lgo corporate presentation aug - pr
Post on 19-Jun-2015
372 Views
Preview:
TRANSCRIPT
www.largoresources.com
Near Term VANADIUM Producer
Aug, 2013
CORPORATE PRESENTATION
Metals and Mining Deal of the Year
Forward Looking Statements
The information presented contains “forward-looking statements,” within the meaning of the United States Private Securities Litigation Reform Act of 1995, and
“forward-looking information” under similar Canadian legislation, concerning the business, operations and financial performance and condition of the Company.
Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to the estimation of mineral reserves and mineral
resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; metal prices and demand for
materials; capital expenditures; success of exploration and development activities; permitting time lines and permitting, mining or processing issues; government
regulation of mining operations; environmental risks; and title disputes or claims. Generally, forward-looking statements and forward-looking information can be identified
by the use of forward-looking terminology such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,”
“anticipates” or “does not anticipate,” or “believes,”, “projects” or variations of such words and phrases or state that certain actions, events or results “may,” “could,”
“would,” “might” or “will be taken,” “occur” or “be achieved.” Forward-looking statements and forward-looking information are based on the opinions and estimates of
management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or
forward-looking information, including, but not limited to, unexpected events during operations; variations in ore grade; risks inherent in the mining industry; delay or
failure to receive board approvals; timing and availability of external financing on acceptable terms; risks relating to international operations; actual results of exploration
activities; conclusions of economic valuations; changes in project parameters as plans continue to be refined; and fluctuating metal prices and currency exchange
rates. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in
forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be
no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any
forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws.
Investors are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources
be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources
The information presented uses the terms “measured,” “indicated” and “inferred” mineral resources. United States investors are advised that while such terms are
recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral
resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility
or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted
into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally
mineable.
2
3
Production in sight.
As at July 17, 2013
Maracas Vanadium Project
Vanadium Project in Brazil
Highest grade/quality; lowest cost project
Funded and in construction
Production to begin in Q1, 2014
Glencore Off-take: 100% Take-or-Pay Contract
4
Set to capitalize on rising demand for high-strength steel
Metals and Mining Deal of the Year
Vanadium – a Strategic Metal
Most used alloy to strengthen steel
Found with iron
Highly magnetic
Proven process for separation
5
Makes steel stronger, tougher and lighter
Source: vanitec.org/Roskill, 2013
Vanadium – Few Substitutes
6
2lbsV1 Tonneof Steel =2X
Strength
Strongest strength to weight ratio of any alloy
Source: vanitec.org
Demand is growing
Demand Drivers:
Growth of V use in steel production
Growth in applications for V
Higher quality steel standards in BRICs
7
Very tight Supply/Demand balance
CAGR through 2017
Source: Roskill, 2013
8
• Rebar for construction
• Buildings, bridges, tunnels
• Automotive parts
• Pipelines
• Aviation and aerospace
• Power lines and power pylons
• Chemical plants, oil refineries, offshore-platforms
• Various tools and dies
• High strength steel structures
• Construction machinery and equipment
• Cast iron used for rolls in steel mills
Vanadium is Everywhere:
Source: Vanitec
Growth Example
9
0.08% 0.07% 0.05% 0.023%
2010
Minimum
0.05%
2013+
Source: Les Ford Vanadium and Steel presentation, PDAC 2010
%V in Rebar
Growth Example
10Source: Roskill, 2013Source: Vanitec
China 39,000 tonnes
South Africa 19,600 tonnes
Russia 7,800 tonnes
Total Supply: 71,000 tonnes
Total Demand: 76,000 tonnes
Supply is Concentrated
11
Brazil production provides stability of supply
Source: Roskill, 2013
Of global supply
Vanadium Historical Pricing
12
$0.00
$5.00
$10.00
$15.00
$20.00
Low Price High Price Industry costLargo cost
Consistent pricing floor at $5.00
Maracas – Ideal Location
13
Located in a safe, mining friendly jurisdiction
Government and local support
Arid climate, ideal topography
Management with regional experience
Metals and Mining Deal of the Year
Maracas - Mineralization
Magnetite deposit
Mineralization at surface
Highest grade and quality ore
Contains Platinum Group Metals
14
Long strike zone
Significant opportunity for future expansion
Concessions and Mineralization
Gulcari “A” Deposit Detail
Maracás concessions
and strike length
15
Mineral Resources
16
0.83% V2O5
+2 Times
Industry Average Grade
30.4 Million Tonnes
24.6 Million Tonnes
Cost Advantage
*Average grade comparisons compiled by Les Ford, presentation March 8, 2011 17
Highest Grade/Quality Vanadium Deposit in the World
Ore V2O5% Concentrate SiO2%Concentrate V2O5%
Higher head-grade and higher iron content
Concentrate has
much higher V2O5
Concentrate has fewer contaminants
like silica
=LOWEST COST
PRODUCTION
Higher Recoveries
Less Energy
Required
Lower reagent costs
Results in
Maracas Project Economics
18*including iron ore byproduct credit – OPEX without credit is $3.18 (still lowest cost producer)**Average years 1-15
Net Present Value $554 million
After tax Internal Rate of Return 26.3%
Discount rate 8%
Average Production 11,400 tonnes V2O5 equiv
Mine life 29 Years
Initial CAPEX 235 million
OPEX $2.10*
V2O5 price – 3 year avg $6.37
Average annual cashflow $89 million**
Includes all taxes, royalties, and sustaining capex
Low Cost Environment
Open pit mining
At surface deposit
Highly magnetic ore
Few contaminants
Water leaching process
19
OPEX costs*
Ore provides better recoveries and reduces input costs
*including iron ore byproduct credit - OPEX without credit is $3.18 (still lowest cost producer)
Vanadium Historical Pricing
20
$0.00
$5.00
$10.00
$15.00
$20.00
Low Price High Price Industry costLargo cost
Profitable at historic lows
Process Flow Sheet
21
Proven, industry tested process
Production Profile
22
Phase 1Initial Ramp Up, Implementing
Expansion & FeV Plant
Phase 2Full Scale Production
Strong Partners
Glencore International Plc.
Largest trader of Vanadium
Take-or-pay agreement
100% of all material produced
23
Off-take agreement
De-risked product sale
Strong Management
24
Mark Brennan President & CEO 20+ years experience in capital markets
Tim Mann Chief Operating Officer 30+ years mining engineering experience designing, building, operating, managing mines
Les Ford Technical Director Vanadium expert. 40+ years experience building/designing vanadium plants
Kurt Menchen Country Manager & Maracas Project Manager
30+ years mining engineering experience operating mines in Brazil
Douglas Herbst Maracas Construction Manager
30+ years mining engineering experience building mines
Don Clark Construction Advisor Specialist with 30+ years managing, designing and construction of mines
Andy Campbell VP Exploration 30+ years of mining exploration experience
John Laurie Chief Financial Officer 20+ years experience in financial management
Maracas Project Schedule
25
Engineering
Procurement Services
Civil Works
Crushing System Erection
Milling System Erection
Kiln System Erection
Sulphate Salt Recovery System Erection
Deammoniator/ FurnaceErection
Utilities System Erection
Equipment Fabrication
Eletrical Line Contract
Water Pipeline Erection
COMPLETE
COMPLETE
Full Plant Commissioning Target
Q1 Q2 Q3 Q4Q4Q3Q2
COMPLETE
COMPLETE
Q1 Q2
2012 2013 2014
First Production
Target
26
Site Development
Gulcari “A” Deposit and Open Pit
Concrete PlantMain Access RoadAdmin Facilities
Processing Plant
Crushing and Milling
Maracas Deposit Outcrop
27
25 meters of ore at surface
150 meters
Magnetite(ore)
Gabbro (waste)
◦Dips at 65
28
Site Development
Concrete PlantMain Access RoadAdmin Facilities
Processing Plant
Crushing and Milling
Project as at July 17, 2013
Corporate Structure
29
Stock symbol: LGO – TSX-V
Share price (Aug 16, 2013): $0.23
Shares issued (Basic): 897 million
Market Cap C$206 million
52-week High/Low: $0.275 / $0.155
Management & Institutions: 75%
Warrants & Options (Basic): 250 million
Institutional Shareholders
Arias Resource Capital-19.9%
Mackenzie Investments-15.9%
Eton Park Capital Management-12.5%
Ashmore Investment Management-12.5%
Shareholders & Project Partners
Project Finance Deal of the Year Awards - March 2013
Project Partners
Glencore International 100% 6 yr take-or-pay off-take for Maracas
Business Development Bank of Brazil
Bank Itau, Votorantim, Bradesco
Secondary Projects
30
Project Jurisdiction Metal Stage
Currais Novos Brazil Tungsten Development –care and maintenance due to drought
Northern Dancer Yukon, Canada Tungsten PEA Complete
Campo Alegre
de Lourdes
Brazil Iron, Titanium,
Vanadium
Exploration
Blue sky potential to add value
Investment Summary:
Project funded, permitted and in construction
Advancing towards production in Q1, 2014
High grade, low cost production project
Experienced management
Capitalizing on market demand and supply instability
Pipeline of projects in place for growth
31
Substantially de-risked flagship project with near term cash flow
32
Largo Resources
@LargoResources1
Largo Resources
32
www.LARGORESOURCES.com
55 University Ave. Suite 1101
Toronto, ON – M5J 2H7
Darcie LaddBusiness Development Manager
dladd@largoresources.com
416-861-9406
Mark BrennanPresident and CEO
mbrennan@largoresources.com
416-861-9797
Appendix
Board of Directors
TSX – TSXV Market
Maracas Cashflow Projections
Maracas Mining Process
Tungsten
Currais Novos
Northern Dancer
Campo Alegre de Lourdes
33
Appendix: Strong Board
34
Mark Brennan Director Largo Resources President & CEO
Dirk Donath Director Managing director Eton Park Capital Management
Alberto Arias Director Founder & President Arias Resource Capital
Dan Ioschpe Director CEO of Lopche-Maxion
David Brace Director CEO of Karmin Exploration. Formerly with AurResources
Wayne Egan Director Partner at Weir Foulds LLP
Dr. Alan Alper Director Tungsten expert. Formerly with Osram Sylvania
Appendix: Maracas Mining Process*
35
• Deposit outcrops at surface
• Less than 1 meter pre-stripping
• High grade material from
surface continues to depth
Simple, Cost-Effective Open
Pit Mining Process
Unit Mining
Cost
Total
OPEX
Revenue
Tonne of ore $14.29 $61.50 $129.97
Per lb V2O5 /equiv.** $0.82 $2.10 $6.09
*See press release dated Jan 18, 2013**Includes all royalties less credit Iron Ore byproduct
Appendix: Tungsten
36
Tungsten [W74]
Tungsten is unique in its extreme
qualities and difficult to replace
Source: Roskill, 2011Source: Minor Metals Trade Association
Cemented Carbide Usage•Only diamonds are harder
•100X harder than steelVery Hard
•Highest melting point
• Lowest expansion
Very Heat Resistant
•Greater than lead or uraniumVery Dense
Tungsten is….
Appendix: Tungsten
37Source: British Geological Survey’s Risk List, 2011 Source: US Gelological Survey
Supply Demand
Source: Roskill, 2011/Europacific Canada, April 12, 2012
Production
17%
Tungsten Scored 4th
Most at Risk out of 52 Elements
67,000 Tonnes(2011)
95,000 Tonnes(2015)
Growingat 7%
per year
Consumption
Supply
Appendix: Currais Novos
Historical production district
Significant production from 1940s to 1970s
(approx 8% of global supply)
Numerous potential acquisitions in
immediate vicinity – both underground and
tailings
Provides significant expansion potential
Preliminary exploration underway with goal
of defining additional resources
38
Appendix: Currais NovosSummary Highlights
39
Production Commenced December 2011
90 tonnes of concentrate shipped
Initially commissioned without mill due to
importation delay at port
Mill commissioned in February
Plant optimization proceeded to adjust milling
circuit
3 additional screens were added in order to
increase yields
Screens commissioned in Q3
Modifications to plant are ongoing
Production temporarily suspended due to severe
regional drought
Currais NovosSite Visit – August 2012
40
Appendix: Northern Dancer Project
Northern Dancer Resource Estimate
223.4 MT grading 0.102% WO3 and
0.029% Mo (M&I)
Higher-grade tungsten and molybdenum zone: 60.3
MT of 0.14% WO3 and 0.045% Mo (M&I)
201.2 MT grading 0.09% WO3 and
0.024% Mo (I)
Development Milestones
PEA complete
Environmental permitting under way
Discussions with off-take partners and
JV partner
Appendix: Northern DancerPEA Highlights
Tungsten (US$ per MTU)
Moly(US$ per lb)
IRR (%)NPV @ 8%(US$ millions)
$275 $17.50 20.0 918
$300 $17.50 22.2 1,110
$325 $17.50 24.4 1,302
$350 $17.50 26.5 1,494
$365 $17.50 27.8 1,769
* The PEA is preliminary in nature, and includes inferred resources that are too speculative geologically to have economic considerations applied to them.
There is no certainty that the PEA will be realized.41
Low cash cost producer: US$116 per MTU
49 year mine life
Pre-production capital costs: $645 million
Cumulative cash flow US$4.8 billion
Average annual production of 833,000 MTU tungsten
(18.3 million pounds) and 5,959,000 pounds
molybdenum over initial 23 years
Current trading price of US$300 MTU
Attractive economics at current tungsten prices
Strategic asset for long term supply of tungsten
42
Appendix: Campo Alegre Project
Non NI 43-101 Resource:
133 Million Tonnes Grading 50% Fe,
21% TiO2, 0.75% V2O5*
100% owned iron, titanium, and vanadium
deposit - seven concessions covering 9,274.66
hectares
Purchased in 2009 for USD $250,000.00 from
Bahia State Mining Development Agency
(CBPM)
Preliminary metallurgical testwork completed in
2011 suggested potential for titanium dioxide
(TiO2) project
Further metallurgical testing underway in 2012
* Historical resource provided by CBPM (Bahia State Mining Development Agency)
top related