Strike Resources Limited · ASX:SRK
Strike Resources — 12th Annual Global Iron Ore & Steel Forecast Conference 2009
61 slides from Strike Resources's conference presentation, Mar 25, 2009
Slide 1: Market Announcement: Presentation at Global Iron Ore & Steel Conference
Wednesday, 25 March 2009 MARKET ANNOUNCEMENT Presentation at Global Iron Ore & Steel Conference The Company is pleased to enclose a copy of a presentation delivered by Managing Director, Shanker Madan, at the 12th Annual Global Iron Ore & Steel Forecast Conference, held in Perth, Western Australia.
Slide 2: Developing a World Class Iron Ore Project
DEVELOPING A WORLD CLASS IRON ORE PROJECT Strike Resources –March 2009
Slide 3: Executive Summary
Summary EXECUTIVE SUMMARY STRIKE IS DEVELOPING A 20 – 40 MTPA HIGH GRADE (+67% FE) IRON ORE OPERATION IN PERU, WITH A CURRENT JORC INDICATED RESOURCE OF 133MT AND A TARGET POTENTIAL OF ~1 BILLION TONNES IN TWO PROJECT AREAS PRE-FEASIBILITY STUDY CONFIRMS PROJECT EARNINGS FROM 20MTPA OF ~US$ 900 MILL
Slide 4: Presentation Schedule
PRESENTATION SCHEDULE STRIKE RESOURCES LIMITED – WHO WE ARE OVERVIEW OF THE APURIMAC AND CUZCO PROJECTS THE APURIMAC PROJECT – EXISTING RESOURCE – RESOURCE POTENTIAL – METALLURGY – PIPELINE – PREFEASIBILITY STUDY RESULTS THE CUZCO PROJECT SUMMARY 3
Slide 5: Strike
STRIKE
Slide 6: Structure
Structure STRIKE RESOURCES LIMITED IS A PUBLIC COMPANY LISTED ON THE AUSTRALIAN STOCK EXCHANGE (ASX) ASX Code: SRK Ordinary fully paid shares: 130 million Unlisted Options: 18.3 million Fully Diluted Issued Capital 148.3 million Cash : A$71.5 million Major shareholders include: Gallagher Holdings Li
Slide 7: Strike Board
Strike Board STRIKE HAS A BOARD OF DIRECTORS WITH EXTENSIVE IRON ORE INDUSTRY AND COMMERCIAL EXPERIENCE John Stephenson – Chairman Farhad Moshiri Exploration Director Rio Tinto Australasia. Executive Chairman of Metalloinvest 35+ years managing exploration. (leading Russian mining and metals group).
Slide 8: Peru Assets - Structure
Peru Assets - Structure STRIKE HOLDS ITS INTERESTS IN PERU DIRECTLY AND THROUGH A JOINT VENTURE COMPANY, APURIMAC FERRUM S.A. (AF) Strike Resources Limited 51% 70% 30% MAPSA 100% (Peru) Iron Associates Corporation (Panama) 24.5% D&C Group 24.5% (Peru) Strike Resources Peru Apurimac Ferrum S.A. (Peru
Slide 9: Overview of the Apurimac and Cuzco Projects in Peru
OVERVIEW OF THE PURIMAC AND CUZCO PROJECTS IN PERU >
Slide 10: Location
Location STRIKE HOLDS A MAJORITY CONTROLLING INTEREST IN TWO WORLD CLASS IRON ORE DEPOSITS LOCATED IN PERU, SOUTH AMERICA. 9
Slide 11: Peru Minerals
Peru Minerals PERU IS A WORLD CLASS MINERAL BELT Peru has 12% to 16 % of the world’s known resources of silver, gold, zinc, copper and lead Peru is among the top five producers in the world of silver, zinc, gold, copper and lead Rio Tinto, Xstrata, Newmont, BHP, Shougang and Teck Cominco among
Slide 12: Resource
Resource HISTORICAL REPORTS ESTIMATE A LARGE HIGH GRADE RESOURCE IN THE TWO AREAS Large untapped deposits of high grade iron ore are rare. Potential target resources from published estimates for Apurimac and Cuzco project areas by the Peruvian Ministry of Energy and Mines (1974) and Takahashi Tr
Slide 13: The Apurimac Project
Apurimac THE APURIMAC PROJECT 12
Slide 14: Apurimac
Apurimac APURIMAC DEPOSITS ARE HIGH GRADE AND EASILY ACCESSIBLE. Apurimac deposits are located near a regional airport servicing the major town of Andahuaylas (15km away, population 50,000). 13
Slide 15: Apurimac Concessions
Apurimac Concessions THE APURIMAC DEPOSITS ARE AT THE HEART OF A NEW IRON ORE PROVINCE The Apurímac -13.6 °N F ER R U M 1 3 -1 3.6 °N -73 °E FE R R U M 6 0 project FE R R U M 8 F ER R U M 2 7 -73.4 °E MA P S A 2001 S ILL A CC A S S A 1 P AC U N C O 1 S ILLA C C A S SA 2 comprises 71 O PA B A N I FE
Slide 16: Concessions
Concessions DRILLING HAS TO DATE ONLY SCRATCHED THE SURFACE AT APURIMAC Airport Airport Numerous +60% Fe rock chip samples on the majority of concessions indicate significant potential for delineation of large resource. 15
Slide 17: Apurimac Has a JORC Indicated Resource
Resource APURIMAC HAS A JORC INDICATED RESOURCE 133MT @ 59.40% FE AND GROWING. Resource drilling has been conducted in only 2 out of 73 concessions in Apurimac to date. A resource target of 210 - 260 Mt at Opaban I is projected based on geophysical data. 133Mt at 59.4% Fe JORC Indicated Resour
Slide 18: Drilling at Opaban 1 Includes 154m Intercept
Resource DRILLING AT OPABAN 1 INCLUDES A 154M INTERCEPT OPEN AT DEPTH. Detailed gravity and magnetic surveys followed by 31 diamond core holes and 45 RC holes have been drilled to date High grade intercepts including 154 metres at 62.8% Fe. Drilling at (located north and contiguous to Opaban I
Slide 19: Drilling at Opaban 3
Resource DRILLING AT OPABAN 3 INDICATES AVERAGE DEPTH OF MINERALISATION TO BE 62 METRES. Only a small portion of the gravity anomaly has been drilled. Average grade of +6mm fraction is +62% Fe. +6mm fraction constitutes 90% of the total rock. Although the total resource is estimated at 21 Mt
Slide 20: Significant Potential Exists for Resource Expansion
Resource SIGNIFICANT POTENTIAL EXISTS FOR RESOURCE EXPANSION. Airport Airport CONCESSION COMMENTS Opaban 1 & 3 One third of drill holes in Opaban 300Mt 1 are open at depth. Further resources are expected at depth, to the north ,west and east in both concessions. Ferrum + MAPSA 2001 Large magnetic an
Slide 21: Resource Potential
Resource Potential RESOURCE POTENTIAL AT APURIMAC IS ESTIMATED AT 600Mt. Christoforo Ferroso Stranded Opaban 1&3 40Mt Deposits Los Andes Owned by 300Mt Others Total 720 Mt Pampachiri 60Mt Sillicasa 60Mt MAPSA 2001 10Mt Ferrum Colcabamba 100Mt 30Mt “It is noted however that the non-JORC compliant pot
Slide 22: Aggressive Drilling Campaign to Delineate 600Mt by 2011
Resource Potential AN AGGRESSIVE DRILLING CAMPAIGN SHOULD DELINIATE 600MT by 2011. MT 21
Slide 23: Exploration Methodology
Exploration STRIKE’S EXPLORATION METHODOLOGY IS PROVINCE RATHER THAN DEPOSIT FOCUSSED. The Company is committed to developing its regional presence by continuing to explore in the region. The Company believes that the Apurimac and Cuzco deposits are not isolated instances of large iron ore depos
Slide 24: Resource Definition Temporarily Suspended
Exploration RESOURCE DEFINITION HAS BEEN TEMPORARILY SUSPENDED. Reasons: Market uncertainties. Partner funding constraints. 23
Slide 25: Community Relations
Community Relations STRIKE IS BUILDING STRONG GOOD COMMUNITY RELATIONS IN PERU. Local community approvals are required for land access and mining. Company has appointed strong and experienced Community Relations team. Mine Development involves negotiations with many communities; negotiations c
Slide 26: The Apurimac Project: Mine Development
Apurimac THE APURIMAC PROJECT MINE DEVELOPMENT 25
Slide 27: Prefeasibility Studies
Prefeasibility Studies A SIGNIFICANT COMPANY MILESTONE WAS ACHIEVED WITH THE COMPLETION OF THE APURIMAC PRE-FEASIBILITY STUDY IN JULY 2008 STUDY PRIME RESPONSIBILITY Geology, Mining and Resource Snowden Group Mineralogy, Petrology and Characterisation CSIRO Process system design and testing Si
Slide 28: Apurimac Production
Apurimac Production PRODUCTION OF 20 MILLION TONNES PER YEAR IS PLANNED FROM APURIMAC. Mining will be open pit with a low stripping ratio of 1.7:1. Mined ore will be beneficiated and fed into a ~360km slurry. Product mix will be 50:50 Principal Mag/Hem concentrate. Ore Body Product grades of
Slide 29: Mineralogy
Mineralogy DISTRIBUTION OF MAGNETITE HEMATITE IS ROUGHLY 50: 50. 28
Slide 30: Mineralogy
L code | LTYPE Core Depth (m) | Summary of macroscopic characteristics Grade est. greyish/dull, cracked to microporous w. distinct, fine blue-green infill, MGOX 5 OP1-0018-1 | 43.75-50.6 rel. friable & lower end of medium hardness. moderate Macro/micro-porous, earthy w. brown goethitic infill and mi
Slide 31: Mineralogy
Miia ein l= \ J i HD REE ine STRIKE ee, ae . 0019-2 43.75-50.6m-3 5x _ ; = ey ANS ne “aD J LES 0019-1 43.75-50.6m-1_ 10x g 0019-143.75-50.6m-1_ 20x Figure 1 Representative reflected optical micrographs of diamond core sections from sample OP1-0019" 43.74-60.6m (MGOX).
Slide 32: Mineralogy
Mineralogy Typical crushed ore <1 mm with liberated sulphide particles [white], grey particles are iron minerals, darker gangue difficult to see against epoxy background, OP1- 0028 MGSUL 31
Slide 33: Mineralogy
Mineralogy Ultrafine cyclosized crushed ore with liberated sulphide particles [white], grey particles are iron minerals, darker gangue difficult to see against epoxy background, OP1-0028 32
Slide 34: Mineralogy
Mineralogy Beneficiation achieved in cyclosizer from CS1 to CS3 compared to screened product –53+38 microns. 33
Slide 35: Product Specifications/Metallurgical
Product Specifications/Metallurgical TEST WORK HAS CONFIRMED EXECLENT METALLURGICAL PROPERTIES. Test work on reverse circulation chip samples from Opaban I returns product grades at coarse crushing with particle sizes of 80% passing 125 and 250 microns as follows. Fe 68.02% to 68.28% Al2O3 0.30% to
Slide 36: Flowsheet
Flowsheet RESOURCES LIMITED Ore Project Pracess Flow Schama-ic Andea Iron Ore Pi
Slide 37: Pipeline
Pipeline TOPOGRAPHY FAVOURS A SLURRY PIPELINE, OFFERING LOW COST TRANSPORTATION TO THE COAST. Pipeline offers relatively low capital expenditure and operating cost. The route allows for a mostly flat to gentle downhill gradient, allowing gravity to do most of the work thereby minimising the need
Slide 38: Pipeline Route
Pipeline Route 37
Slide 39: Water
Water LARGE BODIES OF WATER ARE LOCATED NEARBY TO SUPPORT TRANSPORT BY SLURRY PIPELINE. 38
Slide 40: PSI Slurry Pipelines Utilise Proven Technology
PSI SLURRY PIPELINES UTILISE PROVEN TECHNOLOGY. PSI have selected a preferred pipeline route to transport iron ore from the mine to coast over a distance of 363km Only 2 pumping stations will be required The pipeline will be buried The route does not pass through any sensitive areas 39
Slide 41: Operating Conditions at Apurimac
Conditions OPERATING CONDITIONS AT APURIMAC ARE HIGHLY FAVOURABLE. CLIMATE Apurimac 3,500m ASL; Cuzco ~4,000m ASL Similar elevations to many large mines in Peru Weather conditions benign LABOUR Apurimac Project 15km from Andahuaylas with 50,000 population Cuzco Project 80km from Cuzco: Per
Slide 42: Port
Port TRES HERMANAS IS AN ATTRACTIVE PORT SITE. 20 Metres depth at 300 metres from shore. Good protection from prevailing southern winds and currents. Considerable land available for stockpile etc. 41
Slide 43: Apurimac Estimated PFS Operating Costs
Opex APURIMAC ESTIMATED PFS OPERATING COSTS (20 Mtpa) Cost US$/T dry Description Concentrate Process, General and Administration 0.93 Reagents and Consumables 1.03 Infrastructure 0.40 Power 2.74 Spares 2.78 Mining and Geology 6.30 Port Operations 0.32 Total 14.50 Contingency 1.45 Total incl. Conting
Slide 44: Opex Comparison
Opex Comparison APURIMAC OPERATING COSTS WILL BE MUCH LOWER THAN AUSTRALIAN MINES Company Cash costs before royalties A$/t FOB (US$/t where indicated) Strike Resources (US$/t) – BFO (16) Fortescue Metals (FMG) – DSO 24 BHP (US$/t) (29) Rio Tinto (US$/t) (30) Midwest Corporation – DSO 38* Murchison M
Slide 45: Capex
Capex ESTIMATED CAPITAL COSTS FOR APURIMAC (20 MTPA) ARE REASONABLE FOR A PROJECT OF THIS SCALE Description Cost US$M Mine Site and off site infrastructure 361,082 Process Plant 341,971 Tailings 48,329 Concentrate Pipeline 489,962 Port 280,962 Water Supply 34,886 Electrical and Communications 54,654
Slide 46: Earnings and Valuation
Earnings and Valuation FORECAST EARNINGS AND NET PRESENT VALUE FOR APURIMAC (20 MTPA) ARE VERY ATTRACTIVE. Description Units Estimate Price per tonne FOB 2013 US$/T 60 Cash Operating Costs per tonne 2013 US$/T 18 Tonnes per annum MT 20 Capex US$M 2,500 EBITDA (first year full production) US$M 880 Ne
Slide 47: Competitive Advantage
Competitive Advantage GOOD GRADES + SIMPLE METALLURGY + LOW PERUVIAN COST STRUCTURE = A DISTINCT ADVANTAGE Apurimac offers superior grades compared to lower grade ores from Australia. Operating costs are expected to be very competitive. Apurimac ore is a mix of hematite and magnetite which lib
Slide 48: Summary of Project
Summary of Project THE APURIMAC PROJECT HAS THE POTENTIAL TO BE A TRULY WORLD CLASS, HIGHLY PROFITABLE IRON ORE MINE Strike is confident of delineating sufficient resource to support a 20Mtpa operation at Apurimac. Capex of $125 per annual tonne of production is comparable with other major iron
Slide 49: The Cuzco Project
STRIKE THE CUZCO PROJECT fr \\., APURIMAC
Slide 50: Cuzco Offers Potential to Expand Production to 40 Mtpa
Cuzco CUZCO OFFERS THE POTENTIAL TO EXPAND PRODUCTION TO 40 MT PA Drilling to delineate resource to support a further 20Mtpa Separate mine development at Cuzco Second pipeline to join into the Apurimac pipeline corridor Utilise same port infrastructure as for Stage 1 Apurimac project 49
Slide 51: Cuzco Deposits
Cuzco CUZCO DEPOSITS The Cuzco project is located 130 kilometres south-east of the Apurímac Project area and 80 kilometres South of the city of Cuzco which is Peru’s second largest city. 50
Slide 52: Cuzco Concessions
Cuzco Concessions THE CUZCO PROJECT COMPRISES A TOTAL OF 15 CONCESSIONS WITH AN AREA OF 12,363 HECTARES -72.2 °E -71.8 °E FERRUM 17 FERRUM 15 -14.2 °N APURIMAC -14.2 °N JULI EL PA A CIFIC CLAR O II A DELIA ESPE RANZ A FLOR DE MARIA EL PA CIFICO I FERRUM 14 LEGEND FERRUM 19 APURIMAC FERRUM CLAIMS FER
Slide 53: Cuzco Has a Targeted Resource of 500-650Mt
Resource CUZCO HAS A TARGETED RESOURCE OF 500-650MT Current drilling on 10% of radial anomaly has delineated 54Mt iron ore. The Cuzco deposits occur as flat tabular radial iron ore deposits within a 4km diameter area around an intrusive core Work done to date includes: • Geophysical surveys •
Slide 54: 125 Drill Holes Completed at Cuzco
Drilling 125 DRILL HOLES HAVE BEEN COMPLETED AT CUZCO Two types of iron ores occur in the Cuzco concessions: • High grade exo-skarn mineralisation in limestone is generally high grade (+60% Fe) 1 hematitic and low in impurities. k • Endo-skarn mineralisation in m the intrusive rocks is widespread
Slide 55: Cuzco Ore Occurs in Flat Lying Deposits
Orebody CUZCO ORE OCCURS IN FLAT LYING DEPOSITS Cross sections drawn of geophysical modelling indicate iron ore deposits are likely to be horizontal or gently dipping commencing at or near the surface with potentially low waste to ore ratio for mining operations. 54
Slide 56: A Second Pipeline from Cuzco Will Join Apurimac Pipeline
Pipeline Route A SECOND PIPLEINE FROM CUZCO WILL JOIN WITH THE APURIMAC PIPELINE Stage 1- Apurimac Stage 2 - Cuzco 55
Slide 57: The Way Forward
The Way Forward STRIKE WOULD WELCOME A PARTNERSHIP TO DEVELOP ITS PROJECTS IN PERU. The Strike Board wishes to proceed along a path of continued development for the Apurimac Project and seeks a partner who shares the same ideal: A 2 year programme to develop reserves to at least 500MT. A positiv
Slide 58: Project Timeline
Project Timeline 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 Resource Definition Detailed Engineering Environmental/Approvals Decision to Proceed Construction 57
Slide 59: Summary
Summary STRIKE IS DEVELOPING A 20 – 40 MTPA HIGH GRADE (67% FE) IRON ORE OPERATION IN PERU, WITH A RESOURCE POTENTIAL OF ~1 BILLION TONNES. STRIKE HAS THE EXPLORATION, DEVELOPMENT AND OPERATIONAL EXPERTISE NECESSARY FOR THE SUCCESSFUL DEVELOPMENT OF SUCH WORLD CLASS PROJECTS. 58
Slide 60: Disclaimer
Disclaimer DISCLAIMER This material contains certain forecasts and forward-looking information, including regarding possible or assumed future performance, costs, production levels or rates, prices, reserves and resources or potential growth of Strike Resources, industry growth or other trend projec
Slide 61: End
End Strike Resources Limited A.B.N 94 088 488 724 Level 14 The Forrest Centre 221 St Georges Terrace Perth, Western Australia 6000 Telephone +61 8 9214 9700 Facsimile +61 8 9322 1515 Email: info@strikeresources.com.au Web: www.strikeresources.com.au
Strike Resources — 12th Annual Global Iron Ore & Steel Forecast Conference 2009 on 6ix