Department for Manufacturing,

Innovation, Trade, Resources and Energy

Commodities Outlook for

South Australia

Paul Heithersay Deputy Chief Executive

Resources and Energy Group

26 November 2013

www.dmitre.sa.gov.au

Resources is a tough game

2

3

But look at China

4

And look at China again

Barry Dawe’s Thesis

5

6

South Australian Mineral Exploration Expenditure 1993-2012

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

0

50

100

150

200

250

300

350

400

South Australia Minerals Expenditure SA % share of Australia

$ M

illio

n

SASP Target 41 - $200m to 2015

PACE 2020

Olympic Dam drill-out

Hillside discovery

Carrapateena discovery

Jacinth-Ambrosia discovery

PACE Prominent Hill

discovery

Olympic Dam Expansion

Challenger discovery

Four Mile discovery

South Australian Mineral Exploration Licences 2013

January 2004

Applications Granted Renewed Transferred Surrendered Current Total

(Active) Area

Exploration Licences

11 6 5 Nil 2 972 421,923.00 sqkm

Mineral Claims

3 4 NA NA NA 109 16,874.58 Ha

Mineral Leases

Nil Nil Nil Nil Nil 896 99,627.61 Ha

Extractive MLs

Nil Nil Nil Nil 1 706 16,271.86 Ha

Misc. Purposes Licences

Nil Nil Nil Nil Nil 104 12,086.16 Ha

Retention Leases

Nil Nil Nil Nil Nil 40 47,896.70 Ha

September 2013

South Australian Mineral and Petroleum Production

by Commodity 2000/01 – 2012/13

8

0

1

2

3

4

5

6

7

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13$ B

illio

ns

Copper Hematite Magnetite Gold Uranium Coal Other Metallics Industrial

Construction Gemstones Caroline 1 CO2 (well) Condensate Crude Oil Ethane LPG Natural Gas

Source: Resource Production Statistics for year ended 30 June 2013 – complied by DMITRE

9

MCA Scorecard of Approvals 2012, publ. June 2013

South Australia leads Australian and New Zealand

mining jurisdictions securing the highest scores on 12/19

issues relating to the design and implementation of

policies and regulations linked to mining approvals,

maintaining its leadership position since the last

scorecard release in 2006.

‘The SA system works well and is driven by a positive

attitude toward mining which derives from the top

echelons of government. This is reflected in a positive

and assistive attitude by the Lead Assessment Agency

which has been empowered by government to

expeditiously seek whole of government solutions in

approving mining projects’

The result confirms South Australia leads all jurisdictions

in Australia and New Zealand for the majority of mining

approval, environmental assessments and land access.

10

RESOURCESTOCKS – South Australia, Australia’s NO.1 !!!

For the fourth consecutive year, South Australia is Australia’s best

low risk destination for resources investment according to the

RESOURCESTOCK World Risk Survey for 2013.

Though South Australia leads within Australia, South Australia ranked

10th, behind Canadian provinces (TAS 12th, WA 13th, VIC 15th, Qld

16th, NT 17th and NSW 18th)

Australia rated 6th out of forty countries up from 7th last year.

“South Australia has again won the „battle of the states‟, with its

reputable mines and petroleum department bending over backwards as

always to facilitate investment and its geology still highly regarded. Its

oil and gas industry is booming in the Cooper Basin with links to multi-

billion dollar LNG projects in Queensland and a guaranteed market in

NSW and Victoria. On the mining side, the Eyre Peninsula is growing

a reputation as “the Pilbara of graphite‟ – to say nothing of the state‟s

well established copper, uranium, gold and zinc mining industry among

others.”

The survey is based on members of the global mining and petroleum sectors, including

investors, supply companies who were asked to rank on perceived risk factors including

financial, sovereign, land access, green and red tape, social risk, infrastructure, civil unrest,

natural disasters and labour relations.

• South Australia is rich

in resources

• World Class Deposits

11

4 mines

in 2003

21

mines in

2013

Copper

Gold

Rare earths Minerals

Sands Silver

Coal Zinc

67% of Australia’s economically

demonstrated copper resources

Uranium

Iron Ore

30% of Australia’s economically

demonstrated gold resources

78% of Australia’s identified

resources

14 billion tonnes in identified

resources

Lead

World Class Deposits

Graphite Nickel Tin

THE SOUTH AUSTRALIAN RESOURCE SECTOR

3 operational copper mines

4 development projects

40 prospects

For more information on copper please contact Invest in South Australia

Many of the deposits in South Australia’s copper

provinces are covered by a sequence of

younger rocks that have effectively hidden

many large copper deposits from the early

explorers.

COPPER

67% of Australia’s economically

demonstrated copper resources

12

PROJECTS NEEDED TO MEET WORLD COPPER

DEMAND

2 2

WORLD COPPER SUPPLY

• The output from existing mines are expected to decline by 2.1% pa from 2013-2022

• Forecast supply from committed projects are not expected to meet demand

• New sources of production will be required with large discoveries occurring with less frequency

WORLD COPPER DEMAND

• The long term growth in demand for copper is to accelerate driven in large part by the urbanisation of

China and India.

• 1997-2011: Global refined copper demand increase of 2.8% p.a.

• 2011-2022 : Forecast global refined copper demand increase of 5.2% p.a.

Source: IBIS World forecast, US Geological Survey, Brazilian Symposium on Mineral Exploration- CRU presentation

Mt

Co

nta

ined

Cu

COPPER WILL BE

HIGHLY SOUGHT AFTER

IN THE FOLLOWING

DECADE

Olympic Dam

14

BHP Billiton owned

Copper, uranium,

gold, silver

Australia’s largest

u/ground mine,

~ 300 km tunnels

570 km north of

Adelaide

Roxby Downs

~ 4500 people

Olympic Dam Expansion Deferred

Deferral announced in August 2012

BHP Billiton considering less capital intensive

methods

SA Government have extended Indenture option to

2016

BHP Billiton will spend around $650 Million

researching new options

Includes $10 million towards Mining Skills Centre

of Excellence

15

16

3 operational mines and 1 approved mine

78% of Australia’s identified resources

25% of the world’s uranium resources

Olympic Dam – the world’s largest uranium

deposit

South Australia has an unusually high incidence

of ‘felsic magmatic rocks’, these provide an

excellent naturally elevated source for uranium.

For more information on uranium please contact Invest in South Australia

URANIUM

17

0

20

40

60

80

100

120

2013 2018 2023 2028 2032

Forecast Iron Ore Production (Mtpa)

North Gawler Craton South Gawler Craton Braemar Province

Source: Deloitte Regional Mining & Infrastructure Plan

3 operational iron ore mines

20 development projects

14 billion tonnes in identified resources

Forecast production of 105Mtpa by 2025

For more information on iron ore please contact Invest in South Australia 18

IRON ORE

Cooper Basin Exploration & development for 50+ years

Otway Basin Mature & immature conventional/unconventional plays

Arkaringa Basin Unconventional plays with significant shale oil potential

For more information on oil & gas please contact Invest in South Australia

OIL & GAS

19

Bight Basin BP & Statoil leading offshore exploration

An emerging unconventional oil & gas boom.

VISION: The unconventional gas revolution will

deliver decades of safe, secure, competitive gas

www.petroleum.dmitre.sa.gov.au

To reach the vision

• Potential risks to social, natural and economic environments

are reduced to as low as reasonably practical (ALARP); and

meet community expectations for net outcomes BEFORE IT

IS PERSONAL – before approval sought for land access;

• Affected people and enterprises get timely information

describing risks and rewards to enable informed opinions;

• Convene a Roundtable to deliver a Roadmap for

Unconventional Petroleum Projects to inform: the PUBLIC,

GOVERNMENTS, INVESTORS, AND REGULATORS and

in doing so – will enable welcomed unconventional

petroleum projects;

South Australia’s Roadmap published Dec. 2012

• Outcome:

Attain the vision

• Strategy:

Cooperate to compete

• Roundtable:

List what to do by

priority (125

recommendations)

• Working Groups:

Implement priority

recommendations.

Priorities to foster sustainable, profitable projects

roundtable and roadmap for unconventional gas

Top priorities to build trust:

• Legal frameworks provide certainty and simultaneously

meet community and investor expectations for outcomes

• Trustworthy, people implement and regulate projects

• Environmental sustainability

Priorities to foster sustainable, profitable projects

roundtable and roadmap for unconventional gas

• Manage supply-chain risks

(people and facilities)

• Bolster understanding of

risks, risk management and

rewards

GO TO AUSTRALIA

DRILL A WELL

BINGO

SORTED

GO TO AUSTRALIA

DRILL A WELL

BINGO

SORTED

Go to South Australia

16 www.petroleum.dmitre.sa.gov.au

DEEP GAS IN THE COOPER BASIN

Beach Energy: PEL 218: Encounter, Holdfast

and Moonta all flowed >2 MMscf/d. Beach

estimate potential 300 TCF gas in place in PEL

218 (Nappamerri Trough, SA) – almost 100 TCF

in shales and >200 TCF in sands. Chevron now

PEL 218 partner

Santos: High-side 200+ TCF recoverable raw

gas. Moomba 191 (vertical well): 2.6 MMscf/d

from shales at line pressure flowing to market.

Santos/Beach/Origin JV have domestic and

export markets. Will invest strongly hence

Senex Petroleum: Estimate 75-110 TCF gas in

place in tight sandstones, shales and coals. Extensive

unconventional gas program. Kingston Rule-1 (PEL

516) 1.2 MMscf/d. Hornet-1 (PEL 115) flowed > 2

MMscf/d

EIA: 85 TCF sales gas in Cooper Basin shales

Up to 1000m of

gas-filled shale,

siltstone, coal &

sandstone

REM shale REM shale

Shale Play

Ro = 0.95%

Patchawarra

coal thickness

Toolachee

coal thickness

Deep coal

target area

Ro = 0.95%

Deep coal

target area

Basin-Centred Play

below ~3000m

$10+ billion in announced infrastructure

Path to Market Projects 6 port projects, multiple slurry pipelines, rail upgrades

Mine Infrastructure Projects 3 desalination plants, magnetite beneficiation plants

Electricity transmission upgrades Eyre Peninsula, North Gawler Craton, Braemar

Province

For more information on resources infrastructure please contact Invest in South Australia

RESOURCES INFRASTRUCTURE

Source: Deloitte Regional Mining & Infrastructure Plan 26

PRINCIPAL SOUTH AUSTRALIAN RAIL OPERATIONS

• Connections to Sydney, Melbourne, Perth and Darwin.

• Network is strategically located to key mining regions

• Tarcoola to Darwin line servicing the North

Gawler Craton

• Broken Hill to Adelaide line servicing the

Braemar province.

Location Owner Gauge Primary Usage

Metropolitan Adelaide South Australian

Government

Standard

Broad

Urban passenger

Kalgoorlie – Melbourne

Adelaide – Broken Hill

Australian Rail & Track

Corp. (ARTC)

Standard

Standard

Intermodal, grain,

ores, steel

Tarcoola – Darwin Genesee & Wyoming Standard Intermodal, ores

Port Lincoln – Thevenard Genesee & Wyoming Narrow Grain, gypsum

Middleback Ranges Arrium Narrow1

Standard

Iron ore

EXISTING RAIL NETWORK

27

0

25

50

75

100

125

150

2013 2018 2023 2028 2033

Resources Sector - Forecast Freight Demand (Mtpa)2

North Gawler Craton South Gawler Craton Braemar Province

Source: ARTC, Genesee & Wyoming, Bureau of Infrastructure, Transport & Regional Economics, Deloitte 1 Narrow gauge rail from Iron Duke to Whyalla, standard gauge rail from Whyalla to Port Augusta 2 Adapted from the Deloitte Regional Mining & Infrastructure Plan

PRINCIPAL ROAD NETWORK

South Australia’s road network is in excess of 23,000km and covers all key mining regions

within the State. This includes sealed highways linking the North Gawler Craton, South

Gawler Craton and Braemar Province to export facilities.

The following projects currently use road as their main transport option:

Source: Department of Planning, Transport & Infrastructure, company websites

Mine Owner Mineral Annual Production

Beverley Heathgate Resources Uranium 60t U3O8

Beverley North Heathgate Resources Uranium 370t U308

Challenger Kingsgate Consolidated Gold, silver 66Koz Au

3Koz Ag

Honeymoon Uranium One Uranium 76t U308

Jacinth-Ambrosia Iluka Heavy mineral

sands

138Kt zircon

86Kt limenite (saleable)

3Kt limenite (upgradable)

26Kt rutile

Kanmantoo Hillgrove Resources Gold, copper,

silver

13Kt Cu

6Koz Ag

121Koz Au

Olympic Dam BHP Billiton Iron oxide,

copper, gold,

uranium

166Kt Cu

113Koz Au

880Koz Ag

4,102t U3O8

EXISTING ROAD NETWORK

28

Source: Company websites, DMITRE 1 Due to timing between the regions, the maximum forecast production across the State is 105Mtpa and not the sum of the individual regions

Operating Mines Operator Production 2012-13

Middleback Ranges (multiple mines) Arrium 6.5Mt

(Ramp up to 8Mtpa)

Peculiar Knob Arrium 1.5Mt

(Ramp up to 4Mtpa)

Cairn Hill IMX Resources 1.7Mt

Total 9.7Mt

Mines & Projects by Region Measured Resources Forecast Production

North Gawler Craton 1,376Mt 13Mtpa

South Gawler Craton 5,660Mt 56Mtpa

Braemar Province 7,263Mt 39Mtpa

Total 14,299Mt 105Mtpa1

IRON ORE IN SOUTH AUSTRALIA

South Australia is the birthplace of the Australian iron ore industry with existing operational

mines in the Middleback Ranges (six mines) and North Gawler Craton (two mines). There are

a further two mines approved and twenty development/prospect projects across the State

with identified resources of over 14 billion tonnes.

IRON ORE INFRASTRUCTURE

Arrium own and operate the port at Whyalla to export ore from their Middleback Ranges and

Peculiar Knob projects. The Middleback Ranges are linked to the port via narrow gauge rail

while Peculiar Knob is linked via the standard gauge rail network.

IMX Resources rail ore in containers from their Cairn Hill project to Port Adelaide where the

ore is loaded onto a vessel via a container rotating facility.

Of the development projects and prospects there are a range of infrastructure solutions being

considered including the development of new deep sea ports, rail lines and slurry pipelines.

These are detailed on pages 23 - 49.

IRON ORE

29

Source: Company websites, Deloitte 1 Adapted from the Deloitte Regional Mining & Infrastructure Plan

PROPOSED IRON ORE PRODUCTION

Infrastructure demand will be heavily driven by the development and production of South Australia’s

iron ore regions. These regions are best described as:

• North Gawler Craton

• South Gawler Craton

• Braemar Province

Based on existing and forecast production, estimated iron ore production will reach 105Mt by 2025.

INFRASTRUCTURE DEMAND

30

0

20

40

60

80

100

120

2013 2018 2023 2028 2033

Forecast Iron Ore Production (Mtpa)1

North Gawler Craton South Gawler Craton Braemar Province

NORTH GAWLER CRATON IRON ORE PRODUCTION

Situated more than 800km north west of Adelaide, the North Gawler Craton includes two

operating iron ore mines and a further seven development projects and prospects.

Of the operating mines, Arrium are currently producing from Peculiar Knob with ore sent via

standard gauge rail to their port at Whyalla (first shipments in 2012-13).

IMX Resources are currently producing approximately 1.7Mtpa from their Cairn Hill mine with ore

sent via rail to Port Adelaide.

Including the development projects and prospects there is forecast production of 13Mtpa by

2018.

EXISTING INFRASTRUCTURE

• Adelaide – Darwin open access

standard gauge rail

• Major road networks

• Ports (Whyalla, Port Adelaide, Port

Pirie)

PROPOSED INFRASTRUCTURE

• Rail upgrade

• Port Bonython deep sea port

• Port Pirie upgrade

• Electricity transmission

• Desalination plants

NORTH GAWLER CRATON

PROJECTS

• Cairn Hill (operating)

• Peculiar Knob (operating)

• Commonwealth Hill

• Coolybring

• Gawler Iron Project

• Giffen Well1

• Hawks Nest

• Hicks Hill

• Mt Woods

Source: Company websites, DMITRE 1 WPG Resources announced on 7 May 2013 that they would not exercise the option to acquire the Giffen Well project. WPG released on 8 March 2013 the PFS for this project highlighting a capex amount of $1.72B and

opex of $71/tonne and announcing the project was ‘feasible’

Cairn Hill

Peculiar Knob

INFRASTRUCTURE DEMAND – NORTH GAWLER

31

IRON ORE PRODUCTION

2012-13 Production 3Mtpa

Development/Prospects 10Mtpa

Total 13Mtpa

IRON ORE RESOURCES

JORC Resources 1,378Mt

SOUTH GAWLER CRATON IRON ORE PRODUCTION

The South Gawler Craton is situated on the Eyre Peninsula and is home to the

birthplace of the Australian iron ore industry, the Middleback Ranges.

Currently there are multiple mines in operation within the Middleback Ranges with

current production of 6Mtpa in 2011-12 (ramp up to 8Mtpa forecast).

There are a further 7 development projects and prospects with a total forecast

production of 56Mtpa by 2021.

IRON ORE PRODUCTION

2012-13 Production 6Mtpa

Development/Prospects 50Mtpa

Total 56Mtpa

IRON ORE RESOURCES

JORC Resources 5,604Mt

Source: Company websites, DMITRE

SOUTH GAWLER CRATON

PROJECTS

• Bungalow JV

• Central Eyre Iron Project

• Eyre Iron JV

• Gum Flat

• Middleback Ranges (operating)

• Wilcherry Hill & Hercules

• Wilgerup

EXISTING INFRASTRUCTURE

• Whyalla steelworks

• Standard gauge rail from Whyalla

to the national network

• Narrow gauge rail close to mine

sites

• Major road networks

• Close to deep water

PROPOSED INFRASTRUCTURE

• Port Bonython deep sea port

• Port Spencer deep sea port

• Luck Bay port development

• Cape Hardy deep sea port

• Standard gauge rail to Cape

Hardy

• Slurry pipelines

• Electricity transmission upgrade

• Desalination plants

• Road upgrade

Middleback

Ranges

INFRASTRUCTURE DEMAND – SOUTH GAWLER

32

New Application Status Menu Option

Minerals Exploration Licence Online Tracking Application

Click Tenement to view Application Status

Application Status

Tracking

South Australian Mining App

• a free smart phone app designed for investors

• highlights real-time investment opportunities within resources sector

• information on geospatial map interface, mines and projects, geology

34

South Australian Mining App

35

7 Reasons to Invest in South Australia’s Resources

Sector

36

Resource Rich 81% of Australia’s EDR of Uranium

69% of Australia’s EDR of Copper

28% of Australia’s EDR of gold

8% of Australia’s EDR of Iron ore

Cooper Basin 54% of Australia’s

onshore oil production

1st Unconventional Gas

production in Australia

Strong

Government Support PACE 2020

Mining Industry Participation Office

Mining and Petroleum Services

Centre of Excellence

RESA

RESIC

World Class

Geoscientific

Information 125+ yrs of geological information

available free

World-Class Drill Core Storage Facility

Award winning SARIG 2020 online

geoserver

Australian government’s

first Mining App

Proven Record of

Red Tape Reduction MCA 2012 Scorecard of Mining

Approvals

ResourceStocks World Risk Survey

No.1 in Australia 2009-13

Long

Mining History Australia’s first base metal mine

Australia’s Copper Booms of the

1850’s, 1870’s

Australia’s first iron ore mines and

steel works

Australia’s first uranium mine

Australia’s first ISR

uranium mine

World Class

Mines and Deposits Olympic Dam Mine - World largest

Uranium Deposit, World’s 4th largest

copper deposit, World’s 4th largest

gold deposit,

World class discoveries, Prominent

Hill, Jacinth/Ambrosia, 4 Mile,

Carrapateena,

Hillside

Research

Capability Ian Wark Research Institute

Australian School of Petroleum

Deep Exploration Technologies CRC

Institute for Mineral and Energy

Resources (IMER)

Mawson Institute

www.invest.sa.gov.au

Published October 2013

The information contained in this presentation has been compiled by the Department for Manufacturing, Innovation, Trade, Resources and Energy

(DMITRE) and originates from a variety of sources. Although all reasonable care has been taken in the preparation and compilation of the

information, it has been provided in good faith for general information only and does not purport to be professional advice. No warranty, express or

implied, is given as to the completeness, correctness, accuracy, reliability or currency of the materials.

DMITRE and the Crown in the right of the State of South Australia does not accept responsibility for and will not be held liable to any recipient of the

information for any loss or damage however caused (including negligence) which may be directly or indirectly suffered as a consequence of use of

these materials. DMITRE reserves the right to update, amend or supplement the information from time to time at its discretion.

Further Information

Please contact Invest in South Australia for detailed investor-ready information across copper, gold, uranium, iron ore and resources infrastructure.

Invest in South Australia

Level 9, The Conservatory

131-139 Grenfell Street

Adelaide, South Australia 5000

T: +61 8 8303 2400

F: +61 8 8303 2410

E: investinsa@sa.gov.au