Sunstone Metals Ltd · ASX:STM
Sunstone Metals — Avalon Minerals — Investor Presentation (October 2012)
29 slides from Sunstone Metals's investor presentation, October 2012
Slide 1: Avalon Minerals Ltd Investor Presentation October 2012
AVALON MINERALS LTD Investor Presentation October 2012 1
Slide 2: Avalon Minerals Key Assets
AVALON MINERALS Narvik RUSSIA Kiruna Key Assets: Viscaria Cu-Fe Project Kiruna Fe Mine Malmberget Fe Mine Aitik Cu Mine • Viscaria Copper Project Norwegian Sea (100%) Lulea FINLAND Skelleftea Ronnskar • Viscaria Regional Cu-Pb smelter Kokkola Umea Exploration Ostersund Zn smelter NORWAY Gulf of • Ho
Slide 3: Company Snapshot
COMPANY SNAPSHOT Share Register Capital Structure Abu Sahid Bin Mohamed 15.03% 330,873,602 shares Siew Mun Chuang 8.67% Share Price: $0.085 Galena Fund 6.02% Market Capitalisation circa A$28M Lim Heng Suan 5.33% Cash $2.2M JP Morgan Nom 5.20% Top 10 holders 49% of share capital Board of Directors Sh
Slide 4: Avalon's Objectives
AVALON’S OBJECTIVES Minimum of 500% increase to shareholder value within a 2-4 year time period Increase Viscaria Project NPV to >$300M and IRR>30% Demonstrate ability to produce >25,000tpa of Cu Complete BFS and Permit Project for Development Select development path which maximises returns for shar
Slide 5: Proven Management and Track Record
PROVEN MANAGEMENT AND TRACK RECORD Share Price Volume Jeremy Read (Managing Director) and Dr Quinton Hills ('000) $2.00 80,000 (Exploration Manager) appointed in early 2012 $1.80 70,000 $1.60 60,000 $1.40 Demonstrated track record of exploration success and $1.20 DML 400% return 50,000 $1.00 40,000
Slide 6: Sweden – Attractive Mining Destination
SWEDEN – ATTRACTIVE MINING DESTINATION Infrastructure 4km from mining centre of Kiruna (pop. Railway 23,000) Powerline Nearby smelters Tenement Heavy haulage railway Ports – Narvik (ice free), Luleå Power (3c/Kwatt hour) Sweden Sovereign Risk No. 2 on Resource Stocks World Risk Survey No. 7 on Frase
Slide 7: Viscaria Copper Project Resource
VISCARIA COPPER PROJECT RESOURCE* A ZONE 21.6Mt @ 1.5% Cu Inc. 9.5Mt @ 2.7% Cu B Zone B ZONE A Zone 19.7Mt @ 0.8% Cu D Zone D ZONE 14.8Mt @ 26% Fe 5.4Mt @ 0.9% Cu TOTAL RESOURCE 46.6Mt @ 1.0% Cu 520kt contained Cu. * See slide 27 for the JORC Classification of Mineral Resources 7
Slide 8: Viscaria Project History
VISCARIA PROJECT HISTORY World-class Iron Oxide Copper Gold (IOCG) and iron province. Discovered in the 1970’s. 15 years historical production from 1982 to 1997 at the A Zone via combined OP/UG operation (Outokumpu). Produced a 25% concentrate. Production of 12.5Mt of 2.3% Cu. AVI acquired Viscaria
Slide 9: Viscaria Layout
VISCARIA LAYOUT A Zone Tailings Dam Processing Plant Site Power Line Portal 9
Slide 10: Exploration Strategy
EXPLORATION STRATEGY Understand controls on high grade (>2% Cu) mineralisation. Initial 2,000m drill program has identified resource growth potential exists. Scoping Study has outlined technical and economic viability of open pit and underground operations. Intensive drill program planned to commenc
Slide 11: Scoping Study Outcomes
SCOPING STUDY OUTCOMES* Project is viable at $3.25/lb Cu and US$150/t Fe pellets. ‘Base Case’ NPV of A Zone and D Zone open pits currently stands at US$61M. Three ‘development cases’ expected to be underwritten by resource growth following planned 25,000m drill program and have the potential to add
Slide 12: Scoping Study Analysis (US$3.25/lb Cu, US$150/t Fe)
SCOPING STUDY ANALYSIS (US$3.25/lb Cu, US$150/t Fe) Scenario Base Case Devt Case A Devt Case B Devt Case C Devt Case D Tonnage and 11.0 Mt @ 0.50% 15.5 Mt @ 0.46% 18.5 Mt @ 0.80% 20.2 Mt @ 0.86% 28.2Mt @ 0.7% Grade Cu 22.2% Fe Cu 23.1% Fe Cu 19.4% Fe Cu 20.0% Fe Cu, 24.7% Fe Optimum Mining 2.1 Mtpa
Slide 13: Development Cases – Resource Extensions
DEVELOPMENT CASES – RESOURCE EXTENSIONS Mineral Tonnage and Parameter Resource How Grade Extension 11.0 Mt @ 0.5% Base Case Cu, 22.2% Fe 15.5 Mt @ 0.46% 4.5 Mt @ 0.38% D Zone +300m Development Case A Cu, 23.1% Fe Cu, 25.4% Fe strike, 35m depth Extend A Zone 18.5 Mt @ 0.80% 3.0 Mt @ 2.5% Development
Slide 14: D Zone Extensions (Depth and Strike)
D ZONE EXTENSIONS (DEPTH AND STRIKE) Open Pit: • Objective is to extend resource 300m along strike and 35m down dip. • Resource base will increase from 9.6Mt to 14.1Mt. Underground: • Objective is to extend resource a further 150m further down dip. VDD0128 68m @ 1.0% CuEq, Inc 8.1m @ 2.1% CuEq, 6.4m
Slide 15: D Zone Cross-Section (Copper and Iron)
D ZONE CROSS-SECTION (Copper and Iron) Open at depth, displaying extension potential. VDD0129 88M @ 0.7% CuEq, Inc 9m @ 2.1% CuEq, 5m @ 1.5% CuEq* 15 *See slide 28 for actual assay results used to calculate Copper equivalent (CuEq)
Slide 16: A Zone Drilling Has Indicated Open at Depth
A ZONE DRILLING HAS INDICATED OPEN AT DEPTH A Zone Extensional Drilling – 2 holes, 2 high grade intersections Potential for additional mineralisation 16
Slide 17: Exploration Strategy: Discovery Zone Acquisition
Discovery Zone acquisition • Binding HoA signed with Hannans Reward for total EXPLORATION STRATEGY payment of $4m subject to completion of due diligence • Current JORC of 10.9Mt @ 0.3% Cu and 38.7% Fe* • 10kms (trucking distance) from Viscaria • Potential to add up to $100m in value and bring overal
Slide 18: Discovery Zone Mineralisation Similar to D Zone
DISCOVERY ZONE MINERALISATION SIMILAR TO D ZONE Discovery Zone Cu-Fe D Zone Cu-Fe 18
Slide 19: Highly Competitive C1 Cash Cost Profile
HIGHLY COMPETITIVE C1 CASH COST PROFILE T CASES B & D US$1.03/lb BASE CASE US$0.65 CASE D US$0.61 CASE A US$0.47 19
Slide 20: Regional Exploration Targets
REGIONAL EXPLORATION TARGETS Viscaria Regional Exploration • 720km² tenure, 100km of cumulative strike Heli-EM to define drill targets • High quality targets defined Tjavelk Viscaria 10km 20
Slide 21: Development Timeline
DEVELOPMENT TIMELINE Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS
Slide 22: Objectives for Upcoming Drill Program
OBJECTIVES FOR UPCOMING DRILL PROGRAM Increase D Zone resource base by 4.5Mt to 15.5Mt 3Mt @ 2.5% Cu defined at A Zone (underground mining) Assess underground mining potential at D Zone Increase mine life to +10 years Confirm mineral resources to underpin +US$300M project NPV Test best regional expl
Slide 23: Summary
SUMMARY Objective is to achieve +500% value creation within 2-4 years Management with proven track record Sweden a Top 10 mining destination with excellent infrastructure Clear pathway defined, potential to increase Viscaria Project NPV to +$300M Low risk Mineral Resource extension drill program def
Slide 24: Contact
CONTACT Jeremy Read jeremy.read@avalonminerals.com.au Mobile: +61 409 484 322 ASX Code: AVI www.avalonminerals.com.au 24
Slide 25: Appendix: Scoping Study Economic Parameters
APPENDIX: SCOPING STUDY ECONOMIC PARAMETERS Parameter Unit Value Overall pit slope angle Degrees 55 Copper Price US$/t US$7,165 Magnetite Price US$/t US$150 Mining Cost (ore) US$/t US$4.55 Mining Cost (waste) US$/t US$4.55 Mining Recovery % 95% Mining Dilution % 5% % Cu 90% Metallurgical Recovery %
Slide 26: Appendix: Price of Fe Pellets
APPENDIX: PRICE OF FE PELLETS US$150/t 26
Slide 27: Mineral Resources
MINERAL RESOURCES Resource JORC Classification Tonnes (t) Cu Grade (%) Cu Metal (t) Name Measured 14,439,000 1.66 239,000 Indicated 4,690,000 1.22 57,000 A Zone* Inferred 2,480,000 1.03 26,000 Subtotal 21,609,000 1.49 322,000 Measured 123,000 1.33 2,000 Indicated 4,118,000 0.72 30,000 B Zone* Inferr
Slide 28: Additional Information and Attribution
ADDITIONAL INFORMATION AND ATTRIBUTION Copper Equivalent Formula • *% CuEq = % Cu + ((%Fe x Fe price US$/tonne x Fe recovery)/(Cu price US$/tonne x Cu recovery) • Cu price US$/tonne = $7,163.00 (US$3.25/lb) • Cu Recovery = 90% • Fe price US$/tonne = $144.93 (calculated from US$100 Net Price per tonn
Slide 29: Additional Information and Attribution
ADDITIONAL INFORMATION AND ATTRIBUTION Competent Persons Statement The information in this report that relates to Mineral Resources and exploration targets is based upon information reviewed by Mr Jeremy Read BSc (Hons) who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Read
Avalon Minerals — Investor Presentation (October 2012) on 6ix