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Esperanza Resources Corp. Presentation - A Clear Path To Gold

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  • 1. A CLEAR PATH TO GOLD
  • 2. 2LEGAL DISCLAIMERSome statements in this presentation constitute “forward-looking statements” within the meaning of applicable U.S. securitieslaws and “forward-looking information” within the meaning of applicable Canadian securities laws, which are collectively referredto as “forward-looking statements”. The United States Private Securities Litigation Reform Act of 1995 provides a “safe harbor”for certain forward-looking statements. Such statements include but are not limited to statements as to the completion of thetransactions between Esperanza Resources Corp. (the “Company”) and Pan American Silver Corp., the potential of the EsperanzaGold Project property, the Company’s plans in respect of exploration and development, including: significant costs and timingthereof and other exploration properties. The forward-looking statements involve risks and uncertainties and other factors thatcould cause actual results to differ materially, including those relating to permitting, availability of equipment, exploration resultsand bringing properties into production. Please refer to a discussion of these and other risk factors in the Company’s publicfilings with the Canadian regulators and the Form 20-F of the Company filed with the US Securities and Exchange Commission.The forward-looking statements contained in this presentation constitute management’s current estimates as of the date of thispresentation with respect to the matters covered herein. We expect that these forward-looking statements will change as newinformation is received and that actual results will vary, possibly in material ways. While we may elect to update this forward-looking information at any time, we do not undertake to do so.This presentation is not, and under no circumstances is to be construed as, a solicitation or an offer of any kind. The matters setforth in this presentation do not constitute an agreement or offer that may be accepted. Accordingly, no person may bring aclaim or action against another for a failure to negotiate, agree or enter into any agreement with respect to matters contained inthe presentation.TSX.V: EPZOTCQX: ESPZF
  • 3. STRONG MANAGEMENT TEAMProven mine builders, led by former Minefinders executive andoperating team.ESPERANZA GOLD PROJECTAccelerating to production and positive cash flow.$38 MILLION IN CASH AND SECURITIESWell funded to bring our first asset into production.LONG-TERM OBJECTIVEBuilding a multi-mine precious metals producer.HIGHLIGHTS3
  • 4. THE NEW TEAMMANAGEMENTGREG D. SMITHPresident & CEOFormer CFO Minefinders, Chartered AccountantDANIEL O’FLAHERTYExecutive VPFormer Director, Investment Banking at Scotia CapitalANDREW POOLERCOOFormer COO of Abacus Mining and Exploration CorpSenior Vice President, Mine Operations for Pan American SilverKYLIE DICKSONCFOFormer Controller of MinefindersJOHANNES J. MILLERVP OperationsFormer Operations Manager and Acting VP Operations forMinefindersNON EXECUTIVE DIRECTORSWILLIAM J. PINCUSChairmanFormer CEO of Esperanza with over 30 years experience as acertified professional geologistANDREW SWARTHOUTDirectorCEO of Bear Creek Mining Corp. and former officer of SouthernPeru CopperMARCEL DE GROOTDirectorFounder and President of Pathway Capital Ltd.BRIAN E. BAYLEYDirectorResource Lending Advisor for Sprott Resource Lending Corp.4
  • 5. THE ESPERANZAGOLD PROJECT• 100% ownership• 15,025 hectares• Gold oxide depositPlanned conventional open-pit heap-leachoperation with short construction lead-time& manageable capital requirementsUpdated PEA completed in September 20115
  • 6. ESPERANZA GOLD PROJECT HIGHLIGHTS6WELL DEFINED GOLD RESOURCELOW CAPITAL REQUIREMENTSSTRONG ECONOMICSFAVOURABLE LOCATION IN MEXICOLOW RISK CONVENTIONAL OPERATION (OPEN-PIT HEAP-LEACH)SILVER BYPRODUCT CREDITEASY ACCESS TO INFRASTRUCTUREEXPLORATION UPSIDESTRONG COMMUNITY SUPPORTEXPERIENCED MINE BUILDERSQUICK TIMELINE TO PRODUCTION
  • 7. LandfillCalabazas HilltopLeach Pad FieldsPower LinesCerro JumilESPERANZA GOLD PROJECT PIT & EXPLORATION UPSIDE7SouthwestExtension
  • 8. PEA HIGHLIGHTS: SEPTEMBER 2011SEPTEMBER 2010 RESOURCE (USED AS THE BASIS FOR THE PEA)TONNAGE(000’S)GOLDGRADE(G/T)SILVERGRADE(G/T)GOLD(KOZS)SILVER(KOZS)M&I 34,406 0.83 1.8 913 1,951INFERRED 8,596 0.83 6.9 230 1,904TWO-STAGES OF CRUSHINGAVERAGE ANNUAL GOLD PRODUCTION (KOZS) 103OPERATING COSTS (NET OF BY-PRODUCTS) ($/OZ AU) 499INITIAL CAPITAL COST ($MM) 114PRODUCTION RATE (KTPD) 20GOLD RECOVERY 65-75%SILVER RECOVERY 25%OVERALL STRIP RATIO (WASTE:ORE) 2.2:1NSR ROYALTY 3%Note: Totals may not sum to 100% due to roundingBased on Sept. 2010 Resource including 41,500 meters of drilling (does not include positive 2011 & 2012 drilling of 22,000 meters)8
  • 9. VALUE CONSIDERATIONSAs per Esperanza Gold Project 2011 Preliminary Economic Assessment90%10%20%30%40%50%60%70%$0$50$100$150$200$250$300$350$1,000$1,050$1,100$1,150$1,200$1,250$1,300$1,350$1,400$1,450$1,500$1,550$1,600$1,650$1,700INTERNALRATEOFRETURN(%)AFTER-TAXNETPRESENTVALUE(US$M)PRICE OF GOLD (US$/OZ)(1)IRR5% NPV7% NPV$1,250/oz AuAfter-Tax NPV5% of $165MIRR of 35%$1,550/oz AuAfter-Tax NPV5% of $270MIRR of 53%(1) Silver price based upon a Ag:Au price ratio of 55:1Based on initial 6 year mine life  does not include 0.5 Moz Au resource increase
  • 10. 913@ 0.83 gpt1,474@ 0.91 gpt2301692.016.01.92.805101520253035404502004006008001,0001,2001,4001,6001,800SILVERRESOURCES(MOZ)GOLDRESOURCES(KOZ)10SEPTEMBER 2012 RESOURCE10September 2010 ResourceGold SilverSeptember 2012 ResourceGold SilverM&I Resources Inferred ResourcesSEPTEMBER 2012RESOURCE STATEMENT(63,500 METERS OF DRILLING)TONNAGE(000’S)GOLDGRADE(G/T)SILVERGRADE(G/T)GOLD(KOZS)SILVER(KOZS)M&I 50,336 0.91 9.9 1,474 16,015INFERRED 7,970 0.66 10.9 169 2,793INCREASE TO M&IFROM 2010+46% +10% +466% +61% +729%6 yearmine life
  • 11. CAPITAL COSTESTIMATENew management toreview and optimizecapital costs from PEAPEA Operating Costs:<$500/oz +3% NSRTOTAL PEA CAPITAL$114 million+$15 million workingcapital$15 millionCrusher$6 millionHeap Leach Phase II$20 millionTruck Fleet$25 millionSupport Equipment$65 millionInfrastructureLeach PadMine DevelopmentOwner CostsWorking CapitalPotential to payfor out of cashflowPotential forcontract mining11Currentlyunderrevision
  • 12. Q1 2012 Q2 2012 Q3 2012 Q4 2012 2013–2015ESPERANZA GOLD PROJECT MOVING FORWARDINAH CompletesArchaeological ReviewPrepare Permit ApplicationResource UpdateSubmit Permit ApplicationExpansion DrillingInitiation ofFeasibility StudyAddition of Experienced Operating TeamCompleted $34MEquity PlacementConstructionSurface LandAgreementObtain All PermitsProductionFeasibility Study12
  • 13. 13ESPERANZA RESOURCES & PAN AMERICAN SILVERTRANSACTION ANNOUNCED FEBRUARY 25, 2013
  • 14. TRANSACTION STRUCTURE14Esperanza’s Pro Forma Asset ProfileMineral Property AcquisitionLa BolsaPico MachayCalcatreu$68 million Cash$15 million Standby FacilityEsperanza26% of Global MineralsExploration PropertiesRoyalty PortfolioLa Bolsa, Pico Machay,Calcatreu50.9 million shares10 million warrantsPrivate Placement into Esperanza$35 million cash$15 million standby facility20.6 million shares$1.70 / share
  • 15. LA BOLSA OPEN PIT PROJECT15Avg. AnnualProduction 42,000 oz GoldCash Costs US$510 / oz (2011)Initial Mine Life 6+ yearsDevelopmentCapital US$31 million (2011)Resources(M&I)427,000 oz Gold6.2 million oz SilverResources(Inferred)222,000 oz Gold3.3 million oz SilverSource January 2011 PFSStatusPermittedConstruction Ready
  • 16. PICO MACHAY OPEN PIT PROJECT16Resources(M&I) 270,000 oz GoldResources(Inferred) 450,000 oz GoldSource2011 resource update(resource only)StatusDrill ready targetsFurther work required
  • 17. CALCATREU OPEN PIT PROJECT17Avg. AnnualProduction ~90,000 oz GoldCash Costs US$226 / oz (2007)Initial Mine Life 5+ yearsDevelopmentCapital US$79 million (2007)Resources(M&I)676,000 oz Gold6.6 million oz SilverResources(Inferred)226,000 oz Gold1.8 million oz SilverSource2007 feasibility2008 resource updateStatusFeasibility stage projectFurther work required
  • 18. PRO FORMA ASSET PROFILE18Note: La Bolsa M&I inclusive of P&P materialSource: La Bolsa resource based on January 2011 technical report;Esperanza resource based on October 2012 technical report;Pico Machay resource based on April 2011 technical report press release;Calcatreu resource based on April 22, 2008 Aquiline Resources press releaseAsset LocationReserves and ResourcesLa BolsaEsperanzaPico MachayCalcatreuMeasured & Indicated InferredGold Silver Gold SilverContained Grade Contained Grade Contained Grade Contained Grade(koz) (g/t) (koz) (g/t) (koz) (g/t) (koz) (g/t)La Bolsa 427 0.6 6,232 9.0 222 0.5 3,343 7.6Esperanza 1,470 0.9 16,010 9.9 170 0.7 2,790 10.9Pico Machay 270 0.8 -- -- 450 0.6 -- --Calcatreu 676 2.6 6,606 25.7 226 2.1 1,821 16.6Total 2,843 28,939 1,068 7,954
  • 19. CORPORATE PROFILE19Potential Annual Gold Production (000 oz)Note: production values based on 5-year averages; Pico Machay and Calcatreubased on internal estimates, further study required. La Bolsa IRR is pre-tax andEsperanza is post-tax. Sequence is conceptual and subject to further study.GROWTHHIGH MARGIN, LOW CAPEXLOW RISKPROVEN TEAM Near term gold production in Mexico Substantial production potential Leading mid-tier gold producer by 2016 Focus on open-pit low infrastructure projects Focus on cash flow and financial returns Strong balance sheet Supportive major shareholder Diversified in stable jurisdictions in Americas Executives with significant operatingexperience Strong Board with Pan American Silversupport42105~150La Bolsa Esperanza Pico Machay/Calcatreu~30095% IRR@ $1,200 Au32% IRR@ $1,200 Au147
  • 20. 2020Esperanza Gold ProjectCaballo BlancoCerro del GalloSan AntonioLa India San FranciscoEl CastilloLa Colorada0.200.400.600.801.000 500 1,000 1,500 2,000M&IRESOURCEGOLDGRADE(g/t)MEASURED & INDICATED GOLD RESOURCE (koz)Open-Pit Heap Leach Mines / Projects in MexicoProducingDevelopmentSize of bubble denotesest. annual productionLa BolsaSource: Scotia Capital, Company ReportsResource grades may not be diluted for miningPEER BENCHMARKING
  • 21. Luna TimminsMcEwenPrimeroArgonautAlamosAuRicoRio AltoEPZ + LB$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000100 120 140 160 180 200 220MARKETCAPITALIZATION(US$MM)2013 ANNUAL GOLD PRODUCTION FORECAST (000 OZ)PEER COMPARISON –PEER COMPARISON – RERATE POTENTIAL21Market Capitalization vs Gold Production Per YearNote: 2012 production shown for peer group from BMO equity research, annual production shown for Esperanza, La Bolsa based on 2012 and2011 technical reports, respectively; Pico Machay and Calcatreu based on internal estimates, further study required.RERATEPOTENTIAL
  • 22. PEER COMPARISON – COST METRICS22Operating Cash Costs (US$/oz)$1,026$1,011$907$852$842$766$753$695$671$633$589$436$510$499Kirkland LakeLake ShoreOsiskoBrigusAllied NevadaAuRicoNew GoldAurizonArgonautPrimeroRio AltoLa BolsaEsperanzaAlamosNote: 2012 cash costs shown for peer group from BMO equity research; Esperanza and La Bolsa cash costsbased on January 2012 and January 2011 technical reports, respectively, net of by products;Esperanza cash cost does not include 3% NSR royalty
  • 23. $499 $510$42$184$138$33$55$780$703$1,200Esperanza La Bolsa Peer AverageCash Costs Royalty Dev. Capex Sus. Capex Spot GoldPEER COMPARISON – BREAK-EVEN METRICS23Break-Even Gold (US$/oz)Spot Gold: US$1,400 /ozSignificantMarginSource: Peer Average based on BMO and Canaccord equity research. Esperanza and La Bolsa are based on the January 2012Preliminary Economic Assessment and the January 2011 Preliminary Economic Assessment, respectively.
  • 24. PAN AMERICAN SILVER24Market Capitalization $1.8B30 Day Average Volume 2.6M2012 Silver Production 25.1 Moz# Producing Mines 7 Second largest primary silverproducer in the World Operating 7 mines in 4 countries Reputation as strong mine builderand operator Highly liquid with a diverseshareholder base Committed to being a supportiveEPZ shareholder Ability to lend technical assistancethrough board positionsAN INDUSTRY LEADING PARTNER
  • 25. PRO FORMA CAPITAL STRUCTURE25Shares Outstanding 150.3 millionPrivate Placement Price @ $1.70 / shareWarrants Outstanding 23.6 millionCash From Warrant Exercise $36 millionPro Forma Market Capitalization $110 millionCash and Marketable Securities $69 millionEnterprise Value $40 millionMajor ShareholdersPan American 48%Sprott 11%Wexford 4%Note: Capital Structure on a basic basis.
  • 26. 26VALUE PROPOSITION26FULLY-FUNDED WITHSTRONGBALANCESHEETNEAR TERMPRODUCTIONEXPLORATIONUPSIDE ATMULTIPLEASSETSENHANCEDCAPITALMARKETSPROFILERISKDIVERSIFICATIONEXCEPTIONALBOARD &MANAGEMENTSTRONG CORESHAREHOLDER3 MILLION OZGOLD (M&I)29 MILLION OZSILVER (M&I)
  • 27. APPENDIX
  • 28. APPENDIX: CORPORATE INFORMATIONESPERANZA RESOURCES CORP.TSX.V LISTING (SINCE AUGUST 2003) EPZOTCQX LISTING ESPZFCURRENT PRICE (19-JUNE-13) C$0.67HIGH – LOW (12 MONTH) C$0.60 — $1.70AVERAGE DAILY VOLUME (3 MONTHS) 70,000SHARES OUTSTANDING 79 MMARKET CAP (ISSUED/OUTSTANDING) C$48 MCASH C$34 MVALUE OF SHARES IN GLOBAL MINERALS LTD. C$3 MWEBSITE www.epzresources.com28
  • 29. APPENDIX: OTHER ASSETSOperatorProject Strieborna San LuisBiricuEl CanarioGallos BlancosLocation Slovakia Peru MexicoCommodity Ag, Cu Ag, Au AuResourcesM&I INFERRED290 koz Au Reserves7.2 Moz Ag ReservesExploration Stage14.3 Moz Ag48.1 Mlbs Cu13.5 Moz Ag29.8 Mlbs CuEPZ Interest 26% equity interest 1% NSR 100% owned29
  • 30. APPENDIX: ESPERANZA GOLD PROJECTCAPITAL COST ESTIMATEPEA PREPRODUCTION CAPITAL (US$M) TWO-STAGE CRUSH RUN-OF-MINEMINE DEVELOPMENT (PRE-STRIP) $10.5 $10.5MINING EQUIPMENT/INFRASTRUCTURE $52.0 $52.0PLANT/INFRASTRUCTURE $32.1 $18.1LEACH PAD $17.4 $17.4OWNER COSTS $1.6 $1.6TOTAL PEA PREPRODUCTION CAPITAL $113.6 $99.6WORKING CAPITAL $13.6 $10.0LOM SUSTAINING CAPITAL $7.0 $7.0INCLUDED IN PREPRODUCTION CAPITALTRUCK FLEET $19.5SUPPORT EQUIPMENT (E.G. DOZERS) $12.3LOADERS $8.9ROTARY DRILL $4.1HEAP LEACH PAD PHASE II $5.7SUB-TOTAL FLEXIBLE CAPITAL $50.5The PEA Preproduction capitalincludes several components thatcan be leased, replaced withcontract mining, or staged later inthe mine lifePEA Operating Costs: <$500/oz +3% NSR30
  • 31. APPENDIX: THE ESPERANZA GOLD PROJECTEXPLORATION TARGETS10 Target Areas Warrant FurtherExploration:4 target areas adjacent to the knownresource (DRILL READY)• Southwest Extension• Colotepec• Northern Contact• NE Intrusive Contact6 other target areas, in order of priority(DRILL READY)• Coatetelco• Alpuyeca• Pluma Negra• Mercury Mines• La Vibora• Jasperoid de Toros31
  • 32. DHE-12-7425.5 meters containing 1.65 g/t AuDHE-12-7731.5 meters containing 2.8 g/t AuDHE-12-8145 meters containing 1.9 g/t AuDHE-12-90Two separate intervals, 27 meterscontaining 1.1 g/t Au and anotherinterval with 121.5 meters containing1.1 g/t AuAPPENDIX:RESOURCEEXPANSIONPOTENTIAL• Mineralization remains openin several directions• 5000 meter programexpected for 2013 to pursuethe Southwest ExtensionDHE-12-74DHE-12-77DHE-12-81DHE-12-9032Esperanza GoldProject 2012Drill HoleLocation Map
  • 33. APPENDIX: ESPERANZA GOLD PROJECT PIT33
  • 34. APPENDIX: ESPERANZA GOLD PROJECT PIT34
  • 35. 35APPENDIX: LA BOLSA PFS HIGHLIGHTS: AUGUST 2010OCTOBER 2009 RESOURCE (USED AS THE BASIS FOR THE PFS)TONNAGE(000’S)GOLDGRADE(G/T)SILVERGRADE(G/T)GOLD(KOZS)SILVER(KOZS)P&P 15,631 0.63 9.0 316 4,502M&I 21,470 0.62 9.0 427 6,232INFERRED 13,663 0.51 7.6 222 3,343Note: Totals may not sum to 100% due to rounding; M&I resources inclusive of P&P reservesTWO-STAGES OF CRUSHINGLIFE OF MINE GOLD PRODUCTION (KOZS) – BASED ON RESERVES ONLY 228OPERATING COSTS (NET OF BY-PRODUCTS) ($/OZ AU) $510INITIAL CAPITAL COST ($MM) $31PRODUCTION RATE (KTPD) 8.5GOLD RECOVERY 72%SILVER RECOVERY 7%OVERALL STRIP RATIO (WASTE:ORE) 1.9:1PRE-TAX NPV 5% ($MM) - $1,200/OZ AU $91PRE-TAX IRR (%) - $1,200/OZ AU 95%
  • 36. APPENDIX: NET ASSET VALUE MULTIPLES0.0x0.2x0.4x0.6x0.8x1.0xUnfundedDevelopersFundedDevelopersJuniorProducersIntermediateProducersSeniorProducersPriceNetAssetValue• Industry wide value multiples have contracted over the last several years• Within peer groups, companies that trade at the highest multiples have:o Strong balance sheetso Low capital intensity growtho Political risk diversificationo Capable operators• The NAV of an asset when it is producing is higher because capex is sunk and positive cash flowsare sooner (less discounting)  higher multiples then compound share price growth0.1 – 0.2x0.4 – 0.5x0.5 – 0.7x0.6 – 0.8x0.7 – 1.0xAverage Net Asset Multiples By Peer GroupThe biggest opportunity for multiple expansion is growing from anunfunded developer to a financially strong producer20122014Source: National Bank Financial equity research36
  • 37. SHAREPRICE$0DISCOVERYSPECULATION1–2 YEARSDEVELOPMENTINVESTMENT ANALYSIS2–3 YEARSPRODUCTIONREVALUATION2–3 YEARSHIGHER RISK:Confirm DepositReality Sets InLOWER RISK:Production DecisionStart UpSOURCE: U.S. Global Research37APPENDIX: LIFE CYCLE OF A MINE
  • 38. 38TSX.V: EPZOTCQX: ESPZFADDITIONAL DISCLOSURESWilliam J. Pincus, M.Sc., C.P.G. and Chairman of Esperanza is the “Qualified Person” as that term is defined in NI 43-101 responsiblefor the contents of this presentation.Mineral resources that are not mineral reserves do not have demonstrated economic viability.La Esperanza: William D. Bond, P.Geo, Dean D. Turner, P.Geo., Thomas Dyer, P.E., Doug K. Maxwell, P.E., Charlie Khoury, P.E., ErnestT. Shonts Jr., P.E. are the qualified persons (“QP”) under NI 43-101 who have prepared the resources and reserves estimates, andother technical information in respect of La Esperanza Project contained in this presentation. All of the QP’s are independent of theCompany as defined under NI 43-101. For additional information with respect to the assumptions and parameters related to thetechnical information disclosed herein, refer to the technical reports entitled: (i) “Preliminary Economic Assessment Update 2011Cerro Jumil Project, Morelos, Mexico” dated September 2011 and Amended in January 2012, and (ii) "Cerro Jumil Project, 2012Mineral Resources Estimate" dated October 26, 2012, which can be found under the Company’s profile at www.sedar.com.La Bolsa: For additional information with respect to the assumptions and parameters related to the technical information disclosedherein, refer to the technical report entitled “Technical Report La Bolsa Project Pre-Feasibility Study” dated January 10, 2011, whichcan be found under the profile of Minefinders Corporation Ltd. at www.sedar.com.Calcatreu: For additional information with respect to the assumptions and parameters related to the technical information disclosedherein, refer to the technical report entitled “Calcatreu Gold Project” dated April 5, 2007, which can be found under the profile ofAquiline Resources Inc. at www.sedar.com.Pico Machay: For additional information with respect to the assumptions and parameters related to the technical informationdisclosed herein, refer to the technical report entitled “Independent Technical Report and Resource Estimate Pico Machay GoldDeposit Huancavelica Province Peru” dated July 14, 2011, which can be found under the profile of Treasury Metals Incorporated atwww.sedar.com.
  • 39. NOTES:39

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