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ASX RELEASE 30 November 2011
Perth: Level 2 Aquila Centre, 1 Preston Street, Como WA 6151 Telephone (61) 8 9423 0111Facsimile (61) 8 9423 0133 Brisbane: Level 11, 10 Market Street, Brisbane QLD 4000 Telephone (61) 7 3229 5630 Facsimile (61) 7 3229 5631 Thabazimbi: C/O Platina and Lood Avenue, Thabazimbi 0380, South Africa Telephone (27) 14 772 3337 Facsimile (27) 14 772 3337 Northern Cape: Stand 585 Opwag, Groblershoop, Northern Cape, South Africa Telephone (27) 798 816 459 Facsimile (27) 866 838 065 Indonesia: Level 2 Zone B Wisma Raharja, JI. TB Simatupang Kav 1, Jakarta 12560 Telephone (62) 21 7884 7214 Facsimile (62) 21 7884 7215
Annual General Meeting Presentation
Aquila Resources Limited is pleased to attach a copy of the powerpoint presentation that will be delivered today by Mr Tony Poli, CEO, at the Company’s Annual General Meeting to be held at the Novotel Perth Langley Hotel. Tony Poli Executive Chairman For further information regarding this announcement, please contact Tony Poli. Telephone: (08) 9423 0111 Facsimile: (08) 9423 0133 Email address: mail@aquilaresources.com.au Visit us at: www.aquilaresources.com.au
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No representation or liability: No representation or warranty is made as to the fairness, currency, accuracy, completeness, reliability or reasonableness of this presentation, or any opinions, conclusions and forward-looking statements it contains or any other information which Aquila provides to you (whether in this presentation or otherwise). Except to the extent required by law, Aquila Resources Limited (“Aquila”) does not undertake to advise any person of any information coming to its attention (including, without limitation, correcting or updating information) relating to the financial condition, status or affairs of Aquila or its related bodies corporate.
To the maximum extent permitted by law, Aquila and its related bodies corporate and officers, employees and advisers are not liable for any loss or damage (including, without limitation, any direct, indirect or consequential loss or damage) suffered by any person directly or indirectly as a result of relying on this presentation or otherwise in connection with it.
Forward-looking statements: This presentation is heavily dependent on forecasts, projections or forward-looking statements (together the “Forward-looking Statements”). No representation or warranty is given as to the accuracy, completeness, reliability, financial feasibility, likelihood of achievement or reasonableness of any Forward-looking Statements contained in the presentation. Forward-looking Statements are by their nature subject to significant uncertainties and contingencies and no representation is made that any Forward-looking Statements will come to pass.
Seek your own independent advice: Do not rely on this presentation to make an investment decision. This presentation has been prepared without consideration of your objectives and needs (including, without limitation, the need if any for the information to be accurate, reasonable, complete or reliable) and financial situation. You should make your own independent assessment of the information in the presentation and seek your own independent professional financial, taxation and legal advice in relation to the information and before taking any action in relation to any matter contained in the presentation.
Not an offer: This presentation is not intended to be an offer for subscription, invitation, solicitation or recommendation with respect to securities in Aquila in any jurisdiction. Without limiting the foregoing, this presentation is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security in the United States, United Kingdom or Australia or to any person to whom it is unlawful to make such an offer, invitation, solicitation or recommendation. No shares or other securities in Aquila have been nor will be registered under the US Securities Act.
This presentation does not constitute an advertisement for an offer or proposed offer of securities. It is not intended to induce any person to engage in, or refrain from engaging in, any transaction.
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DISCLAIMER
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ASX 200 public company with
market capitalisation of ~A$2.3bn1
~A$171m cash and liquids2
Focus on significant projects in the key steel making raw materials of metallurgical coal and iron ore
Production and sales from Isaac Plains Coal Mine
Significant near term growth from development of West Pilbara Iron Ore Project and Eagle Downs Hard Coking Coal Project
Experienced management team with a focus on maximising shareholder value
Isaac Plains(Met/Thermal Coal)Eagle Downs (Metallurgical Coal)Washpool (Metallurgical Coal)Talwood (Metallurgical Coal)
West Pilbara(Iron Ore)
Thabazimbi (Iron ore)Avontuur (Manganese)
10Mtpa*
>30Mtpa*
1-2Mtpa* up to 4Mtpa*1. As at 29 Nov 20112. As at 30 Sep 2011* Target production on 100% basis
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COMPANY OVERVIEW
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Safety highlights for the year include:
the Aquila Coal group achieved a LTIFR1
of zero injuries per million hours worked across all operations, projects and exploration
Completion of the development of Safety Management Systems for the whole Aquila group
Decreasing number of lost time injuries over the three years, achieving 2011 frequency rate of 0.5
OUR COMMITMENT TO SAFETY
Aquila provides a safe and healthy work environment with a “zero harm” culture
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2009 2010 2011
Lost Time Injuries*
75% improvement from 2009 to 2011
* Inclusive of joint venture operations
1. LTIFR = Lost time injury frequency rate
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Community highlights for the year include:
Native Title Agreement negotiations are progressing well for mine and rail development activities for the West Pilbara Iron Ore Project
A Social Impact Assessment was conducted for the Washpool Hard Coking Coal Project with the local community of Blackwater and extended Central QLD regional community
The proposed Social & Labour Plan projects for the Gravenhage Manganese Project were ratified by the Joe MorolongLocal Municipality during May 2011
OUR CONTRIBUTION TO COMMUNITY
Aquila is committed to building strong, lasting relationships with communities and key stakeholder groups as it is integral to the success of Aquila’s projects
Donations & sponsorships totalling $350,000 for the year
Aquila’s latest initiative is to donate computers to Groblershoop High School in South Africa
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In the last 10 years, China has accounted for the entire growth in seaborne trade in iron ore
China will continue to be the dominant market for seaborne iron ore, with urbanisation and large scale infrastructure development continuing to drive steel consumption
IRON ORE DEMAND
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At 30mtpa, WPIOP will be one of the key projects adding to seaborne iron ore supply growth in the next 5 years
Significant support from China for supply growth outside of the majors
NEW IRON ORE SUPPLY
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IRON ORE PRICING OUTLOOK
High cost Chinese domestic ore
will continue to set a floor for
iron ore prices as demonstrated
by the recent decline in October
to US$120/t
Cost inflation in marginal
Chinese production is expected
to continue to increase with a
marginal cost of $161/t
(260c/dmtu) in 2013
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Seaborne supply will continue to remain heavily reliant on Queensland (Bowen Basin)
New coking coal reserves are increasingly hard to find – emerging regions of Mozambique and
Mongolia have significant infrastructure challenges
COKING COAL SUPPLY CONSTRAINTS
Metallurgical coal trade flows
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COAL PRICE OUTLOOK
Corporate interest in the Australian coal sector has remained very strong, as evidenced by the
large number of M&A transactions, despite volatile markets
Rising capital costs mean that the marginal price (for zero return) for many projects is now in
excess of US$150/t real
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Issue the Definitive Feasibility Study for the Gravenhage Manganese Project
Issue the Definitive Feasibility Study for the West Pilbara Iron Ore Project
Secure rail and port infrastructure solution for Eagle Downs
Secure West Pilbara project financing and complete non-core asset divestments
Start construction on the Eagle Downs Hard Coking Coal Project; and
Start construction on the West Pilbara Iron Ore Project
OUR 2011/12 OBJECTIVES
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Focus on Completing Phase One
Focus on Commencing Phase Two
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ISAAC PLAINS COAL MINE (50%)
RESOURCES: 127.9 MILLION TONNESRESERVES: 49.7 MILLION TONNES
EAGLE DOWNS HARD COKING COAL PROJECT (50%)
RESOURCES: 959 MILLION TONNES*RESERVES: 254.1 MILLION TONNES
COAL
AUSTRALIA
* 69Mt of the Eagle Downs resource is deemed PCI quality
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PROJECT DETAILSLOCATION25km south-east of Moranbah in Queensland’s Bowen Basin region
ESTIMATED MINE LIFE47 years
RESOURCES AND RESERVES Resources (JORC) Measured: 648Mt, Indicated: 171Mt and Inferred: 140Mt
Total Resources: 959Mt
Reserves (JORC)Proved: 206.6Mt, Probable: 47.5Mt
Total Reserves: 254.1Mt
PRODUCTSHard coking coal
AQUILA INTEREST50%
PROJECTED PRODUCTION RATEUp to 5.9Mtpa and an average of 4.5Mtpa of product from one underground longwall over the first 10 years of full production
EAGLE DOWNS HARD COKING COAL PROJECT
Proposed underground longwall mine immediately adjacent to and down dip from BMA’s Peak Downs Mine
Hard coking coal from three target seams (Harrow Creek Upper, Harrow Creek Lower and Dysart)
Product would peak at 5.9Mtpa and average 4.5Mtpa from one underground longwall over the first 10 years of full production
Mining Lease granted in August 2011
Potential for installation of a second longwall for up to 8Mtpa of product coal at full production from 2020
Key facts
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EAGLE DOWNS HARD COKING COAL PROJECT
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Marketing
Large sample testing underway with marketing program to commence soon
Capital costs
A$1,254m for a single longwall
Operating costs
Cash cost of A$94/tonne FOB (exc. royalties)
2011/12 Objectives
Secure rail and port capacity
Early site civil works for access and services
Gas drilling to verify gas model
Mining & Processing
Longwall mining is the preferred method of high production underground coal extraction
Proposed 1200tph CHPP to utilise a standard washing process (screens, dense media cyclones, spirals, flotation) and produce a single hard coking coal product
Rail & Port
An expression of interest was lodged for the Stage 2 expansion of the Wiggins Island Coal Export Terminal with availability between 2015 and 2016
An application for port capacity at the DPPM terminal at Dungeon Point has been submitted
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PROJECT DETAILSLOCATION7km east of Moranbah in Queensland’s Bowen Basin region
ESTIMATED MINE LIFE+15 years
RESOURCES AND RESERVES (as at 30 Jun 2011)
Resources (JORC) Measured: 56.0Mt, Indicated: 38.7Mtand Inferred: 33.2Mt
Total Resources: 127.9Mt
Reserves (JORC)Proved: 17.5Mt, Probable: 32.2Mt
Total Reserves: 49.7Mt
PRODUCTSSemi-hard coking coal, semi-soft coking coal/PCI coal, and thermal coal
AQUILA INTEREST50%
PROJECTED PRODUCTION RATE2.8Mtpa (saleable coal)
ISAAC PLAINS COAL MINE
Open cut contract operation moving 3.6Mt ROM coal to target 2.8Mtpa sales
Produces metallurgical (over 70%) and thermal coal (less than 30%)
No Lost Time Injuries in the past 12 months
Mining & Processing
Truck and shovel mining complemented by a dragline which commenced operations in June 2011
Operations heavily affected by flooding during the last summer wet season (rainfall from Nov 2010 – Mar 11 was 216% of average) however:
Conditions have improved
Contractor performance has improved
Dragline performing well
Presently mining the northern deposits with work underway to finalise approvals for southern deposits
Key facts
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ISAAC PLAINS COAL MINE
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Rail & Port
Logistics contracts in place with Queensland Rail, Pacific National and Dalrymple Bay Coal Terminal for full 2.8Mtpa
Marketing
Aquila has now assumed marketing responsibility for its 50% share of product from the Isaac Plains Coal Mine
Operating costs
Average cash cost of ~A$95/tonne FOB (exc. royalties)
Dalrymple Bay Coal Terminal For
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AUSTRALIA
RESOURCES: 1, 223 MILLION TONNES @ 57.1% FeRESERVES: 445 MILLION TONNES @ 57.1% Fe
WEST PILBARA IRON ORE PROJECT
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1.22Bt Resource across entire project area
445Mt Reserve to support Stage 1 production of 30Mtpa of West Pilbara Fines
New 282km railway to an independent port development at Anketell Point
Granted “Major Project Facilitation” status by the Federal Government
40 MoUs agreed and signed with steel mills – testing confirms up to 20% WPF can be added to sinter plant feeds
Significant tenement position outside Stage 1 project area to support future expansions
WEST PILBARA IRON ORE PROJECT
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Key Facts
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PROJECT DETAILSLOCATIONStage 1: 70km south of Pannawonicain the Pilbara region of Western Australia
ESTIMATED MINE LIFEAt least 15 years from Stage 1
RESOURCES AND RESERVES Resources (JORC) Measured: 209Mt @ 57.8% Fe,
Indicated: 392Mt @ 56.2% Fe and Inferred: 86Mt @ 55.4% Fe
Total Resources: 687Mt @ 56.6% Fe
Reserves (JORC)Proved: 165.7Mt @ 58.0% Fe,
Probable: 279.4Mt @ 56.5% Fe
Total Reserves: 445.1Mt @ 57.05% Fe
PRODUCTSDirect ship channel iron and bedded iron fines
AQUILA INTEREST50%
PROJECTED PRODUCTION RATEAt least 30Mtpa from Stage 1
Stage 1 production capacity of 30Mtpa
Definitive Feasibility Study due for completion Q4 CY2011
Mining Lease applications submitted
Environmental approval of the mine and rail development recommended by the EPA
Preferred Project Managing Contractor (PMC) identified
Mining & Processing
3 mining hubs: north, central and south
Drill & blast, load and haul operation
Overburden to Ore ratio of 1.13:1
Rail
Negotiations under way for a State Agreement for the Project railway
Key Facts
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WPIOP - STAGE 1
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Anketell Port
Anketell Point has been identified by the State as a suitable site for a new deep-water, bulk loading port for the West Pilbara area
WPIOP has been in the process of completing extensive technical & environmental studies to develop an expandable facility, capable of growing to 350Mtpa capacity as required
Port environmental assessment currently before the EPA, with the EPA report expected in Q2 CY2012
Port layout for the Stage 1 DFS has been updated:
to comply with the Dampier Port Authority’s Anketell Port Master Plan; and
to avoid Dixon Island following concerns raised through the EIS process
Latest discussions with the WA Government confirms an initial port layout design based on a 100Mtpa capacity port
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WPIOP - STAGE 1
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Key facts
Pre-feasibility Study for Hardey Iron Ore Deposit completed
Targeted Hardey production rate of 10Mtpa
Rail & Port
Potential for an additional 150km of new rail to be constructed to connect with the proposed rail for Stage 1
Minimal incremental port capex with additional berth to be added to the Stage 1 jetty
Marketing
Hardey Deposit comprises both Brockman and Marra Mamba ores which will be blended to form a single fines product for export
Project Timeline
Construction planned to be integrated with Stage 1 development activities (subject to approvals)
First shipment of Hardey BID product expected in 2016/2017
WPIOP – STAGE 2
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Debt funding negotiations with CDB nearing conclusion
Washpool Hard Coking Coal Project
Expression’s of interest
Provision of Information Memorandum
Indicative bids and shortlisting of parties
Detailed due diligence, management presentation & site visits
A concluded sale agreement is expected before end 2011
China Development Bank
FINANCING
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Avontuur Manganese Project
Expression’s of Interest
Provision of Information Memorandum
Indicative bids and shortlisting of parties
Announcement of DFS coincides with commencement of detailed due diligence for shortlisted parties
Management presentations and site visits commencing in December 2011
Final bids expected in Q1 2012
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Gravenhage Manganese Project
Definitive Feasibility Study (“DFS”) confirms the technical and economic viability of a 1.5Mtpa manganese development in the Kalahari region of South Africa
AVONTUUR
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Located 60km north of existing rail infrastructure at Hotazel
Upfront capital cost of US$180m (real 2012)
Average cash cost US$2.9/dmtu (CIF China)
Life of mine ~17 years
Initially mined as an open pit, with subsequent underground mining from an open pit access
Industry led negotiations with Transnet for upgrade of infrastructure through to SaldanhaBay or Coega (near Port Elizabeth)
Construction to commence in Q1 2014 with first production in 2015
Gravenhage Resource(4) now 117.9Mt at 38.3% Mn - potential to discover additional manganese resources within the Avontuur Prospecting Right
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(1) The information in this presentation that relates to the Eagle Downs Resource Statement has been based on information compiled by Mr MalBlaik who is a member of the Australasian Institute of Mining and Metallurgy. Mr Blaik has over 30 years experience in geology and over 20years experience in coal resource evaluation. Mr Blaik is a Principal Consultant of JB Mining Services Pty Ltd. Mr Blaik is a qualified geologist(BSc App Geol (Hons) University of QLD, 1979) and is a member of the Australasian Institute of Mining and Metallurgy and as such qualifiesas a Competent Person under the JORC Code. Mr Blaik consents to the inclusion in the presentation of the matters based on their informationin the form and context in which it appears.
The information in this presentation that relates to Eagle Downs Coal Reserves, is based on information reviewed by Mr J Steenekamp, who isa Fellow of the Australasian Institute of Mining and Metallurgy. Mr Steenekamp has sufficient experience which is relevant to the style ofmineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as definedin the 2004 edition of the JORC Code. Mr Steenekamp is a full time employee of Mining Consultancy Services (Australia) Pty Ltd and holdsthe position of Managing Director. Mr Steenekamp has consented to the inclusion in the presentation of the matters relating to Coal Reservesbased on the information he has reviewed, in the form and context in which it appears.
(2) The information in this presentation that relates to the Isaac Plains Resource Statement has been compiled by Mr Mal Blaik. Mr Blaik is aPrincipal Consultant of JB Mining Services Pty Ltd. Mr Blaik is a qualified geologist (BSc App Geol (Hons) University of Queensland, 1979)with over 20 years experience in coal geology and over 15 years experience in resource evaluation. Mr Blaik is a Member of the AustralasianInstitute of Mining and Metallurgy and as such qualifies as a Competent Person under the JORC code. The Resource Statement has beenprepared under the guidelines of the December 2004 edition of the Australian Code for Reporting of Mineral Resources and Ore Reserves(the JORC Code). Neither Mr Blaik nor JB Mining Services Pty Ltd (JBMS) have any material interest or entitlement, direct or indirect, in thesecurities of Bowen Central Coal or any companies associated with Bowen Central Coal. Fees for the preparation of this report are on a timeand materials basis.
The information in this presentation that relates to the Isaac Plains Reserves Estimate has been prepared by Mr Mark Bowater. The estimatesof Coal Reserves for Isaac Plains North (ML 70342) and Isaac Plains South (MLa 70361) have been carried out in accordance with the 2004edition of the Australian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code). Mr Bowater is the Director of EchelonMining Services. Mr Bowater has a Bachelor in Civil Engineering from Queensland University of Technology and a Bachelor in Business fromUniversity of South Queensland. Mr Bowater has over 20 years experience in the open cut mining industry, including 18 years in Queenslandcoal. Mr Bowater has substantial experience in mining operations financial evaluations, including previously conducted reserves statements.Mr Bowater is a Member of the Australasian Institute of Mining and Metallurgy and as such qualifies as a Competent Person under the JORCCode. Neither Mr Bowater nor Echelon Mining Services have any material interest or entitlement, direct or indirect, in the securities of BowenCentral Coal or any associated companies. Fees for the preparation of this report are on a time and materials basis.
COMPETENCY STATEMENTS
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(3) The information in this presentation that relates to Mineral Resource Estimates was prepared under the supervision of Mr Stuart Tuckey. MrTuckey is a member of the Australasian Institute of Mining and Metallurgy and full-time employee of the API Management Pty Ltd. Mr Tuckeyhas sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he isundertaking to qualify as a Competent Persons as defined in the 2004 Edition of the ‘Australasian Code of Reporting of Exploration Results,Mineral Resources and Ore Reserves’. Mr Tuckey consents to the inclusion in the presentation of the matters based on his information in theform and context in which it appears.
The information in this presentation that relates to Ore Reserves is based on information compiled by Mr Steve Craig, Managing Director ofORElogy (Mining Consultants). Mr Craig is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experiencewhich is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as aCompetent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and OreReserves”. Mr Craig consents to the inclusion of the matters based on his information in the form and context in which it appears in thispresentation.
(4) The information in this presentation that relates to the Gravenhage Manganese Resource was prepared under the supervision of Brent EGreen who is a member of the Australian Institute of Geoscientists, and who has more than five years’ experience in the field of activity beingreported on. Mr Green is a full-time employee of Aquila Resources Limited. Mr Green has sufficient experience which is relevant to the styleof mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person asdefined in the 2004 Edition of the ‘Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Greenconsents to the inclusion in the presentation of the matters based on the information in the form and context in which it appears.
COMPETENCY STATEMENTS
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