2016 annual and special meeting of shareholderss21.q4cdn.com › 981952641 › files ›...

RE-IMAGINING LEAD

JUNE 9, 2016

(TSX:LFX)

2016 ANNUAL AND SPECIAL

MEETING OF

SHAREHOLDERS

FORWARD LOOKING STATEMENTS

6/9/2016 STRICTLY CONFIDENTIAL - NOT FOR FURTHER DISTRIBUTION

Certain statements contained in this Presentation are forward-looking

information within the meaning of applicable securities laws. All statements

included herein (other than statements of historical facts) which address

activities, events or developments that management anticipates will or may

occur in the future are forward-looking statements, including statements as to

the following: the timing and length of care and maintenance at the Paroo

Station mine or Burgin Mine and future sales, future targets and estimates for

production and sales, the receipt of required additional financing to restart and

operate the Paroo Station mine, statements relating to the business and future

activities of, and developments related to LeadFX and its subsidiaries, including

the development of water, lead, silver and industrial minerals and aggregates

assets, future tolling agreements, future business acquisitions, future lead

production, development of the Burgin Mine or quarrying on the property of

Chief Consolidated Mining Company, potential partnerships, opportunities to

sell excess real estate, the Company’s ability to meet its working capital needs

and debt repayments in the near term, the circumstances or timing and costs

surrounding a restart of the Paroo Station mine, forbearance by Enirgi Group

Corporation pursuant to the Enirgi Group Bridging Facility, as amended,

projections with respect to cash flows and working capital, the cost and timing

for completion of capital projects necessary for any future operations, the

Company’s ability to comply with the transportation and operating conditions for

the Paroo Station mine, receipt of regulatory approvals, capital expenditures,

operating costs, cash costs, Mineral Resources, Mineral Reserves, life of mine,

recovery rates, grades and prices, business strategies and measures to

implement such strategies, competitive strengths, estimated goals and plans

for LeadFX’s future business operations, commodity prices outlook and other

such matters. Forward-looking statements are often, but not always, identified

by the use of words such as ‘‘seek’’, ‘‘anticipate’’, ‘‘contemplate’’, ‘‘target’’,

‘‘believe’’, ‘‘plan’’, ‘‘estimate’’, ‘‘expect’’, and ‘‘intend’’ and statements that an

event or result ‘‘may’’, ‘‘will’’, ‘‘can’’, ‘‘should’’, ‘‘could’’ or ‘‘might’’ occur or be

achieved and other similar expressions. These statements are based upon

certain reasonable factors, assumptions and analyses made by management in

light of its experience and perception of historical trends, current conditions and

expected future developments, as well as other factors management believes

are appropriate in the circumstances. However, whether actual results and

developments will conform with management’s expectations is subject to a

number of risks and uncertainties, including factors underlying management’s

assumptions, such as, expected concentrate sales when in operations, the

costs and other capital expenditures required to maintain operations and

transportation, the timing, need and ability to raise any additional financing and

the risks relating to ramping up mining and milling throughput and operations,

funding requirements, operations being placed on care and maintenance, the

restart of mining and milling operations, matters relating to regulatory

compliance and approvals, shareholder dilution, matters relating to public

opinion, presence of a majority shareholder and Management Services

Agreements, matters related to the Esperance settlement and shipments

through the Port of Fremantle, regulatory proceedings and litigation and

general operating risks such as metal price volatility, lead carbonate

concentrate treatment charges, exchange rates, the fact that the Company has

a single producing mineral property, health and safety, environmental factors,

mining risks, metallurgy, labour and employment regulations, government

regulations, insurance, dependence on key personnel, constraints on cash

distribution from the Paroo Station mine, the nature of mineral exploration and

development and common share price volatility. While we are not aware of any

misstatements regarding any industry data presented in this Presentation, the

lead and silver industries involves risks and uncertainties and is subject to

change based on various factors. Additional factors and considerations are

discussed in the Company’s annual information form dated March 8, 2016,

elsewhere in other documents filed from time to time by LeadFX with Canadian

securities regulatory authorities. While LeadFX considers these assumptions to

be reasonable based on information currently available to it, they may prove to

be incorrect. These factors may cause the actual results of the Company to

differ materially from those discussed in the forward-looking statements, and

there can be no assurance that the actual results or developments anticipated

by management will be realized or, even if substantially realized, that they will

have the expected results on the Company. Undue importance should not be

placed on forward looking information nor should reliance be placed upon this

information as of any other date. Except as required by law, while it may elect

to, LeadFX is under no obligation and does not undertake to update this

information at any particular time.

All statements, opinions and views contained in this Presentation are solely

those of LeadFX and/or Rosslyn Hill Mining Pty Ltd. and do not constitute any

written or public oral statement of the Sentient Group of Global Resource

Funds or any other third party.

2

RE-IMAGINING LEAD

JUNE 9, 2016

(TSX:LFX)


MEETING OF SHAREHOLDERS

BUSINESS

OVERVIEW

TSX:LFX6/9/2016 STRICTLY CONFIDENTIAL - NOT FOR FURTHER DISTRIBUTION

• Completed acquisition of GeoZone Exploration Limited

• Delivers a potential pipeline of future projects

• Rebranded company as LEADFX

• Restructured or retired debts

• LEADFX has no secured debts due until June 2017

• Reduced the outstanding debt to US$8.1M at 31 March 2016 (compared

to US$15.6M in March 2015)

• Maintained Paroo Station Mine in a restart-ready condition with a

core of key experienced staff

2015-16 Achievements

4

• Commenced dialogue with Regulators to deliver life-of-mine

access to concentrate transport route and orebody

development


• Focus on LEAD and SILVER projects

• Focus on early CASH GENERATION by using our skills and

experience to DEVELOP and OPERATE responsible cost-efficient

mining operations

• Accumulate lead and silver projects in stable jurisdictions which are

able to be in PRODUCTION by 2020

Strategy

5

Use our expertise and resources to responsibly manage:

• Our Employees

• Our Environment, and

• Our Economic Outcomes

Approach


LEADFX Overview

• 100% ownership of the Paroo Station lead carbonate mine in Western Australia

• 1.4M tpa capacity lead concentrator placed on care and maintenance in early 2015

• 6.5M tonnes of Proven and Probable Reserves at 7% Pb*

• 32M tonnes of Measured and Indicated Resources (inclusive) at 4.4% Pb*

• Restart ready with robust economics at today’s lead prices and Australian dollar

• Recently refinanced debt-package and deferred payments to June 2017

• 83% ownership in Chief Consolidated Mining, a lead-silver project located in Utah

advancing to pre-feasibility stage

*As at December 31, 2015. The Mineral Reserves have been prepared and verified by Mr. Andrew Robb, a qualified person currently

employed by an affiliate of LeadFX. See LeadFX’s annual information form dated March 8, 2016 for further details.

6


Why Focus on Lead?

• In the 1980’s and 90’s the mantra “Lead is dead” was a common catch phrase around the resources

sector and, as a consequence, little was invested in lead exploration or mine development. A quick

review of electric vehicles confirms that “Lead is NOT dead” as Tesla, Nissan and others include

a lead-acid battery in their latest EVs

• Due to decades of underinvestment in exploration, the mining sector is not prepared to meet the

demand. There are limited new mine opportunities to replace the rapidly depleting resources

• Many lead-silver mines closed in the period from 1970-1990 due to low metal prices and, in some

jurisdictions, increasing regulatory burdens. Many of these dormant mines are now owned by under-

capitalized companies

• Lead is expected to be in a supply / demand balance to deficit in 2017 as demand rebounds and a

portion of current supply is taken off-line. Lead price forecasts for 2017 from Wood Mackenzie

and Metal Bulletin Research are $2,300/t and $2,005/t, respectively, or $1.04/lb and $0.91/lb

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Lead Price (US$/lb)

LME Lead Stock

7

1Source: UBS Global I/O: Miner’s Price Review


Lead Price – Is it a matter of perspective?

8

$1,200/t

$1,400/t

$1,600/t

$1,800/t

$2,000/t

$2,200/t

$2,400/t

$2,600/t

$2,800/t

LME weekly lead price

US$/t AU$/t

From December 17, 2014 to May 11, 2016

• US$ lead price down 4.4% or US$180/t

• AU$ lead price UP 5.6% or AU$130/t

1Source: Internal reports


LEAD will continue to be an important element in the ELECTRICITY

STORAGE space for at least the next decade

9

Under the hood of a Tesla S Model

you will find a lead-acid battery

• About 70% of lead produced each year is used in batteries. The most important sector

today is in automobile batteries.

• Growth sectors for electricity storage are grid energy storage systems (ESS) and the

growing global automobile fleet

Grid ESS will store/smooth the electricity supply between traditional and non-

traditional sources and their customers

The growth of lithium battery electric cars still grows the market for lead-acid

batteries

1Source: Publicly available photograph

RE-IMAGINING LEAD

JUNE 9, 2016

(TSX:LFX)



FINANCIAL

OVERVIEW


• Revenue for 2015 was US$27.2M compared to US$151.1M in 2014

• The mine only operated for one month in 2015 before being placed on

care and maintenance and shipments ceased in March 2015

• Net loss of US$12.9M for the year (before tax US$12.2M)

• This is a reflection of being on care and maintenance since the first

quarter 2015 and the associated shut-down costs

• The Sprott Loan Facility was replaced with a Bridging Facility with Enirgi

Group

• The Bridging Facility has a current outstanding debt amount of

US$8.0M due on June 30, 2017

• The cash position at March 31, 2016 was US$0.2M and US$1.3M restricted

• Subsequent to March 31, 2016, a US$2.5M loan facility was agreed

with The Sentient Group of Global Funds

• The current cash position is approximately US$1.8M

2015 FINANCIAL HIGHLIGHTS

11


• 75 to 1 stock consolidation completed in November 2015

Outstanding shares – 38.3 million

The Sentient Group of Global Funds own 85.1% of the shares

STOCK INFORMATION

12

C$0M

C$2M

C$4M

C$6M

C$8M

C$10M

C$12M

C$14M

C$16M

C$18M

LFX Market Capitalisation

1Source: TMX.com

RE-IMAGINING LEAD

9 JUNE 2016

(TSX:LFX)



OPERATIONAL

OVERVIEW


Paroo Station Lead Carbonate Mine, WA

• Operations placed on care and maintenance in Q1

2015 due to low lead price, unfavourable exchange

rates, high treatment charges and ongoing upward

cost pressure caused by WA mining boom

• 4,000 tpd concentrator consisting of crushing,

grinding, sulphidisation, flotation and dewatering

circuits commissioned in 2005

• March 2015 NI 43-101 technical report completed by SRK notes that the

capital costs associated with restarting the project are considered to be

relatively low given the recent operational history

• Unique concentrate can be treated in battery recycling plants

• World-class lead concentrate handling system for mine site, rail and port

facilities

• LEADFX priority to lower site operating costs and capitalize on foreign

exchange advantage

Opportunities

• Potential for toll treatment agreements with South East Asia smelting partners

to provide cost certainty

14


Paroo Station Lead Carbonate Mine, WA

Environmental Approvals

• Ministerial Statement 905 deals with environmental conditions relating to mining,

processing and transport

• Existing conditions and approvals are sufficient to re-start operations

• We are in the process of applying for changes to certain conditions to ensure

continuity of operation, including;

• Increasing project footprint to access remaining ore on Magellan Hill

• Export of product from the Port of Fremantle for life-of-mine

• Proposal to modify the transport route financial assurance bond to levels in-line

with the likely worse-case scenario cost

• All twenty local government councils have signed off with no objections to the

proposed changes

• Final submissions to the WA Regulators will be made in June 2016

15


• 83% owned mineral properties in historic mining district in

Utah

• 14,000 acres of patented and unpatented mining claims in

the state of Utah

• Historical Tintic mining district which produced 1.1 million

tonnes of lead metal and 289 million ounces of silver

• The claims include the Burgin mine which was operated

by Kennecott until 1978.

Burgin mine, Utah - Chief Consolidated Mining

Opportunities

• Partner with technology leader to develop electro-win solutions for lead recovery without

smelting

• Industrial mineral quarrying potential for 97.5% silica and cement-grade calcium

carbonate

• Potential for third party to market mine water

• Investigating opportunity to sell excess real estate to generate income

16

• Short-term cash flow opportunity from industrial mineral quarrying is being pursued


Why LEADFX?

Proven Management

Restart Ready

Project Pipeline

Stable Jurisdictions

LEADFXAdvantage

A proven management team with extensive experience in the primary lead

sector including commissioning and operating the Paroo Station Mine.

The flagship Paroo Station Mine in Western Australia is currently on

care and maintenance. Potential restart of operations is scheduled for

H1, 2017 subject to external economic factors and funding.

The Burgin Mine silver-lead-zinc located in Utah to be advanced to

a pre-feasibility level by Chief Consolidated Mining (83% owned by

LEADFX).

Western Australia and Utah ranked 5th and 14th, respectfully, in

the Frasier Institute’s Mining Investment Attractiveness Index in

2014.

A technology advantage through leveraging Enirgi Group’s

existing smelting relationships.

Potential cash flow from industrial minerals on Chief.

17


• Remove controllable hurdles to a Paroo Station Mine restart:

• Secure restart financing

• Receive permit extensions from WA Regulators

• Negotiate and secure acceptable treatment terms

• Restart Paroo Station Mine if supported by the external economic

factors

• Evaluate the potential for a Resource upgrade at the Burgin project in

Utah

• Identify suitable merger & acquisition opportunities to grow the lead-

silver portfolio consistent with the strategy

2016-18 Pathway Forward

18

• Generate value and focus by outsourcing or offloading resources

that do not fit our strategy

TSX:LFX

CONTACT

Rob Scargill, President and CEO of LEADFX

1 Adelaide Street East, Suite 3001

Toronto, Ontario

Canada M5C 2V9

P | + 1 416 649 9876 E | [email protected] W | leadfxinc.com

A pure Lead & Silver resource company

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