EXCO RESOURCES LIMITED
EXS - Excellence in Mining and Exploration Presentation - Mr Michael Anderson, Managing Director
Tue, 16 Sep 2008 11:30AM
Select a tab above to display more information
 NORTHERN MINING LIMITED
(NMI)
|
42 Metre Gold Intersection At Blair North Prospect in Kalgoorlie - Mr Alan Lockett, Executive Chairman Wed, 1 Jul 2009 12:30PM |
    |
 HEEMSKIRK CONSOLIDATED LIMITED
(HSK)
|
Twin Hills Gold Project Acquisition - Kevin Robinson, Managing Director Fri, 3 Jul 2009 09:00AM |
|
 FLINDERS MINES LIMITED
(FMS)
|
FMS - Iron Ore Activities Report No 27 - Dr Kevin Wills, Managing Director Wed, 1 Jul 2009 10:00AM |
|
EXCO RESOURCES LIMITED (EXS)
ASX code: EXS
Website: http://www.excoresources.com.au
Industry: Materials
Principal Activities:
Exploration for copper, gold and uranium
Address:
, 8 Colin Street, Level 2,
WEST PERTH
WA
Phone: (08) 9211 2000
Fax: (08) 9211 2001
Executives & Directors
Mr Barry Sullivan , Chairman
Mr Michael Anderson , Managing Director
Mr Alasdair Cooke , Executive Director
Mr Craig Burton , Non Exec. Director
Mr Peter Reeve , Non Exec. Director
Mr Eamon Byrne , CFO
Mr Eamon Byrne , Company Secretary
Company Podcasts
Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
EXCO RESOURCES LIMITED (EXS) Events
Australia/NSW
EXCO RESOURCES LIMITED (EXS)
| Change in substantial holding from LST | Wed, 24 Jun 2009 |
| $7.2 Million Placement Completed | Fri, 19 Jun 2009 |
| Investor Series Presentation - 16 June 2009 | Tue, 16 Jun 2009 |
| Notice under section 708(5)e of the Corporations Act 2001 | Thu, 11 Jun 2009 |
| Reinstatement to Official Quotation | Thu, 11 Jun 2009 |
| Share Placement | Thu, 11 Jun 2009 |
| Suspension from Official Quotation | Wed, 10 Jun 2009 |
| Trading Halt | Tue, 9 Jun 2009 |
| Boardroomradio Broadcast with Michael Anderson | Tue, 26 May 2009 |
| AMEC 2009 National Mining Congress Presentation | Fri, 22 May 2009 |
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 MICHAEL ANDERSON, MANAGING DIRECTOR OF EXCO RESOURCES LIMITED (EXS)
“EXS - Excellence in Mining and Exploration Presentation”
http://www.brr.com.au/event/51306
TUESDAY, SEPTEMBER 16, 2008, 11:30 AM.
EXS Good morning, everybody, and nice to be here. Certainly a bit of late relief from traffic there and that is what we all need in this current market, but I
10 guess we all are still focused with getting on with the job of trying to make a success of our companies and I think there is plenty of success out there despite the backdrop of a fairly ordinary market.
Let me tell you about our Cloncurry Copper Project. When I spoke here last
15 year, we were setting out on a pretty aggressive drilling and resource development program. In that time, last year, that program has been hugely successful. We embarked upon a pre-feasibility study that amply demonstrated in our mines the robustness of our project. We are now in a full feasibility study, still drilling and still finding more copper.
20
We will run through some of the details of the work we have been completing, and maybe not as far-reaching as Trafford’s predictions into the future, but we will tell you a little bit about the next couple of years for us.
25 Snapshot of today though. There are a few interesting points on this slide I will just make before moving on. I think despite all the numbers and the graphs, the most important number on that slide for me is the $15 million that we have in the bank. I am very pleased about that position in this market. We are well funded to carry on with our immediate objectives, both drilling-wise
30 and study-wise. Also then the support of our two largest shareholders. We like to think pretty smart money backing a company that they believe in, both Ivanhoe and Lion have been very supportive over the last 12 to 15 months. In particular, the bulk of our fund raising has come from them. We also have a longstanding Board and Management Team who have been quite prepared to
35 put their money where their mouth is.
A little bit about the Cloncurry region. Northwest Queensland is pretty hotter. There are a number of our fellow explorers and companies who are looking to move to production here exhibiting. I would certainly encourage you to get
40 around and meet us all. There is plenty of good news up in this part of the region. It is undeniably one of the best base metal provinces in Australia, if not in a wider field than that. It is already host to a number of world-class deposits, Mt. Isa itself, Ernest Henry, Cannington, Dugald Rivers -- still to be developed but a sizeable base metal project -- and then our project is sitting
45 just right next door to Ernest Henry at the E1 camp where we are capturing some of the surrounding resources into a planned 2.5 to 3 million tonne per annum project. Our activities up there range from grassroots exploration right through to the resource development that is now supporting our feasibility studies.
Just to home in on that geography around Ernest Henry. We got a Cloncurry diner here. There is a 40-kilometre tarred road all the way out to the Ernest Henry Mine. Power lines, water pipelines, and this is the centre of gravity for
5 us here at what we call the E1 camp. We will capture some of these higher grade deposits down at Monakoff early in our piece. Some infrastructure there. It is a fairly straightforward area topographically, billiard table flat in many respects for us to track that ore so that all goes well and we are, of course, in an existing mining territory with a precedent of sizeable operations.
10 We are conducting our own EIS at the minute, but do not envisage any atypical or insurmountable challenges. It is a process, but we are well advanced with that so far.
At the end of the day, I guess the quality of the asset begins with the geology
15 and the tonnes and the grain for us, and for those of you who have followed our story recently, you will have known that we have upgraded both E1 and E1 north and south recently. So we now are pushing up towards a 50 million tonne global resource but over 40 million tonnes for the Cloncurry Project itself, and almost 40 million tonnes indeed at E1. That is not finished, no
20 question. We have had a tremendous couple of years in having doubled our resource base now. We did have an interim target of 50 million tonnes for next year. We have now just increased that to 60; we are so close to 50 right now. Also important on this slide is to note the increase of the indicated category that will form the basis of our mineable reserve as we move into the
25 detailed feasibility studies, and we are committed to continue our expanding there. There is no ceiling to the size of this resource. Best time and money spent is delivering more tonnes of copper and gold.
Just a bit of a quick snapshot of the E1 North deposit itself where last week
30 we put out an upgrade. That is coming from this eastern limb that was discovered recently and it is interesting. The drilling that we have done was largely aimed at converting inferred to indicated resources, but has come up with upside in the pits and now in this new zone. So it just goes to show that geology can produce positive surprises for you and I have been very pleased
35 that that has been the case for us. There are more tonnes to come out of that new drilling. Assays are still coming through. For those of you on our distribution list, you will see that coming through shortly.
We also have a new zone here in the central zone, so this is the E1 deposit,
40 E1 North, E1 South and E1 East with a scale of a kilometre between each of these in the north-south direction. What you see there in the pink is the geophysics, the magnetic imagery which is pretty much our roadmap to the mineralisation. It is co-hosted by a very magnetite-rich host horizon, and so far, some of the visuals from these other exploratory holes here are coming
45 up with some very positive results. Again, auguring well in terms of our ability to increase the size of this resource. You will see some of the planned infrastructure that the open pit shells here. We will go as far as to say that they will necessarily join up, but there clearly is some potential for that to happen with the continuity here. The geology is quite easy to explain now. There is a folded system that runs through here and so it is quite understandable that the mineralisation is continuous.
Likewise, down at Monakoff where I made a small mention of those deposits,
5 they are running at 1.5% copper. Those grids made their way right into the front end of our schedule. We have a number of other deposits or prospects to the south here that are getting ahead out right now. Simply put, if any of those turn into Monakoff look-alikes, they too will make their way straight into the front end of our mining schedule.
10
So, all that geology adds up to a critical mass. As I said for us, we began our studies at the turn of the year, and on the face of it, the PFS was very successful. We delivered a robust base case that we are now looking to build on in the DFS, and part of that building is to now increase the throughput. The
15 economies of scale clearly work for us and thankfully the resource base is delivering. So we have got some of that upside already being brought to bare. It is a very straightforward metallurgical flow sheet, crush metal and flow to a copper-gold concentrate. There are indeed a number of very potentially lucrative by-products, and cobalt, magnetite or pyrite can be roasted to
20 generate asset and that is becoming a much sought-after commodity in our region, and maybe with the common sense, it is now about to prevail in WA with uranium mining. Fingers are crossed that Queensland can finally catch up to the rest of the world as well.
25 We have got our Native Title agreements in place. EXS has been around for a number of years and has negotiated some healthy disagreements with our native title claimants, which all goes well for the future. As I said, our EIS is well underway together with our PFS. We expect to submit both of those in the first quarter of next year, targeting production in 2010.
30
The base case. We put some results out on this in June-July, and you can see an NPV of around the $120 million odd mark. I have got to say that we went after capturing every single dollar and cent of upside because that relates to the copper-gold only and was based on a 2 million tonne per
35 annum benchmark. By pushing it up to 2.5 to 3 million tonnes per annum, we can easily double our NPV, and likewise, the by-products alone have the potential to double that NPV. So, it is our job to capture that upside in the DFS and to deliver on it ultimately, but certainly, it has given us every encouragement and indeed has generated a very positive amount of
40 proactive interest from the financial community. I am looking forward to the discussions over the next few months as we look to finalise some arrangements with debt providers for this project, and I think good projects in this market despite the backdrop will still get funding.
45 We touched a little bit on where we are going to capture this upside. Certainly in the resource base, but some of the more specific things in terms of the operations homing in on the unit costs and looking to reduce those, labour power, even our approach to mining, we costed our mining in the PFS on Owner Mining fleet. Highly unlikely, we will go that way and certainly Dry Hire offers some upside for us. With the resource base that we have being a little spread out, I think there are some other opportunities for us in scheduling that to maximise grade early on in the pace and minimise our cost through utilisation of multiple fleets.
5
The by-products. Cobalt is there as really a freebie and that there is no additional capital involved. It will come down to the marketing of our concentrates and how that turns out, but certainly well worth going after. Likewise, the magnetite, we can install a magnetic separation circuit on our
10 tailings for as little as $10 million and produce 500,000 tonnes plus of magnetite per annum. Capturing that value is more about the transport side of things. There is an existing real net workup in Queensland. It is somewhat capacity constrained at the moment, but certainly in time, we believe that the number of us there looking at that will encourage Queensland and others to
15 improve that logistical side of things and the magnetite is not going anywhere, so certainly we believe we can ultimately bring it to the bottom line. I mentioned the pyrite and the acid side of things. I know there is a number of our peers up in the area now looking at that, and why would we not with acid prices where they are at. There is a healthy market through Incitec Pivot’s
20 Phosphate Hill and some of the heap leach SX-EW copper producers up there. So there is a ready market on our regional doorstep. On the uranium side, if we are allowed to ultimately look at, again there is certainly some value to be captured there.
25 Metals prices. We used some information from the likes of the commodities. Researched it. We subscribed to their copper business which for me is as good as it gets. You are dealing with a very credible research team there. We also got a lot of information from the banks. The forward curves are now starting to line up quite similarly over the next few years, and I think
30 encouragingly so. I know we are seeing some volatility at the minute, but you look what is being done with hedging and some of the long-term price forecast out to 2011-2012, and they will certainly still be giving you prices that are representing good margins for the likes of new producers. We assume the forward curve did decline ultimately to $2 a pound. If it ever gets there, I
35 suspect there are a lot of us who will be mining for fun, but I am a lot more optimistic than that myself and I think that just to give you a feel for it, our average price in the PFS was $2.50 a pound for our NPV of 120 million. If you use a flat $3.50, that NPV rises to $300. So obviously very sensitive to the copper price, but I am quite relaxed about that. I think the copper bull market
40 will be here for a lot longer than day-to-day commentators are suggesting now.
Just to update you then on where the DFS is at. We rolled seamlessly through with GRD Minproc. Again, I am sure plenty of you know them, a very
45 credible company. I am very happy with their efforts through the PFS and so far in the DFS. It is their job, together with us, to help unlock that upside that we see through increasing the throughput and bumping up the capacity of the culmination combination and floatation circuits. We will work through reoptimising our pits using some of the price assumptions that we are now talking about here. With the metallurgy side of things, there are some test works ongoing that will optimise recoveries and start to now bring to bare the by-product potential that we have got.
5 You have seen some of the resource upgrades that we have had. There will be more to come and we will keep drilling. As we improve, both tonnage and grade, there certainly will be effects on the bottom line.
EIS is going along very well right now, and with the timetable that we have for
10 submission in the first quarter of next year, that still keeps our timeline to production on track for 2010.
Just reflected in the Gantt Chart here, we have had a pretty good run through the last 12 months and I think those have been the easy parts, but right now,
15 we are still head down trying to convert the potential that we have into reality. The backend, the construction period, the commissioning and production, of course, does depend on the approvals process. That will be our critical path, but I do not see at this moment in time any instrument or obstacles to that. We intend working closely with the Queensland department to help expedite
20 that process. We do sit after all on the doorstep on an existing 10 million tonne per annum operation.
Leading into that 10 million tonne per annum operation, everything I have talked about has been in the context of Exco’s standalone project, which
25 certainly we believe has got some real substance now. You cannot ignore the fact that we do sit 8 kilometres away from Ernest Henry, which by their own releases in recent times is scheduled to run (inaudible) (0:14:44) open pit ore in 2010. Sitting 8 kilometres away across the billiard table, we believe that there is a tremendous win-win opportunity to supply our ore to them to mill
30 through their facility. I think the value is implicit. We would not be building our own project. We would not be spending the money on that. Their economies of scale of 10 or 11 million tonnes per annum produce a cost base that is half of what can we generate ourselves. So there is upside for us to share. We believe we have gone well past the issues of “is this technically possible or
35 feasible?” It is really about a commercial discussion that we need to have with them. We have flagged our strong interest in doing that and it is not that there is not a dialogue. It is just not a formal one as yet. We will continue to seek that in parallel with progressing our own project and I think we are well placed to make some objective decisions on what the right route for us to follow is.
40
I have not made much mention about Ivanhoe’s plans. I am sure plenty of you have caught up with their recent listing and indeed the sizeable resources that they put out last weekend to the market. We have a joint venture with them around their Selwyn and Mt. Elliot project, as they are calling it. That
45 was a bit of an option for us in and that the leases here in yellow that we have joint venture with them are far enough away from our E1 camp to probably render them too far to contribute there, but they certainly can contribute to Ivanhoe’s project so they are proactively earning in on our joint venture down there, managing and spending the time and money right now. So that is another string to our bow, if you like, and certainly in a collaborative sense going forward, I think Ivanhoe’s rule in the region will increase in importance. I think perhaps not everybody is going to go forward and build new projects, but certainly Robert’s track record suggests that he will and I think that it will
5 be great for the region in the longer term.
Just one last word on the market fundamentals. As I say, I remain optimistic and very bullish going forward mainly because of the bottom chart there that the long term forward curve of copper which has more than doubled than its
10 backend over the last 12 to 15 months. It is that sort of long run price information backed up by Allan Trench and his team from CRU that has me quite confident with the activities we are busy with right now pressing forward to ultimately enter the production ranks.
15 So in summary, the key ingredients, if you like, for you to think about as a potential investor in Exco, what does this company offer you? We have got a Management team and experienced Board and Management team with a track record of continuous disclosure. We will tell you what we are going to do, we will tell you when we have done it and we will tell you what we are
20 going to do next. We have a track record of successful delivery. Some of my colleagues on the Board, people like Craig Burton, Alasdair Cooke, had successful history with companies like Sally Malay, now Panoramic, (inaudible) (0:17:44) and Mirabela Nickel, and that precedence and that success will be replicated in Exco.
25
We have a highly strategic growing position in one, as I say, one of the best areas for base metals in Australia, if not globally, and a resource base that continues to grow. We are well funded right now to achieve our immediate objectives to complete our resource development programs and to finalize the
30 studies. We have, as I say, a healthy amount of proactive interest from the financial community about funding this project.
We have three clear options for Exco. There is that standalone project, 100% owned by Exco. We do have the ore supply arrangement with Xstrata, which
35 could potentially be even more lucrative. There has been plenty of speculation about M&A and consolidation up in Cloncurry. We are quite prepared to pay our part in that however it unfolds and really it all comes down to expediting the path to value for us all us shareholders, and as I say, going back to that Board and Management team, we believe we are in a
40 position to make the right decisions as to which path is the best to follow.
I thank you for your time today. There is a copy of the presentation at the back if anyone is interested. We have got a booth just outside. We would certainly love to talk to you. Have a good conference, everybody.
45
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.
