Aeris Resources Limited · ASX:AIS
Aeris Resources — Investor Presentation (June 2020)
62 slides from Aeris Resources's investor presentation, Jun 4, 2020
Slide 1: Transformational Acquisition and Equity Capital Raising
Transformational Acquisition and Equity Capital Raising 4 June 2020 Not for release to US wire services or distribution in the United States
Slide 2: Important notice and disclaimer
Important notice and disclaimer This presentation may contain certain statements and projections provided by or on behalf of Aeris Resources Limited (“Aeris”) with respect to the anticipated future undertakings. These forward-looking statements reflect various assumptions by or on behalf of Aeris. A
Slide 3: Compliance statements
Compliance statements Tritton Copper Operations Production Targets Cautionary Statement The presentation includes references to a Production Plan (Production Targets) for the Company’s Tritton Copper Operations. The Production Targets referred to in this presentation are based on: Proved Ore Reser
Slide 4: Table of contents
Table of contents Section 1: Transaction Summary Section 2: Transaction Highlights Section 3: Update on Aeris Resources Section 4: Equity Capital Raising Section 5: Key Risks Section 6: International Offer Restrictions Section 7: Further Information on Cracow Section 8: Appendix 4
Slide 5: Section 1: Transaction Summary
Section 1: Transaction Summary
Slide 6: Transaction summary
Transaction summary Aeris Resources Limited (“Aeris” or the “Company”) to acquire Evolution Mining Limited’s (“Evolution”) 100% interest in Cracow gold mine (“Cracow”, the “Transaction”) ─ Acquisition also includes an extensive, highly prospective tenement package covering 903km 2 Transaction co
Slide 7: Transaction summary (cont.)
Transaction summary (cont.) The Transaction and associated costs will primarily be funded through a combination of equity and debt: ─ Fully underwritten A$40m equity raising comprising of a placement and entitlement offer (“Offer” or “Equity Raising”): ─ A placement of 244.3 million shares to rais
Slide 8: Section 2: Transaction Highlights
Section 2: Transaction Highlights
Slide 9: Consistent with strategy – an exceptionally strong fit
Consistent with strategy – an exceptionally strong fit Aeris Resources Commodity ✓ Gold M&A strategy ✓ Tier 1 mining jurisdiction Location ✓ c.5 hours drive from Aeris’ head office ✓ Same time zone as Tritton mine in NSW Pursue strategic M&A opportunities to add value, complement existing ✓ Produc
Slide 10: Radically enhances Aeris' portfolio
Radically enhances Aeris’ portfolio Cracow Gold production (koz)(1)(5) 89 90 Ownership 100% 81 82.5 – 87.5 70 – 75 Mine type U/G 57 – 62 Processing 570 ktpa CIP FY21F production(1) 70 – 75 koz Au 64 FY21F C1 cost(1) A$980/oz Au Au Reserves(2) 114 koz @ 5.8 g/t Au Resources(2) 345 koz @4.2 g/t FY17A
Slide 11: Cracow mine – an established, proven operation
Cracow mine – an established, proven operation Location 500 km NW of Brisbane, Queensland Ownership 100% Tenement package 18 MLs + 3 EPMs covering 903km2 Orebody Low-sulphidation epithermal Cracow Operating structure Owner / operator Brisbane Mining method Underground – open stoping Processing plant
Slide 12: The Aeris plan for Cracow
The Aeris plan for Cracow Immediate priorities Medium term Longer term (next 2 years) (years 3 – 4) Deliver the mine plan Improve confidence / development Evaluate the exploration potential of ─ A$105m – A$115m net mine of identified brownfield developments the highly prospective tenement cash
Slide 13: Next year plan
Next 2 year plan Deliver the robust cash flow profile Cracow production profile (koz)(1)(2) 95 93 91 89 90 82.5 – 87.5 81 70 – 75 57 -62 64 FY14A FY15A FY16A FY17A FY18A FY19A FY20F FY21F FY22F Cracow net mine cash flow (A$m)(1)(2)(3) 84 – 89 63 – 68 41 41 42 – 47 33 37 36 30 57 FY14A FY15A FY16A FY
Slide 14: Substantial synergies and benefits which can be unlocked
Substantial synergies and benefits which can be unlocked Source Description Target annual savings Site, infrastructure Optimisation of equipment usage across both sites Potential direct synergies and procurement Cost savings through utilisation of enhanced purchasing power and re- A$2.5m efficie
Slide 15: The favourable near term price outlook will be partially insured
The favourable near term price outlook will be partially insured Aeris will be undertaking a Spot gold price and outlook to 2023 (US$/oz) Spot copper price and outlook to 2023 (US$/t) prudent level of gold hedging to underpin future cashflows 2,000 Historical Forward 12,000 Historical Forward Ba
Slide 16: Continued resource and reserve growth
Continued resource and reserve growth Cracow has a strong history of replenishing reserves and resources which will be a key focus for Aeris to continue ─ has produced more than 1.4 Moz of gold over its life since first production in 2004 ─ depletion has generally been replaced annually, with a 3
Slide 17: Aggressive 2 year exploration budget
Aggressive 2 year exploration budget Prove-up of feed for years 3 and 4 Target Timing Expenditure Objective Golden Plateau 2021 A$3m Indicated MR Klondyke Early 2021 A$1m Indicated MR Roses Pride Early 2021 A$1m Indicated MR Underground central vein cluster 2022 A$3m Inferred / Indicated MR Commence
Slide 18: Defining feed for years 3 and 4
Defining feed for years 3 and 4 Open pit targets Near mine opportunities (open pit) Aim: By June 2021 convert open pit targets to Indicated Mineral Roses Pride Resource status for feasibility studies Part of an aggressive A$13m exploration spend: Golden Plateau ─ large mineralised system with appr
Slide 19: Defining feed for years 3 and 4 (cont.)
Defining feed for years 3 and 4 (cont.) Underground Extension Targets Aim: By June 2022 drill test all currently identified near mine exploration target and conversion to Killarney Down Plunge Target Mineral Resource status Multiple drill ready targets identified peripheral to Killarney mineralised
Slide 20: Longer term - feeding the mill from year 5 and beyond
Longer term - feeding the mill from year 5 and beyond Greenfield exploration opportunities outside the 2.5-3.0 Moz discovered to date(1) A highly prospective tenement package which remains under explored. Priority targets: Ballymore ─ newly identified structure along southern margin of the current
Slide 21: Aeris management team has the right experience for Cracow
Aeris management team has the right experience for Cracow Experienced mining executive with a career spanning more than 30 years, primarily in the gold industry Andre Labuschagne Held various executive roles in South Africa, PNG, Fiji and Australia for a number of leading gold companies, includi
Slide 22: Summary
Summary 1 ✓ Established, low risk, high grade gold mine in an attractive location A highly ✓ Accretive transaction which immediately delivers significant free cashflow compelling investment ✓ Favourable mine geology and highly prospective exploration package provides for opportunity continued profit
Slide 23: Section 3: Update on Aeris Resources
Section 3: Update on Aeris Resources
Slide 24: Corporate overview
Corporate overview Aeris’ Tritton copper operation comprises: Share price performance ─ Tritton and Murrawombie underground mines, producing high quality copper / gold concentrate A$/sh #m shares $0.15 10 ─ 1.8 Mtpa processing plant and associated surface infrastructure 8 $0.10 ─ 2,160 km2 highly
Slide 25: Established copper mine in highly prospective region
Established copper mine in highly prospective region Tritton Copper Operations First production in 2005 with >320 kt Cu produced to date Highly endowed tenement package >750 kt copper discovered on tenements to date Tritton is a >20 Mt copper dominant deposit Murrawombie is a >10 Mt deposi
Slide 26: Tritton – a consistent producer
Tritton – a consistent producer Current management has a track record for achieving or Tritton production (kt) bettering production targets FY19 copper production of 26.9 kt – initial guidance was 30 30 24.5 kt 26 27 27 23 23 23.5 – 24.5 FY20 copper production guidance of 23.5 – 24.5 kt Mini
Slide 27: Tritton – 4 year plan with potential to extend mine life
Tritton – 4 year plan with potential to extend mine life Existing copper metal inventory: ─ Ore Reserve: 6.7 Mt @1.5% Cu(1) ─ Mineral Resource: 19.8 Mt @ 1.5% Cu(1) Four year production plan(2) Potential to extend mine life: ─ Tritton and Murrawombie brownfields extensions ─ Avoca Tank and Bud
Slide 28: Tritton – consistent track record of mine life extensions
Tritton – consistent track record of mine life extensions Copper discoveries on Tritton tenements History of mine life extensions % Cu 3.50 172 152 151 130 135 137 3.00 124 Avoca Tank 108 83 2.50 Larsens 2.00 Target Tritton (24) Kurrajong (48) 1.50 North-East (71) (98) Budgerygar (128) 1.00 Murrawom
Slide 29: Tritton – brownfields exploration (Tritton and Budgerygar)
Tritton – brownfields exploration (Tritton and Budgerygar) Life of Mine extension opportunities at Tritton: Tritton at depth (high grade shoots) and North Wing ─ exploration drilling in FY21 Corridor between Tritton and Budgerygar Budgerygar deposit: ─ exploration drive from Tritton ─ drill to
Slide 30: Tritton – brownfields exploration (Murrawombie)
Tritton – brownfields exploration (Murrawombie) Geologically performing better than expected Open at depth and to the North Recent grade control drilling hit good copper intersections outside of current Mineral Resource envelope Exploration drilling planned for FY21: ─ holes planned to test
Slide 31: Torrens Project (AIS 70%) – IOCG target in Gawler Craton (SA)
Torrens Project (AIS 70%) – IOCG target in Gawler Craton (SA) Aeris holds a 70% interest and is the manager of the Torrens Project through a JV with Argonaut Resources NL (30%) Torrens is located on Eastern Gawler Craton IOCG corridor in South Australia, which hosts several large scale deposits
Slide 32: Section 4: Equity Capital Raising
Section 4: Equity Capital Raising
Slide 33: Transaction funding
Transaction funding Aeris has entered into an agreement to acquire 100% of Cracow: ─ A$60m cash at completion Purchase price ─ deferred cash payment of A$15m on 30 June 2022 ─ 10% net value royalty from 1 July 2022 to 30 June 2027, capped at A$50m(1) Closing conditions FIRB (if required) Compl
Slide 34: Equity raising overview
Equity raising overview Fully underwritten equity raising comprising a Placement and Entitlement Offer: Offer structure ─ a placement of c.244.3 million shares to raise c.A$7.3m and size ─ a 2.02 for 1 pro-rata, accelerated, renounceable Entitlement Offer to raise c.A$32.7m Approximately 1,333.9
Slide 35: Equity raising indicative timetable
Equity raising indicative timetable Key events Indicative dates (2020) Trading halt continues and announcement of the Transaction and the Equity Raising Thursday, 4 June Placement bookbuild and Institutional Entitlement Offer opens Thursday, 4 June Placement bookbuild and Institutional Entitlement O
Slide 36: Pro forma capital structure
Pro forma capital structure Aeris standalone Transaction Units Pro forma Aeris (as at 31 Dec 2019) adjustments Cash A$m 8.6 0.0 8.6 Borrowings(1) A$m 55.3 30.0 85.3 Net debt / (cash) A$m 46.7 30.0 76.7 Ordinary shares outstanding(2) #m 539.4 1,333.9 1,873.3 Share price / Offer Price(3) A$/sh 0.043 0
Slide 37: Section 5: Key risks
Section 5: Key risks a Tay Reris
Slide 38: Key risks
Key risks Introduction There are risks involved with participating in the Offer and holding Shares in Aeris Resources Limited (the “Company”, “Aeris”, "we" or "us"). Certain of these risks are specific to an investment in the Company and others are specific to investing in and holding shares. The
Slide 39: Transaction and offer risks
Transaction and offer risks Transaction risk The Transaction may consume a large amount of management time and attention, and the Transaction may fail to meet strategic objectives, or achieve expected financial and operational performance. Aeris has undertaken financial, operational, business and ot
Slide 40: Transaction and offer risks (cont.)
Transaction and offer risks (cont.) Equity underwriting risk Aeris has entered into an underwriting agreement under which the Underwriters have agreed to fully underwrite the Offer, subject to the terms and conditions of the underwriting agreement. Prior to settlement of the Retail Entitlement Offer
Slide 41: Risks related to an investment in Aeris
Risks related to an investment in Aeris COVID-19 The global economic outlook is facing uncertainty due to the current COVID-19 (novel Coronavirus) pandemic, which has been having, and is likely to continue to have, a significant impact on global capital markets, commodity prices and foreign exchange
Slide 42: Risks related to an investment in Aeris (cont.)
Risks related to an investment in Aeris (cont.) Operational and cost risk The Company is a producer of copper and gold which is sold under commercial contracts. The Company’s immediate plans and objectives are dependent upon a continuation of such production generating operating surpluses to assist
Slide 43: Risks related to an investment in Aeris (cont.)
Risks related to an investment in Aeris (cont.) Regulatory risk and government policy The availability and rights to explore and produce base metal and/or precious metal, as well as operational profitability generally, can be affected by changes in government policy that are beyond the control of Ae
Slide 44: Risks related to an investment in Aeris (cont.)
Risks related to an investment in Aeris (cont.) Contractual and joint venture risks Aeris’s ability to efficiently conduct its operations in a number of respects depends upon third party product and service providers and contracts. Accordingly, in some circumstances, contractual arrangements have be
Slide 45: Risks related to an investment in Aeris (cont.)
Risks related to an investment in Aeris (cont.) Additional requirements for capital The Company’s capital requirements depend on numerous factors. Depending on such factors as: the continuation of receipt of operating revenue from its operations; the outcome of the Company’s exploration programs
Slide 46: General risks
General risks Share market risk The market price of listed securities can be expected to rise and fall in accordance with general market conditions and factors specifically affecting the Australian resources sector and exploration companies in particular. The New Shares carry no guarantee in respect
Slide 47: Section 6: International Offer Restrictions
Section 6: International Offer Restrictions
Slide 48: International offer restrictions
International offer restrictions This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold in the institutional entitlemen
Slide 49: International offer restrictions (cont.)
International offer restrictions (cont.) New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (New Zealand). This document is not a product disclosure statement under New Zealand law and is not
Slide 50: International offer restrictions (cont.)
International offer restrictions (cont.) United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Market
Slide 51: Section 7: Further Information on Cracow
Section 7: Further Information on Cracow
Slide 52: Cracow history
Cracow history 1996 2001-02 2004 2017 Formation of Discovery of First gold Strong track record Cracow Crown, Sovereign, production in of replacing mined exploration JV Empire and November ounces between Newcrest Phoenix deposits (70%) and Resource definition Sedimentary drilling at Holdings (Catalpa
Slide 53: Cracow geology
Cracow geology Gold mineralisation is hosted in steeply dipping structurally controlled low sulphidation epithermal veins The Black Creek Group sediments overlie a significant portion of the mineralisation Highly endowed epithermal goldfield Historical production of greater than 1.4 million
Slide 54: Cracow site layout
Cracow site layout SW 3 (Group 1 ) 1 2 3 SW 17 (Group 4 ) 14 6 13 SW 9 (Group 2) SW 9 (Group 1) SW B2 (Group 5 ) 7 SW 1 (Group 3 ) 4 5 8 SW 25 (Group 4 ) SW6 (Group 2) Accommodation SW6 (Group 3) Village 12 10 9 11 SW C1 (Group 6 ) SW7 (Group 5 ) SW18 (Group 6 ) 54
Slide 55: Cracow mine long section / plan views
Cracow mine long section / plan views Cracow long section Cracow plan view Legend Previously mined area Unmined area 55
Slide 56: Cracow mining and processing
Cracow mining and processing Mining Processing Mining accessed through single surface decline 570 ktpa capacity CIP processing facility Ore primarily mined via a modified Avoca method with paste backfill Three stage crushing feeding three stage grinding circuit: 80 minute trucking cycle ti
Slide 57: Historical operating performance summary
Historical operating performance summary Units FY16 FY17 FY18 FY19 UG ore mined kt 499 529 537 560 UG grade mined /t 5.9 5.6 5.5 4.9 Total tonnes processed kt 511 540 529 573 Grade processed g/t 5.9 5.5 5.6 4.8 Gold recovery % 93.1 94.6 94.3 91.5 Gold produced koz 90.6 89.5 90.4 81.0 Silver produced
Slide 58: Section 8: Appendix
Section 8: Appendix a Tay Neris
Slide 59: Tritton – reported Mineral Resource
Tritton – reported Mineral Resource Tritton tenement package (30 June 2019)(1)(2) Measured Indicated Inferred Total Resource Cut-off Project (%Cu) Tonnes Cu grade Cu metal Tonnes Cu grade Cu metal Tonnes Cu grade Cu metal Tonnes Cu grade Cu metal (kt) (%) (kt) (kt) (%) (kt) (kt) (%) (kt) (kt) (%) (k
Slide 60: Tritton – reported Ore Reserve
Tritton – reported Ore Reserve Tritton tenement package (30 June 2019)(1)(2)(3)(4) Proven Probable Total Ore Reserves Cut-off Project Type (%Cu) Tonnes Cu grade Cu metal Tonnes Cu grade Cu metal Tonnes Cu grade Cu metal (kt) (%) (kt) (kt) (%) (kt) (kt) (%) (kt) Tritton Underground 1.2 2,400 1.5 37 6
Slide 61: Cracow – Mineral Resource and Ore Reserve
Cracow – Mineral Resource and Ore Reserve Cracow (31 December 2019)(1) Gold grade Tonnes (Mt) Gold metal (koz) (g/t) Ore Reserve Proven 0.39 5.95 74 Probable 0.21 5.67 38 Total 0.61 5.78 114 Mineral Resource Measured 0.33 7.99 84 Indicated 0.74 5.88 141 Inferred 1.48 2.54 121 Total 2.55 4.21 345 (1)
Slide 62: Competent Persons statement
Competent Persons statement Competent Persons statement Mr Cox confirms that he is the Competent Person for all the Mineral Resource and Exploration Target estimates summarised in this Report and he has read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting o