November 2013 CARBON CREEK METALLURGICAL COAL DEPOSIT British Columbia, Canada

Transcription

1 Met Coal Iron-Titanium Iron Gold November 2013 CARBON CREEK METALLURGICAL COAL DEPOSIT British Columbia, Canada

2 Outline This presentation contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable Canadian and US securities legislation. All statements, other than statements of historical fact, included herein including, without limitation, statements regarding the anticipated content, commencement and cost of exploration programs, anticipated exploration program results, the discovery and delineation of mineral deposits/resources/reserves, the potential for the expansion of the estimated resources/reserves at Carbon Creek, the completion of a feasibility study for the Carbon Creek deposit, the potential for a production decision to be made regarding Carbon Creek, the potential commencement of any development of a mine at Carbon Creek following a production decision, business and financing plans and business trends, are forward-looking statements. Information concerning mineral resource/reserve estimates and any economic analysis thereof contained in the prefeasibility study may be deemed to be forward-looking statements in that it reflects a prediction of the mineralization that would be encountered, and the results of mining it, if a mineral deposit were developed and mined. Such statements are based on a number of assumptions which may prove incorrect, including, but not limited to, assumptions about the price of coal, the timing of the receipt of regulatory and governmental approvals, permits and authorizations necessary to implement and carry on the Company s planned exploration and potential development program at Carbon Creek; the Company s ability to attract and retain key staff, particularly in connection with the carrying out of a feasibility study and the development of any mine at Carbon Creek, the timing of the ability to commence and complete the planned work at Carbon Creek, the ongoing relations of the Company with its underlying lessors and the applicable regulatory agencies, and the timetables for the completion of a Feasibility Study at Carbon Creek. Accordingly, the Company cautions that any forward-looking statements are not guarantees of future results or performance, and that actual results may differ materially and adversely from those set out in the forward-looking statements as a result of, among other factors, variations in the nature, quality and quantity of any mineral deposits that may be located, the Company s inability to obtain any necessary permits, consents or authorizations required for its activities, material adverse changes in economic and market conditions, changes in the regulatory environment and other government actions, fluctuations in commodity prices and exchange rates, the inability of the Company to raise the necessary capital for its ongoing operations, and business and operational risks normal in the mineral exploration, development and mining industries, as well as the risks and uncertainties disclosed in the Company s most recent Annual Information Form filed with certain provincial securities commissions in Canada and in the Company s most recent Form 20F filed with the United States Securities and Exchange Commission, available at and respectively. The Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events except as required by law. All subsequent written or oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by the cautionary statements herein. Scientific or technical information contained herein is derived from the independent NI technical report entitled Prefeasibility Study of the Carbon Creek Coal Property, British Columbia, Canada dated November 6, 2012 by Larry Messinger (QP), John Lewis (P.E.) and Larry Henchel (P.G.) ( Report ), which includes more detailed information with respect to the Carbon Creek project, including the dates of the estimates included therein, details of quality and grade of each resource/reserve, details of the key assumptions, methods and parameters used in the resource and reserve estimates, a general discussion of the extent to which the resource and reserve estimates and the other estimates and projections included in the reports may be materially affected by any known environmental, permitting, legal, taxation, socio-political, marketing, or other relevant issues. You are urged to review the Report, available under the Company s profile at or on the Company s website, in its entirety. The Company uses certain terms in this presentation, such as resources, indicated and inferred that the SEC s guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. Accordingly, the Company s disclosures regarding mineralization may not be comparable to similar information disclosed by US registered companies. The presentation contains information with respect to adjacent or similar mineral properties in respect of which the Company has no interest or rights to explore or mine. Readers are cautioned that the Company has no interest in or right to acquire any interest in any such properties, and that mineral deposits on adjacent or similar properties and any production therefrom or economics with respect to thereto, are not indicative of mineral deposits on the Company s properties or the potential production from, or cost or economics of, any future mining on any of the Company s properties. You are urged to consider closely the disclosure in the Company s latest Form 20F annual report, which may be secured from the Company, or from the SEC s website at 2

3 Qualified Persons EurGeol Keith Henderson, PGeo, Cardero s Executive Vice President and a qualified person as defined by National Instrument , has reviewed the scientific and technical information that forms the basis of this presentation, and has approved the disclosure herein. Mr. Henderson is not independent of the Company, as he is an officer and holds common shares and incentive stock options. Larry Henchel, P.G., John Lewis, P.E., and Larry Messinger (all of Norwest Corporation, Salt Lake City, Utah, USA), each of whom is a qualified person, as defined by National Instrument , are each responsible for portions of the Prefeasibility Study NI technical report that forms the basis for information in this presentation regarding the Carbon Creek Prefeasibility Study and the results thereof. John Lewis, P.Eng (Utah), Registered Member (SME), is the Manager of Underground Mining with Norwest Corporation. Mr. Lewis has 18 years experience in the coal mining industry with expertise gathered from US mining operations in the areas of longwall mining, continuous mining, pillar retreat with MRS, mine ventilation, mine safety and health regulations, project management, short and long-term planning and mine budgeting. Larry Messinger, Qualified Professional (MMSA), is a Senior Project Manager at Norwest Corporation and has over 35 years in the mining and energy industries with experience in project management, project evaluation and development, surface coal mine planning and operations, strategic planning, and market analysis. He has performed pre-feasibility studies for coal properties in Mongolia, South America and Mexico. Lawrence D. Henchel, Registered Member (SME), is Vice President, Geologic Services of Norwest Corporation and has over 25 years experience in surface and underground coal mining geology, specializing in exploration and evaluation of coal and mineral properties. He has held positions in operating mines as well as participating in regional exploration projects. He is skilled in computerized modeling and reserve analysis of single and multi-seam coal deposits and has worked on projects in numerous countries, including the United States, Canada, India, South America, the Middle East, Mongolia and Southern Africa. 3

4 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 4

5 Carbon Creek Metallurgical Coal Deposit CARBON CREEK METALLURGICAL COAL DEPOSIT One of only two metallurgical coal projects in Canada controlled by junior mining companies Largest single metallurgical coal resource in northeast coalfield Largest single coal reserve in northeast coalfield Potentially largest single producer in the region Good quality metallurgical coal Robust post-tax economics Existing, reliable infrastructure (power, port, rail) Carbon Creek JV 75%:25% 5

6 Project Summary EXISTING INFRASTRUCTURE LARGEST RESOURCE IN REGION GOOD QUALITY METALLURGICAL COAL Category Category Million Tonnes Proven & Probable Reserve 121 Anticipated Clean Coal Production (LOM) Million Tonnes Measured & Indicated Resource 468 Inferred Resource 232 LARGEST RESERVE IN REGION 78 PRODUCT HARD COKING COAL SEMI-SOFT / PCI Ash % Volatile Matter% Sulphur % Phosphorus % Fixed Carbon % Calorific Value (Kcal/kg) 7,900 8,300 7,600 8,000 FSI CSR n/a ROBUST ECONOMICS UNCOMPLICATED GEOLOGY, MULTIPLE SEAMS Coal Price Per Tonne IRR % Post Tax 100% Basis NPV 8% $ $878M 6

7 Projected Project Flowsheet 7

8 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 8

9 $5.8 Billion M&A Activity (3 years) 9

10 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 10

11 Project Site and Topography Carbon Inlet Carbon Inlet Proposed Central Surface Mine Proposed Surface Facilities Camp 11

12 Carbon Creek Deposit Scale Sections presented at the same scale Carbon Creek is several times larger Size of Carbon Creek resource contributes to flexibility of mining, potential production rate and LoM, consolidation of production Multiple seams contribute to tailored product specification Simple geology contributes to flexibility in mining methods, particularly underground Deposit Mine Deposit Mine Carbon Creek Deposit 12

13 Geological Sections Prefeasibility Proposed Mine Plan (published data) 13

14 Exploration Completed (to date) UTAH MINES HISTORIC DATA 299 drill holes (average depth 108 metres) 24,000 metres of drilling 6 underground bulk samples 14% of coal quality database CARDERO EXPLORATION TO DATE 158 drill holes (average depth 278 metres) 42,000 metres of drilling 86% of coal quality database New geological model Multiple resource models Extensive coal quality testing (>1,000 samples) Geotechnical and engineering work Hydrogeological testing Gas desorption test work Environmental baseline Completion of Resource Estimate, Preliminary Economic Assessment and Prefeasibility Study 457 Drill Holes 66,000 metres of drilling 14

15 Coal Resources Prefeasibility Study CONTINUED RESOURCE GROWTH Initial Preliminary Economic Assessment 2012 Resources (Prefeasibility) 27 Coal Seams Measured & Indicated: 468 Mt Inferred: 232 Mt 699 Mt Reserves (included): ROM 121Mt Clean Coal (LOM) 78 Mt Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources shown in this table have been excluded from the PFS for the purposes of mine planning and financial evaluation. Mineral reserves are included in measured and indicated mineral resources. The Compa ny cautions that the accuracy of resource and reserve estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and ju dgment. Given the data available at the time the estimates were prepared, the estimates presented herein are considered reasonable. However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision. These revisions may be material. There is no assurance that any mineral resources, other than those already identified in the PFS as proven or probable reserves, will ultimately be reclassified as proven or probable reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. 15

16 Regional Comparison Company Project Stage Mine Reserve Million Tonnes Cardero Carbon Creek Feasibility 121 Walter - Anglo JV Belcourt-Saxon Feasibility 86 Xstrata Sukunka Feasibility 61 Walter Energy Wolverine Operating Mine 49 Teck Quintette Permitted 42 Anglo American Roman Permitted 30 Anglo American Trend Operating Mine 23 Walter Energy Brule Operating Mine 21 Walter Energy Willow Creek Operating Mine 19 Company Project Stage Production Rate Mtpa Cardero Carbon Creek Feasibility > 4.1 (proposed) Teck Quintette Permitted 3.0 Walter Energy Wolverine Operating Mine 2.5 Xstrata Sukunka Feasibility 2.5 Anglo American Roman Permitted 2.0 Anglo American Trend Operating Mine 2.0 Walter Energy Brule Operating Mine 2.0 Walter Energy Willow Creek Operating Mine 1.8 Walter - Anglo JV Belcourt-Saxon Feasibility? 16

17 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 17

18 Coal Quality - I EXPECTED BLENDED PRODUCT SPECIFICATIONS PRODUCT MOISTURE % ASH % SULPHUR % VOLATILE MATTER % FIXED CARBON % CV GAD (Kcal/kg) FSI CSR HARD COKING COAL ,900-8, SEMI SOFT / PCI ,600 8, n/a COAL QUALITY HIGHLIGHTS Carbon Creek Coal quality is comparable to other premium coal products in northeast BC Two main products 1. Hard Coking Coal Average yield 65% 2. Semi-Soft Coking Coal / PCI Low ash content is a significantly positive feature of the coal 18

19 Coal Quality II Source: Wood Mackenzie Source: Wood Mackenzie CARBON CREEK versus OTHER CANADIAN COALS Total moisture, phosphorus, CSN (FSI) and reflectance are comparable with Canadian average Volatile matter and sulphur are within range of Canadian coals Very low-ash content, below Canadian average and global benchmark very positive CSR (Coke Strength after Reaction) is important. Carbon Creek falls in range well within global standards 19

20 Coal Quality III Marketing WOOD MACKENZIE ASSESSMENT AUGUST 2013 Both the Hard Coking Coal and the Semi-Soft Coking Coal are close to benchmark specification Carbon Creek s HCC will be marketed as a Mid-Volatile HCC, based on average 27% volatile matter & CSR Overall project fundamentals are positive, in particular ash contents are low Source: Wood Mackenzie Wood Mackenzie Price Outlook For Cardero s Mid-Vol HCC and equivalent NSW SSCC 20

21 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 21

22 Mine Site Processing Plant Design Conventional dense medium bath, cyclones and double stage froth flotation Three products: 60% Hard Coking Coal (HCC) 34% Semi-Soft/PCI met coal 6% Thermal coal (oxidized met coal) Product as delivered moisture content <9% with mechanical drying No thermal drying Tailings paste rather than slurry (tailings to CCR / waste rock) 22

23 Mining Methods CONTOUR MINING HIGHWALL MINING ROOM AND PILLAR OPEN PIT MINING 23

24 Operational Efficiencies SINGLE OPERATION EFFICIENCIES Competitors run 3 mines, 2 rail loadouts, 2 processing plants and 1 haul road to produce 4.5Mtpa COMPLEX & FRAGMENTED LOGISTICS Cardero plans to produce >4.0Mtpa from 1 mine and 1 processing plant, with barges connecting the railway to the mine site CONSOLIDATED OPERATION Carbon Creek Competitor Mine Operations 1 3 Processing Plant 1 2 Haul Road 0 1 Rail Loadout 1 2 Million Tonne Coal

25 Regional Operating Costs FOB COST Mine Operation/Property Company Status Product Reserves (US$/Mt) (Mt) Willow Creek Walter Energy Care & Maintenance LV PCI - 19 Production 2012 (Mtpa) Targeted production (Mtpa) 1.7 Brule 1 Walter Energy Producing LV PCI Wolverine 1 Walter Energy Producing HCC Quintette 2 Teck Permitting HCC Trend 3 Peace River Coal (Anglo) Producing HCC Roman Peace River Coal (Anglo) Permitting HCC Carbon Creek Project Cardero Resource Corp Feasibility HCC / PCI Notes 1 Q reporting extracted from financial statements 2 Teck has indicated that operating costs at Quintette will be similar to their southern BC operations 3 Estimate ANTICIPATED CAPITAL COSTS (PFS) Pre-production capital $217M Capital to Full Production $258M $475M Sustaining Capital LOM* $363M $838M *funded out of proposed cash flow Source: Wood Mackenzie 25

26 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 26

27 Infrastructure WORLD CLASS INFRASTRUCTURE IN PLACE POWER -- Williston Reservoir is a hydroelectric facility. A BC Hydro System Impact Study has shown that connection to the Bennett Dam is feasible. BARGE -- Barging has been ongoing on Williston Reservoir since before Barging of coal from Carbon Creek to rail head at Mackenzie is the most cost-effective option. RAIL -- CN Rail currently has 40% excess capacity available for Carbon Creek. Town of Port Edward PORT -- Ridley Terminals is expanding from 12Mtpa to 25Mtpa. Grain Terminal Coal Terminal 27

28 Electricity BC HYDRO PROGRESS BC Hydro System Impact Study Complete BC Hydro Feasibility Study beginning and due for completion April 2014 CONSTRUCTION Connection at WAC Bennett Dam has been approved BC Hydro will modify GMS* site to accommodate Point of Interconnection. Mine Operator will be required to construct a private 138 kv line and sun-station at mine site Line anticipated to be constructed close to existing mine access road Total distance to mine site is <40km from the dam *generating station at Bennett Dam 28

29 Barge Transport ROUTE DETAILS Williston Reservoir is a man-made hydro-electric facility 175km barge route from Carbon Inlet to MacKenzie rail head PRECEDENT Finlay Navigation built first barge for the lake in 1969 Barges have operated on the lake for more than 40 years All previous barges were built on the shores of the lake WILLISTON TRANSPORTER Can be used for initial production Williston Transporter is a self-propelled 5,200 tonne vessel It has operated successfully on Williston Reservoir since

30 Mackenzie Transload Facility TRANSLOAD FACILITY Land lease agreed in principle with Conifex ($1/yr) Operational contract with Navcor in process Rail loop design approved by CN Rail Transload Facility will accommodate barge unloading, product stockpiling and rail car loading 30

31 CN Rail CN RAIL CN operate on lines between the northeast coalfield and port Cardero is in advanced discussions with respect to rail transportation CN and Cardero will also cooperate on rail loop design for the Mackenzie Transload 31

32 Ridley Terminals RIDLEY TERMINALS OPERATIONS Deep water port accommodating cape-sized vessels Sailing time to Asia ~13 days Wait times only 2-3 days RIDLEY TERMINALS CAPACITY Current capacity of 12Mtpa Current expansion to 24Mtpa completion in Q Awaiting approval for expansion to 30Mtpa Ultimate potential expansion to 60Mtpa 32

33 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 33

34 Work Force & Communities ESTIMATED WORK FORCE (Full Production) ~850 direct employees Management, operational and ancillary staff to be sourced partly within Canada Miners to be initially sourced external to B.C. to provide nucleus of skilled workforce PLANNED MINE SITE ACCOMODATION 400 shift workers would be accommodated on-site 450 workers anticipated to settle in Hudson s Hope & Chetwynd Hudson s Hope would see significant growth during mine construction Housing studies are in progress 34

35 Transparent Permitting Process Substituted Process: One Environmental Assessment (Provincial) On completion, two decisions (Federal & Provincial) In Progress 35

36 Outline CARBON CREEK SUMMARY M&A ACTIVITY GEOLOGY & COAL RESOURCES COAL QUALITY MINING INFRASTRUCTURE PERMITTING & STAKEHOLDERS ECONOMICS 36

37 Feasibility Study POTENTIAL OPTIMIZATION OF PREFEASIBILITY IN FEASIBILITY STUDY MINE PLAN Feasibility Study work will investigate a number of potential changes: Faster ramp-up to a higher average level of annual production (5Mtpa or greater) Prioritization of higher-value hard coking coal production in early years Potentially shorter payback period Higher valuation and increased rate of return Resulting Higher Average Production Per Year Potential Faster Production Ramp-Up Potential Optimization 37

38 Coal Pricing Assumptions Historical 5-Year Average Benchmark Carbon Creek Hard Coking Coal Semi-Soft / PCI Year Average HCC WOOD MACKENZIE MARKETING ASSESSMENT Hard Coking Coal Carbon Creek HCC would be priced as a mid volatile HCC Canadian Mid Vol HCC sells for $2 to $4 discount to benchmark Low Vol HCC Semi Soft Coking Coal SSCC Newcastle Australia. we expect Carbon Creek s SSCC to achieve a similar price on an FOB basis $174/t Carbon Creek Products 5-Year Average Source: public domain data Average price based on projected volumes of coal products sold over mine life: 60% hard coking coal, 34% semi-soft / PCI, 6% premium thermal (nearsurface oxidized coal) 38

39 Prefeasibility Economics Prefeasibility Study Base Case Pricing Assumption $176/t Ramp-Up to Full Production 6 years Annual Clean Coal Production 4.1Mtpa NPV 8 $878 IRR % 27% PREFEASIBILITY STUDY ECONOMICS All figures on Post-Tax, 100% basis CDU has 75% interest NEXT STEPS TO POTENTIALLY FURTHER IMPROVE PROJECT ECONOMICS Potential for faster ramp-up Potential to prioritize higher-value HCC in early years Potential to attain higher rates of annual production 39