new oz minerals corporate update · 2015. 9. 15. · −8-10 days sailing to customers. −storage...

OZ MINERALSCORPORATE UPDATE

BMO 2010 Global Metals & Mining ConferenceTERRY BURGESSManaging Director & CEO - OZ MineralsWWW.OZMINERALS.COM

OZ MINERALS • PAGE 2

DISCLAIMER

This presentation has been prepared by OZ Minerals Limited (“OZ Minerals”) and consists of written materials/slides for a presentation concerning OZ Minerals. By reviewing/attending this presentation, you agree to be bound by the following conditions.

No representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information, contained in the presentation or of the views, opinions and conclusions contained in this material. To the maximum extent permitted by law, OZ Minerals and its related bodies corporate and affiliates, and its respective directors, officers, employees, agents and advisers disclaim any liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or its contents, including any error or omission there from, or otherwise arising in connection with it.

Some statements in this presentation relate to the future and are forward looking statements. Such statements may include, but are not limited to, statements with regard to intention, capacity, future production and grades, projections for sales growth, estimated revenues and reserves, targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow and debt levels, the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside OZ Mineral’s control. Actual results and developments may differ materially from those expressed or implied in such statements because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation.

Given these risks and uncertainties, undue reliance should not be placed on forward-looking statements and intentions which speak only as at the date of the presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, OZ Minerals does not undertake any obligation to publicly release any updates or revisions to any forward looking statements contained in this presentation, whether as a result of any change in OZ Minerals expectations in relation to them, or any change in events, conditions or circumstances on which any such statement is based.

Certain statistical and other information included in this presentation is sourced from publicly available third party sources and has not been independently verified.


Prominent Hill copper-gold

operation

Operation

Headquarters

AUSTRALIA

Cambodia

Exploration

MARKET STATISTICSASX-listed (OZL, S&P/ASX 100).3,121m issued shares.Average turnover; 25m shares/day.Share price; A$1.08Market capitalisation; A$3.4 billion.

Australia68%

UK12%

Europe2%

Asia5%

N America9%

Other4%

Institutions: 60%. Retail: 40%

SHAREHOLDER BASE

• Prominent Hill copper-gold operation – successful ramp-up in 2009, now at full capacity.

• Production guidance for 2010-2012:- 100,000t – 110,000t copper- 80,000oz – 90,000oz gold- C1 cash cost US85-95c/lb

• Feasibility study on underground project at Prominent Hill in progress.

• Exploration for further Prominent Hill-style deposits in prospective 7,000km2 tenement package. (including IMX ground)

• Advanced gold exploration project in Cambodia – resource delineation underway.

• Healthy balance sheet.

• A$1,076.3m cash at 31 December 2009.

• US$105m convertible note-only debt.105,600 shareholders

OZ MINERALS: SNAPSHOT


STRATEGY

ZERO HARM

FOUNDATION BUILT ON GOVERNANCE

SUPERIOR TOTALSHAREHOLDER RETURNS

FOCUS ON COPPER

MAXIMISE POTENTIAL OF ASSETS

BUILD A PROJECT PIPELINE

INVEST IN EXPLORATION

DISCIPLINED CAPITAL

MANAGEMENT


STRATEGY

To achieve superior returns (measured by Total Shareholder Return) in the resources sector.

To achieve this OZ Minerals will:

− Operate under the principle of Zero Harm – to employees, to the environment, while benefiting the communities.

− As a priority, maximise potential from its existing assets through requisite performance improvement, cost reduction, investment and exploration.

− Focus on copper as the preferred commodity, benefiting from the strong outlook for the metal, and consider other commodities, where competitive fundamentals and potential for returns is demonstrated.

− Build a project pipeline through a range of development stages to enable delivery of sustainable returns over time; by leveraging its balance sheet strength and expertise to realise opportunities.

− Pursue Australian and international opportunities in low to medium risk jurisdictions which have the potential to increase earnings of the company significantly and have the potential to support a mine life of more than 10 years.

− Have exploration as a key pillar of growth both around existing operations and elsewhere in prospective regions with a balanced risk-returns strategy and based upon a tollgate decision process.

− Distribute cashflows from operations, which are surplus to the immediate needs of the business, through suitable capital management initiatives.

− Maintain high standards of governance in all areas of its business as a foundation and enact the OZ Minerals Values of Respect, Integrity, Action & Results.


COPPER: OZ MINERALS PREFERRED COMMODITY

0

5

10

15

20

25

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

GDP/Capita

kg/c

apita

Sth Korea China

Germany India

Japan China F'cast

COPPER INTENSITY OF USE

Source: World Bank, CRU

> Chinese and Indian demand for copper has a long way to go.

Forecast

COPPER SUPPLY/DEMAND FORECAST – LONG TERM

Source: ICSG; Brook Hunt; Citi

> Supply will be a challenge.

1998

2000

2002

2004

2006

2008

2010

e

2012

e

2014

e

2016

e

2018

e

2020

e

14

18

22

Copp

er (M

t)

Refined production Consumption demand

COPPER MINE PRODUCTION LOSSES FROM PLAN

'000

t

Source: Brook Hunt, Macquarie Research, June 2009

5%

10%

15%

20%

25%

0 500 1,000 1,500 2,000Cumulative Annual Copper, kt

IRR,

%

US$2 /lb Cu

US$2.5 /lb CuProject at US$2.5/lb Cu

Project at US$2/lb Cu

15% IRR hurdle rate set by many companies

Source: OZ Minerals Research

NEXT GENERATION COPPER PROJECTSCumulative Potential Production – 2Mt pa


PROMINENT HILL – SUCCESSFUL RAMP-UP NOW IN FULL PRODUCTIONLocation: South Australia, Australia.

Ownership: 100%.

Status: Ramp-up completed.

Copper-gold resources:

189.7Mt @ 1.32% Cu, 0.5g/t Au (2.5Mt Cu, 2.9 Moz Au)

Strip ratio: 5-6:1 (waste to ore, tonnes basis)

Plant: 8.8Mtpa crush, grind, flotation.

Production 2009:

96,310t contained copper, 75,535oz gold.

Production 2010-2012

100,000t to 110,000t contained copper,80,000oz to 90,000oz gold

C1 costs 2010E: US$0.85 – US$0.95/lb

Workforce: 600 (including contractors)

Reserves: 75.7Mt @ 1.19% Cu, 0.59g/t Au (0.9Mt Cu, 1.4Moz Au)

Gold only resources:

78.8Mt @ 0.06% Cu, 1.4g/t Au (0.05Mt Cu, 3.4Moz Au)

Mine: 45Mtpa open pit, mining contractor Thiess

Product: High grade (+50% Cu), high quality, copper concentrate.

Estimated mine life:

9 years for Stage 1 open pit. Potential underground capable of supporting mine life and throughput expansion.


PROMINENT HILL SITE

TAILINGS DAM

PIT

ROM PAD

PROCESSING PLANT

VILLAGE

WESTERN COPPER ZONE

AREA

NORTHERN WASTE DUMP

SOUTHERN WASTE DUMP


2009 PRODUCTIONProminent Hill – 2009

2009

MINED ORE (TONNES) 9,120,226

WASTE (TONNES) 38,467,993

MINED GRADE COPPER (%) 1.32

GOLD (G/T) 0.75

SILVER (G/T) 3.55

ORE MILLED (TONNES) 6,538,276

MILLED GRADE COPPER(%) 1.86

GOLD (G/T) 0.56

SILVER (G/T) 4.97

RECOVERY COPPER (%) 79.4

GOLD (%) 64.7

SILVER (%) 67.0

COPPER CONCENTRATE PRODUCED (TONNES) 178,066

CONCENTRATE GRADE COPPER (%) 54

GOLD (G/T) 13.2

SILVER (G/T) 122.3

CONTAINED METAL IN CONCENTRATE COPPER (TONNES) 96,310

GOLD (OZ) 75,535

SILVER (OZ) 700,177

TOTAL CONCENTRATE SOLD (DM TONNES) 158,736


PROCESSINGProminent Hill plant copper recovery 2009

Average Recovery Concentrate gradeTrial Days t/hr Chalcocite dominant

(parts)

Bornite-dominant

(parts)

Gold only (parts)

Total tonnes

Copper

85%

83%

85%

87%

88%

Copper Gold

Base 11 1,139 1 306,478

Gold

72%

61%

73%

72%

11g/t

1 23 1,118 1 412,234*

54%

40%

51%

53%

75%

12g/t

2 6 1,128 9 1 168,903 16g/t

3 12 1,162 7 3 341,682 14g/t

4 7 1,116 6 3 1 164,404 51% 17g/t

Ore-blending trials

0%

20%

40%

60%

80%

100%

Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec

Reco

very

*Includes shutdown


CONCENTRATE: HIGH GRADE, COMPETITIVE DELIVERY TIMESHigh quality concentrate

− Currently highest grade copper concentrate traded on the open market – over 50% copper.

− Ideal for blending with lower grade concentrates.

− Grade will vary depending on ore type – 45% Cu LOM.

− Gold content is high but variable, 19g/tAu LOM.

− Low impurities – controlled by latest technology in fine grinding – Isa Mill, Jameson Cell.

Logistics

− 48 hours from mine to Port of Darwin.

− 8-10 days sailing to customers.

− Storage at Port of Darwin.

Marketing

− 200,000+ dmt concentrate per annum.

− Deliveries to China, Europe, India and Australia.

− TC/RC’s remain low due to limited global concentrates supply.

Production committed to Sales Agreements

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2012

2011

2010

2009

% of production

committed balance

Asia, 70%

Europe, 15%

Domestic, 15%

Prominent Hill sales 2009-10


PROMINENT HILL UNDERGROUND FEASIBILITY STUDY – UPDATE Q2 2010

Selected Infill Drilling where sites allow – otherwise, more drilling west

and east, along strike

? ?

? ?

In progress Q1 2010

Proposed for 2010

2200 mplanned

2700m4000m

4000m4000m

4000m

4000m4000m

2700m

ExtensionDiamond Drilling

ExtensionDiamond Drilling

Proposed for 2010

?

Extension and InfillDiamond Drilling –

28,000m drilled to date

Completed in 2009

Western copper deposit Main underground deposit


PROMINENT HILL HIGH REGIONAL PROSPECTIVITY

− Large 100% owned, under-explored tenement holding, highly prospective for IOCG deposits

− Now drilling targets

− Several broad zones of IOCG-style alteration systems intersected with low-grade mineralisation.

− Heads of Agreement with IMX Resources* extends available exploration area to 7,000km2.

− 51% stake with potential to increase.

− Secures most of Mt Woods Inlier.

Total IMX area of 3208 Sq Km* Subject to joint venture agreement


CAMBODIA – ADVANCED EXPLORATION

− Greenfields intrusive related gold discovery.− Exploration since 2006.− Drilling to delineate an initial resource at Okvau

prospect by Q1 2010.− District scale potential to be identified.


OZ MINERALS’ GROWTH STRATEGY

Objective: top quartile total shareholder return in the resources sector.

Strategy: to quickly and sensibly assemble a pipeline of projects to support growthobjective over the next ten years

Tactics:

− Copper is the preferred metal, favourable fundamentals, many opportunities.

− Identify projects that matter to OZ Minerals in scale, returns, location, economies

• 50 - 150 ktpa operations represent a “Window of Opportunity”

• Take advantage of industry consolidation

• Projects requiring development capital or risk reduction

• Strategic holdings or joint ventures with junior companies

− Flexible approach to how such investments are made

− Key is the quality of the asset


COPPER OPPORTUNITIES - SIZE & NUMBER

Source: OZ Minerals

The probabilities of achieving a material business for OZ Minerals are much higher in copper as there are significantly more operations producing >50ktpa compared to other commodities.

THE BASE METALS BALANCE: GRADE-TONNAGE-EBITDA RELATIONSHIPS

Size of circles is proportional to EBITDA:

US$200 M

US$1 B


COPPER OPPORTUNITIES - SIZE & TYPE− 50-150ktpa copper mines are often too small for the major companies but have significant technical, financial and marketing

challenges for smaller companies. − 50-150ktpa represents a “Window of Opportunity” for a company of OZ Minerals’ size and capability. Not a lot of other

companies compete in this space.− Porphyry and IOCG deposits dominate this window and are hence the main exploration and acquisition targets.

Source: OZ Minerals

GLOBAL COPPER DEPOSITS – EBITDA VS PRODUCTION

Major Companies

OZ MineralsWindow of

Opportunity


COPPER OPPORTUNITIES GEOGRAPHICAL DISTRIBUTION

Most copper operations and projects, excluding the FSU, are located in low-moderate risk geographical jurisdictions (green & blue) which is mostly where OZ Minerals will focus.

Source: MinEx, MEG, OZ Minerals

Global distribution of copper resources containing>500 kt of copper


INCOME STATEMENT - SUMMARY

A$M

Prominent Hill

Mine*

Total Continuing Operations

Total Discontinued

Operations

Group

Revenue 608.5 608.5 764.9 1,373.4 Cost of goods sold (178.3) (209.6) (452.4) (662.0)Net foreign exchange gains/(losses) (24.6) (113.0) (17.3) (130.3)Other expenses (24.7) (64.0) (38.9) (102.9)EBITDA 380.9 221.9 256.3 478.2

Depreciation and amortisation (80.2) (85.7) (156.9) (242.6)EBIT 300.7 136.2 99.4 235.6

Net financing expenses (0.7) (88.3) (5.7) (94.0)Income tax benefit/(expense) (97.4) (16.6) (30.6) (47.2)NPAT (before loss on sale of discontinued operations) 202.6 31.3 63.1 94.4

Loss on sale of discontinued operations after income tax n/a n/a (606.8) (606.8)NPAT 202.6 31.3 (543.7) (512.4)

* Formal production commenced 1 May 2009 for accounting purposes


CASH FLOW 2009

CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2009 CONTINUINING & DISCOUNTED OPERATIONS

(500)

0

500

1,000

1,500

2,000

2,500

119 1,419 (1,176) (302) (86) (25) (25) 2,038 (886) 1,076

OpeningCash

Receipts from

Customers

Pmts tosuppliers and

employees

Propertyplant andequipment

Financing/Borrow ingcosts and net interest

paid

FX on CashBalances

Other Proceedsfrom assetdisposals

Repayment ofBorrow ingsand Finance

Leases

ClosingCash

(A$M)


OZ MINERALS SUMMARY

− Prominent Hill successfully ramped up in 2009.

− Prominent Hill development studies underway.

− Priority regional targets being tested at Prominent Hill.

− Advanced exploration in Cambodia - resource modelling underway.

− Strong balance sheet – A$1,076m at Dec 31 2009.

− Active business development team.

Now one of the best positioned companies in the sector.

OZ MINERALS • PAGE 22OZ MINERALS • NOVEMBER 2009 • PAGE 22

APPENDICES Investor contact:Natalie WorleyHead of Investor & External [email protected]


MINERAL RESOURCES & RESERVES 30 JUNE 2009RESOURCES*Copper-gold Mineral Resource Summary**

Category Tonnes (Mt)

Cu (%) Au (g/t) Ag (g/t) Contained Cu (kt)

Contained Au (Moz)

Contained Ag (Moz)

Measured 36.6 1.65 0.5 3.6 604 0.6 4.2

Indicated 70.2 1.30 0.5 3.2 910 1.2 7.1

Inferred 83.0 1.18 0.4 2.9 982 1.1 7.6

Total 189.7 1.32 0.5 3.1 2,496 2.9 19.0

Total

Gold only Mineral Resource Summary***

2.43.4510.91.40.0678.8Total

1.22.4310.71.40.0651.4Inferred

0.70.8111.11.30.0619.0Indicated

0.50.381.81.10.108.4Measured

Total

Contained Ag (Moz)

Contained Au (Moz)

Contained Cu (kt)

Ag (g/t)Au (g/t)Cu (%)Tonnes (Mt)Category

RESERVES****Prominent Hill Ore Reserves Summary

732714269043.010.591.1975.7Total

27145813072.850.611.0429.6Probable

46138455973.110.571.2946.1Proved

Contained Ag (koz)

Contained Au (koz)

Contained Cu (kt)

Ag(g/t)

Au(g/t)

Cu(%)

Tonnes(Mt)Classification

* Resources are inclusive of Reserves.** Cut off grade is 0.3% Cu above 9730m RL and 0.8% Cu below 9730m RL.*** Cut off grade is 0.5g/t Au above 9730m RL and 1.0g/t Au below 9730m RL (exclusive of copper-gold Mineral Resource).**** Based on US$210/lb Cu, US$800/oz Au, US$12.50/oz Ag and FX rate of A$1.00:US$0.78.

new oz minerals corporate update · 2015. 9. 15. · −8-10 days sailing to customers. −storage...

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