Post on 25-Jun-2020
Building
Australia’s next
great gold
company
North American Investor Roadshow – February/March 2016
Investor UpdateFor
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Doray Minerals Limited | ASX: DRM
Disclaimer
This presentation has been prepared by Doray Minerals Limited (“Doray”) to provide an update regarding the company to investors.
Presentation information: This presentation is for information purposes only and does not constitute a prospectus or prospectus equivalent document. The information in this presentation is provided insummary form, has not been independently verified, and should not be considered to be comprehensive or complete. It is not intended to and does not constitute, or form part of, an offer, invitation orthe solicitation of an offer to purchase or otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, nor shall there be anyoffer, sale, issuance or transfer of securities in any jurisdiction in contravention of any applicable law.
Not financial product advice: This presentation is not financial product or investment advice, nor a recommendation to acquire Doray securities. It has been prepared without taking into account theobjectives, financial situation or needs of individuals and is not intended to be relied upon as advice to investors or potential investors. Before making an investment decision, investors or prospectiveinvestors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction.Doray is not licensed to provide financial product advice in respect of its securities or any other financial products. Cooling off rights do not apply to the acquisition of Doray securities. Doray assumes thatthe recipient is capable of making its own independent assessment, without reliance on this document, of the information and any potential investment and will conduct its own investigation.
Disclaimer: Doray and its related bodies corporate and each of their respective directors, officers, employees, agents and contractors disclaims, to the maximum extent permitted by law, all liability andresponsibility for any direct or indirect loss or damage which may be suffered by any person (including because of fault or negligence or otherwise) through use or reliance on anything contained in oromitted from this presentation. In particular, this presentation does not constitute, and shall not be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the futureperformance of Doray.
Forward looking statements: This presentation contains forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", “target”,"anticipate", “forecast”, "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similarexpressions. Indications of, and guidance on, future expected production or earnings and financial position and performance are also forward looking statements.
The forward looking statements in this presentation are based on current expectations, estimates, assumptions, forecasts and projections about Doray and the industry in which it operates as well asother factors that management believes to be relevant and reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. The forward looking statementsrelate to future matters and are subject to various inherent risks and uncertainties. Many known and unknown factors could cause actual events or results to differ materially from the estimated oranticipated events or results expressed or implied by any forward looking statements. Such factors include, among others, changes in market conditions, future prices of gold and exchange ratemovements, the actual results of production, development and/or exploration activities, variations in grade or recovery rates, plant and/or equipment failure and the possibility of cost overruns. NeitherDoray, its related bodies corporate nor any of their directors, officers, employees, agents or contractors makes any representation or warranty (either express or implied) as to the accuracy, correctness,completeness, adequacy, reliability or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extentrequired by law.
You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this presentation reflect views held only as at the date of this presentation. Otherthan as required by law and the ASX Listing Rules, Doray disclaims any duty to update forward looking statements to reflect new developments.
“Reserve” and “LOM”: This presentation refers to both “Reserve” and “LOM (Life of Mine) Inventory” in reference to Mutiny. LOM metrics include inferred resources. Unless otherwise stated the metricspresented in this presentation refer to LOM Inventory. The financial metrics quoted in this presentation are those determined before any hedging, gold streaming, gearing or taxation.
Gold Equivalent Ounces: This presentation also refers to Gold Equivalent Ounces (AuEq). The Resource oz (AuEq) shows estimated AuEq ounces which relates specifically to the time the resourceestimate was done and the metal prices quoted in those estimates. Slide 30 and slide 31 of this presentation shows a graph of “Mine Peers, Reserve Grade and Production”. This graph uses AuEq oz forcomparative purposes only against gold only mines. Doray advises that the use of metal equivalents is not recommended for detailed financial analysis.
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Doray Minerals Limited | ASX: DRM 3
Building Australia’s next great gold company
Doray Minerals Limited is Australia’s highest grade gold producer, a proven project developer and an award-winning explorer with substantial upside
Increasing production to 140koz pa from two high-grade WA gold operations from mid-2016
• Targeting average AISC <A$1,000/oz (US$750/oz)
Andy Well Gold Project
• Highest grade gold operation in Australia
• “Australian Mine of the Year - 2015”
• On track for upper end of 2016FY guidance (78-85koz)
• Substantial mine life upside being discovered
Deflector Gold Project
• Open pit mining commenced (Feb 2016)
• First production scheduled for mid-2016
• 60kozpa (+Cu+Ag) with initial 6-year mine life
• Significant exploration upside
High-grade Resource and Reserve Inventory
Highly prospective regional exploration portfolio
Track record of delivery against guidance
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Doray Minerals Limited | ASX: DRM
The story so far…
4
•Listed on ASX
•Wilber Lode discovery
•Most successful IPO of 2010
2010
•Maiden high-grade Wilber Lode resource
•“Gold Explorer of the Year”
2011
•Mining Lease granted
•Debt and equity funding
•Open pit mining commences
2012
•Underground mining commenced
•Plant commissioned
•First Gold Pour
2013
•77koz produced
•A$43M debt repaid
•Judy and Suzie Lode discoveries
•Exploration JV’s
•Mutiny Takeover
2014
•89koz produced
•Mutiny deal completed
•Deflector funding completed and construction underway
•Horse Well discovery
2015
Open pit mining commenced
2016
Since listing in early 2010, Doray has:
Discovered, funded and developed the highest grade gold mine currently in operation in Australia;
Had ongoing exploration success across a number of projects; and
Acquired, funded, started constructing and mining at our second high-grade gold mine…
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Doray Minerals Limited | ASX: DRM
Doray’s strategy to create value for shareholders
5
Shareholder returns
Robust operating cash flows
Sustainable production and profit
growth
Exploration success
Prudent capital
management
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Doray Minerals Limited | ASX: DRM
Board/Management
Peter Lester Non-Exec Chairman
Allan Kelly Managing Director (Founder)
Peter Alexander Non-Exec Director
Leigh Junk Non-Exec Director
Jay Stephenson Non-Exec Director
Allan Brown Non-Exec Director
Peter Bamford GM, Operations
Mark Cossom GM, Growth
Jon Latto Chief Financial Officer
6
Corporate Snapshot
Analyst Coverage
Argonaut Patrick Chang
Baillieu Warren Edney
Bell Potter Peter Arden
Evans and Partners Cathy Moises
GMP Duncan Hughes
Macquarie Ben Crowley
ASX Code DRM
Shares on Issue 307.5M
Market Cap (@86c) A$264M
Cash/gold (Dec 15) A$63M
Debt (Dec 15) A$45M
Hedging 169koz @ A$1,596/oz
Substantial Shareholders Top 20 hold ~58%
Hunter Hall Inv Mgt 14.8%
SG Hiscock & Co 7.0%
Colonial First State 4.6%
Allan Kelly 4.0%
38%
13%5%
2%
42%
Domestic Institutions Offshore Insto's
Board/Management Corporate Stakeholders
Private Stakeholders/Investors
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Doray Minerals Limited | ASX: DRM
Near-term Production and Margin Growth
7
YTD
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Doray Minerals Limited | ASX: DRM
Now is the perfect time to be:
a profitable Australian gold producer
building a new high-grade gold project
a self-funded explorer
The depreciating AUD over the last 12 months has seen a stable/rising AUD gold price against a declining USD gold price
Doray’s current hedging programme has locked in this currency benefit
• 169koz @ A$1,596/oz
With targeted AISC of <A$1,000/oz, margins of A$500-600/oz are achievable
Drop in oil price significantly reducing diesel input costs (~A$0.60/litre vs budgeted A$1/litre)
Wider resources market sentiment means less competition for staff, drill rigs etc.
8
The AUD gold producer advantage
WA retail diesel price (pre-rebates)
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Doray Minerals Limited | ASX: DRM
A$55M debt funding for Andy Well was rapidly repaid
• A$43M repaid in first 12 months of production
• Net cash positive after 6 months
• Top-ups for Mutiny deal and Sandstorm loan
New $90M Westpac corporate debt facility
• Existing A$25M balance refinanced
• Additional A$60M for Deflector
• A$5M contingency
Rapid repayment expected once Deflector in production
9
Track record of debt funding and rapid repayment
Use of debt funding and repayment from operating cash flow
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Doray Minerals Limited | ASX: DRM
Doray has outperformed the ASX gold sector index (XGD) over the last 12 months
• Doray up 64%
• XGD up 26%
• ASX200 down 15%
Significant increase in trading volumes with increased off-shore interest
Remains undervalued against peers on most production and cash flow metrics, especially when projected cash flows for 2017FY are taken into account
10
Rerating underway…but still undervalued
Doray’s share price has seen a significant rerating since Deflector funding announced
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Doray Minerals Limited | ASX: DRM 11
Undervalued against ASX gold producers…
Source: Thomson One and Macquarie Research
Bubble size represents production scale
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Doray Minerals Limited | ASX: DRM 12
…especially when Deflector comes online
Source: Thomson One and Macquarie Research
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Andy Well Gold Project
Australia’s
highest
grade gold
operation
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Doray Minerals Limited | ASX: DRM 14
Andy Well - Australia’s highest grade gold operation
“Australian Mine of the Year – 2015”
From discovery to production in 3.5 years
Parallel high-grade gold veins with very high gravity and total gold recoveries
Production to date exceeds BFS (74kozpa):
• 2014FY – 76,785koz @ AISC A$1,044/oz
• 2015FY – 88,736oz @ AISC A$1,165/oz
• 2016FY – guidance 78-85koz
Currently producing from:
• Wilber Lode u/g
• Judy Lode u/g
Substantial near-mine upside being uncovered
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Doray Minerals Limited | ASX: DRM 15
Andy Well - high-grade gold lodes open at depth
Judy Lode
Wilber Lode
Suzie Lode
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Doray Minerals Limited | ASX: DRM
2015FY
Sep15Qtr
Dec15Qtr
2016FY guidance
Gold Produced (oz) 88,736 25,690 21,507 78-85,000
C1 cost 607 546 680 600-700
AISC 1,165 1,050 1,100 -
Gold Sold 89,434 25,441 22,249
Gold Price (A$/oz) 1,495 1,532 1,535
Margin/oz 330 482 435
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Andy Well – Robust production and marginsF
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Doray Minerals Limited | ASX: DRM
Wilber North
• High-grade drilling results below current Reserve
Judy Lode
• Second high-grade mine open at depth
Suzie Lode
• Potential for third high-grade u/g mine beneath open pit
Surface Targets
• Building up a target pipeline
Gnaweeda JV
• Potential for additional high-grade ore within trucking distance
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Growing a new high-grade gold camp…
Multiple opportunities exist to further extend Andy Well mine life
*Refer ASX announcement dated 30 September 2015
34% increase@ $17/oz
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Doray Minerals Limited | ASX: DRM
Wilber North drilling intersects new high-grade zone
18*See ASX release dated 4 February 2016
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Doray Minerals Limited | ASX: DRM 19
Judy Lode – 2nd high-grade gold lode
High-grade results beneath Judy North indicate further underground potential
*Refer December 2015 Quarterly Report
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Doray Minerals Limited | ASX: DRM 20
Additional high-grade ore within trucking distance
Gnaweeda JV (Doray 88%)
Doray paid A$0.5M for 88%
• Chalice Gold Mines (ASX:CHN) 12%
Results confirm potential for additional high-grade ore within trucking distance of Andy Well
Turnberry - RC drilling results:
• 3m @ 10.1g/t Au from 149m
• 5m @ 17.4g/t from 71m,
• including 1m @ 79.8g/t Au
• 4m @ 17.9g/t Au from 45m,
• including 1m @ 63.3g/t Au
• 4m @ 7g/t from 127m
• 26m @ 2.6g/t from 82m
• incl. 2m @ 11.45g/t
New farm-in agreement with Mithril (ASX:MTH) expands land position
Refer to ASX Announcement dated 11 June and 14 October 2015
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Deflector Gold Project
High-grade
gold with
by-product
credits
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Doray Minerals Limited | ASX: DRM
Second high-grade/low-cost WA gold project
60kozpa Au (+Cu+Ag) with 6-year initial mine life
By-product credits deliver low AISC
Fully-funded
• A$65M debt facility (incl. $5M overrun)
• A$13.8M placement
• A$12.9M fully underwritten rights issue
Relatively simple process flowsheet
• Gravity circuit - Au doré bars
• Flotation circuit – Au/Cu/Ag concentrate
Production scheduled for mid CY2016
Open pit mining commenced (Feb 2016)
Off-take agreement signed with MRI Trading AG*
Power station contract signed with Pacific Energy
Substantial exploration upside
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Deflector – a transformational acquisition
Deflector reduces risk, increases production and profit margin and extends mine life
*Refer ASX announcement dated 24 February 2016
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Doray Minerals Limited | ASX: DRM
Deflector – high-grade underground gold mine
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Utilising the Andy Well experience to optimise funding, construction and operation
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Doray Minerals Limited | ASX: DRM 24
Deflector – Summary processing flowsheet
Average LOM throughput 454ktpa(480ktpa design capacity)
60kozpa Au2,500tpa Cu
Average LOMgravity recovery >60%
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Doray Minerals Limited | ASX: DRM
On track for mid-2016 start-up
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Utilising the Andy Well experience to optimise funding, construction and operation
Jan Feb Mar Apr May Jun
Plant construction
Open pit mining
Underground mobilisation
Underground development
Plant commissioning
Production
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Doray Minerals Limited | ASX: DRM 26
Deflector on track for mid-2016 start-upF
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Doray Minerals Limited | ASX: DRM
Au-Cu targets (“Deflector-style”)
• EM survey recently completed over “Deflector Corridor” identifies several targets for drill testing
Au-only targets (“Gullewa-style”)
• Historical high-grade gold field
• Previously mined during much lower gold price environment
• Average drill hole depth only 34m
VMS Potential?
• Proximity to Golden Grove
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Deflector - Substantial exploration upside
A high-grade Au-Cu-Ag deposit with a gold project thrown in for free
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Exploration and Growth
Building on
our success
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Doray Minerals Limited | ASX: DRM
Targeting sustainable production and profit growth
Near-term mine-life extensions
Andy Well in-mine
Andy Well near-mine
Gnaweeda JV
Deflector near-mine
Mid-term production growth
Horse Well JV
New project
Long-term blue-sky
West Gawler
New project(s)
29
One of Doray’s key points of difference is our commitment to greenfields exploration and discovery as a source of future growth
Mid-term goal - 240-250koz pa of high-margin gold production from 3 operations
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Doray Minerals Limited | ASX: DRM
JV with Alloy Resources (ASX:AYR) in NE goldfields
• Doray 60% (opportunity to earn 80% by spending $2M over next 12 months)
Geological and structural similarities to highly endowed Yandal Belt with Granny Smith and Jundee deposit analogues
Significant results from initial drilling:
• 65m @ 2.6g/t Au, incl. 13m @ 8g/t Au
• 23m @ 1.2g/t Au
• 13m @ 0.9g/t Au
Follow-up drilling intersects further mineralisation
• 16m @ 7.2g/t Au, incl. 6m @ 16.3g/t
• 44m @ 1.4g/t Au, incl. 3m @ 6.3g/t Au
Open at depth and down plunge
Numerous regional targets to be tested
30
Horse Well – a new greenfields gold discovery
* Refer ASX Announcements dated 10 December 2014 and 21 October 2015
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Doray Minerals Limited | ASX: DRM 31
Dusk ‘til Dawn – a Granny Smith lookalike?
Wide zone of gold mineralisation located in flexure on granite contact
*Refer ASX Announcements dated 10 December 2014 and 21 October 2015
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Doray Minerals Limited | ASX: DRM 32
Django – Widespread gold anomalism
*Refer December 2015 Quarterly Report
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Doray Minerals Limited | ASX: DRM
Farm-in with Iluka Resources (ASX:ILU) in western Gawler Craton, South Australia
• Doray earning 80% by spending $7M over 6 years
20,000sqkm land position with geological similarities to Tropicana and Fraser Range
No previous precious/base metal exploration
2,000 shallow drill holes with basement samples – never previously assayed
Maiden drilling campaign completed @ “Target A”
Ability to leverage off existing Iluka infrastructure
33
West Gawler – “elephant country”
Numerous large gold and pathfinder element anomalies overlying structural targets
Landmark farm-in over highly prospective and underexplored land position
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Doray Minerals Limited | ASX: DRM
Doray Minerals – a compelling value proposition
ROBUST PRODUCTION AND CASH FLOW
• Highest grade gold operation in Australia
• On track to achieve upper end of 2016FY production guidance (78-85koz)
• Exposure to AUD gold price
• AUD gold price hedging reinforces attractive operating margins
NEAR-TERM PRODUCTION AND PROFIT GROWTH
• First production from Deflector scheduled for mid-2016CY
• Second high-grade low-cost project to double production and increase margins
• LOM production of 60kozpa (+Cu/Ag)
• Targeting average AISC of <A$1,000/oz across Deflector and Andy Well
SUBSTANTIAL EXPLORATION UPSIDE
• Wilber North, Judy and Suzie Lodes offer potential for near-term mine life extensions
• Deflector Project has substantial unrealised exploration potential
• Highly prospective regional exploration portfolio delivering results
34
Doray has a unique combination of cash-flow, growth and exploration upside
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Doray Minerals Limited | ASX: DRM
Doray is on the cusp of a significant increase in production and cash flow from mid-2016CY
Track record of rapidly converting exploration success into commercial production whilst executing a disciplined approach to project funding and balance sheet management
By mid-2016 we will:
• have funded and built 2 new high-grade gold projects within 4 years
• be producing 140koz pa and targeting AISC <A$1,000/oz (US$750/oz)
• Be generating significant free cash flow even after debt repayment, overheads and exploration
Remains undervalued against peers with numerous near-term catalysts to create further value for shareholders
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Doray - Australia’s next great gold company
Doray Minerals Limited is Australia’s highest grade gold producer, a proven project developer and an award-winning explorer with substantial upside
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www.dorayminerals.com.au
Building
Australia’s next
great gold
company
For further information contact:Cameron PeacockInvestorrelations@dorayminerals.com.au
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