South Australian Minerals and Energy Resources Overview

10th GMUSG / SACOME Annual Resources Industry Conference & Trade Expo

Whyalla – 3 September 2014

Dr Paul Heithersay Deputy Chief Executive Resources and Energy

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South Australia’s Major Mines and Resource Projects

South Australian Resources Industry Indicators

• Petroleum ($531.3m) and Minerals ($116.3m)

$647.6 million EXPLORATION EXPENDITURE - 2013/14

• ~$30 billion of potential capital for Minerals and Energy projects in the Major Developments Directory RECORD HIGH

$1.8 billion new CAPITAL EXPENDITURE – 12mth to June 2014

• Minerals ($5.4 b) and Petroleum ($1.6 b) RECORD HIGH

$7.0 billion resources PRODUCTION - 2013

• Minerals ($4.6 b) and Petroleum ($0.2 b) RECORD HIGH • 39% of South Australia’s total exports ($12.4 b)

$4.8 billion EXPORTS – 12mth to June 2014

• Minerals ($157.4 m) and Petroleum ($133.9 m) RECORD HIGH

$291.3 million ROYALTIES – 2013/14

• more than double - 6,641 ten years ago RECORD HIGH

16,208 people EMPLOYED – May 2014

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Exploration Expenditure

Minerals and Petroleum exploration expenditure 1998-99 to 2013-14 For 2013-14 was $647.6 million ($531.3m – Petroleum and $116.3m – Minerals)

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Source: ABS data cat. 8412.0 June 2014

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Onshore and Offshore Oil and Gas

ONSHORE COOPER – EROMANGA BASINS The Cooper-Eromanga basins represent a world class hydrocarbon province (Australia’s largest, most mature onshore basins for petroleum production) and has been the centre of South Australia's exploration, development and production activities for 50+ years. Both the Western Flank oil play and several major unconventional gas resource plays are, and will leverage on existing processing and transport infrastructure connecting the basin nationally to major cities and LNG export markets

ONSHORE OTWAY BASIN Otway Basin contains both mature and immature conventional and unconventional oil and gas plays, with high potential for further discoveries. The onshore area is regarded as the State’s second most prosperous petroleum basin

OFFSHORE BIGHT BASIN The Bight Basin is the largest, prospective but unexplored Cretaceous marine delta-play in the world. To date, most exploration drilling in the Bight Basin has focused on the margins of the Ceduna and Duntroon Sub-basins. The BP – Statoil Joint Venture is leading in exploration the offshore Bight Basin, with fast-followers Chevron, and the Murphy-Santos joint ventures FRONTIER BASINS Prospectivity is being explored in the Pedirka (including oil shows in the Poolowanna Trough), Officer and Arckaringa Basins

Emerging conventional and unconventional oil & gas boom South Australia’s history of oil and gas exploration extends back to 1866 with the first oil exploration in the Otway Basin. South Australia has 14 petroleum basins (12 onshore, 1 offshore, 1 on-and-offshore), however currently only three are producing commercial hydrocarbons

Source: Updated form of display from Invest in SA - Department of State Development

Setting the Scene – Oil and Gas

Parks with no petroleum exploration access

Officer Basin

Pedirka Basin

Cooper

Basin Arckaringa

Basin

Eromanga Basin

Arrowie Basin

Stansbury Basin

Bight Basin

Otway Basin

Petroleum exploration licence (Onshore: PEL Offshore EPP) Petroleum exploration licence application (PELA)

Polda Basin

Moomba

Olympic Dam Mine

Simpson Basin

200 km

Gas pipeline Gas and liquids pipeline Oil pipeline

Acreage release blocks – bids close 29 May 2014

Selected mine

• Four Cooper CO2013 bid round blocks offered versus aggregate $103 million bids

• Western Flank oil play in the Cooper- Eromanga continues with 50+ percent success in finding average 2.5 million barrels of oil

• Encourage results from Otway Basin exploration

• Bight Basin attracting the majors – massive investment

• Frontier basins’ plays include: Conventional oil and gas Unconventional regional plays

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Roadmap for Unconventional Gas

Designed to inform industry strategies, government policies, and regulations to facilitate unconventional gas projects in ways that SA communities welcome. Working groups of the Roundtable: 1. Training;

2. Supply hubs, roads, rail and airstrips for the Cooper-Eromanga basins;

3. Water use in the Cooper-Eromanga basins;

4. SA-Qld ‘wharf to well’ corridors for the Cooper- Eromanga basins;

5. Cost effective, trustworthy GHG detection; and

6. Supplier’s forum to boost local content

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Now under the auspices of the Roundtable for Oil and Gas Projects

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$ Bi

llion

Copper Hematite Magnetite Gold Uranium Coal

Other Metallics Industrial Construction Gemstones Caroline 1 CO2 (well) Condensate

Crude Oil Ethane LPG Natural Gas

Mineral and Petroleum Production

Record Production

Production by commodity 2000 – 2013 In 2013 was $7 billion ($5.4b – Minerals and $1.6b – Petroleum)

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South Australian Mining Industry Dimensions

Mineral Tenements - July 2014 • Mining Leases (ML’s) 866 • Extractive ML’s (EML’s) 655 • Private Mines (PM’s) 235 • Operating Mines 450 • Major Operating Mines ~20 • Opal Mining Claims 391 • Advanced Mineral Projects ~30 • Former Mines 3500

Commodities mined • copper, gold, coal, iron ore, zinc, lead, silver, uranium,

heavy mineral sands • Industrial Minerals - salt, silica sand, gypsum • Extractives, dimension stone, opal & other gemstones

Mining Methods: open cut, underground, in-situ recovery

Processing Methods: flotation, carbon in pulp, crushing and screening, cyanide leaching, ion exchange, magnetic separation, salt harvesting, solvent extraction

Middleback Ranges iron ore operations (courtesy Arrium Mining)

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Olympic Dam - long life

Olympic Dam massive 910 year resource life - longest life core asset of global mining major, BHP Billiton

• Contained resource: 78 Mt copper, 2.5 Mt uranium oxide, 100 Moz gold & 307 Moz silver • world’s largest uranium deposit • world’s 4th largest copper deposit • ~65% of Australia’s copper resources

Premier’s Award for Excellence in Social Inclusion 2014

• Prisoner reintegration employment opportunities program

• Archeological program with Aboriginal communities

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Resource Life - BHP Billiton’s core assets

Minister Koutsantonis (right) presenting award to Darryl Cuzzubbo (BHP Billiton)

Olympic Dam – way forward

• 2013-14 production

• 184 400t copper, 3988t uranium oxide, 121 335 oz gold, 972 000 oz silver

• Technology studies proceeding

Lab scale leach testing continues

BHPB now considering on-site Heap Leach Demonstration trial (small scale)

Applications referred to State and Federal Governments

If approved, construction to commence July 2015, operation to commence Oct 2016 for 3 year trial

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GEO-MEMBRANE LINED COPPER HEAP LEACH IN ARIZONA, USA

Carrapateena – positive PFS OZMinerals announcement - 18 August Pre-Feasibility study confirms Carrapateena is a technically and financially viable project • Capital cost $2.985 billion • 12.4 Mtpa block caving via 2 x 500m lifts • producing copper-gold concentrate • 114,000 tpa copper and 117,000 ozpa gold • low operating costs and a 24 year mine life • potential to use Prominent Hill concentrator • base case demonstrates ore exported via Port

Adelaide - closer ports to be investigated • next stage – feasibility study and development

of exploration decline Ore reserve: 270Mt at 0.9 %Cu, 0.4 g/t Au, 4.5 g/t Ag = 2.5Mt Copper, 3.5Moz Gold & 39Moz Silver

Government of South Australia PACE co-funded discovery in 2005

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Arrium Mining – Iron Ore

• South Australia - birthplace of Australia’s iron ore production and is country’s second largest producer

• Arrium leads South Australian production; stepping up production from 3 mtpa a decade ago to 11.6 mtpa in 2013/14

• Export capacity boosted with expanded port capacity at Whyalla complete with rail-loops - delivered on time and on budget

• Expansion continues through Middleback Ranges - Government case managers and regulators working closely in Iron Knob area

Source: Photographs by Sean Kelly, courtesy of Arrium Mining

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Central Eyre Iron Project (CEIP)

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Central Eyre Iron Project (CEIP)

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Nyrstar Port Pirie Smelter Transformation

Source: Courtesy of Nyrstar

Slag Fuming Plant

Precious Metals Refinery

Lead Refinery

Sinter Plant

Blast Furnace

New Acid Plant

Oxygen Enriched Bath Smelting Furnace

Zinc Plant

Copper Plant

Closed end of July. Zinc oxide transferred to Hobart from August 2014 onwards

Change due to Redevelopment process Advanced metal recovery and refining facility 3-D snapshot of Redevelopment on completion

Government Initiatives

• Creation of new Department of State Development

• Premier’s Economic Priority 1 – Unlocking the full potential of South Australia’s resources, energy and renewable assets

• The Regional Mining and Infrastructure Plan & Resources Infrastructure Taskforce (RIT) within the Olympic Dam Taskforce

• Nyrstar Pt Pirie Smelter Transformation – Govt. guarantee to underpin the $514 million investment

• PACE 2020 – further $4 m to launch PACE Frontiers

• New Core Library underway at Tonsley

• Mining and Petroleum Services Centre of Excellence ...

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Resources Infrastructure Taskforce (RIT)

• The Regional Mining and Infrastructure Plan launched by the Minister for Transport and Infrastructure 12 June 2014

• Resources Infrastructure Taskforce (RIT) within the Olympic Dam Taskforce, jointly chaired by senior staff from the Department of State Development and DPTI

• The RIT will guide development of rail, road, port, water and electricity infrastructure supporting expansion of State’s resources and energy sectors

• In 12 months development of a business case for a 1st port solution supporting increased export of iron ore from prospective mines in SA

• Work closely with key private sector stakeholders

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Eyre Peninsula Land Use Support Program (EPLUS)

The objectives of the program include:

• Shared commitment to multiple land use

• Build capacity of Eyre Peninsula communities, farming businesses and local industries

• Provide tools and support to fully understand and realise the opportunities for agribusiness by working collaboratively with the explorers and mine developers

• Knowledge and understanding for landowners to effectively participate in the land access negotiation process

http://www.pir.sa.gov.au/eplus

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Land Access Community Engagement Program

• Resources & Energy Group Stakeholder Engagement Framework

• Community Landholder Workshops

• Field Days

• Premier’s Community Excellence Awards in Mining and Energy

• Local Government workshops

• Booklets “Understanding Mineral Exploration” & “Understanding Dryland Farming”

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Future Farm Landscape Workshops

Targeted workshops to assist potentially impacted landholders to assess the overall impact of exploration and mining on their sustainability and identify the opportunities for their farming business

Aboriginal Economic Participation

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• Working to identify all known Aboriginal Businesses in SA

• Developed a Business list of 66 Businesses so far, available on request

• Building a business network and proposing they link through ICN

• Agency Aboriginal Economic Participation Strategy

• Encouraging Industry leaders to support Aboriginal Economic Participation through: Supporting Small Business Direct Employment; and Training and Development via

Skills for All

• Further information contact Jason Downs at jason.downs@sa.gov.au or 0428 830 473

WPA – 166 ELs & 9 PELs

• The Federal Parliament passed the Defence Legislation Amendment (Woomera Prohibited Area) Bill 2014 on 16 July 2014 Formally establishing an innovative

coexistence framework Providing clarity and certainty in accessing

this world-class resources province

• The WPA boundary will exclude the land known as Section 400, placing its full care and control back to the Maralinga people who are freehold landowners

• Details of the permit system in the WPA Rules – now available on the Federal Register – presentation forum in Adelaide planned

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Sample

Measure

Interp

Target

Drill

Greenfields Exploration Drilling

Current Practice • Continual cycle over

many months

• Delayed decision making

• Multiple drilling campaigns

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Deep Exploration: Prospecting Drilling

• Build out from initial targets using 5-10 km coiled tubing drilling array and resampling prior holes for consistent geochemical data

• Downhole & Lab-at-Rig™ tools define petrophysics and geochemical halos real-time

• Anomalies re-modelled and followed up during same campaign

• Targets based on broad bandwidth of geophysical and geochemical data reduces false +ves and allows recognition of new deposit types

• Start to map entire mineralising system with regional scale vector potential

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SA Mineral Systems Drilling Program

Funding ~$2M (PACE Frontiers)

• Collaborative project involving DET CRC

• Q1/Q2 2015 calendar year

• Trial a new style of industry collaboration

Aim • Test geological questions in an

economic context

• Test DET CRC technology in the field

• Test mineral systems mapping concept

• Test prospectivity indices

DET CRC / Boart Longyear diamond rig

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Cairn Hill

Jacinth-Ambrosia

Wilcherry Hill

Where to Drill ?

Emphasis is in the Olympic Cu-Au Province and including the WPA but other areas will be considered GSSA – Key areas of interest • Coober Pedy Ridge • Mt Woods • Olympic Dam Region • Southern margin Gawler Range

Volcanics • Eastern Eyre Peninsula • Yorke Peninsula

All proposed locations

will be considered

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Drilling Specifications

• Regional drilling – 5-10 km spacing • Holes will be cored from surface

where practical • Diameter of drillholes will be large

enough to fit DET CRC probes • Preference for areas less than 500

metres of cover (Max depth of 1,200 m)

• Areas with more than 1,000 m of cover will be excluded

• Minimum of 50 m of basement core to be recovered

DET CRC drilling site at Brukunga

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Coiled Tubing Drill Rig

New coil tube rig delivered to the DET CRC for further in late 2013

Lab-at-RigTM Prototype deployed during the Victorian regional drilling program in mid-2014

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• Only 5 day period to apply

• Follows the one month moratorium/publication period

• Pre-defined assessment criteria are outlined in Minerals Regulatory Guidelines MG17

• Online application via SARIG is available

• If multiple applications are received, valid applications will be assessed by an assessment panel

Mineral Exploration Release Areas (ERAs)

New ground release process in South Australia

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Exploration opportunity

East Gairdner relinquished tenements area

• Area of ~ 9000 km2 subdivided into 10 separate Exploration Release Areas (ERAs)

• Mineral prospectivity: copper, gold, silver & uranium

• Mineral potential: IOCG style mineralisation Epithermal, porphyry and skarn style Ag, Au,

Pb, Zn, Cu, Sn and uranium Stratabound base and precious metals Unconformity uranium Unconformity related Cu, Ag, Co, Pb and Mn

mineralisation

Applications open 6-10 October 2014

For further details visit www.minerals.statedevelopment.sa.gov.au/east_gairdner_ERAs

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State-of-the-art training hub

• The state-of-the-art TAFE SA training hub at Regency Park was opened on 28 August 2014

• The $38.3 million Mining, Engineering and Transport (MET) Centre will help deliver training for the 25,000 new workers projected required by mining, transport, defence, engineering and allied industries over the next five years

• The MET Centre consolidates programs delivered across several campuses in one centralised training hub

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State Drill Core Library - Tonsley

Free App for South Australia Mining Investors…

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Disclaimer

The information contained in this presentation has been compiled by the Department of State Development and originates from a variety of sources. Although all reasonable care has been taken in the preparation and compilation of the information, it has been provided in good faith for general information only and does not purport to be a professional advice. No warranty, express or implied, is given as to the completeness, correctness, accuracy, reliability or currency of the materials. The Department of State Development and the Crown in the right of the State of South Australia does not accept responsibility for and will not be held liable to any recipient of the information for any loss or damage however caused (including negligence) which may be directly or indirectly suffered as a consequence of use of these materials. The Department of State Development reserves the right to update, amend or supplement the information from time to time at its discretion.

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