OZ MINERALS UK ROADSHOW OCTOBER

Transcription

1 OZ MINERALS UK ROADSHOW OCTOBER

2 DISCLAIMER This presentation has been prepared by OZ Minerals Limited ( OZ Minerals ) and consists of written materials/slides for a presentation concerning OZ Minerals. By reviewing/attending this presentation, you agree to be bound by the following conditions. No representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information, contained in the presentation or of the views, opinions and conclusions contained in this material. To the maximum extent permitted by law, OZ Minerals and its related bodies corporate and affiliates, and its respective directors, officers, employees, agents and advisers disclaim any liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or its contents, including any error or omission there from, or otherwise arising in connection with it. Some statements in this presentation relate to the future and are forward looking statements. Such statements may include, but are not limited to, statements with regard to intention, capacity, future production and grades, projections for sales growth, estimated revenues and reserves, targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow and debt levels, the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be (but are not necessarily) identified by the use of phrases such as will, expect, anticipate, believe and envisage. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside OZ Mineral s control. Actual results and developments may differ materially from those expressed or implied in such statements because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation. Given these risks and uncertainties, undue reliance should not be placed on forward-looking statements and intentions which speak only as at the date of the presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, OZ Minerals does not undertake any obligation to publicly release any updates or revisions to any forward looking statements contained in this presentation, whether as a result of any change in OZ Minerals expectations in relation to them, or any change in events, conditions or circumstances on which any such statement is based. Certain statistical and other information included in this presentation is sourced from publicly available third party sources and has not been independently verified. OZ MINERALS PAGE 2

3 SNAPSHOT OZ MINERALS PAGE 3

4 OZ MINERALS WHY INVEST? Our strategy Highly regarded, strongly performing Australian copper asset in Prominent Hill. Strong operating cash flows $388 million for first half Active capital management recent capital return and current buy-back. Significant cash balance, no debt actively looking for value adding acquisitions. Developing project pipeline Carrapateena copper project. Major exploration campaign in new copper province around Prominent Hill. Paying dividends 30-60% of normal operating profits. Experienced management team. Leverage to copper plus gold credits. OZ MINERALS PAGE 4

5 OZ MINERALS - STRATEGY Why invest? Copper focus. Achieving consistent excellence in performance. Building a project pipeline. Major exploration commitment. Capital management discipline. OZ MINERALS PAGE 5

6 OZ MINERALS - SNAPSHOT Prominent Hill copper operation 100,000t to 110,000t per annum copper plus gold by-product credits. In production since Carrapateena Newly acquired significant copper deposit exploration and studies underway to bring project on by Share price - $ Market capitalisation - $3.5 billion. Issued share capital million. Shareholders: Institutional 66% Retail 34% Australian 60% Offshore 40% Equity investments ~42% of Toro Energy ~20% Sandfire Resources ~13% IMX Resources Growth strategy Looking to deploy cash balance for value adding opportunities - $750 million allocated for potential M&A. Exploration - $60 million program underway to discover more Prominent Hills. Working to develop Carrapateena exploration project. OZ MINERALS PAGE 6

7 FINANCIAL OVERVIEW OZ MINERALS PAGE 7

8 H FINANCIAL OVERVIEW Strong revenues and cash flow for first half 2011 Record revenue from Prominent Hill of $632.7 million. EBITDA of $384.2 million. Underlying NPAT of $189.1 million.* Statutory NPAT of $113.9 million.** Cash flow from operations of $388.3 million. Significant cash balance $905.6 million at 30 June Increased returns to shareholders Dividend 30 cents per share H1 - $97 million, dividend yield 6.5%. Capital return - $389 million paid in June * excluding impairment & litigation settlement. ** major variances include FX, litigation settlement expense, Toro impairment, Impairment reversal in OZ MINERALS PAGE 8

9 MARKETS $ 10,500 Copper price $ 1,900 Gold price 9,500 8,500 1,700 7,500 1,500 6,500 1,300 5,500 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 1,100 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Source: Bloomberg US$/t A$/t Source: Bloomberg US$/oz A$/oz A$ $18.00 Share price A$/US$ 1.10 A$/US$ $16.00 $ $ $10.00 $8.00 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Source: Bloomberg OZ MINERALS PAGE Jan-11 Mar-11 May-11 Jul-11 Sep-11 A$/US$ Average A$/US$

10 OPERATIONS OVERVIEW OZ MINERALS PAGE 10

11 SOUTH AUSTRALIA Very favourable mining jurisdiction. Close to road and rail. Grid power to site. Water supply. Export routes via Darwin and Adelaide. Highly competitive shipping times. Access to extensive, 7,000km 2, area of exploration ground (including IMX JV ground). OZ MINERALS PAGE 11

12 PROMINENT HILL SITE NORTHERN WASTE DUMP ROM PAD SOUTHERN WASTE DUMP MALU PIT ANKATA DEPOSIT AREA TAILINGS DAM PROCESSING PLANT Commissioned in February Flat terrain. Fly in fly out workforce competitive rosters and conditions, four year employee agreement in place. Workforce of VILLAGE High standard accommodation. Current operation open pit. Underground being developed and on track to commence Q OZ MINERALS PAGE 12

13 PROMINENT HILL PRODUCTION Product: Production H1 2011: Production guidance 2011: Mine and Plant: High grade (~50% Cu), high quality, copper concentrate. 53,725t contained copper, 86,129oz gold. Contained copper 100,000t to 110,000t. Contained gold 150,000oz to 160,000oz. Open pit, mine, crush, grind, flotation. Cash costs: Competitive C1 cash costs US71.8c/lb for Q C1 cost guidance 2011: Workforce: <US70c/lb. Approximately 1,000 (including contractors). OZ MINERALS PAGE 13

14 PROMINENT HILL Q UPDATE PROMINENT HILL PRODUCTION STATISTICS JUN QTR '11 SEP QTR '11 MINED ORE (TONNES) 2,840,117 2,807,269 9,121,697 YTD '11 WASTE (TONNES) 15,434,750 14,220,747 43,417,322 MINED GRADE COPPER (%) GOLD (G/T) ORE MILLED (TONNES) 2,431,303 2,484,882 7,449,020 MILLED GRADE COPPER (%) GOLD (G/T) Good throughput, recovery. Strong copper production. Lower gold grades responsible for lower production. RECOVERY COPPER (%) GOLD (%) COPPER CONCENTRATE PRODUCED CONTAINED METAL IN CONCENTRATES TOTAL CONCENTRATE SOLD TONNES 51,731 49, ,062 COPPER (TONNES) 28,017 27,217 80,942 GOLD (OZ) 44,219 36, ,193 (DM TONNES) 64,737 40, ,062 C1 CASH COSTS US CENTS PER LB OZ MINERALS PAGE 14

15 UNDERGROUND DEVELOPMENT Q UPDATE Excellent progress on underground development. Orebody accessed and first level commenced. Raise boring of ventilation underway, paste fill commenced. On track for first ore to be produced from stoping by Q Full mining rates (1.2Mtpa) by Q Contributes 25,000t copper and 12,000oz gold per annum. Will enable production of 100,000t to 110,000t copper to be maintained. Pre-production capital increased to $148 million (<10% increase) due mainly to higher mining costs and extra plant requirements. OZ MINERALS PAGE 15

16 GROWTH OZ MINERALS PAGE 16

17 NEAR MINE EXPLORATION Now drilling from underground. Munda zone drill out Decline extension to provide access beneath pit in Under pit resource drilling 2012/2013. Aim to add 1-3 years mine life from immediate nearmine program. Deeper infill drilling to follow with access. OZ MINERALS PAGE 17

18 UNDERGROUND DRILLING - CONCEPTUAL TIMING OF DRILL PROGRAMS Plan view 2013 Remaining Resource tested beyond ANKATA MUNDA MALU OZ MINERALS PAGE 18

19 PROMINENT HILL Q3 DRILLING RESULTS PROMINENT HILL LONG SECTION 2011 OZ MINERALS PAGE 19

20 REGIONAL EXPLORATION NEW MINERAL PROVINCE Coober Pedy EL3445 Gravity Shadwell IMX tenements IP Surveys in Progress EL3830 EL3729 EL4429 EL3518 Airborne Magnetic Survey completed in Q4 20km OZ MINERALS PAGE 20 Bluebird Arapiles EL4283 EL3730 Rouse EL4132 EL4429 EL4429 Blue Duck Cressida EL3795 Epsilon Taurus Near Mine EL4025 Prominent Hill EL3730 Neptune Metis Future OZ Minerals Prospects IMX JV target areas EL4390 OZ Minerals tenements EL3387 EL4446 Perseus Hallifax Danae Hill Sizeable exploration program. Exploring for new Prominent Hills. Large, approximately 7,000km 2 tenement area - 4,000km 2 OZ Minerals - 3,000km 2 IMX JV $17 million spent on regional exploration in H1. Detailed geophysical surveys undertaken, more in progress. Three drill rigs dedicated to the OZ Minerals regional program and two rigs for IMX JV exploration. Many holes have intersected IOCG alteration. Some wide intervals of low-grade copper mineralisation. Program continues.

21 CARRAPATEENA COPPER GOLD DEPOSIT IN SOUTH AUSTRALIA Acquired in May Large IOCG deposit similar to Prominent Hill. In exploration phase, drilling underway. An initial Inferred Resource of 203Mt at 1.31% copper, 0.56g/t gold and 270ppm U 3 O 8 in the southern area of the Carrapateena deposit reported by OZ Minerals. OZ MINERALS PAGE 21

22 CARRAPATEENA COPPER GOLD EXPLORATION SOUTH AUSTRALIA Q UPDATE * These are early stage studies which occur before pre-feasibility and feasibility studies and any subsequent decision to mine. Good progress on Carrapateena. Native title agreement reached for exploration activity. Exploration drilling commenced. Exploration camp construction underway. Northern target-area first exploration priority. Infill of southern area. Scoping studies* commencing. Mining options: sub-level open stoping, sub-level caving, block caving and hybrid. Mining inventories and rates being developed. Production schedules/early stage costs being investigated. OZ MINERALS PAGE 22

23 CARRAPATEENA DEPOSIT - INITIAL INFERRED RESOURCE TO SOUTH Chalcopyrite shell in yellow Exploration & Inferred Resource status area Exploration area Historic drillhole collar Historic drillhole trace N Target range: 1% Cu, 0.4g/t Au, 140ppm U 3 O 8, 4g/t Ag Mineralisation not well understood, potential for extension to the east Main deposit Potential for extension at depth Mineralisation open to the east Exploration area Exploration & Inferred Resource status area Inferred resource: 0m 250m 1.31% Cu, 0.56g/t Au, 270ppm U 3 O 8, 6g/t Ag OZ MINERALS PAGE 23

24 CARRAPATEENA CROSS SECTION N LOOKING NORTH HIGH COPPER GRADES -100 PLAN N ±50m clip Bornite shell in blue Chalcopyrite shell in yellow -500 Cu values 0.5 1% Cu 1 2% Cu 2 3% Cu >3% Cu CAR % Cu, 0.89g/t Au from 506m (incl. 4.78% Cu, 1.13 g/t Au from 518m) CAR031W1 1.88% Cu, 1.20 g/t Au from 582m (incl. 2.85% Cu, 1.48g/t Au from 858m) m OZ MINERALS PAGE 24 NB Holes drilled by previous owners

25 MINING OPTIONS STUDY Options: Block caving. Inclined sublevel caving. Selective mining. Stoping at higher levels, then caving. Visual representation of the Carrapateena deposit Lower mining costs <$10/t $10 20/t $20 50/t Block caving Sublevel caving Sublevel open stoping Lower development costs OZ MINERALS PAGE 25

26 CARRAPATEENA CONCEPTUAL PROJECT SCHEDULE Exploration drilling to complete initial Inferred Resource, 10,000m Option studies for mining Phase II exploration drilling to move to Indicated Resource Geotechnical drilling Pre-feasibility Exploration shaft Feasibility study Construction OZ MINERALS PAGE 26

27 BUSINESS DEVELOPMENT ACTIVELY LOOKING FOR OPPORTUNITIES COMMODITY - Copper or copper with gold. SCALE - 50,000t 150,000tpa production or future production potential. JURISDICTION - Global low to medium risk countries. TERMS - 100% or with partners depending on project. STAGE - Advanced exploration, feasibility study, development, in production. OZ MINERALS PAGE 27

28 SUMMARY High quality copper asset at Prominent Hill Consistent copper production New underground development Aggressive exploration program to extend mine life at Prominent Hill - near mine and regional Significant cash holding $750 million available for M&A Active business development Clear strategy Disciplined approach Flexibility of cash Capital management program Capital return 120 cents per share or $388.6 million completed Share consolidation completed Share buyback up to $200 million underway, 40% complete. Dividend stream 2011 Interim dividend of 30 cents per share paying out percent of normal operating profits Strongly performing commodities Good outlook for copper and gold OZ MINERALS PAGE 28

29 APPENDICES 1. NORTH WALL CUT-BACK 2. CARRAPATEENA 3. FINANCIAL INFORMATION

30 DESIGN OF FINAL PIT CROSS SECTION NORTH-SOUTH Complete August 2012 June 2014 October 2017 (Stock piles continue to be processed after mining of open-cut complete) Geotechnical studies complete. Re-optimisation using flatter wall angles to increase stability. Additional 30Mbcm over five years. Remaining life of mine strip ratio now 5.5:1. Approximately $150 million extra in NPV terms. $3/t milled extra mining costs. NB: Deferred mining provision to be lower than planned due to higher strip ratio. OZ MINERALS PAGE 30

31 CARRAPATEENA COMPARABLE WITH OTHER GLOBAL BLOCK CAVES Cu % Cu/Au grades and relative deposit size global block caves (Mt) Northparkes Lift Oyu-Tolgoi Hugo North Lift Carrapateena Northparkes Lift 2 Grasberg IOZ Northparkes E48 Grasberg DOZ Grasberg GBC 0.75 Bingham Canyon SE mine Bingham Canyon NE mine Wafi-Golpu Red Chris Cadia East Ridgeway Deeps Au g/t Operating mines Development project Size = Reserves Mt * NB: Carrapateena based on target range not Resource or Reserve Source: OZ Minerals research OZ MINERALS PAGE 31

32 COMPETITIVE ACQUISTION Exploration / Development Construction / Production EVc/lb CuEq Advanced Projects / Producers OZ Minerals/ Carrapateena OZ MINERALS PAGE 32

33 BLOCK CAVING INCREASINGLY COMMON Source: New Gold OZ MINERALS PAGE 33

34 CARRAPATEENA CROSS SECTION N LOOKING NORTH CAR051W1 2.15% Cu, 0.66 g/t Au from 608m (incl. 4.30% Cu, 0.74 g/t Au from 1174m). CAR % Cu, 0.98 g/t Au from 487m (incl. 4.63% Cu, 1.10 g/t Au from 1203m) PLAN N ±50m view Bornite shell in blue Chalcopyrite shell in yellow Cu values 0.5 1% Cu 1 2% Cu 2 3% Cu >3% Cu OZ MINERALS PAGE m

35 UNDERLYING NPAT A$M Variance Analysis - Underlying NPAT, H vs H Increased mining costs due to diesel and increased volumes partially offset by interest income. Reduction in deferred mining credit and increase in depreciation, partially offset by increased inventory adjustment Increase in copper price (32%) and gold price (25%). Increase in A$/US$ 16%. Decrease in copper sales due to lower processed grades. Increase in exploration activity partially offset by exploration impairment in (172.0) (17.0) (21.4) (10.9) (4.7) H Copper Price MARKET DRIVEN Gold Price FX Sales Volume Cash CONTROLLABLE Non Cash Exploration/ Expl. Impair't Income Tax H OZ MINERALS PAGE 35

36 C1 COST GUIDANCE Q FOREIGN EXCHANGE IMPACT Previous C1 cost guidance Sensitivity to 1 US cent movement in A$:US$ (12 months) <60 US cents 1.8 US cents Revised C1 cost guidance Sensitivity to 1 US cent movement in A$:US$ (9 months) <70 US cents 1.3 US cents Previous guidance was issued at analyst consensus rates of A$:US$ 0.96 for FY11, current guidance issued at current consensus A$:US$ Current spot rate OZ MINERALS PAGE 36

37 INCOME TAX H Tax losses fully sheltered first half earnings no tax payable for the half. Utilisation of losses in the first half partially offset by upfront deductions on Carrapateena purchase. Unrestricted tax losses of $14.8 million (tax effected) remain as at 30 June 2011 Unrestricted losses expected to be exhausted in the second half, resulting in a provision for tax in 2011 and associated tax payment in June Tax payments in 2012 would allow franking of dividends. OZ MINERALS PAGE 37

38 2011 SENSITIVITIES H Sensitivities of EBIT in 2011* A$/US$ +/- 1c Copper +/- 5% Gold +/- 5% $5.3 million $23.3 million $5.5 million Prices as at 30 June 2011 Copper Gold US$4.22/lb US$1,507/oz A$/US$ * Sensitivities are for remaining 6 months of OZ MINERALS PAGE 38

39 EXPLORATION Cambodia, $3m IMX - JV, $4m Other, $6m 2011 H1 Exploration expense Prominent Hill - Near mine, $8m Prominent Hill - Regional, $13m Exploration program primarily focused on Prominent Hill near mine and regional targets. Carrapateena exploration program to commence in H Approval of underground exploration decline, funding to come from existing budget. Cambodia in fill drilling in progress. OZ MINERALS PAGE 39

40 INCOME STATEMENT CONTINUING OPERATIONS A$M H H Revenue Cost of goods sold (210.8) (190.7) Net foreign exchange (loss)/gain (32.7) 40.8 Exploration expense (33.6) (18.2) Other expenses (24.5) (23.6) Underlying EBITDA Litigation settlement expense (60.0) - Impairment (15.2) EBITDA Depreciation and amortisation (83.3) (66.8) EBIT Net financing income Income tax expense (79.4) (160.4) NPAT from continuing operations Underlying NPAT from continuing operations Includes raw materials, consumables, direct employee costs, movements in inventory, freight and royalties Regional and near mine exploration, excludes capitalised resource development Corporate and site G&A Impairment of investment in Toro Statutory tax charge, utilisation of losses results in no cash tax payable in relation to the first half result Consistent good production and cost performance from Prominent Hill. Appreciation of the A$/US$ negatively impacted US$ denominated cash balances. Increase in exploration spend in line with strategy to increase life of Prominent Hill operations. OZ MINERALS PAGE 40

41 CASH FLOW 2011 (A$M) 2,100 Cash flow for the half year - June ,900 1,700 1,500 1,300 1, , (267.2) (44.2) (33.6) (7.4) ,664.9 (241.2) (129.5) (388.6) Opening Cash Receipts from Customers Payments to suppliers and employees PP&E and capitalised exploration Exploration FX on cash balances Other Operating cash balance Acquisitions Disposals Dividend Capital Return Closing Cash OZ MINERALS PAGE 41

42 BALANCE SHEET A$M Consolidated Jun'11 Consolidated Dec '10 Assets Cash ,334.2 Receivables Inventories Other Investments & exploration assets Property plant & equipment 1, ,288.1 Total Assets 3, ,386.9 Liabilities Creditors Net deferred tax liability Provisions Total Liabilities Net Assets 2, ,291.0 Decrease in cash balance from December due to payments for Carrapateena and distributions to shareholders Includes investment in Carrapateena and Sandfire shareholding Includes class action settlement and GST on Carrapateena Increase due to utilisation of losses. Balance sheet remains strong with significant cash holdings and no debt. Post balance date OZ Minerals entered into US$200 million debt facility with four relationship banks, facility provides prudent financing flexibility in short to medium term. OZ MINERALS PAGE 42

43 Investor contact: Natalie Worley Head of Investor & External Relations THE INFORMATION IN THIS PRESENTATION WHICH REFERS TO MINERAL RESOURCES AND EXPLORATION RESULTS AT CARRAPATEENA IS BASED IN INFORMATION COMPILED BY STUART MASTERS WHO IS A MEMBER OF THE AUSTRALASIAN INSTITUTE OF MINING AND METALLURGY (AUSIMM) (108430). STUART MASTERS IS EMPLOYED BY CS-2 PTY LTD AND IS A CONSULTANT TO OZ MINERALS. HE HAS SUFFICIENT EXPERIENCE WHICH IS RELEVANT TO THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITY WHICH HE IS UNDERTAKING TO QUALIFY AS A COMPETENT PERSON AS DEFINED IN THE 2004 EDITION OF THE AUSTRALIAN CODE FOR REPORTING OF EXPLORATION RESULTS, MINERAL RESOURCES AND ORE RESERVES. STUART MASTERS CONSENTS TO THE INCLUSION IN THE REPORT OF THE MATTERS BASED ON HIS INFORMATION IN THE FORM AND CONTEXT IN WHICH IT APPEARS. WITHIN THIS PRESENTATION REFERENCES TO EXPLORATION RESULTS RELATING TO PROMINENT HILL ARE BASED ON INFORMATION COMPILED BY MR MARCEL VAN ECK MSC WHO IS A FULL-TIME EMPLOYEE OF OZ MINERALS, IS A MEMBER OF THE AUSTRALIAN INSTITUTE OF GEOSCIENTISTS AND HAS SUFFICIENT EXPERIENCE RELEVANT TO THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITIES UNDERTAKEN TO QUALIFY AS A COMPETENT PERSON AS DEFINED BY THE JORC CODE (2004). MR VAN ECK HAS CONSENTED TO THE INCLUSION OF THE MATERIAL IN THE FORM AND CONTEXT IN WHICH IT APPEARS. ALL OTHER REFERENCES TO EXPLORATION RESULTS WITHIN THIS PRESENTATION/STATEMENT ARE BASED ON INFORMATION COMPILED BY MR A HOUSTON BSC WHO IS A FULL-TIME EMPLOYEE OF OZ MINERALS, IS A MEMBER OF THE AUSTRALIAN INSTITUTE OF GEOSCIENTISTS AND HAS SUFFICIENT EXPERIENCE RELEVANT TO THE STYLE OF MINERALISATION AND TYPE OF DEPOSIT UNDER CONSIDERATION AND TO THE ACTIVITIES UNDERTAKEN TO QUALIFY AS A COMPETENT PERSON AS DEFINED BY THE JORC CODE (2004). MR HOUSTON HAS CONSENTED TO THE INCLUSION OF THE MATERIAL IN THE FORM AND CONTEXT IN WHICH IT APPEARS.