gold. production. growth. presentation to the sydney mining club choosing new milestones 03 february...
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Gold.Production.
Growth.Presentation to the Sydney Mining Club Choosing New
Milestones
03 February 2005
Our StrategyGrowth in China
Environmentally advanced gold treatment businessCash flowAccess to existing producersEmerging opportunities
Growth in the PacificGold Ridge 2.3M ozs @ 150,000ozs/yGrowth through Exploration potentialLong term refractory ore potential using Bacox
Growth through competitive advantage in refractory ore processing
Our Value
ChinaImminent cash flow from 82% of expected 170k ozs of production in China China experienced managementPotential for increase in production as Environmental laws take effect in China for some 4M ozs of refractory oreAccess to existing and new projects in worlds 4th largest gold producer
Mkt Cap 1 Feb 04 - A$55M For this you get;
Pacific20% with option to 47% of 2.3Moz resource In 2006/7 150k pa production (2.3M ozs resource) @ US$235/ozExploration potential (drilling below resource area)
10m@ 32g/t from 446m down hole8m @ 11.6g/t from 408m down hole
Refractory at depth – Bacterial oxidation potential?
Opportunity for value growth
Corporate Overview
MIC inexpensive in relation to peers
Company ASX Resource Reserves Share price Market Cap Market Cap Market Capm oz m oz cps A$m per resource oz per reserve oz
A$/ oz Au A$/ oz Au
Beaconsfield* BCD 0.71 0.38 40 58 168 315Bendigo BDG 13.00 0.20 90 228 18 1,138BMA Gold BMA 0.43 0.24 35 20 47 86Bolnisi Gold** BSG 3.10 52 89 29 n/aDragon DRA 0.32 0.29 27 95 294 332Highlands HIG 1.20 0.50 47 199 166 399Kingsgate KCN 1.08 0.79 270 228 211 288Leviathan LVR 1.16 0.25 107 82 70 331Michelago*** MIC 2.30 1.60 8.2 58 66 91Perseverance PSV 2.45 1.01 36 190 78 188Range River RNG 0.45 15 13 29 n/aSino Gold SGX 3.10 2.10 210 275 89 131Average 105 330
* - figure adjusted to account for BCD 48.5% interest in the Beaconsfield mine, TAS** - BSG - incorporates silver credits*** - figure adjusted to account for MIC moving to 47.5% interest in Gold Ridge, BioGold not accounted for
Project locations
Gold RidgeSignificant reserves and resources• Reserves - 1.67 M ozs• Resources – 2.3 M ozs
Low waste to ore ratio, 1:1Low cost gold producer approx US$235/ozExisting plantProduction 150,000 ozs/year and mine life >10 yearsExpected recommencement of production in mid 2006
Recommencement 2006
Deposit Total Resource
Tonnes
(000t)
Grade
g/t Au
Ounces
ValehaichichiNamachamataKupersDawson
10,6001,750
12,04014,820
1.72.22.01.9
582,300120,100784,100880,800
Total 39,210 1.9 2,367,300
June 2000 Resource (Delta Gold 2000 Annual Report)Not included below Kupers;
10m@ 32g/t from 446m down hole8m @ 11.6g/t from 408m down hole
Mining/Processing
Low operating costs
Low sulphidation epithermalZone 2.5km long and 1.4km wideOpen CutThree ore types: oxide, transitional and fresh. The oxide material is soft and generally free diggingStrip ratio average 1:1 Max pit depths 70mOre crushed - CIP.Power station on site
InfrastructureReasonably good condition:
Valehaichichi pit tailings dams and water storage damsconcrete foundationsstructural steel at the plant siteprimary crushing station, the ball mill, CIP circuit and tanks.
Significant infrastructure in place
Infrastructure
⇑ Original Status
⇓ Current Status
SecurityRAMSI - July 2003 Aust and other Pacific govts put army and police forces in place to restore stabilityOver $1billion spent for long term commitmentGold Ridge was some 30% of GDP
Underpinned by Aust – NZ govt commitment to stability
OpportunityNear term Production
150kpa @US$235 in 12 - 24 monthsExploration potential
Exploration limited since the early 1990s – focus was on drilling out the four known deposits. Best intersections from wildcat holes below Kupers include;
10m@ 32g/t from 446m down hole8m @ 11.6g/t from 408m down hole
Refractory at depth – Bacterial oxidation potential?
A rare opportunity in our backyard
Australian Solomons GoldTo purchase AND develop – some US$90M – reduced by US$20M if certain fiscal and gold price milestones are not metTotal acquisition and development costs US$30 – US$39/oz resourceExpected to be financed by US$30M – US$50M equity and US$40M debtEquity paid in 3 tranches – majority after PRI and key approvals (6 months), balance just prior to production
Attractive Project Economics
MIC/ASGMIC currently 20% of ASGMIC raised funds in January for first 1st payment trancheOption over further 27.5% subject to shareholder approvalMIC to be 47.5%
Potential to increase equity
China
BioGold
China Reserves and Resources (Chinese
classification)Reserves 4,000 tonnes 129M ozs)
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Prospective resources
Shandong Xinjiang Sichuan Shaanxi Guizhou
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Proven Reserves
Shandong Shaanxi Sichuan Yunnan Guizhou
Source: 2003 data, GFMS
Resources 11,000 tonnes (354M ozs)
China – Refractory GoldUSA Australia China
Annual Production (ozs) 9.7M 8.8M6.8M
No operating mines 75 55 >1,000
Refractory production 20% 5% ~70% (4.5M ozs)
Largest mine (ozs/y) 1.4M 0.8M 0.15M
(USGS 2002)Very fragmented industryDominated by small minersCentral processing is common
From 94 tons(3M ozs) in 1994 to 212 (6.8M ozs) tons in 2004
Shandong is a key Province
2004 China production was 212 tonnes (6.8M ozs)Shandong largest producer with 64.5 tons (2M ozs) output in 2004Other top gold producing provinces adjacent to Shandong: Henan, Liaoning, Hebei
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Top Gold Producing Provinces
Shandong Henan Shaanxi Liaoning Hebei
Source: 2003 data, GFMS, China Gold News
top gold producing provinces
Michelago Business CaseEnvironmental laws changing industryIn 1995, there were 10 roasters in Shandong, now there are only 2 (Zhaoyuan and Muping)The BioGold (Laizhou) treatment plant is the only (non roasting technology) commercial facility in China which can treat refractory gold concentrates. More mines are now examining the potential to sell previously unprofitable refractory ore.
Environmental issues now in the forefront of the China’s Gold Industry
BioGold: immediate cashflow
Commissioned 2000
Est 2005 production:
80,000 ozs Bacox
90,000 ozs CIL plant
260,000 ozs gold refinery
2006 Bacox expansion from 80 to 150k oz pa
10 year rights to Bacox in China, Mongolia, Siberia and Korea
Environmentally acceptable to China EPA
MIC purchase price 82% for A$11M
Synergies with Gold Ridge mine
MIC to be in control of BioGold cash flow
The transaction progress Negotiate transaction (June – Nov 03) Independent experts report (Jan 04) Shareholder approval for acquisition (May 04) Equity Purchase Agreement (Dec 04) Joint Venture Agreement (Dec 04) Bactech Licence Agreement (Jan 05) Materials Supply and Service Agreement (Jan 05)
Replace existing Bank guarantee (Mar - Apr 05)BioGold from Coy ltd by shares to SFJV (SFJV) (Mar - Apr 05)Provincial Govt. to issue Business Licence to SFJV(Mar Apr 05)
Completion imminent
Concentrate stockpiles at BioGold Facility
Bacox Plant
Living bacteria in tank
Research BioGold laboratory
Michelago Business Case
Concentrate stock (either paid in advance, in transit, or in circuit) may be up to an equivalent of 75,000 ozs depending on season and quality.
MIC is working with an Australian Bank to transfer existing working capital loan facility from Vendor
Other exploration
Xinjiang Project5 deposits covering some 2,000km2
On going business development
Reviewing open cutsSeveral opportunities
Other Foreign Companies
Afcan Mining CorporationAnglo Gold AshantiBarrick Gold CorporationCaledon Resources plc.China Diamond Corp.Consolidated Minerals LimitedCrescent GoldDynasty Gold CorporationEldorado Gold CorporationGold Fields Ltd. Inter-Citic Minerals Inc.International KirklandIvanhoe Mines Ltd. Jinshan Gold Mines
Afcan Mining CorporationAnglo Gold AshantiBarrick Gold CorporationCaledon Resources plc.China Diamond Corp.Consolidated Minerals LimitedCrescent GoldDynasty Gold CorporationEldorado Gold CorporationGold Fields Ltd. Inter-Citic Minerals Inc.International KirklandIvanhoe Mines Ltd. Jinshan Gold Mines
Kingsgate Consolidated Ltd.Leyshon Resources Luna Gold Majestic Gold Corp.MichelagoMincorpMundoro Mining Inc. NGM Resources LimitedOxiana Ltd.Placer Dome (China) Ltd.Sino Gold Ltd.South Western resourcesSparton Resources
Kingsgate Consolidated Ltd.Leyshon Resources Luna Gold Majestic Gold Corp.MichelagoMincorpMundoro Mining Inc. NGM Resources LimitedOxiana Ltd.Placer Dome (China) Ltd.Sino Gold Ltd.South Western resourcesSparton Resources
China Mining Congress 2004 had 1,350 delegates broken down into about
550 international and 800 Chinese mining corporationsGrowing International presence within Chinese Mining
Sector
Risk Perception
Risk rank rose from 13th to 9th over last year reflecting improved view of doing business in China, and the more business-friendly attitude of the Chinese government
Source: Mining NewsGrowing confidence in China
Corporate OverviewASX listed, code MIC, Sydney basedMarket Cap $55million - 701m shares @ A$0.08
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JOHN HORAN FCPA, FCIS Non-Executive ChairmanPETER SECKER BSc (Hons) Mining Technical Director GREG STARR BBUS, CPA, MAICD, FACCA Managing Director STEPHEN EVERETT BE Chem Eng, MAICD Non-executive Director
Board of Directors
SummaryGold Focus Production to cash flow
(BioGold 140k+ ozs, Gold Ridge 75k ozs) 215,000+ ozs production by mid 2006
Competitive AdvantageEnvironmentally friendly processingChina’s refractory gold resources >100M ozsMultiple ore sources inside and outside China
MIC’s growth opportunity 3 years >300,000ozs