Benefits to Invest in Silver Mine Project - Prof Timo Lindborg, Sotkamo Silver


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Benefits to Invest in Silver Mine Project
Professor Timo Lindborg, Sotkamo Silver

Mining On Top: Helsinki 2013
16-17 September 2013 | Helsinki

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Benefits to Invest in Silver Mine Project - Prof Timo Lindborg, Sotkamo Silver

  1. 1. Benefits to Invest in Silver Mine Project BULLET POINTS • Effective implementation of the mining project • The Entrepreneurial Approach in Mining • Sotkamo Silver and how to inform stakeholders
  2. 2. 1 ■ Headquarter is in Stockholm, Sweden. The Company also has an operations office in Oulu and a field office in Sotkamo, Finland ■ The primary listing is on the NGM Equity stock exchange in Stockholm with secondary listing on the Nasdaq OMX Helsinki ■ Current market capitalization is about € 20 million ■ The Company had € 2.9 million of net cash at the end of Q2 2013 OVERVIEW OF SOTKAMO SILVER
  4. 4. 3 PRESS RELEASE 130828 • THE VOLUME OF THE EXPLORATION TARGET IS MORE THAN 20 M TON MINERAL RESOURCES • TOTAL 33 M TON (resources + potential) • THIS INCREASE THE TARGET SUBSTANTIALLY “The result of this study shows clearly the great potential, which Silver Mine deposit has towards depth and strike. This increases the potential of the Silver Mine projektet and our expectations of the deposit quality. I am certain that the Silver Mine will have much longer life time than the actual reserves shows today.” Comments Timo Lindborg, CEO3
  5. 5. 4 INCREASED POTENTIAL DOWN TO - 2 000 M Total Mineral Resource (JORC) 13 Mill.t, Ag 60 g/t Ore Reserve (JORC) 3 Mill.t, Ag 86 g/t Exploration Target (JORC) >20 Mill.t, Ag 60 g/t Drill Intersections R-110: 27.25 m, Ag 92 g/t R-106: 23.40 m, Ag 148 g/t Open Pit Mine Decline Planned Decline 2 Km 500 m
  6. 6. 5 SENIOR MANAGEMENT HAVE EXTENSIVE MINING EXPERIENCE IN THE NORDIC REGION Timo Lindborg – President & CEO ■ Doctor of Technology, MSc ( Civil Engineering) and BSc (Geology). Professor at Oulu University ■ 35 years experience with mining projects and Nordic companies ■ Former Chief Executive Officer of Endomines AB, Endomines Oy and Kalvinit Oy ■ Extensive experience in silver and gold mining projects ■ Born 1955 Ilkka Tuokko – Managing Director Sotkamo Silver Oy ■ MSc in Geology and mineralogy from Oulu University ■ More than 30 years experience in mining projects, precious metals and international mining companies ■ ”Competent Person” status, according to Australian JORC and Swedish SveMin ■ Former Group Geology & Mining Manager of Mondo Minerals B.V. ■ Born 1950 pic
  7. 7. 6 BOARD OF DIRECTORS HAVE EXTENSIVE MINING EXPERIENCE IN THE NORDIC REGION Mauri Visuri – Chairman of the Board (since 2011) ■ MSc in Economics from the University Of Vaasa ■ Bachelor of Science in Machinery Engineering from Vaasa Polytechnic ■ Extensive experience in mining and process industry ■ Mr. Visuri is also Managing Director of Teknoventure Oy ■ Born 1957 Teuvo Jurvansuu – Board member (since 2010) ■ 35 years experience in the mining industry ■ Worked in various mines in Finland during that period including Vihanti, Keretti, Enonkoski and Pyhäsalmi mines ■ In 2001 he entered the position of Managing Director of Pyhäsalmi Mine Oy and at the same time, Inmet Finland Oy (retired in 2009) ■ Born 1948 Joanna Kuntonen-van ‘t Riet – Board member (since 2012) ■ MSc in Environmental Sciences from the University of Helsinki ■ Over 13 years experience in environmental and safety management in the mining industry ■ Presently Environmental and Safety Manager at Northland Resources ■ Born 1974 Jarmo Vesanto – Board member (since March 2013) ■ MSc (Geology and Mineralogy) ■ Member of the Australian Institute of Mining and Metallurgy ■ More than 30 years experience in mining and exploration including 10 years in Australia and Canada with Outokumpu Oyj ■ Currently General Manager - Finland at Altona Mining Ltd ■ Born 1954
  8. 8. 7 Existing Mine Decline (brown) Planned extension of the decline (green) Backfill with waste rock Open pit Existing ventilation shaft Year Colour 2014 Green, Brown 2015 Red 2016 Yellow 2017 Blue 2018 Black 2019 – 2021 Grey RAMP-UP PHASE WILL BENEFIT SIGNIFICANTLY FROM THE EXISTING WORK Mining plan ■ The existing mine decline of 2.6 km and ramp access (25 m2) , as well as the vertical ventilation shaft extending 350 meters from the surface, are both already in place and ready for operational use. ■ The projected mine life is 9 to 10 years based on current estimated mineable ore reserves of approximately 3.0Mt
  9. 9. 8 Top five shareholders % ownership Market value (EUR’m) Teknoventure Oy 14.2 3.5 Finnish Industry Investments Ltd 14.2 3.5 Timo Lindborg (through a company) 10.2 2.5 Jouko Jylänki 8.9 2.2 Ilmarinen Mutual Pension Insurance Company 8.5 2.1 Total top five shareholders 56.0 13.9 Other shareholders 44.0 10.9 Total 100% 24.8 REPUTABLE KEY SHAREHOLDERS WITH EXTENSIVE EXPERIENCE IN MINING SECTOR INVESTMENTS
  10. 10. 9 ORE RESERVES AND MINE ECONOMICS KEY PROJECT SUMMARY Ore reserves Ore tonnage Ag Grade Ag Proven 1.19 Mt 90.18 g/t 3 442 141 oz Probable 1.78 Mt 83.40 g/t 4 786 353 oz Proven and probable ore reserves 2.97 Mt 86.11 g/t 8 228 494 oz MINE ECONOMICS Production of payable silver 0.8 million oz Ag per annum and 7.4 million oz Ag over LOM Operations commencement date Q4 2014 Average operating cash costs € 10.5 / oz Ag over LOM (US$ 13.7) Required capital expenditure (including infrastructure) € 30.7 million Required net financing (including contingency, working capital and guarantees) € 40 million KPMG Corporate Finance (“KPMG”) has been retained by Sotkamo Silver as exclusive Financial and Strategic adviser in connection with the Project.
  11. 11. 10 FURTHER EXPLORATION POTENTIAL ■ Exploration projects ongoing in the surrounding Silver Mine region, with claims made on plots covering over 3,000 hectares in the Tipasjärvi greenstone belt ■ The map illustrates locations of the applied claims (previous Mining Act) and ore exploration permit applications ■ Additional prospects include Hopeavuori (Vammala Migmatite Zone) in Southern Finland. Management believe there is significant potential in these zones
  12. 12. 11 Effective implementation of the mining project There are key points in the mining (development project) process where the resource model is critical to mining decisions, since the resource estimate controls financial expectations at each stage. • Back to basics – There are no guarantees with new technology. • Conceptual study • Pre-feasibility study stage • Feasibility study stage • Planning for the unforeseeable – do you have plan B or C • Mining is cyclical - Volatility is the new stability. • The licence to operate demands better technology and sustainability. 11
  13. 13. 12 DEVELOPMENT STAGES Timo Lindborg 12
  14. 14. 13 ENTREPRENEURIAL APPROACH • Use infrastructure by innovative and effective way. • Acquire knowledge and experience. • Lack of capital – low cost approach and good cost control. • Work hard to create added value. • Innovations comes from people with expertise and experience. 21.11.2 Timo Lindborg13
  15. 15. 14 INNOVATIVE USE OF INFRASTRUCTURE • Geological Survey of Finland • TEKES - National Technology Agency of Finland • Subsidies • Ministry of Employment and the Economy • Municipalities • Potential customers • Financiers • Good project portfolio 21.11.2 Timo Lindborg14
  16. 16. 15 WORK HARD TO CREATE ADDED VALUE Low salaries, long nights, unsafe future, lost carrier opportunities… … but lot of hope and fun! 21.11.2 Timo Lindborg15 19 472 m drilling in 172 hole
  17. 17. 16 INFORM PROPERLY YOUR STAKEHOLDERS ETHICS – HONESTY - The level of the ethics of the Company comes from the entrepreneurs, owners, management and board. COMPANY'S GOVERNANCE - The stock exchange rules and legislation obliges. - Mining Industry Association’s recommendations INFORMATION AND COMMINUCATION - Adequate transparency + credibility - NI 43 101; JORC; FINNMIN; SVEMIN; CIM; NI 43 101 World bank; EQUDOR PRINCPLES; etc….. 16
  18. 18. 17 RULES REDUCE RISKS •Ni 43 101 •JORC CODE •SVEMIN •FINNMIN •CESR Committee of European Securities Regulators Timo Lindborg 17 MINERAL ORE RESOURCES RESERVES (IN SITU) (MINEABLE) Increasing level of geological knowledge and confidence Consideration of economic, mining, metallurgical, marketing, and governmental factors PROVEN MEASURED PROBABLE INDICATED INFERRED JORC or NI43101 CODE
  19. 19. 18 Low risk mining and processing ■Deposit mineralogy is simple, well understood and easy to process, with standard grinding and flotation with recovery above 86%. Significant growth potential ■Geophysical surveys suggest substantial extension to potential mine life and resource mineralization. ■Exploration mineral resource estimate in the inferred category (NI 43-101 compliant) is 13 Mt of ore for 26 Moz silver at 65g/t (cut- off grade 30 g/t Ag) + the Exploration target is 20 Mt at 60g/t. ■Substantial pipeline of promising exploration projects in the surrounding Silver Mine region. Management team with proven track records ■The management team has wide experience of running mines in Finland. Both CEO Timo Lindborg and Managing Director Ilkka Tuokko are experienced mining professionals with a proven track record of exploration and production. Environment ■Equator Principles Assessment received with no significant issues noted. LOW RISK AND SIGNIFICANT GROWTH POTENTIAL
  21. 21. 20 KPMG Corporate Finance contacts Rama Ayman Mikko Harju Tommi Valento Partner, Global Head Senior Manager, Senior Manager, Metals & Mining Corporate Finance Corporate Finance Head of Debt Advisory +44 20 7311 5092 +358 20 760 3288 +358 20 760 3246 Mob. +44 7826 918 994 Mob. +358 50 339 5910 Mob. +358 40 720 8951 PRIMARY CONTACT REGARDING THIS INVESTMENT OPPORTUNITY