Regent Pacific Group Limited · HKEX:575
Regent Pacific — H1 2007 Earnings Presentation
58 slides from Regent Pacific's earnings presentation, Dec 14, 2006
Slide 1: Regent Pacific Group Limited Interim Report for Six Months Ended 30 September 2006
Regent Pacific Group Limited Interim Report for Six Months Ended 30 September 2006 14 December 2006
Slide 2: Financial Highlights – Regent Pacific Group
Financial Highlights – Regent Pacific Group • Net profit of US$2.53m • EPS of 0.18 US cents per share • Shareholders equity of US$19.34m, 47% increase from 31 March 06 • Net Finance costs of US$1.3m • Cash balance of US$6.9m at 30 November 2006
Slide 3: Financial Highlights – Regent Pacific Group
Financial Highlights – Regent Pacific Group • Outstanding CBs and RCPS of US$22.95m • Undiluted share capital of 1,467,687,324 and fully diluted of 2,246,839,023 shares • Market capitalisation of US$61.2m at 11 December 2006 • No forward sales of any commodity
Slide 4: Financial Highlights – Simao Shanshui Copper JV Company
Financial Highlights – Simao Shanshui Copper JV Company • Net profit of US$7.4m • Shareholders equity of US$58m • Cash balance of US$4.3m • No borrowings or hedging of any commodity or currency • Ore production of 12,642 tonnes • 2,109 tonnes of contained Copper in Concentrate sold • Cash cost US$0.
Slide 5: Environmental, Health & Safety
Environmental, Health & Safety • Completed needs analysis • Committed to International Best Practice Standards • Appointed Environmental Resources Management for completing Mine wide EHS plan & training • Appointed SRK and ENFI for upgrading tailings disposal, waste dump and wastewater management pl
Slide 6: Markets Remain Strong - Copper
Markets Remain Strong - Copper • Copper prices driven by best-ever fundamentals • Inventories to remain at record lows for next 2 ~ 3 years • Expected ongoing market deficits in 2007 and 2008 • Supply side problems remain endemic; more losses expected • Sharply higher Chinese demand in 4Q; expected
Slide 7: Markets Remain Strong - Zinc
Markets Remain Strong - Zinc • Plunging LME Stocks have underpinned Zinc at over US$2.00/lb • Deficit forecast for next 18 months, stocks to reach record lows of 1.3 weeks in 2007 • Extremely tight market • Risk of higher-than-expected Chinese mine production has tempered the outlook • MS price fore
Slide 8: Consultants – Blue Chip Firms
Consultants – Blue Chip Firms Committed to using Blue Chip Firms for assisting on optimisation programme Resource Estimation : Cube Consulting Mine Engineering : Cube Consulting Geotechnical : Steffen Robertson and Kirsten (SRK) Environmental : Environmental Resources Management (ERM) Legal : Linkla
Slide 9: Exploration Focus
Exploration Focus • Strategic focus on exploration equals strong exploration commitment • Significant budget – US$12 million • Drilling biased • Focussed target styles • Total landholding over 157 sq km
Slide 10: Dapingzhang – Exploration Licence Area
Dapingzhang – Exploration Licence Area 100 sq km DPZ area EL/ML Permits DPZ EL (31.25Km2) DPZ EL DPZ EL (16.22Km2) (9.89Km2) DPZ ML DPZ EL (2.75Km2) (7.5Km2) DPZ EL (3.8Km2) Regent Minerals EL DPZ EL Oxiana Rixin EL （36.41Km2) (36.02Km2) （21.1Km2) JD EL (77.62Km2)
Slide 11: Exploration – Current Mineral Resources (JORC Code)
Exploration – Current Mineral Resources (JORC Code) • Mineral resources 26.5m tonnes at 0.82% Cu at Sept 2006 • 18.6m tonnes Indicated & 7.9m tonnes Inferred • 216kt Copper • 150kt Zinc • 230kOz Gold • 8,334kOz Silver
Slide 12: Exploration – Current Mineral Resources (cont’d)
Exploration – Current Mineral Resources (cont’d) • Updated JORC Code mineral resources scheduled for March 2007 • Drilling continues to confirm the potential for significant additional Copper and Zinc resources and to extend mine life beyond 7 yrs • Additional mineral resources will be added as dril
Slide 13: Mineral Resource Statement as at 31 August 2006
Exploration – Current Mineral Resources (cont’d) Mineral Resource Statement as at 31 August 2006 (JORC Code Compliant) Indicated Resource Inferred Resource Copper Zinc Gold Silver Lead Copper Zinc Gold Silver Lead Tonnes Tonnes Grade Grade Grade Grade Grade Grade Grade Grade Grade Grade (mt) (mt) (%
Slide 14: Exploration (cont’d)
Exploration (cont’d) • In-fill drilling returned a number of significant massive sulphide (V1) intercepts DH6810, 17.08 meters at 4.94% copper and 2.52% zinc at Dapingzhang DH1905, 12.7 meters at 0.42% copper and 11.11% zinc at Dawaz • 9 operating rigs Period Metres Drilled 30th November 2006 47,618
Slide 15: Exploration – Yinzishan JV Property – 90.5% Ownership
Exploration – Yinzishan JV Property – 90.5% Ownership • Completed geological mapping of the underground workings • Started geophysical surveys of a 2.5 sq km area to identify and prioritise drill targets • Anomalies identified • Landholding of 57 sq km
Slide 16: Drill Hole Assay Highlights – Q3
Drill Hole Assay Highlights – Q3 Drill Hole From (m) To (m) Interval (m) Copper (%) Zinc (%) Gold (g/t) Silver (g/t) Dapingzhang DH6810 168.61 185.69 17.08 4.94 2.52 1.12 26.41 DH021 102.94 118.00 15.06 2.30 6.90 1.00 67.60 DH241 91.50 115.40 23.90 1.69 2.00 1.45 50.76 DH009 97.64 106.20 8.56 1.15 7
Slide 17: Dapingzhang Plan – Mineralization with Potential to add Significant Resources
Dapingzhang Plan – Mineralization with Potential to add Significant Resources and to Extend Mine Life
Slide 18: Dapingzhang Mine – DPZ Massive Sulphide Area
Dapingzhang Mine – DPZ Massive Sulphide Area
Slide 19: Dapingzhang Mine – DPZ Massive Sulphide Area
Dapingzhang Mine – DPZ Massive Sulphide Area
Slide 20: Dapingzhang Mine – DWZ Massive Sulphide Area
Dapingzhang Mine – DWZ Massive Sulphide Area
Slide 21: Dapingzhang Mine – Looking North
Dapingzhang Mine – Looking North Ore Massive (V1) – yellow Disseminated (V2) - red
Slide 22: Dapingzhang Mine – Looking North
Dapingzhang Mine – Looking North Topography and Ore V1 - yellow, V2 - red
Slide 23: Dapingzhang Mine – Looking North
Dapingzhang Mine – Looking North Pit 1B and Ore Massive (V1) – yellow Disseminated (V2) - red Pit 1
Slide 24: Dapingzhang Mine – Looking North
Dapingzhang Mine – Looking North Pit 2 and Ore V1 - yellow, V2 - red Pit 1 Pit 2
Slide 25: Dapingzhang Mine – Looking North
Dapingzhang Mine – Looking North Pit 3 and Ore V1 - yellow, V2 - red Pit 1 Pit 3 Pit 2
Slide 26: Dapingzhang Mine – Looking North
Dapingzhang Mine – Looking North All Dapingzhang Pits and Ore V1 - yellow, V2 - red Dawaz Pit (V1 only) Cu 0.7%, Zn 10% (est)
Slide 27: Dapingzhang Mine – Looking South
Dapingzhang Mine – Looking South
Slide 28: Dapingzhang Mine
Dapingzhang Mine • Open Pit Mine • Currently milling capacity for V2 ore 2,100 ~ 2,500 tpd • Or V1 milling capacity of 2,600 tpd • Tailings dam adequate for existing mine life • Infrastructure in place (water -1,300m3) and power (35,000 KV) • Upgrading power to 110kV in 2007
Slide 29: Staged Operational Plan
Staged Operational Plan Current Future Stated Processing capacity (tpd) 2,200 ~ 2,500 2,600 ~ 10,600* Concentrate Grade >20% (V2) >18% (V1) Recovery >90% In-fill drilling >80% Optimization Flotation Circuit Single concentrate Program Cu & Zn concentrates Potential Expansion Smelter penalties Low Low
Slide 30: Process Plant Improvements
Process Plant Improvements Objectives to process massive sulphide ore (V1) into separate Copper and Zinc concentrates and increase throughput • Lab met test work completed on V1 ore Copper con: 86.2% recovery, 19.5% grade, 5.2% Zinc content Zinc con: 76.3% recovery, 41% grade, 1.3% Copper content •
Slide 31: Mine Development
Mine Development • Completed preliminary mine plan for 2007 • Exploit V1 ore (easily accessible by open pit) • Complete final mine plan in May 2007 • Upgrade tailings dam to withstand seismic activity and waste dumps to guard against potential acid mine run off • Implement comprehensive mine wide EH
Slide 32: Preliminary Mine Plan 2007
Preliminary Mine Plan 2007 2007E Total Ore (mt) 1.1 Copper Grade (%) 1.39% Zinc Grade (%) 6.03% Total Waste (mt) 34.0 Total Tonnes (mt) 35.1 Strip Ratio (w:o tonnes) 29.8:1* Note: Preliminary Mine Plan 2007 prepared by Cube Consulting Pty Ltd - December 2006 - * Preliminary LOM stripping ratio is 7.
Slide 33: Mine Development
Mine Development • Exploit V1 ore (easily accessible by open pit) • Complete updated mine design in May 2007 • Upgrade tailings dam to withstand seismic activity and waste dumps to guard against potential acid mine runoff • Implement comprehensive mine wide EH & S plan
Slide 34: Infrastructure Studies – Immediate Objectives
Infrastructure Studies – Immediate Objectives • Complete feasibility study for plant expansion - 8,000 tpd concentrator expansion = total concentrator capacity of 10,600 tpd • Upgrading tailings dam and waste dump (SRK and ENFI appointed) • Construction has commenced on the return water system and u
Slide 35: Long Term Objectives
Long Term Objectives Our Long term objectives are: • Improve profitability by processing V1 ore in 2007 = significant uplift in cash-flow • Aggresssive drilling to add significant resources • Maximise conversion of resources into reserves • Focus on regional exploration for discovering new VMS depos
Slide 36: Immediate Risks
Immediate Risks • Relocation of DPZ and Dawaz Hamlets • Successful completion of pilot plant results on V1 ore • Interruptions to waste stripping plan (9.6m bcm in 07) • Upgrading of tailings dam and waste dumps • Sensitivity to Commodity Prices
Slide 37: Mill Infrastructure
Mill Infrastructure No.3 Mill Plant 500 tpd No.2 Mill Plant 500 tpd Tailings Dam Capacity 16m tonnes No.4 Mill Plant 2,000 tpd
Slide 38: Mill Infrastructure
Mill Infrastructure No.4 mill plant - 2,000 tpd No.3 mill plant - 500 tpd No.4 mill plant - 2,000 tpd No.2 mill plant - 500 tpd
Slide 39: Mine Infrastructure
Mine Infrastructure DPZ Mine substation Voltage: 35,000KV Transformer: 6,300KVA Output: 10KV Upgraded in May & June 2006 Water pond (1,300m3) Lift: 360m Pipeline: 4500m DPZ Village Pipe diameter: 273mm Flow rate: 450m3/per hour Water pump motor: 712kw (two stage pump station)
Slide 40: Geology
Geology 8.32% Cu 4.30% Cu 1.33% Cu Vein and Disseminated Massive Sulphide Sulphide V1 sample from Sample from section V2 sample from section 8, Pit No.2 10, Pit No.2 section 16, Pit No.1
Slide 41: Dapingzhang – Potential for Value
Dapingzhang – Potential for Value Dapingzhang (estimated) Source: Queen’s University study, Kingston, Canada (Feb 2005)
Slide 42: Sino Foreign Equity Joint Venture
Sino Foreign Equity Joint Venture Joint Venture Company Name: Yunnan Simao Shanshui Copper Company Limited – YSSC, a Sino-foreign equity joint venture company incorporated in the PRC. Parties: Regent Metals Limited – RML, incorporated in Barbados, an indirect wholly-owned subsidiary of Regent Pacifi
Slide 43: Sino Foreign Equity Joint Venture
Sino Foreign Equity Joint Venture Yunnan Simao Shanshui Copper Company Limited Regent Pacific Group Limited (Cayman) 100% Regent Metals Yunnan Copper Holdings Limited Group (BVI) 100% Regent Metals Jersey Limited (private) 100% Regent Metals Yuxi Resources Simao Shanshui Limited Corporation Minerals
Slide 44: Sino Foreign Equity Joint Venture
Sino Foreign Equity Joint Venture Board of Directors: 9 Directors – YUXI appointed 4, RML appointed 3 and SSM appointed 2 Chairman appointed by SSM and two Vice Chairman, one appointed each by RML and YUXI Management: General Manager appointed by YUXI and two Deputy General Managers appointed, one e
Slide 45: Sino Foreign Equity Joint Venture
Sino Foreign Equity Joint Venture Total investment amount and registered capital of YSSC: RMB 400 million (US$49.4M) has been contributed to JV Co as follows: Cash Capital Contribution Equity Interest YUXI RMB 200 million (US$24.7M) 50% RML RMB 160 million (US$19.8M) 40% SSM RMB 40 million (US$4.9M)
Slide 46: Sino Foreign Equity Joint Venture
Sino Foreign Equity Joint Venture Dividend Policy: 40% of the distributable profits annually (or semi annually if agreed between the joint venture parties) Off-Take Agreement: Jingyi pays a profit share (PS) of >84% of Shanghai Futures Exchange (SHFE) price for Copper at 25% Copper Grade and PS will
Slide 47: Disclaimer
Disclaimer The information contained in this presentation has been prepared using the information available to Regent Pacific Group Limited (“Regent”) at the time of preparation and may not include all relevant information regarding Regent or Yunnan Simao Shanshui Copper Company Limited (“Yunnan Sim
Slide 48: Disclaimer
Disclaimer These materials are highly confidential, are being given solely for your information and for your use and may not be copied, reproduced or redistributed to any other person in any manner. Accordingly, you agree to keep the contents of this presentation and these materials strictly confide
Slide 49: Appendix
Appendix
Slide 50: Summary Copper Supply/Demand Balance: Critically Low Stocks Ahead in 2007-08
Summary Copper Supply/Demand Balance: Critically Low Stocks Ahead in 2007-08 ('000 t) 2004 2005 2006e 2007e 2008e 2009e World Refined Production 15,928 16,668 17,475 18,337 19,260 20,398 % change 4.2% 4.6% 4.8% 4.9% 5.0% 5.9% World Consumption 16,954 16,904 17,586 18,445 19,289 20,170 % change 9.3%
Slide 51: Exchange Stocks Have Started to Decline Again
Exchange Stocks Have Started to decline Again and Could Re-Test the 2005 Lows by Year-End Shanghai Metals Exchange LME Comex LME Cash Copper Price 1,800 4.00 1,600 3.50 1,400 3.00 LME Cash Copper (US$/lb) 1,200 2.50 Stocks ('000t) 1,000 2.00 800 1.50 600 1.00 400 200 0.50 0 0.00 Jan-06 Jul-05 Jul-06
Slide 52: Shanghai Premium/(Discount) to LME Copper
Shanghai Premium/(Discount) to LME Copper Price* 20 Shanghai Premium/ (Discount) to LME Copper (%) 15 Shanghai Premium 10 5 0 (5) Shanghai Discount (10) (15) May-06 Jul-06 Sep-06 Nov-06 May-04 Mar-06 May-05 Nov-04 Jul-04 Jul-05 Nov-03 Mar-04 Sep-04 Sep-05 Nov-05 Mar-05 Jan-04 Jan-05 Jan-06 *LME Copp
Slide 53: Copper Stocks-Consumption Ratio at Record Lows
Copper Stocks-Consumption Ratio* at Record Lows 14 400 Stocks-consumption ratio LME cash copper Global stocks-consumption ratio (weeks) 350 12 Spot Price US$3.19/lb 300 LME cash copper (USc/lb) 10 250 8 200 6 150 4 100 2 50 0 0 2003 2004 2005 2006 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 20
Slide 54: Pinch-Point Charts Show Near-Vertical Relationship Between Prices and Stocks
Pinch-Point Charts Shows Near-Vertical Relationship Between Prices and Stocks* 400 350 Near-vertical price move LME Cash Price (US cents/lb) 300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Stock/Consumption ratio (weeks demand) *Based on total reported stocks (consumer, prod
Slide 55: Summary Zinc Supply/Demand Balance, 2004-2009e
Summary Zinc Supply/Demand Balance, 2004-2009e ('000 t) 2004 2005 2006e 2007e 2008e 2009e World Refined Production 10,239 10,315 10,685 11,463 12,229 12,637 % chg 4.0 0.7 3.6 7.3 6.7 3.3 US Stockpile Sales 32 30 35 8 - - World Consumption 10,341 10,650 11,117 11,589 12,092 12,564 % chg 6.8 3.0 4.4 4
Slide 56: LME Stocks Continue to Decline Very Sharply
LME Stocks Continue to Decline Very Sharply Producer Stocks Consumer Stocks LME Stocks LME Cash Zinc Price (USc/lb) 1,800 180 1,600 160 1,400 140 1,200 120 Zinc Price (USc/lb) Stocks ('000t) 1,000 100 800 80 600 60 400 40 200 20 0 0 2004 2005 2006 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 20
Slide 57: Stocks-Consumption Ratio Already at Record Low of 2.5 Weeks
Stocks-Consumption Ratio Already at Record Low of 2.5 Weeks 14 Stocks/Consumption (weeks) Nominal Price (USc/lb, RHS) 160 Spot Price US$1.48/lb 140 12 Stocks-consumption ratio (weeks) 120 10 LME zinc price (USc/lb) 100 8 80 6 60 4 40 2 20 0 0 2003 2004 2005 2006 1980 1982 1983 1984 1985 1986 1987 19
Slide 58: Pinch-Point Charts Show Extremely Low Current Stocks
Pinch-Point Charts Shows Extremely Low Current Stocks Relative to Last 25 Years 150 140 3Q06 Position Zinc price (USc/lb, 2005 real terms) 130 120 110 100 90 80 70 60 50 40 30 2 4 6 8 10 12 14 Weeks of inventory Note: quarterly average prices shown; stockpiles include consumer, producer, merchant an