Transcript of "Magellan Minerals Corporate Presentation"
Building Gold Resources in Brazil’s Tapajos Region October 2011 TSX-V: MNM | www.magellanminerals.com
Safe Harbor Statement The material presented herein is private and confidential. The contents are not to be reproduced or distributed to any third party, including the public or press. Certain statements contained in this presentation constitute forward-looking statements. These statements relate to future events or the Corporations future performance, business prospects or opportunities. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect, "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in those forward- looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These statements speak only as of the date specified. The Corporation does not intend, and does not assume any obligation, to update these forward-looking statements. These forward-looking statements involve risks and uncertainties relating to, among other things, results of exploration activities, the Corporations limited experience with development-stage mining operations, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government approvals, changes in commodity and, particularly, diamond, prices, actual performance of facilities, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.2
Why Invest in Magellan? • Region with Excellent Potential: the Tapajos is the World’s third largest placer gold province, estimated to have produced 20-30 Moz from streams between 1978 and 1995 from artisanal, garimpeiro- type miners • Experienced Management: 150+ years of mining experience, track record for discovery. Management is previously responsible for discovery of the nearby Tocantinzinho deposit (2.5Moz), now owned by Eldorado Gold • Projects: two organic, grass roots gold discoveries so far - and building… • Cuiu Cuiu – 1.3Moz gold resource (100,000oz indic. + 1.2Moz inf.), drilling with 3 rigs • Coringa – 370,000oz gold resource (270,000oz indic. + 100,000oz inf.), drilling with 3 rigs • Key Stakeholders: Newmont Mining owns 2.5%; Kinross owns 1% • Strong Cash Position: $12M in treasury3
Proven Management Team • Jim Stypula, Chairman - previously CEO of Chapleau Resources, financier with 20 years experience in mineral exploration. Founding director of Far West Mining • Alan Carter, B.Sc., Ph.D., President & CEO, Director - 20 years of experience. Former Exploration Manager for Rio Tinto and Business Dev. Manager at BHP Billiton. Director and co-founder of Peregrine Diamonds and Peregrine Metals. Raised +$100M in capital for mining and exploration companies since 2004 • Dennis Moore, B.Sc., P.Eng., VP Business Development, Director - exploration geologist with 27 years experience, half of it in Latin America. Responsible for discovery of the Tocantinzinho deposit, now owned by Eldorado Gold • Paul Hansed, C.A., B.A., Chief Financial Officer - 20+ years of accounting and finance experience including 19 years with KPMG in Canada and Europe. CFO of Magellan Minerals since March 2008 • Guillermo Hughes, B.Sc., P.Eng., - Chief Geologist - 26 years experience in the mineral exploration industry including experience in Argentina, Peru and Brazil • Gordon Allen, B.Sc., - Head, Regional Exploration - 35 years experience in the mineral exploration industry, predominantly in Latin America. Exploration experience Far West Mining Ltd., and the discovery of the Santo Domingo IOCG deposit in northern Chile.4
Independent Directors • Derek White, B.A., Director - currently Executive VP Bus. Dev. of Quadra Mining and with 20+ years financial experience in the mining and metals industry. He worked for Impala Platinum Ltd, Gencor and Billiton, where he was CFO of the Base Metals Division • Mario Szotlender, Director - former CEO of Rusoro Mining, Director of Endeavour Silver and Radius Gold. 20 years experience financing and managing companies in Latin America • Richard Zimmer, P. Eng., MBA., Director – former senior mine engineer for Teck, mine manager of Afton Mines, general manager of Mount Edon Gold Mines, and project manager of POGO project. His most recent role was President & CEO of Far West Mining Ltd. 30+ years of experience in mining and metals industry.5
The Tapajos : World’s Third Largest Placer Gold Belt • Site of the world’s largest ever gold rush from 1970’s to 1990’s • Largest alluvial gold province in Brazil, third largest alluvial gold province in world – previous production from streams estimated at 20-30 Moz of gold • Geology is similar to other prolific gold belts (e.g. Eastern Canada, Western Australia). World-class potential • Under-explored province. One mid-size deposit discovered so far: Tocantinzinho (2.5 Moz) • Kinross, Eldorado and Newmont are active. Eldorado acquired Tocantinzinho for $122M during mid 2010. Eldorado also spent $5M on a 27% stake in Serabi Mining in 20106
Eldorado Developments at Tocantinzinho • Tocantinzinho (2.5Moz) produced an est. 200,000oz of Cuiu Cuiu 2Moz from streams placer gold from artisanal +1.3Moz resource to date surface workings. Cuiu Cuiu produced 1.5 – 2Moz of placer gold ** • Eldorado’s announced PFS in Tocantinzinho 0.2Moz from streams May 2011 on 160,000oz/yr OP 2.5Moz resource mine, Capital costs of $383M, Cash costs of $559/oz and 11.8% IRR (14.4% with tax breaks) • EIA expected to be submitted during Q3 2011. • FS study on Toca currently in progress and expected to be completed during Q2 2012 * Source : DNPM ** Source: Melho, R. 2007. A preliminary assesment of the Tocantinzinhop gold project, Tapajos gold province, Para Brazil. NCL Brazil 43-101 report8
Cuiú Cuiú – recent developments • 1.2 Moz (inferred) + 0.1 Moz (Indicated) of gold identified to date at Central and Moreira Gomes at avg. grade of 1.2g/t • Exploration drilling with 3 rigs in progress at Central North, Babi and Jerimum Baixo;15,084m (47 holes) so far completed during 2011 • Recent drill results include:- Central North ; 39.6m @ 1.25g/t gold, Central SE; 7.8m @ 8.44g/t gold & 27m @ 6.94g/t gold Aerial view of village of Cuiu Cuiu9
Cuiú Cuiú – a District Rather Than a Project Placer workings and soil anomalies Placer gold workings ? ? Gold in soil anomaly 17km in length Au in soils (ppb) Placer gold workings ? ? Moreira Gomes deposit 0.7Moz Central deposit 0.6Moz10
Central – 1 of 2 deposits so far at Cuiú Cuiú • Bulk tonnage, open pittable deposit • Inferred resources to date at Central total 17Mt @ 0.9 g/t gold (0.5Moz) + Indicated resources of 3.4Mt @ 1.0 g/t (0.1Moz) • Central deposit currently extends over approx. 1,000m strike and 450m depth • Deposit remains open to north, south and at depth Aerial view of Central deposit looking north • Additional drilling is in progress Outline of mineralized Stockwork mineralization on surface at Central zone at Central12
Central SE-NW section through Central Typical mineralized interval Central zone – hole CC-55-10, 2.15g/t Au Central Total Resources Au Contained Tonnage g/t Au Tonne x 1000 gpt oz. Indicated 3,400 1.0 100,000 Resources Inferred 17,000 0.9 500,000 Resources * Mineral resources are not mineral reserves and do not have demonstrated economic viability. Please note that all figures have been rounded to reflect their appropriate level of accuracy. * These resources are constrained by mineable shapes and cut-off grades to meet the requirement that resources must have reasonable prospects for economic extraction. The mineable shapes are either Lerch-Grossman pits or conceptual underground stopes. Resources falling within the pits are reported at cut-off grades13 of 0.3 gpt Au for fresh rock or 0.4 gpt Au for saprolite. Stope shapes only include blocks above a cut-off grade of 1.3 gpt Au. The cut-off grades consider a gold price of $1,250 per ounce and metallurgical recoveries of 91% for fresh rock and 66% for saprolite.
Central North – Significant New Discovery Drilling in progress Drilling in progress Central 600,000oz14
Moreira Gomes – Recent Developments • Bulk tonnage open pittable deposit • Inferred resources to date at MG total 14Mt @ 1.5 g/t gold (0.7Moz) • MG deposit extended additional 300m along strike to 1.8km • Recent drill results include 24m Aerial view of Moreira Gomes deposit looking north @ 4.06g/t gold from 40m E of hole 79, and 18m @ 0.46 g/t Moreira Total Resources gold from hole 122 drilled Gomes 400m E of hole 79 Tonnes Au Contained Au • Narrow high grade zone (0.5m Tonne x 1000 gpt oz @ 30.2g/t gold) identified at Inf. 14,000 1.5 700,000 Guarim 500m to south of MG Resource * Mineral resources are not mineral reserves and do not have demonstrated economic viability. Please note that all figures have been rounded to reflect their appropriate level of accuracy. * These resources are constrained by mineable shapes and cut-off grades to meet the requirement that resources must have reasonable prospects for economic extraction. The mineable shapes are either Lerch-Grossman pits or conceptual underground stopes. Resources falling within the pits are reported at cut-off grades15 of 0.3 gpt Au for fresh rock or 0.4 gpt Au for saprolite. Stope shapes only include blocks above a cut-off grade of 1.3 gpt Au. The cut-off grades consider a gold price of $1,250 per ounce and metallurgical recoveries of 91% for fresh rock and 66% for saprolite.
Cuiú Cuiú – Moreira Gomes/Guarim Map shows airborne magnetic data, grade contours, and drill hole locations16
Bom Jardim • Located 25km NW of Cuiu Cuiu along main Tocantinzinho trend, 15,385 ha • Historic placer gold production of 0.5 – 1Moz. No previous drilling. 500 soil samples and 200 rock samples collected by Magellan • Major structural intersection. Gold-in-soil anomaly 7km in length • Air mag survey completed and ground geophysics planned in advance of drilling late 2011 / early 2012 Placer gold workings at Bom Jardim18
Coringa – a Reminder • Good infrastructure: 20km east of main road and mains power • Existing high grade resource of 270,000 oz Ind. (1Mt @ 8.5g/t) + 100,000 oz Inf. (0.3Mt @ 9.3g/t) • Last resource estimate was completed in September 2009 and requires updating. • Scoping study of April 2010 gave a project IRR of 34% + NPV @ 5% of $41.3M @ $950 per oz • Scoping study based on 400t/d u/g mine prod. 36,000oz / yr. Capex of US$26.4M + Op cost of US$418/oz • NPV of US$82.5M and IRR is 59% @ US$1200 per oz19
Coringa – Growing • Currently drilling with 3 rigs on deep extensions to Serra and Meio and on new structure at Domingo Valdette • New major structures identified: Valdette, Demetrio and Domingo, adding +5km of total strike length to structures • Widely spaced drilling (9 holes to date) returned values of 37m @ 0.79g/t and 28m @ 0.64 g/t at Valdette and 5.5m @ 6.49g/t gold at Demetrio Demetrio • Soil sampling in progress aimed at identifying additional targets 370,000oz resource confined to: Galena Serra Meio 0 1km20
Meio Block – Consistently High Grades Drill plan21
Coringa – Resource Estimate Assumes 2g/t Au cut-off, SG of 2.7t/m3 and minimum mining width of 1.5m Resource represents less than 20% of vein system discovered to date. Raising the cut-off grade to 5 g/t gold results in a M&I resource of 0.563 Mt @ 12.37 g/t gold (223,914oz) and an inferred resource of 0.178 Mt @ 14.65 g/t gold (83,873oz) on a diluted basis23
Coringa – Domingo • New mineralized structure identified and traced over 350m • Located 4km W of Meio and 2.3km SW of Demetrio • Gold-in-soil anomaly is 3.8km x 0.3km • Surface rock chip results average 8.3 g/t gold • Drilling in progress Gold-in soil anomaly,and surface sampling results at Domingo zone24
Coringa – Upside • Recent soil sampling has identified additional new and untested gold in soil anomalies • 10,000m step-out drill program began March 2011 & is aimed at expanding resources, 5192m completed to date • Updated resource estimate planned for Q1 2012. • Feasibility study planned to commence mid-late 2012 Demetrio Drilling in progress Grab sample from surface 2.5km SE of Come Quieto25
Mato Grosso JV • Magellan has acquired a 35% - 50% interest in 320,000ha of the Baixada Cuiaba gold belt in southern Mato Grosso • Excellent access with power and water. Flat terrain - cattle farming • The belt is characterised by an E-W Proterozoic fold and thrust schist belt extending 100km in length • Approx. 20 small open pit mines are currently in production. +100 abandoned open pits • Belt has potential to host several large low grade (0.5 – 1.0g/t) Au deposits • 4000m drilling program in progress – Initial drill results expected September 201126 Oregon pit, Pocone; approx 1km in diameter
Corporate Information Capital Structure Shares outstanding 109.4M Options 7.7M Major shareholders Analyst Coverage Warrants 8.8M Management 11% National Bank Financial Fully Diluted 127.4M Institutions 45% Shane Nagle Cash $12M Newmont 2.5% Mackie Research Market Cap. $65M Kinross 1% Dale Mah Recent Financings Closing No. of shares Price Warrants Amount Feb 2008 (IPO) 11M $1.00 expired $11M Dec 2009 18.3M $0.70 ½ @ $1.00 $12.8M June 2010 10M $0.75 none $7.5M Oct 2010 19.2M $1.20 none $23M27
Valuation Considerations Current Market Cap. $65M Cash $12M Value on per oz basis* (1.7Moz) no cash $38/oz Value on per oz basis* (1.7Moz) with cash $29/oz Coringa NPV @ US$1200/oz $82M Step-out drilling program in progress (6 rigs).....25,000m planned at Cuiu and 10,000m planned at Coringa for 2011. Recce drilling in progress or planned on other projects for late 2011 / early 2012, i.e. Mato Grosso, Mato Velho, Agua Azul, Bom Jardim28
Further Information Alan Carter Jennifer Duthie President & CEO Corporate Communications Suite 1650 – 409 Granville St., Suite 1650 – 409 Granville St., Vancouver, BC, V6C 1T2 Vancouver, BC, V6C 1T2 Tel. + 1 604 676 5663 Tel. + 1 778 838 3990 Fax + 1 604 676 5664 Fax + 1 604 676 5664 firstname.lastname@example.org email@example.com Lawyers Auditors Morton & Company PricewaterhouseCoopers 1200-750 West Pender Street 700-250 Howe Street Vancouver, BC Vancouver, BC Canada V6C 2T8 Canada V6C 3S729
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