Cerro del Gallo CERRO RESOURCES NL. Developing gold & silver production + Exploring for precious metals

Transcription

1 Cerro del Gallo CERRO RESOURCES NL Developing gold & silver production + Exploring for precious metals CJO TSX.V & ASX October 2011

2 Cerro Resources NL Forward Looking Statements All information contained in this presentation is of a general nature. Potential investors are cautioned against using the content of this presentation, in isolation, for making investment decisions. Best efforts have been made to ensure the accuracy of information contained (at the time of preparation). Where forward targets and/or assumptions have been included all such instances are indicative only and subject to alteration and/or cancellation as and when the management of Cerro Resources NL determines. Research and advice of a qualified financial advisor or accountant are strongly recommended to anyone considering investing in listed company securities, including those of Cerro Resources NL. The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr John Skeet (as it relates to process related material), who is a Member of the Australasian Institute of Mining and Metallurgy; Mr Bill Fleshman (as it relates to the San Anton Project & Namiquipa), who is a Fellow of the Australasian Institute of Mining and Metallurgy; and Mr Trevor Leahey (as it relates to the Mt Isa Project), who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Skeet is the Chief Operating Officer of Cerro Resources NL. Mr Fleshman and Mr Trevor Leahey are consultants to Cerro Resources NL. They have sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity, which they are undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and qualified persons as this term is defined in Canadian National Instrument Mr Skeet, Mr Fleshman and Mr Leahey consent to the inclusion in the report of the matters based on their information in the form and context in which it appears. This presentation contains contain certain forward-looking information within the meaning of applicable Canadian securities legislation (collectively referred to as forward looking statements ). Generally, forward-looking statements can be identified by the use of words such as "plans", "expects", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements in this presentation include, but are not limited to, statements with respect to Cerro Resources plan and strategy, its plan to complete technical studies and mine development, and its capacity to raise additional funds to pursue its objectives. By their very nature, forward-looking statements require Cerro Resources to make assumptions that may not materialize or that may not be accurate. Although Cerro Resources believes that the expectations reflected in the forward-looking statements in this presentation are reasonable, no assurance can be given that these expectations will prove to have been correct, as actual results and future events could differ materially from those anticipated in the forward looking statements. Accordingly, viewers are cautioned not to place undue reliance on forward-looking statements. Cerro Resources does not undertake to update publicly or to revise any of the included forward-looking statements, except as may be required under applicable securities laws. Cautionary Note to U.S. Investors This presentation uses the term "measured", "indicated" and "inferred" resources. We advise U.S. investors that while these terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. In addition, "inferred" resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of inferred mineral resources will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility or other economic study. U.S. investors are cautioned not to assume that any part or all of an inferred mineral resource exists or is economically or legally mineable. 2

3 Cerro Resources Summary Cerro Resources Summary Cerro del Gallo 132Mt Gold-Silver domain resource, low strip ratio deposit Near-BFS Gold/Silver 2-stage heap + CIL project: Cerro del Gallo, Mexico - ~90,000oz p.a Aueq, 14-yr LOM 57% IRR, $US292M Net Cash Flow 1 st stage Heap Leach feasibility 1 4Q11/1Q12 - Bankable Feas. Study (1 st Stg) (1 Based on LT Metal Prices of $US1,293Au/$US23.87Ag as reported in April 2011 N43-101) Under Active Exploration : Espiritu Santo Gold/Silver, Mexico (new acquisition Oct. 2011) Greenfield prospect 3 x 2km of veined strike area identified Reconnaisance exploration and drill target identification this quarter Namiquipa Silver/Lead/Zinc, Mexico 2.5km linear strike identified by initial exploration Drilling results anticipated this quarter Jalisco state, Mexico site of the Espiritu Santo gold/silver project Mt Isa - Mt Philp Iron Haematite, Qld 36.6% Fe partial JORC inferred resource announced Oct km of added southern strike area to be included in resource 3

4 Cerro del Gallo Project Development Project data: 66% CJO - 34% Goldcorp (CJO earning to 90%) 253sq km, 12-concession San Anton package located in Guanajuato state, 270km NW Mexico City World class silver and gold district Cerro del Gallo Cerro del Gallo ( Hill of the Rooster ) 132Mt M&I JORC gold/silver domain resource High sulphidation epithermal mineralisation with low sulphide material at/near surface due to weathering 114,000m of drilling 433 drill holes Significant exploration upside around mine area 4

5 Cerro del Gallo Reserves Reserves & In-Pit Resources & In-Pit Cerro del Gallo Resources Cerro del Gallo in-pit resource Total Category M Tonnes Au g/t Total Au (Moz) Ag g/t Total Ag (Moz) Feasibility Proven and Probable Preliminary Assessment M&I Resources Proven & Probable reserves and Preliminary Assessment (PA) measured and indicated resources are reported using gold equivalent cut-off grades of 0.21 and 0.29 g/t for weathered and partially oxidized material respectively. The gold equivalent cut-off grade for the measured and indicated resources fresh rock material is 0.35 g/t. Metal prices used are US$1,020/oz gold and US$16.40/oz silver. The total In-Pit Resources were prepared by Mr Tim Carew of Reserva International LLC using a Whittle optimization. The Proven & Probable reserves and the PA Measured & Indicated resources were estimated by Mr Thomas Dyer of MDA 5

6 Cerro del Gallo Key Features Project advantages: Heap leachable weathered material At/near surface mineralisation 2 years spent on detailed project dev. Jurisdiction Project Benefit: = Lower capex/opex = Low operating costs = Facilitate fast-track to mining = Investment/jobs demand + stable area 6

7 Cerro del Gallo Flow sheet Stage 1 7

8 Cerro del Gallo April Stage 1 Feasibility & Stage 2 P.A. Study Project economics 1 Stage 1 Heap $US1,293 Au/ $US23.87 Ag Net Cash Flow undiscounted and before tax (US$M) 292 Net Present Value (6% discount rate) (US$M) 200 Internal Rate of Return (%) 57.5 First Stage Capital Payback (years) 1.7 Gold Sold (koz) Silver Sold (koz) 5, Excerpt from NI43-101, April 2011 (pp. 13,19). NB: Stage 1 project economics calculations reflect outcomes derived from P&P reserves and an optimised pit calculated using metal prices of US$1,020/oz gold and US$16.40/oz silver. 2. Mineral resources that are not mineral reserves do not have demonstrated economic viability 3. The gold equivalent ounces were calculated using the 2 year historic gold and silver prices US$1,157/oz gold and US$19.81/oz silver resulting in price ratio of 58.4 (58.4 oz of silver is equal in value to 1 ounce of gold). Estimated 14.3 yr Life of Mine Production 1 Stage 1 Heap Leach + Stage 2 CIL+ HL 2 Year Material Processed K Tonnes Strip Ratio Gold (koz) Metal Sold Silver (koz) Gold Eq. (koz) 3 Avg. 5, , , , , , , , , , , , , , , , , , Total 77, ,127 10,048 1,299 8

9 Cerro del Gallo Cerro del Gallo Feasibility Study & PA Highlights Project Cash Flow Metal Price Correlation $M $1060Au/17.77Ag (a) Cerro del Gallo Gold Silver project Net Free Cashflow (100% basis) sensitivity analysis ($USD) $1157Au/$19.81Ag (a) $1293Au/$23.97Ag (a) 2nd Stage Dual Heap Leach/CIL estimate (c) 1st Stage Feasibility Heap Leach (est 1-8 years) $1424Au/$35.81Ag (b) April 2011 Feasibility study 1 st Stage Heap Leach 4.5Mtpa, 8 year heap leach 0.45 Moz Gold and 5.32 Moz Silver produced $US87.6M Capex (100% project basis incl 20% contingency) $US491 per ounce Au Eq Opex 2nd Stage Estimate - Heap Leach / CIL 10 year expansion with 3Mtpa CIL from Yr Moz gold and 4.73 Moz silver (based on pit $US1,020/oz Gold & $US16.40/oz Silver) 45.0Mt additional in-pit M&I resource $US83M capex expansion (100% project basis incl 20% contingency) $US541 per oz Au Eq Opex for expansion (*) Net Cash flow estimate on 100% project basis, post capital payback, pre tax, undiscounted (a) Historic 3,2,1-yr average prices up to 31st March, 2011 (b) Average spot prices for March, 2011 (c) Mineral resources that are not mineral reserves do not have demonstrated economic viability 9

10 Cerro Resources Cerro del Gallo Comparable Mexican Operations Cerro del Gallo Comparisons Mexican Gold Heap Leach comparisons - Grade + P&P Reserve & In-Pit M&I Resource scale Mexican Gold Heap Leach Life of Mine OPEX comparisons 1.2 Resource Grade: Gold eq g/t Cerro del Gallo, (CJO), 77Mt El Castillo (AR), 105Mt El Chanate (GAM), 71Mt Camino Rojo (G), 75Mt Operating costs ($USD/oz) Cerro del Gallo, (CJO) El Castillo (AR) El Chanate (GAM) Camno Rojo (G) Cerro figures used above are based on the 2011 feasibility study and PA. Comparison project data from respective NI Tech. Rep. Feb 24, 2011 (AR), NI Tech. Rep. Nov 27, 2009 (GAM), NI Tech. Rep. PA Nov 30, 2009 (G). 10

11 Cerro Resources Cerro del Gallo Comparable Mexican Operations Cerro del Gallo Comparisons Enterprise Value to Reserve/Resource Ounce Ratio EV ($USD) per Reserve Ounce (P+P + In-Pit M&I) Cerro Resources Hambledon Mining NovaGold Resources Detour Gold Gabriel European Goldfields Centamin Egypt Great Basin Gold Dundee Precious Metals China Gold International EV/Reserves G-resources Argonaut Resources Rubicon Minerals Corp Greystar Resources Charaat Gold Kentor Gold Alhambra resources EV/Resources EV ($USD) per Resource Ounce (P+P + In-pit M&I) Source: Independent Cerro Resources NL broker initiation report 11

12 Cerro Resources Cerro del Gallo Regional Targets Cerro del Gallo Regional Targets Prospective target areas Secondary priority but previous scout drilling has shown promise 590g/t Ag and 3.40g/t Au 428g/t Ag and 3.52g/t Au 359g/t Ag and 1.57g/t Au 239g/t Ag and 1.91g/t Au 243g/t Ag and 1.70g/t Au 200g/t Ag and 1.05g/t Au 168g/t Ag and 1.51g/t Au 12

13 Espiritu Santo New Acquisition Project data 5,800 ha land package Located within the Mascota-Navidad Mining district in Western Jalisco, Mexico Espiritu Santo 130 km W. of Guadalajara and 50 km East of Puerto Vallarta 3x2km of known mineralized strike length Within the heart of gold/silver district crossing the Sierra Madre Occidental & the Neovolcanic Axis of Mexican Republic Good road access (20km paved and 20 gravel to property campsite) Area worked by small mining companies and prospectors but little-no modern exploration techniques/efforts undertaken The small, high grade San Quiteria Mine in San Sebastien del Qeste continues today. Navidad area discovered in early 1900 s and developed at low scale until

14 Namiquipa Drilling underway 4,400 ha silver-lead-zinc exploration project Located 145 km WNW of Chihuahua city, Chihuahua state, Mexico Includes site of former high grade La Venturosa Silver mine Historic production: moz silver ,550t lead (produced from 1.16mt mined oxide/sulphide material) ,530t zinc (from just sulphide material) Cerro controls north/south extensions of known vein systems Prospective for Fresnillo-style silver-lead-zinc vein systems Complementary to Cerro del Gallo potential cash flow (2012/2013) 11

15 Namiquipa 2.5km+ Strike 2.5km+ of primary vein strike potential identified by initial 3- hole scout drilling + ground magnetic & IP program (11 Aug 2011) Broad intervals of significant grade mineralisation intersected, including 92.87g/t AgEq over drilled length of 65.7m (NAM-003) g/t AgEq over drilled length of 23m(NAM-002) & 72.63g/t AgEq over drilled length of 11.05m (NAM-001); & 63.87g/t AgEq over drilled length of 6.5m (NAM -001) Excellent enriched grade zones encountered, including g/t AgEq over drilled length of 0.82m including 1730g/t Ag, from m to 167.0m (NAM-003) g/t AgEq over drilled length of 0.47m including 1350g/t Ag, from m to 165.0m (NAM-003) g/t AgEq over drilled length of 1.24m, from 236.5m m (NAM-002) 2 nd drill rig added end of July to increase core drilling rates 15

16 Mt Philp Fast-track Resource Growth 36.6% Fe partial inferred JORC resource (Oct 2011) Northern 2.75km of 4 km strike haematite iron outcrop 68% average iron content post simple beneficiation (crushing/ screening) in recent test work (Dec 2010) <25km of Mt Isa/ Townsville rail/electricity 1.25km of additional strike to south now under interpretation for inclusion in resource Commercialisation studies underway 16

17 Cerro Resources NL Share Structure Common Shares: 748M Market Cap: $123M Options: 46M ($0.12-$0.60) Price Sep 20 th : $ High/Low (Oct 2010-pres): $0.37/$0.11 Cash Avail: $15M as of Sep 30, Mth Avg ASX Volume: 1.8M 17

18 Cerro Resources NL A Team With Over 300 Years Experience Norman A Seckold, Non-Executive Chairman (Since July 2001) Norman Seckold graduated with a Bachelor of Economics degree from the University of Sydney in He has spent over 25 years in the full time management of natural resource companies, both in Australia and overseas. Mr Seckold has been the Chairman and Director of 9 previously publicly listed companies, including Bolnisi Gold NL and Palmarejo Silver & Gold which successfully merged with Coeur D Alene Mines in 2007; and Mogul Mining NL which drilled out the Magistral and Ocampo Gold deposits in Mexico. Mr Seckold is also currently Chairman and Director of Cockatoo Coal Limited, Augur Resources Ltd and Planet Gas Ltd. James A Crombie, Executive Vice Chairman (Since October 2010) Mr Crombie graduated from the Royal School of Mines, London, in 1980 with a B.Sc. (Hons) in Mining Engineering. Post a 20 year career within multinational mining companies and as a mining analyst and investment banker, Mr Crombie held the position of President and CEO of Ariane Gold Corp and Palmarejo Silver and Gold Corporation. He is currently President, CEO and a director of Reunion Gold Corporation, Avala Resources and Odyssey Resources Limited, CEO, Executive Vice Chairman, and Director of Queensland Minerals Limited, and a director of Arian Silver Company and Sutter Gold. Anthony J McDonald, CEO and Managing Director (Since October 2010) Tony McDonald graduated from the Queensland University of Technology, Brisbane, in 1981 with a Bachelor of Laws degree and was admitted as a solicitor in Mr McDonald has been involved in the natural resources sector in Australia and internationally for many years and in the past 10 years has been actively involved in management in the resources sector. He was an executive director of Kings Minerals NL (now Cerro Resources NL) from 1996 until March Currently, Mr McDonald is a non-executive director of Industrea Limited and Planet Gas Limited. 18

19 Cerro Resources NL A Team With Over 300 Years Experience Craig J McPherson, Alternate Director, Corporate Secretary and CFO (Corporate Secretary since March 2007) Craig McPherson graduated with a Bachelor of Commerce degree from the University of Queensland and is a member of the Institute of Chartered Accountants in Australia. Prior to joining Cerro Resources, Mr McPherson spent 10 years in senior management positions as a chartered accountant. Over this time he developed extensive experience in areas of business, financial and strategic management. Mr McPherson was a Director of San Anton Resource Corporation Inc which completed a Business Combination with Kings Minerals NL (now Cerro Resources NL) in September John S Skeet, Chief Operating Officer (Since May 2009) Mr Skeet is a Metallurgist with more than 20 years experience in the mining and resources sector. Formerly Project Manager for Bolnisi Gold NL and managing the Palmarejo Silver and Gold Project prior to the successful merger with Coeur D Alene, Mr Skeet has also been responsible for the successful development of Bolnisi s gold heap leach operation in the Republic of Georgia and was the General Manager for Valdora Minerals NL s projects and operations where he was responsible for the first gold production in the famous gold producing city of Ballarat, Victoria, in over 80 years. He has significant and relevant experience with the types of projects Cerro Resources NL is developing. Non-executive directors Richard E Keevers Robert M Bell John F Cook Nicholas Tintor 19

20 Cerro Resources NL Summary/Conclusion Seasoned team - many years of Mexico-specific experience Near-to- decision-to-mine gold/silver production Good scale, low OPEX project with excellent DCF leverage to gold price & significant exploration upside surrounding project mine site Next steps Namiquipa drilling - Continuing 2011/2012 Espiritu Santo exploration - Drill target identification 4Q2011 Mt Philp resource update - 4Q2011 Cerro del Gallo BFS Stage 1 HL - 4Q2011/1Q

21 Cerro Resources NL Contact Information North America: Australia/Asia/Europe : Jim Crombie, Executive Vice Chairman Tony McDonald, Managing Director / CEO jcrombie@cerroresources.com tmcdonald@cerroresources.com Tel: Tel: Fax: Fax: Gerri Paxton, Manager Investor Relations Greg Germon, Gen. Mgr Investor Relations gpaxton@cerroresources.com ggermon@cerroresources.com Tel: Tel: Cell: WEBSITE: 21