MINING IN TRANFORMATIONAL TIMES. Core Days La Ronge, SK

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1 MINING IN TRANFORMATIONAL TIMES Core Days La Ronge, SK Pam Schwann, President May 25, 2017

2 SASKATCHEWAN MINING ASSOCIATION Voice of the Saskatchewan mining industry. Over 45 Member companies including producers and exploration companies: o PotashCorp, Mosaic, Agrium, Cameco, AREVA, Westmoreland Coal, Silver Standard Resources, HudBay Minerals, BHP Billiton, K+S Potash Canada Inc., Denison, Rio Tinto, Vale, Shore Gold Inc. Western Potash, and dozens of exploration companies.

3 SASKATCHEWAN IS A CANADIAN & GLOBAL LEADER IN MINING #1 Canadian Mineral Investment Attraction #1 Global #1 Potash Producer Global (30%) #2 Uranium Producer Global (22%) #4 Value of Mineral Product $5.5B (drop) #1 Industrial Employer of Indigenous people #4 Canadian Expln $193 M Leading Client of Rail and Vessel Transport

4 MINING: PILLAR OF LOCAL & PROVINCIAL ECONOMIES >25 producing mine facilities across SK Employment and business opportunities >30,500 jobs > $2.5 Billion annually on wages, goods, services >$1.5 Billion in royalties & taxes. Mining sector accounts for > 6% of GDP

5 CANADIAN MINERAL PRODUCTION Total value of mineral production in Canada in 2016 decreased to $40.8B Gold #1 MVP commodity by value of production ($8.35B); potash $3.9B Ontario, ($10.6B),QB ($8.3 B), BC ($6.3B) and SK ($5.5 B) top 4 mineral producing jurisdictions (75% value of Canadian mineral production) Volume constant; price decline SK continues to be Canadian jurisdiction to be world leading producer in 2 commodities potash and uranium Canada s Top Minerals Value ($B) 2016 ($40.8B) Gold Copper Potash Iron Ore Coal Nickel Diamonds Uranium Value ($B) 2015 ($42.8B)

6 STATE OF SK MINING Between >$25 B capital expansions invested in brownfield and greenfield mines 3 new potash headframes (Mosaic K3, PotashCorp Scissors Ck, BHP Jansen) 1 new solution potash mine (K+S Potash Legacy) 1 new uranium mine (Cigar Lake) and 1 refurbished mill (McClean) CCS facility thermal coal >$300 M/yr Exploration Investment

7 MINING IN TRANSFORMATIONAL TIMES COMMODITY PRICES $873 MT $138/lb Potash $213 MT Reduced growth in global markets Undisciplined production Declining commodity prices cost control measures reductions/suspensions in operations maximize production at lowest cost/tier 1 assets Merger of equals PotashCorp + Agrium Cancellation of contracts (TEPCO) 2017 U3O8 - $21.25/lb; KCl inventory drawdown; >fert intensive crop; upward price US$258 MT - Brazil

8 DRIVERS China & India BUT Positive Long Term Fundamentals GROWING GLOBAL POPULATION = > FOOD + > CLEAN ENERGY ON < LAND Growing industrialized middle class (9.2 B by 2050) China consumed 5% of world s base metals in 1980s v ~30% today > meat, vegetable and electrical consumption crop production must increase by 70% by 2050 Energy consumption increase by 75% by 2040 Limited local potash and uranium resources Low C economy Trade Agreements Federal Nuclear Cooperation Agreements - China and India Canada European Free Trade Agreement

9 POTASH PRODUCERS 10 producing mines (8 underground; and 2 solution) 3 producing companies: PotashCorp (5) Mosaic (4) Agrium (1) 2016 production 18 M t KCl By 2020 brownfield expansion capacity increase of 90% over 2004 values at cost of over $15 B. Greenfield K+S 2017 production (2.8M) BHP Billiton 2023? (8 12 M?) YanCoal/Vale/Gensource

10 CONVENTIONAL U/G MINING Mining at ~1000 m depth 14.6 m Multi-pass room and pillar Stress relief chevron method 4.9 m Continuous, mechanized system High Productivity Automated miners Lanigan Division 4-Pass System

11 Continuous Mining Systems Room and Pillar Mining Needs stable, flat ore body Multi-pass cutting of rooms Can use automated miners Ore extraction in panels: 42% Plan View of Mining Patterns Stress Relief Mining Used in clay-banded ore Complex cutting pattern Some automation Ore extraction in panel: 65%, (42% overall)

12 SOLUTION MINING Evaporators, crystallizers, dryers, compaction, sizing, product handling

13 URANIUM PRODUCERS 100% of Canadian production; 22% global production Record 35 M lbs U3O8 in operating mines in 2017 McArthur River/Key - (~18 M lbs) Cigar Lake/ McClean lake (~16 M lbs) Eagle Point/Rabbit production suspended in 1Q 2016

14 MINING METHOD Uranium deposits lie at the contact of basement rock & overlying water-saturated ss at depths up to 640 m u/g Control groundh2o with freezing technology & innovative mining techniques - raise boring & jet boring. UNDERGROUND Conventional longhole stoping - Eagle Point UNDERGROUND Remote (high grade) McArthur River Raiseboring; Blasthole stoping Cigar lake Jet Boring

15 COAL SK primary source of baseload power supply (44%) 2 Lignite coal strip mines in the Estevan & Coronach areas (Estevan and Poplar River Westmoreland Coal) Estevan mine production above budget to compensate for reduced hydro Additional activated Carbon Plant potential Clean Coal Technology Project Estevan ($1.4B)

16 MINING METHOD - STRIP MINING 1) Coversoil Removal 2) Dragline Stripping 3) Coal Removal 4) Spoil Leveling 5) Coversoil Replacement 6) Re-vegetation

17 GOLD/DIAMONDS GOLD Claude Resources - Seabee Mine & Santoy 8 Surpassed 1 M oz Au production Aug annual record gold production of ~77,640 oz 1 st Q ,023 oz Diamonds (Advanced Expl) Fort a la Corne - world s largest diamond bearing kimberlite field New Pelican & Athabasca region

18 EXPLORATION $ by COMMODITY (Ministry of Economy)

19 MINING IN TRANSFORMATIONAL TIMES - Regulatory Multiple federal regulatory initiatives underway will strongly influence mining s operational viability 1. Expert Panel Report on EA Processes 2. Standing Committee Report on the Fisheries Act 3. Standing Committee Report on the Navigation Protection Act 4. Species at Risk Act incl Woodland Caribou 5. MMER/Schedule 2 6. Migratory Birds Act 7. Climate Change

20 MINING IN TRANSFORMATIONAL TIMES - Regulatory Multiple federal regulatory initiatives underway will strongly influence mining s operational viability. Seen through lens of: Public Support Public Confidence Indigenous participation Clean growth ongoing reductions in emissions, discharges

21 INDIGENOUS RELATIONSHIPS Economic Outcomes (2016) o Mining: decades-long constructive relationship o Employment at minesites 2584 o o o o o 52% (1344) of all N. SK mine workers are RSN; $ 123 M Annual Payroll RSN 1 in 5 jobs in N SK directly related to mining. $312 M (43%) in goods and services purchased from businesses based in N SK. Mining operations in S SK also increasing the number of indigenous employees, suppliers and building educational and economic capacity in indigenous communities PotashCorp Aboriginal Content Playbook Employment 52% (1344) 1 in 5 Business 43% ($312 M)

22 MINING AND PUBLIC SUPPORT Polling in SK consistently demonstrates that the Saskatchewan public is supportive of mining industry (89%); with 97% indicating it is important to the province; 75% confident in the regulatory process. EA Reviews and licensing hearing are inclusive - Indigenous communities and leaders encouraged and supported in participating

23 What is the economic contribution of the Mining Sector producers + suppliers? mining companies Mining Supply Sector is Hidden sector Mining, quarrying, and oil and gas extraction together Manufacturing; finance; transportation; professional, scientific & technical services; construction; all separate suppliers Tip of the Iceberg employment & GDP; interconnections

24 What is the economic contribution of the Mining Sector producers + suppliers? Diverse services & geography Tailored & responsive Survey (Praxis) in Nov 2015 Feb 2016 Operational & New Spend; % SK Suppliers; % Aboriginal spend Response 7/9 mining companies representing 90% spend; 196/591 suppliers (baseline)

25 MINING SUPPLY CHAIN SECTOR Economic Analysis of Supply Chain Sector Study Companies purchased goods & services from SK suppliers worth $1.7 billion in 2014, $1.8 billion in 2015, and are expected to purchase between $1.65 and $1.4 billion from 2016 and 2019 The 224 SK supply companies employed in Saskatchewan over 14,300 people and earned just over $1.1 billion from sales in 2014.

26 Northern Mining Supply Chain $6.7 B paid in northern wages and northern goods and services since 1991 $727 M in 2016 for goods and services- $312 M to northern companies & JV (43% of total purchases)

27 Northern Mining Supply Categories 2015 $388 M in goods and services supplied by northern businesses & JV (41% of total). 19.5% of all goods & 49% of all services supplied by northern companies& JV

28 SK MSS Survey : Total Operating & Capital Spend in SK Total Operating and Capital Utilities Mobile Equipment 54 Stationary Equipment Mining/Milling Consumables Construction Consulting/Prof services Logistics Chemicals 36.6 Fuel

29 Mining Supply Chain Aboriginal businesses Mine operations and new capital mine projects over $350M per year for the survey period. Ongoing operations anticipated to grow from $283M in 2015 to $295 M in 2019, (28.6%) of total operating spend. Ya Thi Néné Lands of the North New capital projects will increase from 7.5% to >19% of the total spend, although the absolute purchase amount will decrease from $74M to $60M.

30 Questions? Victoria Avenue Regina, SK S4P 0R7 Phone Fax