Transcript Sherritt International Investor Presentation

Presentation
Annual General Meeting
– June 2009 -
Forward Looking Statement
This presentation
contains statements that constitute “forward-looking
statements” within the meaning of Section 21E of the Securities Exchange Act
of 1933. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements, or developments in our industry, to differ
materially from the anticipated results, performance or achievements
expressed or implied by such forward-looking statements. There can be no
assurance that such statements will prove to be accurate. Actual results and
future events could differ materially from those anticipated in such
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of their respective dates.
Important factors that could cause actual results to differ materially from the
Company’s expectations are discussed under the heading “Risk Factors” and
elsewhere in the Company’s documents filed from time to time with the
Toronto Stock Exchange, Canadian, United States and other securities
regulators. Forward-looking statements are based on the beliefs, estimates
and opinions of the Company’s management on the date the statements are
made. The Company undertakes no obligation to update these forwardlooking statements in the event that management's beliefs, estimates or
opinions, or other factors, should change.
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Overview
2008
• Decision to suspend production driven by
metal price decline
• Operating achievements position FNI for
future development
Lockerby cost & production thresholds
met
Lockerby reserves & feasibility studies
advanced
• Exploration launched at Belmont, Raglan
Hills
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Lockerby Mine - 2008
 Metal/Ore production on track at time of shutdown
- 3.8 M lbs Ni after 10 mos vs 3.8-4.4Mlbs full year
 Mine operating costs last 4 months
- C$165/t vs budgeted C$236 (-30%)
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Lockerby 2008
 Full feasibility
announced July 2008
 Needed US$10 Ni for
robust economics
 Resource models
recalculated later in
year at higher cutoff
 Next stage feasibility
and engineering studies
launched late 2008
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Exploration – Southeastern Ontario
 Grassroots
exploration
program
 Targets – Voisey’s
Bay style nickel
copper PGE deposit
 Over 40 known
nickel-copper
occurrences
 Under-explored
region of Ontario
 Drilling in 2009
Sudbury
Raglan Hills JV
Belmont Project
Toronto
Lockerby 2008 – Still Significant Upside
 New resources added
to upper workings
*
 New resource
estimate on Lockerby
Depth
 East Zone prepared
for conversion to
reserve and
development
 High potential for
Footwall-hosted
mineralization
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West Graham: 2008
 Exploration budget of $1.5
million for 2009
 FNI will earn 70% interest in
property on December 31, 2009
 NI 43-101 Resource estimate
completed in January 2009 by
Scott Wilson RPA
 Metallurgical testing completed
at SGS Lakefield
 6,000 m diamond drill hole
program scheduled for 2009
 “no seeum” type platinum group
element (PGE) mineralization
 Footwall remains relatively
untested
First Nickel Inc. West Graham Property, Conwest Zone,
Tonnes
(000’s)
Ni%
Cu%
Co%
Au g/t
Pt g/t
Pd g/t
Ag g/t
S%
Ni Eq%
Indicated Resource
8,550
0.45
0.31
0.01
0.03
0.07
0.02
1.91
2.43
0.55
0.0
2.1
2.10
0.50
0.02
1.29
3.00
0.68
Inferred Resource
2,000
0.40
0.30
0.0
0.0
0.1
Boundary Pillar
8
270
0.57
0.33
0.02
0.02
0.06
Lockerby Mine – Recent Work
 New Depth resource estimate
modeled at 1.5%Nieq cutoff
 These resources then used for
the new feasibility study
 Feasibility to 43-101 standard
by GENIVAR incorporated
extensive estimating and
input from many sources
 Results announced in
February 2009
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Lockerby Mine: Feasibility
 Reserves:
1.4 [email protected]% Ni, 1.36% Cu, 0.083% Co
 Mine Life of 2010-2015 yields:
- 51.7 Mlbs payable Ni;
- 34.4 Mlbs payable Cu;
- 1.0 Mlbs payable Co
• Resources will lead to production
well beyond 2015
 Pre-production Capex: $37.6 M
 Sustaining Capex: $32.2 M
 Cash Cost/lb Ni: US$4.50
 IRR: 40.5%
 NPV (10%):$34 M
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Lockeby Mine - Development
 Low Risk Project – very
conservative plan with room
to optimize
 Capital plan based upon a
tight and well-understood cost
model
 Consists of extending existing
infrastructure in a wellengineered mine
 Old fleet to be replaced with
new mobile equipment
 Improve U/G ore handling and
air cooling systems
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New Financing
On June 17, 2009 we announced the arranging of a
US$10M Working Capital Facility. After closing this
transaction we will:
• Acquire a major investor with impeccable banking and mining
finance credentials which adds immeasurably to our stature in
financial markets
• Be able to advance Lockerby engineering planning and undertake
modest capital projects that will expedite later development
• Have sufficient working capital to cover business needs through
the downturn and be positioned to seek full mine financing
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Action Plan 2009
We plan to:
1. Advance Lockerby scheduling and
detailed engineering in anticipation
of a late 2009 financing - if
appropriate
2. Continue exploration drilling in SE
Ontario, Lockerby and West
Graham
3. Continue exploration’s generative
studies to launch new projects in
2010
Nickel: Still the Place to Be
 Significant production pulled
from the market – >300 Kt
 Large Southern Hemisphere
projects (high Capex) –
additional projects may be
stalled/abandoned?
 China/India long term growth
still in place
 Marginal cost around the world
averages close to US$5/lb
excluding capital
 >US$7.00/lb Ni is a reasonable
long term nickel price (2011+)
Nickel output falls, for the first time in a decade
Low growth rates reflect historic
under-investment and operational
underperformance
Chinese
nickel pig
iron to the
rescue!
Underperformance
continues,
cutbacks start
7%
3%
-2%
Data: CRU
-6%
2000
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2001
2002
2003
2004
2005
2006
2007
2008
FNI – Looking Ahead
 Need to grow beyond a
single operation
 Pipeline of grass roots to
advanced exploration
projects
 We are actively identifying
additional opportunities
Drivers for Growth
FNI Operations Group:
-
G. Bilodeau: VP Operations
M. Bilodeau: Project Manager-Lockerby
C. Lafleur: Chief Engineer-Lockerby
B. Gascon: Mine Superintendent-Lockerby
L. Wilson: HR Superintendent-Lockerby
 Lockerby Depth is a good orebody - because we have the
right team to manage, execute and deliver the mine
plan.
 This team is capable, motivated and wants to build the
company by developing and building more mines.
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Drivers for Growth
FNI Exploration Group:
- P. Davis: VP Exploration
- P. Vicker: Manager Sudbury Geology
The team is responsible for the additional resources at
Lockerby. Extensive nickel-copper geology experience,
both in exploration and resource definition, and in
Canada and internationally. Actively engaged in sourcing
new projects.
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Drivers for Growth
 Strong board with diverse backgrounds and high level of
industry experience
 Board direction is to grow the company
 A new serious investor coming on board who could
potentially support new investment opportunities
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