Rimfire Pacific Mining Limited · ASX:RIM
Rimfire Pacific Mining — Shareholder Meeting (November 2014)
47 slides from Rimfire Pacific Mining's shareholder meeting presentation, Nov 14, 2014
Slide 1: Uncovering exploration trends and the future: Where's exploration going?
For personal use only Uncovering exploration trends and the future: Where’s exploration going? Richard Schodde Managing Director, MinEx Consulting Adjunct Professor, Centre for Exploration Targeting, UWA Presentation to International Mining and Resources (IMARC) Conference 22nd September 2014 Melbou
Slide 2: Overview
Overview For personal use only 1. Trends in exploration spend for the World 2. Number of discoveries made 3. Exploration performance – cost per discovery 4. Change in the depth of discovery 5. Location of recent discoveries 6. Current financial situation for junior explorers 7. Outlook for explorati
Slide 3: Exploration expenditures reached an all-time high in 2012, down 30% in 2013
For personal use only Exploration expenditures reached an all-time high in 2012, down by 30% in 2013 1. TRENDS IN EXPLORATION SPEND MinEx Consulting Strategic advice on mineral economics & exploration 3
Slide 4: Exploration expenditures: World by Commodity 1975-2013
Exploration expenditures: World by Commodity : 1975-2013 For personal use only Spend reached an all- $30B 2013 US$ billion in 2012 time high in 2012 10x real increase in the last decade $21B in 2013 $3B in 2002 Sources: MinEx Consulting estimates © September 2014, based on data from ABS, NRCan, MLR
Slide 5: Exploration expenditures: World by Commodity, percentage of total
Exploration expenditures: World by Commodity : 1975-2013 Major increase in spend on Bulk Minerals For personal use only Percentage of total spend Other - Bulk 1% 11% Coal 14% Iron Ore Diamonds 12% Other – Non Bulk 2% Uranium 4% Base Metals (Cu, Ni, Zn, Pb) 24% Gold continues Gold to be the main 33%
Slide 6: Exploration expenditures: World by Region 1975-2013
Exploration expenditures: World China spends more by Region : 1975-2013 on exploration than any other country in the World For personal use only Percentage of total spend 2% 7% 17% 2% 15% 6% 22% 6% 11% 12% Can+USA+Aust market share has halved in the last 2 decades Note: Includes spend on Bulk Minera
Slide 7: Industry finds on average one significant new deposit every week
For personal use only Industry finds on average one significant new deposit every week 2. NUMBER OF DISCOVERIES MADE MinEx Consulting Strategic advice on mineral economics & exploration 7
Slide 8: Number of significant discoveries made
Number of significant discoveries made Non-Bulk discoveries World: 1975-2013 For personal use only Number of Discoveries Note: Excludes satellite deposits within existing Camps. Also excludes Bulk Mineral discoveries. Giant >6 Moz Au, >125 kt U3O8, >1 Mt Ni, >5 Mt Cu equiv Major >1 Moz Au, >25 kt U3
Slide 9: Number of significant discoveries made (adjusted)
Number of significant discoveries made Non-Bulk discoveries World: 1975-2013 For personal use only Number of Discoveries On average 60-70 discoveries are Need to adjust for the made each year in the World fact that it takes time to report a discovery and drill it out Rimfire discovered the Au/Ag Sor
Slide 10: Number of discoveries made by Commodity
Number of discoveries made by Commodity Moderate+Major+Giant discoveries in the World: 1975-2013 For personal use only Number of Discoveries 288 12% 130 5% 701 28% 1366 55% 2485 100% Over half of the discoveries were GOLD Note: Excludes satellite deposits within existing Camps. Also excludes Bulk Mi
Slide 11: Number of discoveries made by Company Type
Number of discoveries made by Company Type Moderate+Major+Giant discoveries in the Western World: 1975-2013 For personal use only Number of Discoveries Note: Figures are adjusted for shared discoveries Western World only. Excludes discoveries made in FSU, Eastern Europe and China Source: MinEx Consu
Slide 12: Percentage of discoveries made by Company Type
Percentage of discoveries made by Company Type Moderate+Major+Giant discoveries in the Western World: 1975-2013 For personal use only Number of Discoveries Junior Companies now account for 50-60% of all discoveries in the Western World Note: Figures are adjusted for shared discoveries Western World
Slide 13: Unit discovery costs are rising
For personal use only Unit discovery costs are rising 3. EXPLORATION PERFORMANCE MinEx Consulting Strategic advice on mineral economics & exploration 13
Slide 14: Discovery rate moved in line with exploration expenditures
Until recently discovery rate moved in-line with exploration expenditures Non-Bulk exploration spend and discoveries World: 1975-2013 For personal use only Number Huge increase in spend, 2013 US$ Billion but no corresponding increase in the number of discoveries Exploration Spend Number of Discovery
Slide 15: Discovery costs are rising
Discovery costs are rising Unit cost per for a moderate-sized Gold or Base Metal discovery in the World For personal use only Average Cost per discovery (2013 US$m) Unit discovery costs GOLD have doubled in the Weighted Average for last decade ~$150m 2000-2009 = $77m Weighted Average for 1980-89 = $
Slide 16: We are having to explore under deeper cover
For personal use only We are having to progressively explore under deeper cover 4. CHANGE IN THE DEPTH OF DISCOVERY MinEx Consulting Strategic advice on mineral economics & exploration 16
Slide 17: Depth of cover for discoveries in Australia: 1950-2013
Depth of cover for discoveries in Australia: 1950-2013 For personal use only Discovery Year Most of the gold discoveries are still being made under shallow cover It is difficult to find deposits under deep cover … end-result is that we have to drill more metres per discovery Admiral Bay (1981 Zn) 13
Slide 18: Average depth of cover for discoveries - Gold
Average depth of cover for discoveries - GOLD World: 2004-2013 For personal use only Sorpresa was FSU + 2-5metres World Rest Pacific EE + Western Latin Average of World SE Asia China Europe Am Africa Aust USA Canada 0 0 3 19 40 29 5 56 53 50 71 If you exclude South Africa, the average 100 depth of c
Slide 19: Current financial situation for junior explorers
For personal use only The Junior sector makes up ~40% of total spend and finds over half of all discoveries … so the future of the industry depends on them Junior companies are doing it “tough” 6. CURRENT FINANCIAL SITUATION FOR JUNIOR EXPLORERS MinEx Consulting Strategic advice on mineral economics
Slide 20: Cash reserves and expenditures have dropped dramatically
Cash Reserves and Expenditures have dropped dramatically MEDIAN Australian Junior Exploration Company : 1998-June 2014 For personal use only During a downturn, 2013 A$ Million pa “in-field” exploration & development expenditures Cash Reserves are cut the most Cash Reserves Exploration are at an & De
Slide 21: Cash Reserves and Expenditures: Rimfire Pacific Mining
Cash Reserves and Expenditures Rimfire Pacific Mining: December 1998-June 2014 For personal use only RIM’s expenditures Most of the spend is RIM’s cash raisings 2013 A$ Million pa have doubled in “into the ground” are episodic recent years rather than Admin Cash Reserves Exploration & Development Ad
Slide 22: Most junior explorers have less than $1m in cash reserves
Most Junior Explorers in Australia & Overseas currently have less than $1m in Cash Reserves For personal use only ASX TSX/TSE Other Exchanges Expanded Scale Cash Reserves (A$ Million) Cash ASX TSX Other TSX/TSE RIM <A$0.2m 19% 50% 68% [30 June 2014] <A$0.5m 35% 64% 79% ASX <$A$1.0m 52% 74% 85% $2.4m
Slide 23: Lack of cash is main concern for juniors with low market caps
The lack of cash is of main concern to those junior companies with low market caps For personal use only Companies can always raise cash by issuing new shares ….. but that’s Cash Reserves (A$ Million) difficult if the market cap is low There are some companies where Mkt Cap < Cash !! RIM [Sept 2014]
Slide 24: Junior explorers with very small market caps are at most risk
Junior Explorers with very small market-caps are at most risk of failing For personal use only RIM Cumulative Number [Sept 2014] Other Exchanges TSX/TSE ASX Mkt Cap ASX TSX Other <A$0.5m 1% 12% 20% Depending on the jurisdiction 5-30% of <A$1m 5% 26% 30% Juniors are at risk of <$A$2m 17% 42% 48% goin
Slide 25: Junior explorers are incredibly resilient and most will survive
…. But junior explorers are incredibly resilient For personal use only and most will survive “Junior companies are like cockroaches … they can both survive a nuclear winter !” Source: Canadian Mining Industry spokesperson (who wishes to remain anonymous) March 2014 MinEx Consulting Strategic advice
Slide 26: History of junior exploration companies over the last decade
History of Junior exploration companies over the last decade (100 ASX-listed Junior Explorers in June 2004 versus June 2014) For personal use only Building a mine is risky business for a Junior Number of companies Very few of the 100 100 explorers went 4 9 broke 5 9 went into 28 80 Administration 10
Slide 27: Value of a portfolio of ASX junior exploration companies
Value of a portfolio of 100 ASX junior exploration companies Each company purchased for $1000 on 4th July 2004 versus its value on 4th July 2014 For personal use only Share GIR: $36,200 Value AVO: $33,000 NST: $13,550 The top 10 companies Over the decade, the Cumulative Value CNT: $10,000 accounted
Slide 28: Spending is set to rise in the next 2-3 years
For personal use only Spending is set to rise in the next 2-3 years 7. OUTLOOK FOR EXPLORATION MinEx Consulting Strategic advice on mineral economics & exploration 31
Slide 29: Forecast exploration expenditures World: 1990-2020
Forecast exploration expenditures World : 1990-2020 CAUTION: For personal use only $30B Forecast assumes no 2013 US$ billion in 2012 change in Country Risk and tax rules Exploration spend is driven by commodity prices and $21B $22B World GDP growth in 2013 in 2020 MinEx’s view is that the $15B explo
Slide 30: Summary / Conclusions
For personal use only 8. SUMMARY / CONCLUSIONS MinEx Consulting Strategic advice on mineral economics & exploration 33
Slide 31: Summary / Conclusions [1/4]
Summary / Conclusions [1/4] 1. Trends in exploration spend For personal use only - Over the last decade global exploration spend rose 10-fold, reaching an all-time high of US$31 billion in June 2012. Its half that now. - Gold still the most important target, but bulk minerals now account for ¼ of al
Slide 32: Summary / Conclusions [2/4]
Summary / Conclusions [2/4] 3. Exploration performance For personal use only - Over the last decade, expenditures have risen but discovery rates haven’t. - Unit discovery costs have doubled in the last decade. Average cost of finding a significant gold deposit is US$150m. Discovery cost for a base m
Slide 33: Summary / Conclusions [3/4]
Summary / Conclusions [3/4] 6. Current financial situation for junior explorers For personal use only - Expenditures are driven by the junior’s ability to raise capital. - In a downturn, the first cost to be cut is spending on fieldwork. - 19% of Australian and 60% of Canadian juniors have <A$200k i
Slide 34: Summary / Conclusions [4/4]
Summary / Conclusions [4/4] 7. Outlook for exploration For personal use only - To be sustainable, the mining industry needs to continue to fund exploration. - The level of exploration spend is primarily driven by commodity prices, world economic growth and the availability of funds for juniors. - Ba
Slide 35: Contact details
Contact details For personal use only Richard Schodde Managing Director MinEx Consulting Melbourne, Australia Email: Richard@MinExConsulting.com Website: MinExConsulting.com Copies of this and other similar presentations can be downloaded from my website MinEx Consulting Strategic advice on mineral
Slide 36: Spare slides
For personal use only Due to time constraints the following slides were left out of the main presentation SPARE SLIDES MinEx Consulting Strategic advice on mineral economics & exploration 39
Slide 37: History of exploration
For personal use only Most mineral deposits have been found in our life-time A1. HISTORY OF EXPLORATION MinEx Consulting Strategic advice on mineral economics & exploration 40
Slide 38: Half of the World's major deposits found in the last 40 years
Half of all of the World’s major deposits have been found in the last 40 years Number of Major discoveries in the World: 1800-2013 For personal use only Number of Discoveries Half of all the World’s known Major deposits were discovered after 1972 This was driven by opening up of new search frontiers
Slide 39: Number of discoveries made
For personal use only 2A. NUMBER OF DISCOVERIES MADE MinEx Consulting Strategic advice on mineral economics & exploration 42
Slide 40: Quality of the discoveries made
Quality of the discoveries made Discoveries in the World by Tier: 1975-2013 For personal use only Number of Discoveries 986 40% 1151 46% 268 11% 80 3% 2485 100% Tier 1 discoveries are very rare … on average only 2 found per year in the World Note: “Tier 1” defined as World Class deposits that are la
Slide 41: Location of major discoveries
For personal use only 5A. LOCATION OF MAJOR DISCOVERIES MinEx Consulting Strategic advice on mineral economics & exploration 44
Slide 42: Significant Mineral Deposits in the World by Size
Significant Mineral Deposits in the World by Size : All Years For personal use only Base Au Metal U3O8 Other Giant Major Moderate All of the continents host significant mineral deposits N = 7089 Note: Excludes Bulk Mineral discoveries. Note: “Moderate” >100koz Au, >10kt Ni, >100Kt Cu equiv, 250kt Zn
Slide 43: Significant discoveries in the world by Quality: 2004-2013
Significant discoveries in the world by Quality: 2004-2013 KP405 For personal use only [2013: Potash] Detour Lake [2005: Gold] Canadian Malartic Red Hill [2005: Gold] [2011: Gold] Chester [2010: Gold] Escobal Golpu [2006: Silver] [2009: Copper] Fruita del Norte Moto [2006: Gold] [2004: Gold] La Colo
Slide 44: Current financial situation for junior explorers
For personal use only 6A. CURRENT FINANCIAL SITUATION FOR JUNIOR EXPLORERS MinEx Consulting Strategic advice on mineral economics & exploration 47
Slide 45: Change in cash position: 1998-June 2014
Change in cash position: 1998-June 2014 Sample of Australian Junior Exploration Companies For personal use only A$ Million per Company (in Constant Dec 2013$) $2.80m $1.02m $0.29m Source: MinEx Consulting © September 2014 Note: Survey based on a sample of 125 (past & present) junior exploration comp
Slide 46: Change in expenditures: 1998-June 2014
Change in expenditures: 1998-June 2014 Sample of Australian Junior Exploration Companies For personal use only A$ Million per Company (in Constant Dec 2013$) $4.02m $2.97m $1.62m $0.80m Note : Survey based on a sample of 125 junior exploration companies listed on the ASX between 1998-2014 Source: Mi
Slide 47: Cash burn rate for Australian Junior Explorers
Cash burn rate for Australian Junior Explorers Annualised operating expenditures divided by cash reserves For personal use only Years The Median Burn Rate generally stays around 0.8 - 1.2 years 1.11 Years 0.73 Years 0.29 years Source: MinEx Consulting © September 2014 Note: Survey based on a sample
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