intierra: state of the market: examining mining`s predicament

7/28/2019 Intierra: State of the Market: Examining Mining`s Predicament

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Presenter: Chris Hinde

Research: Jeremy [email protected]

Austmine, May 22nd 2013

State of the MarketExamining mining’s predicament



Leadership: Over 30 years of providing mining information(through two databases, consultancy, maps, conferences/seminars and published reports)

Information: Lease locations and ownership, companyintelligence, drilling data, project pipeline, due diligencereports, production statistics, finance and M&A activity

Reports: Quarterly examination on trends in exploration,

mine development and metals production, analysis of themarket and financing, and expert comment on the industry

Disclaimer:IntierraRMG makes reasonable and diligent efforts to obtain accurate information for our clients and presentations. No warranty, expressed or implied is made regarding the accuracy, adequacy,completeness, reliability, or usefulness of any information contained herein. Neither IntierraRMG nor the contributors of data to this presentation shall be held liable for any improper or incorrect use of the information contained herein and assume no responsibility for the use of the information.

About IntierraRMG



By the end of the March quarter, the mining industryhad found itself between a rock and a hard place:

Rock: Falling metals prices, with little prospect of anearly recovery because of lacklustre demand.

Hard Place: Pressure on operating costs and aheightened threat of resource nationalism.

Problems compounded by the restricted supply of finance, especially for mineral exploration.

Disclaimer:IntierraRMG makes reasonable and diligent efforts to obtain accurate information for our clients and presentations. No warranty, expressed or implied is made regarding the accuracy, adequacy,completeness, reliability, or usefulness of any information contained herein. Neither IntierraRMG nor the contributors of data to this presentation shall be held liable for any improper or incorrect use of the information contained herein and assume no responsibility for the use of the information.

State of the Market: Mining



Base Metals Gloom (but Gold OK)



0

100

200

300

400

500

600

700

800

900

1000

R E A L ( £ / o z )

|----100 years---|

Gold at record real-priceof over £1,000/oz

Gold floods into Europefrom Spanish conquestsin 16th century, causinginflation spiral

1489: Royal Mint issuesSovereign (£1 =0.5oz)

1717: Isaac Newtonfixes £1 at 0.235oz

USA discovered (1492)

All-Time High For Gold



Prices Stall for Coal, Iron and Copper



Mid-2012 Prices MINED

(‘000t)PRICE(US$/t)

VALUE PA(US$ bn)

Coal 7,700,000 90 693

Iron Ore 1,980,000 120 238

Gold 2.57 51,440,000 132

Copper 16,300 7,500 122Bauxite 203,000 350 71

Nickel 1,400 16,400 23

Zinc 12,000 1,900 23

PGMs 0.38 38,560,000 15

Diamonds 0.032 350,000,000 11

Lead 4,000 1,900 8

Top Ten Total 9,916,700 (134) 1,336

Shape of an Industry

$1,600/oz

$70/ctie 32 tonnes!



www.intierraRMG.com

State of the Market Snapshot: Exploration

Edition 2, 2013

FEASIBILITY

STUDIES

NPV

Q1 USD13.1M

Q4 USD12.7M

EXPLORATION

RESULTS

Copper assays led

by Carrapateena

project

ASSAY SHARE-

PRICE ALERT

Top 35 share

price increases

EXPLORATION

HOT SPOTS

Prospects

Q1, 2013 - 1,457

Q1, 2012 - 2,467

DRILLER’S LOG

355 drill reports

in March

17th month fall

CAPITAL RAISING

FOR EXPLORATION

Q1 - USD470M

Q4 - USD1.51B

Expert review on exploration activities and trends for the previous and upcoming

quarters. Below are some highlights from this edition.

There has been a sharp reversal in fortunes during the three months to end March after thewelcome improvement in financing for the exploration sector in the December quarter. After an

18-month decline in share prices from the end of 2010 to mid-2012, the second half of last year

saw a gradual recovery in the mining industry’s overall market capitalisation. This improvement

was helped by a strengthening gold price, but metals prices, and the market’s equity valuation of

the mining industry, have gone into reverse this year.

FULL REPORT CONTAINS:

• 16 pages• 11 graphs

• 17 tables

● Driller’s Log

Exploration activity captured on the

IntierraLive database dropped to a new low in March, extending the downward trend into a 17th

month, with the drilling reports from only 355 prospects. (See graph below)

● Feasibility Studies

Little overall change in new development announcements but there has been wide geographicalvariation. For the quarter to end-March IntierraRMG identified 27 new development projects.

● Capital Raising for Exploration

USD470 million was raised for exploration in the quarter just ended, compared with (a restated)

USD1.51 billion in the three months to end-December, and USD1.26 billion in the year-ago period.

Global drilling activity continue to fall

● Exploration Hot Spots

Cumulative reports from all exploration

activity for the quarter to end-March

amounted to 1,457 prospects,

compared with 2,467 prospects in the

first quarter of 2012 and 1,959 in the

first quarter of 2011.

● Exploration Results

Copper assays were led, for the second

successive quarter, by a drill hole at OZ

Minerals’ Carrapateena project near

Woomera in Australia; this time 1.62%

Cu over 1,094m at a depth of 821m.

Gold assays were led by recent drilling

on La Ronge’s Preview property in

Saskatchewan, Canada, which returned

634g/t over 4.1m at 204m.

● Assay Share-Price AlertThe report notes the top 35 share price

increases following assay

announcements, with Kidman

Resources leading the list with

a jump of 270% in its share price.

For the full report, subscribe now: [email protected]

SPECIAL OFFER

10% discount off the

annual subscription

(4 editions)

After discount:

USD1,440 plus taxes

Usual price:

USD1,600 plus taxes

Offer expires 30 June 2013

D o w n l o a d

f u l l s u m m a r y a t

w w w .i n t i e r r a R M G .c o m



Drilling Trends

17 month decline



Drilling Reports

Drill Announcements Mar Q 2013 Dec Q 2012 Mar Q 2012

Gold Prospects 651 702 1,119

Copper Prospects 192 238 315

Silver Prospects 154 174 274

Zinc Prospects 63 72 104



Reported Ore Reserves (contained metal)

Metal Deposits Mar Q 2013 Dec Q 2012 Mar Q 2012

Gold (‘000oz) 23,752 15,665 50,059

Copper (‘000t) 1,110 5,239 8,537

Silver (Moz) 574 469 309

Zinc (‘000t) 2,264 872 1,901



Copper/Gold Open-Pit Developments

Copper and gold deposits that have received a capital expenditureforecast (during the past two years) for an open-pit development



www.intierraRMG.com

State of the Market Snapshot: Mining and Finance

Edition 2, 2013

For the full report, subscribe now: [email protected]

● Hinde Sight – Market Comment

The value of merger s and acquisitions has f allen, and the global industry's market capitalisation is back to the levels last seen at the star t of 2009 (see graph below).

● Market for Mining

Not only have precious metals prices fallen but the index price for the six base metals on the London Metal Exchange fell during a March quarter for the first time since 2001.

● ExplorationExploration activity captured on the IntierraLive database dropped to a new low in March, extending the

downwar d trend into a 17th month, with drilling reports from only 355 prospects.

● Assay Share-Price Alert

The repor t notes the top 30 shar e price increases following assay announcements , with KidmanResources leading the list with a jump of 270% in its shar e price.

● Metals Production Outlook

Early production announcements for the three months to end-March indicate significantly lower gold output in the Americas. Copper and iron ore output also sharply down.

● Mergers and AcquisitionsThe Raw Materials Database captured a 28% fall in announced deals, and a 14% drop, to under

USD12.0 billion, in the valuation.

● Mining Finance

IntierraLive tracks almost 3,500 listed companies, and the funds raised by the mining sector in thequarter to end-March dropped to under USD5.2 billion from almost USD6.8 billion in the last three

months of 2012.

EXPLORATION

355 drill reports

in March

17th month fall

MERGERS &

ACQUISITIONS

Value of metalsdeals drops 14%

FUNDS RAISED

Q1 - USD5.2BQ4 - USD6.8B

METALS

PRODUCTION

OUTLOOK

Lower goldproduction inthe Americas

MARKET FOR

MINING

Precious andbase metals

sold down

ASSAY SHARE-

PRICE ALERT

Top 30 shareprice increases

Ed.2 SPECIAL REPORTS► Operating Costs

► Open-Pit Ore Grades

► Regional Activity -

Latin America

Exper t review on all aspects of the industry, recent performance and quarterly

outlook. Below ar e some highlights from Edition 2.

MARKET CAPITALISATION ACROSS INTERNATIONAL MINING MARKET

Market capitalisation back to the levels of early 2009

0

1,000

2,000

3,000

4,000

Jan2009

Jan2010

Jan2011

Jan2012

Jan2013

0

1,000

2,000

3,000

4,000

Number of Companies Aggregate Market Capitalisation

U S D b

i l l i o n

40 2.50

2.00

1.50

1.00

0.50

0 0

35

30

25

20

15

10

5

Resource base at inception Grade at inception

R e s o

u r c e b a s e

( M o z )

G r a

d e ( g / t A u )

2004 2006 2008 2010 2012

Gold resources and grades at new mines

Gold

RESOURCES AND GRADES AT NEW MINES

Full report contains:

● 36 pages

● 42 graphs

● 33 tables

● 3 special reports

Copper mine costs in 2012

COPPER MINE COSTS

2012

T YPE N UM BE R

OUTPUT

('000t)

COSTS

(USD/t)

LABOUR

(%)

Open Pit 77 7,889 2,757 20.4

Underground 54 2,181 3,841 32. 0

OP / UG 16 1,496 3,354 24.1

Tailings 2 84 4,466 20.2

TOTAL 149 11,650 3,049 23.6

D o w n l o a d

f u l l s u m m a r y a t

w w w .i n t i e r r a R M G .c o m

SPECIAL OFFER

10% discount off the annual

subscription (4 editions)

After discount: USD3,240 plus taxes (Usual price: USD3,600 plus taxes)

Offer expires 30 June 2013



Metals M&A Activity

Metals Deals: US$11.9billion in March quarter (US$14 billion in Dec Q)



An Industry Devalued

20 monthdecline

6 monthrecovery



Copper Discovery Rates

Average

Feasibility

Study Grade

(Open-Pit Mines Only)



Gold Discovery Rates

Average

Feasibility

Study Grade

(Open-Pit Mines Only)



Funds Raised (US$m)

Company Size

(US$m)

Q1 2013 Q4 2012 Q1 2012

<10 Market Cap 246 179 593

10 – 49 537 954 1,181

50 –

100 301 498 1,182

>100 4,075 5,137 2,914

Total 5,159 6,768 5,870

Explorers 1,451 3,405 3,418

Producers 3,710 3,364 2,454

Falling total, and

smaller share

End-2012 corporate cash holdings of US$300 billion(under US$15 billion of this held by explorers)



Regional Spending



Operating Costs Held at Base Metals Mines

Up only12% on2008



But Costs Soar at Gold Mines

Up 62%on 2008



Thank You

For a copy of this presentation, contact

[email protected]

mailto:[email protected]

mailto:[email protected]

intierra: state of the market: examining mining`s predicament

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