Euro presentation - business strategy


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Euro presentation - business strategy

  1. 1. A European Gold Royalty Company November 2008 Business and Strategy
  2. 2. Contents <ul><li>A unique gold royalty company </li></ul><ul><li>A cash generating business </li></ul><ul><li>Management </li></ul><ul><li>Business Strategy </li></ul><ul><li>Appendix </li></ul>FORWARD LOOKING STATEMENTS This presentation contains certain “forward-looking” statements regarding the Company’s overall objectives and strategic plans, mineral interests and outlook. Forward-looking statements express, as at the date of this presentation, the Company’s plans, estimates, forecasts, projections or beliefs as to future events or results. Forward-looking statements involve a number of risks and uncertainties, many of which are beyond the Company’s control and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to update any forward-looking statement that is contained in this presentation.
  3. 3. <ul><li>April 1993: French company formed as Guyanor Ressources SA - Acquired Golden Star’s gold properties in French Guiana – listed in Paris and Toronto </li></ul><ul><li>Gold production ceased: losses exceeded $50million </li></ul><ul><li>June 2004: focus on gold royalties following a reorganization </li></ul><ul><li>December 2004: acquired the ROSEBEL ROYALTY, a 10% royalty interest on production from Rosebel gold mine in Suriname, operated by Cambior </li></ul><ul><li>July 2005: changed name to EURO Ressources SA – ”EUR” on NYSE Euronext, Paris and TSX, Toronto </li></ul><ul><li>March 2006: shares trade on a continuous basis in Paris - high market liquidity </li></ul><ul><li>November 2006: Cambior acquired by IAMGOLD </li></ul><ul><li>July 2007: IAMGOLD announces mill expansion </li></ul><ul><li>March 2008: Scoping studies prepared on Paul-Isnard (2 million ounces of gold identified in target: study based on 660 000 ounces recovered) </li></ul><ul><li>August 2008: IAMGOLD tender offer for EURO at €1.20 per share </li></ul><ul><li>November 2008: anticipated completion date of mill expansion and optimization </li></ul>1. A unique gold royalty company Key milestones for EURO 1993 1998 2004 2008 2005 2006 2007
  4. 4. <ul><li>100% GOLD Royalties </li></ul><ul><li>Limited risk profile compared to mine operation </li></ul><ul><ul><li>No direct operating cost risk </li></ul></ul><ul><ul><li>No capital cost risk </li></ul></ul><ul><ul><li>No environmental risk </li></ul></ul><ul><li>The Rosebel Royalty: </li></ul><ul><ul><li>a «  crown jewel » gold royalty </li></ul></ul><ul><ul><li>Long life gold mine </li></ul></ul><ul><ul><li>Strong operator </li></ul></ul><ul><li>Strong Cash Flow </li></ul><ul><ul><li>Support acquisition strategy </li></ul></ul><ul><ul><li>Enables dividend 2009 </li></ul></ul><ul><ul><li>No net debt </li></ul></ul>1. A unique gold royalty company Key Strengths 1 2 3 4
  5. 5. 1. A unique gold royalty company The Rosebel Royalty : a «  crown jewel » gold royalty <ul><li>Participation right, calculated and payable quarterly </li></ul><ul><li>Calculated on gold price over ~ $320 ounce </li></ul><ul><li>based on 60% “soft” rock ($300 threshold) and 40% “hard” ($350 threshold) </li></ul><ul><li>87,000 ounces produced in Q3 2008, 350,000 ounces annual rate </li></ul><ul><li>Projected long term production of + 400,000 ounces per annum </li></ul><ul><li>10% royalty rate equivalent to roughly 40,000 oz annual production – one of the 3 largest gold royalties </li></ul><ul><li>~ $20 million annual cash flow at $800 per gold oz and 400,000 ounces annual production </li></ul><ul><li>Participation right, calculated as a royalty payable by IAMGOLD on attributable production up to 7 MM oz of gold </li></ul><ul><li>5.6 MM oz participation remaining as at September 30, 2008, with 1.4 MM oz already paid since mine start up in 2004 </li></ul>Source Press release EURO (October 23, 2008), annual reports EURO
  6. 6. 1. A unique gold royalty company The Rosebel gold mine <ul><li>Notes </li></ul><ul><li>Source: CIA – The World Factbook </li></ul><ul><li>Also see appendix </li></ul><ul><li>Population: 476 000 (July 2008) </li></ul><ul><li>Government type: constitutional democracy </li></ul><ul><li>Economy: mining industry (alumina, gold, oil) accounting for 85% of exports and 25% of government revenues </li></ul>Republic of Suriname 1 Open pit mine Ball Mill Mill Expansion Rosebel is located approximately 100 kilometers south of Paramaribo 2
  7. 7. <ul><li>A long mine life based on existing reserves and resources </li></ul><ul><ul><li>Current mine life: 15+ years </li></ul></ul><ul><ul><li>Approx 400,000 ounces annual gold production </li></ul></ul><ul><ul><li>Continuing exploration and confirmatory drilling program </li></ul></ul><ul><ul><li>Production potential recently increased following new mine plan and mill expansion </li></ul></ul><ul><ul><li>Production likely to merit a further increase on completion of committed drilling program </li></ul></ul><ul><ul><li>Measures indicated an inferred resources of 8.8 million gold ounces as of 31/12/07 </li></ul></ul><ul><li>Benefiting from a reputable operator </li></ul><ul><ul><li>IAMGOLD is a global operator with interests in 8 gold mines </li></ul></ul><ul><li>EURO is the only gold company on Euronext Paris </li></ul><ul><li>EURO is the sole listed pure gold royalty company in Europe </li></ul>1. A unique gold royalty company The Rosebel gold mine – a quality operation 1 2 3 4 Source Press release EURO (October 23, 2008), press release IAMGOLD (September 22, 2008), Offer Note IAMGOLD (August 29, 2008)
  8. 8. <ul><li>Over the last two years, IAMGOLD invested 45 MM USD in optimization and expansion programs to increase level of production: </li></ul><ul><ul><li>US$26 million mill expansion program </li></ul></ul><ul><ul><ul><li>started in July 2007 </li></ul></ul></ul><ul><ul><li>US$18.4 million mill optimization project </li></ul></ul><ul><ul><ul><li>launched in February 2008 </li></ul></ul></ul><ul><ul><li>Expected to be completed in November 2008 </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><ul><li>Increase throughput capacity to 11.0 MM tonnes of ore </li></ul></ul></ul><ul><ul><ul><li>(+ 400k oz in annual production) </li></ul></ul></ul><ul><ul><ul><li>Maintain reserve grade of 1.3g/tonne </li></ul></ul></ul><ul><ul><ul><li>Boost metallurgical recovery from 94% to 95% </li></ul></ul></ul><ul><li>US$16 MM exploration and confirmatory drilling expenditure in 2008 with US$20 MM forecast for 2009 </li></ul>1. A unique gold royalty company The Rosebel gold mine : recent capital investment Source IAMGOLD presentation at the Denver Gold Forum (September 9, 2008)
  9. 9. 1. A unique gold royalty company The Paul-Isnard royalty <ul><li>Sale of Paul Isnard properties to Golden Star Resources Ltd negotiated in 2007 </li></ul><ul><li>Consideration calculated as a Royalty </li></ul><ul><ul><li>based on the gold price over $400 and future production: </li></ul></ul><ul><ul><li>10% x gold production for first 2 MM ounces </li></ul></ul><ul><ul><li>5% x gold production for next 3 MM ounces </li></ul></ul><ul><li>2 million oz contained identified - 33.2 MM tonnes @ 1.69 g/t </li></ul><ul><li>Scoping study based on 660,000 oz recovered </li></ul><ul><li>Considerable exploration potential based on historic work </li></ul><ul><li>Golden Star did not complete required feasibility study </li></ul>
  10. 10. <ul><li>Production = mine production (less 2% royalty to Suriname Government) </li></ul><ul><li>Gold Price = London PM gold price average per calendar quarter </li></ul><ul><li>Gold Price over $320 = Gold Price less </li></ul><ul><ul><li>$300/oz for “soft” and “transitional” ore (~60%) </li></ul></ul><ul><ul><li>$350/oz for “hard” ore (~40%) </li></ul></ul><ul><li>~ $20 MM annual cash flow at $800 gold and 400,000 oz annual production </li></ul><ul><li>15 years current mine life </li></ul>2. A cash generating business Rosebel Royalty: long term established cash flow Rosebel Royalty = 10% x Production x (Gold Price > $320) Rosebel Royalty
  11. 11. 2. A cash generating business Rosebel Royalty - A cash generative asset Last hedging Hedge settlements No hedge Royalties Cash in Cash out - $2.2MM - $5MM +$1MM +$3MM +$10MM Net Cash No hedge Today Loan repayments No loan 100% royalty cash flow Source EURO consolidated financial statements … 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010… Q1 Q2 Q3 Q4
  12. 12. 2. A cash generating business The Rosebel gold royalty: increasing royalty cash-flow… History of the Rosebel royalty revenue in Euro and US dollars USD/EUR 0.82 0.83 0.65 0.74 0.70 0.76 0.75 0.74 0.74 0.68 0.63 0.63 $ ‘000 0.78 0.83 0.85 0.77 0.74 0.81 0.83 Source Press releases EURO, Quarterly reports EURO
  13. 13. 2. A cash generating business Gold production by quarter vs. average gold price … benefiting from higher gold prices ‘ 000 oz $ Source Press releases EURO
  14. 14. 2. A cash generating business oz Historic gold Hedging – a « dehedging » story (1/2) Remaining Hedge position Hedging was required by Macquarie Bank to protect repayment of loan made for acquisition of Rosebel Source EURO consolidated financial statements, press releases
  15. 15. 2. A cash generating business k€ Historic royalties revenue vs. gold hedge cash costs Historic gold Hedging – a « dehedging » story (2/2) Source EURO consolidated financial statements
  16. 16. <ul><li>James H. Dunnett – Directeur Général and Director </li></ul><ul><ul><li>30+ years experience in mining industry finance </li></ul></ul><ul><ul><li>largest shareholder of EURO </li></ul></ul><ul><li>Allan J. Marter – Président of the Board of Directors </li></ul><ul><ul><li>30+ years experience in mining industry as corporate director and chief financial officer </li></ul></ul><ul><li>Susanne A. Hermans – VP Finance </li></ul><ul><ul><li>CPA, MBA - responsible for developing and maintaining accounting system and preparing financial statements and related reporting </li></ul></ul>3. Management A management team with recognized experience in mining industry finance
  17. 17. <ul><li>Build a portfolio of gold mining royalties by </li></ul><ul><ul><li>Acquisitions and… </li></ul></ul><ul><ul><li>… creating royalties through financial structuring </li></ul></ul><ul><li>Many opportunities identified by EURO management </li></ul><ul><li>Strategic business strengths are : </li></ul><ul><ul><li>Strong Cash flow generation from Rosebel royalty </li></ul></ul><ul><ul><li>Financial Expertise of EURO’s management </li></ul></ul><ul><ul><li>100% gold royalty income </li></ul></ul><ul><li>Create increased value for all its shareholders through diversified portfolio resulting in higher multiple to cash flow, in keeping with its peer group </li></ul>4. Business strategy Stand alone business model
  18. 18. 5. Appendix Asset structure Rosebel (Incorporated in Canada) 95% 5% 10% Rosebel Royalty on 100% production SOTRAPMAG 100% « P.E.R » Concessions Rosebel Royalty Payments 100% Potential royalty income 100% Paul Isnard ( Republic of Suriname )
  19. 19. The Rosebel gold mine property 5. Appendix Source IAMGOLD Denver Presentation Forum (September 9, 2008)
  20. 20. Detailed P&L over the last semester 2007 - HY1 2008 P&L statement 5. Appendix Source EURO consolidated financial statements
  21. 21. Detailed P&L over the last 9 months 5. Appendix 9 months ended 2007-2008 P&L statement Source EURO consolidated financial statements
  22. 22. Detailed Balance sheet Balance sheet as of 30/09/08 5. Appendix Source EURO consolidated financial statements