Rio Tinto Exploration strategy and exploration in Australia€¦ · · 2015-08-03Ian Ledlie...

Ian Ledlie

Exploration Director – Australia-Asia Region

Diggers and Dealers 2015

3 August 2015

Rio Tinto Exploration strategy and exploration in Australia

© 2015, Rio Tinto, All Rights Reserved

Cautionary statement

This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio

Tinto”). By accessing/attending this presentation you acknowledge that you have

read and understood the following statement.

Forward-looking statements

This document contains certain forward-looking statements with respect to the

financial condition, results of operations and business of the Rio Tinto Group. These

statements are forward-looking statements within the meaning of Section 27A of the

US Securities Act of 1933, and Section 21E of the US Securities Exchange Act of

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“expects”, “may”, “should”, “will”, “target”, “set to” or similar expressions, commonly

identify such forward-looking statements.

Examples of forward-looking statements include those regarding estimated ore

reserves, anticipated production or construction dates, costs, outputs and productive

lives of assets or similar factors. Forward-looking statements involve known and

unknown risks, uncertainties, assumptions and other factors set forth in this

presentation.

For example, future ore reserves will be based in part on market prices that may vary

significantly from current levels. These may materially affect the timing and feasibility

of particular developments. Other factors include the ability to produce and transport

products profitably, demand for our products, changes to the assumptions regarding

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uncertainty.

In light of these risks, uncertainties and assumptions, actual results could be

materially different from projected future results expressed or implied by these

forward-looking statements which speak only as to the date of this presentation.

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undertake any obligation to publicly update or revise any forward-looking statements,

whether as a result of new information or future events. The Group cannot guarantee

that its forward-looking statements will not differ materially from actual results. In this

presentation all figures are US dollars unless stated otherwise.

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This presentation contains a number of non-IFRS financial measures. Rio Tinto

management considers these to be key financial performance indicators of the

business and they are defined and/or reconciled in Rio Tinto’s annual results press

release and/or Annual report.

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RTX Traditional Owner Engagement It often starts with exploration

Holistic and lifecycle approach to Indigenous engagement across

Rio Tinto

Four key platforms

Regional development and land access agreements

Community capacity building

Cultural heritage and land management

Funding bodies that support Indigenous-directed programmes

Rio Tinto supports the national Recognise campaign for

constitutional recognition of Aboriginal and Torres Strait Islander

Relationships

Respect

Opportunity

3

© 2015, Rio Tinto, All Rights Reserved 4

Aluminium

Copper & Coal

Diamonds & Minerals

Iron Ore

Greenfield projects

Brownfield projects

Updated June 2015

Rio Tinto Exploration 2015 operational footprint Exploring for 8 different commodities across 18 countries


2002

Resolution

Copper

5

65 year track record Discovery success

5

1947

Lac Allard

Ilmenite

1953

Elliot Lake

Uranium

1955

Weipa

Bauxite

1956

Palabora

Copper

1960

Kirka

Borates

1962

Tom Price

Iron Ore

1968

Rössing

Uranium

1970

Tarong (QLD)

Coal

1972

Paragominas

Bauxite

1979

Argyle

Diamonds

1982

Moro de Ouro

Gold

1983

Lihir

Gold

1986

Kintyre

Uranium

1996

Diavik

Diamonds

2004

Simandou

Iron Ore

2008

Bunder

Diamonds

2008

Sulawesi

Nickel

2008

Mutamba

Ilmenite

1960

Seirrita

Copper

1955

Mary Kathleen

Uranium

1964

Panguna

Copper

1968

OK Tedi

Copper

1972

Richards Bay

Ilmenite

1977

Kelian

Gold

1984

Kaltim Prima

Coal

1990

Century

Lead-Zinc

1996

Las Cruces

Copper

2000

PRC

Potash

2009

Jadar

Lithium

2005

Caliwingina

Iron Ore

2005

La Granja

Copper

2007 Chapudi

Coal

1991

Corumba

Iron ore

2011

Amargosa

Bauxite

1996

Sepon

Copper

2013

Saskatchewan

Potash

1956

Sangaredi

Bauxite

2004

Eagle

Nickel

2004

Constancia

Copper

1999

Murowa

Diamonds

2014

Yandi Braid

Iron Ore

19

47

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

20

10

20

13

20

16

Australian discoveries since 1990 Founding discoveries for key product groups

© 2015, Rio Tinto, All Rights Reserved 6 *sold to Vale in 2009 **sold to Lundin in 2013 ***sold in 2014

Saskatchewan

2012, potash

Eagle

2004, nickel**

Resolution

2002, copper

La Granja

2005, copper Amargosa

2011, bauxite

Potasio Rio Colorado

2000, potash*

Simandou

2004, iron ore

Bunder,

2008, diamonds

Mutamba

2008, mineral sands

Jadar

2009, borate/lithium

Sulawesi

2008, nickel laterite***

Caliwingina

2005, iron ore

Yandi Braid

2014, iron ore

Rio Tinto significant discoveries – 2000 to 2014 Majority of Rio Tinto discoveries since 2000 are outside the OECD

Aluminium

Copper & Coal

Diamonds & Minerals

Iron Ore

Greenfield projects

Brownfield projects


The key to value creation is rigorous opportunity prioritisation

7

Exploration

Accountability

Target

Generation

Target

Testing

Project

of Merit Order of

Magnitude Area

Selection

Discovery Pre

Feasibility Feasibility

Product Group

Accountability

100% of targets

• Exploration on an industry-wide basis is a high-risk activity

• Success - the creation of value -demands ongoing rigorous

testing and prioritisation of opportunities

• Getting the process right requires technical expertise,

high-quality management and rigorous prioritisation

Mine & Process

Discovery

Production

0yrs

~10yrs

~25yrs

Tim

eli

ne

<0.1% of targets


Why has RTX been a successful “Major” exploration team?

Safely and effectively conduct exploration in all jurisdictions

World class social and environment “license to operate”

Longevity, stable exploration strategy, company and corporate

executive support and sustained funding

Prime Terranes and global prioritisation to aid balancing technical and

operational risk across greenfield and brownfield projects

Focused and motivated team, fast adoption of key research

Fieldwork and drilling

Treat exploration like a business and pay our way - in the last decade

• US$1.7b spent on greenfield exploration

• US$2.2b generated from pre-decision to mine divestments

8


Exploration spend and discovery rate Significant mineral discoveries & expenditures (excluding bulk commodities)

Significant* mineral discoveries (excluding bulk commodities)

Western world: 1996 - 2014

0

50

100

150

200

0

5

10

15

20

25

1996 2000 2004 2008 2012

Number of discoveries

Worldwide exploration expenditure (US$B)

Exp

lora

tio

n e

xp

en

dit

ure

(real 2014 U

S$B

)

Discoveries

Expenditures

Nu

mb

er

of

Dis

co

veri

es

Caution: Incomplete discovery data in recent years

*Significant defined as >100Koz Au, >10Kt Ni, >100Kt Cu equiv, 250Kt Zn+Pb, >5Moz Ag, >5kt U3O8

Source: Discoveries & expenditures - MinEx Consulting June 2015

Estimated spend (1996 – 2014): $155B

Total number of discoveries (1996 – 2014): 1031

Incomplete

discovery data

in recent years

9


Industry context – Australia Australian exploration spend continues to decline

Drilled metres on existing (brownfield) and new (greenfield) projects

All mineral commodities

10

0

2

4

6

8

10

12

$0

$1

$2

$3

$4

$5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Metres drilled; existing deposits

Metres drilled; new deposits

Expenditures

Exp

en

dit

ure

s (

real U

S$B

)

Metr

es d

rilled

(m

illio

ns)

Expenditures 2015

estimated

spend:

US$B1.1

Source: Australian Bureau of Statistics - From July 2000 value data no longer contains wholesale sales tax.

*2015 expenditures based on an estimate (actual expenditure from Jan–Mar: US$B0.2)


Non-technical barriers to exploration (Australian Government Productivity Commission Inquiry – 2013)

• Increasingly longer time frames

from concept to testing are

impacting success rates

• In many instances, the first year

of a licence period can be

exhausted by the need to gain

the necessary regulatory

approvals truncating the time left

for actual exploration activity

A A work program must be submitted with the application, but may not be part of

the decision-making process.

B Jurisdictions require different environmental, heritage and land access

agreements to be completed at different stages of the exploration licence

approval process.

Source: Australian Government Productivity Commission Inquiry Report September 2013

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Application for exploration licencea

Public notification

Scope for public comment (some jurisdictions)

Environmental assessment (some cases)

Exploration licence granted

Works and access approvals and agreements

Exploration commences

Land access agreements and

compensation for landholders

Native title agreement

Heritage surveys

Other land access agreements

Works approval

Environmental approvals

Other approvals as required

b


Non-technical challenges to exploration – Australia & Canada Timeframes for license access for exploration

12

Exploration Process

Australia

Average timeframe

(months)

Canada

Average timeframe

(months)

Concept 6 - 12 6 – 12

Application for claims 9 0.25

Permits or work access

approvals for ground work*

(sampling, drilling, etc)

18 – 60 2

Total (months)

(years)

~ 33 – 75

~ 2.7 – 6.2

~ 8 – 14

~ 0.6 – 1.2

Trend in time Slow improvement Increase

• Timeframes to

commence ground

disturbing work are

significantly shorter in

Canada than Australia

• In WA the “POW” is

now down to

approximately 28 days,

from 45 days in 2012

• Improvements are

happening but not in all

States and not fast

enough

Source: Australia - Rio Tinto Exploration Pty Ltd experience post 2000 ; WA government – July 2015;

Not all States have the same trend

*Includes negotiations with all stakeholders


Longevity of multi-commodity exploration across Australia

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A selection of RTX

discoveries-divestments:

• Century/Dugald River Zinc

• Kintyre Uranium

• Peak Gold Mine

• Honeymoon Well Nickel

• Westmoreland Uranium

• WIM 150 HMS

• Ellendale Diamonds

• Admiral Bay Zinc

• Jowlenga HMS

• Uley Graphite

Continuing to replenish the

pipeline

100% RTX and through JV’s with

key partners in prime terranes

Recent & current JV’s

• Cameco Australia Pty Limited

• Pepinnini Minerals Limited

• DPG Resources Australia Pty

Limited

• TNG Limited

• Aeon Metals Limited

• Laramide Resources Limited

• Intercept Minerals Limited

• Tasman Resources Limited

Active Programmes

Aluminium

Copper & Coal

Diamonds & Minerals

Iron Ore

Greenfield projects

Brownfield projects

Past discoveries

Outcrop & shallow basement

(the highlighted areas serve as an indication only)

Rio Tinto Exploration historical tenement footprint

Rio Tinto Exploration 2015 tenement


We have access to vast quantities of geoscientific data

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Australia surface samples*: >3.5 million

Rio Tinto Exploration pulp store + diamond legacy samples in

Australia is a valuable and accessible archive

Where are the equivalent petrophysical data

RTX Global Public Geochemical Database (GPG) ; Total global surface samples: >10 million

RTX Public Surficial Geochemistry, Australia

n > 3,300,000 samples (Mar 2014)

Pilbara public data capture >570,000 surface

samples; >60,000 drillholes

Gridded stream sediment Zn geochemistry


Eleven propylitic altered samples 250 -

1,600m from mineralisation

Once fertile propylitic halos are identified use

chlorite to assess fertility and vector to source

Resolution Case Study

Modified from Holliday and Cooke, 2007; AMIRA P765A

15

Greenrocks Vision Epidote and Chlorite vectoring - A distal indicator of porphyry Cu deposits

Rio Tinto Exploration is the only exploration company with the in-house capability to apply such techniques


New technologies

and concepts

Data

Integration

Traditional

methods

RTX mineralogy centre –

Greenrocks & RIMS

Improving discovery rates Combination of old and new technologies and effective data integration yielding knowledge

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VK1 gravity

gradiometer

Discovery

Success


Uncover

To improve discovery rates, in particular in areas of post mineral cover,

we need:

Improve industry-academia-government collaboration

Focus on data compilation and acquisition to deliver critical insights

to drive discovery

Increase the search radius by targeting alteration footprints

RTX Commitment by sponsoring AMIRA Roadmap, member of

Executive and Geoscience committees, petrophysical data contribution

AMIRA Roadmap (Stage 1) was launched by Minister MacFarlane on

the 22nd July

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RTX Mineral Industry Engagement in Australia

Links to geological surveys and universities

across Australia

Employment of graduates throughout cycle

Sponsorship of 1 on 1 research projects and

through collaboration

Adopting global collaborative research

outcomes into operational exploration tools in

Australia

RTX is a potential R&D / Technology

Development partner

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Conclusions

• The mineral exploration industry has entered an extended period of cyclical adjustment

• The minerals exploration industry has come off a decade of unprecedented expansion

• However, in that period discoveries have generally fallen below trend

• Over the last decade have witnessed significant uplifts in resources through brownfield drill-outs

• The capital markets remain largely closed to Juniors

• Regulatory hurdles continue to rise and time to granted title is generally on the rise

• The industry has yet to develop an effective toolkit to allow cost effective exploration through

cover

• Finally, to sustain the significant production expansion the mining industry has witnessed over

the past decade new high quality discoveries are required

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Rio Tinto Exploration strategy and exploration in Australia€¦ · · 2015-08-03Ian Ledlie...

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