western areas nl...western areas – core assets 1. flying fox and spotted quoll mines – 100%. two...
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WESTERN AREAS NL 1
March 2010Mining and developing high grade, low cost, long life nickel mines
WESTERN AREAS NL
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The information contained in this presentation has been prepared by Western Areas NL. No representation or warranty, express or implied, is or will be made in or in relation to, and no responsibility or liability is or will be accepted by Western Areas NL, employees or representatives as to the accuracy or completeness of this information or any other written or oral information made available to any interested party or its advisers and any liability therefore is hereby expressly disclaimed.No party has any obligation to notify opinion changes or if it becomes aware of any inaccuracy in or omission from this presentation. All opinions and projections expressed in this presentation are given as of this date and are subject to change without notice.
This document contains forward-looking statements. These statements are subject to certain risks and uncertainties that could cause the performance or achievements of Western Areas NL to differ materially from the information set forth herein, although such information reflects forecasts and projections prepared in good faith based upon methods and data that are believed to be reasonable and accurate as at the dates thereof and although all reasonable care has been taken to ensure that the facts stated herein are accurate and that the forward-looking statements, opinions and expectations contained herein are based on fair and reasonable assumptions. Western Areas NL undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances. Individuals should not place undue reliance on forward-looking statements and are advised to make their own independent analysis and determination with respect to the forecasted periods, which reflect Western Areas NL’s view only as of the date hereof.
The information within this PowerPoint presentation was compiled by Mr. Julian Hanna and the information as it relates to mineral resources and reserves was prepared by Mr. Dan Lougher and Mr. John Haywood. Mr. Hanna, Mr. Lougher and Mr. Haywood are full time employees of Western Areas. Mr. Hanna, Mr. Lougher and Mr. Haywood are members of AusIMM and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Hanna, Mr. Lougher and Mr. Haywood consent to the inclusion in this presentation of the matters based on the information in the form and context in which it appears.
DISCLAIMER AND FORWARD LOOKING STATEMENT
THIS DOCUMENT IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES
OR FOR DISSEMINATION IN THE U.S.
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PRODUCTION
1. Double production to target 20,000tpa (44Mlb pa) nickel2. Major ramp up (tonnes and grade) starts June Q 20103. Maintain cash cost <US$2.50/lb
DEVELOPMENT
1. Double capacity of processing plant by 30 June2. Feasibility study for new 10 year underground mine3. Complete major capital spend to sustain 25,000tpa nickel
GROWTH
1. Extend mineral resources / ore reserves. Target >10 years2. Discover next Flying Fox type deposit at Forrestania3. New nickel discovery at Sandstone Project announced 8th March
OTHER
1. Secure major offtake + funding partner for Finland projects2. Commence nickel sales to Jinchuan in China
WESTERN AREAS – 2010 GOALS
BOARDTerry Streeter Chairman and 16.6% shareholderJulian Hanna Managing Director and CEOCraig Oliver Finance Director and Company SecretaryDaniel Lougher Operations DirectorDavid Cooper Independent DirectorRobin Dunbar Independent Director, Toronto basedRick Yeates Independent Director
Western Areas – Corporate
ASX & TSX LISTED - ASX 200
ISSUED CAPITAL: 179M shares, 11M options
MARKET CAPITAL: A$860M @ A$4.80/share
WEBSITE: www.westernareas.com.au
FINANCIAL
CASH (31 Dec 2009): A$90.7M plus ~A$28.4M Receivables & Working Capital
FINANCE FACILITIES: A$80M (drawn to A$60M) ANZA$45M BHP Billiton
CONVERTIBLE BOND: A$209M - 8% coupon - converts $8.16 - July 2012
NET DEBT: A$200M
EXPLORATION: A$13M Budget in CY2010
DIVIDEND POLICY: 50% net profit after tax
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WESTERN AREAS – Core Assets
1. Flying Fox and Spotted Quoll Mines – 100%. Two highest grade nickel mines in world, based on ore reserves. Target sustained 25,000 tpa (55M lbs) by 2011, low cash cost (US$2.00 – 2.50/lb Ni). Major established infrastructure.
2. Regional Nickel Projects – Dominant position in 500km nickel province in Australia. 6 projects in joint ventures earning up to 70%. 4 recent nickel discoveries.
Finland Nickel/Copper/Zinc Project – Earning 75% in JV with dominant position in 180km long metal province in Finland. Target to define and develop large deposits similar to Talvivaara mine. Minimum target 20,000 tpa (44M lbs) Ni production.
• Offtake – agreements with two nickel smelters, BHP Billiton and Jinchuan Group
• Growth Strategy – to become Australia’s 2nd largest and lowest cost nickel producer 5
1. 12 months production to Dec 09:2. 244,000t @ 3.8% Ni for 9,190t Ni (20.2M lbs Ni)
3. Higher cash cost in Dec Q 09 the result of completion of major development of T4 ore body
4. Rapid ramp up of production from Flying Fox and new Spotted Quoll mine to start June Q 10
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PRODUCTION AND CASH COSTS
Production Statistics - Flying Fox
Mar Qtr Jun Qtr Sep Qtr Dec QtrRolling 12 MonthTotal
Flying Fox - Ore Tonnes Mined Tn's 77,501 59,098 54,150 53,618 244,367 Ni % 3.7% 4.3% 3.7% 3.3% 3.8%
Ni Tonnes Mined Tn's 2,833 2,570 2,015 1,776 9,193
Flying Fox - Ni Tonnes Produced
Total Ore Processed Tns 58,802 62,447 60,064 64,985 246,298 Ni % % 3.5% 4.4% 3.8% 3.1% 3.7%Ave. Recovery % 87% 90% 91% 88% 89%
Ni Tonnes in Concentrate Tns 1,805 2,435 2,066 1,791 8,097
Ni Tonnes in Concentrate Sold Tns 888 2,783 3,091 6,762
StockpilesConcentrate Tns 11,070 1,382 Grade % 15.1% 13.2%
Ore Tns 28,823 17,456 Grade % 2.9% 3.4%
Contained Ni in Stockpiles Tns 2,517 773
Financial Statistics - Flying FoxMar Qtr Jun Qtr Sep Qtr Dec Qtr Total
Group Production Cost/lbMining Cost (*) A$/lb 1.92 2.02 1.76 3.30 2.21 Haulage A$/lb 0.26 0.11 0.12 0.14 0.15 Milling A$/lb 0.52 0.54 0.77 0.96 0.69 Admin A$/lb 0.25 0.15 0.22 0.16 0.19 By Product Credits A$/lb (0.02) (0.01) (0.12) (0.21) (0.08) Cash Cost Ni in Con (***) A$/lb 2.93 2.81 2.74 4.34 3.16 Cash Cost Ni in Con/lb (***) US$/lb (**) 1.98 2.14 2.29 3.95 2.54Exchange Rate US$ / A$ 0.68 0.76 0.83 0.91 0.81
Note. Grade and recovery estimates are subject to change until the final assay data is received in accordance with the Offtake agreements.
(*) Mining Costs are net of deferred waste costs and inventory stockpile movements(**) US$ FX for Relevant Quarter is RBA ave daily rate (Dec Qtr = A$1:US$0.9107)(***) Payable terms are not disclosed due to confidentiality conditions of the offtake agreements. Cash costs exclude royalties.
GRADE RANGE 3-5% NICKEL
• Target Production – >25,000 tpa Nickel from 2 main mines. 3 other potential mines
• Cash Flow – Maximise value from Flying Fox and Spotted Quoll mines
• Growth Strategy – Fund growth without impacting profits from core assets
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FORRESTANIA – Targets and Growth Strategy
Note: production target graph represents WSA targets based on an estimate of annual nickel production from Flying Fox, initial potential production estimates from Lounge Lizard and preliminary estimates from Spotted Quoll. Production targets are not all based on ore reserves or completed feasibility studies and may be varied at any time. Potential or existing investors should not rely on these production targets as a basis to invest in Western Areas NL.
25,000t Ni
35,000t Ni 7 Year Mine Production Targets
8.2% Ni
7.4% Ni
8.8% Ni
9.2% Ni
7.9% Ni
8.2% Ni
7.4% Ni
8.8% Ni
9.2% Ni
7.9% Ni
Growth by Exploration
High priority to discover another Flying Fox or
Spotted Quoll type deposit
CENTRAL YILGARN NICKEL PROVINCE – Western AustraliaWestern Areas dominates nickel 500km long nickel province
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100% OWNED FORRESTANIA NICKEL PROJECT
• Deposit Type – high grade massive sulphides underlying granite intrusions
• Mineral Resources – rapid growth in Mineral Resources & Ore Reserves
• Flying Fox Mine – 95% conversion from Mineral Resources to Ore Reserves
• Target – >1.0Mt nickel in Mineral Resources at Forrestania Nickel Project
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FORRESTANIA – potential to develop into a “world class” nickel camp
Note: The above graph shows current announced Mineral Resources for the Flying Fox, Spotted Quoll, Diggers South, New Morning and Cosmic Boy deposits it also includes Kagara’s Ltd’s announced Mineral Resource for the Lounge Lizard deposit.This excludes low grade Mineral Resources at Flying Fox and Lounge Lizard.
400,000t Ni
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WSA Ore ReservesAustralian Nickel DepositsGlobal Nickel Deposits
Note: Flying Fox and Spotted Quoll open pit are ore reserve grades. Spotted Quoll underground and Diggers South are based on scoping studies and feasibility studies and New Morning and Cosmic Boy are estimates of underground mining grades.
Global Nickel Ore Reserve Grades
Current high quality Mineral Resources
FORRESTANIA NICKEL PROJECT – WESTERN NICKEL BELTTwo high grade mines - excellent potential for more discoveries.
10New Morning
Drilling in progress to extend Mineral Resources
T1/T2 Deposit – in production1,300 t nickel in high grade (3.5% Ni) Ore Reserves
T4 Deposit – in production11,730 t nickel in high grade (3.9% Ni) Ore Reserves
Lounge Lizard – first ore Dec 09, drilling in progress53,100 t nickel in high grade (4.6% Ni) Mineral Resources
T5 Deposit – first production January 2010.( intersection: 78m @ 9.3% Ni in ore reserve )66,370 t nickel in high grade (6.6% Ni) Mineral Resources58,820 t nickel in high grade (5.6% Ni) Ore Reserves
T6/T7 – Mineral Resource drilling required
Excellent potential for extensions north & below deposit
Flying Fox Mine – longitudinal projection (1st mine)
Five high grade nickel deposits to 1400m depth.
Mine decline currently at 940m vertical depth
Mineral Resources 2.5Mt @ 5.5% Ni for 140,000t Ni(Flying Fox plus Lounge Lizard)
Ore Reserves increase at depth from 3.9% to 5.6% nickel
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Flying Fox – grade distribution of T4, T5, T6 and T7
12• High Grade Core - >5% Ni zones extend over 500m vertical extent
• Geometry – structure of high grade ore shoots now apparent
• Potential Extensions – North of T5, T6, T7 still to be drilled
• Depth Extensions – Open at depth. T7 rotated 45 degrees and moved northwards below fault
NEW INTERPRETATION
OPEN
OPEN
Flying Fox – continuous high grades to 1400m depth
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- 400m
- 200m
- 600m
- 800m
-1400m
- 1200m
LEWINSKI LODE
TOP OF T5 DEPOSIT
First massive sulphide ore (8% Ni) exposed in
30m wide crosscut.
Stoping starts April 2010
PROBABLE ORE RESERVE – OPEN PIT MINE390,000 @ 5.1% Ni containing 19,900t Nickel
Estimated cash cost : US$2.00/lb Ni------------------------------------------------------
CURRENT MINERAL RESOURCE2Mt @ 6.2% Ni for 125,460t Nickel (to 640m depth)
Target: >150,000 tonnes nickel
FEASIBILITY STUDY FOR MAJOR UNDERGROUND MINE
Target 10 years mine life up to 10,000tpa nickel
DRILLING REQUIRED FOR EXTENSIONS
High grade nickel intersected in widely spaced Drill holes. Best intersection 3.5m @ 6.5% Ni
Potential remains open along strike and at depth
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Spotted Quoll Mine – longitudinal projection (2nd mine)
Spotted Quoll – continuous high grade Nickel to 600m.New high grade zone discovered 400m below resource
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Initial design for U/G mineOre Reserve and Feasibility due
before June 2010
Western Spotted Quoll at Forrestania. Western Areas funds
research of this rare marsupial
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Spotted Quoll Mine, Stage One open pit
FIRST HIGH GRADE PRODUCTION FROM OPEN PIT - expected April 2010
Weathered granite (white) overlying
mineralised ultramafic/sediment sequence
Cosmic Boy – (proposed 3rd mine)
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Portal exposed for new development - 2009
Outokumpu Mine 1994
COSMIC BOY – first ore expected from South End deposit, to be accessed from existing mine decline.
Large nickel system, open at depth
MINERAL RESOURCE - CORE ZONE ONLY
Indicated Mineral Resource3.0Mt @ 1.5% Ni for 44,700t Ni
Drilling required to extend resource to south.Diggers South part of an 8km long nickel system
Diggers South – (proposed 4th mine)
SURFACE SITE WORKS COMPLETE
Intention to use existing Outokumpu mine infrastructure to access Core Zone at 200m depth
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Forrestania – major infrastructure complete
ACCOMMODATION VILLAGE
490 rooms with all amenities
INFRASTRUCTURE
Major roads, airstrip, grid power, village, offices
Plant: 10 years tailings storage, bore fields etc
STAFF AND CONTRACTORS
Experienced & highly skilled mining workforce
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AWARD WINNING GEOLOGICAL TEAM Forrestania core yard
Cosmic Boy nickel concentrator – Stage One upgrading to Stage Two
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DOUBLING CAPACITY OF THE CONCENTRATOR TO 550,000tpa
ORE
EXPECT UPGRADE TO BE FULLY COMMISSIONED JUNE 2010
2010 and 201125,000t Ni total
WESTERN AREAS – offtake agreements
JINCHUAN SMELTER
GANSU, CHINA
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BHP BILLITON SMELTER
KALGOORLIE
2009 onwards10,000tpa Ni
2012 onwards 12,000tpa Ni
NEW NICKEL DISCOVERY ANNOUNCED 8TH MARCH 2010SANDSTONE JOINT VENTURE: 400km north of Forrestania.
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• 30m intersection of disseminated, stringer and vein sulphides in second drill hole
• Preliminary grade estimates range from 1.0% to 9.5% nickel. Assays awaited.
• Drilling has commenced to test potential for major new “Nickel Camp” over wide area
NICKEL PRICE – strong recovery past 12 months
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$4 FLOOR
$10 CAP
5 YEAR SPOT NICKEL 1 YEAR SPOT NICKEL
5 YEAR LME STOCKS
AUSTRALIA CANADA CHINA RUSSIA FINLAND BRAZIL AFRICA 2 nickel camps 4 nickel camps 1 nickel camp 2 nickel camps
BHP BILLITON VALE INCO JINCHUAN NORILSK NORILSK VOTORANTIM BCL
XSTRATA JILIN JIEN
1 smelter 4 smelters 3 smelters 4 smelters 1 smelter 1 smelter 1 smelter
Western Areas FNX Talvivaara * Mirabela * Norilsk
IndependenceMustang * Xstrata
MincorCrow Flight *
Panoramic Liberty *Victory *
C. Royalties *
Xstrata
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NICKEL SULPHIDE - smelters and producers
1 colour coded for offtake party
2 nickel camp is >1.0Mt contained nickel
3 * project : commissioning or feasibility stage
PECHENGA
THOMSON
JINCHUAN
KAMBALDA
LEIN
STER
VOIS
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AY
NEBO‐B
ABEL
SANTA R
ITA
SUDBURY
NORIL
SK
DULUTH
HONEYMOON
WELL
KABANGA
FORRESTANIA
0
5
10
15
20
25
1883 1890 1897 1904 1911 1918 1925 1932 1939 1946 1953 1960 1967 1974 1981 1988 1995 2002 2009
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Mt N
icke
lDiscovery Year
SULPHIDE MINE DISCOVERY DECLINING
NICKEL – supply issues from 4 different sources
2 largest nickel camps contribute ~40% global production -
discovered >80 years ago
NO MAJOR NEW DISCOVERIES
1) NICKEL SULPHIDES
3) NICKEL PIG IRON
Chinese nickel pig iron contributes 5-10% global production
KEY: REQUIRES SURPLUS POWER CAPACITY TO EXPAND IN CHINA
2) NICKEL LATERITESLaterite & Ferro Nickel contribute
~40% global production
KEY: HIGH CAPEX REQUIRES SUSTAINED HIGH Ni PRICE
NICKEL PIG IRON - ENERGY INTENSIVE
4) BACTERIAL LEACHING
Talvivaara in Finland is first large scale commercial mine. Target 50,000 tpa Ni, <US2.50/lb costs
$1Bn CAPEX, LOW ENERGY
KEY: LOW ACID CONSUMPTION
‘BIOHEAP’ – New growth opportunity for Western Areas
• Use – low cost treatment of large, low grade nickel and copper sulphide deposits
• Technology – bacterial leaching of ores to produce a range of refinery products
• History – 15 years of testwork on many projects with world wide patents
• Opportunity – treat large low grade nickel deposits in Australia and Finland
• 100% Owned – Western Areas has acquired technology with global patents
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Power LineNew Access Gate
Talvivaara Ni/Zn/Cu mine – bacterial leaching operation
TALVIVAARA OPEN PIT, CENTRAL FINLAND – World’s largest Bacterial Leaching Nickel Mine
Announced Targets - From 2010 : 30,000 tpa Nickel, 60,000 tpa zinc, 10,000 tpa copper. From 2012 : 50,000 tpa Nickel
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Mt Ni% Cu% Zn% Co%505 0.23 0.13 0.50 0.02
Measured + Indicated Mineral Resource at
Dec 2008
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New Access Gate
Exploring for Talvivaara type deposits – 6 major projects
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Potential to become a major Ni/Zn/Cu metal province
23 Targets with similar magnetic /EM signature to Talvivaara
Minimum target 10M tpa ore for >20,000tpa nickel
Low acid consuming sulphide ore suited for leaching
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New Access Gate
Kokkomaki / Hakonen Project – Talvivaara region (8 Targets)
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TARGET : K1 and K2
Test coincident magnetic and EM
anomaly
15km N of Talvivaara
TARGET : H1 and H2
Test coincident magnetic and strong EM
anomaly
3km E of Talvivaara
Note: Geophysical data acquired from GTK/Finnish
Geological Survey
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New Access Gate
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Rautavaara – 60km south of Talvivaara Mine
TARGET : R1 and R2 – initial drilling completed
Define mineral resource at R1
Rautavaara and Paltamo Projects (12 Targets)
Paltamo – 50km north of Talvivaara Mine
TARGET : P1 – drilling February / March 2010
Test coincident magnetic and EM anomalies
Note: Geophysical data acquired from
GTK/Finnish Geological Survey
129m @ 0.22% Ni, 0.39% Zn and 0.11% Cu
Similar to Talvivaara grades
NICKEL INDUSTRY – Summary
• Sulphides – Nickel industry needs another “World Class” sulphide discovery
• Laterites – required to meet demand (high capex requires sustained high nickel price)
• Nickel Pig Iron – China expanding production but constraints (energy intensive)
• Bacterial Leaching – Being developed for low cost treatment of sulphide ores
• Price – analysts underestimate the impact of medium to long term supply issues
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WESTERN AREAS – Summary
• Goal – to be Australia’s 2nd largest & highest grade nickel producer by 2011
• Flying Fox Mine – rapid increase in low cost production expected June Q 2010
• Spotted Quoll Mine – high grade open pit & underground mine, first ore June Q 2010
• Growth Strategy – exploration based. Exciting new discovery at Sandstone JV
• Prestige Industry Awards – “Digger Award 2008” and “Prospector Award 2009”
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