status update · contents 1. strategic objectives 2. projects a) merlin diamond mine and orbit...
TRANSCRIPT
Alan CampbellAlan CampbellManaging DirectorManaging Director
2828thth February 2006February 2006
Status Status UpdateUpdate
www.nadl.com.au
www.nadl.com.au
Forward Looking Statements
This presentation contains “forward looking statements”. Such “forward looking statements” may include without limitation (1) estimates of future earnings, the sensitivity of such earnings to diamond values and foreign exchange rate movements (2) estimates of future diamond production (3) estimates of future cash costs (4) estimates of future cash flow, the sensitivity of such flows to diamond values and foreign exchange rate movements (5) estimates of future capital expenditure (6) estimates of reserves, resources and statements regarding future exploration results.
Where the Company expresses or implies an expectation or belief as to future events or results such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, “forward looking statements” are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such “forward looking statements”. Such risks include but are not limited to diamond values, currency fluctuations, increased production costs and variances in grades or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries and states in which the Company operates or sells product and governmental regulation and judicial outcomes.
The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, expect as may be required under applicable securities laws.
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Contents
1. Strategic Objectives
2. Projects
a) Merlin Diamond Mine and Orbit Tenements
b) Arnhem Land
3. Capital Structure, Share Price and Share Holders
4. Comparison with industry – market capital and ore value
5. Corporate Directory
6. NADL Positioned for Growth
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Strategic Objective•• Profitably mine the Merlin deposits and Profitably mine the Merlin deposits and
secure long term increasing value to NADL secure long term increasing value to NADL shareholdersshareholders
Objectives and aims:Objectives and aims:
Focus on MerlinFocus on MerlinManage the risks to ensure success by incremental development tManage the risks to ensure success by incremental development to produce o produce steadily increasing carats and revenuessteadily increasing carats and revenuesDevelop Develop brownfieldbrownfield and grassroots exploration potential within the mine and grassroots exploration potential within the mine lease and orbit tenementslease and orbit tenementsInvestigate alluvial diamond deposit potential Investigate alluvial diamond deposit potential
Second Order Aims:Second Order Aims:Grassroots exploration plays in Arnhem Land and the KimberleyGrassroots exploration plays in Arnhem Land and the Kimberley
Project Areaswww.nadl.com.au
125 km
Broome
Darwin
Arnhem Land
EllendaleKimberley
Diamond Co
ArgyleRio Tinto
Mt Harriet
AriesThundelarra
Timber CreekTawana
North Kimberley
Merlin
Arnhem Land
NADL / Rio Tinto DataLicense Agreement Area
Diamond Pipe
Project Areas
Seppelt
Merlin
WA
Darwin
NT
Perth
Qld
Sydney
NADL Tenement Interest = 27,500kmNADL Tenement Interest = 27,500km²²
Abner Range Gravity Diamonds
Gravity Diamond JV
Alloy Resources JV
Merlin Projectwww.nadl.com.au
Access Road
NADL Tenement
Merlin Mining Lease
Drainage
15 km
Cape Crawford
Diamond Pipes
Borroloola
Gly
de
Riv
er
Mining Lease
McArthur River Mine(Pb/Zn)
Tintagel ProspectEvidence fornew diamondbearing pipes
Gravity Diamonds Abner Range Discovery
Legend
NADL Tenement Interest = 4,150kmNADL Tenement Interest = 4,150km²²
Darwin
Alice Springs
Tennant Creek
Nhulunbuy
Borroloola
Merlin
Distance from Coast (kms)
350
20
300
250
200
150
100
50
040 60 60 100 120 140 160 180 200 220
Alluvial Diamond PotentialAlluvial Diamond Potential
Sea
River ProfileTerrain Profile
Tintagel Prospect
MerlinWave Hill
Landsurface
Alluvial Diamond
Potential
Alluvial Deposits
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Merlin Diamond Mine
ExcaliburExcalibur
Launfal & Launfal NorthLaunfal & Launfal NorthSacramoreSacramore
TristramTristram(not mined)(not mined)
PalomidesPalomides
GawainGawainYwainYwain
GarethGarethEctorEctor
KayeKaye
EEmmu Pipesu Pipes
BedevereBedevere(not mined)(not mined)
MLN1154
1km
Production from 9 pipes:• 2.4mt mined (shallow open pit resources)• Produced 500,000cts at US$108/ct between 1998 to 2003• 2 pipes not mined
Why did Rio sell Merlin?•Served it’s purpose as a market trail•As a mine it was below Rio Tinto’s threshold level
Acquired by NADL in late 2004 as a package deal.Since closure rough diamonds prices have increases circa 24%
AustraliaAustralia’’s largest diamonds largest diamond104.73cts recovered from Gareth104.73cts recovered from Gareth
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Staged approach: a means of managing riskStaged approach: a means of managing risk•• Liberation, recoveries, grade determinationLiberation, recoveries, grade determination
Merlin Diamond Mine
Stage 1: Recovery of Diamonds from Sorthouse TailsStage 1: Recovery of Diamonds from Sorthouse Tails
Confirmation of significant loss of diamonds from previous operationsLargest stone = 14.21cts
Stage 2 : Reoptimised Pits
Pipe YwainMining grade 81cpht
approx 200m
Launfal
Sacramore
Palomides
Old plant siteExcalibur
Stage 3 : PALSAC Cutback
1.7 M tonnes380,000 cts
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Stage 3: PalSac Cutback – Higher grade ore
100m
150m
200m
250m
300m
Large Diameter drillLarge Diameter drillsamples reports highsamples reports high
diamond counts in VK1 unitdiamond counts in VK1 unit
HigherHighergrade?grade?
Shale
Sandstone
0m
50m
??
??
?
Kimberlite
VK1 Kimberlite
Country Rock
Pits
Legend
Pipes coalesce atPipes coalesce atbase of sandstonebase of sandstone
SacramoreSacramore PalomidesPalomides
VK1VK1VK1 = 10%VK1 = 10%of volumeof volume
Improved recoverydue to different kimberlite type
Optimum recovery
Surface EnrichmentClay – poor recovery
0 0.05 0.10 0.15 0.20 0.25 0.40 0.45
Grade (carats/m³³)0.50
180
160
140
120
100
80
60
40
20
0
Dep
th (m
)
SacramoreSacramore
Harder rock
0.30 0.35
60% increase in grade60% increase in grade
Increasing grade with depth
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Stage 4: Underground Mining Potential
Underground Model : Southern ClusterUnderground Model : Southern Cluster
SacramoreSacramore
PalomidesPalomides
ExcaliburExcalibur
LaunfalLaunfal
Launfal
20cpht20cphtSacramore
Launfal North
Ywain
Tristram
Excalibur
Gawain
Palomides
20cpht20cpht25cpht25cpht
24cpht24cpht
10.1 M tonne for 2.36 M carats10.1 M tonne for 2.36 M caratsover 10 year mine lifeover 10 year mine life
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Merlin In situ value exceeds US$500m
Since acquiring Merlin, work to date has increased the resource by circa 2.45mt = 14.4%
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Merlin Orbit Tenements
Merlin Pipes
Digital Terrain ModelDigital Terrain Model
Alluvial Diamonds
Alluvial Diamonds75 Diamonds
5.3 Carats
Australia’s Largest Diamond
104.73 carat
21 stones3.15cts
15 stones4.78cts
Fingerprinting indicates Fingerprinting indicates diamonds are not diamonds are not
sourced from Merlinsourced from Merlin
Kimberlite Pipe
Alluvial Sample with Diamonds
Indicator Target
Legend
Geophysical Target
25 Indicator Mineral &25 Indicator Mineral &26 Geophysical26 Geophysical
Identified for FollowIdentified for Follow--upup
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Projects: Arnhem Land
Groote
Eylandt
Carpentaria
Gulfof
Sydney
Central
Arnhem
Hwy
Darwin
Central Arnhem Hwy
WA
Darwin
NT
Closed for 5 years
Under Consideration
Aboriginal Consent
Application Tenement
Granted Tenement
Competitor Tenement
Perth
Legend
Consent Received
Kak
adu
Nat
iona
l Par
k
Area has potential for other minerals as well as Diamonds
Nhulunbuy
30 km
Arnhem Land Tenement Interest = 21,500kmArnhem Land Tenement Interest = 21,500km²²
$.05
$.04
$.04
$.04
$.03
$.03
$.03
15 Feb31 Jan30 Dec30 Nov31 Oct30 Sept31 Aug
1550
1410
1310
1210
1120
96010001040
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Capital Structure, Share Price and Share Holders
Listed on the Australian Stock Exchange :Listed on the Australian Stock Exchange : Code: NAD
817m ordinary shares817m ordinary shares20.5m options @ 7.5c 31/07/2008 :20.5m options @ 7.5c 31/07/2008 : Employee
Market capitalisation :Market capitalisation : $32 M
Share register restructured : Top 5 hold 22.74%
NADL Shareholders Percentages
22.74%
17.15%
60.11 %
Top 5Shareholders 6 to 40Other Shareholders
S & P / ASX 200M. Average
NAD Share Price
NAD Share Price 15/8/05 to 15/2/06
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NADL under valued vs. peers
NVarious - Australia/Africa30.0935Paramount Diamonds
NVarious - Australia30.015178Flinders Diamonds
NVarious - Africa50.1142Rox Resources
NVarious - Australia5.350.08563Conquest Mining
NVarious - Australia/Africa80.09780Bonaparte Diamonds
NVarious - Africa/Brazil/Australia90.069125Namakwa Diamonds
NVarious - Australia11.620.12593United Kimberley Diamonds
NVarious - Africa180.099179Mt Burgess Mining
NVarious - Australia/Brazil27.30.4469Elkedra
NVarious - Australia/Africa330.565Tawana
YAustralia - Northern Territory/Kimberley31.90.039817
North Australian Diamonds
NAustralia/Africa430.36120Gravity Diamonds
YVarious - India/Africa760.8293Dwyka Diamonds
NAustralia - Ellendale Exploration1230.69154Blina Diamonds
YVarious - Africa2071.4148Petra Diamonds
YAustralia - Ellendale 4 & 9432.41.63318Kimberley Diamonds
ProductionActivity
Market Capital
A$ million's
Price A$
On Issue (million’s)Company
$1,600$1,560
$1,260
$10,800
$10,800
$66,000
$19,610
$19,200
$13,640
$10,750
$9,280
$7,920$7,800
$7,410
$7,280
$5,520$5,490
$4,760
$4,200
$3,680
$3,400$3,300
$2,350$2.350
$2,050
$28,800
INTE
RN
ATIO
NAL
A-154 South Rio Tinto
A-418 Rio Tinto
MIR
PAND
A
UD
AC
HN
AYA
A-21 Rio Tinto
MIS
ER
Y
KOALA
A-154 North R
io Tinto
SYTYKANSKAYA
VE
N IN
C S
PEC
VENETIA
LETLHAKAN
E
SABLE
FOX
CA
TOC
A
OR
APA
JUBILEE
FINS
CH
AR
GYLE
KO
FFIEFO
NTE
IN
PREM
INC
SPEC
PR
EM
IER
KIMBER
LEY (South A
frica)
MIBA
ELLEND
ALE
US$ per 100 US$ per 100 tonnestonnes
$14,980
JWAN
ENG
US$2,700US$2,700
MerlinMerlin
Ore Value Ore Value
$3,150
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Merlin Ore value at historical prices /grades:Potential upside emerging
Merlin:
ROM average value = USD108/ct
Circa 24% increase in rough diamond prices since 2003
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Corporate Directory
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NADL Positioned for Growth1. Incremental approach has mitigated risk and delivered answers on:
• Liberation (high pressure grinding rolls crusher)
• Diamond recovery (optical sorting and non-fluorescing diamonds)
• Revised grades for Ywain and Kaye. Further testing of other pipes in progress
2. Run of mine production anticipated to produce circa 40,000cts and valued at circa A$7m in the period from Q2 to Q4 2006
3. Key factors are moving in the right direction – improved recoveries, higher grades and increasing rough diamond prices
4. Share register restructured (support from the top shareholders)
5. Opportunity to participate in the growth of the company at the current share price levels are becoming limited
On track to become AustraliaOn track to become Australia’’s s Third Diamond ProducerThird Diamond Producer