Investor Presentation
May 2011
Disclaimers
Competent Persons
The information in this presentation that relates to Mineral Resources for the Santa Rita Nickel Deposit is based on information compiled by Mr. Neil Inwood in 2011. The information in this
report that relates to Metallurgical Results for the Santa Rita Nickel Deposit is based on information compiled by Mr Rod Smith in 2011. Both Messrs Inwood and Smith are Members of The
Australasian Institute of Mining and Metallurgy. Messrs Smith and Inwood are Principal Consultants with Coffey Mining Pty Limited, the independent mining consultants engaged by Mirabela
Nickel Limited. Messrs Smith and Inwood qualify as both a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’ (JORC Code) and as a Qualified Person in accordance with NI 43-101. Messrs Smith and Inwood consent to the inclusion in the presentation of the matters
and defined Resources and Metallurgical information based on their information in the form and context in which it appears.
The information in this rpresentationt that relates to pre-mining Ore Reserves, Mining Production and Cost Estimation for the Santa Rita Nickel Deposit is based on information compiled by
Mr. Carlos Guzmán who is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Guzmán is a Mining Engineer, Principal and Project Director with NCL Brasil Ltda and is a
consultant to Mirabela Nickel Limited. Mr. Guzman qualifies as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’ (JORC Code) and is a Qualified Person in accordance with NI 43-101. Mr. Guzmán consents to the inclusion in the presentation of the matters based on his
information in the form and context in which it appears.
Forward Looking Information
Certain information in this presentation, including all statements that are not historical facts, constitutes forward-looking information within the meaning of applicable Canadian securities laws.
Such forward-looking information includes, but is not limited to, information which reflect management’s expectations regarding Mirabela’s future growth, results of operations (including,
without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits
and the success of exploration activities) and opportunities. Often, this information includes words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes” or variations of such words and phrases or statements that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved.
In making and providing the forward-looking information included in this presentation, the Company has made numerous assumptions. These assumptions include among other things:
(i) assumptions about the price of nickel and other base metals; (ii) that there are no material delays in the optimisation of operations at the Santa Rita Operation; (iii) assumptions about
operating costs and expenditures; (iv) assumptions about future production and recovery; (v) that the supply and demand for nickel develops as expected; (vi) that there is no unanticipated
fluctuation in interest rates and foreign exchange rates; and (vii) that there is no material deterioration in general economic conditions. Although management believes that the assumptions
made and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. By its nature, forwardlooking information is based on assumptions and involves known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or
achievements, or results, to be materially different from future results, performance or achievements expressed or implied by such forward-looking information. Such risks, uncertainties and
other factors include among other things the following: (i) decreases in the price of nickel and copper; (ii) the risk that the Company will continue to have negative operating cash flow;; (iii) the
risk that additional financing will not be obtained as and when required; (iv) adverse fluctuations in foreign exchange rates; (v) the risk that concentrate produced will not meet certain
minimum specifications; (vi) material increases in operating costs; (vii) production estimates may not be accurate; (viii) environmental risks and changes in environmental legislation; (ix)
adverse fluctuations in interest rates; (x) failure to comply with restrictions and covenants in the Senior Loan Agreement; (xi) risks arising from the Company’s hedging activities; (xii) failure to
comply with restrictions and covenants in the off take loan agreements; (xiii) changes in the terms of the Senior Loan in order to achieve successful syndication; and (xiv) changes in the
terms of the Leasing Facility in order to achieve successful syndication.
The Company’s MD&A and the annual information form contain information on risks, uncertainties and other factors relating to the forward-looking information. Although the Company has
attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking information, there may be other factors that
cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of the factors are beyond the Company’s control. Accordingly, readers
should not place undue reliance on forward-looking information. All forward-looking information disclosed in this presentation is qualified by this cautionary statement.
Page 2
Key investment highlights

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World class deposit with a 23 year reserve life and potential to expand

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Off-take agreements secured for 100% concentrate production until 2014
Largest nickel sulphide project commissioned in the last decade
Low cost producer
Simple, proven open pit mine and conventional sulphide processing plant
16 months of full commercial operation ramping up to a run rate of 7.2Mtpa
by the end of 2011
Self-funding from existing operations & cash balance
Favorable supply and demand trends for nickel
Strong management team driving ramp-up and substantial improvements
in operational efficiency
Page 3
World class asset located in a pro-mining
jurisdiction
Mirabela Nickel is an international nickel producer
•
•
•
•
•
•
•
Largest nickel sulphide operation commissioned in over a decade after Voisey’s Bay
Operation is the 100% owned Santa Rita open pit, nickel sulphide mine in Brazil
Stable political environment with economic growth
Well situated, with access to power, water and logistics
Majority of the 800 staff plus contractors live in nearby towns of Ipiaú and Itagibá
Secure off-take agreements in place with two customers for 100% production
Mining license has a renewable 20-year term initially, expiring in 2028
Aratu Port
50km
Brazil
Brazil
Ipiau
Salvador
Atlantic Ocean
Santa Rita
Ex-mine gate to
Votorantim’s
Fortaleza de Minas smelter,
1,375km by road
Ilheus Port
CIF Norilsk
Harjavalta Smelter,
Manty luoto, Finland
Page 4
Simple, well proven business model
Mining
Sales
transport & logistics
Processing
•
Open pit mine
•
Quality mobile fleet
•
Simple, low cost, drill and
blast, load and haul
•
•
Caterpillar trucks, O&K
shovels and Atlas Copco
drill rigs
•
•
On-site maintenance
facilities
•
•
OEM equipment support
•
Conventional nickel
sulphide flotation plant
•
One product, two customers
•
Proven technology with
simple flowsheet
50% of production collected by
Votorantim at mill gate
•
100% of production
meets contract
specification
50% exported to Norilsk from
deep water port 140 km from site
(an alternative port nearby)
•
100% of production sold under
off-take agreements
•
Provisional payment (90% within
14 days of month end for
domestic and 14 days of shiploading for export customer)
Quality components –
Metso crushers, Outotec
grinding and flotation,
Larox filters
Proven process & technology
23 year mine life
100% off-take through 2014
Page 5
Fully contracted off-take agreements
through 2014
•
Agreements in place to sell 100% of production until the end of 2014 to two off-take
partners:
–
50% to Votorantim Metais, a Brazilian mining company, at the mine gate
–
50% to Norilsk, a nickel producer at CIF Rotterdam
•
Quality concentrate (+18% metal) meeting off-take specification
•
First shipment to Norilsk in January 2011, second shipment completed in April
•
Division of Votorantim Group, which is
a diversified business engaged in
primary goods manufacturing
•
Brazil’s 4th largest private company
•
Parent ratings of Baa3 / BBB
•
Norilsk Nickel Harjavalta is a subsidiary
of Norilsk Nickel. Norilsk is a diversified
mining and metal producing company
with a market cap of $47.2bn
•
World’s largest producer of nickel and
palladium with 20% of worldwide nickel
production
•
Parent ratings of Baa2 / BBB-
Page 6
Project successfully brought into
production within 5 years
2005:
2007:
Maiden JORC open-cut Construction
resource announced
commenced
2004:
Deposit
acquired and
nickel sulphides
intersected
2004
•
Oct 2009:
Commissioning
2007:
Bankable Feasibility
Study completed
and development
decision
2008:
Maiden JORC
underground
resource
announced
2005
2007
2006
2008
2010:
First stage
production ramp-up
to 4.6Mtpa
Nov 2009:
First production
produced to customer
specification
2009
2010
Rapid commercialization possible due to the quality of the asset and the scarcity of
high quality nickel sulphide projects in the pipeline globally
Page 7
Substantial reserves and resources 23 year expected mine life
JORC mineral reserves and resources1
Classification
Open-cut reserves2,7
Proven
Probable
Total
Open-cut resources5,7
Measured
Indicated
Inferred
Total
Underground resources6,7
Inferred
Copper grade (%) Recovered Nickel (t)4
Tonnes (M)
Nickel grade (%)
16.7
142.6
159.3
0.57%
0.52%
0.52%
0.14%
0.13%
0.13%
64,100
505,700
569,8003
16.3
156.0
25.7
198.0
0.57%
0.51%
0.53%
0.52%
0.14%
0.13%
0.14%
0.14%
n/a
n/a
n/a
n/a
87.5
0.79%
0.23%
690,000
¹ Mineral reserves referred to are reported in accordance with the JORC Code. Mineral resources that are not mineral reserves do not have demonstrated economic viability
² Reflects strip ratio of 5.0:1
³ Contained nickel tonnes of 829,800
4 Weighted average recovery of 68.7%
5 Based on a weighted average cut-off grade of 0.25% nickel
6 Based on a weighted average cut-off grade of 0.50% nickel
7 As of December 31, 2010
•
494 drill holes used in resource calculation totaling 131,695m of drilling
•
For 6 months ended December 31, 2010 Mirabela recovered 7% more metal than was expected
compared to the resource model
Page 8
Consistent quarterly production
improvements in 2010
Mining: Q4 total material mined at 36 Mtpa annualized
Processing: Achieved rate of 5.2 Mtpa annualized
Ore milled (t)
Plant throughput (%)¹
Recovery (%)
108%
Ore mined (t)
Waste mined (t)
Nickel grade processed (%)
(t)
10,000,000
8,000,000
6,000,000
%
(t)
0.75%
1,500,000
0.65%
1,250,000
0.55%
1,000,000
68%
73%
100%
82%
80%
750,000
4,000,000
0.51%
0.52%
0.52%
0.50%
0.45%
0.35%
250,000
0
0.25%
0
1Q10
2Q10
3Q10
4Q10
Nickel: Production of 10,375 t for FY2010
3,104
4,000
3,000
1,987
2,505
1,000
3,676
1,991
2,304
2Q10
3Q10
Based on nameplate capacity of 4.6Mtpa
52%
49%
1Q10
2Q10
3Q10
60%
40%
20%
0%
4Q10
4,000
10.00
$8.12
$7.62
8.00
$6.76
$6.27
3Q10
4Q10
6.00
2,000
4.00
2,405
0
1Q10
48%
US$/lb
3,000
2,359
2,000
60%
Cash costs: Continued improvement during FY2010
Nickel in concentrate produced (t)
Nickel in concentrate sold (t)
(t)
1
500,000
2,000,000
120%
4Q10
1,000
2.00
0
0.00
1Q10
2Q10
Page 9
2010 highlights
•
Production on target at 10,375t of nickel
•
All project ramp-up milestones achieved
•
Break through mining and plant performance in Q4 2010
•
Established sustainable mining and processing operations including
maintenance, safety performance and environmental compliance
•
Established a clear path forward to full production by the end of 2011
Page 10
Key operating metrics from Independent
Technical Report
Mining
Processing
Ore mined (t)
Waste mined (t)
Nickel grade processed (%)
(t)
0.60%
50,000,000
40,000,000
%
65%
6,000,000
64.2%
55%
0.40%
2,000,000
0
0.30%
2010
2011E
60%
4,000,000
0.50%
10,000,000
50%
53.0%
0
45%
2012E
Nickel
2010
2011E
2012E
Cash costs
Nickel in concentrate produced (t)
(t)
US$/lb
23,800
25,000
8.00
$7.00
10,375
Unit Cash Costs
$5.69
6.00
16,800
20,000
15,000
70%
64.5%
0.50%
30,000,000
Recovery (%)
8,000,000
0.51%
0.51%
20,000,000
Ore milled (t)
(t)
$4.99
4.00
10,000
2.00
5,000
0.00
0
2010
2011E
2012E
2010
2011E
2012E
Page 11
Plant expansion to a run rate of 7.2
Mtpa by the end of 2011
•
Targeted plant expansion to a run rate of
7.2 Mtpa by end 2011
•
Modular plant upgrade:
•
–
Additional pebble crusher and filter
already installed
–
Second ball mill installation underway
–
Additional crushing capability
engineering completed and major
components ordered
–
Desliming plant engineering completed
and major components ordered
Installation of upgrade can be done
concurrently to plant’s ongoing operation
Page 12
Q1 2011 operational performance
•
•
2,825t nickel in concentrate produced
•
No lost time injuries for the quarter, 12 month rolling average decreased to 0.64
•
Accelerated mining pre-strip of central pit on track for completion by end Q2 2011
•
Non-recurring SAG mill motor failures in January 2011 reduced production for the quarter
•
Production expected to be significantly stronger in 2H 2011 as ramp-up activities are
completed
Unit cash costs at US$6.97/lb for the quarter due to reduced production
•
•
Sales of 2,084t nickel in concentrate
•
•
Not representative of FY2011 forecast unit costs
1,070t contained nickel Norilsk shipment and sale completed on 1 April 2011
7.2Mtpa processing plant expansion currently within budget & on track for completion by
end 2011
•
Successful debt re-financing in April with issue of US$395 million of 8.75% senior
unsecured notes due 2018
Page 13
Debt re-financing overview
Uses
8.75% for 7 years due 2018
Standard high yield covenants
Ratings: B2 (stable), B- (positive)
US$M
Senior debt
Norilsk facility
152
56
25
Votorantim facility
Hedging (take out)
Payment of taxes related to repayment of debt
Estimated fees and expenses
20
6-19
14-16
Cash to balance sheet
Total uses
122-107
$395
Hedge profile post transaction
Instrument
Nickel forward contracts
Tonnes
US$/lb
% of expected nickel production hedged
Copper forward contracts
Tonnes
US$/lb
% of expected copper production hedged
2011
2012
2013
2014
2015
6,198
7.90
37%
4,899
7.89
21%
3,683
7.66
15%
819
7.55
3%
-
162
3.02
3%
2,232
2.87
27%
2,904
2.74
37%
2,922
2.62
33%
732
2.57
9%
Page 14
Debt maturity profile
Old maturity profile (US$M)
Senior loan
Votorantim off-take
Norilsk off-take
Caterpillar facility
$100
$50
$0
2011
2012
2013
2014
2015
2016
2017
2018
2017
2018
Current maturity profile (US$M)
Senior unsecured notes
Caterpillar facility
$400
$300
$200
$100
$0
2011
2012
2013
2014
2015
2016
Page 15
Nickel industry - stainless steel is the key
driver of growth
• Nickel is used mainly as an alloying element in steel
– Around 65% of nickel supply goes into stainless steel and 5% in alloy steels with
other elements; non-ferrous alloys form another 13% of nickel use
• Nickel occurs as two main deposits:
– Sulphides: typically processed via low capital intensity nickel flotation
– Laterites: processed via a capital intensive high pressure/temperature process
• Australia, Brazil, Canada, China and Russia are the principal nickel mining areas;
major refineries operate in Norway, Finland, China and Russia
End uses of nickel
Stainless steel: 65%
Non-ferrous alloys: 13%
Alloy steels: 5%
TBU
Electroplating: 7%
Foundry casting: 3%
Other: 7%
Source: Brook Hunt
Page 16
Nickel demand is set to rise
•
Nickel demand is forecast to rise at a CAGR of 5% from 2010 to 2015
•
Asian demand for nickel is forecast to comprise around 63% of global demand
by 2015, rising from 58% in 2010
•
China is expected to account for 38% of global consumption by 2015
Forecast nickel demand¹ by region (Kt)
China
Asia (excl. China)
Europe
Americas
1,481
1,558
1,657
1,696
2010E
2011E
2012E
2013E
Africa
1,804
2014E
Oceania
1,916
2015E
Source: Brook Hunt
¹ Analysis of demand for thousands of tonnes of contained nickel
Page 17
Nickel has a robust price outlook
• After 2007 peak of US$17.71/lb, nickel prices fell during the global financial crisis to below
US$7.00/lb
• Q1 2011 nickel price average of US$12.20/lb
• Brook Hunt is forecasting a long term nickel price of US$9.80
• Brook Hunt forecasts a decline in nickel prices from 2012-2015 due to expected nickel
projects coming on-line with a significant increase from 2016 onward due to supply
shortages
• CRU is predicting an upturn in prices as early as 2013
Historical and forecast nickel price (2010 dollars)
Brook Hunt
Mirabela cash cost
4.00
2000
2003
2006
2009
2012E
2015E
US$4.26/lb
2017E
3.50
2016E
6.00
2015E
7.00
2014E
8.00
US$10.38/lb
2013E
10.50
US$10.74/lb
2012E
14.00
10.00
2011E
17.50
0.00
1997
US$11.00/lb
12.00
2010E
US$/lb
Historical
CRU
LME forward prices
Source: Brook Hunt, CRU, Management projections
Page 18
Low cost producer
2012 forecast nickel industry cost curve
Brook Hunt Cash Cost (US$/lb Ni) in 2010 dollars
CuNi Sulphides
15.00
Santa Rita
10.00
Laterite Pyro
5.00
0.00
(5.00)
First quartile
(10.00)
Second quartile
Third quartile
Fourth quartile
Cumulative production (paid Mlbs Ni)
0
596
1,192
1,788
2,384
2,980
3,576
Page 19
Clear and focused growth strategy
•
Current focus is ramp-up to full production of Santa Rita open pit
•
Independent Technical Report has confirmed “Base Case” parameters &
demonstrates financial strength of current open pit operations
•
Mirabela is positioned to take advantage of full portfolio of growth
opportunities by end of 2012
Mirabela Growth Strategy
Phase 1
Medium Term
Brownfields & Near Mine Opportunities
Phase 2
Longer Term
Growth Pipeline & Opportunities
•
Production expansion opportunities
•
Regional exploration
•
Drilling program to increase open pit
resource
•
Acquisition targets
•
Better define the underground potential
•
Further assessment of near mine targets:
Palestina and Peri Peri
Page 20
Key investment highlights





World class deposit with a 23 year reserve life and potential to expand




Off-take agreements secured for 100% concentrate production until 2014
Largest nickel sulphide project commissioned in the last decade
Low cost producer
Simple, proven open pit mine and conventional sulphide processing plant
16 months of full commercial operation ramping up to a run rate of 7.2Mtpa
by the end of 2011
Self-funding from existing operations & cash balance
Favorable supply and demand trends for nickel
Strong management team driving ramp-up and substantial improvements
in operational efficiency
Page 21