INDIA RESOURCES LIMITED Audio Webcast

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INDIA RESOURCES LIMITED (IRL)

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INDIA RESOURCES LIMITED (IRL) Events

Company (Stock Code)	Date/Time	Event	Timezone: Australia/NSW
INDIA RESOURCES LIMITED (IRL)	Thu, 18 Sep 2008 10:00AM	IRL - Excellence in Mining and Exploration Presentation - Andrew Simpson, Chairman
INDIA RESOURCES LIMITED (IRL)	Tue, 27 May 2008 11:30AM	2008 AMEC National Mining Congress - Mr Eoin Rothery, Managing Director, India Resources Limited
INDIA RESOURCES LIMITED (IRL)	Wed, 12 Dec 2007 09:15AM	IRL - Surda Copper Project Production Update - Mr Eoin Rothery, MD
INDIA RESOURCES LIMITED (IRL)	Thu, 12 Mar 2009 11:00PM	Interim Results
INDIA RESOURCES LIMITED (IRL)	Thu, 27 Nov 2008 12:00PM 02:00AM Australia/WA	Annual General Meeting Celtic Club, 48 Ord St, West Perth, WA
INDIA RESOURCES LIMITED (IRL)	Mon, 20 Oct 2008 11:00PM	Full Year Results
INDIA RESOURCES LIMITED (IRL)	Fri, 23 Nov 2007 01:00PM	Annual General Meeting The Celtic Club, 48 Ord Street West Perth WA
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INDIA RESOURCES LIMITED (IRL)

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 ANDREW SIMPSOM, CHAIRMAN OF INDIA RESOURCES LIMITED (IRL)

“Excellence in Mining and Exploration”

http://www.brr.com.au/event/51328

 

THURSDAY, SEPTEMBER 18 2008, 10:00 AM.

 

            IRL       Thank you very much. It’s always interesting being the last speaker of the day. This is quite a different story and certainly unique story and certainly

10                    something that we hope will be the beginning of a much bigger program not only for our company but also the development of the Indian mining industry over the next decade which we think has got very significant potential. The usual disclaimer there, of course, you can read at your leisure. Firstly, just a brief overview of India Resources. Clearly, our strategic focus is the -- is on

15                    the development of the Indian resources and the opportunities they present. We have developed over the last 12 months strong commercial lines with Hindustan Copper, a major organization, a government organization in India that has been established for many years. We have our first copper mine project now in production, the Surda Mine which I’m going to talk to you about

20                    in more detail. We have growing production, again as I’ll explain in some detail, and, as a directly of that, we now have an ongoing earnings base we expect to add to strongly over the next couple of years. In particular, as part of that, we have an expansion opportunity at the existing Surda operation with the proposed decline that we’re -- we’ve now entered discussions with with

25                    Hindustan Copper. We’re reviewing the opportunity now which is also very important to us in the development of two additional mines in the area, the Khetri Mine and the Kolihan Mine, also owned by Hindustan Copper and presenting some bigger scale programs than what we’ve done to date. And also, of course, and it was the instigation or the primary reason that we

30                    started India Resources last year, was an exploration or recent exploration portfolio of base metal, copper and iron ore. For anybody that has actually taken the opportunity to look at the geological structure of India, they in fact do have an amazing resource base that is very largely untapped and -- but certainly requires development if they’re going to meet demand minerals and

35                    metals over the next decade and beyond. At this moment, India Resources is the only mining company or the Australian -- the only Australian mining operating company in India.

 

                        For such a small company, we have a very strong board. Apart from my

40                    involvement in the industry for many years, Eoin Rothery is a very senior geologist with commodity experience and understands what the needs are in terms of identifying and developing some of these projects that are being presented towards India. Equally is our Director of Operations, Arvind Misra. Arvind is an Indian by birth but was educated as a mining engineer in

45                    Australia and has a very, very strong mining engineering background and now is taking that expertise with a number of colleagues that he has brought to the company as well to assist in the development of the program that we’re doing. So it’s a very good and happy fit that we’ve started to develop.

 

                        Very briefly, the shareholding structure. No truly dominant shareholder. Territory Resources, which, as I’ve mentioned, I am currently Chairman of Territory Resources, is the largest shareholder and it is broken down there. So it’s a very liquid shareholding at the moment and we will grow that

5                      shareholding potentially with some investors from India as well over the next 12 months to 2 years.

 

                        Okay, why India? Well, as you’ve -- most of you are aware, the economic times of India have changed quite dramatically over the last couple of years,

10                    and it’s -- now, after China, this is the world’s second largest growing economy. Average GDP at the moment is 8.8%, and in fact, in 2006/2007, it was 9.6%. It’s -- it has a booming capital market and a rapidly growing foreign direct investment program. Structural economic transformation is underway driven by industrial and service sectors. And the growing savings and

15                    investment rate -- gross capital formation -- accelerated to 32% of GDP in 2007/2008. And then, of course, finally, there’s 1.1 billion people in India at the moment and with a rapidly growing demand for minerals and metals. As a market researcher of minerals and metals for many years, I think one point apart from GDP growth that people do tend to miss is that as individual

20                    wealth is created -- and we’ve seen this now become very evident in China over the last decade -- as this individual wealth is created, the demand for metals increases exponentially quite dramatically. Obviously, I’m talking about things like washing machines, refrigerators and motor cars and second motor cars, that sort of thing. So, once a person in a poor economy moves

25                    past the normal subsistence level of getting sufficient food and having a roof over their head, this demand for metals is -- it really takes off. So I’m not sure in fact that even in India that they really fully understand just what their demand for metals and minerals is going to be over the next two decades. But obviously, as I’ve said, what we’ve seen in China is very much a model

30                    that will be presented in India.

 

                        Again, if you go on to any of the major research programs, you will see in fact what amazing resource structure that India does in fact hold. And in fact, I -- to this day, I’m still quite amazed that it’s such still in its infant stages in terms

35                    of mine development. They have a massive base metal project, or resources: gold, iron ore, coal, diamonds, mineral sands. The list is almost endless. And as I said, yet the vast majority of these are very much undeveloped and they are still, to this day, very, very heavily reliant. As an example, in terms of servicing this rapidly growing steel industry they’re building, the vast majority

40                    of the raw materials of that steel industry are still imported from places like Australia and other areas. So it really -- in simple, logical terms going forward in macroeconomics, it just doesn’t add up with these resources. So, it’s not a question of if these resources will be developed, it’s a question of when. And when the final penny, I guess, does fully drop in India, without being too

45                    unkind I think the English-developed bureaucracy and the Indians perfected, I think that’s been part of the problem in terms of getting a lot of these things happening. Certainly, as any geologist that has spent any time in India will tell you -- and Eoin will certainly underline this -- there has been very minimal mining exploration programs and that, in fact, still prevails very much today. The Indian mining market or the structure by word is certainly now undergoing a transformation by Government design including recommendations from the Hoda Report where they did identify a couple of years ago that they had to get this industry rocking and rolling and that one of

5                      the biggest things they have to do is to get rid of the bureaucracy and the red tape and removing obstacles not only for internal companies in India but, most importantly, they do recognize that they now do need to attract people from overseas with expertise to develop these programs, develop these mining programs, and that’s why they’re trying to do. Patience is certainly the

10                    magical word. It’s easy to say that these things will happen, and I’m sure, given time, they will. But it’s -- I think it’s fair to say that in India the wheels do move slowly and, as I say, patience is one of the key words in expecting these things are going to happen. India Resources was formed in 2006 after considerable research, and we did as a group of people identify these

15                    opportunities. So we listed on the ASX in mid-2007 with an initial raising of $10 million, and we’ve subsequent -- done some raisings beyond that as well which I’ll talk about.

 

                        So where is India Resources at the moment? As I’ve said, we started

20                    primarily very much as an exploration company. But as we started to spend more time up there and our people were on the ground, we identified that in fact there were two important streams of business. The first now, and probably our leading stream of business now, is what we loosely term our mind development program. In the history of the mining industry over the last

25                    two decades as I’ve said before, it certainly couldn’t claim to be efficient. And certainly, as at the early part of this century as an example when the copper price went south very badly, a number of the existing operations in China -- in India were closed. And that includes some areas that we’re operating in now. And that was the case with their Surda Copper Project. The mine was closed

30                    in 2003 and -- after recognizing that it wasn’t, well, (competitive) at that time, and that was mainly again because of lack of expertise and efficiency. So we are -- as I’ve said, it’s our first stage operating the Surda Copper Mine, and I’m going to talk about that in detail in a sec. And there are many other projects pending both through our commercial alliance with Hindustan Copper

35                    but also with other outside groups. As I was saying to some of the guys today when we talked about this, I’m truly not exaggerating our brand name, India Resources brand name, in India is much, much stronger than one -- it is here in Australia. And we have now reached the point where we are being offered a new project: would we consider operating a new project every month

40                    without fail? (Someone) (inaudible) (10:48) with a project, would we consider helping them get it going. So the opportunity is certainly there in terms of mine development and the recognition of our expertise in that area. Exploration program -- pardon me -- we are still continuing. As I said, a lot of resources up there, base metals, iron ore and diamonds, which we’re having

45                    a look at each one of those areas and we will measure the opportunity in terms of exploration and developing the mining leases. So that program will continue. And fortunately, the program will become a little bit easier. As they are -- as our -- as the operation -- our mine development operations become cash-positive, supporting the exploration program will be assisted as well.

 

                        Now, more specifically to our first project which we’re very excited about. It’s located in Jharkhand State. It’s in the prolific Singhbhum mineral belt and there are numerous existing underground copper mines in that area. Some

5                      are in operation and some are not. It’s part of the India Copper Complex, which includes a group of six mines. As I said before, it was operated by Hindustan Copper between -- it started in about 1928 but stopped in about 2003. So in fact, it is a fully-developed mine which I’ll show you in a sec. It -- under that guideline, it produced 1.47 million tonnes at about an average

10                    grade of .9% copper for six years to January 2003.

 

                        When IRL took over the operation, we knew that we had a considerable amount of work to bring it up to a state that we would accept this as being efficient and profitable going forward. We commenced our first-stage

15                    production in December -- sorry, in November 2007, and that included the refurbishment of the actual mine, which I’ll show you in a sec, and also the Mosaboni Concentrator, which is about 2 kilometers away, in which the ore is fed into and then we concentrate prior to delivering to HIndustan Copper. Under our agreement, Hindustan Copper owns the mine, but we have taken a

20                    contract over the mine to an existing agreement through 2014. And all concentrate that we produce is supplied to Hindustan’s smelter up the road so there is no marketing. It’s under an existing agreement, and that agreement will continue until the -- through the existing contract. We have currently 7 million tonnes of mineralization identified at 1.2%, and that’s

25                    sufficient for the remaining six years of the contract that we have. But in reality -- and again, which I’ll explain to you about the potential expansion; we’re in discussion at the moment -- in fact the life of -- the economic life of the mine at those grades we believe will prove to be in excess of 30 years. So it’s a very extensive system there that we will -- we have to continue utilizing

30                    we think well beyond 2014. Surprisingly for such a small company, we currently employ 850 people locally, and that number will continue to grow with some of the expansion programs that we hope to confirm in the next couple of months.

 

35                    This is the scale of where we’ve -- or the history of the mine. On the left-hand side, you can see there the previous Hindustan copper program. We have been at this now for only a year, as I said starting in November last year. And as of this month, we will be -- we will exceed 30,000 tonnes per month. And in fact, by the end of this quarter, we will be close to 40,000 tonnes per month.

40                    And as you can see on that scale, that is well, well above what was ever achieved historically in the mine. That was just a case of introducing, I guess, Australian expertise and standards and operating procedures, and the results are becoming very evident very quickly. You can see there is a revised target of 9000 tonnes of copper per annum, and that will involve the potential

45                    introduction of the Surda decline which again I’ll talk to you about just in a sec.

 

                        This is the ramp up program, initial production target of 450,000 tonnes of ore per annum at 1% copper. As I said, potential to double that to 900,000 tonnes. And we are currently on track to reach a 30,000-ton level and I’ll tell you why that’s important in a sec. And that, well, we expect to gleefully announce early next month, that we’ve achieved that level.

 

5                      Again, this is emphasizing where we started from. The first quarter was the -- of this year was the first serious quarter of production. And in that quarter, we achieved just over 1300 tonnes of concentrate, 23.5% copper. Then you will see the ramp up program: a further growth in the June quarter, December -- September quarter again going up consistently. And in the fourth quarter of

10                    this year, we anticipate we’ll see which -- exceeding the level of 4000 tonnes in the quarter.

 

                        How is this achieved, we’ve certainly -- we’ve invested totally in the operation at Surda approximately $15 million. That has been both in terms of

15                    refurbishment of the mine and also the refurbishment of the concentrator. New mining and processing equipment has been introduced. This has included things like new LHDs for the underground which has certainly allowed us to lower costs to make the program much more efficient. New stopes have been developed in Blocks 1, 7 and 8, and mining is in fact now

20                    underway in eight stopes. Further growth will certainly be possible as next month, for example, we’re going to upgrade again the shaft hoisting capacity.

 

                        Similarly with the Mosaboni Concentrator, we’ve put in the 12 new flotation cells, new -- a new Chinese ceramic vacuum filter which provided immediate

25                    savings, and we are currently now very much in line with our target daily production rate. And then, most importantly, through that refurbishment program with the concentrator, that concentrator, in fact, is only operating at about 35% capacity. It’s operating very efficiently. But we certainly have the opportunity to feed a lot more ore through the concentrator and that’s

30                    important in terms of our forward program.

 

                        Very briefly, this is a cross section of the mine at Surda, of the -- the long section view of the mine. All levels are connected by rail, developed mining box in each area as you can see with very clearly defined tonnes and grades.

35                    Those blocks closely define the availability of the mineral going forward. We get to -- we get only very limited variation in terms of the grade, and that again gives us considerable optimism in terms of what we actually can do with this mind not only through to 2014, but potentially much longer than that.

 

40                    We are currently in discussions with Hindustan Copper about the introduction of this -- of the decline. The reason that that decline is very important to us is that, first of all, as I mentioned, because of the existing -- the shaft hoisting capacity and operation of the mine in fact is limited. So it’s 47%, the concentrated capacity that we’re currently using at the moment. And that –

45                    we were able to -- through the inclination of the decline, it not -- not only will it enable us to at least double the existing production up to about 9000 tonnes per annum, which will certainly in itself provide us very strong, increased profitability, but it does provide us with very strong economy of scale benefits for the existing operation as well. So, marginally, the profitability would increase off the existing operation by approximately 150% of where we’re currently at the moment. So, as I said, we’re in discussion with Hindustan Copper at the moment, but that will be subject to a couple of things. It will certainly require an extension of the existing agreement and we’re targeting

5                      out to about 2025. And secondly is that we do require further JORC confirmation.

 

                        Again, I’m aware that I’m running out of time, but this is -- that’s a diagram of the proposed decline that we are in discussion (inaudible) (20:12) (putting in).

10                    And as I said, subject to agreement, that’s the way that we are -- I won’t go into any further detail about the blocks and that sort of thing. You can read that in the presentation later on. As I said, I’m conscious that I’m running out of time a bit.

 

15                    So, most important -- and this is a serious benchmark for us and something that we’re pretty excited about -- the operation is in fact on track and we will become cash flow-positive in September 2008, in other words this month. And we are very looking forward to announcing that early next month as an achievement. And then that -- as I said, there’s a very strong potential to

20                    increase the EBITDA of this operation by about 145% if the decline goes in. You can see we’re -- at the moment we’re at exactly at that breakeven point, and you can see the opportunity of what we can do there with serious profitability.

 

25                    Quickly in terms of people who continue -- who has asked us what it’s like working in India, of course it’s a very different experience. We have 850 workers on-site, but our safety program is now very strong. We’ve introduced Australian standards. And as you can see on that scale here, the lost time injury rate is in fact well below what the Australian standards are at the

30                    moment. We’ve got a very strong compliance, the people are very enthusiastic about following these programs, and it has proven to be very successful.

 

                        Certainly, our existing partnership with Hindustan Copper is very important to

35                    us. They’re a major Government organization, but they are listed on the Mumbai, Delhi and Calcutta stock exchanges. Yup. They -- sorry. And they have a number of other plants and mines that they’re in discussion with us about developing. And in particular, this includes the Khetri Copper Complex which we have tended for to develop, and we should have the outcome of

40                    that tender within the next month. So that will be potentially our second project. And also Kolihan Mine which is nearby, that mine -- the grade of that mine in fact is better than the Surda Mine. It’s about 1.5% copper and we could -- we believe that we could start that operation within four to five months. And with the existing non-use capacity at the concentrator, it would

45                    be in fact the much easier process than what it was versus that of Surda Copper Mine. So I’m trying to run through these now fairly quickly. I apologize for running a little bit too long.

 

                        So, again, there’s more detail there about those potential developments. They are very, very important to us. And we hope that within the next 12 months, we have to stand up and say, hey, in fact, here we’re not the -- we’re not operating one mine in India but we’re operating at least two or three. And it

5                      certainly continues to strengthen our relationship with Hindustan Copper.

 

                        Going back to the exploration side and the program that we have there, we have -- first and foremost, we have an investment in Pebble Creek Mining which we own 17% of. This Pebble Creek has been operating in India for 10

10                    years. They have just been advised that they’ve now awarded their mining license subject to confirmation and environmental thing which they expect to achieve early next year. And that will then give them the freedom to start mining. We certainly -- as a major shareholder in that program, we anticipate that we will be a partner in that mining program and we will bring our

15                    expertise to that. On the exploration side, as I mentioned before we have an active exploration program for base metals, for iron ore and diamonds, and we anticipate that we will have – be able to present some results on that program also over the next 12 months.

 

20                    Again, I’ll -- I’d like to show you some detail now, but it’s all included in the presentation. So just going through then until the final summary and the outlook, as you can gather we are extremely positive about our forward position and what the opportunities are being presented to us. It’s been a fairly steep learning curve for the -- over the last 12 months, but we are now

25                    much more comfortable of our position in the mining industry in India. The upside potential, as I said, is very strong. We have already developed a very strong brand name in India, we have a very strong and experience Board management, and we think that when we stand up again at this conference hopefully in 12 months’ time, we will be able to say that we’re a much bigger

30                    and more robust company taking through these opportunities that are being presented to us. So thanks for your time.

 

PRESENTATION CONCLUDED

 

 

 

 

Contact brr@brr.com.au for more information

 

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