Investor Presentation - November 2020 Building the world's leading mid-cap diamond company - Squarespace
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Investor Presentation
November 2020
Building the world’s leading mid-cap diamond company
Burgundy Diamond Mines Limited
ASX: BDM
Managing Director:
Peter Ravenscroft
Forward Looking Statements
Certain information contained herein regarding Burgundy Diamond Mines Ltd, including management’s assessment of future
plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks,
including but not limited to risks associated with mining exploration, operating costs, production costs, volatility of share prices,
currency fluctuations, imprecision of resource and reserve estimates, environmental risks and ability to access sufficient capital
from internal and external sources.
As a consequence, actual results may differ materially from those anticipated in any forward-looking statements. Plans,
intentions or expectations disclosed in any forward-looking statements or information should not be read as guarantees of
future results or events, and will not necessarily be accurate indications of whether or when or by which such results or events
will be achieved.
Except as required by law, Burgundy Diamond Mines Ltd expressly disclaim any intention and undertake no obligation to
update any forward-looking statements or information as conditions change.
burgundy-diamonds.com 2Burgundy Diamond Mines
An emerging diamond company with a compelling growth strategy
Opportunity ▪ Industry facing significant supply shortfall over next ten years, with
severe under-investment in project development
$12 billion/year sector
under sustained stress ▪ The diamond cycle is currently at a very attractive position for project
acquisitions
People ▪ Burgundy management brings deep global industry
knowledge and technical expertise in diamonds
>100 years of experience
in management team ▪ Board with a demonstrated track record in realising
value from resource projects and diamond operations
Strategy ▪ Identify and acquire a portfolio of interests in incomplete evaluation
programs on world class discoveries at a low entry cost
Innovative approach
▪ Unlock the latent value from these projects through disciplined project-
level funding and technical expertise
▪ Complement portfolio with longer term exploration and near-term
production opportunities
burgundy-diamonds.com 3Why Diamonds?
An industry needing significant investment over next 10 years
Industry Outlook Natural rough diamond supply and demand values
$ billions (in real terms), 2000-30F
$20 Optimistic demand
▪ Significant forecast supply shortfall due to very Base demand
limited exploration funding since 2010
Optimistic supply
▪ 2019 global production of 142 million carats for total
Base supply
revenue of ~US$12 billion
▪ Supply shortfall in 2030 varying between 20% and
35% of world demand $5
2000 2019E 2030F
▪ Need for additional 35-75 million carats per year Source: The Global Diamond Industry 2019, Bain & Company
from future mine projects
▪ Current project pipeline forecast to add only 10-20
$1,000
million carats by 2030 Exploration Budgets, C$M, 2006 - 2020
3x increase in exploration spend required now
to meet forecast industry demand
Total
Canada
Africa
$0 Australia
2006 2020
Source: S&P Global Market Intelligence
burgundy-diamonds.com 4Diamond Strategy
Successful investment in the sector requires a new approach
Focused Entry ▪ Identify incomplete evaluation programs on promising discoveries in Canada, Botswana, Australia
▪ Carefully targeted funding will prove real value in many cases
High quality missed opportunities
▪ Initial investment at relatively low cost (Rapid Evolution in 2020
Initial project acquisition, base funding and building of powerful leadership team
Q4 2019 Q1 ‘20 Q2 ‘20 Q3 ‘20 Q4 ‘20 Q1 ‘21 Q2 ‘21
6 December 2 June
Acquisition of Earn-in deal on
Nanuk Naujaat Project
Continued evaluation of
Diamonds
further project opportunities
9 June
Botswana Exploration
Projects Alliance
10 August
Closing of A$10.6
Finance million capital raise
11 March 6 July 22 September
Appointment of MD/CEO Appointment of Director Appointment of Director
Peter Ravenscroft Marc Dorion Kim Truter
8 September
Appointment of Vice Presidents
Sean Whiteford and
People George Read
burgundy-diamonds.com 6Impact of Covid-19
Adaptive and sensitive approach to pandemic; counter-cyclical strategy even more relevant
Impact on Diamond Sector Impact on Burgundy Activities
Retail Sector Corporate
▪ Severe downturn in sales in early stages of pandemic and ▪ Successful financing despite tight market conditions
resulting pricing impact ▪ Careful allocation of capital; focus on emerging opportunities
▪ Initial withholding of sales by major producers
▪ Situation started to ease in Q3 2020 Naujaat Project
▪ Immediate deferral of bulk sample to 2021
Rough Diamond Production ▪ No access to project site, respectful of restrictions in isolated
▪ Series of mine closures or idled operations at start of and vulnerable community
Covid-19; major producers continued to operate ▪ Opportunity to optimise bulk sample design
▪ Several operations restarted in Q3/Q4
▪ Abnormal sales/pricing profiles due to managed return to full Botswana Alliance
product offering ▪ Delay in environmental permitting, with drilling programs
deferred to Q1 2021
M&A Opportunities ▪ Used opportunity to focus on new target generation, with
▪ Short-term bad news resulted in a number of stressed assets additional leases now in application
and acquisition opportunities
▪ Correction has rebalanced industry in short-term, but has Other
exacerbated long term supply shortfalls ▪ Activities at Nanuk and La Victoria curtailed with Covid-19
restrictions
burgundy-diamonds.com 7Disciplined Strategy Execution
Managing risk through a diverse portfolio of hand-picked assets
Portfolio Focus
Project Style Location Scale
▪ Target deposits with high value diamonds ▪ Traditional diamond elephant country ▪ Mid-tier deposits that are not in focus
▪ Larger sized stones, coloured stones, (Canada, Botswana, Australia) for majors
higher qualities ▪ Focus on low-risk jurisdictions ▪ Potential district scale for future value
generation
Portfolio Objectives
Core Strategic Focus LongTerm
Long TermProject
ProjectPipeline
Pipeline Funding of Strategy
▪ Advanced exploration projects ▪ Earlier stage generative exploration ▪ Potential early cash flow
▪ Incubation funding of stalled projects ▪ Green/brown fields projects in areas of ▪ Small low capex/opex development
unresolved opportunities opportunities
▪ JV partnerships with select owners
▪ Project generator model with leading ▪ Continual monitoring of distressed
▪ Control ownership of asset
diamond explorers current operations
▪ Equity positions or partnerships
burgundy-diamonds.com 8Board and Management
Demonstrated track record in realising value
Peter Ravenscroft - Managing Director
Stephen Dennis
• 40 years of experience in the international mining industry, with
Non-Executive Chairman
specific knowledge of diamonds
• Large company experience in senior executive roles in Rio Tinto and
Cleveland Cliffs, technical roles in De Beers
• Expertise in exploration, resource development, mine planning,
Michael O’Keeffe
project development and M&A
Non-Executive Director
Sean Whiteford - VP Business Development
• Over 25 years of mineral exploration and operational experience,
including 15 years in diamonds
Kim Truter
• 13 years with Rio Tinto in various corporate, operational and
Non-Executive Director
geological technical roles in Australia, Canada and the USA and
various executive positions with Cliffs Natural Resources
• Expertise in exploration, operations, commercial evaluation and M&A
Marc Dorion George Read - VP Exploration
Non-Executive Director
• Diamond exploration geologist with over 36 years of international
experience, including 12 years with De Beers involved in diamond
exploration projects in South Africa, Botswana, Namibia, Zimbabwe,
Tanzania, Mali, Brazil, Greenland, USA and across Canada.
Jeremy King
• Led the technical team responsible for the exploration and evaluation
Non-Executive Director
of the Star – Orion South Diamond Project in Saskatchewan.
burgundy-diamonds.com 9Corporate Overview
ASX Code BDM
Issued Shares 258.2m
Options (unlisted, escrowed) 18.0m
Market Capitalisation (1 November 2020) A$23.5m
Net Cash (1 November 2020) A$10.2m
Enterprise Value A$13.3m
Management and Director Ownership 18.8%
burgundy-diamonds.com 10Canada
Naujaat Project
Nanuk Diamonds Project
Peru
La Victoria Au-Ag Project
Botswana
Diamond Exploration Alliance
Project Overview
Perth Registered Office
▪ Global presence
▪ Stable jurisdictions
▪ Partnerships with leading diamond explorers
11Naujaat Diamond Project Advanced stage exploration and development Potential high-value project ▪ Largest undeveloped diamond property in Canada not under control of a major mining company ▪ Discovered by BHP in early 2000s, not developed due to perceived low price of contained diamonds ▪ Subsequent work has shown value potential of contribution from exceptional population of uniquely coloured Fancy Vivid Orangey-Yellow stones Deal structure ▪ Earn-in structure with North Arrow Minerals (TSXV:NAR), seen as leading diamond exploration company in Canada (highly respected Board and Management) ▪ Burgundy funds Phase 1 bulk sample for C$5.6 million to earn 40% of project: these funds were committed after July 2020 capital raise, and deal is now unconditional ▪ LOI in place for Phase 2, where Burgundy can earn additional 20% by funding 10,000 tonne bulk sample Planned work program ▪ 2020: fuel and other supplies have already been mobilised to site on Q3 sealift ▪ 2021: extract 1,500 – 2,000 tonne bulk sample; recover diamonds; assess size and quality distribution ▪ 2022: commit to Phase 2 10,000 tonne bulk sample for Scoping Study/PFS level of definition burgundy-diamonds.com 12
Exploration alliance in Botswana Early-stage exploration with ground-breaking targeting technology Generative program to build longer term project pipeline ▪ Turn-key entry into Botswana, one of the word’s leading diamond countries ▪ Considered most stable mining jurisdiction in Africa – government participation in mining projects with full participative funding ▪ Historical exploration by De Beers and others has left many unanswered questions and unresolved opportunities Alliance with Diamond Exploration Strategies Ltd ▪ Low-cost “project generator” model with highly-experienced local team (all ex De Beers exploration executives) in privately owned company ▪ Burgundy funds US$1.5 million over three years, option to extend ▪ Targets/discoveries accepted by joint technical committee as Designated Projects become 50% owned by Burgundy ▪ Burgundy can sole-fund to Scoping Study to reach 70%, or Feasibility Study to attain 90% ownership Potential high-value projects ▪ Partner currently has five project areas under 100% title – 1,015 km2 ▪ Drill-ready targets to be advanced early in Q1 next year ▪ Applications in process for additional four additional target areas with compelling potential burgundy-diamonds.com 13
Nanuk Diamonds Initial project investment in Canada An unresolved diamondiferous district ▪ 100% ownership ▪ 625 Mining Claims over 274 km2 in Category III lands of New Quebec Territory ▪ Abloviak Fjord, Torngat Peninsula, Quebec ▪ 1,650 km NNE of Montreal Known diamond occurrence ▪ Several occurrences of diamond-bearing ultramafic lamprophyre dykes ▪ Originally found in early 2000s but left unexplored for last 15 years ▪ Historical exploration program produced only 13 carats, largest stone 0.7 carats, but relatively coarse size distribution ▪ Confirmatory results from 2019 sampling program but no new discoveries Work program deferred ▪ Need to establish potential for greater scale ▪ Possible high-definition airborne mag program and further surface sampling programs considered for 2020/21, but deferred due to Covid-19 burgundy-diamonds.com 14
Legacy Gold and Silver Assets
Low holding cost, long term potential
La Victoria Gold-Silver Project, Peru
▪ Agreement with TSX-V listed Eloro Resources Ltd. in March 2017 to earn up to 25%
▪ Burgundy completed the first stage of the farm-in by contributing C$2 million to exploration
in December 2017, and as a result earned an initial 10% interest in the Project,
subsequent earn-in to 18%
Project Summary
▪ Located in the North-Central Mineral Belt of Peru on the western slopes of the Peruvian
Andes at elevations that vary from 3000m to 4500m above sea level
▪ Within 50 km of several producing mines: La Arena (Tahoe Resources), Lagunas Norte
(Alto Chicama) owned by Barrick Gold Corporation and Santa Rosa owned by Compañia
Minera Aurifera Santa Rosa (COMARSA)
▪ Geological setting exhibits the same rock types, alteration style and mineralisation as
several of the world-class gold mines in the Northern Peru Mineralized Belt
▪ Has never been drilled, yet major mineralized targets with very prospective results from
Eloro surface sampling and artisanal mining have been known since the 1970s
▪ Proposed drilling has been impacted by permitting delays, but Burgundy remains
enthusiastic about the potential of the project. Holding costs are low.
burgundy-diamonds.com 15Outlook Disciplined execution of strategy and early exploration results anticipated Portfolio Growth ▪ Ongoing evaluation of multiple opportunities to build portfolio ▪ Potential for further incremental transactions ▪ Focus on cash-flow opportunities for portfolio funding Project Development Naujaat Botswana Exploration Alliance ▪ Continued optimisation of Phase 1 bulk sample design ▪ Rapid results from early programs Q1 2021 ▪ Site activity to commence June 2021 ▪ Additional prospecting licenses in application for exciting new targets ▪ Sample completion Q4 2021 ▪ Potential to start earn-in on designated projects in 2021 burgundy-diamonds.com 16
Investment Summary
Counter-cyclical investment with significant upside
Well developed strategy
▪ New source of
Proven
investment capital to
management diamond sector
team ▪ Asset ownership of
▪ Many decades of large- leading diamond
Unresolved
company diamond projects via creative
opportunities project experience transactions
awaiting harvest
Attractive ▪ Industry leading ▪ Building of diverse
diamond sector ▪ Diamond project expertise on advanced portfolio providing risk-
evaluation more complex valuation methods balanced pure-play
fundamentals diamond investment
than other minerals ▪ Backed by board with
exceptional track record vehicle
▪ A high growth ▪ Historical funding
commodity sector with models impatient and in value creation ▪ Formation of powerful
forecast significant inappropriate new player in diamond
supply shortfall in next industry
▪ Premature curtailment
ten years commonly results in
under-estimation of
project value Unlocking value from
the world’s best diamond projects
burgundy-diamonds.com 17Burgundy Diamond Mines Limited
ASX: BDM
ABN: 33 160 017 390
www.burgundy-diamonds.com
Contact
P: +61 8 6313 3945
info@burgundy-diamonds.com
Level 25
South 32 Tower Transforming
the
108 St Georges Terrace
Perth WA 6000
AUSTRALIA
Diamond
Industry
*Fancy Vivid Orangey Yellow diamond recovered from the Naujaat ProjectYou can also read
