Slide 1: Lumwana Site Visit Part I – Operations Review
Lumwana Site Visit P t I – Operations Part O ti R i Review February 5-6, 2014 1 Agenda 1 SAFETY IMPROVEMENTS 1. 2 OVERVIEW OF COPPER GROUP 2. 3. SITE OVERVIEW 4. TURNAROUND PROGRESS TO DATE 2
Slide 2: Lumwana Safety Improvements
Agenda 1 SAFETY IMPROVEMENTS 1. 2 OVERVIEW OF COPPER GROUP 2. 3. SITE OVERVIEW 4. TURNAROUND PROGRESS TO DATE 3 Lumwana Safety Improvements Total Reportable 2013 Most Improved Large Injury Frequency Rate Site Global Safety Award 0.31 23% Lumwana TRIFR: 0.24 0.25 0.24 Peer average TRIFR(1): 1.0
Slide 3: Global Copper Group
Agenda 1 SAFETY IMPROVEMENTS 1. 2 OVERVIEW OF COPPER GROUP 2. 3. SITE OVERVIEW 4. TURNAROUND PROGRESS TO DATE 5 Global Copper Group A dedicated senior leadership team was appointed in late 2012 Small company approach, lean, clarity of roles Focused exclusively on optimizing copper assets to ma
Slide 4: Copper Group Leadership Team
Copper Group Leadership Team Mark Fisher: President Jon Douglas: CFO David Elliott: Vice President Brian Grebenc: Director of Operations, p , Africa & Middle East Bill MacNevin: General Manager, Lumwana 7 Agenda 1 SAFETY IMPROVEMENTS 1. 2 OVERVIEW OF COPPER GROUP 2. 3. SITE OVERVIEW 4. TUR
Slide 5: Lumwana Highlights; Background and Potential
Lumwana HIGHLIGHTS 9 Large, high-potential copper deposit d it 9 Multi-decade reserve life 9 Stable jurisdiction with a long g historyy of mining g and established infrastructure 9 Strong reputation with government and regulators g 9 Lumwana BACKGROUND AND POTENTIAL An 18-month drill program was i
Slide 6: 2012 Copper Reserves & Resources
2012 Copper Reserves & Resources(1,2) Tons Grade Contained lbs Lumwana (000s) (g/t) (millions) P&P Reserves 580,204 0.520 6,038 M Measured d Resources R 105 428 105,428 0 369 0.369 778 Indicated Resources 809,871 0.512 8,287 Inferred Resources 23,938 0.363 174 Using a $3.00/lb $3 00/lb copper pric
Slide 7: Zambian Copper Belt; Lumwana Land Package
Zambian Copper Belt DRC Tenke Kamoto ZAMBIA Sentinel Kansanshi A N G O L A ANGOLA LUMWANA Konkola Z A M B I A ZAMBIA Nchanga Chambishi 1,265 km2 Equinox Tenement Mufulira Nkana Upper & Lower Roan Basement Inlier 0 200km Undiff Kundelunga 13 Lumwana Land Package 14
Slide 8: Lumwana Plan View; Open Pit Mining
Lumwana Plan View Malundwe Lumwana Waste Dam Dump Tailings Storage Facility Malundwe Main Pit ROM Pad & Crusher Lumwana Township Plant Camp Diversion Channel Chimi Dam Admin Office Light Chimiwungo Chimi Industrial Chimiwungo East Main Pit Area East Pit Waste Chimiwungo Chimi ngo Main Waste Chimiwun
Slide 9: Mining Fleet and Equipment; Processing
Mining Fleet and Equipment 10 Sandvik DK45 drills 3 Cubex DR560 drills 10 D10 track dozers 2 CAT 854 wheel dozers 6 CAT 16M motor graders 3 777 water trucks 3 CAT 994/993 front end loaders 31 Hitachi 4500 dump trucks y 6 Hitachi 5500 hydraulic shovels/excavators 17 Processing 20MTPA design copper
Slide 10: Processing Process Flowsheet
Processing Ball Mill – 26’ x 40’ Conveyor from Crusher Stockpile to Grinding Circuit SAG Mill – 38’ x 18’ Flotation Cell – 14 x 160m3 Roughing Capacity 19 Process Flowsheet 20
Slide 11: Concentrate Marketing
Concentrate Marketing Lumwana sells concentrate under long-term sales agreements to three smelters in Zambia – Chambishi Copper Smelter (CCS) – Konkola Copper Mines (KCM) – Mopani Concentrate is only sold domestically and is not subject to the 10% duty on all copper concentrate sold internationa
Slide 12: Turnaround Framework; Key Elements of Turnaround
Turnaround Framework KEY BUSINESS IMPROVEMENT ELEMENTS END STATE EMPOWER PEOPLE EMPOWERPEOPLE ResultsDriven Results Driven • LeadershipandCommunication Culture • EffectiveOrganizationStructure • RoleClarity(Expats&National) Training/CapacityBuilding 12) • BASELINE (Q4 201 Operational ENABLE THEORGAN
Slide 13: Key Elements of Turnaround; Manpower Improvements
Key Elements of Turnaround Efficiency Improvements: – Reconfigured organization structure and hired the right people – Launched Management Operating System Implementation Improved Fleet Productivity – LMC T Tonnage 2012: 2012 60.2 60 2 million illi tonnes t – LMC Tonnage 2013: 71.0 million tonne
Slide 14: 2013 Cost Reduction Breakdown; C1 Cash Cost Summary
2013 Cost Reduction Breakdown These focused improvements all contributed to the $100M total cost reduction in 2013 Mine Optimization ~40% Contract Other ~8% ~12% Re-negotiation ~20% ~20% Cost Management Maintenance Improvements 27 C1 Cash Cost Summary Focused changes have translated into significa
Slide 15: Sustained Performance Improvements; Global C1 Cash Cost 2012
Sustained Performance Improvements Beat original 2013 production Production (Mlb) C1 Costs ($/lb) 80 $4.00 guidance of 210 210-250 250 M lbs and New mine plan significantly beat C1 cash cost adopted 70 guidance of $2.70-$3.10/lb $3.50 Similar production at lower 60 $3.00 C1 costs expected in 201
Slide 16: Global C1 Cash Cost 2013; Improved 2013 Copper Guidance
Copper Mines – Global C1 Cash Cost 2013 2013 Copper Mine, Composite, C1 Cash Costs Grouped by Mine and Ranked by Cash Cost (C1) Lumwana Cost (US$/lb) 4 go-forward f d 3 C1 Cash C 2 1 0 0 5,000 10,000 15,000 20,000 25,000 30,000 Paid Metal (Mlbs) Source: Wood Mackenzie Ltd., Dataset: Q4 2013 31 Impro
Slide 17: Lumwana Site Visit Part II – Corporate Responsibility and Future Opportunities
Lumwana Site Visit Part II – Corporate Responsibility and Future Opportunities February 5-6, 2014 33 Agenda 1. CORPORATE RESPONSIBILITY 2. FUTURE OPPORTUNITIES 34
Slide 18: Corporate Responsibility
Agenda 1. CORPORATE RESPONSIBILITY 2. FUTURE OPPORTUNITIES 35 Corporate Responsibility Lumwana has a long history of working together with local communities to foster sustainable, long-term success Sample initiatives include: Support to Lumwana Community HIV and AIDS Task Force Health and Safety
Slide 19: Relationships with Royal Establishments; Fostering Wealth Creation
Relationships with Royal Establishments Strong relationships with the three Royal Establishments in our area Lumwana Development Trust Fund (LDTF) was established to ensure impact benefit is allocated appropriately between the Chiefdoms A formal f l MOU has h been b developed d l d to t addres
Slide 20: Lumwana Corporate Responsibility
Lumwana Corporate Responsibility Women’s Savings Empowerment Wheat Promotion Program Maternity Hospital Funding Hospital Staff Housing Funding Scholarship Programs Waste Recycling Program Basketry Program School Construction Funding Training Community Health Workers 39 Agenda 1. CORPORATE RESPONSIBI
Slide 21: Future Opportunities; 2014 Opportunities
Future Opportunities KEY BUSINESS IMPROVEMENT ELEMENTS END STATE EMPOWER PEOPLE EMPOWERPEOPLE LeadershipandCommunication ResultsDriven EffectiveOrganizationStructure RoleClarity(Expats&National) Culture Training/CapacityBuilding 12) BASELINE (Q4 201 ENABLETHEORGANIZATION Effectivesystemsandprocesses
Slide 22: Looking to the Future
Looking to the Future Lumwana is a large deposit in a stable, mining- friendly jurisdiction New mine plan maximizes free cash flow in the current p price environment and p preserves optionality p y Our goal is to continue to improve Lumwana’s productivityy and drive it further down the Global
Slide 23: Copper Market Outlook; Copper Grade Outlook
Price, Production Costs & Stocks 1990-2018 Historically,pricefloorforcopperhas beenthe90th percentileofC1cost ( (2014forecast~$2.25/lb) $ / ) Average Metal Stocks Source: Wood Mackenzie 45 Copper Grade Outlook IndustryHeadGradeTrends(WeightedbyPaidCopper) 46
Slide 24: Positive Copper Outlook
Positive Copper Outlook Structural change in demand supported by urbanization of emerging markets, i.e. China/India In the long term, the industry will be challenged to mount a sufficient supply response due to: – aging, lower grade mines and operational disruptions – dearth of new discoveries –