WPG Resources Ltd Proactive Investors Presentation April 2013
Key Corporate Information Directors: – Bob Duffin (Executive Chairman) – Heath Roberts (Executive) – Gary Jones (Executive) – Len Dean (Independent Non Executive) – Dennis Mutton (Independent Non Executive) – Lim See Yong (Independent Non Executive ) Executives – Martin Jacobsen (Chief Executive) – Greg Harding (CFO) – Myles Fang (Iron Ore Marketing) – Larissa Brown (Company Secretary) – Wayne Rossiter (GM Coal) Issued shares 260.9m Cash: $13.4m (31 December 2012) Unlisted share rights 4.6m (vest in July 2015 if Substantial shareholders: certain conditions met) – Bob Duffin 9.3% – Jalinsons Pty Ltd 8.6% Fully diluted 265.5m In last 12 months WPG’s shareprice has outperformed Market cap (@ $0.09) $24m all of our peer group – the market is taking notice Proactive Investors Presentation April 2013 2
To Recap: Sale of Iron Ore Assets in 2011 WPG sold its iron ore assets (Peculiar Knob and Hawks Nest and exploration tenements) to OneSteel (now Arrium) for ~$320 million in October 2011 Net earnings of $171 million for FY 2011 Paid fully franked dividend of $0.63/share and return of capital of $0.42 per share (total $1.05 per share) in November 2011 WPG has raised a total of $129 million from shareholders since incorporation in 2004, and has paid back more than twice this amount WPG shareholders retained their WPG shares post sale We did not sell our other project assets nor our Port Pirie land with its development approval Peculiar Knob mine in production WPG has delivered outstanding investment return November 2012 to shareholders, and remains committed to this objective going forward Management’s and shareholders’ interests are aligned Proactive Investors Presentation April 2013 3
WPG’s Key Project Assets IRON ORE • Giffen Well – the focus of the March 2013 prefeasibility study COAL • Penrhyn (a key element of the Giffen Well PFS), Perfection Well, Lochiel North EXPLORATION • Lake Woorong, Mirikata, Muckanippie PORT PIRIE • Large industrial freehold land holding (another key element of the PFS), Development Approval, and valid leases over third party land Proactive Investors Presentation April 2013 4
Why Another Iron Ore Project? • The “China Development Story” is not over! • While Chinese coastal development has been spectacular in the last 10 years, it’s hardly started in the inland cities • In contrast with some negative comments in the popular press in recent weeks, professional market participants like Societe Generale believe the demand growth for iron ore exceeds that for all other commodities in the foreseeable future Source: Mines and Money Hong • Consumers want security of supply and Kong March 2013 don’t want to be beholden to the “Big 3” Proactive Investors Presentation April 2013 5
Outlook for Iron Ore • Head grades of Pilbara DSO ores are falling • It’s unlikely that there will be any new discoveries of >62% Fe DSO deposits of size anywhere in the world • India is out of the export market – security of supply for domestic use • West Africa is prospective but the infrastructure investment required is enormous and sovereign risk in most of these countries is high • Market pays a premium for high grade Proactive Investors Presentation April 2013 6
Giffen Well Iron Ore Project • WPG’s subsidiary Giffen Iron Pty Ltd farmed into Giffen Well in 2012 • Giffen Well is in the WPA Green Zone • GIPL completed a $3m PFS in March 2013 • GIPL’s interest will be 25% by paying $5m to vendor if WPG decides to go forward, and GIPL will earn an additional 20% for each $5m budgeted to maximum of 82% • If a decision to develop a mine is taken GIPL will pay a further $10m to the vendor, at which time vendor has the right to decide whether to retain its equity interest in the project or exchange it for a royalty • JV does not cover Penrhyn nor Port Pirie which assets remain 100% owned by WPG Proactive Investors Presentation April 2013 7
Giffen Well Development Concept • Open pit iron ore mine and treatment plant at Giffen Well • Open pit coal mine and power station at Penrhyn • Project water to be obtained from dewatering Penrhyn pit with excess water reinjected • 132 kV power line and water pipeline from Penrhyn to Giffen Well • Rail spur and loading loop from Central Australian Rail Line • Accommodation villages and airstrips at Giffen Well and Penrhyn • Rail haulage to Port Pirie • Transhipment to Capesize ships in deep water in Upper Spencer Gulf • Long term employment for 550 persons • First sales in 2017 with 30 year project life Proactive Investors Presentation April 2013 8
Giffen Well Geology • There are 3 simple lenticular lodes or zones of BIF at Giffen Well • The Main Zone is ~4 km long by 350 m wide in the centre and open at depth • It dips steeply to the east • There is a thin oxidised zone at the surface, part of which is effectively mineralised waste • Fe grades are consistent within each zone • Resource estimates used data from 42 drill holes totalling 3,949 metres • Cut off grade of 15% Fe Proactive Investors Presentation April 2013 9
Giffen Well Resource Estimate Category Million Tonnes Fe% SiO 2 % P% Al 2 O 3 % S% Oxide Indicated 65.8 33.0 33.6 2.5 0.05 0.04 Inferred 41.4 34.5 35.4 0.04 2.7 0.03 Total 107.2 33.6 34.3 2.5 0.04 0.04 BIF Indicated 361.9 31.6 38.4 0.07 1.7 0.64 Inferred 220.0 30.0 41.4 2.0 0.55 0.07 Total 581.9 31.0 39.5 0.07 1.8 0.61 Total Resource Estimate Indicated 427.7 31.8 37.6 0.06 1.8 0.54 Inferred 261.4 30.7 40.4 0.07 2.1 0.47 Total 689.1 31.4 38.7 0.07 1.9 0.52 Proactive Investors Presentation April 2013 10
Giffen Well Mine • The main lode will be mined at 13 mtpa of primary ore to produce 5 mtpa of high grade magnetite concentrate • The plant has been designed to produce an additional 0.4 mtpa of haematite concentrate from treating 1.3 mtpa oxide ore (“mineralised waste”) using a scavenging circuit on the magnetite rougher tailings • LOM will be 30 years on main lode only • The pit has been designed to a maximum depth of 190 metres but the deposit is open at depth Proactive Investors Presentation April 2013 11
Treatment Plant Design • Primary crushing to -50 mm • Secondary crushing to -1.4 mm followed by two HPGR units • Ore passes through HPGR circuit four times before delivery to ball mill without pre-concentration where it is ground to 80% passing 110 microns • Ore is then magnetically concentrated and tails scavenged in spiral circuit to recover haematite • Magnetite then reground in energy efficient tower mills to 80% passing 25 microns • Final concentration using hydroseparators and magnetic cleaner • Concentrate product filtered and flushed with fresh water to remove salt prior to stockpiling and railing to Port Pirie Proactive Investors Presentation April 2013 12
Saleable Products Magnetite Concentrate – 5 mtpa Fe SiO 2 Al 2 O 3 P S LOI P 80 68% 4.5% 0.16% 0.007% 0.02% ‐ 2.8 25 μ m Haematite Concentrate – 0.4 mtpa SiO 2 Al 2 O 3 P 80 Fe P S LOI 60% 10% 0.70% 0.030% 0.01% +3.0 120 μ m Proactive Investors Presentation April 2013 13
Penrhyn Black Coal Deposit • Penrhyn is a sub- bituminous black coal deposit in the Arckaringa basin south east of Coober Pedy • Like Giffen Well, it also lies in the Green Zone of the WPA • Penrhyn is a thermal coal deposit with specs generally similar to Indonesian, Collie Basin in WA, and Leigh Creek in SA • WEC’s Lake Phillipson coal deposits 20 km to the SW are similar Proactive Investors Presentation April 2013 14
Penrhyn Black Coal Deposit • Penrhyn is a thermal coal with similar geology and specs to Lake Phillipson • A trial pit was opened at Ingomar in the Phillipson basin in 2001 and 10,000 t ROM coal was mined for testing • The photo at the right shows mining operations in the Ingomar pit. The Penrhyn mine will be generally similar Proactive Investors Presentation April 2013 15
Penrhyn Power Station and Utilities 3X25MW • The 90 MW power station will be built near unit coal the mine mouth. It will be designed fired specifically to burn Penrhyn coal power station in • The low footprint power station will meet or China exceed contemporary environmental and emissions standards • The pit will be dewatered, with some water fed to a reverse osmosis plant, the bulk of it will be piped to Giffen Well, and excess water will be reinjected • High tension power line (132 kV) and water pipeline will be built between Penrhyn and Giffen Well (110 km) Proactive Investors Presentation April 2013 16
Rail to Port Pirie • A 24 km spur line will be built from the project area to the Central Australian line near Carnes siding • It is 544 km from Giffen Well to Port Pirie by rail • WPG’s prior experience in designing built- for-purpose rail wagons for Peculiar Knob will be utilised • A tippler unloader will be built at Port Pirie and gondola-type wagons will be used - not bottom dump wagons as built for PK • WPG will own the wagons and a rail operator will be engaged under a hook and pull contract Proactive Investors Presentation April 2013 17
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