ROMARCO - Corporate Presentation JANUARY 2012
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Transcript of ROMARCO - Corporate Presentation JANUARY 2012
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JANUARY 2012
CORPORATE PRESENTATION
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The information in this document has been prepared as of February 9, 2011. Certain statements contained in this document constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward looking information under the provisions of Canadian provincial securities laws. When used in this document, the words “anticipate”, “expect”, “estimate”, “forecast”, “will”, “planned”, and similar expressions are intended to identify forward-looking statements or information.
Specifically, this presentation contains forward looking statements regarding the results and projections contained in the February 2011 technical report of the Haile Gold project, including the expected mine life, recovery, capital costs, cash operating costs and other costs and anticipated production of the described open pit mine, the projected internal rate of return, the projected payback period, the availability of capital for development, sensitivity to metal prices, ore grade, the reserve and resource estimates on the project, the financial analysis, the timing for completion of the revised feasibility study on the Haile Gold project, the timing and amount of future production, the timing of construction of the proposed mine and process facilities, capital and operating expenditures, the timing of the receipt of permits, rights and authorizations, communications with local stakeholders and community relations, availability of financing and any and all other timing, development, operational, financial, economic, legal, regulatory and political factors that may influence future events or conditions and expected drilling activities. In addition, this presentation also contains updated resource estimates contained in the February 2011 technical reports.
Scientific and technical information referred herein has been extracted from and are hereby qualified in their entirety by reference to the aforementioned technical reports (“Technical Reports”). Joshua Snider, P.E., Thomas L. Drielick, P.E., Lee “Pat” Gochnour, M.M.S.A., John Marek, P.E. and Derek Wittwer, P.E. are responsible for preparing the Technical Reports. Each of the above referenced persons is a “qualified person” as defined in National Instrument 43-101 — Standards of Disclosure for Mineral Projects.
Such forward‐looking statements are based on a number of material factors and assumptions, including, but not limited in any manner, those disclosed in any another of Romarco’s public filings, and include the ultimate determination of mineral reserves and resources, availability and final receipt of required approvals, licenses and permits, sufficient working capital to develop and operate the proposed mine, access to adequate services and supplies, economic conditions, commodity prices, foreign currency exchange rates, interest rates, access to capital and debt markets and associated cost of funds, availability of a qualified work force, lack of social opposition and legal challenges, and the ultimate ability to mine, process and sell mineral products on economically favorable terms. While Romarco considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Actual results may vary from such forward‐looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in other Romarco filings at www.sedar.com. Forward‐looking statements are based upon management’s beliefs, estimate and opinions on the date the statements are made and, other than as required by law, Romarco does not intend, and undertakes no obligation to update any forward‐looking information to reflect, among other things, new information or future events Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources:Certain tables may use the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, however, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of a Mineral Resource is economically or legally mineable.
All figures are US$ unless otherwise indicated
Cautionary Statement
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Why own ROMARCO?
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Near term, low cost gold producer with strong project economicsLocated in a mining friendly jurisdiction with excellent infrastructure
Significant Exploration Upside – open pit & underground
Resource update Q1 2012 – open pit & underground
Solid cash position (~ US$115 million), no debt – as of December 31, 2011
70% Institutionally Held
Permits Pending – targeted by year end 2012
Extremely undervalued in today’s Market vs. Peers
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2011 HIGHLIGHTS
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Completed Feasibility Study• Economically robust• Low cost gold producer (<
$380/oz)• Low capital cost gold mine (< US
$300mm)• High grade open pit mine (2.06
g/t) Filed for all State & Federal
permits Completed 172,000 meters
exploration drill program• Discovered 2 underground targets
– Mustang & Palomino Ordered long lead-time equipment Permitted & built assay lab on
time & under budget• Successfully passed 2 of 3
requirements for accreditation• Final test to achieve
accreditation expected in 2012
Acquired 5 regional targets,drilled 3
Romarco added to following indices:
• Morgan Stanley Small Cap Index
• S&P / TSX Composite Index• S&P / TSX Global Gold Index• S&P / TSX Gold Mining Index• Dow Jones Junior Precious
Metals Index Completed C$92 million bought-
deal financing October 2012
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2012 OBJECTIVES
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NEW RESOURCE – Q1 2012
UNDERGROUND STUDY – Q1 2012
AGGRESSIVE DRILL PROGRAM
ADVANCE PERMITS targeting approvals by year-end
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FEBRUARY 2011 Feasibility completed
$292 million (1)
One of lowest capital cost projects in industry
$379/oz ($347/oz first 5 years)
One of lowest operating cost projects in industry
2.06 g/t One of highest grade open-pit projects in industry
* NOTE: As per February 9, 2011 Feasibility Study(1) As reported in Q3 MD&A November 7, 2011
INTRODUCTION TO THE
HAILE GOLD MINE PROJECT
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* All figures are in millions of dollars(1) Source: Company Disclosure
Peers include direct and indirect costs, contingency funding and previously sunk development capital (sustaining capital not included)(2) As reported in Q3 MD&A November 7, 2011
Development Capex for Primary Open Pit Asset (US$mm) (1)
(2)
LOW CAPITAL COST
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(1) Source: GFMS presentation, Gold Survey 2010 Update(2) Announced February 9, 2011
LOWEST QUARTILE AVERAGE CASH COST IN 2010 (1)
Industry Average (1) ROMARCO LOM Average (2)
Lowest Quartile (1)
LOW CASH COST
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Reserve Grade for Primary Open Pit Asset (g/t Au) (1)
(1) Source: BMO Capital Markets
HIGH GRADE FOR OPEN PIT
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Gold Price
Per oz.NPV @0% NPV @ 5% NPV @ 10% IRR %
PAYBACKYEARS
$2000 $2,261 $1,521 $1,058 69.3% 1.4
$1900 $2,094 $1,403 $970 64.9% 1.5
$1800 $1,927 $1,285 $883 60.5% 1.6
$1700 $1,760 $1,166 $796 56.1% 1.7
$1600 $1,593 $1,048 $708 51.6% 1.8
$1500 $1,426 $930 $621 47.0% 2.0
$1400 $1,259 $811 $534 42.3% 2.2
$1300 $1,092 $693 $447 37.6% 2.4
$1200 $925 $575 $359 32.7% 2.7
$1100 $758 $457 $272 27.6% 3.1
$1000 $591 $339 $185 22.3% 3.8
$950 $507 $279 $141 19.6% 4.2
$800 $257 $102 $10 10.7% 7.6
$700 $90 ($16) ($77) 4.0% 9.4
Pre-tax NPV and IRR Sensitivity to Gold Price (1)
($ Millions, except gold price)
(1) As per parameters used in February 9, 2011 Feasibility Technical Report
NPR & IRR SENSITIVITYTO GOLD PRICE
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2010 RESOURCES & RESERVES
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MEASURED + INDICATED RESOURCES AT US$1200 GOLD (1)
METRIC TONNES(000’S)
g/t CONTAINED ozAu (000’s)
MEASURED 27,782 1.89 1,684
INDICATED 25,596 1.75 1,439
MEASURED + INDICATED
53,378 1.82 3,123
INFERRED 24,944 1.34 1,072
RESERVES AT US$950 GOLD (2)
METRIC TONNES(000’S)
g/t CONTAINED ozAu (000’s)
PROVEN RESERVE 19,592 2.19 1,382
PROBABLE RESERVE 10,917 1.82 636
PROVEN & PROBABLE RESERVE
30,509 2.06 2,018
(1) From December 14, 2010 Technical Report(2) From February 10, 2011 Feasibility Study
* 2011 RESOURCE UPDATE – PENDING Q1
2012
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AERIAL OF HAILE
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US$950RESERVEPITS
3.5 KM
US$950 RESERVE PIT LIMITS
601 CHAMPION SMALL SOUTH PIT LEDBETTER SNAKE
PLAN VIEW
HAILELONGSECTION
2 0 1 0
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RESOURCE GROWTHAt year end 2010
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2011 EXPLORATION
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• Drilling focused on increasing measured and indicated resources, converting in-pit inferred resources and condemnation drilling
• Exploration focused on step-out drilling
1ST HALF 2011 2ND HALF 2011
2011 DRILLING• 172,000 meters • 11 drill rigs
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• 404 Wetlands Permit only• USACE is sole deciding
regulatory body• All other agencies
commenting agencies only – EPA, US Fish and Wildlife, etc.
• 401 Water Quality Certification
• Mining Permit• Operating Permit• Air Quality Permit• Others
Federal – USACE* State – DHEC**
* US Army Corps of Engineers** South Carolina Department of Health and Environmental Control
HGM PERMITTING
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HAILE GOLD MINE PERMITTING
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ALL
BA
SELI
NE S
TU
DIE
S R
EV
EA
LNo endangered species
No historical sites
No fish or protected wildlife
No impact on local water supplies
No impact on recreation areas
No impact on traffic patterns
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Typical PalustrineEmergent Wetland
WETLANDS ATHAILE PROPERTY
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Typical PalustrineForested Wetland
(inundated)
Non-RelativelyPermanent Waters
(intermittent stream channel)
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Record of Decision (ROD)
30 day minimum comment period
Final EIS includes comments, amendments if necessary
Prepare Final EIS and Response to Comments
45 day Review Period
Draft EIS filed
Preparation of Draft EIS
Scoping Comment Period Closes – Nov. 28, 2011
Public Scoping Meeting – Oct. 27, 2011
30 day notice period
Notice of Intent Federal Register – Sept. 23, 2011
Contractor (3rd Party) Selection – Sept. 2, 2011 (announced Sept. 26, 2011)
ENVIRONMENTAL IMPACTSTATEMENT PROCESS
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CURRENT STAGE
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HAILE EQUIPMENTBEING ASSEMBLED
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• Strong balance sheet with approximately $115M in cash and no debt(1)
• Well defined project schedules and clear development milestonesHaile Milestones and Status Report
Milestone / Activity StatusComplete feasibility study State operating permit submitted
401/404 permit submitted Resource / reserve report Expand Haile & Horseshoe Identify new targets Acquire other properties Explore regional targets
Update Resource2012 –
Q1
Draft EIS 2012
(1) As at December 31, 2011
Project Schedule for EIS
2011 2012 2013 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Feasibility Study
Optimization
Permitting
Construction
Production
Exploration
CLEAR PLAN TO BRINGHAILE INTO PRODUCTION
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BlackRock
Franklin Templeton Investments
Oppenheimer Funds
Van Eck
Sun Valley Gold
Colonial First State
Norges Bank
Tocqueville
JP Morgan
US Global Investors
Baker Steel Capital Managers
Wellington Management
Investec
URAM
Fidelity Investments
70% Institutional Ownership
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70%
TO
P 1
5
SH
AR
EH
OLD
ER
S
OF OUR SHARES ARE
INSTITUTIONALLY OWNED
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TARGET PRICEParadigm $2.75
GMP $2.50
BMO $2.25
NBF $2.10
RBC $1.50
ANALYST COVERAGE
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P/NAV vs PEER GROUP
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Romarco trades at a discount to its developer peers on a P/NAV basis(1)
Source: BMO Capital Markets, as at January 16, 2012
Median = 0.75x
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EV/RESOURCE
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Median = $126
Source: BMO Capital Markets, as at January 16, 2012
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PEER COMPARISON52 Week LOW vs. Stock Prices as per Jan. 20, 2012 close
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Exchange/ Symbol TSX:R
Share Price(1) C$1.38
Shares Outstanding (Basic) 583.8M
FD Shares Outstanding (TSM)(2) 588.8M
Market Capitalization(1) C$806M
52 Week High / Low(1) C$2.73 / C$0.88
Cash Balance (December 31, 2011) US$115M
(1) As at close on January 20, 2012(2) Includes 5.0 mm “in-the-money” options at an average strike price of C$0.47 as of January 6,
2012
Capitalization Summary
CAPITAL STRUCTURE
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2 in North Carolina• Hickory – currently
drilling• Historical production during 1800s• Historical drilling consists of 11 core
holes and 130 RC holes• Completed 5 of 16 holes from phase
one program• H KDH-11-002 encountered
10.7m of 4.5 g/t• Have budgeted for phase two
program
• Ironwood – currently drilling
• The highest grade encountered in the trenching was 9.1 g/t
• Twelve shallow RC holes and two core holes have been drilled
• Currently drilling 6-hole phase one program
• Results pending
Carolina Slate BeltTennessee
KentuckyWest Virginia
North Carolina
Georgia
South Carolina
Haile MineBuzzard
Elm
Hickory Ironwood
Bayberry
Locust
NEW REGIONALEXPLORATION TARGETS
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3 in South Carolina• Bayberry – currently
drilling• Similar host rocks, alteration and
mineralization as observed at Haile• 74 shallow rotary holes, 8 RC holes,
and 8 core holes previously drilled on the property
• Completed 15-hole phase one program• RC-2033 encountered 13.7m of
2.3 g/t, including 4.6m of 5.5 g/t• Initiated phase two program
• Locust – drill ready• Small historical oxide resource (pre 43-
101)• 34 RC and 27 core holes have been
drilled on the property• Historical Reported, highlighted
intercepts include:• 71.5 meters of 2.9 g/t• 5.1 meters of 1.5 g/t• 74.6 meters of 1.5 g/t• 65.0 meters of 1.9 g/t
• Elm – drill ready• Soil and rock chip sampling completed• Rock chip sampling has yielded 8.6 g/t
Carolina Slate BeltTennessee
KentuckyWest Virginia
North Carolina
Georgia
South Carolina
Haile MineBuzzard
Elm
Hickory Ironwood
Bayberry
Locust
NEW REGIONALEXPLORATION TARGETS
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Proven gold mine development, finance, permitting and operations experience
Romarco has the team in place to bring Haile into productionExperienced Board of Directors Strong Management & Technical Team
Leendert Krol, acting Chairman Former Brazuro, Newmont
Diane R. Garrett Former Dayton Mining, US Global Investors
James R. Arnold Former Freeport, Gold Fields – Richards Award Winner
Don MacDonald CFO QuadraFNX, former NovaGold, DeBeers, Dayton
Mining
John Marsden Consultant, former Freeport – Richards Award Winner
Patrick Michaels Portfolio Manager – Zuri-invest, Switzerland
Robert van Doorn Former Mundoro, Rio Narcea, Morgan Stanley
Diane R. Garrett, Ph.D., President & CEO Former Dayton Mining, US Global Investors
James R. Arnold, Sr. VP, COO Former Freeport, Gold Fields – Richards Award Winner
Stan Rideout, Sr. VP, CFO Former Phelps Dodge
James Berry, Chief Geologist & Regional Exploration Manager
Former BarrickBrent Anderson, Mine Manager Former Quadra, Freeport
Mike Gleason, Construction Manager Former Freeport
Jim Wickens, Process Manager Former Barrick
Ott Jackson, Health & Safety Former Freeport
Johnny Pappas, Director of Environmental Affairs
Former FreeportRamona Schneider, Environmental Manager Former Kinross
Dan Symons, Vice President, Investor Relations Former Renmark Financial
STRONG BOARD, MANAGEMENT& TECHNICAL TEAM
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SUMMARY
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Near term, low cost gold producer with strong project economicsLocated in a mining friendly jurisdiction with excellent infrastructure
Significant Exploration Upside – open pit & underground
Resource update Q1 2012 – open pit & underground
Solid cash position (~ US$115 million), no debt – as of December 31, 2011
70% Institutionally Held
Permits Pending – targeted by year end 2012
Extremely undervalued in today’s Market vs. Peers
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Brookfield Place181 Bay Street, Suite 3630 Toronto, Ontario M5J 2T3Tel: 416.367.5500Fax: 416.367.5505Email: [email protected]
Dan SymonsVice President, Investor [email protected]
CONTACT INFORMATION