Corporate Presentation - Adriana Resources Inc.
Corporate Presentation - Adriana Resources Inc.
Corporate Presentation - Adriana Resources Inc.
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Annual General and Special Meeting<br />
June 13, 2013<br />
Allen J. Palmiere, President & CEO
Forward Looking Statement<br />
Certain information regarding the Company including management's assessment of future plans and operations, may<br />
constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown<br />
risks and uncertainties. Without limitation, statements relating to potential mineralization and resources, mining<br />
exploration and development, future plans and objectives of the Company and imprecision of mineral resources<br />
estimates, are forward looking statements that involve various degrees of risk. Certain important risk factors could<br />
cause the Company’s actual results to differ materially from those expressed or implied by such forward-looking<br />
statements including, without limitation, changes in the world wide price of mineral commodities and currency<br />
fluctuations, general market conditions, the uncertainty of future profitability and access to sufficient capital, risks<br />
inherent in mineral exploration, development, construction and mining operations, delays in obtaining or failures to<br />
obtain required governmental, environmental or other project approvals, environmental risks, access to labour and<br />
services and competition from other companies. As a consequence, actual results may differ materially from those<br />
anticipated in the forward-looking statements and caution should be exercised on placing undue reliance on forward<br />
looking information. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this<br />
presentation.<br />
2
Lac Otelnuk Project<br />
WORLD CLASS DEPOSIT<br />
Nunavik, Québec, Canada<br />
• Largest iron ore deposit in Canada with the potential of becoming one of the<br />
largest in the world<br />
• Defined resource of 23.74 billion tonnes with the potential in excess of 30 billion<br />
tonnes<br />
• Potentially able to produce 50 million tonnes per annum for 100 years<br />
• Will produce high grade (67.5% Fe) pellets<br />
3
Lac Otelnuk Project – Conceptual Scope<br />
• Mine volume approximately 175-195 million tonnes of ore per annum<br />
• Concentrator capacity approximately 195 million tonnes per annum<br />
• Pellet Plant Production – 50 million tonnes per annum of 67.5% Fe pellets<br />
• Railway from Lac Otelnuk to Sept Îles approximately 849 kilometers<br />
• Port at Sept Îles expanded by an incremental capacity of 50 million tonnes per annum<br />
• Power line to Lac Otelnuk<br />
4
Lac Otelnuk – Location<br />
WORLD CLASS DEPOSIT<br />
LAC OTELNUK PROJECT<br />
Strategic Resource<br />
• Located in Nunavik, Québec<br />
• 170 km north of Schefferville<br />
• 250 km south of Kuujjuaq<br />
5
WORLD CLASS DEPOSIT<br />
2012 Updated NI 43-101 Mineral Resource<br />
Estimate (Davis Tube Weight Recovery (“DTWR”) cut-off grade 18%)<br />
Resource<br />
Classification<br />
Tonnes<br />
(in Billions)<br />
% Fe<br />
Head<br />
DTWR<br />
%<br />
Measured and<br />
Indicated<br />
11.35 28.9 26.0<br />
Inferred 12.39 30.4 26.0<br />
Current mineral resource estimate conforms to the CIM standards for such mineral<br />
resource under the categories listed as reported by Watts, Griffis and McOuat Limited<br />
(“WGM”), a independent geological and engineering consulting firm. WGM completed an<br />
NI 43-101 Technical Report that describes the resource calculation methodology. The<br />
report is available on SEDAR (www.sedar.com).<br />
6
Lac Otelnuk – typical cross section<br />
WORLD CLASS DEPOSIT<br />
• Drilling has outlined iron mineralization over a 36 km strike length averaging 100<br />
meters thick and 4 – 6 km wide<br />
7
Lac Otelnuk Project – Summary Economics<br />
ECONOMIC VIABILITY (Values from 2011 Preliminary Economic Analysis)<br />
Production Rate<br />
50 million tonnes<br />
Discount Rate 8%<br />
Price per tonne of Pellets $100<br />
Operating cost per tonne (FOB Sept Îles) $31.07<br />
NPV<br />
$15.2 billion<br />
IRR 20%<br />
Payback after Full Production<br />
Funding Required<br />
3 years<br />
$9 billion<br />
8
Lac Otelnuk Project – Capital Cost<br />
(Values from 2011 Preliminary Economic Analysis)<br />
Mine Equipment and Infrastructure $655<br />
Crushing and Concentrator $2,428<br />
Pellet Plant $4,332<br />
Railway $2,653<br />
Port $610<br />
Power $528<br />
Indirect costs $506<br />
Contingency $1,197<br />
Total $12,909<br />
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Lac Otelnuk Project – Benefits<br />
• Capital expenditures to stimulate economic development<br />
• Construction spending in excess of $13 billion<br />
• Annual operating costs of $1.5 billion<br />
• Employment possibilities – 2000+ direct jobs during the phase<br />
• Spinoff and secondary economic development for suppliers and service<br />
providers<br />
• Potential catalyst for infrastructure development<br />
• Indirect and direct taxes and royalties to the Government<br />
10
Lac Otelnuk Project - Past Milestones<br />
• Acquired initial property interest – 2006<br />
• Initial exploration drilling – 2006, 2007, 2008<br />
• Initial resource calculation -2009<br />
• Additional drilling – 2010, 2011<br />
• Preliminary Economic Analysis – 2011<br />
• Joint Venture with WISCO – 2012<br />
• Environmental Base line studies – 2010, 2011, 2012<br />
• Updated Resource Report – 2012<br />
• Started ESIA – 2012<br />
• Started Definitive Feasibility Study - 2013<br />
11
Lac Otelnuk Project – Schedule<br />
Why has our schedule changed?<br />
• In 2011, we anticipated that production would commence 2016<br />
• 2011 AGM, we stated that 2017 production would be more likely<br />
NOW:<br />
• Production – 2019<br />
• Delay in start of feasibility study<br />
• Potential future delays<br />
• Funding documentation<br />
• Rail<br />
• Power<br />
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Lac Otelnuk Project – Schedule<br />
• Continue to enhance and expand resources<br />
• Bankable Feasibility Study - completion Q3 - 2014<br />
• Environmental and Social Impact Assessment - completion Q3 - 2014<br />
• Impact Benefit Agreements - completion Q4 - 2014<br />
• Permitting - completion Q4 - 2015<br />
• Construction - completion 2016-2022<br />
• Production - 2019<br />
13
Highlights of Joint Venture Agreement with WISCO<br />
ABILITY TO FINANCE<br />
The Company received $120 million from WISCO for the following:<br />
• WISCO received a 60% participating interest in a Joint Venture - Lac Otelnuk Mining<br />
Ltd., which will hold <strong>Adriana</strong>’s Lac Otelnuk and December Lake properties while<br />
<strong>Adriana</strong> holds the remaining 40% interest<br />
• WISCO acquired 19.9% of the issued and outstanding shares of ADI - subscription<br />
agreement signed February 2011. Closed Private Placement for $28 million with<br />
WISCO on March 23, 2011<br />
• $51.6 million was paid directly to <strong>Adriana</strong> and the remaining $40 million was injected<br />
into Lac Otelnuk Mining Ltd.<br />
• WISCO will use commercially reasonable efforts to assist Joint Venture company to<br />
obtain project financing for not less than 70% of capex<br />
• WISCO will provide funding assistance of up to a maximum of CDN$200,000,000 for a<br />
term of up to 12 months in the event that <strong>Adriana</strong> has difficulty in funding its share of<br />
any cash call prior to the achievement of commercial production<br />
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Railways in Quebec<br />
DEVELOPMENT - INFRASTRUCTURE<br />
• Major issue is lack of capacity<br />
• Mont Wright – Pt. Cartier privately owned<br />
• QNSL from Ross Bay – Sept-Îles has capacity<br />
of approximately 80 million tonnes<br />
Alternatives:<br />
• New rail Lac Otelnuk to Schefferville<br />
• Upgrade Scheffervillle to Ross Bay Junction<br />
• QNSL to Sept-Îles; or<br />
• New rail Ross Bay to Sept Îles<br />
Or<br />
• New rail Lac Otelnuk to Sept Îles<br />
15
Railways in Quebec<br />
DEVELOPMENT - INFRASTRUCTUE<br />
The Company had anticipated having a rail solution by now!<br />
• The Government of Quebec will only permit one multi-user rail. The multi-user rail<br />
must be a common carrier and ownership must not be foreign<br />
• CN proposal was not acceptable to the Company<br />
• QNSL rail may be up for sale<br />
16
Port of Sept-Îles<br />
DEVELOPMENT - INFRASTRUCTURE<br />
Sept-Îles – Phase 1 expansion – 50 million tonnes<br />
Phase 2 expansion dedicated to ADI<br />
17
Social License to Operate<br />
Social License to Operate<br />
• Inuit Communities (JBNQA)<br />
• Naskapi Community (NEQA)<br />
• Innu Communities<br />
• Schefferville<br />
• Sept-Îles<br />
• Province of Quebec<br />
18
Social License to Operate<br />
Sustainability and Social License not a checklist<br />
• must develop partnerships<br />
• must incorporate social and environmental assessment into every<br />
decision<br />
• must be the core of the operational philosophy<br />
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Lac Otelnuk Project– Social License<br />
Two main components:<br />
CSR<br />
Partnerships with Inuit & First Nations<br />
• Work to establish business opportunities<br />
• Employment & training opportunities<br />
• Long-term and sustainable benefits<br />
Environmental<br />
Stewardship<br />
• Adopt and implement best practice<br />
• Each engineering/construction/operating<br />
decision must be subject to environmental<br />
and sustainability screening<br />
20
Lac Otelnuk Project – Montreal<br />
Strong Technical Team<br />
Montreal Office<br />
21
Lac Otelnuk Project – Strong Technical Team<br />
• Xiaogang Hu – General Manager and Project Director, Dr. Hu is a Cold Region Engineer and<br />
Construction Specialist. Over the past more than 30 years, Dr. Hu has worked on the project<br />
management on planning and developing large mining operations in northern territories as well<br />
as in diverse technical disciplines. Most recently, as the project director and Executive Vice<br />
President for ISUA project working for London Mining<br />
• Martin Perusse – Director, Environment and Sustainability. Mr. Pérusse worked as the Director,<br />
Environmental Impact Assessment at Golder and Associates. Previous roles include Director,<br />
Hydropower and Environment at Aecom, Associate and Vice President at Alliance Environnement<br />
<strong>Inc</strong>., and Head, Strategic Environment Issues at Hydro- Quebéc.<br />
• Remi Lapointe – Director, Metallurgy and Processing -Prior to joining LOM, Mr. Lapointe worked<br />
as the Area Manager, Mining and Metallurgy for SNC-Lavalin <strong>Inc</strong>., where he was involved in<br />
various iron ore projects around the world. His previous roles include Operations Manager at<br />
Signature Aluminum Canada <strong>Inc</strong>., and Director of Production and Logistic at Nexans <strong>Inc</strong>.<br />
• Maria Di Niro – Director of Project Controls – Director, Project Control –Ms. Di Niro is an<br />
engineer with over 15 years of experience in the Project Management field. Her career has<br />
progressed with experience in Risk Management for Industrial Industries, the development of<br />
construction claims to her last position as Senior Vice President, Strategic Contracts Management<br />
within SNC-Lavalin’s International Construction Division.<br />
22
Lac Otelnuk Project – Labrador Trough<br />
As at June 2013 - ADI, Alderon, Champion, Century, Labrador Iron, New Millennium<br />
23
<strong>Corporate</strong> Share Structure<br />
TSX-V: ADI<br />
(as at June 2013)<br />
Shares Issued: 157,554,238<br />
Options: 10,325,000<br />
Fully Diluted: 167,879,238<br />
52 Week high/low: $0.75-$0.21<br />
Market Cap (basic)<br />
~$35 Million<br />
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Contact Information<br />
<strong>Adriana</strong> <strong>Resources</strong> <strong>Inc</strong>.<br />
15 Toronto Street, Suite 1000<br />
Toronto, ON M5C 2E3<br />
Tel: 416-363-2200<br />
Fax: 416-363-2202<br />
www.adrianaresources.com<br />
Allen J. Palmiere, President & C.E.O.<br />
416-363-2200 ext. 222<br />
apalmiere@adrianaresources.com<br />
Connie Dos Santos, Director, Investor Relations<br />
416-363-2200 ext. 223<br />
cdossantos@adrianaresources.com<br />
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