PRAIRIE DOWNS METALS LIMITED Audio Webcast

MINEMAKERS LIMITED (MAK)	MAK - Minemakers Responds to Broker Report - Mr Andrew Drummond, Managing Director Tue, 18 Nov 2008 12:00PM
INTEC LTD (INL)	INL - 2008 Annual General Meeting - Mr Philip Wood, MD & CEO Tue, 18 Nov 2008 05:30PM
CARBON ENERGY LIMITED (CNX)	CNX - 2008 Annual General Meeting - Mr Andrew Dash, Chief Operating Officer Thu, 20 Nov 2008 10:00AM

PRAIRIE DOWNS METALS LIMITED (PDZ)

Please refer to the relevant stock exchange if any of the above information is incorrect

PRAIRIE DOWNS METALS LIMITED (PDZ) Events

Company (Stock Code)	Date/Time	Event	Timezone: Australia/NSW
PRAIRIE DOWNS METALS LIMITED (PDZ)	Wed, 13 Aug 2008 05:30PM	PDZ - Resourceful Events Investor Series: Melbourne - Mr Mark Hansen, Managing Director
PRAIRIE DOWNS METALS LIMITED (PDZ)	Tue, 22 Jul 2008 10:15AM	PDZ - Presentation at Mining Aust-Asia 2008 Conference - Mr Mark Hansen, Managing Director
PRAIRIE DOWNS METALS LIMITED (PDZ) Encouraging Mineralisation at Costean Seven	Wed, 9 Jul 2008 02:00PM	PDZ - First Drill Hole at Costean Seven - Mr Mark Hansen, Managing Director
PRAIRIE DOWNS METALS LIMITED (PDZ)	Tue, 27 May 2008 12:30PM	2008 AMEC National Mining Congress - Mr Mark Hansen, Managing Director, Prairie Downs Metals Limited
PRAIRIE DOWNS METALS LIMITED (PDZ) Fantastic Geological Setting for Significant Mineralisation	Mon, 26 May 2008 03:15PM	PDZ - 3.7 Kilometres of Copper Mineralisation - Mr Mark Hansen, MD
PRAIRIE DOWNS METALS LIMITED (PDZ)	Mon, 19 May 2008 12:45PM	PDZ - Investor Series Presentation - Mr Mark Hansen, MD
PRAIRIE DOWNS METALS LIMITED (PDZ) Kerrs Find: Significant Base Metal Discovery	Wed, 7 May 2008 04:00PM	PDZ - New Copper Discovery, Kerrs Find - Mr Mark Hansen, MD
PRAIRIE DOWNS METALS LIMITED (PDZ) Prices to increase after high grade copper discovery	Fri, 18 Apr 2008 09:30AM	PDZ - Spectacular Copper Discovery - Mr Mark Hansen, MD
PRAIRIE DOWNS METALS LIMITED (PDZ)	Tue, 25 Nov 2008 05:00PM 02:00PM Australia/West	Annual General Meeting Level 19, St Martin's Towers, 44 St George's Terrace, Perth, WA
PRAIRIE DOWNS METALS LIMITED (PDZ)	Wed, 1 Oct 2008	Full Year Results
PRAIRIE DOWNS METALS LIMITED (PDZ)	Fri, 14 Mar 2008	Interim Results
PRAIRIE DOWNS METALS LIMITED (PDZ)	Thu, 15 Nov 2007 03:00PM	Annual General Meeting Rydges Hotel, cnr Hay Street and King Street Perth WA
PRAIRIE DOWNS METALS LIMITED (PDZ)	Thu, 15 Mar 2007	Interim Results
PRAIRIE DOWNS METALS LIMITED (PDZ)	Fri, 24 Nov 2006 03:30PM	Annual General Meeting Rydges Hotel, Cnr Hay & King Streets Perth WA
PRAIRIE DOWNS METALS LIMITED (PDZ)	Thu, 16 Mar 2006	Interim Results
		Display 10 results per page 20 results per page 50 results per page 100 results per page

PRAIRIE DOWNS METALS LIMITED (PDZ)

Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.

PRESENTATION BY MARK HANSEN, MANAGING DIRECTOR OF PRAIRIE DOWNS METALS LIMITED (PDZ)

“Resourceful Events Investor Series: Melbourne”

http://www.brr.com.au/event/48840

 

WEDNESDAY, AUGUST 13, 2008, 5:30 PM.

 

            PDZ     We are effectively a single project company. We have a base metal project located near Newman in Western Australia. We listed in October. We have

10                    almost been listed for three years, and during that time, about 5 million tonnes of resources, scoping study, pre-feasibility, and we just announced results of the feasibility yesterday, or a definitive feasibility some might call it. Drilling, subject to rigs arriving on time, which is one of the banes of our existence in this business, will recommence this week. Self-evident. This

15                    resource remains open in all directions. It has very high grade core to it as you can see. That is one of the tricks of course and we have been out to develop a new project. I do not care what the zinc price is so long as my cost of production is lower than most, and it is. I will talk about that. We have used an engineering group called Abesque Engineering. Now the significance of

20                    them is they are constructors as well. Banks like them and that is how we went about selecting someone to do the feasibility as who is going to accept the results of the people we choose. They are like that because they build things as well as design them. Sometimes, the BCM contractors get it wrong because they do not build things, an important point, a bit of a side issue. But

25                    the point to us is that we can have the greatest confidence in the numbers that we have. Now 100,000 tonnes of zinc, 20,000 tons of silver and the silver contains lead. The silver and lead concentrate is worth much more per tonne than the zinc concentrate. You can do those sums yourself; it is interesting.

 

30                    While I am on that subject, there are two markets out there for commodities: One is the world of people who produce and sell the metal and the other one is the trader of the commodity. The LME provides a mechanism for price discovery, for forward selling, for speculation through forward selling, and of course ultimately delivery. In China today, there is a shortage of zinc and a

35                    surplus of copper. Copper production is declining. You would not tell that looking at the LME curves, but remember that copper is in backwardation and that is an unstable position to be, and the normal position for a commodity looking forward is a contango. Zinc is in contango and many metals are. That means that the future cost reflects the cost of capital and the cost of storage if

40                    it is a metal. It is pretty risky trying to estimate what prices are going to be. One good thing about zinc today is that it is obviously near the cost of production for several. In our country, for CBH and Perilya, we have seen AIM postpone this project and we have seen the Lennard Shelf close. The same thing is happening in China in Yunnan province.

45

                        So that is the sort of thing that you can look. There is intelligence on the ground and in the market. You think, “Hey, I think the future looks pretty good for zinc and for lead irrespectable of what the price may be today.”

 

                        Now for those of you who like to do your own calculations, I will give you some more numbers to make it easy. We are assuming $75 per tonne for sea freight delivered to a port such as Shanghai and $25 a tonne for port storage and loading. The pre-feasibility mining cost was actually $40. We presume

5                      that the amount has gone up since then, so we are using as guidance $55. Now the reason we do not reduce DCF numbers is because they are next to meaningless when they are taken out of context and they usually are. I spent a large part of my life as an analyst. Most people want to understand the strengths and the weaknesses of the model. You do this through sensitivity

10                    analysis, goal seeking and so on. However, what we are looking at is can we produce that at the current zinc price with the dollar apparently and make money. Yes, we can, and that is what those numbers say. So the next step is how do we best finance that?

 

15                    My last point on this slide, there are things that are outside of our control, and in this case, it is statutory requirements, government requirements. For people in Australia today and particularly Western Australia, that is environmental issues. So the start that is going to be in February 2010 is an assumption that we will have to go through a full environmental review and

20                    that is how long it will take. We have been working on this already for almost a year. However, if things go well, that will be finished in May next year. So I guess I am trying to say there that we are being quite conservative with our costs and with our scheduling.

 

25                    Dwell upon this slide a little. What is important, and I will put it in the frame with project finance. I will mention something else. Our logo which is so clear is derived from the yin and yang symbol deliberately so. The creative tension that exists between miners and smelters particularly with zinc is something that has never been dealt with and something we intend to do. We are talking

30                    to a number of Chinese parties with a view to having them directly involved in our project. Money by normal methods of project finance which are debt and equity is very expensive at the moment. All us wannabes  have had our share prices higher or more and therefore any money we raise is going to cost twice as much as it would have been in December. So it would be good not to be

35                    issuing shares or as few as possible. Debt is expensive because banks and related organizations are nervous and there is a lot more to come. We have not seen the end of this by a long way, and this is going to affect us all. Cash is good. Just a bit of a side. I sounded like a salesman there, I am sorry. I think cash is a good thing to have for us personally. What I see in the banks

40                    that I have talked to they are nervous as can be. They are wanting massive amounts of cash up front to cover any possible contingencies, cost overruns and so on which makes the whole exercise really expensive.

 

                        Sempra Metals & Concentrates Corp. has a seat on LME. They are a large

45                    metal trader. We have not entered into off-take with them because we plan to structure finance in its entirety including working capital getting to the stage of production. Now Sempra and other metal traders have some very good relationships with (inaudible) (0:07:57) with Chinese smelters as you would expect. That is important because negotiations in Asia where there are cultural and language differences can take an inordinate amount of time. I have had experience in that. That is one of the big benefits of us having Sempra there.

 

5                      Similarly, Sempra has a big brother, and that is the Royal Bank of Scotland, now the Royal Bank of Scotland ABN AMRO. These things were put in place two years ago because we knew what we were going to do. We did not know what the market was going to do, but we had to presume that things could get difficult. They always do in a capitalist system. You cannot have strong profits

10                    forever. Someone will step in, whether it is LIBOR or someone else to take some of that, as is happening right now. Then of course we have wasted a lot being humans. So I do not like the chances of some of those people from the left hand side. Grade is king, it always has been. It is always good to have good grade, and we do. You can see where Herald is, by the way of course

15                    Herald no wonder the Indonesians want that. So there are a lot of other factors that are important.

 

                        Our mineralisation starts at the surface. We have got resource upside; I will touch up on that. We have gas pipeline in our property, and 16 cents per

20                    kilowatt-hour for gas is our second largest production cost. The largest, by the way, you would never pick, the largest is the cost of hauling concentrate to the coast because of the price of diesel. We have potable water on site; that is really important. Our concentrates are superb, very little in the way of contamination. Metals themselves or SHG, super high-grade zinc, is a

25                    commodity. It is all the same even though it is branded by different smelters, but concentrates are not. Some are worth more than others and that is another reason to deal if you have got good concentrates with the people who take the concentrate. They can use that for blending with inferior concentrates. It would be much nicer to be located on tide water, but we are

30                    pretty good where we are, well serviced. Sovereign risk (inaudible) (0:10:21) Australia been excellent only because of some of the delays that we all see caused by various statutory issues; nonetheless good location. In that gas pipeline, today if you have to run diesel generators, you are probably talking three to four times the cost as using gas and gas itself, three times more than

35                    it used to be.

 

                        What you are looking at there, that prospective rift, there are rocks on either side that are billion years different in age. They have been two continents that have been forced together. It is like a suture. Strictly speaking, it is a thrust

40                    and it is very thick, it is wide, it has been very altered. That setting is comparable to the Mt. Isa area. There are some other interesting things that are comparable as well. I will give you one example. We have a very rare type of vanadinite. It is a lead-copper vanadinite, and where else does that occur? As you might guess, of course, in the Mt. Isa region. There are some

45                    other issues that are quite similar as well. I am not going to do much on the geology even though I like it a lot. Suffice to say that the mineralisation that we have, the lodes are on our ring structure. You can see the fractures in the top part of that because I have moved the ring aside. There is an intrusive body that has come out and fractured the rocks in an annular style and there are radial fractures as well. Quite bizarre magnetics, you can see there is almost an arrowhead leading into the centre of that. But anyway, it is those fractures that have hosted the fluids and that now host the mineralisation.

 

5                      You can see that there is much more potential in that. The Gabbro lode and the Zed lode are only that size because that is all the drilling that we have done to date. That is what it looks like in section. That is a good thing for mining, you would understand too I am sure, particularly underground because it gives you much better tonnes per vertical metre.

10

                        Where we have got further depths to be explored on that slide is where we will drill next. There is 2.5 million tonnes there, that is colored. The high grade zone is the red and the yellow. Typically, we do that as mineral content because that relates to the geology quite well. It is like an interference

15                    structure, I guess, and so it gets thicker and it has got a really standard uniform wavelength, that is 800 metres long and they are always about 200 metres apart, the same in the Zed lode. So it is quite predictive for us now but it is easy to say after 300 drill holes. We would expect this system, as they always do, to have a much greater depth extent than horizontal extent. So it

20                    is 800 metres wide, you would expect it to be deeper than that. I guess time will tell. We are looking to take it down to 500 metres, try and get maybe 10 million tonnes together. It helps project finance if we continue to grow the resource base, as you can imagine, if we are negotiating at the same time.

 

25                    This is a discovery made earlier in the year and this is really high grades in sulphides and chalcocite and then bornite. We drilled underneath those outcrops, and while we got a little bit of the same mineralisation, we did not find the source. But what we did find is massive amounts of alteration and low grade of widespread copper and lead and zinc mineralisation along with

30                    silver. So it is not always the case and the geologist by trade and nature does not give out their secrets easily, and once you get a bit cocky and think you understand what you are doing, you get pigged back as indeed we have been. So we are going to have to go back there and drill a lot more holes to understand what is happening. It is a very large system. We do have some

35                    pretty good copper numbers down at the moment, two I might add, and we are going to be looking at those.

 

                        So the program of drilling, which is where most of our money goes, is extended to continue for the rest of the year with one or two or three rigs. At

40                    the same time, because we have done our feasibility, we will be looking to finalise project finance. So if one ignores the marketplace just for the moment, and we cannot of course because that is the final avatar, you would think that there is quite a good news flow. There is a very high probability this will increase resources. There is also a very high probability that we will see

45                    better prices for lead and zinc going forward. Exploration for copper has only just started. So I think it is quite a good story from that point of view. Market could be better. That is my story. Thank you.

 

PRESENTATION CONCLUDED

 

 

 

 

Contact brr@brr.com.au for more information

 

DISCLAIMER: Transcripts made available by Boardroomradio.com is a free service whereby the transcripts are created by one or more third party contractors without any involvement or oversight by Boardroomradio.com or the respective company, firm, partnership or individual that is being transcribed.  Boardroomradio.com and its contractors, client companies, firms, partnerships and guest speakers (paid or otherwise) do not invite reliance upon, nor accept responsibility for, the information they provide. Boardroomradio.com makes every effort to provide a high quality service. However, neither Boardroomradio.com, its transcript providers, nor the providers of any other written or oral data made available on the Boardoomradio.com site (and its partner sites) give any guarantees, undertakings or warranties concerning the accuracy, completeness or up-to-date nature of the information provided. Users should confirm information from another source if it is of sufficient importance for them to do so. Boardroomradio.com, its directors and employees do not accept any liability for the results of any actions taken or not taken on the basis of information in this site, or for any negligent misstatements, errors or omissions.