An Emerging South An Emerging South Australian Australian Bulk - - PowerPoint PPT Presentation

Western Plains Resources Ltd

An Emerging South An Emerging South Australian Australian Bulk Bulk Commodities Producer Commodities Producer Commodities Producer Commodities Producer

Bob Duffin Bob Duffin Bob Duffin Bob Duffin Executive Chairman, Western Plains Resources Ltd Executive Chairman, Western Plains Resources Ltd SA Resources and Energy Investment Conference SA Resources and Energy Investment Conference Adelaide, 4 May 2010 Adelaide, 4 May 2010

Key Corporate Information y p

Directors:

– Bob Duffin (executive chairman) – Heath Roberts (executive) ( ) – Gary Jones (executive) – Bob Richardson (non executive) – Len Dean (non executive) – Lim See Yong (non executive) g ( ) – Greg Jones (alternate for Bob Richardson)

Executives

Martin Jacobsen (COO) – Martin Jacobsen (COO) – Greg Harding (CFO) – Myles Fang (iron ore marketing) – Larissa Brown (company secretary) Issued shares 121.7m Cash: $15.3m (30 April 2010) plus $0.5m WISCO deposit (conditionally refundable if Commonwealth torpedoes WISCO Unlisted options 5.8m Fully diluted 127 5m p deal) Directors control 32m voting shares (26%) Good core group of top 50 shareholders both retail and professional Fully diluted 127.5m Market capitalisation $102m ( t $0 80/ h )

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p capitalisation (at $0.80/share)

Our Key Project Assets

IRON ORE

y j

IRON ORE

• DSO (haematite): Peculiar Knob ML

6314 and Buzzard and Tui (MC 3810) deposits at Hawks Nest deposits at Hawks Nest

• Magnetite BIF (taconite): Kestrel (MC

3809) and Goshawk, Harrier, Eagle, Kite and Falcon (EL 4248) at Hawks Kite and Falcon (EL 4248) at Hawks Nest

• Haematite BIF (itabirite): Buzzard and

Tui footwall deposits COAL

• Option to acquire the Penrhyn deposit

+ 3ELs GENERAL

• All granted tenements lie within the

WPA

• Road/rail haulage from PK to Port

Pirie virtually identical to Portman’s Koolyanobbing - Esperance road/rail haulage distances

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haulage distances

Our Vision

• Bring Peculiar Knob into production at ~3 mtpa in H2 2011
• Bring Buzzard into production later so total DSO sales are ~3 mtpa for minimum 10

Bring Buzzard into production later so total DSO sales are 3 mtpa for minimum 10 year DSO project life

• Continue exploration at Hawks Nest to discover more DSO deposits to extend life

beyond 10 years beyond 10 years

• Commence BFS on Hawks Nest magnetite (taconite) in 2010 and commit to project

development in 2014 so that magnetite sales are 6-10 mtpa for 30 years from 2015-6

• More testwork on Hawks Nest haematite BIF (itabirite) to supplement magnetite

concentrates with haematite concentrates and add value

• Define measured/indicated/inferred coal resource at Penrhyn of not less than 200

mt by 2013

• Commit to clean coal technology project at Penrhyn producing ~10 mtpa by 2016
• Commit to clean coal technology project at Penrhyn producing ~10 mtpa by 2016
• Divert part of magnetite/haematite concentrates and Penrhyn coal to production of

1-2 mtpa merchant pig iron by 2017

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Mineral Resource Estimates Totals

DSO Deposits

Totals – DSO Deposits

Category Million Tonnes Fe % P % SiO2 % Al2O3 % LOl % Measured resource 25.5 62.9 0.03 7.7 0.8 0.7 Indicated resource 9.3 61.6 0.05 9.5 0.7 0.8 Inferred resource 2.6 63.0 0.04 7.8 0.5 0.5 Total resource 37.4 62.6 0.03 8.2 0.8 0.7

NB: Peculiar Knob total resource 19.0 mt @ 63.7% Fe; Buzzard and Tui at Hawks Nest total resource 18.4 mt @ 61.6% Fe South Australian Resources and Investment Conference 4 May 2010

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@

Peculiar Knob DSO

• BFS completed September 2007

Si l l h tit

• Simple specular haematite

deposit; high grade Fe with virtually no impurities virtually no impurities

• Geotech, metallurgy completed
• Pit schedules now being re
• Pit schedules now being re-
• ptimised to match train capacity
• Sinter testwork planned for July

Sinter testwork planned for July

• Lies beneath 15 to 30 m cover
• Effectively all resource reports to
• Effectively all resource reports to

reserves

• LOM W:O strip ratio 3.6:1

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LOM W:O strip ratio 3.6:1

Peculiar Knob - Permitting

• Mining Lease - GRANTED
• Native title mining agreement - SIGNED
• Defence mining access agreement - SIGNED
• MPLs (infrastructure corridor) – LODGED and being review by PIRSA

P t l l h ld d ti t SIGNED

• Pastoral leaseholder access and compensation agreements – SIGNED
• Third party EL holders access agreements - SIGNED

MARP DRAFTED and ready to be lodged when PIRSA is ready to

• MARP – DRAFTED and ready to be lodged when PIRSA is ready to

accept and process it

• Licence to connect Wirrida rail loading loop to main line – DRAFTED

Licence to connect Wirrida rail loading loop to main line DRAFTED

• Borefield – LICENSED by DWLBC and PERMITTED by Defence
• Train paths – RESERVED

p

• Port Pirie port access and cargo handling agreement – UNDER

NEGOTIATION

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• Transshipment point in Spencer Gulf – UNDER NEGOTIATION

Peculiar Knob - Contracts

• Rail operator – SHORT LIST PREPARED AND DETAILED NEGOTIATIONS

COMMENCED

• Transshipment operator – SHORT LIST PREPARED AND DETAILED

NEGOTIATIONS COMMENCED NEGOTIATIONS COMMENCED

• Mining contractor – IN DISCUSSIONS – will be finalised when rail haulage

capacity settled

• Road haulage contractor – IN DISCUSSIONS - will be finalised when rail

haulage capacity settled

• Haul road highway underpass constructors – IN DISCUSSIONS

Haul road, highway underpass constructors IN DISCUSSIONS

• Rail loop constructor – IN DISCUSSIONS
• Sales contracts – MOUs UNDER NEGOTIATION – expect to be in place by end

July and to become binding offtake agreements when project development

• confirmed. Diverse customer base, market clearing prices, mix of FOB and CFR

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Peculiar Knob – the Importance of Grade

• PK is Australia’s highest

grade undeveloped Fe grade undeveloped Fe deposit

• Al O

P S and LOI are

• Al2O3, P, S and LOI are

extremely low – a bespoke product, ideal for blending p , g

• Will replace Brazilian fines in

sinter blend

• Premium for 62% Fe fines

now about US$35/t delivered 8% f

Average price for March quarter for

compared with 58% Fe fines – more than makes up for cost of transport isolation

Average price for March quarter for 62% Fe fines was US$174/t CFRFO at Tianjin port, China South Australian Resources and Investment Conference 4 May 2010

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cost of transport isolation

DSO - Local Infrastructure

We have Defence’s approvals for PK mine and infrastructure d l t development (including haul road, accommodation village rail siding and village, rail siding and Stafford borefield) but we still need to obtain Defence’s approval for Defence s approval for Buzzard mine development and its haul road haul road South Australian Resources and Investment Conference 4 May 2010

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Mineral Resource Estimates Magnetite Deposits Magnetite Deposits

• Kestrel

Category Million Tonnes Fe % P % SiO2 % Al2O3 % LOl %

• Kestrel

Measured resource 100 37 0.06 37 0.8 0.6 Indicated resource 60 36 0.06 38 1.0 0.8 Inferred resource 60 36 0.06 39 1.1 0.8

• All magnetite

Total resource 220 36 0.06 38 0.9 0.7 Category Million Tonnes Fe % P % SiO2 % Al2O3 % LOl % Kestrel meas red 220 36 0 06 38 0 9 0 7

• All magnetite

Kestrel – measured, indicated and inferred 220 36 0.06 38 0.9 0.7 Goshawk - inferred resource 148 35

• Cl

t ti l

Harrier - inferred resource 54 35

• Eagle - inferred

resource 92 31

• Ki

i f d 30 1

Clear potential to increase total resource to >1 billion tonnes

Kite - inferred resource 30 51

• Falcon - inferred

resource 25 32

• Total resource

570 36

• billion tonnes

with further drilling South Australian Resources and Investment Conference 4 May 2010

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Total resource 570 36

Mineral Resources

Hawks Nest Haematite BIF EL 4248 and MC 3810 Hawks Nest Haematite BIF – EL 4248 and MC 3810

Category Million Tonnes Fe % P % SiO2 % Al2O3 % LOl % Tonnes % % % % % Tui - indicated resource 23.9 38.2 0.03 43.5 0.72 0.51 Tui - inferred resource 2.8 36.7 0.02 45.2 0.92 0.61 Buzzard footwall – inferred resource 29.9 38.9 0.03 41.2 0.97 0.73 Buzzard footwall inferred resource 29.9 38.9 0.03 41.2 0.97 0.73 Buzzard SE – inferred resource 16.1 35.2 0.11 45.9 1.65 0.73 Buzzard West – inferred resource 29.8 36.6 0.03 45.4 0.86 0.66 Total resource 102.5 37.4 0.04 43.8 0.99 0.66

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Exploration targets

Hawks Nest BIF EL 4248 MC 3809 and MC 3810 Hawks Nest BIF – EL 4248, MC 3809 and MC 3810

Mineralisation Category Exploration Target Tonnage Range Million Tonnes Fe Grade Range % Magnetite BIF 790 – 890 32 – 37 Haematite BIF 1,400 – 1,680 22 – 43 Haematite BIF 1,400 1,680 22 43 Total 2,190 – 2,570 22 – 43

The exploration targets set out above are in addition to the mineral resource estimates set out in the earlier slides. The exploration targets are based on the currently available drill hole data and are conceptual in nature. Except for the y p p resource estimates in the earlier tables, there has been insufficient exploration to define a mineral resource in these areas, and it is uncertain if further exploration will result in the determination of a mineral resource South Australian Resources and Investment Conference 4 May 2010

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Our WISCO Magnetite Deal – Key Elements g

y

• WISCO will sole fund first $45m to earn a 50% JV interest in the Hawks

Nest tenement (excluding Buzzard DSO)

• WISCO cannot withdraw until it has spent $25m and if it does then its

interest will be 28% M ill b t BFS/ l ti /d l t

• Money will be spent on BFS/exploration/development
• WPG’s interest cannot fall below 50% and WISCO’s cannot be >50%
• WPG will be manager of the JV (BFS and production stages)
• WPG will be manager of the JV (BFS and production stages)
• WISCO will subscribe for 12m WPG shares and nominate 1 person to

join WPG’s board j

• WISCO to have right to purchase part of WPG’s share of cons
• WISCO will assist WPG with project capex and Port Bonython costs
• Agreements fully executed, deal NDRC approval and meets FIRB

guidelines but Defence hasn’t yet agreed to support it

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• Whole of government review in progress – timing unknown

Penrhyn Coal Project y j

• Permian semi-bituminous coal in

Arckaringa Basin 40 km SW of Coober Pedy and 20 km from Peculiar Knob haul road and rail loader road and rail loader

• Limited drilling only in the past
• Our drilling program commenced in

March 2010 – 4 diamond holes drilled and results now being assessed and results now being assessed

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Penrhyn Coal Project y j

Coal Category Exploration Target Tonnage Range (mt) Sub-Bituminous 250 – 350 Coal

The exploration target set out above is based on the currently available drill hole and coal quality data and is conceptual in

• nature. There has been insufficient exploration to define a coal

p resource, and it is uncertain if further exploration will result in the determination of a coal resource This clean coal technology plant is not a WPG

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asset

Woomera Prohibited Area

• Administered by the

Commonwealth Department of D f d b th RAAF Defence and run by the RAAF

• Covers 127,000 km2 - same size

as England g

• Occupies 13% of South Australia

but 25% of Gawler Craton PIRSA/SACOME ti t

• PIRSA/SACOME estimates

mineral endowment of Gawler Craton is $1.4 trillion

• There are 120 granted ELs held by

80 companies inside the WPA

• Until recently access was not
• Until recently access was not

generally regarded as an impediment to exploration and i i

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mining

Woomera Prohibited Area

• Peculiar Knob development not

affected by WPA unless financing attracts FIRB application attracts FIRB application

• Hawks Nest not in as sensitive part
• f WPA to Defence as the

I t t d R d E f Instrumented Range and area E of Highway and S of 300 S but it is still under the flight path

• Penrhyn, Mt Brady, Windy Valley

are not in high investment risk part

• f the WPA
• f the WPA
• Key mining projects in “pan and

handle” are our Hawks Nest, SA Coal’s Lake Phillipson (514 9 mt

Question: What part of “Prohibited” in the Woomera Prohibited Area don’t you understand? Answer: Well, its only selectively “prohibited” There is a lot of commercial and pastoral activity

Coal’s Lake Phillipson (514.9 mt measured, indicated and inferred coal resource) and BHP’s Acropolis

prohibited . There is a lot of commercial and pastoral activity inside the WPA, many people live and work there, more than 400 vehicles per day pass through it, intermodal and passenger trains use it, it’s not fenced off, there are no security guards, etc Defence and mining can coexist

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Cu Au U project

• etc. Defence and mining can coexist.

Port Options p

• Port access is the key

logistics element in SA and d t i j t i determines project economics

• Port Pirie: sub-optimal

solution but it at least exists. solution but it at least exists. Transhipment required. Our favoured port option P t B th Wh ll

• Port Bonython near Whyalla:
• ptimal port solution but no

funding for this ~$500m 20 g mtpa facility. We can’t wait

• Other Ports: We have looked

elsewhere including Adelaide elsewhere including Adelaide, Port Augusta, Ardrossan, Esperance, Darwin, Bunbury,

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Port Kembla, Whyalla etc

Port Pirie

• Operated by Flinders Ports Pty Ltd
• Can’t handle large ships so transshipment required

(similar to OneSteel’s Whyalla operation now (similar to OneSteel s Whyalla operation now transshipping 6 mtpa)

• Flinders Ports currently working with us to scope capex

and opex for handling Peculiar Knob products and opex for handling Peculiar Knob products

• Expect port access agreement to be drafted late June

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Port Bonython y

• Spencer Gulf PortLink Consortium

awarded preferred tender status Oct 2008

• Port Bonython is used for wet bulks by

Santos – handles Capes OK but needs a new jetty for iron ore

• Could be connected to the standard

gauge rail network

• Capex expected to be about $500m

i l di il li k l h d including rail link plus sheds

• SA Transport Minister said in Oct 08 that

the port will be operational in 2011

• It now appears there will be no

government financial support for it

• SGPL Consortium seeking $9m funding

f i i d t

• There is already much industrial development at

Bonython and is zoned for further development from iron ore industry

• BHP's ODX desalination plant will be

built there Bonython and is zoned for further development

• Stuart Petroleum/Scott Group 500 megalitre diesel

plant will be built at Bonython

• A larger refinery by Diamond Fuels is also slated for

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g y y development

Competent Persons p

• The review of exploration activities and results and the mineral resource estimates for the Peculiar Knob, Buzzard

and Tui DSO deposits and the non Kestrel magnetite deposits at Hawks Nest contained in this presentation are and Tui DSO deposits and the non-Kestrel magnetite deposits at Hawks Nest contained in this presentation are based on information compiled by Mr Gary Jones, a Member of the Australasian Institute of Mining and Metallurgy. He is Technical Director of Western Plains Resources Limited and a full time employee of Geonz Associates

• Limited. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under

consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Gary Jones has consented in writing to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.

• The mineral resource estimate for the Kestrel magnetite deposit at Hawks Nest contained in this presentation is

based on information compiled by Mr Arnold van der Heyden a Member of the Australasian Institute of Mining and based on information compiled by Mr Arnold van der Heyden, a Member of the Australasian Institute of Mining and

• Metallurgy. He is an employee of Hellman & Schofield Pty Ltd. He has sufficient experience which is relevant to the

style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Arnold van der Heyden has consented i iti t th i l i i thi t ti f th tt b d hi i f ti i th f d t t i in writing to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.

• The review of exploration activities and results for the Penrhyn coal deposit contained in this presentation are

based on information compiled by Mr Tom Bradbury, a Member of the Australasian Institute of Mining and

• Metallurgy. He is a senior geologist with Geos Mining, and a consultant to the Company. He has sufficient
• Metallurgy. He is a senior geologist with Geos Mining, and a consultant to the Company. He has sufficient

experience which is relevant to the style of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Tom Bradbury has consented in writing to the inclusion in this announcement of the matters based on his information in the form and context in which it appears

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context in which it appears.

Important Notice p

• This presentation contains forward looking statements concerning the

projects owned by WPG. Statements concerning mineral resources and

• re reserves may also be deemed to be forward looking statements in
• re reserves may also be deemed to be forward looking statements in

that they involve elements based on specific assumptions

• Forward looking statements are not statements of historical fact, and

actual events or results may differ materially from those described in the f d l ki t t t lt f i t f i k t i ti forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on WPG’s beliefs, opinions and estimates as of the date they are made and no

• bligation is assumed to update forward looking statements if these

g p g beliefs, opinions and estimates should change or reflect other future developments

• Data and amounts shown in this presentation relating to capital costs,
• perating costs and project timelines are based on consultant reports
• perating costs and project timelines are based on consultant reports,

contractor quotes and internally generated estimates

• Port user charges are assumptions but cannot be relied upon until port
• perators finalise their own plans
• perators finalise their own plans
• WPG cannot guarantee the accuracy and/or completeness of the figures
• r data in this presentation
• All dollar amounts indicated in this presentation are in Australian dollars

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p unless otherwise stated.