WPG Resources Ltd Proactive Investors Presentation April 2013 Key - - PowerPoint PPT Presentation

WPG Resources Ltd

Proactive Investors Presentation April 2013

Proactive Investors Presentation April 2013

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) Cash: $13.4m (31 December 2012) Substantial shareholders: – Bob Duffin 9.3% – Jalinsons Pty Ltd 8.6% In last 12 months WPG’s shareprice has outperformed all of our peer group – the market is taking notice

Issued shares 260.9m Unlisted share rights (vest in July 2015 if certain conditions met) 4.6m Fully diluted 265.5m Market cap (@ $0.09) $24m

2

Key Corporate Information

Proactive Investors Presentation April 2013

3

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 WPG has delivered outstanding investment return to shareholders, and remains committed to this

• bjective going forward

Management’s and shareholders’ interests are aligned Peculiar Knob mine in production November 2012

Proactive Investors Presentation April 2013

4

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

5

Why Another Iron Ore Project?

• The “China Development Story” is not
• ver!
• 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

• Consumers want security of supply and

don’t want to be beholden to the “Big 3”

Source: Mines and Money Hong Kong March 2013

Proactive Investors Presentation April 2013

6

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

• f 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

7

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

8

• 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

Giffen Well Development Concept

Proactive Investors Presentation April 2013

9

• 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

Giffen Well Geology

Proactive Investors Presentation April 2013

Category Million Tonnes Fe% SiO2% P% Al2O3% S% Oxide Indicated 65.8 33.0 33.6 0.04 2.5 0.05 Inferred 41.4 34.5 35.4 0.04 2.7 0.03 Total 107.2 33.6 34.3 0.04 2.5 0.04 BIF Indicated 361.9 31.6 38.4 0.07 1.7 0.64 Inferred 220.0 30.0 41.4 0.07 2.0 0.55 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

10

Giffen Well Resource Estimate

Proactive Investors Presentation April 2013

11

• 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

• f 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

Giffen Well Mine

Proactive Investors Presentation April 2013

12

• 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

Treatment Plant Design

Proactive Investors Presentation April 2013

13

Magnetite Concentrate – 5 mtpa Haematite Concentrate – 0.4 mtpa

Fe SiO2 Al2O3 P S LOI P80 68% 4.5% 0.16% 0.007% 0.02% ‐2.8 25μm Fe SiO2 Al2O3 P S LOI P80 60% 10% 0.70% 0.030% 0.01% +3.0 120μm

Saleable Products

Proactive Investors Presentation April 2013

14

• 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

Penrhyn Black Coal Deposit

Proactive Investors Presentation April 2013

15

• 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

Penrhyn Black Coal Deposit

Proactive Investors Presentation April 2013

16

• The 90 MW power station will be built near

the mine mouth. It will be designed specifically to burn Penrhyn coal

• The low footprint power station will meet or

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)

3X25MW unit coal fired power station in China

Penrhyn Power Station and Utilities

Proactive Investors Presentation April 2013

17

• 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
• perator will be engaged under a hook

and pull contract

Rail to Port Pirie

Proactive Investors Presentation April 2013

18

• Port Pirie is a publicly accessible port
• perated by Flinders Ports Pty Ltd who

manage shipping, maintain port, channel, wharfs etc

• WPG owns a 4.5 ha parcel of freehold

land suitable for the construction of rail unloading, storage and shipping facilities

• WPG has a 30 year agreement with

Flinders Ports for access and pricing

• We continue to pay lease rentals on other

land in Port Pirie

• WPG has development consent for 3.5

mtpa iron ore but the facilities can handle 7 mtpa

• An application will be lodged to increase

approvals to 5 mtpa

Port Pirie

Proactive Investors Presentation April 2013

19

• Port Pirie is not affected by cyclones and

has a good industrial relations climate

• Transhipment is common throughout the

world, and is becoming more widely utilised as environmental and cost pressures make the construction of greenfield ports difficult

• Our transhipment operation at Port Pirie will

be similar to that being used at Whyalla

• We will use a self propelled, self unloading

ship

• First anchorage 11 nm offshore, top up 12

nm further out

• Capacity at least 7 mtpa => this gives a

commercial opportunity to utilise the excess capacity

Transhipment

Proactive Investors Presentation April 2013

• Capex of $1.6bn plus working capital of

$0.2bn makes Giffen Well the lowest cost greenfield magnetite project in Australia, and possibly the world

• Capex is equivalent to $300 per annual

tonne – a common yardstick

• Opex of $71.48/tonne concentrate to FOB is

in line with Peculiar Knob and competitive with many other predevelopment projects

• Scope exists to reduce the capex to $1bn by
• utsourcing non core energy supply to

specialist infrastructure supplier

20

Cost Estimates

Proactive Investors Presentation April 2013

21

WHAT MAKES A GOOD MAGNETITE PROJECT?

Giffen Well High head grade

• High tonnage
• Low strip ratio
• Manageable development scale
• Good metallurgical characteristics – ore and concentrate
• Access to transport infrastructure
• Adequate power and water at affordable cost
• Long life project
• No reliance on other parties to develop shared infrastructure
• Affordable capex
• Competitive opex
• Management with track record and commitment to shareholder value
• Giffen Well – Points of Differentiation

Proactive Investors Presentation April 2013

22

The information in this presentation that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information complied by Mr Gary Jones, a Fellow of the Australasian Institute of Mining and Metallurgy. He is Technical Director of WPG Resources Limited and a full time employee of Geonz Associates Limited. The information is extracted from the following reports: For the Penrhyn coal project: Maiden 352.4 million tonne coal resource estimate for Penrhyn deposit. WPG’s ASX announcement of 7 July 2011 For the Giffen Well iron ore project: Maiden resource estimate makes Giffen Well one of the highest grade BIF iron ore deposits in Australia. 689 million tonnes at average grade 30.9% Fe. WPG’s ASX announcement of 4 October 2012 In addition, the metallurgical testwork reported herein is based on the following reports: Encouraging metallurgical testwork raises WPG’s sights towards iron ore mine development at Giffen Well. WPG’s ASX announcement of 29 October 2012 WPG is not aware of any new information or data that materially affects the information included in the relevant market announcements set out above and, in the case of estimates of Mineral Resources or Ore Reserves, confirms that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed.

Competent Person

Proactive Investors Presentation April 2013

23

This presentation contains forward looking statements concerning the projects owned by

• WPG. Statements concerning mineral resources and ore 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 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 beliefs, opinions and

estimates should change or reflect other future developments Data and amounts shown in this presentation relating to capital costs, operating costs and project timelines are based on consultant reports, contractor quotes and internally generated estimates WPG cannot guarantee the accuracy and/or completeness of the figures or data in this presentation All dollar amounts indicated in this presentation are in Australian dollars unless otherwise stated.

Important Notice