Positioning for sustainable long term growth Len Jubber - Chief - - PowerPoint PPT Presentation

“Positioning for sustainable long term growth”

Len Jubber - Chief Executive Officer 9 June 2006

Slide 2

Important Notice

This presentation is not and does not constitute an offer, invitation or recommendation to subscribe for, sell or purchase any security in any jurisdiction. Reliance should not be placed on the information or opinions contained in this

• presentation. This presentation does not take into consideration the investment
• bjectives, financial situation or particular needs of any particular investor.

No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, Perilya Limited and its affiliates and related bodies corporate and their respective officers, directors, employees and agents disclaim any liability (including, without limitation, any liability arising from fault or negligence) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with it. Any forecasts and other forward-looking statements set out in this presentation are based on a number of assumptions which are subject to change and in many cases

• utside the control of Perilya Limited. Any forecasts contained in this presentation may

vary from actual financial results and these variations may be material. Accordingly the forecasts should not be relied upon. All figures are expressed in Australian Dollars unless stated.

Slide 3

Contents

Corporate Broken Hill Projects & Exploration

– Base metals – Precious metals

Summary

Slide 4

Capital Structure

as at 6 June 2006

Geographic Analysis of Investors at 31 Mar 2006 Shares (m)

Over 50% foreign held Strong recent interest from North America and Asia Taking a global perspective

• n investor relations

ASX Code

PEM

Shares on Issue

191.0 m

Unlisted Options

8.0 m

Share Price

A$2.83

Market Capitalisation

A$541m

Average Daily Turn-over

1.3 m shares Perilya – Share Price Performance

$0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 1 D e c 5 1 5 D e c 5 2 9 D e c 5 1 2 J a n 6 2 6 J a n 6 9 F e b 6 2 3 F e b 6 9 M a r 6 2 3 M a r 6 6 A p r 6 2 A p r 6 4 M a y 6 1 8 M a y 6 1 J u n 6

A$ per Share

• 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000

Volume

Source: IRESS

10 20 30 40 50

Australia New Zealand UK Europe (ex UK) North America Asia West Indies Unknown

31 Mar 2006

Slide 5

Significant Asset Portfolio

Base & precious metals

BASE METALS GOLD OPERATING 1 Broken Hill (Zn, Pb, Ag) DEVELOPING 2 Daisy Milano EVALUATING 3 Potosi (Zn, Pb, Ag) 4 Flinders (Zn, Mn) RESOURCE DRILLING 5 Mt Oxide (Cu) 7 Moyagee 6 Tampang (Cu) 6 Tampang EXPLORING 8 Dee Range (Cu, Zn) 10 Holleton 9 Woodline Well (Ni) 11 Honeymoon Well 12 Kanowna

• Broken Hill metal production:

140kt zinc, 75kt lead and 2Moz silver

• Daisy Milano: target ~ 50-60koz gold
• Development and exploration projects:

– Broken Hill extensions – Flinders – Mt Oxide – Tampang – Yilgarn gold portfolio

Slide 6

Broken Hill cash flow profile

From acquisition to May 2006

• Generated ~A$100m cash from operations since acquisition.
• $46.5m in price & production linked payments made since acquisition – final $8.5m due in

June.

• Generating positive return on A$90m acquisition investment.

(40) (20)

• 20

40 60 80 100 120

Mar 02 May 02 Jul 02 Sep 02 Nov 02 Jan 03 Mar 03 May 03 Jul 03 Sep 03 Nov 03 Jan 04 Mar 04 May 04 Jul 04 Sep 04 Nov 04 Jan 05 Mar 05 May 05 Jul 05 Sep 05 Nov 05 Jan 06 Mar 06 May 06

A$ millions

Cumulative Net Cashflow Cumulative Production Linked Payment Cumulative Price Linked Payment

Slide 7

Broken Hill

Significant operational improvements

Quarterly Metal Production & Cash Operating Margin 5 10 15 20 25 30 35 40 Q3 Q4 Q1 Q2 Q3 04-05 05-06 Contained Metal - kt

• 0.20

0.40 0.60 0.80 1.00 1.20 US$/lb Zinc Lead Net Cash Cost US$/lb Revenue US$/lb

Slide 8

Broken Hill

Significant operational improvements

Total Ore & Metal Production

300 350 400 450 500 550 600 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03-04 04-05 05-06 Ore treated (kt) 30 35 40 45 50 55 60 Contained Metal in Concentrate (kt) Tonnes treated Total Contained Metal In Concentrate

Slide 9

Broken Hill

Significant operational improvements

Ore Grades

2 3 4 5 6 7 8 9 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03-04 04-05 05-06 Grade (%) Zn Grade Lead Grade

Slide 10

Broken Hill

Significant operational improvements

Metal Recovery

76 78 80 82 84 86 88 90 92 94 96 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03-04 04-05 05-06 Recovery (%) Zn Recovery Lead Recovery

Slide 11

Margin growth driven by -

Direct Costs

• Productivity
• Lead Price
• Zinc Price
• Price linked charges
• Broken Hill

Exponential margin growth

Cash Costs Cash Costs Cash Costs Cash Costs

Zinc Price Zinc Price Zinc Price Zinc Price

0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 Dec 2004 Half Jun 2005 Half Dec 2005 Half Mar 2006 Quarter

US$ per lb of Zinc 0.55/lb 0.19/lb 0.12/l 0.07/lb

Slide 12

Multiple value drivers

Taking a long term view

• Production: Target 2.1 - 2.3 Mtpa

─ Increase capacity of existing mining system ─ Identify additional sources

• Direct costs: Target 2 - 4 ¢/lb sustainable reduction in direct

costs p/a over next 2 years

– US$0.01/lb equates to A$4 million per annum *

• Metal prices: Hedge where appropriate

– US$0.10/lb Zn equates to A$24 million per annum * – US$0.10/lb Pb equates to A$15 million per annum *

• Longevity: Target 10 years +

─ Currently 5 years on reserves and 7 on resources ─ Replaced 75% of production over past 4 years

* Based upon annualised March quarterly production statistics

Slide 13

North Mine Southern Operations

City

Surface projection of ore bodies Perilya Lease 5 km

Potosi Flying Doctor

Broken Hill mining leases

Brownfields exploration & project evaluation

Open pit potential Development decision by mid year Compiling geological interpretation of area between Potosi & North Mine Scoping Study on North Mine Deeps Drilling above existing mining area

Slide 14

Potosi

Development decision by mid year

Flying Doctor

North

Slide 15

Potosi

Likely development path Exploration decline S

elf funded through early access to Potosi North orebody

Resource drilling from decline Commence 2nd half 2006

Slide 16

North Mine

Grade is king – well almost

Decline currently below 9 Level Water Table – 960m (26 Level) Current decline design to 16 Level 0.8mt / 21.0 % Zn + Pb Inferred Resource 3.4mt / 25.6 % Zn + Pb Inferred Resource

2 Lens mined 3 Lens mined

Production Areas

Slide 17

North Mine Deeps

Scoping study well advanced Access 3.4mt @ 25.6% Zn & Pb via number 3 shaft. Dewatering critical path 9-15 months. US$1.6b in-situ value at US$3,000 Zn / US$1,100 Pb. What has changed since closure in 1993?

─ Lower operating cost. ─ Higher mining rates with open stoping. ─ Higher metal price. ─ Industry has developed better understanding of managing ground conditions in the past 15 years.

Study outcome to be released in current quarter.

Slide 18

Potosi North Deeps Flying Doctor Pinnacles, White Leads, Little Broken Hill 2006 2007 2008 2009 2010 Exploration Project Evaluation Construction Production

Broken Hill Project Development

Indicative schedule

Slide 19

Broken Hill Mine life

Targeting ten years plus

Improvements Brownfields Exploration North Mine Potosi Current Reserves Greenfields Exploration Annual Production (Mt) Longevity 5 7 8 ? ?? ?? ??? 2.1

Current plant capacity ~ 2.6 – 2.8mt per annum

Slide 20

Flinders

Direct ore shipping or hydro metallurgical?

Alternatives Direct ore shipping. Zinc hydro-met. Zn and Mn hydro-met. Next Steps to end of June Target near surface zinc - rich extensions. Metallurgical review and test- work. Update resource estimate & economic evaluation. Current status Resource of 941kt @ 30% zinc. Completed Padaeng processing trial on direct shipping ore.

Slide 21

• 80,000 tonnes Cu metal (2.8mt @ 2.9%).
• Located 25km from Mt Gordon.
• Geological re-interpretation completed.
• Resource update & exploration plan - June quarter.
• Resource extension drilling - September quarter.

Mt Oxide

Drilling to resume in September quarter

Slide 22

Tampang

Known large gold-copper porphyry system

200m Bongkud Hill TRD030

> 1% eCu > 0.6% eCu

supergene

H i g h G r a d e T a r g e t

Originally delineated on geochemistry & drilling restricted to geochemistry peaks. Subsequent geophysics identified potential western extension. TRD030 too shallow to test hypothesis.

Bongkud Hill

Slide 23

Gold Business

Evaluating go forward model Mt Monger

– Daisy Milano

• Produced ~ 30,000 oz since

acquired

• Final feasibility stage

– 4,500ha landholding incorporates repeat structures

Moyagee

– 223,500 oz inferred resource at Lena prospect – Conducting target definition drilling along Lena shear

Honeymoon Well

– Multiple broad intersections including 24m @ 11.3 g/t.

Holleton

– Strong gold surface geochemistry in a poorly explored greenstone belt

Kanowna JV

– Placer Dome drilling to earn 60%

Strategic Investment

– Gleneagle Limited

• 7.7% shareholding
• A$500,000 on production and

commencing up to A$2 million royalty after first 50,000 oz

– Integra Limited

• 4.9% shareholding
• Exploring in close proximity to

Mt Monger landholding

• Integra pre-feasibility study includes

potential processing facility

Slide 24

Perilya – “Unlocking the Value”

Short Term

• June Quarter:

– 34,000 to 36,000 kt zinc – 16,000 to 18,000 kt lead

• Complete Daisy Milano

feasibility study & address

• perational performance.
• Bring both Potosi and Flinders

to a decision.

• Test Mt Oxide potential.
• Finalise Tampang strategy.
• Finalise gold business strategy.

Medium Term

• Extend Broken Hill mine life.
• Strengthen development

pipeline.

• Diversify cash flow stream.

Slide 25

Positioning for sustainable long term growth

• Broken Hill acquisition obligations retired by mid 2006.
• A$100 million in cash and deposits – A$10 million debt. (end May 06)
• Around A$160-180 million free cash flow per annum

at current prices.

• Evaluating growth options.
• Strengthened senior management team and

Board of Directors.

• Building capability throughout organisation.

“Positioning for sustainable long term growth”