Siana Gold Project March 2017 Update

Transcription

1 Siana Gold Project March 2017 Update Mark Williams, Managing Director Joe Mobilia, Chief Financial Officer ASX Code: RED

2 Disclaimer and Competent Person s Statement Competent Person s Statement for JORC 2012 Mineral Resource and Ore Reserve The information in this report that relates to Mineral Resources and Ore Reserves for the Siana Open Pit is extracted from the report titled Siana Open Pit Mining Review and Reserve Update dated 24 September 2015 and is available on the ASX web-site. The information in this report that relates to Mineral Resources for the Siana is extracted from the report titled Siana Mineral Resource dated 23 February 2016 and is available on the ASX web-site. The information in this report that relates to Ore Reserves at the Siana is extracted from the report titled Siana Gold Project: Mine Approved for Development Following Completion of Positive Updated Feasibility Study dated 14 June 2016 and is available on the ASX web-site. The information in this report that relates to Mineral Resources at the Mapawa Project is extracted from the report titled Maiden Resource for Mapawa LSY deposit dated 21 October 2015 and is available on the ASX web-site. Red 5 confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcements. Production forecasts The Company confirms that all material assumptions underpinning the Siana production target and financial information derived from the production target referred to in this report continue to apply and have not materially changed from when they were first reported on 14 June 2016, within the report titled Siana Gold Project: Mine Approved for Development Following Completion of Positive Updated Feasibility Study, which is available on the ASX web-site. In addition, the ore reserves underpinning the production forecast at the Siana Open Pit in this report are probable ore reserves and have been prepared by a competent person in accordance with the requirements of JORC 201 Competent Person Statements for JORC 2004 Results The information relating to Results are based on information compiled by Mr Byron Dumpleton, Member of the Australian Institute of Geoscientist (Member No 1598). This information was prepared and first disclosed under the JORC Code 200 It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Mr Dumpleton is a full-time employee of Red 5 Limited. Mr Dumpleton has sufficient experience relevant to the style of mineralisation, type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Persons as defined in the 2012 Edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves. Mr Dumpleton consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. Forward-Looking Statements Certain statements made during or in connection with this statement contain or comprise certain forward-looking statements regarding Red 5 s Mineral Resources and Reserves, exploration operations, project operations, production rates, life of mine, projected cash flow, capital expenditure, operating costs and other economic performance and financial condition as well as general market outlook. Although Red 5 believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward looking statements and no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, delays or changes in project, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management. Except for statutory liability which cannot be excluded, each of Red 5, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in this statement and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this statement or any error or omission. Red 5 undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events other than required by the Corporations Act and ASX Listing Rules. Accordingly you should not place undue reliance on any forward looking statement. 2

3 Introduction Recent Events Rapid response to recent s both at Siana and in the Philippines Strong cash and refined gold metal balance of ~A$28.0M at end of February 2017 following robust gold production in 1H FY2017 of 35,257oz Revised operational strategy implemented at Siana in response to delay in obtaining regulatory approval for construction of long-term Tailings Storage Facility (TSF) Low-cost underground activities continuing and progressing well with commitments for major capital items deferred pending TSF approvals Work on Stage 6 Eastern wall cut-back continuing to progress well Processing temporarily suspended from the end of January 2017 Positive visit by Secretary of Philippines Department of Environment and Natural Resources (DENR) to Siana Gold Project in January 2017: Secretary Lopez subsequently confirms that the project operator, Greenstone Resources Corporation, has passed the DENR audit A focused, coordinated and effective management response to protect our key assets and ensure that plans to establish a long-term gold mining operation at Siana remain in place 3

4 Presentation Overview The five key pillars of our long-term growth strategy Siana Gold Project open pit Gold production of 35,257oz for 1H FY2017 Processing plant temporarily placed on standby in January 2017 pending regulatory approval for new long-term tailings storage facility Work on Stage 6 Eastern wall cut-back continuing to progress well Transition to long-term underground mine Robust and viable project confirmed by updated 2016 Feasibility Study Forecast production of ~60,000oz pa at All in Cost of US$ /oz and AISC of US$ /oz over 8 years commenced in 2H CY2016 US$49.5M CAPEX estimate to point of positive cash-flow: significant savings identified Highly prospective tenements Exploring one of the most mineralised provinces in the Philippines Mapawa satellite project potential future regional growth opportunity Only modern gold plant in a highly prospective province Modern 1Mtpa gravity and carbon-in-leach (CIL) facility portal Siana Gold Mine Strong community and sustainability commitment 4

5 Corporate Overview Debt-free, strong balance sheet, experienced leadership team ASX code RED Share price (as at 3 March 2017) A$0.063 Issued shares 765M Market capitalisation (at 6.5cps) ~A$48.1M Cash (at 3 March 2017) ~A$28.0M Enterprise value ~A$20.1M Debt and hedging Nil Directors and Management Kevin Dundo Chairman Mark Williams Managing Director Ian Macpherson Non Executive Director Colin Loosemore Non-Executive Director Frank Campagna Company Secretary Joe Mobilia Chief Financial Officer Shareholders 68% 17.8% 10.7% 8.7% Franklin Resources Inc. Ruffer LLP Matchpoint Asia Fund Our Company Vision To be a successful multi-operational mineral resource company, providing benefits to all stakeholders, through the consistent application of responsible and sustainable industry practices. Other 5

6 Siana Gold Project Location Located in a highly prospective and well-established mining region 6

7 Siana Update Revised Mining Strategy Optimise production schedule, manage uncertainties, protect shareholders interests Open pit Delay in obtaining regulatory approval for construction of a long-term Tailings Storage Facility Application submitted July 2016, however it has not been approved due to the DENR s ongoing focus on the completion of mining company audits Processing at Siana temporarily suspended in January 2017 and revised mining strategy implemented to optimise remaining open pit gold production, while minimising operational risks and regulatory uncertainties Gold sales for March 2017 Quarter forecast at ~7,500oz Revised mine plan expected to deliver a substantial amount of recovered gold in the second half of CY2017, subject to timely receipt of TSF approval Technical studies underway to assess the potential to extract a portion of the remaining open pit Mineral Resources and Ore Reserves from the future underground mining operation Revised operational strategy designed to manage regulatory uncertainties and preserve the significant inherent value of Siana s in-situ gold inventory and high quality infrastructure 7

8 Siana Feasibility Study A blueprint to deliver future growth at Siana Open pit Updated Feasibility Study completed in June 2016 by underground mining consultants Mining One Pty Ltd: Forecast production of ~60,000oz pa over initial 8-year production mine life Forecast life-of-mine All in Cost of ~US$930-US$980 per ounce and AISC of US$800-US$850 per ounce Pre-production CAPEX of US$49.5M (including US$2M contingency) Feasibility Study also considered a longterm mine plan based on the whole UG resource which resulted in a significantly improved financial evaluation commenced 2H CY2016 Isometric view of the proposed underground ore at Siana 8

9 Siana Development progressing well Open pit Combined of main and ventilation declines including sundry currently at ~261m at end- Feb 2017 Construction of bulk emulsion depot, batching plant and heavy vehicle workshop complete to continue throughout 2017 using low-cost hand-held air-leg mining techniques Commitments for major capital items will be deferred until early 2018 First underground ore planned for March 2018 with steadystate production expected to commence around December 2018 Major capital items may be brought forward depending on operational performance of the open pit and receipt of regulatory approvals Opportunities to supplement UG ore feed with material from nearby Mapawa prospect plus other near-mine prospects 9 Development of ventilation and emergency egress portal

10 Siana Resources & Reserves Underpins robust long-term underground mine Open pit Long-section of the resource model above 0g/t Au equivalent 10 Siana deposit Indicated and Inferred Mineral Resource of 8g/t Au for 704,000oz Probable Ore Reserve of 1g/t Au for 396,000oz Strike length of ~450m Vertical depth of ~300m below Stage 4 open pit design, some 480 metres below surface Up to ~40m width for the upper section of the main zone of the resource Reserve equates to 1,300oz per vertical metre Open at depth

11 Siana Mining Method A blueprint to deliver future growth at Siana Open pit Mine plan based on use of a conservative short uphole retreat mining method with cemented paste-fill for ore extraction Proven mining method with good productivities and reasonable costs plus good control of mining voids and drilland-blast Cemented paste-fill allows mining to be undertaken on several levels Conventional jumbo drilland-blast method to be used for tunnel Schematic of proposed short up-hole retreat mining method 11

12 Siana Long-Term Mine Plan Includes assessment of entire resource beneath the Siana open pit Open pit Cross-section at 55100N Feasibility Study also considered technical and economic viability of the entire UG resource including Indicated and Inferred material Most of the Inferred material scheduled to be mined in last half of the mine life represents ~10% of total resource High level of confidence in ability to convert to Indicated Resources with further drilling Based on 8-year production mine life mining 8Mt at head grade of 6g/t gold equivalent to produce 504,000oz of gold 12

13 The Future and Growth Surigao del Norte one of the most mineralised provinces in one of the most mineralised countries globally Numerous exploration targets identified Open pit Near-mine and regional exploration activities ramping up: Near-mine: Siana Gold Project underground in-fill drilling Alegria prospect drilling underway Dayano prospect : Mapawa LSY maiden Indicated and Inferred resource of 8.8Mt at 0g/t for 289,000oz Duyangan prospect mapping underway St Nino prospect Number of strong IP and magnetic anomalies 15

14 Alegria Area Drilling underway targeting copper-gold anomalies Open pit Located in southern tenement region Three significant prospects identified with coincident geochemical and IP anomalies Drilling underway to test copper-gold porphyry targets and epithermal veins mapped at surface Field mapping has confirmed vein continuity 16

15 Mapawa Block II Duyangan Prospect A new, high-priority exploration target Open pit Significant quantities of free gold occurring in unconsolidated sediment/soil under a 5-10m thick limestone cap Coincident with a magnetic high Potential colluvial channel or diatreme intrusive Located close to several major gold mining operations: 4km NW of historic Manila Mining operations - produced ~20Mt of ore from diatreme-based gold mineralisation 5km SE of historic Mother Lode deposit - produced +500,000oz Silica rock fragments mined locally by artisanal miners can carry significant gold grades Major mapping program underway 17

16 Processing Plant Only modern operating gold plant in a highly endowed world-class mining region Open pit Modern 1Mtpa gravity and carbon-in-leach (CIL) facility Constructed in 2011 Heart of the plant is an Outotec Mill (1Mtpa nameplate) Future potential to establish Siana as a central for gold deposits in the region Opportunities to supplement UG ore feed with material from nearby Mapawa prospect plus additional near-mine prospects 18

17 Sustainable Development Initiatives Strong commitment to health and safety, community and environmental programs Operations Support continues in the areas of: Health education Welfare Agricultural Infrastructure Clean water Committed to high environmental standards: Continual water quality monitoring Water drainage systems Silt ponds Cyanide destruction Tree planting Accredited for: ISO 14001: Environmental Management Systems ISO 9001: Quality Management Systems OHSAS 18001: Occupational Health & Safety Management Systems 19

18 Sustainable Development Initiatives Strong commitment to health and safety, community and environmental programs Operations Significant contributor to local communities and to the regional and national economy in the Philippines: Employment for more than 1,000 people ~US$7M per month spent on local procurement ~US$4M in national and local taxes and royalties in FY2016 ~US$570,000 for Social Management Development Program in 2016 Additional contributions to Indigenous People including financial assistance, health, education, livelihood and cultural activities and agriculture Training and programs for our employees Partnering with local communities in sustainable programs to enhance their quality of life 20

19 Summary Aiming to establish a long-term gold mining operation in the Philippines Strong cash balance of ~A$28.0M Rapid response to recent events with implementation of revised mining and operational strategy Low-cost underground activities continuing and progressing well: robust ~60,000ozpa project with AIC of ~US$ and AISC of ~US$ /oz over 8 years Significant inherent value of Siana s large in-situ gold inventory and high quality infrastructure only modern gold plant in a highly prospective province High quality exploration portfolio with numerous targets in one of the most mineralised provinces in the Philippines Strong and experienced management team with proven track record operation in the Philippines 21

20 Thank you. Mark Williams (Managing Director) Joe Mobilia (CFO) Web: