Corporate Review – April 2011
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Corporate Review – April 2011 Presentation Transcript

  • 1. CANADIAN ARROW MINES LTD. CRO.V Canada’s Emerging Nickel-Copper ProducerThis presentation may contain "forward-looking statements" within the meaning of Canadian securitieslegislation and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date of this presentation and the Company does not intend, anddoes not assume any obligation, to update these forward-looking statements.Forward-looking statements relate to future events or the anticipated performance of the Company andreflect management’s expectations or beliefs regarding such future events and anticipated Kenbridgeperformance. In certain cases, forward-looking statements can be identified by the use of words suchas "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", Timmins"anticipates" or "believes", or variations of such words and phrases or statements that certain actions,events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved", or thenegative of these words or comparable terminology. By their very nature forward-looking statementsinvolve known and unknown risks, uncertainties and other factors which may cause the actual Turtlepondperformance of the Company to be materially different from any anticipated performance expressed orimplied by the forward-looking statements. Such factors include various risks related to the Company’soperations, which are detailed from time to time in the Company’s interim and annual financialstatements and management’s discussion and analysis of those statements, all of which are filed andavailable for review on SEDAR at www. sedar.com. Although the Company has attempted to identifyimportant factors that could cause actual performance to differ materially from that described in forward-looking statements, there may be other factors that cause its performance not to be as anticipated.There can be no assurance that forward-looking statements will prove to be accurate, as actual resultsand future events could differ materially from those anticipated in such statements. Accordingly,readers should not place undue reliance on forward-looking statements. Corporate Review – April 2011
  • 2. Asset Valuation vs. Market Cap3 Key Nickel‐Copper Assets: 104M lbs of NI 43‐101 contained nickel:1. Kenbridge nickel‐copper project: 98M lbs of Ni @ US$3.55/lb C1 prod. cost NPV @ US$10/lb Ni net of Cu credits:  $253M2. Alexo and Kelex nickel mines: 5.8M lbs of Ni @ US$5/lb prod. Cost3. Arrow retains 2% NSR in Hart nickel project starting Q1 2012, (Liberty Mines Inc.*): Life of mine net NSR revenue est’d @ $246M*2 NPV (@US$7/lb) Arrow retains a 2% NSR @ US$10/lb = $9M Total Net Asset Value:  $282MMarket Capitalization: Arrow Shares outstanding:  131,792,030 @ $0.09 *1 Internal estimate Market Capitalization: $12M (96% discount to NAV) *2 Liberty Mines Inc. PEA, Feb 26,  Current  nickel LME price:  US$11.50/lb  2010) Arrow Market Cap/lb Ni: US$0.12/lb (99% discount to LME market)
  • 3. Corporate Information (as of April 20, 2011)TSX Venture   CRO.V Majority Shareholders:Share price  $0.09 • Pinetree Capital                     8.4 %Market capitalization $12 M • Management  7.8 %Shares outstanding      131.8 MWarrants     3.4 MFully Diluted        136.8 M52 week high/low                 $0.125‐ $0.025
  • 4. Why invest in nickel? Two thirds of world nickel  production consumed in stainless steel. • World stainless production has increased by avg. 8% qtr Stainless and Heat Resisting Crude Steel Production over qtr in 2009-10. 35,000 • Record world production @ 30,000 World 32mt in 2010 25,000 China(1000 tonnes) 20,000 Asia w/ China • China has led the way: 41% 15,000 Asia w/o China domestic production increase The Americas 10,000 Central + Eastern Europe over the period. W.Europe/Africa 5,000 • 70 nickel producers shut 0 2004 2005 2006 2007 2008 2009 2010 down in 2008, many Source: ISSF International Stainless Steel permanent Forum • Conventional Ni sulphide deposits low risk, low capital, *1% Nickel ~ 0.200 opt gold or 6.6 gpt low op’g cost compared to laterites, pig nickel (March 25, 2011)
  • 5. Production Objectives:Re‐start Kelex production Q3 2011: Recent 2011 drilling to be included in  expanded Kelex resource estimate (in  progress)  Kelex metallurgical work (in progress at  Xstrata Process Services) permit amendments (submitted, awaiting  approval) Finalize custom milling/concentrate off‐take  terms with Xstrata integrating met test work  recoveriesUse cash flow from Kelex ($20M) plus Hart NSR ($9M) to finance Kenbridge feasibility ($2M) and construction ($108M)
  • 6. Production Timelines 2011 2012 2013Timmins Production  $20M CFKenbridge: Permitting  ($0.5M) Feasibility ($2M) Road work Construction ($108M) Production Hart NSR $2M/yr cash flow over 4.5 yrs * Timmins projects offer opportunity to finance Kenbridge through feasibility  and into production with the Company’s own cash flow and minimal  requirement for equity financing
  • 7. Projected Corporate Annual Cash Flow Projected $454M net positive cash flow  Annual Projected Cashflow over 10 years$500,000,000 Near term production plan:$400,000,000 • Re‐start Alexo/Kelex Mines; $300,000,000 • access early cash‐flow at high $200,000,000 metal prices within 6 months$100,000,000 • generate $20M in cash flow $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • Liberty Mines Hart Project NSR to -$100,000,000 generate additional $5‐9M in cash flow -$200,000,000 starting Q1 2012 Cumulative CF Timmins Hart NSR Kenbridge • Use cash flow to develop and construct  Kenbridge • Generate additional $421M in cash flow  over 8 years
  • 8. Timmins Projects Economics: 5.8 M lbs of contained  nickel in 6 zones Kelex• Total NI 43‐101Resource: Kidd Met Site • 249,500 tonnes @  1.08% nickel indicated Liberty Mines Mill • 54,000 tonnes @  0.84% nickel inferred• Permits remain in place• Custom milling facilities now nearby• Direct ore shipping options
  • 9. 2011 Drilling Results: New Massive Sulphide Lens  Discovery 2.13% Ni/4.9mHUX‐04: 1.81% Ni/1.3m Indicated  resource blocks 30 0m un New 2011 Massive  dr ille sulphide lens discovery: d ALX‐01‐96: 2.51% Ni/0.77m •5.84% Ni/0.6m •5.01% Ni/1.0m
  • 10. Hart Project: Liberty Mines Inc.PEA completed March 2010: 1.7Mt @ 1.26% Ni 0.10% Cu potentially  mineable, 47.8m lbs contained Ni Underground, ramp access, 4.5 yr LOM @  1,500 tpdNet smelter revenue to Arrow: $246M net NSR revenue: 2% NSR @ US$7/lb Ni = $5m $435M net NSR revenue: 2% NSR @ US$10/lb Ni = $9m
  • 11. Kenbridge Nickel‐Copper Project• NI 43‐101resource of 98M lbs nickel, 52M lbs copper, contained • Arrow completed PEA: stand alone open pit + UG,  mill/concentrator facility • LOM C1 cash cost/lb Ni net of Cu:  US$3.55/lb Kenbridge • Road access within 100 km of either CN or CP railheads;  1,500 km by rail to Sudbury • Start‐up capital: $108M• Former Falconbridge project, 60 man camp (1952‐58) • 623m x 3 compartment shaft, (4th compartment at bottom 2  levels) • two levels developed, bulk sampled • metallurgical work completed (high Ni recoveries, low MgO) • Base metals price crash in 1958 ‐ never mined • Approximately $150M expended historically Significantly de-risked
  • 12. Kenbridge – Resources @ US$10/lb Aug. 2008 NI 43‐101 Mine area & class Tonnes % Ni % Cu Open Pit (M&I) 4.46 Mt 0.42 0.23 Underground (M&I) 2.67 Mt 0.96 0.50 Underground (Inf.) 0.1 Mt 1.38 0.88• 98 M lbs of contained nickel• 52 M lbs of contained copper 7.2% Ni• Deposit is open at depth in all directions /5.5m• High grades at depth, including  • 7.2% Ni over 5.5m (1.5 opt Au equiv) OP • 4.3% Ni over 3.0m EN OP• PEA economics: EN •US$10.00/lb Ni, $2.50/lb Cu, US$0.90 exch. •LOM C1 cash cost/lb Ni net of Cu:  US$3.55/lb •pre‐tax NPV7.5%: $253 M, ($144M@ US$8/lb) •pre‐tax IRR: 65% OPEN 4.3% Ni/3.0m
  • 13. Kenbridge Site Camp Proposed pit Existing 2000’ Massive  ShaftSulphides  exposed at surface
  • 14. Lynn Lake, Manitoba Geological Model: Comparable to Kenbridge Ni District ‐ Multiple Deposits,  mostly sub‐surface Kenbridge, (superimposed) Lynn Lake, Manitoba (Sherritt Gordon Mines) North America’s 3rd largest nickel camp (1953-1976):(Source: Victory Nickel • 22 Mt @ 1% Ni, 0.5% Cu from 12 deposits; 8 of which were sub-surfaceCorp.)
  • 15. Regional Exploration: an underexplored Ni‐Cu‐PGM belt Kenbridge North Turtlepond/Denmark projects:  • 9 separate Ni/Cu occurrences  including three new discoveries  within 70 km of Kenbridge Kenbridge 15km strike of favourable structural  corridor Several untested magnetic and EM  anomalies for field follow‐up. Caribou Lodge Discovery; 4.5% Ni/0.7m
  • 16. Summary: Two low‐risk, near‐term production projects plus NSR revenue  totaling $285M in net asset value Market capitalization of $12M, (95% discount to NAV)  Opportunity to re‐start production, generate revenue in 2011  with minimal capital outlay and requirement to finance Excellent exploration opportunities and land positions in both  project areas  NI43‐101 indicated nickel inventory market valuation of  US$0.09/lb vs. LME market price of $US12.40/lb Ni: 99%  discount to LME nickel price