Morrison, Georgees, Kirchner and Libby all consent to the inclusion in
the report of the matters based on their information in the form and context in which it appears.
JORC – Exploration Targets
It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information in this presentation relating to exploration targets should not be misunderstood or misconstrued as
an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient work
completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource.
Forward-Looking Statements
This presentation has been prepared by Kagara Ltd. This document contains background information about Kagara Ltd current at the date of this presentation. The presentation is in summary form and does not purport to be all
inclusive or complete. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained
in this presentation.
This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of Kagara Ltd shares
in any jurisdiction.
This presentation may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own
jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction.
This presentation does not constitute investment advice and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs and the opinions and
recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All
securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments.
To the fullest extent permitted by law, Kagara Ltd, its officers, employees, agents and advisers do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any
information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted.
This presentation may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Kagara Ltd. Actual values,
results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward looking
statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and ASX Listing Rules, Kagara Ltd does not undertake any obligation to update or
revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based.
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Agenda
Company Snapshot
Production Overview & Quarterly Results
Copper Business
Overview
Resources, Growth & Exploration
Zinc-Lead Business
Overview
Resources, Growth & Exploration
Nickel Business
Overview
Resources, Growth & Growth
Listed Investments
Mungana Goldmines
Copper Strike
Summary & Outlook
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Company Snapshot
Copper
23,000t production (FY 11) – North Qld
Strong project pipeline and exploration portfolio
Zinc-Lead
42,000t production (FY 11), growing to +70,000tpa – N Qld
Tier One Lead-Zinc-Silver Project in WA (Admiral Bay)
Nickel
1,800t production (FY 11) – WA
Large resource base, excellent growth potential and upside
Listed Investments
Mungana Goldmines Limited (ASX: MUX) – 62.1%:
Market value: ~$80M, Resource inventory: 2.5Moz, 255,000t copper, 32Moz silver
Copper Strike Limited (ASX: CSE) – 17.5%:Market value: ~$2.5M, Resource inventory: 6.7Mt @ 1.1% Cu
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Corporate Overview
Shareholders No. Shares ‘000 % Capital
GGHG Shengtuo Metals Pty Ltd 133,777 18.9
Perennial Value Management 39,608 5.6
JP Morgan Asset Management 35,449 5.0
Strategic Investment Advisors Groups 34,821 4.9
Korea Zinc Co Ltd 29,529 4.2
Kim Robinson (Chairman)
Geoff Day (Managing Director)
Joe Treacy (Executive Director)
Flavio Garofalo (Executive Director)
Mark McConnell (Non Executive Director)
Mark Ashley (Non Executive Director)
Ross Hutton (Non Executive Director)
Shad Linley (Non Executive Director)
Shares on Issue 708.583M
Unlisted options on issue 7.230M ($1.50)
3.0M ($1.40)
3.0M ($1.80)
3.0M ($2.20)
Cash & Receivables: $95.1M*
Market Capitalisation: $450M (@ 63.5c as at 8 April)
Enterprise Value: $450M
Issued Capital
Key Financial Data (as at 31 March 2011)
Major Shareholders (as at 1 March 2011)
Share Price – Past 12 months
Board of Directors
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* Cash on hand of $57.7M and Receivables of $37.4M
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Production Overview
Diversified production base in North Queensland and WA
Strong growth potential across all metals
Secure off-take arrangements in place, providing protection against
current smelter capacity constraints
COPPER ZINC + LEAD NICKEL
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
FY 2011 FY 2014
Growth Potential = 30%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
FY 2011 FY 2014
0
1,000
2,000
3,000
4,000
5,000
FY 2011 FY 2014
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Growth Potential = 185% Growth Potential = 120%
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Operational Overview
Operational and strategic review underway:
Identify key value drivers and refine business plans
Maximise operating margins
Strong focus on improving safety performance
Focused capital development and exploration program
planned over the next 18-24 months:
to be funded by cash flows from existing operations
All North Queensland assets remain highly prospective
but have had minimal exploration attention since the GFC
Exploration budget increasing to +$20M in FY 2012, more
than double current levels
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Breakdown of Forecast Revenues – FY 2011
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Market Outlook – Copper and Zinc
Commodity Price Forecasts – (USc/lb): Goldman Sachs & Partners, February 2011
Strong demand outlook for
both core commodities
Supported by growing
confidence in global
economic recovery
Copper market deficit of
~380,000t forecast for CY
2012
Improving fundamentals in
zinc market – market
deficit of ~230,000t
forecast for CY 2013
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“...subject to a levelling out in zinc production from China‟s „small mines sector‟, the zinc market could begin to resemble copper in two to three years...”
– Goldman Sachs Investment Research, February 2011
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March 2011 Quarterly Highlights
29% increase in group total copper production to 6,767t
cash cost of US$1.85 per pound of payable copper (for
copper production through the Mt Garnet copper plant)
Group total zinc production of 7,119t
cash cost of US$0.81 per pound of payable zinc
Record cash operating margin for copper of US$2.24/lb
Increased cash operating margin for zinc of US$0.21/lb
16,329t of concentrate stockpiles at quarter-end (value: A$25-
30M)
Consolidated cash on hand of $57.7M plus receivables of
A$37.4M
Substantial earnings rebound expected in second half due to:
drawdown of concentrate stockpiles
ramp-up of production at Vomacka
increased nickel production at Lounge Lizard9
March Quarter Cash Cost
6,767t
US$1.85/lb
March Quarter Cash Cost
7,119t
US$0.81/lb
COPPER
ZINC + LEAD
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Copper Business – Overview
Forecast 23,000t production in FY 2011:
~15,000t from Mt Garnet copper plant
~8,000t from Mt Garnet, Thalanga polymetallic plants
Targeting increase to ~30,000tpa by FY 2015
C1 cash operating costs for primary copper production
(500,000tpa Mt Garnet plant) of US$1.85/lb (March Qtr)
Growth pipeline includes near-mine extensions at Balcooma,
Maitland and new high-grade discovery at Griffiths Hill
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
FY 2011 FY 2012 FY 2013 FY 2014
COPPER
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Copper Business – Resources
Global North Queensland resource inventory: 210,000t
of contained copper metal, comprising*:
Copper reserves and resources for processing through
Mt Garnet copper plant:
Reserves: 519,000t @ 3.4% Cu (17,000t Cu)
Resources: 2.768Mt @ 2.0% Cu (55,000t Cu)
Copper reserves and resources for processing through
the Mt Garnet and Mungana polymetallic plants:
Reserves: 3.664Mt @ 1.1% Cu (40,000t Cu)
Resources: 11.296Mt @ 0.9% Cu (100,000t Cu)
Additional Exploration Target1 established for new
Griffiths Hill discovery near Red Dome:
0.8-1.5Mt @ 3-4% Cu (24,000-60,000t Cu)
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1 JORC – Exploration TargetsIt is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource.
* Note: see full resource tables attached to the end of this presentation
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Copper Business – Growth & Exploration
Near-term development opportunities:
Balcooma near-mine extensions
Maitland (Indicated Resource of 1.45Mt @ 1.5% Cu)
Griffiths Hill (to be accessed from Mungana decline)
$12M exploration budget for FY 2012, with key priorities
including:
Balcooma resource extension drilling and resource/reserve
conversion
Maitland resource extension drilling
Griffiths Hill and Red Dome mine corridor
Chillagoe region exploration targets (Victoria, Harpers,
Shannon-Zillmanton)
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1 JORC – Exploration TargetsIt is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource.
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Copper Business – Balcooma
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Copper Business – Balcooma
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BALCOOMA PIT – North Plan
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BALCOOMA PIT – South
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Copper Business – The Red Dome Corridor
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Initial JORC resource for Griffiths Hill by Q2 2011
Potential exploration decline to access Griffiths Hill
Drilling to target high-grade copper potential at Lady Jane
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Copper Business – Griffiths Hill High-Grade Discovery
Significant new high-grade zone
discovered beneath Red Dome
open pit – intersections include:
17m @ 4.33% Cu, 0.6g/t Au, 113.7g/t Ag
8.4m @ 7.41% Cu, 0.93g/t Au, 192g/t Ag
12.9m @ 7.79% Cu, 0.99g/t Au, 55.8g/t Ag
8.4m @ 2.95% Cu, 0.14g/t Au, 46.4g/t Ag
100% ownership by KZL under
Gold Rights Agreement with
Mungana Goldmines
Drilling continuing targeting initial
JORC resource by Q2 of 2012
Exploration Target1 of 0.8-1.5Mt @
3-4% Cu for 24,000-60,000t
contained copper
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ZINC
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Zinc Business – Overview
0
50,000
100,000
150,000
FY 2011 FY 2012 FY 2013 FY 2014
Forecast 42,000t zinc-lead production in FY 2011
Targeting increase to 71,000tpa by FY 2014
C1 cash operating costs of US$0.81/lb (March Qtr)
Strong focus on driving down the cost curve
Current ore sources Mungana (u-g), Mt Garnet (u-g) and
Vomacka (o-p) treated through polymetallic facilities at Mt Garnet
(500ktpa) and Thalanga (750ktpa)
Mothballed 700ktpa facility at Mungana provides optionality for
future growth
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Zinc Business – Resources & Growth
Zinc reserves: 3.664Mt @ 8.7% Zn, 1.1% Cu,
0.9% Pb (318,000t Zn)
Zinc resources: 11.296Mt @ 8.3% Zn, 0.9% Cu,
1.3% Pb (937,000t Zn)
$8-10M exploration budget for FY 2012, with key
priorities including:
King Vol resource extension and reserve drilling
Mt Garnet near-mine resource extension opportunities
Thalanga regional exploration
Other advanced regional targets in Chillagoe region
including Victoria (3.44Mt @ 5.1% Zn, 1.0% Cu),
Montevideo (720kt @ 7.7% Zn, 0.5% Cu), Red Cap,
Nolans, Belgravia
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Zinc Business – King Vol
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Probable Ore Reserve: 1.3Mt @ 11.2% Zn & 0.7%
Cu (145,000t Zn, 91,000t Cu)
Additional Inferred Resource: 2.0Mt @ 14.0% Zn
and 0.8% Cu (280,000t Zn, 160,000t Cu)
Significant potential for extensions down-plunge
and along strike
Major in-fill and extensional drilling
Development commencing Q2 2012
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Zinc Business – Mount Garnet Near-Mine Exploration
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Area of newly discovered zinc/copper
mineralization
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Zinc Business – Thalanga Region
750,000tpa polymetallic concentrator at Thalanga with extensive near-mine exploration portfolio
Current ore production from Vomacka open pit, with near-term development opportunities including West 45
Regional exploration to be ramped up
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Zinc Business – Thalanga Project Pipeline
Deposit Mt Zn% Cu% Pb% Ag g/t Au g/t
Vomacka 0.88 4.7 1.7 1.4 45 0.46
West 45 0.59 8.3 0.6 3.5 69 0.3
Orient 0.27 13.1 0.95 3.0 59 0.2
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Zinc Business – Admiral Bay
Option to participate in evaluation and development
of world-class, Tier One Project in WA
18km strike length of Zn-Pb-Ag-BaSO4
mineralisation with just ~2.1km drill tested, outlining:
72Mt @ 3.1% Zn, 2.9% Pb, 18g/t Ag
Pre-Feasibility Study (PFS) completed
Proceeding towards externally funded Bankable
Feasibility Study (BFS) work program, including:
Sinking a 6.7m diameter shaft to 1,428m
Drilling out approx 10Mt over a 1.2km section
of the Admiral Bay deposit to reserve status to
support financial modelling
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NICKEL
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Nickel Business – Overview
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2,000
3,000
4,000
FY 2011 FY 2012 FY 2013 FY 2014
High-grade underground nickel sulphide mine at
Lounge Lizard (Forrestania region, WA)
Low-cost entry to strategic regional position under
innovative mine development agreement with WSA
Forecast 1,800t production of nickel-in-concentrate
in FY 2011, potential to increase to 4,000tpa by FY
2014
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Nickel Business – Resources and Growth
Nickel Resources: 7.55Mt @ 1.3% Ni (103,000t Ni),
including 1.15Mt @ 4.6% Ni
Development and reserve definition continuing
$3-4M exploration budget for FY 2012, with key priorities
including:
Immediate strike extensions of Lounge Lizard deposit
Systematic testing of down-dip projection of Western Ultramafic
unit which hosts Lounge Lizard, Flying Fox, New Morning,
Beautiful Sunday and Spotted Quoll
Regional targets within 300km2 tenement holdings within
Forrestania Greenstone Belt, including Eastern Ultramafic Belt
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Resources sufficient to support 10 years of
production at current production rate of
50,000tpa
Outstanding exploration upside
Deposit remains open down-plunge
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Nickel Business – Lounge LizardF
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Listed Investments
Mungana Goldmines (ASX: MUX) – 62.1%
JORC compliant Resource of 2.5Moz Au, 255kt Cu and
32Moz Ag ~ open at depth and along strike
Rights to gold exploration, development and mining over
814km2 in the highly prospective Chillagoe region
Positive Scoping Study completed – BFS underway and due for
delivery in March 2012
Targeting production of 120,000z of gold and 20,000t of copper per
annum with long mine life
Strong cash balance A$37M
Copper Strike (ASX: CSE) – 17.5%
• Einasleigh Copper Project, strategic location near KZL operations
• Resource base of 16.7Mt @ 1.1% copper, 0.13g/t gold, 8g/t silver
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Kagara: Summary & Outlook
High-quality asset base in copper, zinc-lead, nickel
Focus on increasing margins, operational enhancements
Rejuvenated exploration programs: +$20M exploration
budget (FY 2012)
Copper:
Griffiths Hill JORC resource (Q2 2011), Balcooma
Red Dome Mine Corridor exploration, Maitland
Zinc-Lead:
Aiming to drive production to +70,000tpa
Outstanding growth potential through development of King
Vol, re-commissioning Mungana concentrator
World-class opportunity at Admiral Bay
Nickel:
Reviewing production growth opportunities
Major drilling programs commencing April 2011
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Corporate
Presentation
Institutional
Presentations
11-15 April 2011
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Supporting JORC Reserves and Resources TablesF
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Supporting JORC Reserves and Resources TablesF
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Supporting JORC Reserves and Resources TablesF
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Note:
This Mungana Goldmines Ltd
Resources Table is included for
reference only and is not to be
added to the Kagara Ltd
Reserves and Resources tables.
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Supporting JORC Reserves and Resources TablesF
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