AMENDED MANAGING DIRECTOR S AGM PRESENTATION

Transcription

1 HIGHLANDS PACIFIC LIMITED ARBN Incorporated in Papua New Guinea Registered Office Registered Office in Australia PO Box 1486, Port Moresby NCD 121 GPO Box 3086, Brisbane QLD 4001 Papua New Guinea Australia Level 1, Allotment 6, Section 58, Sir Level 4, 167 Eagle Street Hubert Murray Highway Boroko NCD Brisbane Qld 4000 Papua New Guinea Australia Telephone: (675) Telephone: (617) Facsimile: (675) Facsimile: (617) Website: 23 May 2008 AMENDED MANAGING DIRECTOR S AGM PRESENTATION Attached is the Managing Director s Annual General Meeting presentation released yesterday. It has been amended to include the Resource and Reserve tables for the Ramu and Frieda River projects in accordance with the JORC code. The tables are as previously published by the Company in announcements to the Exchange and also as previously published in annual reports for the last several years. There is no change to the reserve and resource tables. For further information contact: Mr John Gooding or Mr Craig Lennon Managing Director Chief Financial Officer Highlands Pacific Ltd Highlands Pacific Ltd Phone: (61 7) Phone: (61 7)

2 Managing Director s Presentation Annual General Meeting Port Moresby PNG May 20 th 2008 Level 4, 167 Eagle Street, Brisbane Australia Website: Contact:

3 2007 Review Current Projects and activities Looking forward 2

4 Kainantu Gold Mine New management team recruited and mobilised Reviews by in-house and contract experts Implementation of strategies to improve performance Targeted increased gold production to offset cash flow issues Tonnes mined in the second half increased by 56% Gold production increased by 56% over first half year Concentrate grade increased by 101% over first half 3

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8 Ramu sale process was not going to happen quickly enough to offset cashflow issues and pending bank repayments Kainantu s improved production not enough to offset the increasing debt due to gold hedge book Interest from a number of majors in the surrounding exploration licences led to in depth discussions with Barrick Gold Tight timetables due to debt, and Barricks commitment to sale & PNG allowed for quick commercial and legal process Settlement occurred 2 days before bank holiday (14 th Dec) 240,000 ounce gold purchase in October saved HPL a further US$13.5 million by settlement date 12 th December Debt and hedge book fully repaid leaving US$24million in cash with a further US$7million to be paid on transfer of two remaining EL s 7

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10 Lateritic nickel project. Joint ventured with China Metallurgical Construction Corporation. *Ramu resource is estimated at 1.01%Ni 0.10% Co **Ore Reserve of 0.91%Ni, 0.10% Co 20 year plus mine life. HPL interest 8.56% carried to production, right to claw back to 11.3% free and to 20.55% at fair market value. MRDC & Landowners 6.44% interest. * Refer to Resource Table provided in this presentation for breakdown of resource categories. ** Refer to Reserve Table provided in this presentation for breakdown of reserve categories 9

11 Debt funding arranged and secured by MCC. Non recourse to other Joint Venture partners. Project will be financed by approx 70% debt & 30% equity. Finance from Chinese banking institutions approx 40% and 30% provided by way of a shareholder loan from the Chinese Syndicate involved in the project. Repayable over 10 years. Equity funding free carry. Joint Venture enjoys a 10 year tax holiday. Capex USD 1.37B. (Including financing costs during construction). Production due to commence the second half of

12 Ramu Project Participants China Metallurgical Group Corporation (MCC) MCC JJJ Mining Development Company Limited (MCC JJJ) Ramu Nickel Limited ( RNL ) Highlands Pacific Group Limited Mineral Resources Ramu Limited ( MRRL ) Mineral Resources Madang Limited ( MRML ) MCC Ramu NiCo Limited Jinchuan Group Limited ( Jinchuan ) Jilin Jien Nickel Industry Corporation Limited ( Jilin ) Jiuquan Iron and Steel Group ( Jiuquan ) MCC (61%) Jinchuan (13%) Jiilin (13%) Jiuquan (13%) MCC JJJ MCC Ramu NiCo Limited (85.0%) RNL, a wholly owned subsidiary of HPL (8.56%) MRRL, a wholly owned subsidiary of MRDC (3.94%) MRML, a project area landowner company (2.50%) Ramu Nickel & Cobalt Project 11

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14 Ramu Project Environment & Community All environment approvals received. Deep sea tailings placement plant plan approved. Comprehensive Terrestrial & Marine Baseline Studies completed. Community support through projects such as health programs, road links, Ramu bridge, construction of church buildings, community halls and other community support infrastructure at Maigari & Basamuk, school upgrade and teacher support, supporting local sport etc. Construction phase for schools, hospitals and other public facilities. Social & Economic Development plan to be implemented. Training and employment for Nationals up to 580 job opportunities to be offered. 13

15 Ramu Project Tailings Sediment Discharge into the Vitiaz Bas Submarine Canyons off Basamuk 14

16 Highlands Share of Project Cash Flow 2010 and Beyond Nickel Price USD 7/lb (currently USD 12/lb) Cobalt Price USD 20/lb (currently USD 48/lb) Operating cash costs USD 2.50/lb Projected Annual Production 31,150T Ni 3,300T Co 15

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25 Large open cut copper/gold porphyry. Resource at Frieda is estimated to contain approximately 16.7 billion pounds of copper (7.5Mt Cu) and 14.3 million ounces of gold. Nena, 0.5g/t Au * Porphyries, 0.5%Cu, 0.3g/t Au** Enormous upside Ekwai*** 0.5g/t Au. *indicated and measured resource, 0.2% Cu cutoff (refer to Resource Table provided in this presentation for breakdown of resource categories). **indicated and inferred, 0.2% Cu cutoff as previously reported by HIG (refer to Resource Table provided in this presentation for breakdown of resource categories). *** DDH 097NOR06. Nena - HPL 88% OMRD 12% Greater Frieda Xstrata 73.7%, HPL 16.4%, OMRD 9.9% 24

26 Scoping Study completed. Development timeline in place (assuming hurdles are met). ACTIVITY ExtendedScope Pre-feasibility Feasibility Detailed Eng. Construction Production USD $25M spend in 2008, 2009 and 2010 accelerated spend. USD $10M spent in ,000 metres of exploration drilling on the project to date with a further 20,000 metres planned in 2008, including 16,000 metres of infill drilling in the Horse-Ivaal-Trukai pit. Estimated project capex $2.6B. 26 year mine life. Production averaging 190,000T copper metal, 295,000 oz gold pa. 25

27 Frieda River Project - Copper Price Sensitivity NPV (10%) US$m Real 1, (200) (400) (600) (800) Flat Copper Price US$/lb (Gold at US$500/oz flat) NPV USD 10% discount rate. USD 2.00 lb USD700 oz. IRR -17.7% payback years (undiscounted)3.5 years. Average C1 (real) over 26 years USD 0.84 lb payable copper (Cu). 26

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32 Located within the historic Wau-Bulolo Goldfield. Within 5 km of Kerimenge, Hamata and Hidden Valley deposits. (5M oz Au) Although a small EL it contains two significant high-grade shallow level epithermal Au prospects Yangalemu and Kobiak. Estimated exploration budget USD $1 1.5M for Unusual for PNG as both prospects are within 5 km of existing roads. EL 1340 Lae WAU-BULOLO Port Moresby Yangalemu Hill showing scars from small-scale mining activity 31

33 Hole From (m) To (m) Interval (m) Au (g/t) YD YD YD YD Historical Drill results from

34 The Company s current share of the resource base reported for its Project and Joint Ventures is: 3 million oz of gold. 5 billion pounds of copper. 275 million pounds of nickel. 27 million pounds of cobalt. Listed on ASX & POMSox. Post Kainantu sale effectively USD$30 million in cash, no debt or hedging. JV Partner in the world class Ramu nickel cobalt project currently under construction. JV Partner in the Frieda River copper/gold project being operated by Xstrata Copper. 33

35 Highly potential PNG exploration ground at Wau- Bulolo Graben close to the Hidden Valley Mine and the Wafi Gold Project being developed by Harmony Gold and their new partner Newcrest Mining Limited Ability to now consider M&A opportunities Cash a good springboard for growth Current fiscal climate favorable Commodities - copper/nickel/gold Possible geographic spread Australia, Asia/Pacific region Target assets that provide a superior return on shareholders equity 34

36 RAMU ACHIEVED FUTURE GOALS onwards 2029 Lateritic Nickel 20 plus year mine life Construction underway & accelerated development. $240M USD spent to date. Production due to commence second half of year 8.56% HPL equity 2,667t Ni 280t Co Per annum production before electing to increase up to 20.55% FRIEDA ACHIEVED FUTURE GOALS Mine life extension Copper/Gold 26 year mine life 2008 Scoping Study completed $25M USD spend 2010 Accelerated spend 2011 Feasibility Study completed Construction commences Future Growth: - New discoveries through exploration programs - Mergers/acquisitions - Floats/JV s Production commences avg 190,000t pa copper, 295,000 oz pa gold 2042 Possible extension of mine life Resources: - Good cash reserves - Exploration upside - Low production costs - Experienced and dedicated team 35

37 Highlands Pacific (HPL) - a company with no debt or hedge book. A core portfolio of valuable assets in Ramu Ni/Co Project and Frieda River Copper/Gold Project. Cash USD $24m. Ability to undertake M & A opportunities. Cashflow/equity to commence from Ramu in Committed timeline for Frieda and increased spending levels forecast. Focused and experienced Board and Management team. Current share price does not reflect fundamental value of underlying assets or resource inventory. 36

38 This presentation has been prepared by Highlands Pacific Group Limited (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 Pacific Group Limited 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. Throughout the presentation all figures are quoted in AUD & USD unless otherwise stated. You should not act or refrain from acting in reliance on this presentation material. This overview of Highlands Pacific Group Limited 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. 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 the report to which this statement is attached that relates to Exploration Results is based on information compiled by L D Queen, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Queen is a full-time employee of the company 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. 37

39 RESOURCE The Nena, Horse/Ivaal/Trukai and Koki deposits are now estimated to collectively contain approximately 16.7 billion pounds (7.5 million tonnes) of copper and 14.3 million ounces of gold. The resources at the Nena and Frieda River deposits are summarised in the tables below, both are shown at a 0.2% and 0.5% copper lower cutoff grade: Nena Deposit Identified Mineral Resource (0.2% Cu lower cut off) Nena Deposit Identified Mineral Resource (0.2% Cu lower cut off) Measured Indicated Inferred Total Resource Style Mt Cu% Au g/t Mt Cu% Au g/t Mt Cu% Au g/t Mt Cu% Au g/t Gold resource Copper resource Notes: 1. Copper Resource lower cut off grade 0.2%, Gold resource lower cut off grade 0.6 g/t Nena Deposit Identified Mineral Resource (0.5% Cu lower cut off) Nena Deposit Identified Mineral Resource (0.5% Cu lower cut off) Measured Indicated Total Resource Style Mt Cu% Au g/t Mt Cu% Au g/t Mt Cu% Au g/t Copper resource Notes: 1. Copper Resource lower cut off grade 0.5% copper. 2. The Nena copper resource estimate is based on, and accurately reflects information compiled by Stan Clemmer, who was formerly employed by Falconbridge and has relevant experience sufficient to qualify as a competent person as defined in the Australian Code for Reporting of Identified Mineral Resources and Ore Reserves 1999 Mr Clemmer consents to the inclusion in this report of the Nena resource estimate.

40 RESOURCE Horse/Ivaal Deposit/Tru Kai Identified Mineral Resource (0.2%Cu lower cut off) Horse / Ivaal Deposit / Tru Kai - Identified Mineral Resource (0.2% Cu lower cut off) Indicated Inferred Total Mt Cu% Au g/t Mt Cu% Au g/t Mt Cu% Au g/t Horse/Ivaal Deposit/Tru Kai Identified Mineral Resource (0.5%Cu lower cut off) Horse / Ivaal Deposit / Tru Kai - Identified Mineral Resource (0.5% Cu lower cut off) Indicated Inferred Total Mt Cu% Au g/t Mt Cu% Au g/t Mt Cu% Au g/t Notes: The Horse/Ivaal/Tru Kai resource is reported at a 0.5% Cu and a 0.5% Cu lower cut off grade. The constraining envelope and mineralisation domains are based on 221 diamond and percussion drillholes. Drill section spacing is generally 150 m N-S with infill drilling on 75m spacing in a portion of the Horse deposit. Hole spacing on section is variable but is commonly at 150m centres. Constraining envelopes for grade estimation are based upon lower cutoff s of 0.2% and 0.5% copper. Dry bulk density has been assigned according to domains and adjusted with depth based on results from 1,833 determinations. Assay data within the constraining envelope comprises over 12,457 samples. The resource estimate is quoted as dry tonnes and grade. Raw sample data has been composited to 2 m prior to the interpolation of grade to parent block cell. Outlier values are controlled by applying percentile top-cuts for gold and copper. Block model cell size is 25 m N-S, 25 m E-W and 15 m RL. Ordinary kriging has been used to assign grade values to model cells. Data integrity, drill hole spacing, the number of holes on a section, and kriging variance were used to classify the resource as Indicated or Inferred.

41 RESOURCE Koki Deposit Identified Mineral Resource Koki Deposit Identified Mineral Resource (Inferred) Mt Cu% Au g/t Note: 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, and accurately reflects, information complied by Mr I R Holzberger, Mr L D Queen and Mr S P Hitchman who are Members of the Australasian Institute of Mining and Metallurgy. Mr Holzberger and Mr Queen are employed by Highlands Pacific while Mr Hitchman was a former employee, all have relevant experience in relation to the mineralisation being reported on to qualify as Competent Persons as defined in the Australasian Code for reporting of identified mineral resources and ore reserves Mr Holzberger, Mr Queen and Mr Hitchman consent to the inclusion in this report of the summary Horse/Ivaal resource estimate. The Horse/Ivaal/Trukai resource estimate is based on, and accurately reflects, information complied by Mr Craig MacDougall and Mr Stefan Mujdrica who are Members of the Australasian Institute of Mining and Metallurgy. Mr MacDougall supervised the validation of the digital databases and interpretation of the geological model and Mr Mujdrica supervised the construction and reporting of the resource model. Mr MacDougall was employed by Noranda Pacific while Mr Stefan Mujdrica is employed with Snowden Mining Industry Consultants, all have relevant experience in relation to the mineralisation being reported on to qualify as Competent Persons as defined in the Australasian Code for reporting of identified mineral resources and ore reserves Mr MacDougall and Mr Mujdrica consent to the inclusion in this report of the summary Horse/Ivaal/Trukai resource estimate

42 Disclaimer Ramu Resource 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) Resource Style Mt Ni% Co% Measured Indicated Inferred TOTAL Notes: 1. No upper cut off used. Maximum grade (lithology composite) is 3.44% Ni and 0.91% Co. 2. Lower cut off of 0.5% Ni used to define the down-hole limit of the overburden. 3. The lower boundary of the rocky saprolite is determined by either the first 1.5 metre boulder intersected or a 3 metre intersection of greater than 50% of the volume of the intercept being rock. 4. 1,139 HQ and NG diamond drill holes totalling 22,363 metres, with an average depth of 19.6 metres per hole. 5. 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 ,145 drill samples were assayed for Ni, Co and Mg. Selected samples and composites were analysed for Mn, Al, Si, Fe and Cr. 7. Bulk density measurement from 1,550 drill core samples and 12 insitu tests. 8. Face sampling and mapping from two trial mining pits line kilometres of ground penetrating radar (GPR) survey to map the depth profile of the laterite development between drill holes. 10. 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. 11. The resource estimate was prepared under the supervision of Dr Francois-Bongarçon, a Competent Person in accordance with the Australasian Code for the reporting of identified mineral resources and ore reserves, 1996 (the JORC code). Dr Francois-Bongarçon was employed by Mineral Resource Development, Inc. of San Mateo, California. Dr Francois-Bongarçon has consented to the inclusion of the Ramu resource estimate in this report

43 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 This reserve information is based on and accurately reflects information compiled by Mr Tauno Isokangas and Dr Brian White who were both employed by Tennant Isokangas Pty Ltd and who qualify as Competent Persons as defined in the Australasian Code for the report of mineral resources and ore reserves. Mr Isokangas and Dr White have consented to the use of the Ramu reserve estimate in this report. 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 resulting autoclave feed grade will be 1.09% nickel and 0.11% cobalt.