august 14, 2018 hope bay site visit · 8/14/2018 · mike samuels s director, metallurgy dan...
TRANSCRIPT
August 14, 2018 – Hope Bay Site Visit
Doris Mine and Plant
Caution Regarding Forward-Looking
Information
31
Attendees are cautioned that we will be making forward-
looking comments. To fully understand the risks inherent in
our comments, forecasts and estimates you are
encouraged to read our Management Discussion and
Analysis for the second quarter ended June 30, 2018
together with our Financial Statements for the same
period.
Participants
32
Jason Neal
President & Chief Executive Officer
Gil Lawson
Chief Operating Officer
Mike Samuels
Senior Director, Metallurgy
Dave King
Vice President, Exploration
Ann Wilkinson
Vice President Investor Relations
Strategic Overview – Building Momentum
33
• Operating team in place
• Recovery improvement from 71% in Q1 to 82% in Q2 – June (85%)
better than May (83%)
• Successful ramp up of plant to 2,000 tpd capacity
• Mine positioning for mining in Hinge and Crown Pillar recovery in
Q3
• Improved operations will drive positive AISC margin
• NIRB recommendation that Madrid-Boston Project be permitted to
proceed sent to Crown-Indigenous Relations and Northern Affairs
Canada
• Strategic analysis and planning for higher risk-adjusted returns and
value on Madrid and Boston development
• A return to exploration driven growth
Senior Management
34
Jason Neal
President & CEO
Gil Lawson
COO
Mike Samuels
S Director, Metallurgy
Dan Redmond
Dir, Strategic Mine Planning
Dan Gagnon
General Manager
Jerome Girard
Asst. General Manager
Maarten Theunissen
CFO
Ron Gagel EVP,
Corporate Affairs
Julia Micks EVP, Human Resources
Oliver Curran VP,
Environmental Affairs
David King VP,
Exploration
Ann Wilkinson,
VP, Investor Relations
Senior Management
35
Dan Gagnon
General Manager
Jerome Girard
Asst. General Manager
Ron Bertrand Surface
Operations Manager
Kelly Schwenning Manager, Projects
Chad Parent Process Plant
Manager
Doug Brown Health and Safety
Manager
Jason Nickel Mining Manager
6
• Operations
• Complete sealift in Q3
• Processing
• Q3 recoveries targeting mid-80s%
• Q3 installation of additional gravity concentrators in mill to
achieve 90% recovery in Q4
• Mining - Ramp up production
• Development
• More efficient mining – blasting, dilution control
• Crown pillar recovery – Q4
• Complete exploration program and prepare for increased
exploration activity
Near-Term Priorities - Operational
Key Financial Metrics
37
Q1-18 Q2-18
Gold Sold (ounces) 19,540 25,760
Revenue (C$ millions) 33.0 43.3
Realized Gold Price (US$/oz) 1,332 1,300
Cash Costs (US$/oz) 1,049 928
AISC (US$/oz) 1,807 1,642
Cash flow from Operating Activities
(C$ millions)10.9 14.6
EBITDA (C$ millions) (3.5) 4.9
Capital Expenditures (C$ millions) 18.8 27.1
Unrestricted Cash Balance (C$ millions) 35.7 24.2
Restricted Cash Balance (C$ millions) 42.3 42.3
Q2 2018 Conference Call
8
Growing Toward Positive AISC Margin
-
3,000
6,000
9,000
12,000
15,000
18,000
21,000
24,000
27,000
30,000
33,000
36,000
-
5
10
15
20
25
30
35
40
45
50
55
60
Q4 2017 Q1 2018 Q2 2018
Go
ld S
old
(o
z)
C$ m
illio
ns
Cash cost (Opex) Corporate G&A UG development
Sustaining CAPEX Revenues Gold sold (Y2)
AISCUS$1,807/oz
AISCUS$1,624/oz
AISCUS$1,870/oz
US$1,049/oz US$928/ozUS$1,228/oz
9
• Principal Amount
• US$160 million
• No gold hedging required
• Interest Rate
• 6.5% per annum plus greater of US$ 3-mth LIBOR, and 1.0%,
compounded and payable quarterly
• Payments
• US$6.5 M Quarterly – October 31, 2018 – July 31, 2020
• US$30M Bullet – January 31, 2019
• US$5.5M Quarterly – October 31, 2020 – April 30, 2022
• Maturity Date – July 31, 2022 – Bullet payment of unpaid balance
Debt Facility Summary
KEY TERMS / FEATURES
• Macquarie owns the fuel
• No security required – not debt
• Price = Cost of contract + Premium
• Converts inventory working capital to cash
Diesel Purchase and Storage Arrangement
PROCEDURE
1. Macquarie steps into TMAC’s current fuel purchase and delivery contract
2. Macquarie rents tanks from TMAC
3. TMAC will purchase the fuel from
Macquarie as it draws fuel from Roberts
bay tanks
10
CIRNA
KIA
Letters of credit
Letters of credit
Insurance Company
Letter of credit agreement
Demand Bond
Environmental Bonding Product
11
36
Madrid-Boston Project Permitting Milestone
• Significant permitting milestone: June 26, 2018, Nunavut Impact Review Board
recommended to the Minister of Crown-Indigenous Relations and Northern Affairs Canada
that the Madrid-Boston Project proceed.
• Final Hearing Report is very supportive of TMAC’s proposal with recommend terms and
conditions that offer operational flexibility with respect to how we implement our
environmental programs and mitigations.
• Madrid-Boston Project includes 3 new mines, extensive infrastructure and belt wide
production of 6,000 tonnes per day.
• Next step in the permitting process is for the Minister to approve NIRB’s recommendation,
allowing NIRB to issue TMAC a new Project Certificate for the Madrid and Boston mines.
• Following the Minister’s approval, the Nunavut Water Board will give notice of the final
hearing date for TMAC’s Type A Water Licence applications.
– NWB Technical meetings and the Pre Hearing Conference have been completed with no
outstanding technical issues.
“For those of us in this region, we are also in support of the mining
company, TMAC. We would like to see them continue. We are in support
of TMAC. We were able to ask questions. We were given clear and
concise responses from the company. We would like to see the Hope Bay
project go ahead in the communities in our region. They have really
contributed to the Kitikmeot communities a great deal, and they are very
supportive of the students completing their education, and they've also
recognized the students trying to finish their education.”
-Taloyoak Statement from Final Hearing
“We are in support of the mine. We would like to see the company given
the greenlight. The way I see it, it's going to help our economy and Canada
as a whole. I am thankful to the Government of Nunavut and the
Government of Canada and the Kitikmeot Inuit Association as well. I see it
as a benefit to everyone, ensuring that they have protection plans in place
and to implement the protection plan of the environment.”
- Kugaaruk Statement from Final Hearing12
13
• Plant capacity consistently at 2,000 tpd
• Q3 recoveries back to mid-80s%
• Q3 installation of additional gravity concentrators in mill to achieve
90% recovery in Q4
• Ramp up mine production and development
• Complete current exploration program and prepare for increased
exploration activity
• Secure Madrid-Boston Project Certificate by Q4-2018 and Water
Licences by Q2-19
• Advance analysis of optimized Hope Bay Belt development
Near-Term Priorities
Operations
Doris Mine and Plant14
Safety & Health
15
• We remain lost time
injury free for 2018
• 264 days LTI free and
10 days Medical Aid
free
• 1 Medical Aid in 2018
• Focus is on safe
operating procedures
and personnel
training
Key Operating Metrics
16
Q1-18 Q2-18 Jul-18
Processing
Throughput (t)83,600
(928 tpd)
88,300(970 tpd)
31,500(1,016 tpd)
Processed Grade (g/t) 10.9 10.0 8.8
Recovery (%) 71 82 75
Gold produced (oz) 20,650 23,140 6,660
Gold poured (oz) 18,870 25,970 5,450
Mining
Ore (t) 82,600 68,900 27,300
Waste (t) 72,300 80,700 25,300
Total (t) 154,900 149,600 52,600
Average grade (g/t) 8.5 9.8 9.3
Key Financial Metrics
317
700
1,000
1,300
1,600
1,900
2,200
-
5,000
10,000
15,000
20,000
25,000
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Go
ld p
rod
uc
ed
(o
un
ce
s)
Gold Produced AISC (US$/oz) Cash Cost (US$/oz)
US$/o
z
Plant Performance – June
18
• Gravity gold recovery from ~ 50% to refinery
• The Plant processed 26,000 tonnes with an overall recovery of 85%
• Initial feed to CL2 and commissioning dual concentrator lines
• Challenges seen in solutions and concentrate management on CTP
side resulting in seven days of down days (<400 tonnes processed)
• Confidence to proceed with expenditures related to additional
gravity concentrators
Plant Performance – July
19
• Experienced water balance issues and several mechanical failures in
oxygen generator, detox mixing tank and detox filter press that
affected recovery and throughput
• Ten down days in month (<400 tonnes processed) including three day
scheduled shutdown for power plant and distribution system
• 31,500 tonnes processed at 75% recovery
• Learning to balance concentrates and solutions management
running the twin lines
• CL2 continues to operate as well, or better than, CL1. Best day to
date was ~2,200 tonnes, without topping out the lines
• Expect tonnages to start ramping up consistently now
Demonstration of 2,000 tpd Plant Capacity
20
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1,500
2,000
2,500
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CL1 Feed CL2 Feed Average
2,000 tpd
Dilution Control
21
• We did not “bench” a blast in
June/July, so re-design is working
• Improved dilution in June
Expansion of Gravity Effort
Falcon C2000 (2)
Grind/Flotation Feed Surge bins (2)
Remove cleaner Jigs
Move Spinners to Crushing Circuit
Falcon SB1350 (2)
KnelsonXD20 (2)
Replace Regrind Cyclones (2)
22
Falcon SB400 Addition - May 2018
23
Ultimate Gravity Concentrators - Q4 2018
24
Additional Surge Capacity - Low-g gravity
concentrators to crushing
25
Additional high-g gravity concentrators in
primary grinding
26
Additional high-g gravity concentrators in
sulphide recovery
27
Expansion of pump box volumes
28
Addition of a high-g gravity concentrator to
the regrind circuit
29
• Crushing Surge Capacity
• Completed structural steel design for tower and surge bins
• East tower fabrication completion targeted for August to allow moving spinners
• Surge bins fabrication completion targeted for early September
• Foundation concrete design is finalized
• All east tower equipment operational by end of September
• Primary Grinding
• Falcon SB1350s and screens completed and being shipped to site
• Falcon C2000s and screens ordered – delivery by end of August
• Completed structural steel design - fabrication completion targeted for mid-September
• Foundation concrete design is finalized
• Ball mill discharge pump box volume expanded by 100%
• All west tower equipment operational by end of September
• Regrind area
• Knelson XD20s being shipped to site
• Move spinners after structural steel for east tower erected, then install XD20s
• XD20s operational by early September
• Expansion of regrind mill pumpboxes
Equipment and Materials Status
30
• Pumps
• 20 new pumps (3x2, 4X3, peristaltic hose) – 6 pumps and 3 pump boxes are being re-used, but in a
different area of the flowsheet
• Electrical and mechanical
• Process Flow Diagrams, mechanical equipment lists, instrumentation diagrams completed
• Electrical and instrumentation lists developed for final costing and purchasing
• No new electrical room required - new MCC and some variable speed drives repurposed and
augmented
• G Mining
• Scope includes supervision of concrete, structural steel erection, mechanical and electrical
installation
• Costs/Budget
• Scope increased to add a second surge bin with related tower
• Detailed engineering Gantt chart and budget completed - awaiting detailed costs for surge bins,
west tower, and regrind structural steel
• Budget at $8.0 million (including camp cost allocation)
Other Equipment/Logistics Status
31
Exploration
32
Hope Bay – Exploration Objectives
Near Term
• Production Support
• Doris Connector - definition drilling supporting detailed mine planning
• Doris BTD Extension - definition and expansion, facilitate conversion to reserve
• Madrid Naartok zone - definition of shallow, high grade core, supporting
advanced exploration program
Medium Term
• Development Support
• Doris - “in mine” extend Doris mine lift
• Madrid - Definition and expansion supporting LoM planning
• Boston - Expand known resources, define potential supporting development plan
• Continue developing and testing regional targets
Long Term
• To date, little work completed outside of the 3 known deposits
• Define the long term potential of the Belt. New discoveries and infrastructure nodes 33
2018 Planned
Development
Existing
Development
North Fault
Historical Drillhole
Referenced in text
2018 TMAC Drillhole
High-Grade Doris
“Hinge”
BTD Extension
N
BTD East
Limb
Diabase
Doris North
Open
10TDD741 (Historical)
523 g/t Au over 5.6 m
Incl. 5,777 g/t Au over 0.5 m
TM50148
261.4 g/t Au over 7.1 m
Incl. 2,710 g/t Au over 0.66 m
TM50152
71.8 g/t Au over 1.4 m
and 1,255 g/t Au over 1.5 m
TM00058 (Historical)
112.8 g/t Au over 1.5m
TM00132 (Historical)
21.0 g/t Au over 2.0 m
Doris North BTD Drilling Highlights
TM50124
13.3 g/t Au over 3.0 m
and 96.6 g/t Au over 2.9 m
100 m 34
Naartok East
N
100 m
Naartok
West
Rand
Suluk
High-
Grade
Plunge
Historical Drillhole
2018 TMAC
Drillhole
PMD099 (Historical)
33.1 g/t Au over 11.0 m
TM00375
11.5 g/t Au over 25.1 m
Incl. 18.1 g/t Au over 14.0 m
TM00376
12.9 g/t Au over 50.0 m
Incl. 60.1 g/t Au over 8.5 m
05PMD288 (Historical)
23.2 g/t Au over 15.9 m
Madrid North Drilling Highlights
TM00371
6.0 g/t Au over 40.5 m
35
Huge Database (+30 years; 4 owners)
(+90 high priority targets)Geology Magnetics Gravity Targets Identified
Excellent Exploration Results and Historical Data Base to Build On 36
Hope Bay – Exploration Potential
Tremendous Exploration Potential
within the relatively under-
explored Hope Bay and Elu belts.
• Very little work completed
outside of the 3 known
deposits.
• Begin to define the long term
potential of the Belt. We have
people working on long term strategic planning that will
require data.
• Numerous high grade Au
surface samples throughout
the belt
• Au in till anomalies defined
near current infrastructure at
both Doris and Boston>10g/t Au
Madrid
Boston
Doris • Au in till sampling
• Detailed mapping
• RC/RAB drilling to further define
diamond drilling targets
• Ground geophysics
• Diamond drilling
37
Regional Exploration – Hope Bay
CGG HeliFALCONTM (2016) Ground Gravity (2009)
80 km
38
Hope Bay Belt - Surface Grab Samples +
Outcrop
Doris
Madrid
Boston
80km
>10g/t Au >50g/t AuOutcrop Map 39
Abundance of Targets Near-Mine and
Regionally
Hope Bay
Deformation
Zone
2.5km
Doris
Madrid
N
Hope Bay
Deformation
Zone
2nd Order
Structures
774,000 ozs Au Indicated
400,000 ozs Au Inferred
2,759,000 ozs Au Indicated
843,000 ozs Au Inferred
Boston
2.5km
N
1,096,000 ozs Au Indicated
330,000 ozs Au Inferred
>10g/t Au
Boston
Madrid
Doris
40
28.6 g/t Au/3.8m
Historical
Measured
And
Indicated
Inferred
Un-Classified
56.6g/t Au/8.8m
Historical
28.5 g/t Au/7.1m
17.3 g/t Au/4.8m
46.6 g/t Au/7.8m
Historical
2017 Drillhole15.3 g/t Au/22.3m 22.0 g/t Au/17.55m
15.9 g/t Au/18.4m
Category Tonnes
(kt)
Grade
(Au g/t)
Ounces
(koz)
Measured & Indicated 3,711 9.2 1,096
Inferred 1,393 7.4 330
250 m
N
41
Boston Deposit
43
Boston Regional Exploration
1,096,000 ozs Au Indicated
330,000 ozs Au Inferred
Intense Alteration Trend
Boston Regional Exploration Potential
• Intense alteration trend extends >5
Km south, along mafic
volcanic/metasediment contact similar to known Boston Deposit
• Numerous surface showings >10 g/t
Au, and shallow high-grade drill
intersections
• 2017 gold in till sampling program identified anomalies south of Boston
along alteration trend.
• Several untested gold in till
anomalies north of Boston appear
to be associated with favourable stratigraphy beneath the lake. 2.5km
42
Appendices
43
Share Capital Structure & Major Shareholders
Major Shareholders Number of Shares
Percentage of Shares
Outstanding
Resource Capital Fund VI L.P. 27,959,260 30.4
Newmont Mining Corporation 26,381,620 28.7
Blackrock, Inc 12,252,291 13.3
Directors and Officers 3,478,773 3.8
Kitikmeot Inuit Association 1,133,333 1.2
As at July 31, 2018
Common Shares (Issued and Outstanding) 91,959,512
Share Incentive Options 4,657,517
Lenders Warrants – 1,900,000 @ C$15.43 – Expire Jul 31/22 & 433,834 @ C$7.50 – Exp. Jul 23/20 2,333,834
Restricted Shares 506,173
Director Share Units 31,249
Fully Diluted Shares 99,488,285
44
Who What How Calculated
Kitikmeot Inuit
AssociationNSR • 1% on Hope Bay. Not Elu.
Maverix NSR • 1% on Hope Bay and Elu.
Nunavut
Tunngavik Inc.NPI
• On Inuit-Owned Land (Doris and Madrid)
• 12% of production (limit deductions to
75% of revenue (85% at Doris))
• Deductions never lost and are carried
forward.
Government of
CanadaNPI
• On Crown Land (Boston & Elu)
• Sum of graduated royalty rates from 0%
to 14% of value of the output of the mine 45
Royalties & Taxes
Who What
Kitikmeot Inuit
Association
Commercial Lease Payment
($1.0 million per year plus inflation)
Nunavut
Tunngavik Inc.
Production & Exploration Lease Payments
Start 2017
$8 million payment (accrued in June 2017)
(payable over 8 quarters, $1 million each quarter)
Crown-
Indigenous
Relations and
Northern Affairs
Claim & Lease Payments
Government of
Nunavut
Property Taxes
(Relates to amount of infrastructure at Hope Bay)
Obligations
46