The High North – NordMin Network Conference November 2012

Oslo Nick Rose, Avannaa Resources Ltd

Challenges for Mineral Exploration in Greenland

Mineral Exploration

Discovery

Development

Construction Mining

Exploration Spending in Greenland Increasing

0

100

200

300

400

500

600

1995 2000 2005 2010 2015

Mill

ion

USD

Year

Cumulative Exploration Spend in Greenland

From Mining Journal, March 23, 2012 Sourced from Raw Materials Group

From Greenland Bureau of Minerals and Petroleum

But so is Exploration Expenditure Worldwide

2012: about $12 billion to date From Metals Economics Group 2012

Challenges in Greenland Mineral Exploration

• Industry Perception of Greenland

• Investor Perception of Greenland

• Level of discovery focused exploration

• Cost of exploration

• Logistical challenges

• Cost of mining

• Developing jurisdiction

• Education and local participation

Industry and Investor Perception of Greenland

• Cold, remote and inhospitable • No mining tradition • Expensive to operate • Expensive to explore

Government highly active in promoting Greenland:

Representations and delegations to Canada, China, Korea, Australia, EU and others

GEUS promoting to technical decision makers Private companies active in selling the country as well

as their project Mining success needed Discoveries needed

Exploration Costs Drilling $400 – 600 per meter Sweden costs would typically be less than $200 / meter in most areas

Helicopter $2.500 - $3.500 / hour dependent on location and hence fuel cost Avannaa typically uses 250 to 300 hours each Summer

Logistical Challenges Short season – year cycle – get it right first time No margin for error Most logistics revolve around transport and in particular fuel Helicopter requires 180 kg fuel per hour

NE Greenland Good: 12-24 hours Bad: 48 hours or more !

2012 NW Greenland Good: 12 hours Bad: 48 hours

W Greenland Good: 5 hours Bad: 16 hours

CE Greenland Good: 8 hours Bad: 36 hours

Time to reach a hospital under good and bad conditions

So Why Bother ?

The Balanced View of Greenland

• Highly underexplored with fertile geological environments throughout

• Government and population is highly pro-mining • Egalitarian classless society, which speaks with one

voice • No issues of land ownership • Political stability and favourable fiscal regime • Well organised transparent licensing system and

regulations • Coastal access means transport much easier than

perceived • Strategic location on planet

Sea Ice August 1988

August 2009

National Snow and Ice Data Center, Boulder, Colorado

Sea Ice August 1998

August 2009

National Snow and Ice Data Center, Boulder, Colorado

Sea Ice August 2012

August 2009

National Snow and Ice Data Center, Boulder, Colorado

What Greenland Needs

• Successful operating mine

Underway: Isua iron ore, Citronen Fjord zinc, rare earths in South Greenland

• Several new BIG discoveries

Large scale long-sighted investment in exploration = Large Mining Companies

Level of Discovery Focused Exploration

Number of companies conducting discovery phase exploration

2007 - 2009: 2 to 3

2009 : 4

2010: 6

2012: 8

Who is operating in Greenland ?

Company Market Cap in US dollars

KGHM (PL) 10 billion

London Mining (UK) 290 million

Greenland Minerals & Energy (AUS) 180 milion

Jiangxi Union Mining (CN) ??

All the rest (about 25) Less than 50 million each

High Cost of Mining

• Mining company has to build all infrastructure

• No grid power

• High labour costs

• High transportation

Bigger mines needed that produce major commodities -> More Exploration

More research on arctic mining technology -> opportunity for Nordic collaboration

Developing Jurisdiction

• Taxation, immigration and labour laws are adapting to a developing resource nation, but are inherited from Denmark

• Mining Codes Best Practice needed • Health and Safety Codes • Environmental Standards • Impact Benefit Agreements – what they should contain, how

they are negotiated

Learning from other countries and networking ->opportunity for Nordic collaboration Greenland Mining Association established in September

2012 – a network of exploration and mining companies that can engage with authorities, unions and other stakeholders to build the resource sector

Education and Local Participation

• Exploration Industry worldwide challenged by shortage of well qualified manpower

• Economic geology and basic geological skills becoming de-prioritised in education

• Greenlandic citizens actively participating but need skills

Artek program – a joint study program on arctic

technology between Sisimiut Construction School and Danish Technical University

Produce Greenlandic leaders and decision makers (exploration managers, mine captains etc)

Companies may help with internships / scholarships etc. Part of Impact Benefit Agreement ?

Thank You

Nick Rose Avannaa Resources nr@avannaa.com

+45 26253529 www.avannaa.com