the rosia montana gold & silver project: a project for romania · the rosia montana gold &...
TRANSCRIPT
The Rosia Montana Gold & Silver Project:
A Project for Romania
BMO Capital Markets 24th Global Metals & Mining Conference – February 2015
2
Cautionary Statements/Disclosure CAUTIONARY NOTES
The summary information contained in this presentation is provided by Gabriel Resources Limited ( “Company” or “Gabriel”) in respect of its interest in the Rosia Montana Gold and Silver Project
(“Rosia Montana Project” or “Project”). The Project is owned through Rosia Montana Gold Corporation S.A. (“RMGC”), in which Gabriel holds an 80.69% stake with the balance held by the
Romanian State. Except as otherwise indicated, the information contained in this presentation is as of February 2015.
The contents of this presentation is not to be construed as investment, legal, financial or tax advice. The information is neither an offer to sell nor a solicitation of an offer to buy any securities nor
shall it or any part of it form the basis of or be relied on in connection with, or act as an inducement to enter into, any contract or commitment whatsoever. The contents of this presentation are
being provided to you solely for your information and must not be copied, published, reproduced, distributed in whole or in part to others at any time by recipients. Any failure to comply with this
restriction may constitute a violation of securities laws. The securities of the Company are not listed in the United States and this presentation shall not be construed as an advertisement or public
offering of the securities to U.S. investors.
FORWARD-LOOKING STATEMENTS
This presentation contains “forward-looking statements”, within the meaning of the applicable Canadian securities legislation, concerning the business, operations and financial performance and
condition of the Company, that are based on management’s current expectations, estimates and projections. Forward-looking statements include, but are not limited to, statements with respect to
the expected outcomes of the application processes for permits, endorsements and licenses, including without limitation the ongoing review of the environmental impact assessment, for the
Project; permitting timelines; government and European Union regulations of mining and exploration operations; the timing and possible outcome of pending litigation concerning the Project; the
economic impacts of the Project; requirements for additional capital; the future price of gold and silver; the estimation of Mineral Reserves and Resources; the realization of Mineral Reserve
estimates; the costs, timing and amount of estimated future production; mine life; ore recovery rates; costs of production; capital, operating and exploration expenditures; costs and timing of
development and construction; costs and timing of future exploration; the timing for delivery of plant and equipment; job creation projections; patrimony plans; hedging practices; currency exchange
rate fluctuations; environmental risks; rehabilitation, reclamation and closure expenses; title disputes or claims; requirements for financial guarantees; and limitations on insurance coverage.
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”,
“would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information involves and is subject to known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of Gabriel and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-
looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities and feasibility
studies; assumptions in economic evaluations which prove to be inaccurate; fluctuations in the value of currencies; future prices of gold and other metals; changes to the cost of inputs (including,
but not limited to, labour, cement, steel, capital equipment, reagents and fuel); possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes or slowdowns and other risks of the mining industry; climatic conditions; political instability, insurrection or war; arbitrary decisions by governmental authorities; delays in
obtaining governmental approvals or financing or in the completion of land acquisition, development or construction activities, as well as those factors discussed in the section entitled “Risk
Factors” in Gabriel’s annual information form for the year ended December 31, 2013 available at www.sedar.com. Although the Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are included in this document, except in accordance with
applicable securities laws.
SCIENTIFIC AND TECHNICAL INFORMATION
Certain scientific and technical information regarding the Project contained in this presentation is extracted or derived from the Company’s “Technical Report on the Rosia Montana Gold and Silver
Project Transylvania, Romania” with an effective date of October 1, 2012 (“2012 Technical Report”), which is filed under the Company’s SEDAR profile at www.sedar.com. SRK Consulting (UK) Ltd
(“SRK”), authored the 2012 Technical Report under the supervision of Dr. Mike Armitage C.Eng C.Geol, Group Chairman of SRK, who is considered an independent qualified person for the
purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) guidelines. All Mineral Resources and Mineral Reserves statements contained in the 2012
Technical Report are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum’s “CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines”
as per the requirements of NI 43-101. For more information with respect to the data verification procedures undertaken and the key assumptions, parameters and risks associated with the
foregoing scientific and technical information, please refer to the 2012 Technical Report.
3
Investment Highlights
World class asset:
One of the most significant gold deposits outside the ownership of
a “major” mining company; • Measured & Indicated Resources – 17.1Moz Au and 81.1Moz Ag1 /
Proven & Probable Reserves - 10.1Moz Au and 47.6Moz Ag2
Potential to be Europe’s largest gold mine
Lowest quartile cash cost anticipated
80.69% owned by GBU, with 19.31% State partner
Potential for growth:
No resource definition drilling since 2005
Additional exploration properties at Bucium Rodu Frasin (Au-Ag)
and Bucium Tarnita (Cu-Au)
Rosia Poieni (large State owned copper mine) operating nearby
Potential to expand a major mining district
Cash in bank, long-term owners:
$52.6 million in cash as at September 30, 2014
Cash optimization a priority
Electrum, BSG, Baupost, Newmont - >60%
Stalled permitting - Dispute resolution process enacted:
Formal notification of dispute sent to Prime Minister and President
of Romania on January 20, 2015
Consultation period – Company looking for amicable resolution
1 Source: 2012 Technical Report – Measured and Indicated Resources: 513Mt @ 1.04g/t Au and 5g/t Ag (based on a 0.4 g/t Au cut-off grade) 2 Source: 2012 Technical Report – Proven and Probable Reserves: 215Mt @ 1.46g/t Au and 6.88 g/t Ag
Rosia Montana
Rosia Poieni
Bucium Rodu-Frasin
Bucium Tarnita
4
Rosia Montana Project – Perspective
Carnic Pit
Cetate Pit
Jig Pit
Orlea Pit
Plant Site
Carnic Waste Dump
Rosia Montana
Protected Area
LGS
Tailings Dam
5
Project Key Facts
Open pit truck and shovel mining process – 1.2:1 waste:ore strip ratio
Conventional CIL processing (closed circuit) – approximately 15Mtpa design
16 year operating mine life
Old mining district; good infrastructure and access to educated mining talent
Access to grid power supplied from
existing 110kV transmission line
currently passing through the Project
site
Readily available water supply from
local river
Direct road and nearby rail access
Royalty rate 4%1
Corporate tax rate 16%
1 The Romanian Parliament has recently approved legislation to increase the applicable royalty to 6%. Notwithstanding, the 2012 Technical Report and existing concession agreement for
the Rosia Montana Project currently reflect a royalty rate of 4%
6
Undertaken by SRK Consulting (UK) Limited;
updated from March 2009 NI43-101
Base case metal price assumptions: US$1,200/oz
Au; US$20/oz Ag
2012 NI 43-101 – Highlights
Year of Mine Life Year of Mine Life
Pro
du
ctio
n o
zs (
in 0
00
’s)
Annual Gold Production1
0
100
200
300
400
500
600
700
Annual Silver Production1
Pro
du
ctio
n o
zs (
in 0
00
’s)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Initial Capital + Sustaining
Capital = Total Capital
US$1.40 billion US$571 million US$1.97 billion Mining $3.67
Processing $9.48
G&A $1.87
Other $1.95
LOM cash costs2 $399/oz Total cost per tonne1 $16.97
1 Source: 2012 Technical Report – Operating costs have been estimated in accordance with standard industry practices and are valid as at the third quarter of 2012 2 All figures in US Dollars and royalty based on 4%
Mineral Resource updated using a cut off grade of
0.4g/t; 2009 Resource was stated using 0.6g/t cut off
grade
7
Project Economics
Description Units 2012 2009
Gold price (US$/oz) 1,200 750
Silver price (US$/oz) 20 10.5
Life of Mine Cash cost (US$/oz) 399 335
Pre-production capital (US$m) 1,400 876
Sustaining capital (US$m) 571 366
Closure cost (US$m) 146 128
Undiscounted cashflow after tax (US$m) 3,606 1,662
NPV after tax (5% discount rate1) (US$m) 1,836 997
IRR after tax % 19.6 20.4
Payback Years 3.3 3.5
1 A 5% discount rate was used in the March 2009 43-101 Technical Report. The Base Case discount rate used in the 2012 Technical Report is 10%.
8
Romania Rosia Montana
2,000 years of mining history with significant
gold, silver and copper produced
In the 5 years leading to EU accession in 2007,
in excess of 500 mines were closed, with over
200,000 jobs lost
Romania is in the European Union;
governed by EU rules and regulations
Coalition Governments under socialist party
leadership since December 2012
New President elected
in November 2014
With the current GDP per
capita among the lowest in
the EU, the Romanian
government needs to look to
harness the potential of its
natural resources
Educated and skilled
workforce
Located in a highly prospective mining district
Rosia Montana has been mined for 2,000 years
and most recently by the state until 2006
Unemployment in the Rosia Montana region is
estimated at 90% - following Company
redundancies in last 12 months
The Project will assist in the clean-up of pollution
from years of unregulated mining in the Rosia
Montana region
Designed to comply with or exceed Romanian
laws and EU directives
Key infrastructure already in place
Long-lead time equipment already
purchased and stored in warehouses
• SAG mill
• 2 x Ball mills
• Crusher
9
Recent Project progress
August 2013 – the Government approved an agreement that included revised equity and royalty terms, 25% and 6%
respectively to the State and draft legislation relating to the Project; a Special Draft Law that declared the Project of national
public interest
Q4 2013 – the Special Joint Committee of the Chamber of Deputies and of the Senate of the Parliament, established on
September 17, 2013 for the examination and issuance of an opinion on the Special Draft Law decided to reject it. This was
also subsequently rejected by the Senate of the Parliament on November 19
Q4 2013 - a revised Mining Law, approved in early December by the Joint Commissions of Industries and Administration,
received 160 of the 204 votes required for approval in Parliament; it therefore did not pass into legislation
March 2014 – Company announces layoff of over 400 employees in Romania
April 2, 2014 – TAC meeting to consider environmental issues raised in the Report of the Special Joint Committee of the
Chamber of Deputies – broadly inconclusive
April 2014 – loss of two court cases relating to an archaeological certificate and PUZ endorsement
May 2014 – Chamber of Deputies of Parliament rejected the Special Draft Law
July 24, 2014 – TAC meeting to discuss the Ministry of Environment’s requirement for further studies on the permeability of the
Project’s tailings management facility – broadly inconclusive
Q4, 2014 – The Project once again is used as a political debate theme in the Presidential election runoff with statements from
all candidates
December 2014 – PNL (Liberals) candidate Klaus Iohannis becomes President
January 20, 2015 – Company issues notice letter to President and Prime Minister regarding dispute under various bi-lateral
investment treaties
January 2015 – Following the dispute letter Klaus Iohannis calls for the Government and the Company to talk
To be completed
TAC unanimous recommendation → cabinet approval of EIA → issuance of Environmental Permit
PUZ for the Industrial Project Area and Historical Area
10
60% of total
surface
already
secured
To date RMGC has secured 757ha of
land, amounting to 60% the total
surface area required for Project
construction – this includes 78% of the
number of homes in the Project footprint
Surface Rights Status
61%
belongs to
residential
owners
39% are
institutional
properties
Of the total remaining surface to be
acquired, 39% (196ha) are institutional
properties
The remaining 304ha (61%) of the total
surface to be acquired belongs to
private owners
A total of 155 households located
under the Project footprint are still to be
relocated
Once the Environmental Permit is granted the Company will resume the surface rights acquisition process; the acquisition
programme ceased soon after the 2007 permitting process was put on hold
Project
Objective:
Secure 100% of
the surface rights
and hand over to
the construction
team 40% of total
surface still
to be secured
Resettlement to Date:
125 families opted for resettlement in the Recea neighbourhood at Alba Iulia – a
location chosen by the community and built by RMGC
Construction began in 2006 and was completed in 2010
Resettlement and community support is an ongoing commitment of the
Company
Land is available and in possession for expansion of up to 80 additional houses
for those opting for resettlement
11
Today The vision
Economy High unemployment / poverty rate
Lack of opportunities for businesses
Harsh macroeconomic conditions
>3,000 in direct jobs over the Project’s lifetime
Opportunities for local businesses
>$24 billion1 in total contribution to Romania’s GDP
Environment
Current pollution
Acid waters; heavy metal contamination
in local water system
Abandoned open pits
Soil contamination
Acid waters are cleaned by operation
Pits are closed and planted or transformed into lakes
Pilot water treatment plant currently operating
Establishment of a +$146 million financial guarantee
for closure, environmental restoration and post-closure
monitoring
Patrimony
Most Roman galleries not accessible
Limited historical monuments exhibited
Cultural heritage houses in advanced
degradation, no budget available to the
government to research or preserve
+$100m commitment to the future by Gabriel/RMGC
Many Roman galleries restored and open for visitors
Restoration of historical town center; most historical
houses renovated and used for sustainable
development programs
Community Young leaving the area in search of a
better life
Poverty affects social cohesion
Community life and traditions are restored
Sustainable development strategies ( professional
reconversions, business plans for post mining
activities)
OVERALL Impoverished community with no real
alternative
SOLUTION - Prosperity, growth, clean environment,
tourist destination, cultural heritage rehabilitated.
A long term future for Rosia Montana
Rosia Montana Project Benefits: Summary
1 At a gold price of USD $1,200/oz
12
Summary
Bringing one of the world’s largest
undeveloped gold projects to production
Rosia Montana has the potential to
become one of Europe’s largest gold
mines
Production profile of c.500,0001 oz Au per
annum at lowest quartile cash costs
Project economics robust at current
gold/silver prices; close to US$0.5 billion
free cash flow generated per annum with
a substantial reinvestment into the
Romanian economy
>US$24 billion2 direct and indirect
potential impact from the Project on the
Romanian economy at current gold prices
The Project provides the only solution for
local community and the historical center
of Rosia Montana
Local Romanian public support through
December 9, 2012 positive referendum
vote - community support remains
Sustainable project for the future
Environmental permitting process needs
to be completed
Following recent political impasse, issue
of dispute notification letter, and the lay
off of majority of workforce, waiting to
resume talks with key Government
officials and ministries
Arbitration decision not made - potential
route in Project development
TSX listing with strong global
shareholder base
Permitting Europe’s largest gold mine……… Gabriel Resources, Romania and Rosia Montana
1 Source: 2012 Technical Report 2 At a gold price of USD $1,200/oz
13
ANNEXES
14
Rosia Montana Project – Resources and Reserves1,2,3,4,5,6,7
Resources Tonnes
(Mt)
Au
(g/t)
Ag
(g/t)
Contained Au
M oz
Contained Ag
M oz
Measured 171.5 1.32 8 7.26 43.16
Indicated 341.2 0.90 3 9.89 37.96
Measured & Indicated 512.7 1.04 5 17.14 81.12
Inferred 44.8 0.98 3 1.42 4.10
Reserves Tonnes
(Mt)
Au
(g/t)
Ag
(g/t)
Contained Au
M oz
Contained Ag
M oz
Proven 112.5 1.63 9.01 5.9 32.6
Probable 102.5 1.27 4.55 4.2 15.0
TOTAL 214.9 1.46 6.88 10.1 47.6
1 Source: 2012 Technical Report 2 For more information with respect to the data verification procedures undertaken and the key assumptions, parameters and risks associated with the foregoing scientific and technical
information, please refer to the 2012 Technical Report, a copy of which is filed under the Company’s SEDAR profile 3 Mineral Resources estimates set out above are estimated based on a 0.4 g/t Au cut-off grade 4 Numbers may not total due to rounding 5 Mineral Reserves and Mineral Resources are mine and property totals and are not limited to Gabriel’s proportionate interests in the Project 6 All quoted Mineral Resources are inclusive of the Mineral Reserves. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability 7 Development of the Project is dependent on successful permitting
15
Gabriel / RMGC commitments:
Integrate environmental standards in all activities; ensure high standards of employee training;
Establish and maintain a management system to identify, monitor, control and improve the
environmental performance of RMGC activities;
Finance independent audits and establish independent monitoring mechanism in order to assess
environmental performance in relation to objectives;
Comply with all the applicable laws in Romania and the EU, subject to the reporting requirements and
any other obligations;
Use Best Available Techniques (BATs) in all operations and activities in order to enhance environmental
protection in all the operating phases of the mine;
Implement efficient and transparent communications with stakeholders with regard to the environmental
aspects of RMGC activities and encourage public debate on environmental matters;
Co-operate with national and international institutions and organizations in order to develop efficient,
cost-effective and environmental-friendly measures;
Compliance with Equator Principles and IFC Performance Standards. Project has also initiated a
process to comply with IFC Performance Standard 6 adopted in January 2013;
The Project is committed to remedying past environmental damage caused by over 2,000 years of
poorly regulated mining activity;
RMGC planning to invest $ millions in immediately tackling pollution problems of this type.
Environmental – General
16
Environmental – Rosia Montana
17
Environmental – Rosia Montana
18
Environmental – Rosia Montana
19
Environmental – Rosia Montana
20
Environmental – Rosia Montana
21
Culture – Rosia Montana
22
Culture – Rosia Montana
23
Historically Romania had a strong mining industry
More than 2.6 million people (approx. 12% of the country’s
population) live in approximately 600 mining communities
By 2006, the Romanian government closed 80% of the 650
mines that had been operating in the early 90s (to meet EU
accession criteria)
More than 200,000 jobs have been lost since 2006; less
than 8,000 new jobs created through alternative job
creation programs
People living in mining communities want mining to
continue as well as mining traditions
RMGC has demonstrated its continued commitment to
helping restore the Project mining community and foster
sustainability through:
hosting and supporting social activities and
awareness programs;
investment in restoration and infrastructure
Through its EIA commitments, the Company will invest
>$70m in local heritage and cultural aspects in and around
Rosia Montana over the life of the Project (and up to $50m
more across Romania)
Example of local RMGC community
investment
in the former ‘Town Hall’
Patrimony
24
Old School in Historical Centre ‘Old School’: built in 1898 and used as
school until 2005
Currently owned by the Local Council
Restoration / Conversion plan
Design completed
Restoration largely complete (now
weatherproof)
Proposal to partner with the Local
Council for use in community needs and
to support tourism
In total, over 300 properties in the historic
town center (Protected Area) will be restored /
rehabilitated
Future functions for buildings:
Mining Museum (opened 2010)
Dwellings for residents
Guesthouses and restaurants
Social dwellings for local people
Offices and shops
Restoration Plan
Historical Centre – initial status and restoration project
Patrimony / Community
25
Mining Museum
26
The First House Fully Restored
The house is situated
in the protected area of
Rosia Montana’s
historic centre
The building is part of a
group of 9 houses
situated in the central
square of Rosia
Montana, all proposed
to be organised in a
mining museum
complex
Mining Museum
27
Recea Resettlement Community