Strategic Metals World Class Projects

Transcription

1 3 rd Mining Investment Summit Singapore 28 th July 2011 Strategic Metals World Class Projects 1 Good afternoon and thank you for the opportunity to introduce you to our company Highlands Pacific. The title of today s presentation strategic metals world class projects says it all. I hope at the end of this presentation and after I walk you through our key assets you will agree, we have possibly the best near term development copper gold project in Asia Pacific in the Frieda Project with a long life open pit resource and low operating costs the envy of many. And I will also discuss our world class Ramu Nickel Cobalt project. Projects of this scale and longevity are once in a decade, and I have little doubt Ramu will be in operation for multiple decades in Papua New Guinea. In my presentation today I will quickly provide a brief overview of PNG, a quick snapshot of our corporate structure and each project in turn. 1

2 Disclaimer And Competent Persons Statement Disclaimer & Forward Looking Statements This presentation has been prepared by Highlands Pacific (the Company ). It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the company will be entered into on the basis of this presentation. This presentation contains forecasts and forward looking information. Such forecasts, projections and information are not a guarantee of future performance, involve unknown risks and uncertainties. Actual results and developments will almost certainly differ materially from those expressed or implied. The Company has not audited or investigated the accuracy or completeness of the information, statements and opinions contained in this presentation. Accordingly, to the maximum extent permitted by applicable laws Highlands makes no representation and can give no assurance, guarantee or warranty, express or implied, as to, and take no responsibility and assume no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this presentation. You should not act or refrain from acting in reliance on this presentation material. This overview of Highlands does not purport to be all inclusive or to contain al information which its recipients may require in order to make an informed assessment of the Company s prospects. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation before making any investment decision. Reserves & Resource and Competent Persons Statement Information contained in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on previous announcements made by Highlands Pacific Group Limited to the ASX & POMSOX. The information in this report that relates to Kurumbukari, Koki Mineral Resources and any exploration results is based on information compiled by Lawrence Queen, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Queen is a full time employee of Highlands Pacific and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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 Queen consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Ore Reserves is based on information compiled by Dr Brian White, who is an Honorary Fellow of The Australasian Institute of Mining and Metallurgy. Dr White is employed by Brian White Mining Services and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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. Dr White consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The ore reserve calculation includes low grade rocks and rock fragments, which are present at the base of the ore body. These rocks and rock fragments, which are considered as internal waste, along with chromite will be removed at the mine site in the beneficiation plant. The information in the report that relates to Frieda Horse/Ivaal/Trukai & Nena Mineral Resources presented is based on information compiled by Mr Raúl Roco, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Roco is a full time employee of an Xstrata Copper entity. Mr Roco has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the estimation of Mineral Resources 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 Roco consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Throughout the presentation all figures are quoted in US$ unless otherwise stated 2 The disclaimer and competent persons statement. 2

3 Highlands Pacific Our Base Papua New Guinea PNG Mining laws: World Standard Taxation: 30% Infrastructure: Improving Compelling Geology 1. Ramu Nickel 2. Frieda Copper/Gold 3. Star Mountains 3 Papua New Guinea: PNG is home to world class copper, gold and soon to be LNG projects. The Mining Law is modern and its fiscal regime steady. The likes of Newcrest, Harmony, Barrick and Xstrata are developing or operating world class copper gold projects and the region has spawned other giants like Grasberg, Ok Tedi, Bougainville and Porgera. We are also seeing some of the previous incumbents in Rio Tinto and BHP Billiton returning to the country to search for big copper gold porphyries as well as Exxon Mobil developing the US$16Bn LNG project and MCC a major Chinese company in JV with ourselves on the world class Ramu Nickel Cobalt Project. Highlands Assets: Our three main assets are located in PNG, ranging from (1) Ramu Nickel Cobalt Project near the coastal city of Madang (2) Frieda Copper Gold Project 70km south of the mighty Sepik River and (3) the Star Mountains exploration project NE of the Ok Tedi mine in the far west of PNG near the border. 3

4 Investment Snapshot Our credentials and assets Investment Snapshot Assets: Cash: Leverage: Tier 1 long life and strong partners US$17m, debt free Share of metal in ground Projects Frieda (Copper/Gold) 18.18%* * Excludes Nena deposit which is owned 100% by Highlands subject to an option by Xstrata Star Mountains (Copper/Gold) 100% Ramu (Nickel/Cobalt) 8.56% to 20.55% 4 Value Proposition: The value proposition that Highlands brings to shareholders centers around low cost long life projects partnered with world class partners plus some very exciting exploration leases not a bad position to go with the US$17m of cash, no debt and a focused management team. Frieda By far the largest and most important asset we have is Frieda. Our JV partners Xstrata are required to produce a Bankable Feasibility Study by January 2012 and this is progressing well. There is no doubt that this mine has the potential to be one of the mainstays of the worlds new copper producers in the future. Star Mountains is an emerging copper gold project some 25km s from Ok Tedi. We are hoping to have the first resource estimate out for this project in This is the first major exploration program in an area previously explored by Kennecott in the 1970s. Any resource we can find here could potentially provide vital feed to Ok Tedi which has all but exhausted its open pit ore and must either close, go underground, or undertake a major wall cut back. Under these scenarios the Ok Tedi mill would potentially still have plenty of spare capacity. Ramu Ramu is a US$1.5Bn project that Highlands has a carried interest of 8.56% and has rights to acquire up to 20.55% of the project once the project debt is paid. The Ramu nickel cobalt project will be a significant producer when it commences with annual production of around 31,000 tonnes of nickel and over 3,000 tonnes of cobalt. 4

5 Board of Directors Ken MacDonald Chairman Legal/Resources/Management John Gooding Managing Director & CEO Mining Engineer/Management Drew Simonsen Non executive Director Mining Engineer/Project Finance Mike Carroll Non executive Director Finance/Management Dan Wood Non executive Director Geology/Exploration/Management Fiu Williame Igara Non executive Director PNG/Government 5 Our board has a diverse background of experience and expertise covering corporate law, project financing, mining, geology and exploration and operations management and our management team is very experienced and dedicated 5

6 Capital Structure And shareholders Finance Issued Capital Cash & Equivalents Debt and Hedging A$16M (US$17M) nil Issued Shares Unlisted Options (7.8c 27c) Performance Rights 685 million 24 million 3.6 million Markets Shareholders Exchanges ASX and POMSoX (ASX300 Index) Share Price A34c Capitalisation A$230 million Ave. Daily T/O ~ +1M shares 6 Month price range A22c to A46.5c Baker Steel 9.2 % National Super Fund 7.1 % Independent Public Business 4.4 % Kina Funds Management 4.3 % Regal Funds Management 3.7 % Top 20 holders 45 % Mgt (Diluted) ~ 3 4 % 6 The company is listed on the Australian Securities Exchange and as a PNG company we are not subject to Australia s mining taxes or carbon taxes. The Company is included in the ASX/S&P300 Index. At share price of 30c our current market cap is just above A$200M with and our share registry contains a number of institutions that have entered over the last 8 months with the top 20 shareholders holding approximately 45% and management holding around 4% on a diluted basis 6

7 Our Resource Base Significant share of metal and potential Project s Inventory Our % Highlands Inventory Frieda Copper Copper 11Mt Gold 18Moz 18.18% Copper Gold 3 Mt* 4 Moz* Ramu Nickel Nickel 1.4Mt Cobalt 140 kt 8.56% Nickel 125,000t Cobalt 12,250t * Based on 100% ownership of the Nena deposit which is subject to an option by Xstrata 7 Inventory: In a world short of copper and gold and important metals like nickel this is an inventory that is hard to look past. Project level: At a project level Frieda with its district resources of 11Mt of copper / 18Moz of gold and counting is significant and is possibly in the top 5 7 in the world undeveloped (but we say soon to be developed) copper projects. At Ramu the resource base of 1.4Mt of nickel will sustain a minimum 20 year project life with plenty of potential beyond this. Highlands Share: Highlands share of this inventory of metal in the ground is 3Mt of copper, 4Moz of gold, 125,000 tonnes of nickel and over 12,000 tonnes of cobalt. Perspective: To put this into perspective just Highlands share of copper and gold in the ground is more than Oz Minerals current Prominent Hill resource base (as at 30 June Mt Cu and 3.1Moz Au) or Bougainville Copper s Panguna deposit 0.33% Cu and 0.37g/t Au for 3.5Mt copper). Resource Upgrade: And as you will see me mention a number of times during the presentation the resource at Frieda will grow. We expect a final resource upgrade for the BFS in August. 7

8 Frieda Copper Gold Project A world class Tier 1 asset FRIEDA PROJECT 8 Location: Frieda is located about 70km south of the mighty Sepik River on the border of the East and West Sepik provinces. The river will provide a very convenient transport route for both materials for the project and the shipment of concentrate to market. Free Carry: The project is currently completing a BFS where Highlands is free carried. To date Xstrata have spent over US$160M to the end of last year and will be spending another US$100M this year to complete the study before January 2012, or they forfeit their interest in the project. The PFS was completed in November 2010 and it detailed a large, long life and viable project at modest copper and gold prices. Studies: The Frieda project has been decades in the making and I am sure will be decades in production. The past 18 months has seen a number of resource and prefeasibility studies bringing it to life, and in the months ahead a new updated resource estimate and by January next year a BFS. Key Dates: November 2010 The prefeasibility study was released. February 2011 An updated resource estimate for the Horse Ivaal Trukai pits was announced. August 2011 Another updated resource is expected which will form the basis for BFS. January 2012 Xstrata must deliver the BFS to maintain its 81.82% interest. 8

9 Frieda Copper Gold Prospect Areas District resources of +2.2 billion tonnes 9 Copper Porphyry Cluster: Frieda is not just one deposit, in fact the Frieda area is a copper porphyry province with multiple deposits. Some of which are in resource category and some which are not. In an area of approximately 100 square kilometres we have multiple copper hits and prospects. The crosses on this slide represent a past or current target. Mine v District: Given these multiple locations it is important to understand and distinguish between when we talk of the Frieda district, or the possible Frieda pit, or the epicentre of Xstrata s current feasibility work on the Horse Ivaal Trukai deposits which is the three ore bodies enclosed by the red oval shape. Horse Ivaal Trukai: This refers to three deposits which on current estimates host about 8 million tonnes of copper. We expect a resource upgrade soon. Ekwai: Is a prospect directly adjacent to HIT which is not in resource, but has had encouraging drilling in the past. This has not been drilled as part of Xstrata work. Koki: Koki is another obvious resource in the shadow of the plant and is within a kilometre from the edge of the pit which is currently planned to be at near where the words Ekwai appear on the graphic. Nena: Nena has a resource, and is 7 8 kilometres from H.I.T. It is a high grade high sulphidation copper porphyry, akin to a Wafi Golpu. It is not in the current Xstrata studies but I have little doubt it will be revisited very early in the project s life. Grades of 2.4% copper are hard to look past and Nena has over 1Mt of copper metal. 9

10 Frieda Copper Gold Project Areas District resources of +2.2 billion tonnes Horse Ivaal Trukai Xstrata current JV Focus [ 58% Measured & Indicated ] Resource: 1,900Mt 0.45% Copper, 0.22g/t Gold, 0.8g/t 0.2% Copper Cutoff Koki within JV Resource: 274Mt 0.4% Copper, 0.3g/t 0.2% Copper Cutoff Nena 100% Highlands subject to Xstrata Option Resource: 51 Mt 2.43% Copper, 0.57g/t 0.5% Copper Cutoff 10 Current Inventory: The Horse Ivaal Trukai ( H.I.T ) deposits provide the bulk (about 80%) of the global Frieda district resource. The HIT resource as at the end of last year contained 1.9 billion tonnes of ore with over 58% in the measured and indicated category and is contained within an economic constrained pit. On a district level this totals almost 2.2 billion tonnes containing 11Mt of copper and 18Moz of gold. World Terms: In world terms Frieda has the resource scale to fit in the top 5or 10 of world s undeveloped copper projects. Data derived from Metals Economic Group, would suggest in terms of current copper inventories, only 6 7 projects larger in the world than Frieda in terms of in the ground metal. However the points to note are; i) 3 of these are underground (including Resolution in Arizona is a proposed block cave, Los Sulfatos is also underground), and ii) 3 of these whilst large open pits are lower grade (Pebble in Alaska is 0.34% Cu, and Cobre Panama is 0.3% Cu, and Reko Diq 0.42% Cu in the mountains of Pakistan and is some way off). Gold Equivalent: Projects like Frieda at current prices would derive about 20% of their revenue from gold. There has been focus by some analysts on showing copper/gold prophyry projects in gold equivalent terms. If you did this for Frieda it is also a giant at more than 72Moz of gold equivalent. AuEq: Copper and gold equivalent calculations use metal prices of US$4.00/lb for copper and US$1,500/oz for gold. The contained gold and copper represent estimated contained metal in the ground and have not been adjusted for metallurgical recoveries. Adjustment factors to account for differences in relative metallurgical recoveries for gold and copper will depend upon the completion of definitive metallurgical testing. AuEQ = Au Oz + (Cu lbs x 4.00/1500). 10

11 Frieda Copper / Gold Project 2010 Resource Model Horse Ivaal Trukai 1900Mt at 0.45% Cu & 0.22 g/t Au 0.2% Cu cut of grade applied View looking south Horse Trukai Ivaal Ekwai Koki 0.3% Cu Grade Shell pit 11 Open Pit: Frieda will be a large long life open pit operation some 2.5km long and 1.8km wide. Strip Ratio: This is very low at less than 1:1 so for every tonne of ore there is less than 1 tonne of waste. Outside Pit: As previously mentioned both Ekwai (which does not yet have a completed resource) or Koki (which has a resource) sit outside the current pit design at present but provide potential for extension in the future. Comparisons: Highlands is often asked about comparison with some more well known copper projects in Australia. The difference between the two is often hundred of million of dollars. A lot of projects still have a lot more drilling ahead of them. In terms of scale Frieda is possibly bigger than you might think, by way of example. Newcrest/Harmony s Wafi Golpu It Currently stands at 9Mt copper and 26Moz gold, but with aims to double it. Intrepid Tujuh Bukit Recently reported a 990Mt inferred resource at 0.4% Cu and 0.45 g/t Au and looking at double that (target). Intrepid suggest, subject to permitting, the oxide cap would be developed in 2016 and the copper porphyry later this decade. (Frieda should be nearing first copper in 2017.) BOC/Panguna Its indicated resource base is % Cu and 0.37 g/t Au for 3.5Mt copper and 12.7Moz gold. It is number of years away from possible studies and approvals and production. It has undertaken an Order of Magnitude Study, 50 million tonnes of ore per annum, producing perhaps 170,000 tonnes of copper (compared to Frieda s larger 250,000 tpa) and 450,000 ounces of gold (compared to Frieda 380,000ozpa). 11

12 Frieda Copper Gold Project HIT Resource Drilling and Huge Potential for Growth at Depth Hole 280CX09 968metres at 0.5% Cu and 0.4g/t from 10 metres 12 This slide reinforce two points about depth potential and near site potential of Frieda. Depth: The cross section of the pit shows that the ore body starts at the surface and extends well beyond the current constrained pit. The 968m hole marked here was drilled in 2009 and was in mineralization from start to finish. In other words the resource model stops at about 400 metres and yet we have intersections which go down almost a kilometre. It s hard to compare projects, but interesting to note the recent Newscrest/Harmony Wafi Golpu resource has a resource model or envelop down to 1400 metres. Highlands would be very keen to see a resource model for Frieda down to say a kilometre, but we would probably have to concede given it will take at least a decade to have the open pit get down to 200 metres, its not vital to have a model down to a kilometre. Ekwai and Koki The lower graphic on the slide shows the surrounding areas, with Ekwai having no resource yet but intersections over several hundred meters and Koki with a current resource of nearly 300Mt. Being so close to the plant we have no doubt they will be reviewed in the early years of start up. 12

13 Frieda Copper Gold Project Drill Finished 11 drill rigs; people on site 13 Drilling Since exploration began on the Frieda licences (in some cases in the 1980s) more than 1300 holes have been drilled totalling over 270kms of drilling and over US$250M. Rigs/Assays: As part of the BFS, until recently 11 drill rigs were on site and over 400 people on site plus 100 working out of other offices. The drilling rigs have now left site and in July 2010 Highlands announced a new suite of assay results that will go into the resource upgrade and BFS. The new results reported in July this year included an additional 85 holes up to May this year with multiple +1% Cu intersections of more than 100m in length; and many others exceeding 400m of +0.6% Cu and starting close to surface. Resource Upgrade: This drilling is the final piece in Xstrata s drilling as part of resource modeling for study, with an update due in August. 13

14 World Copper Mines 2009 and 2010 Frieda would be in Top today If Frieda Operating Today 250 ktpa Source: Metals Economics Group This slide shows the world s top 15 projects by copper production operating in 2009 & Two important takeaways are 1) Interesting to note that production from 7 of top 10 copper mines fell in 2010 and production fell from about 15 in top 20. Another reminder that sources of supply are not that obvious. 2) If Frieda were operating today it would sit somewhere around 13/14. The Pre feasibility Study released in November 2010 indicated a 60 Mtpa throughput for the first eight years with output averaging 246,000tpa of copper and 379,000ozpa of gold as part of a multi decade operation with cash costs in the lowest 30th percentile of world copper mines. 14

15 Production Profile First 8 Years Average 246ktpa Cu and 379kozpa First 8 yrs Just Year 2 320kt Cu & 570 koz Au $1.7bn pa ($2.50/lb copper and $1000/oz gold) = $2.4bn pa ($3.50/lb copper and $1300/oz gold) $3.1bn = ($3.50/lb copper and $1300/ox gold) Copper (kt) Gold koz This chart reflects the Frieda production assumptions drawn from the pre feasibility study. It may be slightly different in the final feasibility, but in the main a good guide to annual production potential. This shows the annual production with copper (in brown) and gold (in yellow) averaging around 246,000 tonnes of copper metal a year and 379,000 ounces of gold in concentrate for the first 8 years. Its important to look at production profile and what it can mean for cash flow and earnings. Previously mentioned that if Frieda were in operation today would be in top 15, but based on its year 2 copper profile of 320,000 tonnes of copper and 580,000 ounces of gold this would be in the top 10. Assumptions: This slide is also a reminder of how differing assumptions lead to differing values on a project of Frieda s scale. Using US$2.50/lb copper and US$1000/oz gold the Year 2 revenue on 320 tonnes of copper and 580,000 ounces would be US$2.2 billion. If you take today s current commodity and gold prices the revenue in year 2 would be around $3.9bn at current commodity prices ($4/lb copper and $1500/oz gold). That would make a massive contribution to project cash flow, finance etc. 50Mtpa scenario The other key point about the production profile is that the feasibility study assumes harder ore in years 8 onwards and hence the milling rate moves from 60Mtpa to 50Mtpa. I can well imagine the operator/manager in about year 2020 when the project is bedded down looking at further optimizing the resources we have in order to maintain the 60Mtpa throughput. 15

16 Cash Generation Highlands Share At C1 cash costs of 43c/lb in first eight years 20% below Current Prices US$3.50/lb Cu US$1300/oz Au US$ 273M ave. pa Past 5 Years Cu Price US$3.00/lb Cu US$1000/oz Au US$ 212M ave. pa Highlands Price Assumptions US$2.50/lb Cu US$1000/oz Au US$ 169M ave. pa Highlands 18% share First 8 years Copper 45,000 tpa, Gold 69k ozpa # Cash flow assumptions based on C1 cost of US 43c/lb for the first 8 years and US 58c/lb LOM using a US$1000 gold price {US112c/lb and US125c/lb respectively without gold credits}. May Cash Flow Generation: Based on the PFS the C1 cash costs for the first 8 years are very low at US43c/lb (assuming a US$1000/oz gold price) a great level to be at in strong or weak commodity prices. When you consider the current copper prices of over US$4/lb Frieda has a very healthy margin. Highlands share of annual production is 45kt of copper metal and 70koz of gold which at modest prices of $2.50/lb copper and US1000/oz for gold results in free cash flows of US170M before financing each year. At US3.50/lb and US1300/oz gold cash flows increase to more than US$270Mpa. This slide reinforce the point we were making about assumptions. We recognize it is dangerous to pick one year out of a mine plan, but the PFS says in year 2 Frieda would produce 320,000 tonnes of copper and 580,000 ounces of gold. Highlands share of this would be approximately 60,000 tonnes of copper and 100,000 ounces of gold, and at current gold price the cash costs would be negative, in other words the 60,000 tonnes of copper is virtually free.

17 Frieda Copper Gold Project Capex and Timeline Capital cost US$5.3bn (16% contingency) with a 4 year construction Includes US$803m for a hydro electric dam 1:1 Waste Ore Strip Ratio among world s best US$8.68/t ore milled very competitive Pre Feasibility Definitive Feasibility Permitting Construction Commissioning Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 17 The PFS detailed a project with a capex of US$5.3Bn. Included within this is US$800 million for a hydro electric dam which will provide the project with guaranteed cheap power assisting the project to achieve these low C1 cash costs will see the completion of the BFS with 2012 for permitting before construction commencing in 2013 and production in This may seem a way off but don t forget this is a project once started will go for 20 plus years. In terms of other copper projects of scale in the Asia Pacific, I suggest it is well advance and the closest to production. 17

18 Comparable EV/Copper Resource Multiples Developers $0.60 $0.50 EV / Copper Resources (US$ / lb) $0.40 $0.30 $0.20 $0.10 Average: US$0.11 / lb $0.00 Nevsun Copper Canyon Copper Mountain Tiger Resources Ivanhoe Mines Jabiru Metals Discovery Metals Exco Far West Mining Intrepid Mines Rex Minerals Norsemont Mining Augusta Resources Minera Andes Entrée Gold Copper Fox Continental Minerals Marengo Mining Coro Mining African Copper Hana Mining Pacific Booker Avalon Minerals Baja Mining Highlands Pacific Nevada Copper Redhawk Lumina Copper Duluth Metals Candente Peregrine Metals Western Copper Africo Resources Highlands Pacific trades, on average, at a 77% discount to its global copper developer peers on an EV / Copper Resources basis Source: Bloomberg and company information 18 Peer Valuations: Compared to our peers Highlands is trading at a large discount that should improve as the project BFS is completed and that s not far away at a total cost of US$260M. According to analyst research the average multiple of enterprise value per pound of copper resource is around 11c/lb whereas we are currently sitting at around 3c/lb so there is a lot of upside potential. 18

19 Value of Frieda to Highlands Transaction multiples per resource pound of copper + Ramu + Star Mountains + Ramu + Star Mountains Cash $17m Cash $17m US$230m US$247m Highlands share of Frieda worth US$520m* (~A75c/share) Based on 10c/lb Cu eq. Frieda Enterprise Value Market Cap NOW Implied Values * Based on 18.18% ownership in the Nena deposit which is subject to an option by Xstrata Future Value Uplift BFS Completed Ramu Producing Star Mountains Resource 19 Enterprise Value In looking at multiples of enterprise value per pound of copper resource some people overlook the inherent value in the company s non Frieda assets. Namely our Cash at bank of approximately US$17M, our 10 20% interest in the US$1.5Bn Ramu Nickel Cobalt Project and exploration/investment in the Star Mountains area. If you ascribe the market average of say 10c/lb of copper this results in US$ 520 million for Frieda alone (just for the current resources), significantly above our current market capitalisation and as mentioned we still have our other assets Ramu, Star Mountains and cash. 19

20 Star Mountains Project Olgal Drilling Under ELA Copper/Gold Prospects Gold Prospects NB. EL1312 Xstrata has a claw back to 72% on completion of PFS by Highlands STAR MOUNTAINS EXPLORATION PROJECT 20 Star Mountains: Having discussed Frieda now let me turn to an emerging important copper exploration play. Important because the role it can play in keeping PNG s most valuable foreign exchange and export earner, Ok Tedi, alive for many years to come. Emerging because by 2012 we hope to have the first inferred resource. Location: The Star Mountains project area refers to an area 20km north of the famous Ok Tedi copper/gold mine, shallow drilling by Kennecott 40 years ago at two of the twelve targets intersected mineralisation. Leases: Highlands has 3 leases covering this area that has not been drilled since Kennecott got distracted after they discovered Ok Tedi in the late 60 s Targets: There are over 10 targets in the area highlighted on this map and we don t need a huge ore body to justify the cost of construction and infrastructure as the Ok Tedi Mine and Tabubil township exist already and Ok Tedi will start slowing down soon as its current ore reserves become depleted in Highlands is not looking for billion tonne ore bodies that would be required to justify the capital of a new or a standalone project. We are looking for a 200 million to 400 million tonne ore bodies that can provide valuable mill feed to Ok Tedi. Reimburse: Highlands is doing this exploration on its own. Xstrata do have an option to claw back to 72% on completion of a PFS by Highlands, but to do that they would be required to repay Highlands 3 times the costs incurred by Highlands and then financing a BFS by a defined date. 20

21 Star Mountains Project 21 Drilling to date: In 2010 we commenced a drilling program in the Olgal prospect which to date has resulted in 8 holes being drilled (hole 8 is back into the page where hole 7 is located). Plan Ahead: By the end of September we expect to have 3 rigs at site with two focused on the Olgal prospect and one to test other areas. 21

22 Olgal Drill Cross Section A A 22 Olgal Prospect: The results have been very encouraging. Hole 1 200m at 0.5% copper and 0.4g/t gold. Hole 2 intersected nearly 500m at 0.4% copper and 0.2g/t gold. Holes 3,4,5 tested the boundaries of the ore body. Hole 6 intersecting 0.4%Cu, 0.4g/t gold. Hole 7 was drilled to 330m and located the southern edge of the porphry. Hole 8 was drilled to 500m with assays outstanding. Hole 9 currently underway. Resource Modeling With holes and some historical data we would hope to have a JORCcompliant resource by 2012, subject of course to advice from independent experts. 22

23 Olgal Plan 23 Lidar Survey: A Lidar Survey which looks through the forest canopy helps us see the ridges and spur lines of a hill or mountain and helped us determine appropriate drilling location. This image also helps show the initial area of envelope we will be targeting at the Olgal prospect. Area: The Olgal prospect has a nominal area of 800 metres by 500 metres, or some 4000 square metres. This is not a massive area, but sufficient we think in identifying a prospect or target in the moderate scale we are looking for. 23

24 Doppelmayr Conveyor System Potential Ore transport system from Star Mountains to Ok Tedi 24 So we are excited by our success to date but realize that we have a lot more work to do in challenging conditions. Ok Tedi: With the Ok Tedi open pit approaching the end of its current design life there could be excess milling capacity available and a wonderful infrastructure and workforce that relies on this mine for their future and wellbeing. That we are within an economic distance to transport ore to the mill from Olgal may help extend the life of Ok Tedi which is owned by the people of PNG 100%. Infrastructure: The Olgal prospect and the Star Mountains are relatively short by distance to Ok Tedi (20 30kms) but relatively high in altitude (2500metres). Modern technology could be used to its advantage. The technology we are currently considering in preliminary studies is the use of the Dopplemayer aerial conveyor systems (as shown here) that is used successfully elsewhere in mountainous and difficult terrain. One such example in PNG being at the Simberi gold mine. 24

25 Ramu Nickel RAMU NICKEL COBALT PROJECT 25 Now let me turn to our interest in the US$1.5 billion Ramu nickel project. Highlands has an 8.56% interest which can increase to 20.55% after non recourse debt repayment and exercise by Highlands of an option and purchase of such interest at fair value. This project is fully constructed and after a successful court decision in relation to the DSTP system being received recently it now has a clear path to commissioning and ramp up. 25

26 Ramu History and Resource Long life project (+20 years) no recourse to Highlands Reserves and Resource Resource: 143 Ni and 0.1% Co Reserve: Mine Life: 75.7 and 0.1% Co +20 years at 3.4 Mtpa throughput Laterite Ore Limonite/Saprolite Open Pit: Free digging Strip Ratio: Low cost at 0.28:1 strip ratio Slurry: 135km pipeline to Basamuk 26 Kurumbukari Mine: This photo is of the beneficiation plant at the Kurumbukari mine. The Ramu operation is a simple free dig low strip ratio mining with the ore then beneficiated and piped 135km down to a coastal treatment plant in a slurry pipeline. The beneficiation plant is designed to treat 4.6tpa of ore per annum at 40 60% moisture content to provide the 3.3Mtpa (dry) feed to the process plant. The project has 75Mt in reserve equating to 20 years of operation and that same number again in resource to potentially extend the mine life to 40 years C1 cash costs for the project are around US$3.20/lb on payable nickel. 26

27 Ramu Nickel Snapshot Construction almost complete Process and Production Production: 31,150tpa Ni + 3,300tpa Co Process: HPAL with 3 autoclaves Recoveries: 85% Ni and 85% Co Wet versus Dry Laterites Ramu is a Wet Laterite this is different to Dry laterites such as Bulong Cawse, Ravensthorpe, Murrin Murrin. Bottom line is lower cost processing, simplified grade control, lower acid consumption 27 Wet Laterite: The operation is a typical wet laterite, different from the Australian dry laterites that have struggled. Ramu will produce 31kt of nickel and 3,300t of cobalt annually in the form of a mixed hydroxide product. Wet laterites are more typical of the pacific rim ore bodies operating today and have a lower magnesium content which improves handling and leaching characteristics. 27

28 Community Contribution New Homes for Ramu Landowners Houses for the community Enekwai Village at Kurumbakari Mine Site 28 Community This photo is of the Enekwai village at the Kurumbakari Mine site where 30 houses with electricity, sanitation and running water have been built for the local people with more to come. These houses and employment, health and education facilities supported by the project are just some of the benefits that mining and development can bring to these very poor and disadvantaged areas. 28

29 Ramu Nickel Project Progressing to commissioning Madang Offices 29 Madang This is photo of the Madang office complex which will provide admin services for both the mine site and the treatment plant site. Not surprisingly an office and project that will last many decades, this office building is the largest in Madang. Another reminder of economic contribution mining and value adding can make to PNG. 29

30 Ramu Construction and Commissioning Mine, power, pipeline, autoclaves in place Quality Materials of Construction 30 Quality Project: Ramu is a quality project. Lessons have been learned from the Australian nickel experience and the importance of material selection and equipment and component manufacturers. It would be wrong to say Ramu is a gold plated Rolls Royce plant. But it is definitely high quality titanium and stainless steel. The construction process has had all the advantage of Chinese fabrication and labour combined with the expertise and technology of world experts in their field such as Japanese Moromatsu designed autoclaves, Wartsila power plants, Wirth pumps and valves and Volvo all terrain trucks. So the project is the best mix of European and Asian plant and equipment. 30

31 Ramu Nickel Project Progressing to commissioning Basamuk Refinery 31 Basamuk Refinery Finally a photo of the process plant site ready to operate. This is a large site. For scale the wharf on the RHS will take a 50,000 tonne ships. 31

32 In Summary Cash No Debt World Class Deposits World Class Partners Near Production Exploration Potential 32 So in summary Highlands is a company with cash reserves, no debt; Interests in world class deposits with world class partners on the cusp of production; Projects near production and with some exciting exploration potential. 32

33 Contact us Tel Level Eagle Street Brisbane QLD APPENDICES 34

34 Frieda Copper Gold Project PreFeasibility Fundamentals Execution Model Mine Plan LOM of 20 years with an average production of 50Mtpa (60Mtpa for the first 8 years) Resource Based on % Cu and 0.29g/t gold with 40% in Measured and Indicated Pit Within a constrained economic pit US$1.80/lb Cu, US$700/oz Gold Strip Ratio of 1:1 with 28Mt pre strip Mill two grinding circuits each consisting of one 40 SAG mill plus two 26 ball mills each Concentrate Standard concentrator with concentrate piped 74km to Sepik River port Delivery transported 580km by 3,000t barges to silo ship in Bismarck Sea Tailings Co disposal of saturated waste rock and tailings adjacent to in Ok Binai valley Power 160 MW Hydro electric 4 turbines. 111m high dam wall. Full feasibility must be delivered by January 2012 for Xstrata to maintain its JV interest July Disclaimer Ramu Resource The Ramu resource is estimated at 143 million tonnes at 1.01% nickel (Ni) and 0.10% cobalt (Co). The resource report is shown in the Table below: Mineral Resources (excluding +2mm internal rocky material) Category Mt Ni% Co% Measured Indicated Inferred TOTAL Notes: No upper cut off used. Maximum grade (lithology composite) is 3.44% Ni and 0.91% Co. Lower cut off of 0.5% Ni used to define the down hole limit of the overburden. The lower boundary of the rocky saprolite is determined by either the first 1.5 metre boulder intersected or a 3metre intersection of greater than 50% of the volume of the intercept being rock. 1,139 HQ and NG diamond drill holes totalling 22,363 metres, with an average depth of 19.6 metres per hole. Most drilling on a nominal 100 metre by 100 metre grid, with select areas closed down to 25 metres by 25 metres to establish Geostatistical variability. 22,145 drill samples were assayed for Ni, Co and Mg. Selected samples and composites were analysed for Mn, Al, Si, Fe and Cr. Bulk density measurement from 1,550 drill core samples and 12 insitu tests. Face sampling and mapping from two trial mining pits. 60 line kilometres of ground penetrating radar (GPR) survey to map the depth profile of the laterite development between drill holes..in addition to the 2mm material, the Ramu laterite contains 90 Mt of oversize grading 0.44% Ni and 0.01% Co. This material is easy to remove by simple screening The information in this report that relates to Kurumbukari Mineral Resources is based on information compiled by Lawrence Queen, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Queen is a full time employee of Highlands Pacific and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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 Queen consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. July

35 Disclaimer Ramu Reserve Ore Reserves An ore reserve was designated from part of the mineral resource, reported above, during the feasibility study and has subsequently been reviewed and confirmed by SRK Consulting. Category Mt Ni% Co% Proved Probable TOTAL The information in this report that relates to Ore Reserves is based on information compiled by Dr Brian White, who is an Honorary Fellow of The Australasian Institute of Mining and Metallurgy. Dr White is employed by Brian White Mining Services and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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. Dr White consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The ore reserve calculation includes low grade rocks and rock fragments, which are present at the base of the ore body. These rocks and rock fragments, which are considered as internal waste, along with chromite, will be removed at the mine site in the beneficiation plant. July Frieda District Koki Deposit Inferred Resources Koki Deposit Estimated Mineral Resource using a 0.2% copper cut off Koki Deposit Identified Mineral Resource (Inferred) Mt Cu% Au g/t Notes: The Koki deposit has been intersected by 30 drill holes on a nominal 150 m x 300 m grid. The resource information for Koki is based on information compiled by Lawrence Queen, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Queen is a full time employee of Highlands Pacific and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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 Queen consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. July

36 Frieda District Nena Deposit Indicted and Inferred Resources Nena Deposit Identified Mineral Resource (0.5% Cu lower cut off) Category Mt Cu% Au g/t As% Sb ppm Indicated Inferred TOTAL Notes: Copper resource lower cut off grade 0.5% copper, Mineral Resources stated herein are based on the Nena 2008 Conceptual Stage Resource Model These figures are constrained by topography; no economic pit has been applied to constrain the estimate. Numbers have been rounded for tabulation. The information in the report that relates to Mineral Resources presented in Tables 3 is based on information compiled by Mr Raul Roco, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Roco is a full time employee of Xstrata Copper entity. Mr Roco has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the estimation of Mineral Resources to quality 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 Roco consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. July Frieda District Horse Ivaal Trukia Measure, Indicted and Inferred Resources Horse Ivaal Trukai deposit estimated Mineral Resource using a 0.2% copper cut off Category Mt Cu% Au g/t Ag g/t Measured Indicated Inferred Total Notes: Mineral Resources stated are based on HIT 2010, feasibility Study Mineral Resource Model. These figures are constrained by topography and an economic pit calculated with Measured, Indicated and Inferred resources. Numbers may not be exact as they are rounded for tabulation. The information in the report that relates to Mineral Resources presented in Tables 1 is based on information compiled by Mr Raúl Roco, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Roco is a full time employee of an Xstrata Copper entity. Mr Roco has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the estimation of Mineral Resources 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 Roco consents to the inclusion in the report of the matters based on his information in the form and context in which it appears July