eagle mine site visit - lundin mining · ore mined varying from estimates of grade, ... extensive...
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Cautionary Statements
Caution Regarding Forward Looking Statements
This presentation contains forward-looking statements. These forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.
Such risks may include, without limitation: risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations; the potential for and effects of labor disputes or other unanticipated difficulties with or shortages of labor or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; and commodity price fluctuations.
For further details of other risks and uncertainties see Risk Factors Relating to the Company’s Business in the Company’s Annual Information Form and in each management discussion and analysis.
Note: All dollar amounts are in US dollars unless otherwise denoted.
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Management Team
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Name Title
Background
Paul McRae Sr. VP Projects Lundin
• 40 yrs of underground & surface project execution • Project Mgr of Victor Mine in Western James Bay • Owner, EPCM, contractor – extensive experience in nickel
Mike Welch GM Eagle
• +25 yrs of exploration, projects and operations • +/-20 yrs with Falconbridge, XNi, Glencore • Certified Professional Geoscientist (APGO)
Ben Rose Chief Financial Officer
• 15 years of resource industry finance experience • Last 10 years with Rio Tinto in Aluminum, Coal, Copper and Corporate
roles
Jim French Director, HSE
• 20 years of HSE experience with Rio Tinto • Strength in both HS and environment • Set up the Eagle HS program
Bob Mahin Chief Geologist
• 24 years in exploration & geology - Western Mining Corp, Kennecott, Cleveland Cliffs, HudBay and Rio Tinto
• Certified Professional Geologist & QP for Mineral Resources
Management Team
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Name Title
Background
Kristen Mariuzza Manager, Environmental & Permitting
• 15 years in environmental regulations & permitting • Represented Michigan Dept of Environmental Quality (MDEQ) Water
Bureau in Michigan’s new mining legislation development
Matt Johnson Manager, External Relations
• State and Federal government policy development • Leadership planning , Relationships and Agreements
Steve Kirsch Manager, Mine Site
• 20 years underground mining experience • Worked for Rio Tinto at Diavik and Greens Creek in mine engineering,
planning and construction management roles.
Jeff Murray Manager, Mill Site
• 20 years mineral processing experience with 15 years in base metals. • Exposure to full mine lifecycle with particular focus on brownfield and
greenfield project work.
Darby Stacey Mine, Mill Technical Services
• Experience in base metal flotation design, test work & operations • Strong understanding of Eagle design
Table of Contents
•Overview
• Health & Safety
• Project Progress
• Operational Readiness
• Corporate Strategy
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Eagle Overview
• High grade, low cost nickel and copper concentrate producer
• Very short payback period with start-up in Q4 2014
• Project well advanced
• All major permits in hand
• Good government and community support
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Location
• Project located in Upper Peninsula of Michigan, US
• Eagle Mine is 28 mi (45 km) northwest of City of Marquette and 12 mi (20 km)
from Lake Superior
• Humboldt Mill is 25 mi (40 km) west of City of Marquette
• Mine and Mill are approximately 65 mi (105 km) apart via county roads
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Health & Safety
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• Committed to Zero Harm - 2014 H&S Focus
– Rolling out Visible Felt Leadership
– Supporting Operational Readiness
– Establishing core H&S requirements
– Delivering simple processes
– Managing critical risks
Incident Classifications Year Desired YTD Actual
Fatal Injuries 0 0.00% 0%
Lost Time Injuries 1 0.09% 1%
MA/Restricted Injuries 3 0.90% 4%
Firs t Aid Injuries 13 9% 15%
Total Injuries 17
Damage Incidents 33
Near Miss Incidents 28
Prevention Measures 6 90% 80%
Total Injuries & Events 84
Current TRIF 1.31
F
LTI
MA / RWI
FA
Damage / Near Miss / Prevention Measures
Environmental & Permitting: Mine Site
• Eagle Mine has obtained all environmental permits required to begin
operations
• Renewals/reissuances will occur throughout the life of the mine per the
regulations
• Best in class environmental performance
– Comprehensive internal environmental monitoring program
– Community Environmental Monitoring Program
• Water management key driver in mine site design
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Environmental & Permitting: Mill Site
• Tailings management key driver in the mill site permitting and design
• Subaqueous disposal in historical open pit iron ore mine
• Existing tailings from previous operation
• Grout curtain/cutoff wall approved for operations
• Water Treatment Facility
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Project Status
• Engineering
– Complete
• Procurement
– All equipment on site
• Commissioning Planning
– Mine facilities complete
– Mill commissioning target Q4/2014
• Capital expenditure
– $210m accrued to date with ~$191m remaining (as of 31 March, 2014)
• Construction
– Mill facilities 75% complete, on target (as of 31 March, 2014)
– Mine surface substantially complete
• Underground development – well advanced
Start Ramp-Up Q4 2014
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Project Capital Cost – 31 March 2014
Table below represents spend since time of acquisition of Eagle Mine by Lundin
(17 July 2013)
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$Millions 31 March 2014 Apr. 1 – To Completion Total
Mine surface 23 10 33
Mill 73 80 153
Product transport 7 7 14
Ore transport 8 33 41
Underground mine 12 22 34
EPCM 11 10 21
Owners 26 52 78
Subtotal 160 214 374
Contingency - 27 27
Total 160 241 401
All costs are on a cash basis – Eagle project payables at 31 March 2014 are $50 million
Eagle Resource and Reserves
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Reserve 000's
Tonnes Ni% Cu% Cu T
(000's)
Ni T
(000's)
Proven 1,649 4.2 3.5 55 69
Probable 3,677 2.5 2.1 78 93
Total 5,326 3.1 2.5 133 162
Resource
Measured 1,496 4.8 3.8 58 72
Indicated 3,315 3.1 2.5 84 102
Inferred 49 1.0 1.1 0.5 0.5
As of June 30, 2013
Mine Plan & Design - Underground
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• Mine: 2000 tpd longhole open stope mine with backfill
• Access: 2.8 mi (4,500 m) of lateral development
• Lower internal ramp: 1000m to lowest level - 145L. Switchback design to provide diamond drill access along strike
• Surfaces raises: Twin 560 ft. (170 m) raisebores for intake/egress and exhaust
• Production: Q4 2014
Mining
• Cementation
– Three year contract term with option to renew
– Includes development, production and backfill
– Unit rate based
– Onsite since Q4 2013
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Milling Process
Crushing
Crushing Grinding
Grinding
Bulk Float
Grind & Float
Thicken
& Press Ni & Cu
Concentrates
Metallurgy
Two Predominate Ore Types
• Massive Unit (MU)
– Pyrrhotite, pentlandite,
chalcopyrite
– Soft, high grade
• Semi-Massive Unit (SMU)
– Serpentine, talc, chlorites
and other silicates
– Harder, lower grade
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Metallurgy
High Level Design Criteria
• 2,000 tpd operation at 95% availability
• 3-stage crushing plant (8 hr/day, 7-day/week operation)
• Concentrator (24 hr/day, 7-day/week operation)
• Concentrate Load-out (8 hr/day, 7 days/week depending on production)
Straight Forward Processing Circuit
• Conventional flotation to produce separate Ni and Cu concentrates
• Expected average mill recovery is 82% nickel and 93% copper
• Flotation tailings thickened and deposited subaqueously in the existing
Humboldt tailings disposal facility
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Metal Concentrates
• Nickel concentrate grade is estimated at 11% and copper concentrate at 31%
• By-product credits include: Copper, cobalt, platinum, palladium, gold and
silver
• Storage capacity at site will be approximately 3,000 wmt for nickel
concentrates and 1,000 wmt for copper
• Concentrates will be railed directly to either Canadian smelters or to the ports
on the St. Lawrence, east or west coasts for overseas shipping
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LOM Production & Cost Profile
• Average Life of Mine (LOM) production of 17 ktpa Ni and 17 ktpa Cu at cash
costs (excl. royalties) of ~$2.50/lb Ni
• Average production in first three full years of 23 ktpa Ni and 20 ktpa Cu at
cash costs (excl. royalties) of under $2.00/lb Ni
• Approximately 8 year mine life (late 2014-2022) with upside potential
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2014 2015 2016 2017 2018 2019 2020 2021 2022 Total
Ore Tonnes (kt)
57.9 663.4 739.9 712.7 717.3 751.2 723.5 666.8 151.0 5,184
Ni (%) 4.09 4.21 4.08 3.64 2.65 2.32 1.94 1.82 1.70 2.93
Cu (%) 2.75 3.03 3.08 3.14 2.65 2.35 1.64 1.65 1.70 2.49
Annual Production Profile
• Average Life of Mine revenue percentage breakdown is as follows1:
• 71% Nickel; 23% Copper; 3% Platinum, 2% Cobalt, 1% Palladium, 1% Gold
1 Based on price assumptions used in the July 2013 43-101 Tech Report., which assume long-term prices of: $9.25/lb Ni, $3.00/lb Cu, $1820/oz Pt, $12.75/lb Co, $790/oz Pd and $1405/oz Au
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Expected Operating Costs
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Average $/t % of Total Cost
Mining Total: $67 51%
Transport & Processing:
Transportation (ore to mill) $14 10%
Processing $26 21%
Transport & Processing Total: $40 31%
G&A Total: $24 18%
Total Operating Cost $131/t 100%
• Average LOM Net Smelter Return is $456/t
Eagle Mine: Low-Cost Nickel Producer
• We estimate Eagle LOM C1 cash cost at $2.55/lb, which is in the lowest cost quartile
Eagle (est.)
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Operational Contracts
• Rail gondola car lease
– Complete
• Ore truck haulage (mine to mill)
– Complete
• Underground contract miner
– Complete
• Concentrate rail freight
– Complete
• Concentrate Offtake agreements
– Copper concentrate offtake concluded
– Nickel concentrate contracts partly committed
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Road & Rail
Transport of coarse ore
• 65 mi (105 km) contracted coarse ore haulage
• Approximately 44 truck round trips per day
• Significant budget for local road upgrades
Transport of concentrates
• Concentrate shipping via rail from Mill
• Approximately six nickel and two copper concentrate cars per day
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2014 Drilling Program
• Delineation drilling on 190 and 172 levels: complete
• Exploration drilling 2014: 9600 meters focusing on near-mine potential to add
to mine life and greenfields targets
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Near Mine Exploration
• Eagle near mine exploration: targeting for massive sulphide “sill” extensions.
A little massive sulfide goes a long way.
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NS Section 431522 NS Section 431522
2012 New MSU Drill Intercepts
2012 New MSU Model Extensions
Previous MSU model
Eagle 2014 Exploration Targets
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Preliminary targets from previous geophysical surveys for follow-up ground gravity.
Geologic targets.
2 VD Airborne Mag
Proposed 3D Seismic Area
Eagle Near Mine
Eagle East MSU
Eagle East Feeder
1 km grid
MSU clast in basement
Eagle Reserves in Perspective
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0.1
1
10
1 10 100 1000 10000
Gra
de
(w
eig
ht
% N
i)
million tonnes
Ni deposits and districts - Total resources (past production+current resources)
Laterite Deposits Sedimentary Deposits Sulphide Deposits Sulphide Districts
Sudbury
Noril'sk
Duluth
Platreef
Merensky
Great Dyke
Mt Keith
Pechenga
Thompson
Voisey's Bay
Kambalda
Agnew
Raglan
Kabanga
Jinchuan
Ovoid
Eagle
Serovskoe
Punta Gorda
Murrin-Murrin
Goro
La Sampala
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