GOLD MINER & EXPLORER WHERE TO FROM HERE? For personal … · 10/22/2015 · At Southern Gold our...
Transcript of GOLD MINER & EXPLORER WHERE TO FROM HERE? For personal … · 10/22/2015 · At Southern Gold our...
SOUTHERNGOLD
GOLD MINER & EXPLORER – WHERE TO FROM HERE? Annual General Meeting – Managing Director’s Presentation
22 October 2015
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DisclaimerForward-looking statementsThe information in this presentation is published to inform you about Southern Gold Limited (“Southern Gold”) and its activities. Some statements in this presentationregarding estimates or future events are forward looking statements. These may include, without limitation:
• Estimates of future cash flows, the sensitivity of cash flows to metal prices and foreign exchange rate movements;
• Estimates of future metal production; and
• Estimates of the resource base and statements regarding future exploration results and increasing the company’s resource base
Such forward looking statements are based on a number of estimates and assumptions made by the Company and its consultants in light of experience, currentconditions and expectations of future developments which the Company believes are appropriate in the current circumstances. Such statements are expressed in goodfaith and believed to have a reasonable basis. However the estimates are subject to known and unknown risks and uncertainties that could cause actual results to differmaterially from estimated results.
All reasonable efforts have been made to provide accurate information, but the Company does not undertake any obligation to release publicly any revisions to any“forward-looking statement” to reflect events or circumstances after the date of this presentation, except as me be required under applicable laws. Recipients shouldmake their own enquiries in relation to any investment decisions from a licensed investment advisor.
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Competent Person’s statementsThe information in this report that relates to Exploration Results has been compiled under the supervision of Mr. Ian Blucher (MAusIMM). Mr Blucher, who is a full time employee of Southern Gold Limited and a Member of the Australian Institute of Mining and Metallurgy, has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for the Reporting of Mineral Resources and Ore Reserves. Mr Blucher consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.
The information in this report that relates to Mineral Resources is based on information compiled by Mr Ian Blucher (MAusIMM). Mr. Blucher is a full time employee of Southern Gold Limited and has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC, 2012). Mr Blucher consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.
Pre-Feasibility Study ResultsThe Optimisation announcement dated 13 February 2014 had no material changes to the methodology and assumptions used to determine the production target as detailed in the PFS announcement of 28 August 2013, and all of the key parameters continue to apply. The Optimisation announcement provided an update to the market of the reduction in the forecast operating costs. There have been no material changes to the methodology used to determine the operating costs as outlined in the PFS announcement.
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SOUTHERNGOLD From Exploration Discovery to Mining
Our Exploration Effort
1. The right address at Kalgoorlie
2. Near mine resource upside with multiple targets
3. Plenty of Blue Sky with an exciting regional play
4. Drill deeper
At Southern Gold our focus is on monetising gold assets: we find
them, we define them and aim to turn them into mines.
Our Mining Activity
1. At the right address - Kalgoorlie
2. The right execution partner in MLX
3. Good resource base at the right grade
4. Cash flow and leverage to project expansion
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The Strategy
FROM DISCOVERY TO MINING 4
Projects Exploration
Sustainable Cash Flow
1. Cannon Open Pit
2. Cannon Underground?
3. Near Mine Targets (e.g. Monument)
4. New Projects
Economic Gold Discovery
1. Cannon Region
2. Bulong Regional (Heron JV)
3. Cowarna Regional
4. New Projects
“We find, define and develop Australian high grade gold deposits and ensure a return to
shareholders by monetising them. Total Shareholder Return is our benchmark.”
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The Strategy (2): Gold Projects
FROM DISCOVERY TO MINING 5
~35km East of Kalgoorlie
Infrastructure: multiple mills
Mining Culture and History
Well embedded regulatory system
Local Workforce
Friendly topography
World class deposits – “Elephants”
Cannon AISC <A$1100/oz Au
~35km
Cannon Project Prior to Open Pit Excavation
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6FROM DISCOVERY TO DEVELOPMENT
The Strategy (3): Gold Exploration• Cannon is a small piece of the puzzle…..
• This is a TMI Image with areas of infill SAM surveys indicated as A…E.
• Numerous targets identified based on:• Soil geochemistry• Regional scale RAB and auger drilling• Geophysics• On ground prospecting activity• High level structural interpretation
• Example regional exploration targets:• Tooting Bec• Gunnersbury• Lighthouse• Cyprus• Barbican• Chigwell
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Cash Generation – 2013 PFS Estimate
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Phase 1 & 2
Mine Life Months 36
Tonnes Mines Tonnes 484,000
LOM ave. Head grade g/t Au 4.4
Mined Ounces oz Au 68,200
Recovery (ave) % 92
Infrastructure Cost A$m $13.3
C1 Operating Cost A$/oz 964
Free surplus cash flow @ $1500/oz Au
A$m $18.5m
Sothern Gold Share (50%) Assuming MLX Deal
A$m ~A$9m
*See ASX announcements 29 August 2013 & 18 February 2014 for key parameters of PFS. Mined ounces and grade calculated, based on cut-off grade from A$1400/oz base case.
Phase 1 Open Pit & Phase 2 Underground*
FROM DISCOVERY TO MINING
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• Current AUD Gold price ~A$1600/oz
• Implied margin on open pit, net of all costs ~A$450/oz
• Cash flow expected in 2016Q2
Cash Generation (2) – current Operations stage 1
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# See ASX announcement 16 June 2015, head grade is fully diluted. See also appendix for MLX open pit cost structure.
Stage 1 Only
Mine Life Months 9
Tonnes Mines Tonnes 152,352
Head grade g/t Au 3.1#
Mined Ounces oz Au 15,209
Recovery (ave) % 89
Recovered Ounces oz Au 13,495
Infrastructure Cost A$m $0.89
C1 Operating Cost A$/oz $1053
AISC A$/oz $1084
Total Cost/oz, including capital
A$/oz $1150
MLX Modelling Open Pit Only#
FROM DISCOVERY TO MINING
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Cash Generation (3): potential larger open pitPotential to extend & deepen the open pit, subject to terms being agreed with MLX
FROM DISCOVERY TO MINING
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Where is the upside? Follow the high grade.
Section 110mN Section 175mN
7.6m @21.5g/t Au
7.5m @11.5g/t Au
Open
Open
• Deposit size is constrained by the poor capital markets of 2013-2014, not drilling
Excellent grade and width at depth indicating the deposit is open
FROM DISCOVERY TO MINING
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Shallow Regional RAB drilling
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Where is the upside? (2) Drill Deeper
RC Drilling: Cannon Discovery Drill deeper than 50m
Initial stage
exploration finds ppb
level anomalism
RC drilling targets
below the oxide finds
high grade gold
Implications for
regional targets with
ppb level results
Historical workers mainly drilled to ‘refusal’ so only tested the oxide, or generally <50m
FROM DISCOVERY TO MINING
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What has been achieved this last year?
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• Mine finance and operating agreement signed with MLX
• All permitting for Cannon Mine was put in place
• All pre-development activities were completed
• Mining commenced in late July/ early August 2015
• A very modest re-start to exploration activity
• Small drilling programs at Railway South and Arsenal projects
• Oversubscribed $1.05m equity raising
• Marketing into Singapore and Hong Kong to spread the word
FROM DISCOVERY TO MINING
The Cannon project has gone through all regulatory and development
steps and is now an operating mine. Very few Australian junior exploration
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Bringing it all together…..
Financial information * Pending 15:1 consolidation
Number of shares 527.5 m* 35.1m*
Share price (21 Oct 2015) A$0.021* A$0.31 *
Market capitalisation A$11.1 m
Debt (Metals X finance) A$0.5 m
Cash (@ 30 June 2015) A$0.8 m
Enterprise value A$10.8 m
Major shareholders
Silver Lake Resources 8.20%
PS Super Nominee 6.02%
Gary B Branch 4.45%
JP Morgan Nominees 3.44%
Board and Management 7.42%
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12 month price performance
FROM DISCOVERY TO MINING
90
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
NST OGC RRL EVN ALK TRY MOY DRM SAR SBM MML RMS BDR KCN SAU SLR RSG PRU
A$
/oz
EV/Reserve, Producers
Source: SNL Mining & Metals, Terra Studio, Enterprise Value (EV) as at 6th October 2015
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A Summary of Our Assets
14FROM DISCOVERY TO MINING
Greg Boulton AMNon-Executive Chairman
David Turvey
Non-Executive Director
Mick BillingNon-Executive Director
Simon Mitchell Managing Director
People Are Very Important
Dan Hill – Company Secretary
Ray Ridge – Finance Manager
Ian Blucher – Project Development Manager
Justin Gum – Principal Geologist
Aaron Brown – Senior Geologist
Daniel Brock – Project Geologist
Claire Howe – Accounts/administration
Part time/ contractors
The BoardCategory Total Resource- Cannon Only
Tonnes
t
Au
g/t
Au
Ounces
% Au
Ounces
Measured 109,238 3.07 10,795 11%
Indicated 643,969 3.87 80,132 83%
Total M&I 753,207 3.75 90,927 94%
Inferred 93,053 2.05 6,118 6%
Total All Categories 846,260 3.57 97,045
*See ASX announcements 16 June 2015 for details@ 0.7g/t Au cut-off grade
Gold is Very Important (especially at the right grade!)
Our tenure in the Kalgoorlie region is significant
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Where to from here?
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• Mine the high grade gold (>3.1g/t Au head grade)
• Complete the ‘First Gold Pour’ milestone
• Establish cash flow from operations
• Conclude commercial terms on the large pit with MLX
• Drill the high grade at the base of Cannon
• Explore our significant Kalgoorlie ground position
• Acquire project opportunities in our neighborhood
• Expand our JORC Resource base
• Diversify our potential production sources
FROM DISCOVERY TO MINING
High grade ROM at Cannon Mine
Approx. 40kt @ ~3g/t Au
Overall, we are looking to make our cash flow sustainable and build
the asset base of the company with a view to achieving a superior
Total Shareholder Return.
$$$
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SOUTHERNGOLD
Appendix – Bulong Gold Resource & Background Information
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Measured Indicated Inferred Total
Tonnes Au Au Tonnes Au Au Tonnes Au Au Tonnes Au Au
t g/t Ounces t g/t Ounces t g/t Ounces t g/t Ounces
Cannon Gold Resource
Oxide 16,220 3.42 800 423 1.92 100 - - -
Transitional 90,687 2.98 13,900 73,473 2.41 2,900 13,124 1.65 696
Fresh 2,331 4.31 78,500 570,073 4.06 4,200 79,929 2.11 5,422
Total 109,238 3.07 10,795 643,969 3.87 80,132 93,053 2.05 6,118 846,260 3.57 97,045
Pinner Resource
Oxide - - - - - - 600 3.0 200
Transitional - - - - - - 76,400 2.2 5,400
Fresh - - - - - - 94,900 2.0 6,100
Total - - - - - - 172,000 2.1 11,500 172,000 2.1 11,500
TOTAL RESOURCE
1,018,260 3.32 108,545
Appendix 1 – Bulong Gold Project Resource Table
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Bulong Gold Resource
94% of the Cannon Gold Resource is within the Measured & Indicated category
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Simon MitchellManaging Director
+61 8 8368 [email protected]
Level 1, 8 Beulah RoadNorwood, SA 5065
PO Box 255 Kent Town SA 5071
SOUTHERNGOLD
Southern Gold Limited: Company Profile
Southern Gold Ltd is a successful gold explorer listed on the Australian Securities Exchange (ASX,ticker “SAU”). The Company’s main focus is its Bulong Gold Project located 30 km east of theworld renowned gold district of Kalgoorlie (WA) with the flagship Cannon Gold Mine having 846kt@ 3.6g/t Au or 97koz gold defined in accordance with the JORC code, 94% of which is in theMeasured and Indicated categories.
After a Pre-Feasibility Study demonstrated the Cannon Gold Resource could generate robust cashflows and a positive economic return (ASX Announcement 13/02/2014) the company entered intoan agreement with Metals X Ltd to finance and develop the deposit under a 50/50 profit sharearrangement. Metals X is responsible for all mining, haulage and processing activities. (ASXAnnouncement 11/11/2014)
Southern Gold is currently focused on ensuring cash flow from the Cannon Gold Mine as it movesinto production in 2015 and this will act as the foundation to build a longer-term gold explorationand production business. By monetising the Cannon Gold resource, the company will be ideallyplaced to accelerate exploration within its broader tenement holdings. Southern Gold hasidentified over 30 exploration targets which will underpin the future growth of the Company.
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