An Industry at Risk? Project Finance in the Mining Sector

Transcription

1 An Industry at Risk? Project Finance in the Mining Sector Presented by: Masuma Farooki International Study Groups April 24, 2013 About IntierraRMG Exploration Success 30 years leadership in data, mapping, analysis and reporting. Lease ownership, company evaluations, M&A, due diligence, production statistics and project pipeline. Market and project reports, material flows analysis and mineral economics policy Raw Materials Group is the consultancy unit of IntierraRMG Disclaimer: IntierraRMG makes reasonable and diligent efforts to obtain accurate information for our clients and presentations. No warranty, expressed or implied is made regarding the accuracy, adequacy, completeness, reliability, or usefulness of any information contained herein. Neither IntierraRMG nor the contributors of data to this presentation shall be held liable for any improper or incorrect use of the information contained herein and assume no responsibility for the use of the information. 1

2 4/30/2013 Global Mining Operations Source: Raw Materials Data, 2013 RMG Price Index 2

3 Mining CAPEX Capex total, billion US SD RMG Price Index Capex Total, billion USD RMG price index Mining Project Investment Pipeline, 2012 Investment (billion US$) Share (%) Share Trend Greenfield Projects Conceptual & Pre Feasibility Feasibility Construction Brownfield Projects All stages TOTAL

4 Mining Project Investment by Metal, 2012 Investment (billion US$) Share (%) Share Trend Iron Ore Copper Gold Nickel 60 8 Lead/Zinc 17 2 Others Total Mining Project Investment by Region, 2012 Investment (billion US$) Share (%) Share Trend Africa Asia Europe Latin America North America Oceania TOTAL

5 Mining Project Investment by Country, 2012 Investment (billion US$) Share (%) Rank in 2011 Australia Canada Chile Brazil Russia Peru United States South Africa Guinea Philippines TOTAL

6 Canadian 2 Year Exploration Success Rates Industry Major Metals Iron Ore Industrial Minerals / Rare Earths Discoveries i / projects Explored 26 / 710 (3.7%) 9 / 20 (45%) 4 / 38 (10.5%) Value discovered per Hectare $2,300 $2.5 M $154,000 Projects with drilling undertaken in last 2 years Australian 2 Year Exploration Success Rates Industry Discoveries / projects Explored Value discovered per Hectare Major Metals 32 / 570 (5.6%) $3,500 Iron Ore 19 / 85 (22.3%) $180,000 Coal 19/65 (29.2%) $131,000 Uranium 7/88 (7.9%) $300 Industrials, Rare Earths, Heavy mins, Phosphate 10 / 36 (27.8%) $39,000 Projects with drilling undertaken in last 2 years Bulk commodities: Titano Vanadium, Bauxite, Manganese 17/38 (44.7%) $52,000 6

7 Falling ore grades Grade Cu and Ni Grade Pb and Zn Cu Ni Pb Zn 7

8 Open Pit Development Projects and Concepts Las Bambas (Peru) El Pachon (Argentina) Size of Bubble indicates Expected Capital Cost Source: News releases and technical reports Open Pit Copper Mines Resources and Head Grades for New Copper Open Pit Mines Copper resour t) rces at beginning of development (t 8

9 New Copper Resources Through Time Initial Cu Tonnes Grade % ion Tonnes of Copper Discovere ed Mill % 0.60% 0.50% 0.40% 0.30% 0.20% Average Grade of Discoveries % % Source: News releases and technical reports New Copper Resources Through Time Resource Grade 200,000, % 180,000, % Tonnes of Copper Discovered T 160,000, ,000, ,000, ,000,000 80,000,000 60,000,000 40,000, % 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% Average Grade of Discoveries 20,000, % 0.00% Source: News releases and technical reports 9

10 Is the Industry at Risk? Industry Risk Profile Worsening South America dominated new copper discoveries in past 10 years Annual rate of copper discoveries flat for past eight years Grades of upcoming mines will be significantly lower than new mines Underground projects are averaging three times grade of open pit Is the Industry at Risk? Industry Risk Profile for Copper Generally, upward trend in project costs affected by: Complex ore bodies Deeper lying deposits Remote locations of new mines Equipment suppliers at full capacity already Skill staff shortages emerging again Rise in metal prices 10

11 Is the Industry at Risk? Industry Risk Profile Worsening Projects at feasibility stage has increased strongly (28%) in Projects at conceptual and pre-feasibility stage has decreased There is a decline in risk appetite affecting funding Increasing financial problems for junior companies that initiate most projects Thank You 11