CEO s Welcome Geoff Day

Transcription

1 CEO s Welcome Geoff Day 1

2 Overview of the Presentations Geoff Day, Managing Director & CEO Introduction: Three Horizons for Growth 5 Year Production Outlook: Zinc and Copper Keys to Achieving the 5-Year Production Outlook Kagara Repositioned: After the Change Joe Treacy, EGM Minerals and Business Development Resource Growth Targets and Exploration Strategy Overview of Kagara s Production Hubs Deposits and Prospects: Zinc and Copper Regional Geology and Production Hubs Geoff Day, Managing Director & CEO Managing the Growth Pipeline Flavio Garofalo, EGM Finance and Corporate Overview, Group Structure and FY11 Results Production Growth and Capital Management Plan Reporting Timetable Geoff Day, Managing Director & CEO Conclusion 2

3 Introduction Today s key themes The information presented today will revolve around 3 interrelated and recurring themes: Production growth which positions KZL as a dominant ASX-listed base metals producer An aggressive and targeted exploration program to build resource life an exploration budget which will be at least double and most cases quadruple that of our peers Structuring the business for the future (structure, accountabilities, skills and business improvement) 3

4 Where From, Where To What you ve told us Feedback from the past 6 months: Complicated O Strong potential of KZL assets P High capital turnover O Stable & supportive workforce P Unpredictable O Supportive major shareholder P Difficult to model O Strong base metal expertise P Short resource life O Strong development pipeline P Key objective for today: Provide the market with a road map on what to expect from KZL over the next 5 years and specifically the coming 4 quarters 4

5 Our Basis for Change It all boils down to margins and resource life North Queensland operations currently positioned at the upper end of the cost curve Impacted by short resource life and high capital turnover Deliver improved margins by: Increased production and productivity (reduced unit rates) Cost management focus business improvement Kagara FY11 USc 80/lb Kagara FY11 USc 175/lb Source: Company Filings, AME Note: Current based on June Quarterly cash costs Source: Company Filings, AME Note: Current based on June Quarterly cash costs 5

6 Operating Costs Overview The key cost components 6

7 Cornerstone of the Strategy Growing production and enhancing margins Two key drivers for KZL into the future: Immediate North Queensland: Increased production, increased margins at a time of rising metal prices Medium-to-longer Term Admiral Bay and beyond: Development of Admiral Bay Project to set KZL up as a world leader in zinc, lead and silver: Admiral Bay will position KZL as the lowest cost global producer 7

8 The Outlook for Zinc A looming supply deficit Over the 5 year plan period zinc revenue to US$2,750/t World consumption to double from 7.9Mt in 2009 to 16.9Mt in 2025 = 5.2% pa growth Growth driven by growing use of galvanized steel in Chinese and Indian construction Significant market deficits likely beyond 2013 Supply-side constraints due to anticipated closure of several major Zn-Pb mines, e.g. Brunswick, Century, Lisheen and Perseverance Brook Hunt forecasts 1,215kt will be removed from the market in 2011 and 1,189kt in

9 The Outlook for Copper Demand from China and India expected to underpin strong prices Global demand for refined copper expected to soar more than 40 per cent to 27Mt by 2020 Over the 5 year plan period copper remaining strong: KZL s model price consistent with consensus forecasts for copper 9

10 Our Strategy for Growth A clear three-stage roadmap Horizon 1: Horizon 2: Horizon 3: Beyond 2015 Building the growth platform Deliver to the strategy Grow beyond our own backyard 10

11 Our Strategy for Growth A clear three-stage roadmap Horizon 1: Building the growth platform Get the strategy right and communicate it Increase credibility with employees and investors Develop the organisation to deliver results consistently Develop and hone our skills through BI, technology, planning, etc Never lose sight of safety, community or the environment in which we operate 11

12 Our Strategy for Growth A clear three-stage roadmap Horizon 2: Deliver to the strategy Identify and mine longer life assets. Our goal: An 8-12 yr production outlook for each region Tightly manage the capital project pipeline from studies to profitable operations Reduce site controllable cash costs to at least 20% lower than FY11 levels Become the preferred Zn & Cu producer on the ASX and deliver our promises Position the company for potential offshore operations 12

13 Our Strategy for Growth A clear three-stage roadmap Horizon 3: Beyond 2015 Grow beyond our own backyard Develop a 15+ year production outlook for each region Reduce site controllable cash costs to at least 30% lower than FY11 levels Complete assessment of Admiral Bay and its development timeframe Develop as a regional leader in finding and developing base metals assets throughout Australia and selected SE Asian countries 13

14 Zinc: 5-Year Production Outlook A well-structured plan to reach 120ktpa production 14

15 Copper: 5-Year Production Outlook Targeting 30ktpa production within five years 15

16 Production, Revenue and Cash Flow Outlook A disciplined and focused approach to managing our capital requirements FY11 FY12 Guidance FY16 Outlook Production 40kt Zn 53-59kt Zn 120kt Zn 22kt Cu 17-20kt Cu 30kt Cu Revenue $240.7M $ M $ M EBITDA $49.2M $54-72M $ M 16

17 5-Year Production Profile Underpinned by Exploration Regional resource growth targets Northern Region: Polymetallic Note: the information on which this graph is based is provided in the Exploration Target summaries on slide 131 of this presentation (see slides in Supporting Tables). Refer to the disclaimer on slides in the supporting tables. 17

18 5-Year Production Profile Underpinned by Exploration Regional resource growth targets Central Region: Polymetallic Note: the information on which this graph is based is provided in the Exploration Target summaries on slide 129 of this presentation (see slides ) in Supporting Tables). Refer to the disclaimer on slides in the supporting tables. 18

19 5-Year Production Profile Underpinned by Exploration Regional resource growth targets Central Region: Copper Note: the information on which this graph is based is provided in the Exploration Target summaries on slide 130 of this presentation (see slides in Supporting Tables). Refer to the disclaimer on slides in the supporting tables. 19

20 5-Year Production Profile Underpinned by Exploration Regional resource growth targets Southern Region: Polymetallic Note: the information on which this graph is based is provided in the Exploration Target summaries on slide 128 of this presentation (see slides in Supporting Tables). Refer to the disclaimer on slides in the supporting tables. 20

21 Keys to Achieving the 5-Year Production Profile A strong company structure is central MD & CEO Geoff Day EGM Organisation Development and Sustainability Peter Gough EGM Finance Flavio Garofalo EGM Corporate Dave Peterson COO Evan Spencer EGM Minerals and Business Development Joe Treacy Clear structure ExCo introduced; working through each level of the organization Clear accountabilities single point accountability Experience and skills more than 150 years of combined experience at ExCo Process and systems position for growth and turnkey approach 21

22 Keys to Achieving the 5-Year Production Profile Business Improvement embedded in our day-to-day work Business Improvement (BI) is a priority of the Horizon 1 Strategy BI program and resources established Partners In Performance engaged to assist with kick-starting the program The program includes three key elements: Margin Improvement and Protection, i.e. Scale leveraging the economies of scale to 30/120ktpa Productivity Cost Management and Improvement Stability Reducing variation across the value chain Technology & Engineering Projects 22

23 Business Improvement Initiatives Underway Initial Business Improvement Focus Initial Business Improvement Focus: Throughput improvement development rate at Balcooma and Mungana Establish Organisational Wiring Continuous Improvement Pipeline and Idea Generation Sessions Procurement Improvement Tail Spend and Inventory Management Impact: >6X return on investment costs $12M realised A further $37M in pipeline today Establishing internal capability core team in place by November 2011 Next stage Asset Management program (initiate October 2011) 23

24 Example Simple Targets and Wiring Initial Business Improvement Focus Clear goals and targets communicated to the front line drives improvement: BI diagnostic commences Target: 1 Round per Jumbo per Day Ave rate May 10 To Mar 11: 155m 21% increase in development metres since May kt ore accelerated in FY12 Value of increase: $1.7M 24

25 5 Year Unit Cost Outlook: Zinc Example A plan to achieve a 30% reduction in site controllable cash costs over the outlook period Unit cost base 100% of FY11 cost 25

26 Keys to Achieving the 5-Year Production Profile Improved governance around Mineral Resources and Ore Reserves Motivation: Core company assets Sub-optimal representation of the resource will directly affect the Company s bottom line operationally, commercially, legally Avoid impairments, allow more rigorous planning, ensure target achievement Key components: Resource and Reserve Governance Committee report to CEO and Audit, Risk and Governance Committee Accountability to ensure appropriate management of these Company assets underpinned by: appropriate level of support/resources (funding, time, soft/hardware, etc) adequately trained/skilled personnel standardised and auditable practices (develop culture) clear and reliable reporting format credible, timely, accurate and JORC compliant Clear linkage to and embedded within the project planning process from discovery through to closure 26

27 The New Kagara: After the Change 27

28 Becoming One of Australia s Largest Zinc Producers On a zinc equivalent basis, production to rise from 117ktpa to +200ktpa Source: Company filings, Broker research Note: 1) Equivalent production calculation based on long-term prices: US$0.86/lb for Zinc, US$0.89/lb for Lead, US$17.5/oz for Silver, US$2.5/lb for Copper, US$7.7/lb for Nickel, US$1,200/oz for Gold and US$40/lb for Uranium 2) Cash costs shown are post by product credits 3) Excluding Mungana 28

29 Climbing up the Ranks of Australian Copper Producers On a copper equivalent basis, production to rise from 41ktpa to 71ktpa Source: Company filings, Broker research Note: 1) Equivalent production calculation based on long-term prices: US$0.86/lb for Zinc, US$0.89/lb for Lead, US$17.5/oz for Silver, US$2.5/lb for Copper, US$7.7/lb for Nickel, US$1,200/oz for Gold and US$40/lb for Uranium 2) Cash costs shown are post by product credits 3) Excluding Mungana 29

30 Becoming a Leading Global Zinc Producer Kagara will rank in the world s top 20 within five years Leading global zinc producers by 2011 Zn production (paid metal) Source: Company filings, AME 30

31 Disclaimer Competent Person s Statement Competent Person s Statement Information in this presentation that relates to Mineral Resources and Ore Reserves is based on and accurately reflects reports prepared by Peta Libby, Ingvar Kirchner, Ian Hodkinson, John Banning, Andrew Beaton, Glengarry Resources NL ASX Release April 2, 2008*, North Queensland Metals Limited Prospectus, page 22 released to the ASX 9 November, 2006*, Liontown Resources Limited ASX Release 23 April 2008*, Charlie Georgees and Ian Morrison. All these persons, except Peta Libby and Ingvar Kirchner, are full-time employees of Kagara Ltd or the relevant subsidiary. Each Competent Person consents to the inclusion of material in the form and context in which it appears. All of the Competent Persons named are Members of The Australasian Institute of Mining and Metallurgy and/or The Australian Institute of Geoscientists and possess relevant experience in relation to the mineralisation being reported on by them to qualify as Competent Persons as defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004 Edition). * With respect to the resource statements for these projects, Kagara Ltd has relied on the veracity of the original resource statements. This presentation, so far as it pertains to exploration results, ore and mineralisation, is based on information compiled by and as reported upon by Mr Joe Treacy, a full-time employee of Kagara, who is a member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists and has over five years experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activities which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Treacy consents to the inclusion in the Presentation of the matters based on his information in the form and context in which it appears. JORC Exploration Targets It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information in this presentation relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context. The potential quantity and grade is conceptual in nature, since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource. 31

32 Forward-Looking Statements Disclaimer Forward-Looking Statements This presentation has been prepared by Kagara Ltd. This document contains background information about Kagara Ltd current at the date of this presentation. The presentation is in summary form and does not purport to be all inclusive or complete. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained in this presentation. This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of Kagara Ltd shares in any jurisdiction. This presentation may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction. This presentation does not constitute investment advice and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments. To the fullest extent permitted by law, Kagara Ltd, its officers, employees, agents and advisers do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted. This presentation may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Kagara Ltd. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and ASX Listing Rules, Kagara Ltd does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based. 32

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