Doray Minerals Investor Update - ASX · Doray Minerals Limited | ASX: DRM Disclaimer This...

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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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’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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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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Near-term Production and Margin Growth

7

YTD

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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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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 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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Undervalued against ASX gold producers…

Source: Thomson One and Macquarie Research

Bubble size represents production scale

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…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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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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Andy Well - high-grade gold lodes open at depth

Judy Lode

Wilber Lode

Suzie Lode

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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

16

Andy Well – Robust production and marginsF

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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

17

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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Wilber North drilling intersects new high-grade zone

18*See ASX release dated 4 February 2016

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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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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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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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Deflector – high-grade underground gold mine

23

Utilising the Andy Well experience to optimise funding, construction and operation

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Deflector – Summary processing flowsheet

Average LOM throughput 454ktpa(480ktpa design capacity)

60kozpa Au2,500tpa Cu

Average LOMgravity recovery >60%

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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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Deflector on track for mid-2016 start-upF

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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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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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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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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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Django – Widespread gold anomalism

*Refer December 2015 Quarterly Report

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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 – 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

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Doray has a unique combination of cash-flow, growth and exploration upside

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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

35

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 [email protected]

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mailto:[email protected]

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