AN AFRICAN GOLD MINING AND EXPLORATION COMPANY - Corporation Presentation / February 2017 - Mining Data Online
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DISCLAIMER Disclaimer This presentation has been created to provide general information, solely for the reader’s general knowledge, about Metallon Corporation (“Metallon”), its subsidiaries, properties and activities, as well as the countries it operates in. Although Metallon believes that the information included in this presentation is accurate and current, such information is not intended to be a comprehensive review of all matters and developments concerning Metallon and Metallon does not warrant or make any representations or claims as to the authenticity, validity, accuracy, completeness or currency of the information provided in this presentation. Moreover, Metallon, its directors and officers assume no responsibility for the information or representations contained in this presentation and shall not be liable or responsible for any claim or damage, direct or indirect, arising out of the interpretation, reliance upon or other use of the information provided herein. No information in this presentation constitutes a solicitation, offer or recommendation to engage in any investment activity, to effect any transactions, or to conclude any legal act of any kind whatsoever. Forward-looking statements Certain statements included in this presentation constitute “forward-looking statements” which, based on numerous assumptions, involve known and unknown risks, uncertainties and other factors which are beyond Metallon’s control that may affect the results, performance or achievements of Metallon. In certain cases, forward-looking information can be identified by the use of words such as "aim", "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "continues", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will be taken", "occur" or "be achieved" and include the negative variation of such phrases. With respect to forward-looking information contained in this presentation, Metallon has made assumptions regarding, among other things, Metallon’s ability to generate sufficient cash flow from operations and access to existing credit facilities and capital markets to meet its future obligations, the regulatory framework in its countries of operation with respect to, among other things, permits, licenses, authorizations, royalties, taxes and environmental matters, and Metallon's ability to obtain qualified staff and equipment in a timely and cost-efficient manner to meet Metallon's demand. Although Metallon believes that its expectations reflected in forward-looking information are reasonable, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Metallon or Metallon's projects in its countries of operations, or any of them, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, but are not limited to, risks related to failure to convert estimated mineral resources to reserves, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, future prices of gold, unexpected increases in capital or operating costs, possible variations in mineral resources, grade or recovery rates, failure of equipment or processes to operate as anticipated, accidents, labour disputes and other risks of the mining industry, labour risks, delays in obtaining governmental consents, permits, licences and registrations or financing or in the completion of development or construction activities, risks of title to properties, partner risks, legal and litigation risks, political risks arising from operating in Africa, risks relating to changes in governmental regulations and in operating internationally, risks relating to the infrastructures, uncertainties relating to the availability and costs and availability of financing needed in the future, indebtedness risks, changes in equity markets, inflation, changes in exchange rates, exchange control and export restriction risks, fluctuations in commodity prices and uninsured risks. Although Metallon has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Past performance of Metallon or its shares cannot be relied on as a guide to future performance. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information contained herein, unless stated otherwise, is made as of the date of this presentation and Metallon makes no responsibility to update them or to revise them to reflect new events or circumstances, except as required by law. PAGE 2
ABOUT US CORPORATE SNAPSHOT A Private African gold mining and exploration company • Four underground gold mines in Zimbabwe • Globally significant Mineral Resource of 8.3Moz of gold and exploration targets of between 4-6Moz • Gold production of 94,212oz in 2016 • Low cost producer – C1 costs of US$809/oz and AISC of US$1,023/oz in 2016 • Net revenue of US$113m, operating profit of US$38m and EBTIDA of US$18.6m in 2016 • Rising free cash flows from expansion plans ABOUT US to become a 500,000oz pa producer over next five years • Run by an experienced Zimbabwean management team with ability to operate in Africa PAGE 4
ABOUT US EXECUTIVE MANAGEMENT Kenneth Mekani Ken has been with Metallon for 30 years after joining the then Lonrho Mining as Graduate Trainee Metallurgist in June 1987. He spent several years in the group’s various operations and was involved in major metallurgical Chief Executive Officer projects. In June 2013 he was appointed General Manager for How Mine and in June 2015 was appointed Chief Executive Officer. Ken holds a BSc. Metallurgical Engineering (1987) from New Mexico Institute of Mining and Technology (USA) and a Masters in Business Administration (MBA) from the University Of Zimbabwe Graduate School Of Management (2006). Tulani Sikwila Tulani joined in 2005 and became Group Finance Director in March 2012. He has a decade of operational, accounting and finance expertise in the mining industry having started his career at Ernst & Young in 2001, Finance Director where he spent four years as an Audit Supervisor. A chartered accountant by trade, he holds a B.Com in Accounting from Rhodes University, B. Compt (Honours) from UNISA, and a Diploma in Management Accounting (CIMA). Dr Isadore Matunhire Isadore joined in 2013 as Head of Technical Services and in April 2014 became Technical Director. He is responsible for leading the expansion programme, bankable feasibility studies and business integration. He Technical Director has over 25 years operational mining experience and five years in the mining consultancy field. He worked for TWP Projects as Lead Mining Engineer/ Project Manager where he completed feasibility and due diligence studies for Lonmin Platinum, African Consolidate Resources, Metallon, Anglo Platinum, Zimasco Chrome, Wesizwe Platinum, and BCL Selebi-Phikwe. Isadore also worked as a Senior Mining Lecturer at the University of Pretoria for 4 years. He graduated with a PhD in Mineral Economics from University of Nottingham, England and MSc in Management from City University, London. Mark Tsomondo Mark joined in 2010 as Group Exploration Manager. Mark undertook an in-depth review of Mineral Resource ABOUT US estimation of Metallon’s assets. In September 2014 he was appointed Director - Geology and New Director, Exploration and Business. Mark’s experience spans over 30 years and covers mining and exploration for gold, platinum, New Business chrome and copper. Joining Union Carbide Zimbabwe in Kwe Kwe in 1981, he worked on the Great Dyke deposits and gold in greenstone belts rising through the ranks from Junior to Chief Geologist. Mark formed Midlands Geological Services in 1992, a consultancy that lasted for over a decade. He holds a BSc (Hons) from University of Rhodesia and an MSc and D.I.C. in Mineral Exploration from Royal School of Mines, London (1985). PAGE 5
KEY DATA 2016 8.3Moz GOLD MINERAL RESOURCE (June 2016) = 8.3Moz GOLD PRODUCTION C1 COSTS OPERATING PROFIT REVENUE 94,212oz US$809/oz US$38m US$113m KEY DATA PAGE 6
MINING OPERATIONS ZIMBABWE OUR OPERATING MINES • How Mine • Shamva Mine • Mazowe Mine • Redwing Mine METALLON’S ASSETS – 8.3Moz gold resource and mining infrastructure – considered to be best high-grade, low-cost ASSETS gold mining operations in Zimbabwe PAGE 7
QUALITY MINING ASSETS 100% OWNED Flagship mining operation Mining recommenced in Nov Over 50% of production 2015 Ramp up to capacity by Q3 2017 Zimbabwe's biggest gold producer New processing plant and tailings storage Repairs made across the facility constructed mine Commissioning Contract miners appointed expected Q1 2017 ASSETS and targeting installed capacity PAGE 8
HOW MINE FLAGSHIP MINING OPERATION Location 35km South East of Bulawayo, Zimbabwe Geology Situated on Bulawayo greenstone belt and exploits several individual mineralised pods situated within a structure which dips at 70° to 80° Reserves & Resources M,I&I: 14.8Mt @ 2.12g/t = 1,009koz Au (30 June 2016) Processing Central facility, using combination of conventional milling, gravity recovery and carbon-in-leach process Current hoisting capacity 35ktpm Current milling capacity 33ktpm Average mined grade 5g/t Au Life of mine 9 years based on current capacity Production and costs (2016) Production: 50,191oz Au ASSETS C1 costs: $520/oz Au AISC: $660/oz Au PAGE 9
SHAMVA MINE Location 90km North East of Harare, Zimbabwe Geology Situated in Shamva greenstone belt and exploits numerous orebodies which occur within a 300- to 400-m wide Riedel-type shear system. Silver occurs with the gold and represents some 50% of gold content Reserves & Resources M,I&I: 40.8Mt @ 1.96g/t = 2,574koz Au (30 June 2016) Processing Conventional crushing, milling, gravity recovery and combination of carbon-in-solution and -pulp processes Current hoisting capacity 45ktpm Current milling capacity 33ktpm Average mined grade 3g/t Au Life of mine 22 years based on current capacity ASSETS Production and costs (2016) Production: 21,061oz Au C1 costs: $1,085/oz Au AISC: $1,244/oz Au PAGE 10
MAZOWE MINE Location 50km North East of Harare, Zimbabwe Geology Orebodies generally comprise shear zones in- filled with gold-bearing sulphides and quartz. Mineralised zones are up to 1m in width, have average grades of 4 to 5g/t, and mostly dip between 10° and 60° to the north. Approximately 70% of gold is ‘free gold’ recovered by gravity concentration Reserves & Resources M,I&I: 14.1Mt @ 4.85g/t = 2,194koz Au (30 June 2016) Processing Conventional crushing, milling, gravity recovery and carbon-in-leach facility Current hoisting capacity 19ktpm Current milling capacity 10.5ktpm Average mined grade 4.2g/t Au Life of mine 10 years on current capacity ASSETS Production and costs (2016) Production: 12,060oz C1 costs: $1,116/oz AISC: $1,272/oz PAGE 11
MAZOWE MINE CONTINUED NEW PROCESSING PLANT • 65ktpm Processing Plant – one of the largest in Zimbabwe • Construction 95% complete • Commissioning expected Q1 2017 • Total CAPEX of US$13m • New tailing storage facility completed with CAPEX of US$5m • 66 additional plant workers employed Impressive project economics KPI Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 TOTAL Tonnes pa 720k 720k 720k 720k 720k 720k 4,320k Grade (g/t) 1.15 1.10 0.85 0.75 0.65 0.60 0.83 ASSETS Recovery (%) 82.7 80.0 77.5 76.0 72.0 65.0 75.5 Oz pa 22,016 18,519 15,249 13,195 10,834 9,028 88,84 C1 ($/oz) 976 447 543 627 764 917 612 Profit (gold at $1,100) $15.9m $12.1m $8.5m $6.2m $3.6m $1.7 $48.1m Profit (gold at $1,200) $18.1m $13.9m $10m $7.6m $4.7m $2.6m $56.9m PAGE 12
MAZOWE MINE CONTINUED NEW PROCESSING PLANT, JANUARY 2016 ASSETS PAGE 13
REDWING MINE Location 20km North East of Mutare, Zimbabwe Geology Two main orebodies, the felsite and quartz, are where mining has taken place. Gold mineralisation is associated with sulphide mineralisation comprising pyrite, galena, chalcopyrite, minor arsenopyrite and sporadic native gold. Silver occurs with the gold and represents some 50% of gold content Reserves & Resources M,I&I: 34.1Mt @ 2.26g/t = 2,478koz Au (30 June 2016) Processing Conventional crushing, milling, flotation and carbon-in-leach facility Average mined grade 5.5g/t Au Life of mine 14 years on current capacity Ramp up to capacity Production: • began at 15,000tpm ASSETS • 10,106oz produced in 2016 • 23000tpm by Q3 2017 • 83000tpm by Q1 2018 • 193,000tpm by Q4 2018 PAGE 14
GOLD PRODUCTION • Gold production of 94,212oz in 2016 – approximately 25% of Zimbabwe’s total production • Metallon is Zimbabwe’s biggest gold producer • All gold bullion produced is sold to Fidelity Printers, a subsidiary of the Reserve Bank of Zimbabwe • 100% of the spot gold price is paid on delivery, minus the 5% Government royalty PERFORMANCE PAGE 15
EXPANSION PLAN 2017-2021 TARGET PRODUCTION C1 COSTS Increase to Achieve 500,000oz/pa US$650/oz by 2021 STRATEGY EXPLORATION DRILLING BUILD FOCUS PRIORITISE DIVERSIFICATION STRATEGY Near-surface On-mine Larger plants Open pit/near Brownfield sites in targets and re-engineering to Increase volumes surface resources Tanzania inferred resource lower mining costs PAGE 16
PLANNED ACTIVITY PROGRAMME* 2017-2021 MINE ACTIVITY DATE RESOURCE • Shaft upgrade and deepening – 2017 & 2018 HOW MINE • 28Level Sub-vertical Hoist Installation – 2017 & 2018 • Water and power upgrade – 2017 & 2018 • Open pit feasibility – 2017 1.2Moz • New processing plant and TSF – 2018 • Drilling programme – 2017 – 2020 • Shaft and underground upgrading – Ongoing SHAMVA MINE • Power upgrade – 2017 • Plant upgrade to 50Ktpm – 2018 • Shamva Hill exploration – 2017 & 2018 2.6Moz • Shamva Hill 100Ktpm plant & new TSF – 2018 • 2nd New 75Ktpm plant – 2021 • New processing plant – Commenced 2015 MAZOWE MINE • Drilling programme – 2017 - 2020 • UG2 development – 2017 - 2019 • Shaft upgrade – 2017 - 2019 2.1Moz STRATEGY • UG2 floatation plant – 2020 • New TSF and power upgrade – 2020 • Surface exploration – Ongoing REDWING MINE • Plant upgrade and new TSF – 2017 & 2018 • Power upgrade – 2017 2.4Moz • Shaft sinking & development – 2018 & 2019 • New processing plant and TSF – 2020 *dependent on external funding. PAGE 17
WORLD CLASS MINERAL RESOURCE 8.3MOZ Proved and Probable Reserves Measured and Indicated Resources Inferred, Measured and Indicated Resource as at 30th June 2016 as at 30th June 2016 as at 30th June 2016 Proved Probable Total Measured Indicated Total Measured Indicated Total Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces Ton Grade Ounces kt g/t oz kt g/t oz kt g/t oz kt g/t oz kt g/t oz kt g/t oz kt g/t oz kt g/t oz kt g/t oz How – U/g 430 5.0 69 1,794 3.5 201 2,223 3.8 270 1,609 5.1 265 2,250 3.7 265 3,858 4.28 530 3,969 3.5 444 3,858 4.3 530 7,828 3.9 973 Surface 817 1.1 30 817 1.1 30 817 1.1 30 817 1.10 30 6,917 0.7 156 817 1.1 30 7,734 0.7 186 Total 430 5.0 69 2,611 2.7 231 3,040 3.1 300 1,609 5.1 265 3,067 3.0 295 4,675 3.73 560 10,886 1.7 600 4,675 3.7 560 15,562 2.3 1,159 Shamva – U/g 929 2.87 86 3,608 2.95 342 4,537 2.93 428 1,992 2.54 163 8,576 2.85 785 10,568 2.79 948 12,021 2.35 907 10,568 2.79 948 22,589 2.56 1,855 Surface - - - - - - - - - 167 1.19 6 167 1.19 6 7,193 2.37 549 167 1.19 6 7,360 2.34 555 Surface 2 - - - - - - - - - 2,325 0.80 60 2,325 0.80 60 9,227 0.52 153 2,325 0.80 60 11,552 0.58 213 Total 929 2.87 86 3,608 2.95 342 4,537 2.93 428 1,992 2.54 163 11,068 2.39 851 13,060 2.42 1,014 28,441 1.76 1,609 13,060 2.42 1,014 41,501 1.97 2,623 Redwing – U/g 40 3.43 4 167 3.48 19 207 3.47 23 1,402 2.73 123 7,946 3.99 1,018 9,347 3.80 1,141 14,481 2.62 1,222 9,347 3.80 1,141 23,828 3.08 2,363 Surface Sands - - - - - - - - - 9,924 0.33 105 9,924 0.33 105 9,924 0.33 105 9,924 0.33 105 Total 40 3.43 4 167 3.48 19 207 3.47 23 1,402 2.73 123 17,870 1.96 1,123 19,271 2.01 1,246 14,481 2.62 1,222 19,271 2.01 1,246 33,752 2.27 2,468 Mazowe – U/g 337 6.59 71 279 6.81 61 616 6.69 133 504 9.07 147 1,285 6.50 269 1,789 7.22 416 5,701 7.27 1,333 1,789 7.2 416 7,490 7.3 1,749 Surface - - - - - - - - - 5,116 0.78 128 5,116 0.78 128 1,300 5.00 209 5,116 0.8 128 6,416 1.6 337 Total 337 6.59 71 279 6.81 61 616 6.69 133 5,620 1.52 275 1,285 6.50 269 6,905 2.45 544 7,001 6.85 1,542 6,905 2.4 544 13,906 4.7 2,086 TOTAL 1,736 4.1 231 6,664 3.0 653 8,401 3.3 883 10,623 2.42 825 33,289 2.37 2,538 43,912 2.38 3,364 60,809 2.54 4,972 43,912 2.38 3,364 104,720 2.48 8,335 STRATEGY PAGE 18
WORLD CLASS RESOURCE EXPLORATION UPSIDE • Globally significant Mineral Resource of 8.3Moz of gold (June 2016) • Exploration results category contains about 4-6Moz from satellite ore bodies to operating mines (SRK 2013) • Near mine targets at Mazowe Mine, How Mine, Shamva Hill & Redwing Shallow mine • All four mines have open-ended mineralisation at depth and are under-explored across strike extensions • Conceptual target sizes of: • Mazowe Mine: 2.5 - 3Moz • Redwing Mine: 5 - 8Moz • Rich quartz veins offer huge exploration upside potential STRATEGY PAGE 19
AFRICAN EXPANSION EXPLORATION & DEVELOPMENT Focus on additional gold development sites and exploration projects • Tanzania • currently securing advanced development projects in brownfield sites in prolific greenstone belts with target to commence gold production in 2019 • focusing on open-pit and shallow underground mines • looking at numerous strategic options at projects located near STRATEGY Lake Victoria gold fields • Democratic Republic of Congo • four exploration properties being secured in Maniema province near Bukavu PAGE 20
BECOME A MID-TIER PRODUCER IN THE NEXT FIVE YEARS PRODUCTION EXPLORATION COSTS Plan to be Target exploration 500,000oz/pa opportunities in Focus on further producer over next Zimbabwe, reduction of costs STRATEGY five years Tanzania and DRC PAGE 21
ZIMBABWE SUPPORTIVE MINING JURISDICTION Country snapshot • Zimbabwean gold mining industry operated for over 100 years General and has well-established base of mining skills, expertise and Population 15.6m (World Bank, 2015) local suppliers Capital Harare • Zimbabwean Government expects mining sector to be key Major religions Christianity & Indigenous driver of growth in near term and to attract most foreign direct Economy investment into country GDP $14.4bn (World Bank, 2015) • Metallon is largest gold miner in Zimbabwe and a key Annual GDP growth 1.1% (World Bank, 2015) contributor to the sector GDP / capita $924 (World Bank, 2015) • Metallon employs over 3,500 people and additional contractors Inflation 1.1% (World Bank, 2015) • The Government has implemented favourable policies for Main currency US$ / Zim Bond Note mining companies to incentivise investment in the sector Mining as % GDP 20% (CoM Zim) including: • reduction in royalty rate from 7% to 5% of revenue in Companies operating in Zimbabwe October 2014 • exploration, development and capital costs can be offset STRATEGY against profit in the year incurred or capitalised over LoM • Exemptions on customs duty and import taxes on capital items during exploration and development phases • Government is considering further policy review to assist mining companies during times of declining commodity prices PAGE 22
CSR WORKING WITH LOCAL COMMUNITIES • Supports its employees & local communities • Metallon is good corporate citizen and committed to maintaining its social licence to operate • long-established track record of social delivery to employees and local communities in education, health, housing, other services • 2017 CSR programme underway with targeted projects which will bring sustained socio-economic development in communities where we operate • Indigenisation • indigenisation proposal submitted and approved by Zimbabwe Government • new approved indigenisation structure involves 75% spend on local content STRATEGY Construction of Mazowe School Block and Shamva Mortuary, Nov 2016 PAGE 23
METALLON CORPORATION A GOLDEN OPPORTUNITY • World-class Zimbabwean assets with exciting prospects • Quality mining operations • skilled labour force • good infrastructure • 8.3Moz high grade resource • low cost mining • Massive expansion upside • at current operations • near surface deposits • Good working relationship with OUTLOOK employees, local communities and Government of Zimbabwe PAGE 24
APPENDIX ABOUT US KEY DATA ASSETS PERFORMANCE STRATEGY OUTLOOK PAGE 25
ABOUT US BOARD OF DIRECTORS Mzi Khumalo Mzilikazi Khumalo founded Metallon in 2001 and is the main shareholder of the Company. He purchased the assets in Zimbabwe from Lonmin in 2002. He has held the position of chairman at various companies including Non-Executive Chairman JCI Limited, Capital Alliance Holdings Limited and Point Waterfront Corporation, as well as having been Non- Executive Director at Mintek, Telkom, McCarthy Retail Limited, Ridge Mining and Anglo American Corporation. He holds a Bachelor of Commerce degree from UNISA. Dr Tomas Salomão Dr Tomaz Salomão joined the Board of Metallon in December 2014. He is the former Executive Secretary of the Southern African Development Community (SADC) and served from 2005 - 2013. Dr Salomão has made Independent Non- significant contributions to the development of Mozambique and the Region in senior positions for 22 years. Executive Director During this period, he also served as Governor for Mozambique at the African Development Bank, IMF and World Bank. Dr Salomão is qualified as Certified Public Accountant, has Bachelor of Arts and Master of Arts Degrees in Economics. He is currently the Chairman of the Board of Directors of the Standard Bank, Mozambique (non executive), and a visiting Research Fellow at the Wits School of Governance at the University of Witwatersrand in Johannesburg. Andile Reve Andile Reve joined Metallon in 2002 as Chief Executive and became a Non-Executive Director in August 2010. He was an analyst at Kwazulu Finance and Investment Corporation from 1987 to 1991 and a Commercial Non-Executive Director Manager at Eskom from 1991 to 1996. He joined the Rennies Group as an Executive Director in 1996 and in 1998 he moved to the Industrial Development Corporation as Executive Vice President – industrial finance. He holds an MBA from Rutgers University, State of New Jersey, USA, B .Com (Hons), UNISA and B.Com, Kwazulu-Natal. Kwaku Akosah- Kwaku Akosah-Bempah joined the Board of Metallon in August 2010. He was previously the Chief Financial ABOUT US Officer of AngloGold Ashanti Limited’s West Africa Region, having previously served as General Manager: Bempah corporate finance at Ashanti Goldfields Company Limited. He has also held several senior roles as finance Non-Executive Director director at Freda-Rebecca mine in Zimbabwe. He holds a Bachelor of Commerce (Hons) Degree and a Diploma in Education from the University of Cape Coast, Ghana, and an MBA from the Columbia Business School, USA. He is also a chartered accountant and member of the Institute of Taxation, Ghana PAGE 26
CONTACT US Address: 78 Pall Mall www.metcorp.co.uk London SW1y 5ES Zimbabwe's biggest Tel: gold producer +44(0) 203 178 7431 CONTACT US PAGE 27
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