Transcript Oil Barrel Conference

(Incorporated in Cayman Islands with Company Number CD246747)
CSS Annual Investor Conference
Gold Production and Exploration
Philippines
21 May 2014
Presented by: David Thompson, Chief Financial Officer
Kandooo Tenement
4. Discussion
Notice to Recipient
Confidential
Disclaimer
All information, including statements of fact, contained in this presentation have been obtained and compiled in good faith
from sources believed to be reliable. However, no representation or warranty, express or implied, is made by Phigold Ltd
with respect to the completeness or accuracy of its contents, and it is not to be relied upon as authoritative and should not
be taken in substitution for the exercise of reasoned, independent judgment by you. Recipients are urged to base their
investment decisions upon such investigations as they deem necessary. The analysis contained herein is for the exclusive use
and benefit of Phigold Ltd and to the extent permitted by applicable law, no liability whatsoever is accepted by Phigold Ltd
for any direct or consequential loss arising from the use of this document or its contents.
The analysis contained in this document is based on numerous assumptions; different assumptions could result in materially
different results. Any valuations, projections and forecasts contained herein are based on a number of assumptions and
estimates and are subject to contingencies and uncertainties. The inclusion of any such valuations, projections and forecasts
in this report should not be regarded as a representation or warranty by or on behalf of Phigold Ltd or any person or entity
within PhigoldLtd that such valuations, projections and forecasts or their underlying assumptions and estimates will be met
or realized.
Past performance is not a reliable indicator of future performance. Commodity prices, interest rates, foreign currency
exchange rates may adversely affect the value, price or income of any security or related investment mentioned in this
report. In addition, investors in securities whose values are influenced by the currency and commodity of the underlying
assets, effectively assume currency and commodity price risk.
The Philippines
o
The Philippines’ mineral wealth is due to its position on what
is known as the “Belt of Fire”, a fault-line stretching across
the islands of Luzon and Mindanao. The Belt passes directly
through PhiGold’s area of interest.
o
The Agusan District, East of Mindanao, where the Company’s
assets are located, is one of the prolific gold districts of the
Philippines.
o
Mining operations are at surface and mining is being utilised
using environmentally friendly gravitational concentration
techniques.
o
Project has been materially de-risked play with strong
management and opportunity to expand asset base across
highly mineralised underdeveloped region.
o
JORC compliant resource base and opportunity to leverage
acquisitions in an under-valued marketplace.
flagged bamboo poles. The pits were dug with an opening of 1 x 1m and, initially, a maximum
depth of 10m. The grid was methodically reduced down to a 37.5 x 37.5m excavation grid targeting
Overviewareas that revealed the most significant depths and had the most intense illegal miner activity.
o
In addition, the Company hired two hydraulic excavators and completed two trenches; one along the
northern portion of the tenement and the other along the southern limit (see Figure 6). These
trenches were over 450m in strike length and at least 8m deep. Samples were collected along the
trench
– vertically
in to
10m
increments
along
strike.
PhiGold
was walls
incorporated
in 2008
acquire,
develop and
mine
precious metals, with a focus on the Philippines.
o
This exploration
has enabled
IRES
to compile
independent
The company
has a JORCwork
and NI-43-101
compliant
resource
base ofan
271,932
ounces. Mineral Resource estimate in
accordance with JORC (at a 0.10g/t Au cut-off).
Category
Measured
Indicated
Inferred
Total
Gross & Net Attributable
Au Grade
Contained
Tonnes
(g/t)
Ounces
7,558,900
0.313
76,065
14,589,407
0.265
124,298
11,075,114
0.201
71,569
33,223,421
0.255
271,932
Operator
PhiGold
Metallic Ore
o
The mineral resource covers approximately 77% of the total tenement area (see Figure 6),
Test occurring
production predominately
has generated approximately
of gold
sales to the Banco Sentral Ng Pilipinas.
south of theUS$1m
crossing
highway.
o
concentration
undertaken
by ofMetSolve
in Vancouver, Canada, revealed
GoodGravity
economics
of scale, withtests
the cost
of production
US$600 anLaboratories
ounce at full production.
o
o
o
o
that a minimum of 64% of the gold could be recovered in just one concentrate run. Concentration
using a 3 stage process yielded a recovery rate of 82%. The resulting calculated head grade was
Barobo has a NPV10 of US$78 Million at full capacity.
1.60g/t versus the 0.40g/t assayed. The difference between these grades suggests that smallersized samples may miss gold nuggets whilst large samples contain appreciable amounts of gold
Experienced
mining
team
with considerable
experience
in the Philippines.
nuggets.
This
implies
that by mining
and processing
most of the sediment on the tenement, the
actual mean mineral resource grade will become higher than initially estimated.
Further significant ‘blue sky’ assets under evaluation.
Through 2009 and 2010 the Company completed a detailed assessment of the viability of mining
operations and submitted an Environmental Impact Assessment study containing a preliminary 50
Assessment of listing under way.
tonne per hour processing facility plan which was approved by the Department of Energy and
Natural Resources (“DENR”) on 13 September 2010 concurrent with the issuance of an
Environmental Clearance Certificate.
Current Production at Barobo
•
Aggregate gold sales of $1 million since test production
commenced from sale of 755 ounces
•
Recent equipment upgrade to 100 tonnes per hour completed
rated capacity and successfully tested with test pit ore
•
Approvals to mine first main pit at Barobo pending
government approval. Further funding might be required
depending on outcome of discussions
•
Potential to increase capacity and output to 600 tonnes per
hour
•
Environmental clearance issued for the processing of up to 3m
tonnes per year
•
Project to qualify for tax incentives due to environmentally
friendly gravitational mining techniques
‒
PhiGold has a 100% chemical free process
Schematic of current Equipment at the mine site
Mining Pit A
Processing Operations
Pouring of Gold at the Company’s own processing facilities
From Ore Excavation to sale of Gold to the Philippine Central Bank (all stages of the process completed)
Ore excavation
o Backhoes
excavating earth
o Trucks transporting
ore to stockpile
Gravity
concentration
Gold Extraction
o Trommel feeding
gravity
concentrator
o Plumbing to water
well
o Mains electricity
o Concentrate moved
from site to
production area
o Extraction of gold
using reverse spiral
helix
Gold Pour
Gold Sale
o Laboratory:
o Assay equipment
o Micro-refinery
o To Bank of
Philippines
(Mindanao)
o Export market
Barobo Production forecast
0.281 g/t
Annual Revenue for 2015,2016,2017,2018 – per annum
$33m
Annual OPEX for 2015,2016,2017,2018
$13m
Expected mine life (based on re-investment of profits scenario)
8 years
Net cash generated over mine life to 2021 assuming base case reserves
$129m
NPV10% Discount
$78m
- Note declaration of mining feasibility for main pit mining required
Strategic acquisition (“Stratos”)
•
Stratos represents a 27 km2 concession area located near existing mine and on trend with major existing gold
mines in the region.
•
It is one of the most substantial mining concessions in the Philippines.
•
Potential exists at Stratos for over 10 million ounces of Gold and 5 Billion pounds of Copper.
•
Assay tests conclude high grade mineralization across the tenement.
•
Current project NPV of US$129m.
•
Stratos is a related party transaction with cross shareholdings and directorships for the management of PhiGold.
We refer
the recommended
Exploration programme
attoStratos
drilling targets as presented in the Summary Report and
Recommendations, Kandooo / Superfields Tenement, dated November 1st, 2013.
1. Introduction
Independent Resource Estimations (“IRES”) compiled a comprehensive summary report of all
the geological and analytical work completed to date on the Kandooo/Superfields tenements
on Mindanao Island, Philippines.
Based on the discovered gold and copper anomalies in the southern portion of the Kandooo
tenement, nine (9) areas have been targeted for diamond drilling; see Figure 1.
Figure 1: Drill Targets - Kandooo
preferred that wireline drilling be done. With wireline drilling, a barrel of core can be removed
from the bottom of the hole without removing the rod string. When the driller wants to remove the
core, an overshot is lowered on the end of a wireline. The overshot attaches to the back of the
2014 Drilling programme
costs
attube
Stratos
core barrel
inner
and the wireline is pulled back and the inner tube disengages itself from the
barrel. This will decrease the amount of time required to drill each hole.
2. Costing - Drilling
A cost breakdown for the involved drilling, sampling and assaying is shown in Table 1 below. The
drilling rate is assumed to be 50m/shift with 1 shift per day. This translates to 23 days of drilling
time to complete 1,125m.
Table 1: Costs
Item
Cost
-
Unit
125m long
Number
9 Holes
Totals
1,125m
Drilling
Mobilization
Demobilization
Interhole Moves & Setups
Sump Excavation
$200
$5,000
$5,000
$150
$200
Per meter
Per move
Per hole setup
9
9
$225,000
$5,000
$5,000
$1,350
$1,800
$238,150.00
Drillholes
Sampling
Quality Assurance/Quality Control
Assaying Cost
Core Trays
Transport Samples to Manila
Labor
1m long
1 dup + 1 blk for every 20 samps.
1,125
113
1,125
113
1,238
$125
$15
$5,000
Per sample
Per tray/5m
-
1,238
225 trays
-
$154,688
$3,375
$5,000
$163,063.00
$200
$50
Day/geologist
Day/labor
1p x 30 days
4p x 30 days
$6,000
$6,000
$12,000.00
Total
15% Contingency
Grand Total
$413,213.00
$61,981.95
$475,194.95
The sampling was assumed to be 1m long intervals, given that the lithology remains uncertain. If
large continuous intersections of the same rocktype are encountered, sample lengths should
increase in interval length. This will result in fewer samples to be submitted to the assay
laboratory. At all times, lithological contacts are to be honored.
Furthermore, all cores are to be logged for lithology, alteration, mineralogy and structure (if any).
All cores are to be digitally photographed prior to being hand split for sampling. No provision was
NPV of Stratos Assets
“If we make the assumption that alluvial Au mineralization is present within 53% of the total tenement area (both
Kandooo + Superfields), we can set a valuation of $72,008,798. With regards to the potential porphyry Cu/Au
deposit, If we make the assumption that the average Cu grade is 0.7%Cu, we can valuate the copper deposit as
$32,138,453 and the associated Au as an extra $9,376,151. These values add up to $113,523,402 for the entire
project – and they are, in my opinion, realistic.“
Share Capital
o
165m shares in issue
o
Last placement price $0.176
o
Implied market capitalization of $31 Million
o
455 Stockholders
o
US$13.5 million gross raised since 2009
o
Over 22% of the Company stock is with Management
o
Largest shareholder owns 18% of the stock issued.
Management
Andrew Mullins (age 33), Chairman and CEO
•
Executive Director and Corporate Secretary of listed Philippines-focused Energy explorer, Forum Energy Plc. (LSE:FEP) a
subsidiary of Philex Mining Inc, the Philippines largest Gold producer and ultimate subsidiary of First Pacific Company Inc, a
Hong Kong based conglomerate with a market capitalisation of over $10 Billion.
•
Founding shareholder and Chairman and CEO of PhiGold Limited and Stratos Mining Inc, both mining companies operating in
the Philippines since 2007 and 2011 respectively.
•
Independent director of Atok Big Wedge Company Inc, a US$2 Billion Mining Company listed on the Philippine stock
exchange and FEC resources, Inc. listed on the NSADAQ stock exchange.
•
Directly involved in the raising of over US$100 million equity and debt for primarily mining and energy investments in the
Philippines.
•
Negotiated both the listing and sell out of Forum Energy to First Pacific Company during the economics crisis in 2008.
•
Holds B.Eng. (Hons) in Mechanical Engineering from University College London (2001)
Ronald Zipagan (age 48), President
•
Geologist with over 25 years experience in minerals and petroleum exploration and production.
David Thompson CPA (age 60), Finance Director
•
Over 30 years experience in finance and considerable experience in the Philippines
•
Since 1990 has served in finance roles for many international resources companies including Forum Energy (CFO) and Sea
Dragon Energy (CEO). He floated Sea Dragon on the TSX-V in 2008.
•
In 2010 Incorporated Caracal energy with Chad Oil projects. Now listed on LSE with a market value in excess of $1.5 blln.
•
In 2012 Incorporated United Hydrocarbon International Corp. with Oil and Gas assets in Chad and helped to raise over $250
mlln for development.
Gerard Mizrahi (age 60), Director
•
Managing Partner, Charles Street Securities Europe LLP
•
Over 35 years experience in private equity investing, banking, investment banking
•
MA Economics, Kings College, Cambridge
(Incorporated in Cayman Islands with Company Number CD246747)
For further information please contact:
Andrew Mullins
Chairman and CEO
David M. Thompson
Finance Director & Company Secretary
Email:
Office:
Cell:
Email:
Office:
[email protected]
+632 869 9989
+639 188 989989
[email protected]
+632 869 9989