Willow Creek Mine - Project Update. April 2006

Transcription

1 Willow Creek Mine - Project Update April 2006

2 CAUTIONARY STATEMENT The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this information. CAUTIONARY STATEMENT This information contains certain forward looking statements, as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties including but not limited to economic, competitive, governmental and geological factors effecting the Company s operations, markets, products and prices and other risk factors. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include the Company s dependence on the steel industry, volatility in coal prices, accidents and other risks associated with mining operations, the Company s need for and availability of additional financing, the restrictions imposed under the Company s existing debt arrangements and its debt service requirements and the other risk factors discussed in greater detail in the Company s various filings with the Securities and Exchange Commission and Canadian securities regulators, including the Company s Form 20-F dated September 30,

3 Agenda Company Overview Coal Products Overview of Operations Financial Outputs Growth Opportunities 3

4 Company Overview 4

5 Achievements Successfully developed the first greenfield metallurgical coal mine in Canada in the last 20 years Mining commenced July 2004 First product shipment in September 2004 PCI Coal Completed construction of infrastructure (coal washing plant) in November 2005 to increase potential capacity to 180,000 t/month Completed first full winter of operation Plant now operating on a stable and effective basis Delivered 1 Million tonnes of PCI coal to customers Deliveries of hard coking coal commencing in May, 2006 Coking coal sales have been secured in Japan and Europe 5

6 Strategy Achieve long term supply arrangements for coking coal and PCI to key Pine Valley customers Increase output from the Willow Creek deposit to full plant capacity of 2.2 million tonnes per year Maintain low cost position Explore nearby mineral property interests 6

7 Location and Infrastructure 7

8 Technical Use of PCI and Coking Coal PCI Replaces coke in the furnace Assists in maintaining furnace stability Reduces silicon content of pig iron Improves consistency of the quality of hot metal All major steel mills have PCI facilities or are seeking to increase (optimize) injection rates Coking Coal Used to make coke which holds the iron mix in the blast furnace and provides carbon to the metal 8

9 Crude Steel Making Process 64% of total steel production is based on the smelting of iron ore in blast furnaces (1) Coal requirements per tonne of hot metal kg coke made from kg coking coal kg of PCI coal PCI is a direct replacement for coke in the blast furnace (1) World Coal Institute 9

10 Diversified Portfolio of Customers Building business with top steel producers Customers in Japan, Korea and Europe Shipping samples to 21 different customers for testing Customers want to support independent producers Current Customers Top Active Prospects Company Rank 04 Prod Region Company Rank 04 Prod Region Arcelor Europe US Steel U.S. Nippon Steel Japan ThyssenKrupp Europe JFE Japan Gerdau Brazil POSCO Korea China Steel China Corus Group Europe Stelco Canada Riva Acciao (Ilva) Europe USIMINAS Brazil Sumitomo Japan Dofasco Canada Kobe Steel Japan Tata Iron & Steel India Note: Ranked by 2004 production, millions of metric tonnes Source: Company reports; the International Iron and Steel Institute ( 10

11 Overview of Operations 11

12 Willow Creek Plant Site 27 June July

13 Overview of Mine Development April 2005 April 2005 May 2005 July

14 Plant Site October

15 Mining Operation Gray shading designates mining areas Distance Above / (Below) Reference Point (Meters) (100) (200) Actual exploration drill holes shown as black lines (roughly perpendicular to seams) Coal Seams: Coking PCI Cross Section of Willow Creek Central Pits 15

16 Mine Site 16

17 Environmental Management Monitoring Air quality Water quality (surface and sub-surface) Managing Wildlife interaction ML/ARD Traffic and access Reporting Weekly/monthly to Govt Annual reclamation 17

18 24 April 06 18

19 Production Forecast and Product Mix Coking coal commercial production in 2006 Coking coal specifications are being well received by customers Willow Creek Coking Willow Creek PCI Production forecast based on the following: No production outside Willow Creek Flexibility to increase percentage of coking coal produced. Millions of Tonnes JFY 2004 JFY 2005 JFY 2006 Note: Fiscal year ends March 31 Source: Technical Report, 28 Jul 2005, pg and recent press releases 19

20 Key Willow Creek Statistics LV PCI saleable reserve: 7.1 mm tonnes Coking coal saleable reserve: 7.7 mm tonnes Mine production capacity: 2.2 mm tonnes/yr LOM Stripping ratio: 5.0:1 Mine Life: 8 years approx Processing feed rate: 450 tph Total plant capital costs: $33 million Area to be disturbed: 528 Ha 20

21 Financial Impacts 21

22 Employment - Direct Mine Site Vancouver Total PVM employees Hourly Salaried Total Mining contractor Hourly Salaried 5-5 Total Grand total

23 Employment - Indirect Chetwynd region Suppliers of equipment parts and office goods Suppliers of services (water, rubbish, tires) Accommodation and meals Other BC CN Rail crews Neptune and Ridley port crews Consultants - environmental, mining (PG, Van) Legal advice contracts, purchases (Vanc) Financial auditors, bankers (Vanc, Tor) Fuel supply (PG) 23

24 Financial Impacts Wages paid Tercon and PVM $13 million Charges paid to CN / Ports $31.8 million Paid to mining contractor $42 million Goods/services from northern BC $14.5 million Goods/services from remainder of BC $1.2 million Taxes/licences $3 million 24

25 Growth Opportunities 25

26 Growth Opportunities Processing infrastructure in place to support additional tonneage Current facility has a processing feed rate of 450 tph Additional capacity could be added with minimal Cap. Ex. Drilling program complete at Pine Pass for structure and brand split Data gathering commenced for permitting process Production decision targeted for mid 2006 Additional quality drilling ongoing Other prospective properties for exploration depending on market fundamentals 26

27 Other Exploration Properties Exploration completed by Gulf Canada and Shell Canada in the 80 s identified presence of coal seams at other sites (not NI compliant) Fisher Creek Crassier Creek Falling Creek Willow Creek South and West Following completion of Pine Pass the Company will turn its attention to exploration work on other properties if market conditions warrant Other licenses are in close proximity to Willow Creek Project 27

28 Thank You