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Transcript of For personal use only - Australian Securities Exchange personal use only 2 Disclaimer & Important...
RIU Explorers Conference – Fremantle, Western Australia
An emerging Western Australian Gold Company
JON PRICE
February, 2012
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Disclaimer & Important Information
• Statements and material contained in this Presentation, particularly those regarding possible or assumed future performance, production levels or
rates, resources or potential growth of Phoenix Gold Limited, industry growth or other trend projections are, or may be, forward looking statements.
Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties.
• This presentation may describe Measured, Indicated and/or Inferred Resources. Inferred Resources have a greater amount of uncertainty as to their
existence and greater uncertainty as to their economic feasibility. It cannot be assumed that all or any part of any Inferred Resource will ever be
upgraded to a higher category. Exploration is an inherently risky proposition and investors are advised that most exploration projects fail to identify
economic resources. The Company has at present not confirmed the economic viability of any resources at the project. The company plans further
drilling programs and studies with the objective of confirmation of any deposits and ultimately completing a feasibility study to demonstrate the
economics of the resources.
• The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Ian
Copeland, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Copeland is a full-time employee of Phoenix Gold Limited and
has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Copeland consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears.
• The information contained in this presentation is for informational purposes only and does not constitute an offer to issue, or arrange to issue,
securities or other financial products. The information contained in this presentation is not investment or financial product advice and is not intended to
be used as the basis for making an investment decision. The presentation has been prepared without taking into account the investment objectives,
financial situation or particular needs of any particular person.
• No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and
conclusions contained in this presentation. To the maximum extent permitted by law, none of Phoenix Gold Limited, their directors, employees or
agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault of negligence, for any loss arising from
the use of the information contained in this presentation. In particular, no representation or warranty, express or implied is given as to the accuracy,
completeness or correctness, likelihood of achievement or reasonableness or any forecasts, prospects or returns contained in this presentation nor is
any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and
contingencies.
• Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate
in light of your particular investment needs, objectives and financial circumstances.
• The information on exploration targets in this presentation are based on a conceptual range of targets as follows:
Tonnage 2 million to 15 million
Grade 1.5g/t Au to 5 g/t Au
Ounces 0.1million to 2 million
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Corporate Overview
ASX Code: PXG
Ordinary shares 110 million
Listed options 72 million
Market cap (undil.) ~$25 million
Range (since listing) $0.15 – $0.30
Average daily volume ~300,000
Directors and Senior Management
Dale Rogers Non-Executive Chairman
Jon Price Managing Director
Clay Gordon Non executive Director
Ian Gregory Company Secretary
Ian Copeland Exploration Manager
Investor Shares %
Cazaly Resources 10.1m 9.2
SHL Pty Ltd 10m 9.1
Mr JP Price 7m 6.4
Resource Capital Fund 6.5m 5.9
Ms LA Thomson 5.6m 5.1
JP Morgan Nominees 5.1m 4.6
Cerep Pty Ltd 4.0m 3.6
Grand Private Equities 1.8m 1.6
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Phoenix - the story so far…
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• Conducted global search for gold projects in 2010
• Acquired and consolidated landholding from four vendors with
595,000oz in Resource* and five separate data bases
• Listed 22 December 2010 raising $8 million at $0.20
– Focus on two of Western Australian Goldfield’s major shear zones
– By September 2011 a 977,000 oz Resource* after data base consolidation
and review – up 64 %
• The Phoenix strategy at IPO**
1. Increase Total Resource base by 50% by Dec 2011
2. Build Resource / Reserve to support a 3-5 year mine plan by Dec 2012
3. Generate cash flow to fund exploration and mine development
4. Acquire strategic projects on the two key shear zones
* Refer slide 27 – JORC Resource Inventory
** Refer prospectus dated 20 October 2010
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Project Area Location
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4 Camps with Million Ounce Potential
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• Over 480km² landholding
• 2 world class shear zones
– Zuleika Shear
• Home to million ounce deposits
• High grade open pit and
underground potential
• Phoenix tenure underexplored
along strike and at depth
– Kunanalling Shear
• Home to large base load oxide
and transitional ore
• Historic drilling limited to top 60m
• Modern structural geology absent
• Disjointed tenure re-consolidated
• Close to milling / mining infrastructure
and services
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Resources up 72% in first year* …
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• Total Resource now 29.6Mt at 1.8g/t Au for 1.68 M ounces*
– Increased 182% from initial acquisition
– 90% of the Resource lies between 0m and 80m from surface
• Four priority projects identified
– Castle Hill – added 306,000 oz to 559,000 oz at 1.6g/t
– Broads Dam – added 321,000 oz at 2.0g/t
– Ora Banda – increased to 397,000 oz at 1.9g/t
– Kunanalling – now stands at 245,000 oz at 1.8g/t
• Discovery costs below $5/oz
* Refer slide 27 – JORC Resource Inventory
** Refer slide 2 – Exploration targets
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Castle Hill – a New Gold Deposit
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• Over 5km of continuous
mineralisation
• Remains open in all directions
• Resource envelope down only
70m
• Significant intercepts from
recent drilling
– 10 metres at 9.9g/t Au from
18m including 2m @ 27.4g/t
– 15 metres at 6.6g/t Au from
39m including 2m @ 39.3g/t
– 13 metres at 7.4g/t Au from
60m
– 7 metres at 6.9g/t Au from
67m
• Results of latest drilling
demonstrate potential
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Castle Hill – Base load with adjoining high grade
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Castle Hill – Open in all directions
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Broads Dam Exploring for High Grade
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• Zuleika shear
– Hosts multiple +1M oz mines at
+5g/t
– Recent discoveries below old
pits using structural geology and
deeper drilling
• Strike of 14km
– Acquisitions reconsolidate
project
– Shallow ad-hoc historic drilling
– Open along strike and at depth
• Latest drill results
– 13 metres at 4.85g/t Au from 16m
– 2 metres at 13.74g/t Au from 105m
– 4 metres at 4.92g/t Au from 70m
– 2 metres at 9.04g/t Au from 108m
• Drilling to find the next 1M
oz underground mine
* Refer slide 27 – JORC Resource inventory
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Broads Dam – in the heart of gold territory
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Blue Funnel – the next big underground?
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Ora Banda-Grant’s Patch – no activity for 15 yrs
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• Ora Banda
– Nazzaris and Boundary first pass drilling
complete
– Potential for large scale open cut oxide and
transitional ore bodies
• Latest drill results
– 2 metres at 44.6g/t Au from 20m
– 6 metres at 12.29g/t Au from 20m
– 6 metres at 8.22g/t Au from 29m
– 9 metres at 4.52g/t Au from surface
• Grant’s Patch – Backflip a good start
– 93k oz at 2.5g/t Au
– New paleochannel identified just outside the
Resource envelope
– Intercepts to north and south yet to be tested
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Build Mining Pipeline by Dec 2012
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• Advanced mining review on schedule
• 5 mines under assessment
– Catherwood – Feasibility Study complete
– Project forecast to deliver $15.6m free cash at A$1500/oz gold price*
– 322,000t at 2.6g/t for 25koz over 1 year mine life at cash cost of <$900/oz*
– Blue Funnel – completing the existing pit delivers 15k oz at 3.5g/t**
– Rayjax – Small tonnage (20-30,000t) but grades above 4g/t**
– Nazzaris – soft oxide ore at +2g/t**
– Outridge – mining study yields 106,000 oz at 2.1g/t**
• Aim to self fund development of progressively larger mines while
growing critical mass to + 2.5M oz
* Refer announcement – August 1, 2011
** Refer slide 2 – targets
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Generate cash: Commenced
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• 3 treatment agreements executed
– KMC’s 750,000tpa Bullant Mill
– FMR’s 1Mtpa Greenfields Toll Mill
– Norton’s 3Mtpa Paddington Mill
• Surface stockpiles treated first
– Treated 14,000t of ore through Greenfields Mill
– Sold 41,000t to the Paddington Mill
• Planning for staged development of mines
– Catherwood, Blue Funnel, Rayjax, Nazzaris, Outridge
• 3 milling options
• Targeting cash generation in the June Quarter
* Refer slide 27 – JORC Resource Inventory
** Refer slide 2 – Exploration targets
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Mill Locations – Options for Treatment
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FMR’s Greenfields Mill F
or p
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nal u
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nly
Acquisitions: Broads Dam
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• 3 acquisitions on Zuleika shear in 2011
– Broads Dam corridor
– Highly prospective tenure, untouched for 5 years
– 4-5 high priority drill targets defined, drilling commenced
– Structural geology studies continuing in 2012
– Red Dam Resource
– Contains existing 173,000 oz at 2.5g/t*
– Blue Funnel Gold Mine
– Small open pit mined in the 90s at 4g/t
– Ore remains in the floor of the pit
– Cut back and underground potential to be tested
* Refer slide 27 – JORC Resource Inventory
** Refer slide 2 – Exploration targets
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Next Steps: Self funding explorer
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• Accelerate drill program to grow current Resource base
– Extend Castle Hill
– Grow Broads Dam
– Explore high priority green fields targets
Targeting +2.5M ounces by Dec 2012
• Advance mine plan and realise early cash flow
– Determine maximum value case for Catherwood development
– Generate cash from surface stockpiles through 3rd party mills
– Complete feasibility work on pipeline projects
– Build a 5+ year life of mine plan at +100k oz per annum
– Assess development options including mill construction
• Assess further value accretive acquisitions
* Refer slide 27 – JORC Resource Inventory
** Refer slide 2 – Exploration targets
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Exploration / Development Priorities
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Castle Hill
Broads Dam
Telegraph, Nazzaris
Catherwood, Red Dam
Blue Funnel deeps,
Ora Banda, Carbine North,
Backflip extensions, Whitehaven
Lady Jane, Boundary, Magdala,
Carbine, Cutters Ridge, Kintore,
Star of Fremantle, Emu, Picante
Christmas Reef, Boundary east, advanced brownfields targets
Second-order greenfields exploration targets
Priority 1
Priority 2
Priority 4
Priority 5
Priority 3
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Accelerated Drilling Programme
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• Drill program totalling 50,000m over 9 - 12 months
– 15,000m RC extending Castle Hill laterally and at depth
– 15,000m RC extending Broad Dam along Zuleika shear
– 5,000m DD testing depth extensions at Broads Dam
– 20,000m RAB on green fields exploration
• Budget estimate of A$4-5m
• Drill projects sequentially to allow results and remodelling
to direct next drilling round
• Represents a potential discovery cost <$10 per ounce
• Continuous news flow on a quarterly basis
* Refer slide 2 – Exploration Targets
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Exploration success – value proposition
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Resources 1.7m ozs
Ordinary shares 110m
Feb 2012 ($0.20) 36m ($7.2m)
Nov 2014 ($0.25) 36m ($9.0m)
M Cap (FD) at $0.24 $44m
Cash at bank $1.4m
EV diluted $26m
EV/Resource oz $15/oz
Potential 2.5m ozs
Ordinary shares 146m*
Nov 2014 ($0.25) 36m ($9.0m)
M Cap (FD) at $0.24 $44m
Cash at bank $3m**
EV diluted $32m
EV/Resource oz $13/oz
12
month
drill
program
$4.5m
budget
• Phoenix is targeting a minimum 2.5m oz position* in 9 - 12 months on the
back of its $4-5m budgeted drilling programme.
• February 28 2012 options in the money and underwritten generating A$7.2m
• Refer slide 2 – Exploration targets
• ** includes deduction for acquisitions and underwriting costs
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Attractive metrics
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Summary: New Self Funded Explorer
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• Motivated team in place that is delivering on strategic targets
• Highly successful drilling campaigns growing Resources
– Target +2.5 million ounces by Dec 2012
• Cash flow from stockpiles and mining progressively larger open cut mines
• Complete Feasibility Studies on flagship projects
– Convert Resource to + 500k oz in Reserves
• Build 5+ year life of mine plan at +100k ozs pa
• Very attractive metrics on an EV/resource ounce basis
• February 2012 options in the money and underwritten, $7.2m value
• Well funded to complete the drilling program and development plan
• World class shear zones untested at depth… new discoveries
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Gold bar PXG001 – here’s to many more
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L to R: Dale Rogers, Ian Copeland, Jon Price and Clay Gordon
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The People
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• Dale Rogers – Non Executive Director (Chairman)
– Mining engineer with almost 30 years experience in project development, operations and financing. Developed and managed operations in Australia and overseas.
• Clay Gordon – Non Executive Director
– Geologist and mineral economist with 25 years experience in gold mining, business development and project valuation in Australia and overseas. Current Chief Geologist and MD of Mining Assets.
• Jon Price – Managing Director
– Metallurgist with over 20 years experience in the gold sector. Developed several new open cut and underground operations near Kalgoorlie and project managed milling and heap leaching projects in Australia and overseas. Former GM at Paddington and St Ives gold mines in the Goldfields.
• Ian Copeland – Geology Manager
– Geologist and Mining Engineer with over 25 years experience in the Goldfields region. Worked as Geology/Exploration Manager with Barrick Gold, Goldfields Ltd and Placer Dome with vast experience in the Kunanalling/ Zuleika project area.
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JORC Resource Inventory
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Notes: 1. Stockpiles report material mined from historical mining operations at Lady Jane, Broads Dam, Premier, Catherwood, Bluebell, Mick Adam and
Shamrock.
2. The information in this report that relates to Exploration results and Mineral Resources is based on information compiled by Mr Ian Copeland.
Mr Copeland, who is a member of the Australasian Institute of Mining and Metallurgy and a member of the Australian Institute of
Geoscientists, is a full time employee of Phoenix Gold. Mr Copeland has sufficient experience which is relevant to the style of mineralisation
and types of deposits under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2004
Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Copeland has given his
consent to the inclusion in the report of matters based on the information in the form and context in which it appears.
3. Information that relates to exploration targets refers to targets that are conceptual in nature, where there has been insufficient exploration to
define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
4. The information on exploration targets is based on a conceptual range of targets as follows: Tonnage range: 2 million to 15 million tonnes,
grade range: 1.5 g/t Au to 5 g/t Au
Mt Au (g/t) Au Oz Mt Au(g/t) Au oz Mt Au (g/t) Au oz Mt Au (g/t) Au oz
Castle Hill 0.18 3.4 20,000 5.46 1.6 273,000 5.35 1.5 266,000 10.99 1.6 559,000
Broads Dam 1.32 2.0 84,000 3.79 1.9 236,000 5.11 2.0 321,000
Kunanalling 0.49 2.4 38,000 0.78 1.6 40,000 2.91 1.8 166,000 4.18 1.8 245,000
Ora Banda/
Grants Patch 1.52 2.0 97,000 5.12 1.8 300,000 6.64 1.9 397,000
Carbine 1.40 1.7 78,000 1.40 1.7 78,000
Zuleika North 0.51 2.5 41,000 0.27 2.5 22,000 0.78 2.5 63,000
Stockpiles 0.50 1.2 19,000 0.50 1.2 19,000
Total 0.67 2.7 58,000 10.08 1.7 555,000 18.84 1.8 1,069,000 29.59 1.8 1,682,000
Project
Measured Mineral
Resource
Indicated Mineral
Resource
Inferred Mineral
ResourceTotal Mineral Resource
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