NAP Investor Presentation October 2011

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Text of NAP Investor Presentation October 2011

  • 1. InvestorOctober 2011 William J. BiggarPRESENTATIONPresident & CEO

2. Forward LookingSTATEMENTSCertain information included in this presentation, including any information as to our future production,exploration, financial or operating performance and other statements that express managementsexpectations or estimates of future performance, constitute forward-looking statements within the meaningof the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 andCanadian securities laws. The words expect, believe, will, intend, estimate and similar expressionsidentify forward-looking statements. Forward-looking statements, including future-oriented financialinformation, are necessarily based upon a number of estimates and assumptions that, while consideredreasonable by management, are inherently subject to significant business, economic and competitiveuncertainties, risks and contingencies, including the possibility that operations at the Lac des Iles and SleepingGiant mines may not proceed as planned, that other properties may not be successfully developed, and thatmetal prices, foreign exchange assumptions and operating costs may differ from managementsexpectations. The Company cautions the reader that such forward-looking statements involve known andunknown risks, uncertainties and other factors that may cause the actual financial results, performance orachievements of North American Palladium to be materially different from the Companys estimated futureresults, performance or achievements expressed or implied by those forward-looking statements and that theforward-looking statements are not guarantees of future performance. For more details on these estimates,risks, assumptions and factors, see the Companys most recent Form 40-F/Annual Information Form on file withthe U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. TheCompany disclaims any obligation to update or revise any forward-looking statements, whether as a result ofnew information, events or otherwise, except as expressly required by law. Readers are cautioned not to putundue reliance on these forward-looking statements.All dollar amounts in Canadian currency unless otherwise stated, all references to production refer to payableproduction, and all reference to tonnes refer to metric tonnes.U.S. investors are encouraged to refer to the Cautionary Note to U.S. Investors Concerning Estimates ofMeasured, Indicated and Inferred Resources in the appendix.1 3. Investment CaseFOR NAP Growth-oriented precious metals producer in mining-friendly jurisdictions: LAC DES ILES, one of only two primary palladium mines in the world, transitioning into a long-life, low-cost operation GOLD DIVISION provides foundation for growth Robust pipeline of projects to increase palladium and gold production Significant commitment to palladium and gold exploration Experienced senior management and operating teams Strong balance sheet to fund development programs 2 4. Diversified Precious MetalsPRODUCERLDI: One of only two primarypalladium mines in the world Producing palladium since 1993 Transitioning into a long life, lowcost mine Significant exploration upsideQUEBECSleeping Giant:ONTARIOVEZZA Producing gold for over 20 years Gold Mine LAC DES ILESPalladium Mine SLEEPING GIANT Growth potential at depthGold Mine Underutilized mill has potential to Timmins Val dOr serve NAPs nearby projects in ThunderAbitibi Bay Sudbury MontrealVezza:Toronto Currently being advanced to beproduction ready in Q1, 20123 5. Market Statistics:A VERY LIQUID STOCK STOCK SYMBOLS (NYSE Amex / TSX)PAL / PDL MARKET CAPITALIZATIONUS $335 MSHARE PRICE US $2.06 SHARES/WARRANTS OUTSTANDING162.4 M / 8.8 M3-MONTH AVERAGE TRADING VOLUME (NYSE Amex / TSX)2,721,853 / 449,424Information as at Oct. 4, 2011, Thomson One.Series B warrants (TSX:PDL.WT.B) expire on Oct. 28, 2011, $6.50 exercise price. ANALYST COVERAGE: Bank of America Merrill LynchHaywood Securities Scotia Capital Michael Parkin Chris Thompson Leily Omoumi Cormark Securities MacquarieStifel Nicolaus Rajiv ChailDaniel Greenspan George Topping Credit SuisseOctagon Capital Alex Terentiew Annie Zhang GMP Securities RBC Capital Markets Andrew MikitchookLeon Esterhuizen 4 6. FinancialSTRENGTH $71 M in cash as at June 30, 2011 $60 M undrawn operating line (secured by accounts receivable) $70 M term debt financing closed on Oct. 4, 20115 7. Investment Case forPALLADIUM6 8. Palladium Market:MINE SUPPLY RUSSIANORTH AMERICA40%9% ONLY 6.8 M oz. ANNUAL PRODUCTION WORLDWIDESOUTH AFRICA42% Source: CPM Group, June 2011 Note: Other producing countries (9%) include Zimbabwe, Australia, Botswana, China, Serbia and Montenegro; Excludes secondary supply of 1.7 M oz.7 9. Palladium Market:SUPPLYConstrained Mine Supply From Major Producers (000s ounces) 3,500 Russia South Africa 3,000 2,500 2,000 1,500 1,000500 0 2006 2007 200820092010 Supply unable to match growth in demand Russian state stockpiles believed to be at or near depletion Source: CPM Group, June 20118 10. Palladium Market:DEMAND 2010 Fabrication Demand: 7.5 M oz. RefiningDentalAutomotive6%10% Other 58%3% Jewellery7%Electronics 16%Source: CPM Group, June 20119 11. Palladium Market:DEMANDGlobal Light Vehicle Production 5 Year Forecast (000s) 97M100M100,000 92M 88M Other1 90,00084M 80,000 72M75M Europe 70,000 60,000 North 50,000America 40,000 30,000BRIC 20,000Economies2 10,00002010 2011 2012 2013 2014 2015 2016 (Actual) Source: IHS Global Insight Automotive, June 2011 1. Other includes: Japan, Korea, Middle East and Africa 2. BRIC Economies include: Greater China, South America and South Asia Majority of demand derived from automobile sector for autocatalysts Strongest growth in regions outside of North America, Europe and Japan10 12. Palladium Market:DEMAND Adoption of Stricter Emission Control Standards 200520062007 2008 20092010201120122013 20142015Europe Euro IV Euro V Euro VI Beijing Euro IIIEuro IV Euro VChina NationwideEuro II Euro III Euro IV Select Cities Euro III Euro IV India NationwideEuro IIEuro IIIRussia Euro IEuro IIEuro IIIEuro IV Euro V USATier 2 and LEV IIBrazil Prconve 3 Prconve 4 Prconve 5Prconve 6Japan Japan 05Source: CPM Group, June 2011 Emerging economies have adopted emission control standards that mandate the use of catalytic converters Advancing to a higher level of emission controls results in higher PGM loadings in the catalytic converter Tightening emission control regulations for heavy-duty trucks 11 13. Use of Palladium inCATALYTIC CONVERTERSGasoline Engines Hybrids & Other New Forms Use +90% palladium (of total required Neutral impact on PGM usePGM content) Gasoline hybrids tend to use as much palladium as normal gasoline enginesDiesel Engines Currently account for only 1% of global cars sales1 Historically used platinum due totechnical requirements Forecasted to be 14% of overall market by 20202 Currently use 25% palladium, with scopeto increase to 50% due to advent of lowsulphur diesel fuelElectric No requirement for catalytic converters Challenged by lack of infrastructure to recharge, high costs, long charging periods and short driving range Forecasted to account for only 2% of global car sales by 20202 1. CPM Group, June 2010 2. Stefan Bratzel, director of the Centre of Automotive Management in Germany;as reported in Mitsui Global Precious Metals Pole Position Report, June 2010 12 14. Palladium Market:DEMAND Exchange Traded Funds Physical Palladium HoldingsThousand Ounces Thousand Ounces2,500 2500SPAL-LSESPDM-LSE2,000 WITE2000GLTR1,500 Julius Baer 1500MSL (Australia)PALL-NYSE1,000 1000Palladium ZKBPHPD -LSE500 5000 0 20-Apr-07 20-Jan-08 20-Oct-08 20-Jul-09 20-Apr-10 20-Jan-11 Increasing investment demand driven by perceived positive supply/demand fundamentals for palladium and automotive industry outlookSource: CPM Group, as at October 5, 2011 13 15. Palladium Market:INCREASING PRICE Recent performance of Palladium (US$/oz) Average Annual Price Forecast (US$/oz) $900.00 20112012 $800.00 BNP Paribas $860$810 $700.00 CPM Group $849$908 $600.00 JP Morgan $838$938 $500.00 Credit Suisse $803$950 $400.00 Barclays$820$860 $300.00 $200.00 UBS $800$825 $100.00 RBC Capital Markets $780$850$0.00 1/2/2008 1/2/2009 1/2/20101/2/2011 Historic High: US $1,090 (2001)Recent Price: US $588 (Oct. 6, 2011)YTD Average Price: US$760 Best performing metal of 2010 Sources: Thomson One and available equity research.14 16. Palladium OperationsLAC DES ILES MINE 15 17. LDI:A WORLD CLASS MINE One of only two primary palladium mines in the world Open pit commenced operations in 1993 (now exhausted) Underground mining from the Roby Zone (via ramp) began in 2006 Total production of ~2.5 M oz of palladium (+ Pt, Au, Ni, Cu) since 1993 Mine expansion underway with production from the Offset Zone (via shaft) targeted for Q4 2012 15,000 tpd underutilized mill 200 employees 1616 18. LDI:OPERATING METRICSQ1 2011Q2 20112011 Forecast Payable Palladium Production (oz)30,661 46,971145,000 - 155,000 Tonnes of Ore Mined 332,523428,692 1,460,000 Avg. Head Grade Milled3.85 g/t 4.98 g/t4.2 g/t Palladium Mill Recovery78.8% 83.15% 80% Cash Costs1 ($US/oz)$519 $335 $450 1. Total cash costs per ounce is a non-IFRS measure. For reconciliation of historical total cash costs per ounce to productioncosts, please refer to the Companys financial statements. Cash costs per ounce are presented net of byproduct creditsand can be materially affected by changes in byproduct metal prices, as well as the Canadian/US dollar exchange rate. 17 19. LDI:MINE EXPANSION PLAN Transitioning from mining via ramp to viashaft Surface OPEN PIT High-volume, large scale bulk miningmethod:ROBY long-hole stoping with primary &ZONEsecondary stoping blocks SHAFT Capex: $175 M in 2011, $75 M in 2012 Currently sinking a shaft to the 4,815mine level (700 m from surfac