Mnd investor presentation_august_2013_final

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Mandalay Resources Corporation Investor Presentation August 2013.

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Mnd investor presentation_august_2013_final

  1. 1. DELIVERING GROWTH // DISCOVERING VALUE August 2013 TSX: MND www.mandalayresources.com
  2. 2. 2 This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans and exploration plans and the growth and strategy of Mandalay. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, that exploration results at Cerro Bayo, Costerfield, and La Quebrada may not meet management’s expectations, that Cerro Bayo and Costerfield capital, production and operating cost results may not meet current plans, that reclamation costs associated with Mandalay’s Furioso property may exceed current estimates, and changes in commodity prices and general market and economic conditions. The factors identified above are not intended to represent a complete list of the factors that could affect Mandalay. Although Mandalay 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 not to be as 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. Quality Control and Assurance Quality control and assurance programs are implemented in line with the standards of National Instrument 43-101. The exploration program at Costerfield is supervised by Chris Gregory (Member, Australian Institute of Geoscientists accredited Chartered Professional (Mining)), General Manager of Australasian Business Development for Mandalay and a Qualified Person as defined under National Instrument 43-101. Mr. Gregory regularly visits Costerfield, supervises the collection and interpretation of scientific and technical information contained in this presentation.. The exploration programs on the Cerro Bayo and La Quebrada projects are supervised by Ronald Luethe (Member: American Institute of Professional Geologists and an Idaho Registered Professional Geologist), General Manager of Mandalay Chile Ltda. and a Qualified Person as defined under National Instrument 43-101. Mr. Luethe visits the Cerro Bayo and La Quebrada projects often, supervises the collection and interpretation of scientific and technical information contained in this presentation. Dr. Mark Sander (Member: AusIMM), President of Mandalay, has visited the Costerfield, Cerro Bayo, and La Quebrada projects several times during 2010, 2011 and 2012 and has supervised the preparation of this presentation. Forward-looking Statements 2
  3. 3. 3 Vision 3 To create exceptional shareholder value through the acquisition of undervalued assets that can rapidly become cash generative, self fund exploration, establish and maintain high operating margins and return cash to shareholders within a planned period of time. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement.
  4. 4. 4 Locations and Tradeflows 4
  5. 5. 5 Mandalay in Today’s Market  Markedly lower metal prices  Producers must be responsive to large swings in metal prices  Focus on growth of sustainable cash margins and return of capital  Mandalay well positioned for profitability in this environment  Mandalay strategy robust: low total cost producer • Low acquisition cost of producing assets • Low sustaining and incremental expansion capex; no large, risky new project construction capex • Low risk, head frame exploration drilling for low discovery cost per ounce • Low overhead virtual organization • Operational improvements result in cash cost reductions year-over-year • With no overextension, no disruptive changes in plans with price declines  Healthy cash margins: EBITDA of $11 million in the second quarter of 2013  No impairment charges  Dividend predictable and sustainable– automatically adjusts with metal price at 6% gross revenue  Strong support for equity  NCIB program in place: 1,378,600 shares purchased year-to-date  Management and insiders own 53.66% of shares outstanding as of August 8, 2013
  6. 6. Mandalay Second Quarter 2013 Performance Q2, 2013 Q2, 2012 Saleable Silver oz produced 921,895 814,970 Saleable Gold oz produced 13,046 9,215 Saleable Antimony t produced 738 612 Net Cash/All-in Cost/oz Ag at Cerro Bayo, USD 6.12 / 11.54 4.12 / 8.11 Net Cash/All-in Cost/oz Au Eq. at Costerfield, USD 934 / 1,178 1,052 / 1,197 EBITDA, USD million 11.0 21.6 Net Income, USD million 3.1 19.2 Cash and cash equiv. at end of period, USD million 23.9 11.2 6
  7. 7. 7 Management and Board of Directors 7 Senior Management Board of Directors Brad Mills, CEO and Executive Director Former CEO Lonmin plc, over 30 years of experience in Copper, Gold, PGMs Mark Sander, President 28 years of experience in exploration, strategy and operating improvements Sanjay Swarup, CFO and Executive Director Former Lonmin plc, over 20 years of industry experience Belinda Labatte, Corporate Secretary Over 10 years of experience in capital markets and investment banking Braam Jonker, Chairman Peter R. Jones, Independent Director Tony Griffin, Independent Director Robert Doyle, Independent Director Dominic Duffy, COO Mining Engineer with extensive technical and operational management experience
  8. 8. *Using metal prices of $1,250/oz Au, $27/oz Ag, $12,500/t Sb **The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA is presented because the Company believes it is a useful indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net income or cash flow as determined in accordance with IFRS. ***See AuEq Calculation in Appendix. Estimated 2013 Production: 2.8-3.1MM oz Ag, 38,000-46,000 oz Au, 2,800-3,000 t Sb. ****Annual cash dividend paid quarterly, based on 6% of the Company’s trailing quarter’s gross revenue and the future cash requirements of the Company. 8 Strategy: Rapid Value Generation and Returns 8 0.3 20.6 92.2 171.8 2009 2010 2011 2012 Increase Revenues ($US MM*) 354 15,854 63,351 107,900*** 112,000 - 123,000*** 2009 2010 2011 2012 2013E Grow Production (Gold Equivalent Ounces***) -1.0 1.7 32.0 79.9 2009 2010 2011 2012 Generate Cash (EBITDA - $US MM**) Focus and ResultsEntry Strategy:  Acquire high-quality assets at a low cost relative to ultimate value  Apply management’s extensive operational and exploration expertise to turn around, grow and/or develop the assets  Focus on cash returns to shareholders and prudent use of leverage Operationally, Mandalay is focused on:  High-margin projects where the Company can achieve rapid production ramp-ups from restarts, turn around situations or late-stage development  Early cash flow to fund exploration, growth and operational improvements  Building critical mass through acquisition Capital strategy: Reduce dilution and return cash to shareholders  Announced dividend policy, currently paying annualized dividend of 6% of gross revenue****  NCIB: Repurchasing up to 5% of the Company from operational cash flow over 1 year
  9. 9. 9 Capital Structure and Ownership 9 Major Shareholders (3) Holders % Shares (Million) West Face Capital 42.3% 136.9 Sprott Asset Management 10.4% 33.5 Plinian (Mills, Sander, Swarup) 7.8% 25.3 Arcourt (Byrne) 3.6% 11.7 Baker Steel 2.7% 8.6 (1) Exercise price: C$0.255 - C$0.83; Expiry date: Aug 21, 2013 - Mar 9, 2017 (2) Exercise price: C$0.31 - C$0.465; Expiry date: Nov 30, 2014 (3) As of August 8, 2013, the directors and executive officers of the Corporation, as a group, beneficially owned, or controlled or directed, directly or indirectly, approximately 173,783,259 Common Shares, representing approximately 53.66% of the outstanding Common Shares Capital Structure as at August 8, 2013 Millions (Except Share Price Information) Share price (Last close) (CAD$) 0.80/shr Shares Outstanding 323.9 Options(1) 16.4 Warrants(2) 21.0 Fully Diluted Shares Outstanding 361.3 Market Capitalization (CAD$) 259.1 Cash and Cash Equivalents (US$) (as of June 30, 2013) 23.9 Total Debt (US$) (as of June 30, 2013) 0 Total Enterprise Value (US$) 235.2 0 50 100 150 200 250 300 350 400 Fully Diluted Shares (Million) Post SIB: 361 Pre-recap: 27 Post CB Acq: 373 Goal: 350 Post-recap: 181
  10. 10. 10 Management Track Record: Execution, Value Creation 10 Company History and Milestones 2009 Q4 2010 2011 2012 Financial/ Corporate Acquired Costerfield gold- antimony mine for Mandalay stock Listed on TSX main board from TSX-V Raised $23 million for purchase and restart of Cerro Bayo silver-gold mine Announced Normal Course Issuer Bid to buy back 5% of Company’s shares Completed Substantial Issuer Bid; reduced FD share count by 8% Completed and Renewed Normal Course Issuer Bid Announced Dividend (end-2012) Operational Began Production at Costerfield (Dec 2009) Began production at Cerro Bayo (Sept 2010) Began milling & shipping at Cerro Bayo (Jan 2011) Increased production at both projects Doubled silver reserves, boosted gold reserves 85% Reached design production at both operations 50 100 150 200 250 300 350 400 450 500 Index(August3,2009=100) Mandalay Resources Peers* Gold Silver Mandalay: 185% Silver: 42% Gold: 37% Peers: -1% • Peer group includes: Endeavour Silver, Silver Standard, Fortuna Silver, and Aurcana • Share prices as at August 8, 2013 Q4 2009 - New Management Team (Mills, Sander, Swarup)
  11. 11. 11 Cerro Bayo Silver-Gold Mine 11 Land package 23,096 hectares Ownership 100% 2012 silver production 2,911,595 oz 2012 gold production 17,089 oz 2013E silver production 2.8 – 3.1 million oz 2013E gold production 18,000 – 21,000 oz Current throughput approx. 1,200 tpd P&P Reserves 2.3 Mt @ 241 g/t Ag; 2.2 g/t Au Current recoveries (Q2 2013) Ag: 89.12%, Au: 91.41% 2013E cash costs/oz Ag, net of Au credits $4 – $6 2013 Planned Exploration Metres 60,000 Budget $6-7 million
  12. 12. 12 Cerro Bayo District: Target-rich Land Package NI43-101 Reserve-Resource veins  2012 Infill and Step-Out Drilling 2012 New infill from 2011 Blue Sky successes 2012 Scheduled Blue Sky drill targets 2012- Field work to prep for 2013 drilling Lucia Chatito Sb Anomaly Roadside Brillantes Cerro Viento Aquila Sinter Hill Laguna Verde Marisol Area High level, Madre- Aquila-Meseta Cerro Bayo Guanaco Esperanza Sb Anomaly MarcelaRoadside Cerro Viento Brillantes Coigues
  13. 13. 13 Cerro Bayo: Laguna Verde Area Tailings Mill LAGUNA VERDE DELIA NW FABIOLA DAGNY COYITA DALILA YASNA Producing Mine or Planned mine (Vein Outcrop) 2012 Infill/Extensional Drilling Exploration Vein BIANCA Trinidad DELIA SE. Gabriela Coigues DAGNY UNDER LAKE
  14. 14. 14 2010 2011 Fabiola Vein: Example of Subtle Surface Expression and Reserve Growth Surface 30 m below in Mine, Approximately 1 m
  15. 15. 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 2010 2011 2012 2013 2014 OZSAg CUMULATIVE DEPLETION Dagny Fabiola Delia NW Delia SE Marcela Sur Yasna Coyita Dalila Bianca Cerro Bayo M&I Resource Growth and Depletion 15
  16. 16. Cerro Bayo Operating Performance 16 $0 $10 $20 $30 $40 $50 $60 $70 0 20,000 40,000 60,000 80,000 100,000 120,000 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-2013 USD/Tonne TonnesPerQuarter Mining Rate and Unit Cost t Mined Cost/ t Mined $0 $10 $20 $30 $40 $50 $60 $70 0 20,000 40,000 60,000 80,000 100,000 120,000 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 USD/Tonne TonnesPerQuarter Processing Rate and Unit Cost t Processed Cost/ t Processed $0 $5 $10 $15 $20 0 200,000 400,000 600,000 800,000 1,000,000 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 USD/ozAgNetByproduct OuncesSilverPerQuarter Saleable Silver Produced & Unit Cost Ag oz Cost/ oz Ag net Au
  17. 17. 17 Costerfield Gold-Antimony Mine: Overview 17 2013 Planned Exploration Metres ~13,000 Budget $3.5 million Land package 1,293 hectares Ownership 100% 2012 gold production 18,036 oz 2012 antimony production 2,481 t 2013E gold production 20,000 – 25,000 oz 2013E antimony production 2,800 – 3,000 t Current throughput 340 tpd P&P Reserves 178,000 tonnes @ 8.9 g/t Au; 4.1% Sb Current recoveries (Q2 2013) Au: 89.7%, Sb: 95.7% 2013E Cash cost/ oz Au Equiv. (US$) $950 – $1,000
  18. 18. 18 Augusta Mine & Cuffley Exploration Breakthrough 18 Cuffley Lode N-lode W-lode E-lode  Drilling and development shows possible shoot at southern N-lode in Augusta, open to north and at depth  NI 43-101 Indicated Resource at Cuffley of 79 kt @ 20.8 g/t Au, 6.4% Sb  NI 43-101 Inferred Resource at Cuffley of 300 kt @ 10 g/t Au, 3.8%Sb • Exploration open to south and at depth  Possibility of several hundred kt of new Resource in new W-lode targets, N-lode, and expanded Cuffley lode  Three rigs yielding high- quality new geologic data and understanding of district
  19. 19. 19 Costerfield M&I Resource Growth and Depletion 0 100 200 300 400 500 600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AuEqOz(000's) CUFFLEY AUGUSTA Depletion Yearly Depletion
  20. 20. 20 Costerfield Operating Performance 20 $0 $100 $200 $300 $400 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Q4-09 (Dec. only) Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 AUD/Tonne TonnesPerQuarter Mining Rate and Unit Cost t Mined Cost/ t Mined $0 $20 $40 $60 $80 $100 $120 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Q4-09 (Dec. only) Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 AUD/Tonne TonnesPerQuarter Processing Rate and Unit Cost t Processed Cost/ t Processed $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Q4-09 (Dec. only) Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 USD/OzAuEq. OuncesPerQuarter Au Equivalent Production and Cost Oz Au Eq. Cost/ Au Eq. Oz
  21. 21. 2121 Fundamental Source of Improvements New mobile fleet Improved mine staff, technical work and planning discipline 5 metre stopes moving to 10 metre stopes
  22. 22. 22 La Quebrada Copper-Silver Project: Overview 22 Land package 7,418 hectares Ownership 100% Location 45 km NW of La Serena Mineralization Cu-Ag mantos Elevation 1,000 – 1,500 metres ASL M&I Resource 34.8 Mt @ 10 g/t Ag, 0.6% Cu
  23. 23. 23 La Quebrada 23 Next steps: Drilling for modest expansion of Casa de Piedra District exploration – new concepts Basic engineering studies Conversation for district consolidation La Quebrada Total Resources(1) Rock (t) Ag Grade (g/t) Ag (cont. oz) Cu Grade (%) Cu (cont. lb) Measured 0 0 0 0 0 Indicated 34,800,000 10 11,188,272 0.6% 459,360,000 Measured & Indicated 34,800,000 10 11,188,272 0.6% 459,360,000 Inferred 1,000,000 11 353,652 0.6% 13,200,000 (1) La Quebrada Independent Technical Report filed 16-Aug-2012. Tugal Pit
  24. 24. 24 Discovery-fuelled Organic Growth 24 $9-10 million $10-12 million $6-7 million Capital Expenditure (PP&E) Capital Development Capitalized Exploration 1.3 million 2.9 million 2.8 - 3.1 million 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 2011 2012 2013E Silver (oz) 12,244 17,089 18,000- 21,000 0 5,000 10,000 15,000 20,000 25,000 2011 2012 2013E Gold (oz) 6,678 18,036 20,000– 25,000 0 5,000 10,000 15,000 20,000 25,000 2011 2012 2013E Gold (oz) 0 200 400 600 2010 2011 2012 Cu (cont. lbs MM) Significant M&I Resource Growth (1,2,3) 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013 Source for Dalila vein: Internal Company Report, prepared under the supervision of Qualified Person Ron Luethe 2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI 43-101 report filed March 28, 2013 3 Source: La Quebrada Independent Technical Report, filed Aug 16, 2012. Average guidance range graphed for 2013E Costerfield Budget and Production (2013E) Cerro Bayo Budget and Production (2013E) $7-8 million $4.5-5.5 million $3.5-4.5 million Capital Expenditure (PP&E) Capital Development Capitalized Exploration 1,576 2,481 2,800 – 3,000 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2011 2012 2013E Antimony (Sb) 0 10,000,000 20,000,000 30,000,000 40,000,000 2010 2011 2012 Ag (cont. oz) 0 100,000 200,000 300,000 400,000 2010 2011 2012 Au (cont. oz) 0 10,000 20,000 30,000 2010 2011 2012 Sb (cont. t)
  25. 25. 25 Peer Comparison 25 Midpoint of 2013E production guidance reported Ag Eq oz converted at 54/1 Au/Ag. Metal prices: Ag price of $28.92 and Au price of $1,578.00 Market capitalization as at August 8, 2013 2012 Production 2012 Financials Ag (oz) Au (oz) Other Ag Eq. (Au + Ag) (oz) Revenue (US$MM) EBITDA (US$MM) EBITDA Margin (%) Mandalay Resources 2,911,595 35,125 2,481 t Sb 4,828,166 171.8 79.9 46.5 Endeavour Silver 4,485,426 38,687 6,595,355 208.1 89.8 43.2 Silver Standard 8,350,000 0 5,600 t Zn 8,350,000 241.1 54.6 22.6 Fortuna Silver 3,987,757 20,699 20,100 tPb+Zn 5,117,183 161.0 70.7 43.9 Aurcana 1,388,664 0 7,000 t Cu+Pb+Zn 1,388,664 45.9 14.3 31.2 2013E Production Ag (oz) Au (oz) Other Ag Eq. (Au + Ag) (oz) Market Cap FD (US$MM) Mandalay Resources 2,950,000 39,000 2,900 t Sb 5,241,701 289.0 Endeavour Silver 5,150,000 47,500 7,741,805 418.3 Silver Standard 8,350,000 0 10,000 t Zn 8,350,000 629.1 Fortuna Silver 4,400,000 23,300 22,000 tPb+Zn 5,671,349 453.1 Aurcana 5,400,000 0 7,000 t Cu+Pb+Zn 5,400,000 159.5
  26. 26. 26 Mandalay Compares Favourably to its Peers 26 0 50 100 150 200 250 300 350 400 P+P Reserve Grade Fully Diluted Ag Eq (g/t) Mandalay Endeavour Silver Standard Fortuna Aurcana 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% EBITDA Margin (at $30/oz Ag) $0 $5 $10 $15 $20 $25 Fully Loaded 2012 Cash Cost/Ag Eq oz $0 $10 $20 $30 $40 $50 $60 $70 $80 Market Cap per 2013E Ag Eq Production (oz) 0 1 2 3 4 5 6 7 8 9 10 TEV/EBITDA Multiple ($30/oz Ag) $0 $2 $4 $6 $8 $10 $12 Market Cap per P+P Reserves (Ag Eq oz) Market capitalization as at August 8, 2013 Ag Eq oz converted at 54/1 Au/Ag Metal prices: Ag price of $28.92 and Au price of $1,578.00  Highest grade reserves (Ag Eq oz)  Highest EBITDA margin  Lowest fully loaded cost (Ag Eq oz)  Second lowest market cap per estimated annual production of Ag eq. oz  Lowest total enterprise value/EBITDA multiple  Fourth lowest market cap/P+P reserves oz
  27. 27. 27 Highlights and Catalysts 27 Cerro Bayo  Current ramp up to 1,200 tpd is complete; ramp up to 1,400 tpd on track for Q1 2014  5 owned rigs drilling now– Resource and Reserve updated in Q1 2013; exploration update in Q3, 2013 Costerfield  Currently at 340 tpd, exceeding design production rate of 250 tpd, significant cost reduction  Cuffley lode development and production decision in Q3, 2013 • Growing resources at Cuffley lode and Augusta extensions with 3 rigs • Resource and reserve updated Q1 2013; resource and exploration update in Q3, 2013 • Increased metal production from higher grade ore • Development decision for Cuffley lode associated– expected Q3 2013  Continuing district exploration for longer mine life La Quebrada  Infill drilling completed; indicated NI 43-101 Resource filed August 2012  Metallurgical and engineering studies  District consolidation
  28. 28. 28 Summary 28  Execution-focused management with track record of operational and exploration success, growth and value generation  High-quality, cash flowing asset portfolio with major exploration upside  Strong balance sheet, self-funding projects, zero net debt  Rapid increase in production and margins through low-capex organic growth and operational efficiencies  Returning cash to shareholders and reducing dilution wherever possible  Company paying annual dividend equal to 6% of the Company’s trailing quarter’s gross revenue  Continued growth through further acquisitions
  29. 29. Appendices 29 TSX: MND For more information, please contact: Greg DiTomaso Tel: 647.260.1566 Email: g.ditomaso@mandalayresources.com Company Website: www.mandalayresources.com Twitter: @MandalayAuAg
  30. 30. 30 Mandalay Reserves 30 Cerro Bayo Reserves (1) Ore (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Proven Reserves 420,000 356 4,803,000 2.2 30,000 Probable Reserves 1,934,000 216 13,447,000 2.1 133,000 P&P Reserves 2,354,000 241 18,250,000 2.2 163,000 Costerfield Reserves (2) Ore (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Proven Reserves 48,000 6.5 3,100 11.0 17,000 Probable Reserves 130,000 3.2 4,100 8.1 34,000 P&P Reserves 178,000 4.1 7,200 8.9 51,000 TOTAL RESERVES: 31-December-2012 Ag (cont. oz) Au (cont. oz) Sb (cont. t) Mandalay Proven Reserves 4,803,000 47,000 3,100 Mandalay Probable Reserves 13,447,000 167,000 4,100 Mandalay P&P Reserves 18,250,000 214,000 7,200 Numbers may differ slightly from Source documents due to rounding 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013 2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI 43-101 report filed March 28, 2013
  31. 31. 31 Mandalay Resources 313 Source: La Quebrada Independent Technical Report filed Aug 16, 2012. Numbers may not add due to rounding Cerro Bayo Resources (1) Resource (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Measured Resources 327,000 525 5,521,000 3.2 33,000 Indicated Resources 1,562,000 334 16,754,000 3.2 160,000 M&I Resources 1,889,000 367 22,276,000 3.2 194,000 Inferred Resources 452,000 201 2,922,000 2.4 35,000 Costerfield Resources (2) Resource (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Measured Resources 167,000 4.9% 8,200 8.1 43,000 Indicated Resources 367,000 3.5% 12,900 10.0 118,000 M&I Resources 534,000 4.0% 21,100 9.4 161,000 Inferred Resources 610,000 3.2% 19,500 7.2 140,000 La Quebrada Resources (3) Resource (t) Cu Grade (%) Cu (cont. lb) Ag Grade (g/t) Ag (cont. oz) Measured Resources 0 0 0 0 0 Indicated Resources 34,800,000 0.6% 459,360,000 10 11,188,272 M&I Resources 34,800,000 0.6% 459,360,000 10 11,188,272 Inferred Resources 1,000,000 0.6% 13,200,000 11 353,652 TOTAL RESOURCES 31-Dec-12 Ag (cont. oz) Au (cont. oz) Sb (cont. t) Cu (cont. lb) Measured Resources 5,521,000 76,000 8,200 0.00 Indicated Resources 27,954,000 278,000 12,900 459,360,000 M&I Resources 33,475,000 355,000 21,100 459,360,000 Inferred Resources 3,322,000 175,000 19,500 13,200,000 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013 2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI 43-101 report filed March 28, 2013
  32. 32. 32 Safety, Health, Environment and Community 32 Safety & Health Environment & Community Employees ACTIONS • Spending on S&H (including safety training) tripled in last two years • Focus on line management safety leadership, systems and behaviours • Improved S&H safety processes & compliance • Implementation of DuPont safety system in 2013 at both operations • Extensive training and equipping of mine rescue team at Cerro Bayo • Spent over 200% more in 2012 on environment & community projects as compared to 2011 • Commitment to local purchases & payrolls • Development of new water & mine waste solutions at Costerfield • Closure works completion at Furioso Mine Site • Supplying various workshops for local community at Cerro Bayo • University scholarships for local school leavers at Cerro Bayo • Employee selection process improved • Focus on local hires including management positions • Increased hours of training in 2012 by +80% as compared to 2011 • High level executive coaching for leadership team RESULTS • Consolidated lost time injury frequency rate approximately halved • Improved return to work performance • Maintained high levels of attendance at mine sites • More prosperous local communities • Reduced impacted land area • Zero incidences of unpermitted discharge at both operations • 3 year collective contract signed with Cerro Bayo union in 2012 • Increased presence of local hires among workforce and supervisors • Reduced employee turnover at mine sites • More productive employees, leading to lower unit costs
  33. 33. Metal Price Update 33 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 01-Apr-13 08-Apr-13 15-Apr-13 22-Apr-13 29-Apr-13 06-May-13 13-May-13 20-May-13 27-May-13 03-Jun-13 10-Jun-13 17-Jun-13 24-Jun-13 01-Jul-13 08-Jul-13 15-Jul-13 22-Jul-13 29-Jul-13 05-Aug-13 AupriceUSD/oz GOLD PRICE - DAILY SPOT LME Actual Au-Price LME USD 15.00 20.00 25.00 30.00 35.00 40.00 45.00 01-Apr-13 08-Apr-13 15-Apr-13 22-Apr-13 29-Apr-13 06-May-13 13-May-13 20-May-13 27-May-13 03-Jun-13 10-Jun-13 17-Jun-13 24-Jun-13 01-Jul-13 08-Jul-13 15-Jul-13 22-Jul-13 29-Jul-13 05-Aug-13 AgpriceUSD/oz SILVER PRICE - DAILY SPOT LME Actual Ag-Price LME USD 9,000 10,000 11,000 12,000 13,000 14,000 15,000 01-Apr-13 08-Apr-13 15-Apr-13 22-Apr-13 29-Apr-13 06-May-13 13-May-13 20-May-13 27-May-13 03-Jun-13 10-Jun-13 17-Jun-13 24-Jun-13 01-Jul-13 08-Jul-13 15-Jul-13 22-Jul-13 29-Jul-13 05-Aug-13 SbpriceUSD/t ANTIMONY PRICE - DAILY ROTTERDAM WAREHOUSE Actual Sb-Price Market USD 2.70 2.90 3.10 3.30 3.50 3.70 3.90 01-Apr-13 08-Apr-13 15-Apr-13 22-Apr-13 29-Apr-13 06-May-13 13-May-13 20-May-13 27-May-13 03-Jun-13 10-Jun-13 17-Jun-13 24-Jun-13 01-Jul-13 08-Jul-13 15-Jul-13 22-Jul-13 29-Jul-13 05-Aug-13 CUpriceUSD/lb COPPER PRICE - DAILY SPOT LME Actual Cu-Price LME USD
  34. 34. Antimony Facts 34  140,000 t/y global market • Sold either as metal ingots or various grades of antimony oxides and trioxides • Primary use as fire retardant in fabrics and plastics (trioxides) • Relatively minor uses in electronics, with possible new uses in development, e.g. in batteries • Ingredient of lead alloys as hardener (antimony metal) • Consumption growth in line with global GDP growth  Market dominated and prices set by China • Declining Chinese mine production as reserves depleted and environmental controls strengthened, closing marginal mines • Chinese beginning to invest in mines outside China • Two dominant Chinese smelters, only one of which recovers Au
  35. 35. Gold Equivalent Ounces Calculation 35 ***Au Eq. oz produced is calculated by multiplying the saleable quantities of Au, Ag, and Sb in the period by the respective average market prices of the commodities in the period, adding the three amounts to get a “total contained value based on market price”, and then dividing that total contained value by the average market price of Au in the period. Average Au price in the period is the average of the monthly LME PM fix, average Sb price is the average of the monthly high and low Rotterdam warehouse prices, and average Ag price is the average of the monthly London Broker’s silver spot price, all reported in www.metalbulletin.com. The monthly commodity prices are calculated as the average of the daily prices, with holiday and weekend day prices carried forward from the last business day. Au Eg. oz for each of the low range and high range guidance is calculated by multiplying (i) total Au oz by an assumed US$1,600/oz Au price, (ii) total Ag oz by an assumed US$32.00/oz Ag price and (iii) total Sb tonnes times an assumed US$12,000/t Sb price, then, in each case, dividing by the assumed US$1,600/oz Au price. Silver Equivalent Ounces Calculation Ag Eq oz converted at 54/1 Au/Ag at metal prices: Ag price of $28.92 and Au price of $1,578.00

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