corporate presentation kerr...
TRANSCRIPT
CORPORATE PRESENTATION
Kerr Mines TSX: KER I OTC: KERMF I FRA: 7AZ1
October 2017
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking information, including statements regarding: the proposed timing, schedule, and costs for restarting production at the
Copperstone Mine, rate of production, expected cash costs, expected increase in milling capacity, exploration potential at the Copperstone Mine, proposed debt
restructuring and financing, share capitalization and director ownership,. These forward-looking statements entail various risks and uncertainties that could cause
actual results to differ materially from those reflected in these forward-looking statements. Such statements are based on current expectations, are subject to a
number of uncertainties and risks, and actual results may differ materially from those contained in such statements. These uncertainties and risks include, but are
not limited to, the strength of the economy; the price of gold; operational, funding, and liquidity risks; the degree to which mineral resource and mineral reserve
estimates are reflective of actual mineral resources and mineral reserves; and the degree to which factors which would make a mineral deposit commercially viable
are present; assumptions with respect to the cost and availability of labour for the restart of operations are correct,; results of exploration and validity of geological
models; the risks and hazards associated with underground operations, and any specific risks or assumptions set out or referenced in this presentation. Risks and
uncertainties about Kerr Mines Inc. and its business are more fully discussed in its disclosure materials, including the annual information form, technical reports,
financial statements and MD&As, filed with the securities regulatory authorities in Canada and available at www.sedar.com and readers are urged to read these
materials. Kerr Mines Inc. assumes no obligation to update any forward-looking statements or to update the reasons why actual results could differ from such
statements unless required by law.
This presentation includes certain non-IFRS measures, including cash costs on a per gold ounce basis. Cash costs per gold ounce are defined as costs of
production (including refining costs) divided by the total number of gold equivalent ounces produced. The Company reports total cash costs on a production basis.
In the gold mining industry, these are common performance measures but do not have any standardized meaning, and are non-GAAP measures. As such, they are
unlikely to be comparable to similar measures presented by other issuers. In reporting cash costs per gold ounce, the Company follows the recommendations of the
Gold Institute standard. The Company believes that, in addition to conventional measures, prepared in accordance with IFRS, certain investors use this information
to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered
in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Technical information in this presentation has been reviewed and approved by Michael R. Smith P. Geo., who is a qualified person that is independent of the
Company, as defined in National Instrument 43-101.
2
INVESTMENT HIGHLIGHTS
3
Low Risk
• Past producer – existing high grade gold resource
• Safe, mining-friendly jurisdiction – Arizona, USA
• Production and environmental permits in hand
• Significant capital infrastructure in place and ready to be utilized
• 37 employees and contractors currently working at site
Near term Upside
• Resource expansion - Phase I & Phase II drilling
• Pre Feasibility Study on track & production decision in Q1 2018
• Tremendous exploration potential - 11,800 acres land position including 5 significant targets (South,
SW and 3 NE targets)
Expertise and Experience
• Newly formed management group including advisors
• Enhanced board of directors
Supportive Shareholder Base
• Insiders hold 35% of the company
• C$8 million raise at C$0.18 per share in July 2017
CAPITAL STRUCTURE
Ticker Symbol TSX: KER I OTC: KERMF I FRA: 7AZ1
Shares Outstanding 235.4 million
Options 7.8 million
Warrants 22.2 million
Fully Diluted 265.4 million
Director/Insider ownership ~35%
52 week range $0.09 - $0.41
Recent price* $0.28
Market Cap $65.9 million
Cash & short term investments (YE 30 June 2017) $5.1 million
Debt** $9.5 million
Major Shareholders Fahad Al Tamimi 23.5%
Claudio Ciavarella 11.5%
Eric Sprott 8.0%* Figures denominated in Canadian dollars
**Debt terms: 3 year term at 8% interest, interest waived in first year
Friendly debt held by Fahad Al Tamimi and Claudio Ciavarella
4
MANAGEMENT BOARD OF DIRECTORSFahad Al Tamimi
Chairman
Saudi-based businessman with global investments in mining and real estate
Peter Damouni
Director
Investment banking. Led financings valued at more than $5 billion
Ayman Arekat
Director
Investment banking with Chase Manhattan, Merrill Lynch, Deutsche Bank
James McVicar
Director
Legal specialization in financings, mergers and acquisitions, corporate governance and commercial matters. Director of Monarca Minerals
Claudio Ciavarella CEO
& Director
CPA, 25 years private business owner. CEO of Kerr Mines since April, 2017
Martin Kostuik
President & Director
25 years mining experience. President of Kerr
Mines since April, 2017. CEO of Rupert Resources.
Operations & Engineering at Barrick’s Goldstrike
Mine
Chris Hopkins
CFO
25 years experience in resource industry. Previously held positions with US Silver, Rio Algom, BHP Billiton, and Suncor
Brad Atkinson
Director, Exploration
20 years exploration and geology. Formerly with
Phelps Dodge, Newmont and CAT Finance
Michael R. Smith
Professional Geologist
38 years exploration and geology. Previously
brought the Arizona Vulture Gold Mine back into
production. Magna Cum Laude Arizona State and
MS Geology Mackay School of Mines
TECHNICAL ADVISORS
5
Patrick Downey
Technical Advisor
+30 years of international experience in the
resource industry. Previously CEO of Elgin
Mining Inc
Strategic Growth Vision
Expand current resources
• Immediate resource expansion
• Phase I underground and surface drilling 30,000 feet
• Phase II underground and surface drilling 45-60,000 feet
• PFS on track for Q1 2018
• Over US$50 million spend on existing infrastructure and underground development increase NPV and IRR
Production Decision Regional Exploration
• Property Size: 11,800 acres
• South & SW target – follow up drilling
• NE geophysical target – new drill target generation
Extend mine life Increase production profile Increase resource ounces
6
COMPANY STRATEGY
EXISTING INFRASTRUCTURE
7Accelerating Timeframe, Reducing CAPEX
• Underground mine development in place, access and utilities
• 450 tons per day processing plant
• Tailings storage facility with capacity for existing resource
• Power and water distribution systems
• Surface buildings including assay lab
• Roads and access to surface exploration sites
Category Tonnes Grade (g/t Gold) Contained Ounces
Measured 934,000 10.4 311,000
Indicated 8,000 7.9 2,000
M&I 942,000 10.3 313,000
Inferred 335,000 12.2 132,000
* Source: ‘NI 43-101 Technical Feasibility Report Copperstone Project, La Paz County, Arizona’ dated 01/10/11, independently prepared by Dr. C. Anderson,
T. Buchholz, C. Pratt, J. Brown, in accordance with the guidelines of Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects
8
HISTORIC – RESOURCE ESTIMATES*
9
20182017
Permitting Complete
Phase I Drilling
Phase II Program
PFS including Mine
Plan Optimization
Production Decision
Progress towards
Production
✓Q3 Q4 Q1 Q2 Q3 Q4
✓
✓
TIMELINE – SIGNIFICANT NEAR-TERM CATALYSTS
SCALE POTENTIAL – REGIONAL SIGNIFICANCE
Source: Michael R. Pawlowski P. Geo, January 2005
Schematic cross-section of the Moon Mountain Detachment Fault and
the Copperstone Listric Fault (depth unknown), Solid heavy lines are
observed faults; broken lines and projected faults
Copperstone Mine
Moss Mine
Gold Road
Mineral Park
Mesquite
Castle
Mountain
ARIZONA
NEVADA Detachment Fault
Known detachment fault-
related Mineralization
Source: USGS Keith R Long Preliminary descriptive deposit
model for detachment fault related model
10
PHASE I DRILLING PROGRAM
11
Objectives
Copperstone Zone
• Establish continuity and enhance resource
confidence
• Expansion of resources along strike with
in-fill and down-dip targets
Footwall Target
• Define and validate the Footwall Target as
a new gold zone – add to resources
• Establishing zones of mineralization up to
1,500 feet along strike & 600 feet along dip
• Build on previous successful results
Copperstone Zone
• Enhanced continuity and confirmed reliability
of previous drill results
• Expanded resource and achieved down dip
& up dip extension
Footwall Zone
• Successfully established new Footwall Zone
• To date established 500 feet along strike and
800 feet along dip
• Demonstrated identical geology to previous
successful Copperstone Zone drill holes
Observations & Achievements
D ZoneC ZoneB ZoneA Zone
THE COPPERSTONE MINEHistorically produced over 500,000 oz in the open pit
Open down
dip along
strike
12
Plan to develop access to A,B, C zones
Supports strengthened economics
• Enhanced continuity and confirmed reliability of previous drill results
• Expanded resource and achieved down dip & up dip extension
13
NEW MINERALIZED ZONE – FOOTWALL ZONECross Section View
Phase I Drilling
Historic Drilling
Drill Hole #
Total
Interval1 (ft)
Assay Value
(g/tonne Au)
A00-10* 10.5 32.3
CS-185* 10.0 5.6
CSD-67* 10.0 9.0
CSR-143* 30.0 11.7
DCU-8* 15.0 22.1
F4-1* 5.0 14.0
H5-147* 10.0 6.6
KER-15-02* 6.0 13.9
KER-15-03* 5.0 11.1
KER-17S-02 3.5 9.1
KER-17S-03 5.0 3.1
KER-17S-04 12.0 7.3
KER-17S-07 3.0 4.1
Footwall Zone Selected Intervals
Historical1 not true width
• South and South West
targets have previous
successful drilling
• Intercepts of 8 g/t to 32 g/t
over 6 - 12 feet
• Detachment fault region
REGIONAL EXPLORATION – SOUTH TARGETS
FOOTWALL ZONE
EXISTING
RESOURCE
AND ACCESS
SOUTH WEST
TARGET
SOUTH
TARGET
14
15
• South West Target – geophysical
signature identical to Copperstone and
Blue Pearls , supported by previous
drilling indicating identical geology,
inclination, width and grade to
Copperstone
• North East “Blue Pearl” Geophysical
targets – significant strength and similar
size to the geophysical anomaly under
the Copperstone Orebody. The blue
indicates a uniformly magnetic rock with
a very slow change in magnetic field. No
previous drilling
• Adding two exploration licenses totalling
541 hectares (1,331 acres)
REGIONAL EXPLORATION UPSIDE
Figures denominated in Canadian dollars as at October 1, 2017
Klondex Mines September 2017
Argonaut Gold Website September 2017
Harte Gold Corporate Presentation September 2017
Marlin Gold Corporate Presentation run rates est October 2017
Mandalay Resources Corporate Presentation September 2017
Pershing Gold Corporate Presentation September 2017
Northern Vertex Corporate Presentation September 2017
Pure Gold Corporate Presentation September 2017
Kerr Mines historical estimate at Copperstone Mine
* Source: ‘NI 43-101 Technical Feasibility Report Copperstone Project, La Paz County, Arizona’ dated 01/10/11,
independently prepared by Dr. C. Anderson, T. Buchholz, C. Pratt, J. Brown, in accordance with the guidelines of
Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects
16
PEER GROUP
Company Stage Share Price 52 week range
Mkt Cap
(millions)
Production
estimates
(AuEq koz)
Klondex Mines UG Production $4.67 3.57 – 7.95 829 213-230
Argonaut Gold Production $2.75 1.48 – 3.14 486 115-130
Harte Gold UG Production $0.58 0.20 – 0.87 288 est +50
Marlin Gold Mining Production $0.87 0.43 – 1.15 149 est 45
Mandalay Resources Production $0.31 0.31 – 1.07 143 114-28
Pershing Gold OP Development $3.86 3.44 – 5.52 110 est 93-97
Northern Vertex OP Development $0.64 0.35 – 0.70 110 est 42
Pure Gold UG Development $0.56 0.39 – 0.75 107 est 52-58
Kerr Mines* UG Development $0.28 0.09 – 0.41 66 est 40-50
KEY SUMMARY POINTS
17
• April 2017 – Claudio Ciavarella and Martin Kostuik appointed new CEO and President
• May 2017 – Technical team in place to execute operational plans
• June 2017 – Company closes oversubscribed non-brokered private placement for C$8,000,000
• August 2017 – Initiation of Phase I exploration program
• October 2017 – Released initial results of Phase I exploration program
• November 2017 – Phase II exploration and engineering program and progress towards production decision
Delivering on Strategy
CONTACT INFORMATION
CLAUDIO CIAVARELLA
Chief Executive Officer
T: +1 (416) 855-9305
INVESTOR RELATIONS
W: www.kerrmines.com