Corporate Presentation. January/ February 2011

Transcription

1 Western Areas NL Corporate Presentation January/ February

2 Disclaimer and forward looking statements This presentation is being furnished to you solely for your information and for your use and may not be copied, reproduced or redistributed to any other person in any manner. You agree to keep the contents of this presentation and these materials confidential. The information contained in this presentation does not constitute or form any part of any offer or invitation to purchase any securities and neither the issue of the information nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment on the part of any person to proceed with any transaction. You must not take or transmit this presentation or a copy of this presentation into the United States or Japan or distribute it, directly or indirectly, in the United States or Japan or to any US persons. By your acceptance of this document, you acknowledge that you are a not a U.S. person for the purposes of the US Securities Act. Neither this document, in whole or in part, nor any copy thereof may be taken or transmitted to any other person. The distribution of this document to other persons or in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the federal securities laws of the United States and the laws of other jurisdictions. The distribution of this presentation in other jurisdictions may be restricted by law, and persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions. The information contained in this presentation has been prepared by Western Areas NL. No representation or warranty, express or implied, is or will be made in or in relation to, and no responsibility or liability is or will be accepted by Western Areas NL, employees or representatives as to the accuracy or completeness of this information or any other written or oral information made available to any interested party or its advisers and any liability therefore is hereby expressly disclaimed. No party has any obligation to notify opinion changes or if it becomes aware are of any inaccuracy in or omission from this presentation. All opinions and projections expressed in this presentation are given as of this date and are subject to change without notice. This document contains forward-looking statements. These statements are subject to certain risks and uncertainties that could cause the performance or achievements of Western Areas NL to differ materially from the information set forth herein, although such information reflects forecasts and projections prepared in good faith based upon methods and data that are believed to be reasonable and accurate as at the dates thereof and although all reasonable care has been taken to ensure that the facts stated herein are accurate and that the forward-looking statements, opinions and expectations contained herein are based on fair and reasonable assumptions. Western Areas NL undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances. Individuals should not place undue reliance on forward-looking statements and are advised to make their own independent analysis and determination with respect to the forecasted periods, which reflect Western Areas NL s view only as of the date hereof. The information within this PowerPoint presentation was compiled by Mr. Julian Hanna and the information as it relates to mineral resources and reserves was prepared p by Mr. Dan Lougher and Mr. John Haywood. Mr. Hanna, Mr. Lougher and Mr. Haywood are full time employees of Western Areas. Mr. Hanna, Mr. Lougher and Mr. Haywood are members of AusIMM and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Hanna, Mr. Lougher and Mr. Haywood consent to the inclusion in this presentation of the matters based on the information in the form and context in which it appears. For Purposes of Clause 3.4 (e) in Canadian instrument , the Company warrants that Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. THIS PRESENTATION IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S. 2

3 Western Areas Summary & Global Nickel Industry 3

4 Agenda Western Areas Summary and the Global Nickel Industry Operations Flying Fox Spotted dquoll Concentrator Quarterly Operational Performance Exploration & Growth Strategy & Outlook WSA Board back row: Joe Belladonna (Company Secretary), Rick Yeates (non exec), Robin Dunbar (non exec), David Cooper (non exec), Dan Lougher (Operations), front row: Julian Hanna (Managing Director), Terry Streeter (Chairman). Absent: David Southam (Finance). 4

5 Corporate Summary Listings: ASX & TSX Shares on Issue: 179.7m Options: 7.4m (at varying strike prices >$7.00) Share Price: $6.66 (13 January 2011) Market Cap: $1,197m (undiluted) Top 15 Shareholders % 1T Streeter M & A Greenwell Commonwealth Bank Paradice Investment Management Giovanni Santalucia Northward Capital Aviva Investors Oppenheimer Funds Ausbil Dexia Independent d Asset Management Mt Kellet Capital Management Vanguard Investments Front Street Capital AMP Capital Investors Goldman Sachs Insitutional 1.37 TOTAL WSA 12 Month Share Price $7.00 RSPT $6.50 announced $6.00 $ $5.00 $4.50 $4.00 $3.50 Spotted Quoll $3.00 Cosmic Boy upgrade $2.50 $2.00 Closing Share Price 5

6 The Business Assets Dominant position in 500km long nickel province in Western Australia 100% of two of the highest grade, lowest cost nickel mines in the world 20% of Canadian Nickel Company, Mustang Minerals Corp 75% on Finland Nickel Company, FinnAust Mining Plc Dominant position in major nickel/zinc/copper province in Finland 100% BioHeap sulphide leaching process to process low grade ores Core Business Australia s 3rd largest nickel miner. 25,000tpa Ni production 10 Years mine life based on current resources and reserves Nickel concentrate plant plus all major surface infrastructure Diversified offtake contracts in Australia and China Unrivalled exploration potential for new nickel sulphide discoveries People Experienced management, exploration, mining and processing team Two major Australian awards for exploration and mining Company Growth Next 12 Months Increase ore reserves Flying Fox and Spotted Quoll to >10 years Commence development of Diggers South Mine Discover new high grade nickel deposit at Forrestania Confirm potential of Sandstone JV Project as a new nickel camp List FinnAust Mining Plc (75% WSA) for Finland assets 6

7 The Nickel Industry AUSTRALIA CANADA CHINA RUSSIA FINLAND BRAZIL 3 nickel camps 4 nickel camps 1 nickel camp 2 nickel camps 1 nickel camp 1 nickel camp AFRICA BHP BILLITON VALE INCO JINCHUAN NORILSK NORILSK VOTORANTIM BCL XSTRATA JILIN JIEN 1smelter 4 smelters 3 smelters 4 smelters 1 smelter 1 smelter 1 smelter Western Areas Mustang * (100% WSA) (19.9% WSA) Talvivaara Mirabela Norilsk Independence Mincor FNX FinnAust Mining (75% WSA) Xstrata * Panoramic Liberty * Victory Nickel* Continental Xstrata C. Royalties * Noront 1 colour coded for offtake party 2 * project : commissioning or feasibility stage Independence 7

8 Nickel Supply and Demand 1. Conventional Nickel Sulphide 2010e 2011e 2012e 2013e 2014e Mature nickel camps contribute ~50% global production NO MAJOR NEW DISCOVERIES 2. Sulphide Bacterial lleaching Talvivaara in Finland is first large scale commercial mine. GLOBAL NICKEL PRODUCTION 1,449 1,578 1,691 1,818 1,938 World Mine Capacity 1,511 1,652 1,771 1,903 2,030 World Mine Production Growth Rate GLOBAL NICKEL CONSUMPTION 1,437 1,542 1,636 1,716 1,790 Primary Nickel in Stainless 998 1,074 1, , ,241 Primary Nickel in Non Stainless World Nickel Usage Growth KEY: LOW CAPEX, LOW ENERGY CHINA NICKEL CONSUMPTION Nickel Laterite Laterite & Ferro Nickel contribute ~40% global production KEY: HIGH CAPEX = HIGH COST USA W Europe ROW Nickel iklpig Iron Chinese nickel pig iron, 10% global production. Announced cut backs KEY: ENERGY INTENSIVE 8

9 Operations 9

10 Western Australia Nickel Provinces Nickel processing & sales 100% Western Areas Owned FORRESTANIA NICKEL PROJECT Current Mineral Resources: 2.0% Nickel (340,440 tonnes nickel) Current Ore Reserves: 3.3% Nickel (172,220 tonnes nickel) 10

11 Flying Fox Mine Flying Fox Summary Continuous high grade Ni to 1300m. Open at depth Mine decline currently at 1030m vertical depth Probable Ore Reserve 5.7% Ni containing 58,370t Nickel Ore grades increase at depth thfrom 39%t 3.9% to 59%Ni 5.9% Current Production T4 Deposit fully developed, in production 7,860t nickel in high grade (4.0% Ni) Ore Reserve Lounge Lizard KZL Agreement for 50,000tpa ore T5 Deposit: Commenced production Best Intersection: 9.3% Ni in ore reserve 50,560t Ni (5.9% Ni) Ore Reserves Additional Exploration & Resource Upside Resource extension potential north and below T5 Drilling in progress to test T6/ T7/ T8 T6/ T7/ T8 Best tintersection to dt date % 51%Ni in T7 11

12 Flying Fox Mine Massive Sulphide at T5 Flying Fox 12

13 Spotted Quoll Mine Probable Ore Reserve Open Pit Mine 4.9% Ni containing 12,490t Nickel Target cash cost : US$2.00/lb Ni Probable Ore Reserve Underground mine 4.1% Ni containing 70,200t Nickel Target cash cost : US$2.70/lb Ni Decision to Mine Underground made 15 Dec 2010 NiPrice US$/lb $6.00 $8.00 $10.00 $12.00 Exchange Rate US:AUD NPV(BT) A$90M A$184M A$297M A$385 IRR(BT) 41% 67% 96% 116% C1 Cost (US$/lb Ni in Conc.) $2.29 $2.57 $2.71 $2.86 TOTAL NET CASH A$ M $162M $320M $500M $640M Target >10 years mine life, >10,000tpa nickel to 2020 Drilling for Extensions 400m Below Mineral Resource Best intersection to date: 6.5m Ni 13

14 Spotted Quoll Mine Open Pit at 31 December

15 Forrestania Nickel Concentrator Concentrator Summary Plant upgrade project delivered on time and budget Current capacity of 550,000tpa of ore Nickel concentrate output >25,000tpa Expansion configured for Stage 3 upgrades to 1mtpa Concentrate grades of around 14.0% Ni Averaging 90% recovery (ahead of plan) 14,000t of concentrate storage capacity Excellent infrastructure & close to Esperance Port Well established Logistics contract to Port, BHP & Minara Access to >1000 sealed shipping containers Utilising 25 trucks for concentrate transportation 15

16 Nickel Offtake Contracts Spotted Quoll oxide ore Forrestania Concentrate Minara, Murrin Murrin Total l25,000 tonnes Ni Jinchuan Smelter GANSU, CHINA 10,000 tpa Ni BHP Billiton Smelter Kalgoorlie, WA Significant uncommitted nickel concentrate expected from

17 Quarterly Operational Performance 17

18 Delivery of our Targets Following Targets were detailed in WSA s September 10 Quarterly Report : Maintain high production levels from two operating mines & increase resources: Record half year mine & mill production On track to exceed full financial year production guidance of 25,000t Ni in ore Drilling at Flying Fox below T5 very favorable with high grade intersects Spotted Quoll UG feasibility completed US$6.00/lb Ni) Increase rate of nickel sales to China: Record shipments to Jinchuan (6,785t Ni in five months) with increased container & logistics capacity Discover and develop new high grade nickel deposits at Forrestania: Increased investment in exploration program announced Multiple drill rigs at Forrestania and regional targets (eg Sandstone) Maintain regular dividend payments to shareholders: Interim dividend for six months to 31 December 2010 expected to be announced in February Mine production for the 12 months ended 31 December was 26,281 tonnes (57.9M lbs) nickel in ore compared with guidance of 20,000 tpa for CY 2010 and cash costs were US$2.02/lb nickel in concentrate compared with guidance of US$2.50/lb 18

19 December Q 2010 Performance Highlights 7,959t Ni in ore production averaging 5.2% Ni (16,261t Ni for 1H 2010/11): On target to exceed full year guidance of 25,000t Ni in ore 6,061t Ni higher (+59%) than 2H 2009/10 5,602t Ni in concentrate sold (11,752t Ni for 1H 2010/11): On target to exceed full year guidance of 22,000t Ni in concentrate 6,760t Ni higher (135%) than 2H 2009/10 Improved grades and higher h throughput; h t following the concentrator t expansion, drive di performance A$2.01/lb cash cost (US$1.99/lb using 0.99 exchange rate for the quarter): WSA continues to be the lowest cash cost producer in Australia Cash at Bank of $123.5m, plus $33.2m in nickel receivables Convertible bond due in July 2012 successfully restructured new profile of all bonds as follows: $105.5m due in July 8.0% coupon (converts $8.16) $110.2m due in July 6.4% coupon (converts $7.71) $125.0m due in July 6.4% coupon (converts $6.61) 5,936t Ni in Stockpiles of ore and concentrate at cost of $27.8m. In situ value of $143m (prior to processing, smelting & transportation charges) 19

20 ) December Q 2010 Summary 2009/ /2011 FYTD Tonnes Mined Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Total Flying Fox Ore Tonnes Mined Tn's 53,618 67,072 91,437 84,935 96, ,570 Grade Ni % 3.3% 4.5% 4.0% 4.0% 4.6% 4.3% Ni Tonnes Mined Tn's 1,776 2,990 3,697 3,363 4,459 7, % 6.0% 5.0% Milled Grade & Cash Cost A$/lb Spotted Quoll Ore Tonnes Mined Tn's 6,293 46,258 66,978 56, ,674 Grade Ni % 0.0% 3.5% 6.7% 7.4% 6.2% 6.8% Ni Tonnes Mined Tn's 220 3,113 4,939 3,500 8,439 Grade % 4.0% 3.0% 2.0% A$/lb Total Ore Tonnes Mined Tn's 53,618 73, , , , ,244 Grade Ni % 3.3% 4.4% 4.9% 5.5% 5.2% 5.3% Total Ni Tonnes Mined Tn's 1,776 3,210 6,810 8,302 7,959 16, % 0.0% Tonnes Milled and Sold Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Total Ore Processed Tns 64,985 61,662 83, , , ,569 Grade % 3.1% 4.2% 4.5% 5.7% 5.4% 5.6% Ave. Recovery % 88% 92% 88% 89% 90% 89% Ni Tonnes in Concentrate t Tns , , , , ,976 12,654 Dec Qtr 2009 Mar Qtr 2010 Jun Qtr 2010 Sep Qtr 2010 Dec Qtr 2010 Milled Grade % Cash Cost Ni in Con Ni Tonnes in Concentrate Sold Tns 3,091 2,444 2,307 6,151 5,602 11,753 Ni Tonnes in Ore Sold Tns ,494 Total Nickel Sold Tns 3,091 2,444 2,548 7,138 6,109 13,247 Stockpiles Sep Qtr Dec Qtr Ore Tns 73,293 92,405 Grade % 46% 4.6% 44% 4.4% Concentrate Tns 11,386 13,052 Grade % 14.1% 14.1% Contained Ni in Stockpiles Tns 4,977 5,936 Financial Statistics Dec Qtr Mar Qtr Jun Qtr Sep Qtr Dec Qtr Total Group Production Cost/lb Mining Cost (*) A$/lb Haulage A$/lb Milling A$/lb Admin A$/lb By Product Credits A$/lb (0.21) (0.02) (0.03) (0.02) (0.02) (0.02) Cash Cost Ni in Con (***) A$/lb Cash Cost Ni in Con/lb (***) US$/lb (**) Ore Tonnes Mined (Ktn's) Mined Grade & Ore Tonnes Dec Qtr 2009 Mar Qtr 2010 Jun Qtr 2010 Sep Qtr 2010 Dec Qtr 2010 Ore Mined Tns Ore Mined Grade % 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% Grade % Exchange Rate US$ / A$ (*) Mining Costs are net of deferred waste costs and inventory stockpile movements (**) US$ FX for Relevant Quarter is RBA ave daily rate (Dec Qtr = A$1:US$0.99) (***) Payable terms are not disclosed due to confidentiality conditions of the offtake agreements. Cash costs exclude royalties. Note. Grade and recovery estimates are subject to change until the final assay data are received. Note. All reported numbers in this table exclude Lounge Lizard.. 20

21 Nickel Sales past 6 months Commentary Record six months for nickel sales Includes 49,160t of concentrate containing 6,785t Ni (15.0M lbs) exported to Jinchuan. Over 1000 container capacity with increased logistics capability from mine to port. Concentrator performing above expectations with recoveries (89%) and tonnage throughput Strength of customer diversity is major differentiator from other WA nickel companies All numbers quoted exclude Lounge Lizard and payability 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 12,730 Concentrate Tonnage Sold 2nd Half 2010 Cumulative Jinchuan BHP 28,084 43,890 49,768 64,820 84,687 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 2,057 Nickel Tonnage Sold 2nd Half 2010 Cumulative Minara Jinchuan BHP 4,520 7,138 8,264 10,537 13,247 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 21

22 Exploration & Growth 22

23 Exploration Exploration Budget increased 30% to A$20M for 2011, majority to be spent on drilling Outstanding track record for discoveries using sophisticated geophysical and drilling techniques 100km strike length of prospective Forrestania Nickel Project, within 500km long nickel province Drilling Priority within 8km long zone (below). New discovery would access existing mine infrastructure Drilling in progress at Spotted Quoll Deeps and testing T6, T7 and T8 deposits below Flying Fox 23

24 Diggers South Planned underground mine Summary Feasibility Study and surface works complete Major dewatering infrastructure in progress Existing mine development to access higher grade Core Zone (red) $25M spent on exploration & infrastructure Approx $100m capex required to fully develop mine and 1.0Mt plant expansion 2011 Drilling & Development Program Target: to increase ore reserves > 60,000t Ni Target: Sustainable production 6,000tpa Ni Find strategic partner to help fund project 24

25 Regional Exploration eg: Sandstone JV Comments WSA earning 70% of nickel rights to the Sandstone with Troy Resources Targeting a major new nickel camp with potential ti lfor multiple l mines One of largest areas of untested nickel prospective ground in Western Australia Very encouraging early results with nickel intersected in 2010 Major step up in drilling and geophysical program underway in the March Q 25

26 FinnAust Mining Plc Finland based exploration company being prepared for AIM listing in % owned by WSA, 25% owned by Finland investors Dominant position in a major, underexplored mineral province in central Finland >50 Targets identified with 14 high priority targets to be drilled in 2011 Targeting Talvivaara, Outokumpu and Volcanic Massive Sulphide type deposits Initial mineral resource established at Rautavaara R1 deposit with significant nickel and zinc 5 7m pre IPO seed funds planned to be raised from Finnish and UK investors in February 2011 Intention to use BIOHEAP leaching technology, similar to that used by Talvivaara Mining Plc 26

27 FinnAust Mining Plc 14 Priority Drilling Targets Talvivaara Type Outokumpu Type 27

28 Talvivaara Mining PLC Talvivaara Snapshot Europe s largest Nickel sulphide deposit. World s largest bacterial leaching nickel operation Rapid progress: Incorporated 2003, IPO 2007, first production Production targets: ,000 tpa nickel, 30,000 tpa zinc ,000 tpa nickel, 90,000 tpa zinc (target cash cost US$2.20/lb) 450 Reported first operating profit of EUR 10.9 million for Q Nov Market Cap ~ GBP billion in LSE Talvivaara 12 Month Share Price Daily Share Price Second hydrogen plant to increase capacity of nickel and zinc to reach TALV targets of 50,000tpa Ni &100,000tpa Zn Talvivaara out performed all other nickel stock in the last 6 months FinnAust Mining Plc can provide investors with an opportunity with similarities to the Talvivaara story 28

29 Mustang Minerals Corp WSA owns a strategic stake in Mustang Minerals Canadian based nickel company Mustang has successfully raised C$6.7M: WSA ownership increased to 19.9% (C$1.76m contribution) Funds used to purchase a 2 nd hand base metals plant and accelerate feasibility and drilling Technical support and input from WSA to assist development of Makwa nickel mine WSA Operations Director Dan Lougher to join Mustang Board (2 out of 6 are WSA reps) Makwa Deposit: Nickel and Copper Sulphides in drill core 29

30 Targets, Strategy & Outlook 30

31 Targets, Strategy & Outlook Targets and Strategy WSA to become the established No.2 nickel producer in Australia (No.1 BHP) Long life production assets to sustain +25,000tpa Ni in ore production over 10 years. Remain bottom quartile cash costs Develop high value international projects such as FinnAust and Mustang Minerals Take a considered and disciplined approach to strategic acquisition opportunities Outlook 2 nd half expected to be another strong period Full Year operational targets are likely to be exceeded Exploration updates in Q3 & Q4 as activity is ramped up Substantial cashflow producing company: Reliable and progressively increasing dividend stream Debt fully covered & balance sheet flexibility Surplus cash directed to growth (increased exploration spend to $20m pa) 31

32 The End 32