1. Magellan Metals Pty Ltd
Corporate
Presentation
October 2012
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1

2. Forward looking statements
Magellan Metals Pty Ltd
Certain statements contained in this presentation constitute forward-looking information within the meaning of securities laws. All statements included herein
(other than statements of historical facts) which address activities, events or developments that management anticipates will or may occur in the future are
forward-looking statements, including statements as to the following: the Ivernia Board’s approval of the management services agreement with Enirgi Group,
the execution of a definittve agreement and receipt of any necessary regulatory approvals with respect to the management services agreement with Enirgi
Group, the direct and indirect cost savings from the service agreement with Enirgi Group, the decision to restart and timing of the restart of operations, the
financing requirements to restart the Mine, the cost and timing for completion of capital projects prior to restart, the timing of any steps required under the
Operating Conditions before the end of the suspension of the Company’s transportation of lead carbonate from the Mine, the Company’s ability to comply with
the new Operating Conditions, the duration of the period of care and maintenance commenced in April 2011 and the commencement of transportation of lead
carbonate concentrate from the Mine, future targets and estimates for production, capital expenditures, operating costs, cash costs, mineral resources, mineral
reserves, life of mine, recovery rates, grades and prices, business strategies and measures to implement such strategies, competitive strengths, estimated goals
and plans for Ivernia’s future business operations, lead market outlook and other such matters. Forward-looking statements are often, but not always, identified
by the use of words such as ‘‘seek’’, ‘‘anticipate’’, ‘‘contemplate’’, ‘‘target’’, ‘‘believe’’, ‘‘plan’’, ‘‘estimate’’, ‘‘expect’’, and ‘‘intend’’ and statements that an
event or result ‘‘may’’, ‘‘will’’, ‘‘can’’, ‘‘should’’, ‘‘could’’ or ‘‘might’’ occur or be achieved and other similar expressions. These statements are based upon certain
reasonable factors, assumptions and analyses made by management in light of its experience and perception of historical trends, current conditions and
expected future developments, as well as other factors management believes are appropriate in the circumstances. However, whether actual results and
developments will conform with management’s expectations is subject to a number of risks and uncertainties, including factors underlying management’s
assumptions, such as, the duration of the suspension of the Company’s transportation of lead carbonate from the Mine, the duration of the period of care and
maintenance commenced in April 2011, the timing, need and ability to raise additional financing, risks relating to the operations being placed on care and
maintenance, matters relating the restart of mining and milling operations, matters relating to ramping up mining and milling throughput and operations,
regulatory compliance and approvals, metal price volatility, lead carbonate concentrate treatment charges, exchange rates, regulatory proceedings and
litigation, the fact that the Company has a single mineral property, resources and reserves, health and safety, environmental factors, mining risks, metallurgy,
labour and employment regulations, government regulations, insurance, dependence on key personnel, constraints on cash flow, the nature of mineral
exploration and development, matters relating generally to the transportation of lead carbonate, presence of a majority shareholder, matters related to public
opinion, matters related to the Esperance settlement and shipments through the Port of Fremantle, and common share price volatility and the dilution of the
Company’s common shares. Additional factors and considerations are discussed in the Company’s 2011 AIF under “Description of the Business of the Company –
Risk Factors” and elsewhere in this presentation and in other documents filed from time to time by Ivernia with Canadian securities regulatory authorities. While
Ivernia considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. These factors may cause the
actual results of the Company to differ materially from those discussed in the forward-looking statements, and there can be no assurance that the actual results
or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected results on the Company. Undue
importance should not be placed on forward-looking information nor should reliance be placed upon this information as of any other date. Except as required by
law, while it may elect to, Ivernia is under no obligation and does not undertake to update this information at any particular time.
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3. Magellan Operations
Magellan Metals Pty Ltd
 100% Ownership
 A Unique Mine - The world’s largest pure lead mine,
commenced operations in 2005
 Best practise concentrate transport system – 88,000
dmt successfully shipped since new system introduced
in 2009
 Operations placed on Care & Maintenance in April
2011
 New Operating Conditions received on July 27, 2012
– A restart of operations is antcipated in the second
quarter of 2013.
 A Pure & Unique Product – Lead carbonate
concentrate produced from Magellan is very low in
impurities and unlike lead sulphide concentrates, can be
used in both primary and secondary smelters
 Updated Technical Report – On March 30, 2011,
updated Mineral Resources and Reserves add
significantly to the size of the deposit
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4. Board of Directors
Magellan Metals Pty Ltd
The Honourable J. Trevor Eyton Chairman of the Board
Past Chairman & CEO of Brascan Limited (now Brookfield Asset Management) & Officer of the Order of Canada. Sits
on the board of several prominent companies, including Brookfield Asset Management & Magna International
Wayne Richardson
Wide ranging experience in the lead industry and a career in strategic business development. President and CEO of
the Enirgi Group, a 58.90% shareholder of Ivernia
Alan De’ath
President & CEO
Over 30 years experience in senior management positions in the mining industry, including positions with Rio Tinto
and TVX Gold. Joined Ivernia in 2000; President & CEO since 2003
David N. Murray
Over 30 years operating experience in the mining industry, including senior positions with Rio Tinto, TVX Gold &
Avgold
Michael Agnew
Over 30 years of metallurgical operating experience as an executive, corporate director, consultant and lecturer.
Former Senior Vice President, Technology for Noranda Inc.
David Ming Qi
Deputy General Manager at China Yunnan Metallurgical Group Co. and an experienced executive having a broad
range of experience in China and internationally.
Peter Robson
An experienced company director with a professional background as a senior engineer with both Australian and
Asian manufacturing firms.
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5. Management
Magellan Metals Pty Ltd
Wayne Richardson Magellan Metals Chairman and Ivernia Director
A career in strategic business development at the senior management level in domestic and international markets
including approximately 18 years with Pacific Dunlop Ltd and 10 years establishing a private international
enterprise based on a concept and business model he developed in Australia. He has a track record of successful
management of turnaround, growth and start-up companies. Currently the CEO of the Enirgi Group Corporation.
Robert Scargill
Magellan Metals Managing Director
Mining Engineer with over 20 years management & technical experience, including senior positions at BHP’s
Cannington Mine & Perilya’s Broken Hill Operations.
Doug Grimmond
Magellan Metals GM Operations
A Chemical Engineer with general management experience with Rio Tinto Alcan and Alcan Gove. Has over 10
years of general management experience including mining, mineral processing and rail operations.
Alan De’ath
Ivernia President, CEO & Director
Over 30 years experience in senior management positions in the mining industry, including positions with Rio Tinto
and TVX Gold. Joined Ivernia in 2000, President & CEO since 2003.
Brent Omland
Ivernia VP Finance & CFO
Chartered Accountant with extensive auditing & corporate experience in the Canadian mining & accounting
industries; previously with Teck Resources.
D’Arcy Doherty
IverniaVP Legal & General Counsel
Member of the Ontario bar, specializing in corporate & securities law, previously a partner with Gowling Lafleur
Henderson LLP .
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6. Ivernia at a Glance
Magellan Metals Pty Ltd
Capital Structure & Ownership
(all figures in C$ unless otherwise noted)
Recent Share Price
$0.10-$0.12
52 Week Low-High
$0.06-$0.175
Shares (I&O)
745.1M
Shares (FD)
769.1M
Cash Position (As at October 11, 2012)
Last Reported US$2.0M
Debt Outstanding (As at October 11 2012)
Last Reported $4.0M
Remaining Debt Facility (As at October
Last Reported $2.0M
11, 2012)
Market Capitalization (FD)
Approx. $75M (Based on price of $0.10 per
share)
Ownership
95% Institutional, incl.
58.9% Enirgi Group
Corporation (“Enirgi”)
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7. Ivernia Financings 2011/2012
Magellan Metals Pty Ltd
• Enirgi Group has demonstrated strong
financial support for Ivernia through 2011 and
2012.
• Today Enirgi Group owns 58.90% of Ivernia’s
issued and outstanding common shares.
Shares in Issue
(Millions)
C$ Millions
Shares in Issue
12/31/2010
529.3
2011 Equity Issues
• On June 29, 2012, the Company announced a
C$6 million loan facility with Enirgi Group at
competitive terms – further demonstrating
Enirgi Group’s financial support for Ivernia.
• The Company will require further financing to
restart the Magellan Mine which will be
dependent on the finalization of restart plans
and general market conditions (mainly lead
price and f/x rate). Initial estimates indicate
funding requirements in the range of
approximately US$20 to US$25 million which
includes the repayment of the fully drawn
down $6 million facility in June 2013
• Ivernia has requested an extension to the
scheduled repayment date for the facility in an
effort to reduce the overall funding
requirements during restart, however any such
repayment extension remains at the sole
discretion of Enirgi Group.
January 2011 @ $0.34
May 2011 @ $0.214
December 2011 @ $0.085
18.0
20.0
5.9
Shares in Issue - 06/08/2012
Gross Proceeds 2011
52.9
93.5
69.4
745.1
43.9
Market Capitalization (C$ Millions) - December 30, 2010
$
212
Market Capitalization (C$ Millions) - August 20, 2012
$
82
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8. Enirgi Group Corporation
Business Unit
Commodity
Principal Asset
Jurisdiction
Public (or Private)
Ownership
Status
Magellan Metals Pty Ltd
Ivernia
Enirgi Metal
(EMG)
Natural
Resources
(NRUC)
ADY Resources
(Rincon)
Lead Concentrate
Lead metal
Sodium Bicarbonate
Lithium carbonate, potash
Magellan Mine
RMT/ARA/Orbitas
Piceance Creek Basin
Salar del Rincon
Canada
(corporate)/Australia
(operations)
Australia
USA
Argentina
Listed (IVW:TSX)
Private
Private
Private
59%
100%
100%
100%
Care & Maintenance
Production
Production
Lithium (small
commercial scale)
Potash (feasibility)
Enirgi Group Corporation is a private, Canadian company
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9. Magellan Mine Overview
Magellan Metals Pty Ltd
 Location – The Magellan Mine is located in
central Western Australia, 30 km west of
Wiluna and 750 km northeast of Perth. The
Goldfields Highway passes the front entrance
to the mine and Wiluna has an all-weather
airstrip.
 People – Under normal operations the mine
employs ~220 people commuting on a FIFO
roster from Perth.
 Simple mining – Open pit mining is carried
out to depths of only 50 metres with an
average stripping ratio of 2.4:1.
 Processing opportunity – The milled ore is sulphurdized and then concentrated using
traditional froth flotation. The processing plant was achieving best ever performance
immediately prior to being placed on care and maintenance.
 Magellan Metals developed Best Practice concentrate transport system –
Concentrate is loaded into 2 tonne bulka bags which are then sealed, vacuumed clean
and then placed into shipping containers for transport by road, rail and sea to smelters
around the world.
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10. Magellan – a significant resource
Magellan Metals Pty Ltd
Mineral Resources & Reserves for the Magellan Mine
Mineral Resources (1-6)
Tonnage
(Mt)
Pb grade
(%)
Contained Pb
(‘000 t metal)
Measured & Indicated
40.2
4.5
1,790
Inferred
12.1
4.0
480
Tonnage
(Mt)
Pb grade
(%)
Contained Pb
(‘000 t metal)
19.7
5.6
1,111
Mineral Reserves (1, 6-11)
Proven & Probable
+10 years mine life (12)
1. As at December 31, 2011. Table entries are rounded to the second significant figure. For more information see Ivernia’s annual information form dated March 29, 2012 at www.ivernia.com or www.sedar.com.
2. Mineral resources are inclusive of mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental,
permitting, legal, marketing, or other relevant issues.
3. Mineral resources have been reported based on a cut-off grade of 2.1% lead. Mineral resources are based on the Mineral Resource Report prepared by CSA Global Pty Ltd (“CSA”) titled “Magellan Lead Project – 2011 Mineral
Resource Estimate” dated March 29, 2012 (the “Mineral Resource Report”).
4. Mineral resources are reported in accordance with the 2004 update of the JORC code, which is consistent with the Canadian Institute of Mining, Metallurgy and Petroleum Estimation of Mineral Resources and Mineral Reserves Best
Practices Guidelines.
5. Jeff Elliott and Steve Rose of CSA are the “Qualified Persons” for purposes of National Instrument 43-101 of the Canadian Securities Administrators (“NI 43-101”), independent of Ivernia and have verified the above mineral resource
figures, including the underlying sampling, analytical and test data. Data was verified by a site visit and review of Magellan Metals’ data.
6. Contained lead is total lead mined; planned plant recovery is over 75% as per the life of mine plan and 95% payable contained lead.
7. Mineral reserves are based upon mineral resource estimates set out above, which, in turn, are based on the Mineral Resource Report prepared by CSA.
8. Mineral reserves are a subset of measured and indicated mineral resources. All mineral reserves are reported in accordance with the JORC Code. The JORC Code uses the term “ore reserve” which is equivalent to the term “mineral
reserve”, as defined in NI 43-101.
9. Mineral reserves have been reported based on a cut-off grade of 2.1% Pb, an exchange rate of US$0.95/A$1.00, a lead price of US$2,200 per tonne (approx. A$2,316 per tonne) and estimated operating costs.
10.Mr. Andy Robb (General Manager, Technical Services of Magellan Metals) is a Fellow of the Australasian Institute of Mining and Metallurgy and is responsible for the mineral reserves and has prepared and verified the above mineral
reserve figures. Mr. Robb is a “Qualified Person” within the meaning of NI 43-101.
11.Mineral reserves have a waste to ore ratio of 2.4 to 1.
12.Based on production rates of 1.7 to 2.0 million tonnes of ore processed per annum; such increase in production rates is subject to regulatory approval.
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11. Magellan Value Proposition
• In March 2011, Ivernia published an
•
•
•
•
Magellan Metals Pty Ltd
$
$
$
$
$
$
$
$
$
$
$
$
255 $
1,800
2,000
2,200
2,400
2,600
2,800
3,000
3,200
3,400
3,600
3,800
0.80 $
$193
$261
$329
$397
$465
$533
$601
$668
$735
$802
$870
0.85 $
$166
$236
$305
$373
$442
$510
$577
$645
$712
$779
$846
0.90 $
$136
$211
$280
$349
$418
$486
$554
$622
$689
$756
$823
0.95 $
$106
$187
$255
$325
$394
$462
$530
$598
$666
$733
$800
1.00 $
$76
$159
$230
$300
$369
$438
$506
$574
$642
$710
$777
1.05
$47
$129
$206
$275
$345
$414
$482
$550
$619
$687
$754
updated technical report on Magellan
– with significant increases in
resources and reserves and a mine
life extending beyond 10 years.
With this significantly larger resource
and reserve base Magellan has
tremendous leverage to lead prices as
this NPV (8%) table showing lead
price and A$/US$ f/x rates from the
technical report demonstrates.
The NPVs above are based on a static reserves (from the previous slide) in which only ~49% of
the M&I resources are converted into 2P reserves. At higher metal prices, more of the M&I
resources convert into reserves and higher NPVs can be expected. At metal prices of $3,800
per tonne, it is expected that over 90% of the M&I resources convert into 2P reserves.
The Enirgi Group and Ivernia are committed to working together to restore shareholder value for
all shareholders of Ivernia with a business model for a long term sustainable Magellan
operation.
Additional areas of opportunity to enhance the 43-101 report valuation are being explored
through a number of projects being worked on with the Enirgi Group
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12. Lead Markets and Price performance
Magellan Metals Pty Ltd
• In 2011 the world consumed 10.3
million tonnes of lead – a 2.4 million
tonne or 30% increase since 2005.
• Approx. 90% of the world’s lead is
consumed in batteries.
• China consumed approx. 4.6 million
tonnes or 45% of the worlds lead in
2011 – 2.0 million tonnes of which
was for E-bike batteries (CHR
Metals).
• A number of analysts continue to
forecast strong growth in lead
consumption – driven by demand in
China.
• In September 2012, BNP Paribas forecast a lead price of $2,550 per tonne for 2013 and $2,825
per tonne for 2014.
• In the Q2 2012Thompson Reuters survey of base metals analysts, a median price of $2,250
per tonne was forecast for 2013.
• Lead prices peaked around $3,700 per tonne in late 2007 – the last slide demonstrates the
Magellan valuation leverage in the event of a return to those lead price levels.
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13. Lead prices relative to Copper and Zinc
Lead, Zinc and Copper Prices Since January 1, 2008
12000
• Lead and Zinc prices have traded in
very close ranges in recent years.
Magellan Metals Pty Ltd
10000
• In lead, a number of significant mine
closures are slated for the middle part
of this decade with few large new
projects coming on stream.
• Ivernia continues to hold the view that
this could create the environment for
stronger lead prices during the
second half of this decade.
Copper
Prices
Zinc Prices
4000
2000
0
02/01/2008
60.00%
02/01/2009
02/01/2010
02/01/2011
02/01/2012
Relative Lead, Zinc and Copper Peformance Since January 1, 2008
40.00%
% increase from january 1, 2008 price
• A number of analysts forecast
stronger lead and zinc prices as we
move through this decade.
6000
Metal Price Per Tonne
8000
• Both have significantly
underperformed Copper.
LME Lead
(US$)
LME
Lead
(US$)
20.00%
0.00%
02/01/2008
-20.00%
02/01/2009
02/01/2010
02/01/2011
02/01/2012
Copper
Prices
Zinc
Prices
-40.00%
-60.00%
-80.00%
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14. Historical Market Cap. per Current Shares o/s
Magellan Metals Pty Ltd
• An earlier slide showed a
market cap of C$212 million
immediately prior to the
events of early 2011 –
equivalent to $0.36 cents per
current share outstanding.
• This graph shows the Ivernia
market cap per current share
outstanding since we
embarked on development of
the Magellan project in 2003,
showing it peaked at approx.
$0.43 cents per current share
outstanding in 2006.
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15. Magellan - A Significant Producer at
Full Production
Magellan Metals Pty Ltd
 The Company’s two best production quarters
(Q4 2006 and Q4 2010) show significant lead
metal production on an annualized basis. See
the graph below.
2010 Recovery
80
levels, recoveries are expected to improve.
The graph to the right demonstrates the
recovery improvements made during 2010
which are expected to continue to improve.
60
Lead Metal in Concentrate Produced
50
78%
69%
54%
40
30
20
10
0
80
‘000 tonnes lead metal in concentrate
% recovery
 As the mine moves to steady state production
76%
70
Q1
Q2
Q3
Q4
60
40
20
0
Q4 2006 Production
Annualized
Q4 2010 Production
Annualized
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16. Concentrate transportation system
Magellan Metals Pty Ltd
• Magellan Metals has implemented a concentrate transport system
which is acknowledged by the Western Australian EPA as best practice
– Concentrate is placed in waterproof and sift proof bags and sealed
– The bags are loaded into cleaned containers which are then locked
– Containers are trucked to Leonora and then railed to Fremantle for export
– Over 3,000 samples taken at over 300 sample sites along the transport
route have shown no evidence of concentrate escaping from the bags or
containers
– The trigger levels for some sample sites are less than 100th of the national
health standards
– The Magellan Metals process eliminates potential dust-generating
transfer points in the transport process
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17. Bags contain up to 2,000kg, and are
water proof, sift proof and sealed
Magellan Metals Pty Ltd
Bags as arriving at the smelter
Inner seal
Outer seal
Container as opened at the arrival port
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18. Eliminating potential dust generation
points
Magellan Metals Pty Ltd
Traditional concentrate
transport system
Load road transport at
mine site
Magellan concentrate
transport system
Discharge road transport
Load & seal bags at filter
discharge at mine site
Load rail transport
(30km from nearest residence)
Discharge rail transport
Conveyor(s)
Split & discharge bags at
smelter
Shiploader
Discharge ship
Load road transport
Discharge road transport
at smelter
Whilst the amount of
dust at each transfer
point may be small it
can be significant over
the life of a project
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19. Bags being loaded at Magellan Mine
Magellan Metals Pty Ltd
Bags being vacuum cleaned
Bags being loaded into containers
Truck being washed before leaving site
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20. Magellan Metals today
Magellan Metals Pty Ltd
– Following a series of events in early 2011, we voluntarily took the hard decision in
April 2011 to put our only operation on Care & Maintenance and reduced our
employee and contractor workforce from 235 to ~30
– We have used this down time to upgrade our compliance and risk management
systems as well as improve our capabilities in a number of different areas
– We have worked pro-actively with the WA Government and Regulators to address
their concerns and those of the community resulting in the receipt of updated
operating conditions (“Operating Conditions”) on July 27, 2012
– In general, the Operating Conditions preserve and, in some cases, enhance the
already strict auditing, monitoring, management and reporting requirements
previously imposed on Magellan Metals.
– The Company is strongly committed to meeting the obligations outlined in the
Operating Conditions and demonstrating that the containerized shipping of the
Company’s product is both safe and appropriate.
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21. Operating Conditions
Magellan Metals Pty Ltd
– Below are two quotes from the Minister for Environment upon releasing the
Operating Conditions on July 27, 2012:
– “Despite the detection of several lead exceedances last year, no lead concentrate
was found to have escaped into the environment from the double lined bags within
Magellan’s locked shipping containers.
– “Some of the lead exceedances to date were attributed to historical lead handling at
various sites and not from Magellan’s recent operations. Others were a result of
naturally occurring lead levels in the environment.”
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22. Magellan Mine Restart – Key Points
Magellan Metals Pty Ltd
–
A restart of operations is targeted for the second quarter of 2013.
–
The Operating Conditions require that certain actions be undertaken by the Company prior to the recommencement of transport.
–
In the fourth quarter of 2012, the Company will commence restart capital projects and order long lead
time items.
•
•
–
Capital projects in Q4 2012 and Q1 2013 including upgrades of the hard-stand areas, wash-down facilities
and dust extraction capability.
It is estimated that the Company will spend approximately $5 to $6 million on capital projects over the
course of the next 9 months
A successful restart will be dependent on ensuring key personnel are in place and will involve some
capital projects to meet the new operating conditions
•
•
–
Recruitment of key personnel is well progressed with more general recruitment planning to continue in Q4
2012. Significant training and onboarding process for all personnel.
General recruitment to occur in Q1 2013.
Considering a proposal to transfer the day to day management of the mine to a management service
agreement under the management of the Enirgi Metal Group, a wholly owned subsidiary of the Enirgi
Group.
•
Potential material cost savings in the range of approximately $3 million to $4 million per annum
•
Access to economies of scale and increased technical and operating experience and executive management
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23. Ivernia and Enirgi Group
Rebuilding Shareholder Value Over the Long Term
Magellan Metals Pty Ltd
How will we do this?
–
Leveraging off the strengths and experience of Enirgi Group, with Enirgi Metals Group to
take the lead on the restart of Magellan’s operations anticipated in the second quarter of
2013.
–
Unlocking the value of the global secondary smelting market using Enirgi Group’s secondary
smelting capacity – a unique and potentially very profitable market segment for Magellan
concentrate given the scarcity and high cost of used lead acid batteries in Europe and the
US.
–
Technical improvements, with the assistance of Enirgi Group’s in house engineering and
technical skills that increase recoveries and efficiencies.
–
Long term planning designed to take advantage of Magellan’s resource, mine life and lead
price leverage.
–
Implementing innovative solutions that minimize the impact of the escalating cost pressures
and labor scarcity in Western Australia.
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24. Contact us
Magellan Metals Pty Ltd
For additional information please contact:
Ivernia Inc.
130 Adelaide Street West, Suite 3303
Toronto, ON, Canada
416.867.9298 ●info@ivernia.ca
www.ivernia.com
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