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An Emerging Western Australian Gold Company Schröder Equities Australian Resources Conference JON PRICE 22 February , 2013 For personal use only
An Emerging Western Australian Gold Company Schröder Equities Australian Resources Conference
JON PRICE 22 February , 2013
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Disclaimer & Important Information
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Statements and material contained in this Presentation, particularly those regarding possible or assumed future performance, production levels or rates, resources or potential growth of Phoenix Gold Limited, industry growth or other trend projections are, or may be, forward looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties.
This presentation may describe Measured, Indicated and/or Inferred Resources. Inferred Resources have a greater amount of uncertainty as to their existence and greater uncertainty as to their economic feasibility. It cannot be assumed that all or any part of any Inferred Resource will ever be upgraded to a higher category. Exploration is an inherently risky proposition and investors are advised that most exploration projects fail to identify economic resources. The Company has at present not confirmed the economic viability of any resources at the project. The Company plans further drilling programs and studies with the objective of confirmation of any deposits and ultimately completing a feasibility study to demonstrate the economics of the resources.
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Ian Copeland, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Copeland is a full-time employee of Phoenix Gold Limited and has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Copeland consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information contained in this presentation is for informational purposes only and does not constitute an offer to issue, or arrange to issue, securities or other financial products. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. The presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person.
No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Phoenix Gold Limited, their directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault of negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness or any forecasts, prospects or returns contained in this presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies.
Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances.
The information on exploration targets in this presentation are based on a conceptual range of targets as follows:
Tonnage 2 million to 20 million
Grade 1.5g/t Au to 5 g/t Au
Ounces 0.1 million to 2 million
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Phoenix Gold – In a nutshell
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• Consolidated tenure in world class gold producing region
• Resources grown from 595koz to 2.52Moz1 in 2 years
• Initial Maiden Reserve of 559,000 ounces
• Targeting 4 million ounces2 with development investment decision in Dec Qtr 2013 – feasibility study underway
• Castle Hill – 9 km stock work system close to surface
• Broads Dam – higher grade open cut and underground
• 217,000m drill program to grow resources in all directions
• $22m cash, EV/ Resource oz <$20 and generating cash
1.Refer slide 28 2. As announced on October 23, 2012
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Corporate Overview
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ASX Code: PXG, PXGOA
Ordinary shares 240 million
Options (listed/unlisted) 49 million
Market cap (undil.) ~$60 million
Average daily volume ~450,000
Cash (end of Dec Qtr) A$22 million
Directors and Senior Management
Dale Rogers Non-Executive Chair
Jon Price Managing Director
Clay Gordon Non executive Director
Tim Manners CFO
Ian Copeland GM – Exploration
Grant Haywood GM – Development
Investor summary (m) %
SHL Pty Ltd 16.9 7.0
Resource Capital Fund 15.7 6.5
Citicorp Nominees 10.6 4.4
National Nominees 8.6 3.6
HSBC Custody GSCO 7.7 3.2
HSBC Nominees 7.3 3.0
JP Morgan Nominees 7.3 3.0
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Located in the heart of the WA Goldfields
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Tenure on world class shear zones
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• 2 world class shear zones
– Kunanalling Shear
• Historic drilling limited to top 80m
• Modern structural geology absent
• Home to the Castle Hill gold project
– Zuleika Shear
• Higher grade open pit and underground potential
• Home to Broads Dam, untested along strike and at depth
• 2Moz within 15 km radius on existing roads
• Conventional open cut and u/g mining
• Free milling ore with excellent metallurgy
• Close to infrastructure and services
• 30 minutes drive from the City of Kalgoorlie
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Castle Hill – 1.2 million ounces and growing
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• Fragmented ownership for +15 yrs
• Historic shallow sporadic drilling
• Initial resource of 253k oz at 1.5g/t
• Over 21,000m drilled by Phoenix
• Over 9 km strike length defined
• Basalt with tonalite intrusive – Multiple veins sets in multiple orientations
within multiple rock types
– Entire system appears mineralised
– Large endowment per vertical metre
• Remains open in all directions
• Current resource to only 90m depth
• Recent deeper drilling confirms mineralisation at depth
• Over 100 km drilling commenced
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Castle Hill Stage 1 – the first priority
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• Resource of 647,000oz at 1.6g/t1
• Over 1 km long, up to 200m wide
• Tonalite comprises high grade lodes with surrounding lower grade halo
• High grade lode intercepts include: – 10m at 9.9g/t Au from 18m
– 15m at 6.6g/t Au from 39m
– 13m at 7.4g/t Au from 60m
– 11m at 5.1g/t Au from 85m
• Broad lower grade zones include: – 94m at 2.6g/t Au from 88m
– 65m at 1.9g/t Au from 210m
– 34m at 2.5g/t Au from 91m
– 64m at 1.7g/t Au from 161m
• Drilling to 260m demonstrates mineralisation continues at depth
• Likely first mine and mill location
1.See slide 28
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Castle Hill 1 – 3 styles of mineralisation
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Castle Hill St1 – At surface and continuous
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Latest drilling intercepts large ore zone
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F F’
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Castle Hill Stage 2 – significant upside
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• Acquired in August 20121
• Historic drilling only 70m deep
• 800m long by 200m wide
• Open in all directions
• Modern exploration absent
• Similar geology to Stage 1 – Continuous mineralisation in the tonalite
– Multiple veins sets
– High grade quartz veins within basalt
• Key areas of the Tonalite now 100% owned by Phoenix
• Likely second mine development
• Resource of 404,000oz at 1.5g/t2
1.As announced on 28 August 2012 2. See slide 28
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Significant results from first drilling
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• First phase of 50,000m drilling programme completed
• RC drilling focussed on extensions along strike and at depth
• Infill drilling validated historic data and will enable conversion of Resource to Indicated category
• First drill results included: – 19m at 2.9g/t Au from 110m
– 13m at 2.1g/t Au from 40m
– 13m at 1.7g/t au from 139m
• Results demonstrates continuity of mineralisation to the north
• Resource will be updated in June Qtr
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Broads Dam – exploring for high grade
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• Located on Zuleika Shear 15kms by existing road from Castle Hill
• Open in all directions
• High grade with excellent metallurgy
• Immediately North of 6M oz Kundana field with the same geological setting
• Diamond and reverse circulation drilling along strike and at depth planned for 2013
• Targeting high grade open pit and underground systems
• Higher grade feed source for the mill
Red Dam
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Red Dam – open cut and u/g potential
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• Recent discovery
• Current Resource
– 229,000oz at 2.1 g/t 1
• Open on strike and at depth
• Enriched supergene zone
• Drill results include:
– 5m at 53.1g/t from 32m
– 9m at 22.9g/t from 50m
– 12m at 20.1g/t from 105m
– 14m at 8.3g/t from 97m
• 12km from Castle Hill
• Potential for high grade open cut followed by underground
• Initial open cut optimisation completed
1.See slide 28
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First round Red Dam drilling complete
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• Drilling at Red Dam commenced in January, 2013
• 24,000m planned to test the extent of the ore body along strike and at depth to an average of 190m
• First round of drilling complete
• Logging identified significant alteration and veining outside the current resource envelope
• Final assays expected within 2 weeks
• Potential to become Phoenix’s third open cut development
• Significant potential for decline development on completion of open cut to establish high grade underground operations
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Generating cash from ore sales
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Blue Funnel
• 16,877oz at 3.5g/t1 remain in pit floor with a small cutback to the south
• Contract mining and toll treatment delivers net cash of $8.9m1
• Simple regulatory approval process
Catherwood
• Catherwood deal complete with Norton
• Deal provides risk free cash flow
• Mining commenced
Stockpiles
• Stockpile sales ongoing through 2013
1. As announced on 28 May 2012
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Over 50 exploration targets
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• Ora Banda – Grants Patch
– No activity for over 15 years
– Greenfields exploration and structural geology work commenced
– Nazzaris / Boundary potential med scale oxide ore open cut mines at +2g/t1
• Zuleika North / Split Rocks
– Grass roots targets identified on Zuleika shear
• 3D geological evolution study commenced to identify priority grass roots exploration targets
• Utilising latest research methods and technology available in conjunction with the University of WA’s Centre for Exploration Targeting
1.See slide 2 –exploration targets
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Accelerated drill programme commenced
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• Drilling activity to more than triple over next 15-18 months
• Complete the Definitive Feasibility Study in parallel
• Targeting 4 million ounces within 15km radius of Castle Hill1
• Development investment decision in Dec Qtr 2013
Project Metres Drilled (m) Projected Cost (A$)
Castle Hill – Resource extension 50,420 5.5
Broads Dam – Resource extension 28,620 3.1
Telegraph – Resource extension 12,350 1.3
Grass roots exploration 29,230 1.9
Infill and sterilisation drilling 96,560 7.7
TOTAL PROGRAMME 217,180 19.5
1 Refer slide 2 – Exploration targets
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Conceptual Mining Study2
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• Five advanced project optimisations complete • Castle Hill stages 1 and 2, Red Dam, Emu, Picante
• Latest drilling data, particularly Castle Hill, not included in Study
• Conventional open cut mining
– Low strip ratios, 180t digger and 150t dump trucks
• Combination plant under review
– 1.7 Mtpa conventional processing plant ( ~100,000oz pa)
– 1.2-1.5 Mtpa heap leach operation along side (~25,000oz pa)
• Estimated Capital; $106M mill plus $25M heap leach
• Indicative TOTAL cash operating costs of $900 - $950/oz1
• 12-15 month construction / mine development phase
• Statutory approvals process well advanced 1.See Slide 2 and refer notes on Slide 28
2. As announced on 27 October 2012
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Conceptual site layout
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• Plant in close proximity to Castle Hill
• Dump trucks and road trains direct tip into crusher with no double handling
• Road trains hauling ore from Broads Dam also direct tip into crusher
• Common crusher plant at 4Mtpa feeding both heap leach and mill
• Mill treats high grade material at 1.9 g/t and 94% recovery1
• Heap leach treat low grade at 0.67 g/t and 75% recovery1
• High grade gold solution from the heap leach pumped to the mill for recovery
1.See Slide 2 and refer notes on Slide 28
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Conceptual process flowchart
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Consistent market updates
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Sept 13 Qtr.
Drill results from Castle Hill and
exploration targets
Resource / Reserve upgrade
Cash from Blue Funnel
Nazzaris development
Jun 13 Qtr.
Blue Funnel development
Drill results from drilling at Castle Hill
and Broad’s Dam
Updated Castle Hill stage 2 and Red Dam
Resource
Feasibility study update
Dec 13 Qtr.
Drill results from Castle Hill
Definitive Feasibility Study results
Investment decision
Updated Resource
Cash from Nazzaris
Updated Reserve
Mar 13 Qtr.
Drill results from Castle Hill and Red
Dam
Updated Castle Hill stage 1 Resource
Cash from Catherwood
Further stockpile sales
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Well funded to deliver next growth phase
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• Funds from Placement and SPP in Dec 2012 for accelerated drilling programme over next 15-18 months and to complete the Definitive Feasibility Study
• Targeting +4Moz by Dec 20131
Sources of funds
Placement $20.0m
+ Share Purchase Plan $3.1m
+ internal cash flow (Stocks and small mine deals) $8.5m
+ proceeds from option exercise $1.2m
= Available cash $32.8m
Uses of funds
- bankable feasibility study, drilling and corporate costs
over 12 -15 months ($23.4m)
= Remaining funds $9.4m
1 Refer slide 2 – Exploration targets
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In Summary
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• Re-consolidating underexplored tenements
• Applying modern and systematic exploration techniques
• Castle Hill emerging as a large scale WA gold camp
• 50% Resource increase year on year, now targeting 4M ozs by December 20131
• 217,000m drill programme in 2013 to expand Resources
• Transitioning from explorer to producer
• Monetising stockpiles and selected mining projects
• Low risk open cut mining and conventional milling 50 kms from a major regional mining centre
• Attractive investment metrics with an EV/resource < $20/oz
1 Refer slide 2 – Exploration targets
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PXG’s first gold bar… here’s to many more
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L to R: Dale Rogers, Ian Copeland, Jon Price and Clay Gordon
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The people
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• Dale Rogers – Non Executive Director (Chairman) – Mining engineer with almost 30 years experience in project development,
operations and financing. Developed and managed operations in Australia and overseas.
• Clay Gordon – Non Executive Director – Geologist and mineral economist with 25 years experience in gold mining,
business development and project valuation in Australia and overseas.
• Jon Price – Managing Director – Metallurgist with over 20 years experience in the gold sector. Developed several
new open cut and underground operations near Kalgoorlie and project managed milling and heap leaching projects in Australia and overseas. Former GM at Paddington and St Ives gold mines in the Goldfields.
• Ian Copeland – General Manager - Exploration – Geologist and Mining Engineer with over 25 years experience in the Goldfields
region. Worked as Geology/Exploration Manager with Barrick Gold, Goldfields Ltd and Placer Dome with vast experience in the Kunanalling/ Zuleika project area.
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JORC Mineral Resources
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Notes:
1. Stockpiles report material mined from historical mining operations at Lady Jane, Broads Dam, Premier, Catherwood, Bluebell, Mick Adam
and Shamrock.
2. The information in this report that relates to Exploration results and Mineral Resources is based on information compiled by Mr Ian Copeland.
Mr Copeland, who is a member of the Australasian Institute of Mining and Metallurgy and a member of the Australian Institute of
Geoscientists, is a full time employee of Phoenix Gold. Mr Copeland has sufficient experience which is relevant to the style of mineralisation
and types of deposits under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2004
Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Copeland has given his
consent to the inclusion in the report of matters based on the information in the form and context in which it appears.
3. Information that relates to exploration targets refers to targets that are conceptual in nature, where there has been insufficient exploration to
define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
4. The information on exploration targets is based on a conceptual range of targets as follows: Tonnage range: 2 million to 20 million tonnes,
grade range: 1.5 g/t Au to 5 g/t Au
Mt Au (g/t) Au Oz Mt Au(g/t) Au oz Mt Au (g/t) Au Oz Mt Au (g/t) Au Oz
Castle Hill 0.18 3.4 20,000 7.26 1.6 364,000 16.11 1.5 794,000 23.54 1.6 1,178,000
Broads Dam 2.37 2.2 168,000 3.44 2.2 242,000 5.81 2.2 409,000
Kunanalling 0.58 2.4 45,000 1.51 1.6 76,000 4.28 1.7 237,000 6.37 1.7 358,000
Ora Banda 3.11 1.9 187,000 3.53 1.9 210,000 6.64 1.9 397,000
Carbine 1.97 1.6 103,000 0.09 1.8 5,000 2.06 1.6 108,000
Zuleika North 0.51 2.5 41,000 0.27 2.5 22,000 0.78 2.5 63,000
Stockpiles 0.14 1.5 7,000 0.14 1.5 7,000
Total 0.76 2.6 65,000 16.86 1.7 945,000 27.72 1.7 1,510,000 45.35 1.7 2,520,000
Project
Measured Mineral
Resource
Indicated Mineral
Resource
Inferred Mineral
ResourceTotal Mineral Resource
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JORC Mineral Reserves
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Note: The reserve estimates have been modified with dilution and mining recovery factors (see Appendix 1, table 2) Tonnes and ounces are rounded, rounding errors may occur MT = million tonnes, Au (g/t) = gold in grams per tonne See slide 30
Cut off
Mt Au (g/t) Au Oz Mt Au(g/t) Au oz Mt Au (g/t) Au Oz g/t
Castle Hill 0.05 2.69 5,000 4.43 1.31 186,000 4.49 1.32 191,000 0.7
Broads Dam 1.67 2.14 115,000 1.67 2.14 115,000 0.7
Kunanalling 0.54 2.10 36,000 0.02 1.72 1,000 0.56 2.09 38,000 0.9
Ora Banda 0.58 2.33 44,000 0.58 2.33 44,000 0.8
Carbine 1.27 1.51 62,000 1.27 1.51 62,000 0.7
Sub total - mill feed 0.59 2.16 41,000 7.97 1.59 408,000 8.57 1.63 450,000
Project - Heap leach feed
Castle Hill 5.4 0.60 104,000 5.36 0.60 104,000 0.4
Stockpiles 0.14 1.52 7,000 0.14 1.52 7,000
Sub total - Heap leach feed 5.50 0.63 111,000 5.5 0.63 111,000
Total 0.59 2.15 41,000 13.47 1.20 518,000 14.07 1.24 559,000
Project - Mill Feed
Proven Mineral Reserve Probable Mineral Reserve Total Mineral Reserve
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Qualifying Statements
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• The information in this presentation that relates to Mineral Resources or Ore Reserves is based on information compiled by Ian Copeland, who is a Member of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Ian Copeland is a full time employee of Phoenix Gold Ltd. Ian Copeland has sufficient experience which is relevant to the styles of mineralisation and types of deposits which are covered in this report and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Ian Copeland consents to the inclusion in this report matters based on his information in the form and context in which it appears.
• The information in this report that relates to Mineral Resources estimates for Castle Hill is based on information compiled by Andrew Moulds, who is a Member of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Andrew Moulds is a full time employee of Goldfields Mining Services. Andrew Moulds has sufficient experience which is relevant to the styles of mineralisation and types of deposits which are covered in this report and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Andrew Moulds consents to the inclusion in this report of matters based on his information in the form and context in which it appears.
• The information in this report that relates to Ore Reserves is based on information compiled by Mr William Nene who is a member of The Australian Institute of Mining and Metallurgy. Mr William Nene is a full time employee of Goldfields Mining Services Pty Ltd and has sufficient experience which is relevant to the engineering and economics of the types of deposits which are covered in this report and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. William Nene consents to the inclusion in this report of matters based on his information in the form and context in which it appears.
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