committed to shareholder value creation - cibc whistler institutional investor conference
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Committed to Shareholder Value Creation - CIBC Whistler Institutional Investor ConferenceTRANSCRIPT
Committed to Shareholder Value Creation
CIBC Whistler Institutional Investor Conference January 24, 2013
FORWARD LOOKING STATEMENTS
Certain information included in this presentation constitutes forward-looking statements, including any information as to our projects, plans and future financial and operating performance. All statements, other than statements of historical fact, are forward-looking statements. The words “expect”, “believe”, “anticipate”, “will”, “intend”, “estimate”, “forecast”, “budget”, “schedule” and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: changes to current estimates of mineral reserves and resources; fluctuations in the price of gold; changes in foreign exchange rates (particularly the Canadian dollar, Mexican peso and U.S. dollar); the impact of inflation; changes in our credit rating; the ongoing substantial issuer bid; any decisions to implement a dividend; employee relations; litigation; disruptions affecting operations; availability of and increased costs associated with mining inputs and labor; development delays at the Young-Davidson mine; operating or technical difficulties in connection with mining or development activities; inherent risks associated with mining and mineral processing; the risk that the Young-Davidson, and El Chanate mine and may not perform as planned; uncertainty with the Company’s ability to secure capital to execute its business plans; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; contests over title to properties; changes in national and local government legislation in Canada, Mexico and other jurisdictions in which the Company does or may carry on business in the future; risk of loss due to sabotage and civil disturbances; the impact of global liquidity and credit availability and the values of assets and liabilities based on projected future cash flows; risks arising from holding derivative instruments; business opportunities that may be pursued by the Company Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this presentation are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources This presentation uses the terms "measured," "indicated " and "inferred” resources. We advise investors that while those terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.
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Capital Markets Profile Analyst Coverage
Company Analyst
BMO Nesbitt Burns Brian Quast
Canaccord Genuity Rahul Paul
CIBC Cosmos Chiu
Credit Suisse Anita Soni
Dahlman Rose Adam P. Graf
Desjardins Securities Adam Melnyk
Dundee Securities Ron Stewart
GMP Securities Craig West
Mackie Research Barry Allan
Macquarie Securities Tony Lesiak
Merrill Lynch Mike Parkin
National Bank Paolo Lostritto
Raymond James Gary Baschuk
RBC Capital Markets Dan Rollins
Scotia Capital Trevor Turnbull
TD Securities Steven Green
UBS Chris Lichtenheldt
Capital Structure
Fully diluted shares outstanding1,2 293MM
Market Capitalization $2.3B
NYSE & TSX 3-months avg. daily trading volume 4.8MM
1. Excluding convertible debentures 2. Prior to completion of a US$300M Substantial Issuer Bid
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0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
Volume Close
Recent News Flow • Sale of Australian assets closed May 4/12 (gross proceeds $150M)
• Sale of El Cubo closed July 13/12 (gross proceeds $200M)
• Sale of equity interest in Endeavour Silver and Crocodile Gold (gross proceeds $104M)
• Sale of Ocampo closed Dec 14/12 (gross proceeds of $750M)
• Repayment of $128M debt facility
• Settlement of McKenna Class Action ($13.25M)
• Announcement of $300M Substantial Issuer Bid
• Commercial production declared at Young-Davidson (Sept 1/12)
• Q4 & 2012 production / 2013 guidance
Upcoming News Flow • Closing of Substantial Issuer Bid (Jan. 23/13)
• Reserve and Resources Update (Feb 28/13)
• Q4 & YE Financial Results (week of March 25)
• Details of the Company’s inaugural dividend policy (before the end of March)
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Recent Developments
High Quality Asset Base
1. Cash costs for the Young-Davidson and El Chanate mines are calculated on a per gold ounce basis, using by-product revenues as a cost credit. Production includes gold ounces only. 2. Represents gold or gold equivalent grade as per technical reports and company disclosure. 3. Following the completion of a joint venture agreement, which is anticipated in early 2013, Minera Frisco will acquire a 50% interest in the Orion project. 5
Young-Davidson
El Chanate
Kemess
Orion
Orion (50%), Mexico3
2011 Resources (000’s oz Au Eq)
Measured and Indicated Resources 330 9.27 Au g/t 2
Inferred Resources 29 4.98 Au g/t 2
A Leading Pure Gold Producer Focused on Quality Assets in North America
Young-Davidson, Canada 2012A 2013E
Production Au oz. 56,138 120-140k
Cash Costs per Au oz.1 $690-$170 $575-$675
2011 Reserves and Resources (000’s oz Au)
Proven and Probable Reserves 3,831 2.56 Au g/t 2
Measured and Indicated Resources 956 2.03 Au g/t 2
Inferred Resources 1,431 2.43 Au g/t 2
El Chanate, Mexico 2012A 2013E
Production Au oz. 71,145 70-80k
Cash Costs per Au oz.1 $425-$445 $475-$525
2011 Reserves and Resources (000’s oz Au)
Proven and Probable Reserves 1,285 0.65 Au g/t 2
Measured and Indicated Resources 38 0.42 Au g/t 2
Inferred Resources 8 0.46 Au g/t 2
Kemess, Canada - Gold
2011 Resources (000’s oz Au)
Measured and Indicated Resources 2,610 0.56 Au g/t 2
Inferred Resources 90 0.42 Au g/t 2
Kemess, Canada - Copper
2011 Resources (000’s lbs Cu)
Measured and Indicated Resources 861 0.29%
Inferred Resources 30 0.22%
Compelling Value Proposition
• High quality asset base
• North American (low risk) focus
• Cash costs below industry average
• Organic growth profile
• Mine longevity
• Peer-leading balance sheet
• Growing free cash flow stream
• Strong leverage to gold price
• Shareholder friendly initiatives focus
Repositioning for Consistent, Reliable, Sustainable Growth
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YD Historic Mine Workings
Open Pit
Ramp Portal 10350L
NG Shaft MCM Shaft
9890L
9590L
9400L
9200L
8900L
MCM Historic Mine Workings
Young-Davidson
• Commercial production Sept. 1/12
• Low cost producer & strong production growth profile
• Underground production commenced from UBZ
• Mill above name plate capacity
• Hoisting ore during Q3 2013
• YD West Zone: strategic exploration focus
UBZ Zone
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2nd Leg Northgate
Shaft (450m)
YD West Zone
2012A 2013E
Production (gold ounces)4 56,138 120,000-140,000
Cash Costs (per gold ounce)1,3 $690-$710 $575-675
P&P Reserves (oz.) 3.8 million
Mine Life (years) 18 years
1. Cash costs for the Young-Davidson mine are calculated on a per gold ounce basis, using by-product revenues as a cost credit and are attributable to commercial production ounces only.
2. Includes pre-production, sustaining and accelerated underground capital infrastructure costs. 3. The following currency assumptions were used to forecast estimates:
• 1:1 Canadian dollars to the US dollar 4. 2012 production includes pre-production ounces as well as ounces produced subsequent to the
declaration of commercial production.
37,625 64,781
82,600 97,591 101,305
2010A 2011A Q1-12 Q2-12 Q3-12
Open Pit Tonnes Per Day
El Chanate Mine
• Cash costs in lower quartile
• Achieved target mining rates of ~100k tpd
• Accelerated pre-development program in 2012
• Increasing areas under leach to 80% by end of 2012
Delivering consistent, stable results; lowest quartile cash costs
2012A 2013E
Production (gold ounces) 71,145 70,000-80,000
Cash Costs (per gold ounce)1,3 $425-$445 $475-$525
P&P Reserves (oz.) 1.3 million
Mine Life 8 years
1. Cash costs for the El Chanate mines are calculated on a per gold ounce basis, using by-product revenues as a cost credit. Production includes gold ounces only.
2. Includes $29.2 million of accelerated pre - stripping of the South East Layback associated with the expansion of the crushing and stacking productivity from 14,000 tpd to 21,000 tpd.
3. The following currency assumptions were used to forecast estimates: • 12:1 Mexican pesos to the US dollar
14,871 16,444 18,080 19,093 17,822 19,388
$486 $465
$401 $409 $433 $434
Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12
Quarterly Production and Cash Costs
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New Discoveries at El Chanate
Hole 741 (view looking south) El Chanate Mine (looking south)
North West Zone Hole ID From (m) To (m) Length (m) Au g/t
CHCI-731 183.0 192.0 9.0 0.31 210.0 217.5 7.5 0.26
CHCI-732 55.5 82.5 27.0 0.45 CHCI-733 24.0 34.5 10.5 0.91 CHCI-734 133.5 141.0 7.5 1.51 CHCI-735 97.5 103.5 6.0 2.07 CHCI-749 7.5 21.0 13.5 0.19
Rono Hole ID From (m) To (m) Length (m) Au g/t
CHCI-740 76.5 135.0 58.5 0.27 CHCI-741 114.0 166.5 52.5 0.34
Loma Prieta Hole ID From (m) To (m) Length (m) Au g/t
CHCI-705 46.5 54.0 7.5 0.92 CHCI-716 52.5 64.5 12.0 8.35
CHCI-717 58.5 66.0 7.5 3.60 88.5 93.0 4.5 6.52
CHCI-725 61.5 75.0 13.5 1.70 CHCI-727 48.0 54.0 6.0 4.52 CHCI-747 64.5 70.5 6.0 2.10
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Free Cash Generating Capacity
Increasing production profile at declining cash costs
Robust FCF profile driven by long life mines, production growth, declining cash costs and capital expenditure profile
Source: Consensus data (December 2012)
2012E 2013E 2014E 2015E 2016E
El Chanate - Capex Young-Davidson - Capex FCF
2012E 2013E 2014E 2015E 2016EProduction Cash Costs
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Compelling Value Proposition
• High quality asset base
• North American (low risk) focus
• Cash costs below industry average
• Organic growth profile
• Mine longevity
• Peer-leading balance sheet
• Growing free cash flow stream
• Strong leverage to gold price
• Shareholder friendly initiatives focus
Repositioning for Consistent, Reliable, Sustainable Growth
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Committed to Shareholder Value Creation
CIBC Whistler Institutional Investor Conference January 24, 2013
Management and Board of Directors
Executive Management Team Scott Perry - President and Chief Executive Officer
Peter MacPhail - Executive Vice President and Chief Operating Officer
Robert Chausse - Executive Vice President and Chief Financial Officer
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Board of Directors Colin Benner - Executive Chairman of the Board, Sustainability Committee Member
Mark Daniel - Compensation (Chair) and Corporate Governance Committee Member
Richard Mark Colterjohn - Corporate Governance (Chair) and Audit Committee Member
Joseph Spiteri - Sustainability Committee Member
Alan Edwards - Sustainability (Chair) and Compensation Committee Member
Ronald E. Smith - Audit (Chair) and Compensation Committee Member
Patrick D. Downey - Audit and Corporate Governance Committee Member
Scott Perry - President and Chief Executive Officer
Luis Chavez - Senior Vice President, Mexican Operations
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Proven and Probable Reserves
Proven Reserves Probable Reserves
Tonnes Gold Gold Tonnes Gold Gold
(000's) (g/t) Ounces (000's) (g/t) Ounces
(000's) (000's)
Total - El Chanate 41,783 0.63 851 19,745 0.68 433
Young-Davidson - Surface 4,173 1.40 188 3,394 1.27 139
Young-Davidson - Underground 5,799 3.05 568 33,259 2.75 2,936
Total Young-Davidson 9,972 2.36 756 36,653 2.61 3,075
AuRico - Total 51,755 0.97 1,607 56,398 1.93 3,508
Proven and Probable Reserves
Tonnes Gold Gold
(000's) (g/t) Ounces
(000's)
Total - El Chanate 61,528 0.65 1,285
Young-Davidson - Surface 7,567 1.34 327
Young-Davidson - Underground 39,058 2.79 3,504
Total Young-Davidson 46,625 2.56 3,831
AuRico - Total 108,153 1.47 5,116
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Measured and Indicated Resources
Measured Resources Indicated Resources
Tonnes Gold Silver Gold Silver Tonnes Gold Silver Gold Silver (000's) (g/t) (g/t) Ounces Ounces (000's) (g/t) (g/t) Ounces Ounces
(000's) (000's) (000's) (000's) El Chanate 1,162 0.38 - 14 - 1,652 0.44 - 23 - Young-Davidson - Surface 739 2.02 - 48 - 3,499 1.26 - 142 -
Young-Davidson - Underground 1,527 3.01 - 148 - 8,864 2.17 - 619 -
Total Young-Davidson 2,266 2.69 - 196 - 12,363 1.91 - 761 - Orion (50%) - - - - - 554 3.36 309 65 5,503 Kemess Underground - - - - - 136,500 0.56 - 2,610 - AuRico - Total 3,429 1.90 0 210 0 151,068 0.71 1 3,459 5,503
Measured and Indicated Resources
Tonnes Gold Silver Gold Silver (000's) (g/t) (g/t) Ounces Ounces
(000's) (000's) El Chanate 2,814 0.42 - 38 - Young-Davidson - Surface 4,238 1.39 - 190 -
Young-Davidson - Underground 10,391 2.30 - 767 -
Total Young-Davidson 14,629 2.03 - 956 - Orion (50%) 554 3.36 309 65 5,503 Kemess Underground 136,500 0.56 - 2,610 - AuRico - Total 154,497 0.74 1 3,669 5,503
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Inferred and Copper Resources
Inferred Resources
Tonnes Gold Silver Gold Silver
(000's) (g/t) (g/t) Ounces Ounces
(000's) (000's)
El Chanate 549 0.46 - 8 -
Young-Davidson - Surface 3,515 1.26 - 142 -
Young-Davidson - Underground 14,784 2.71 - 1,289 -
Total Young-Davidson 18,299 2.43 - 1,431 -
Orion (50%) 91 3.33 95 10 275
Kemess Underground 6,000 0.42 - 90 -
AuRico - Total 24,938 1.92 0 1,539 275
Copper Resources
Tonnes Copper Copper
(000’s) (%) Pounds
Kemess Underground (000's)
Indicated 136,500 0.29 861,000
Inferred 6,000 0.22 30,000
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Notes to Reserves and Resources
Reserves Resources
Au $/oz Ag $/oz Au $/oz Ag $/oz Cu $/lb
El Chanate $1250 USD - $1450 USD - -
Young-Davidson $1250 USD - $1450 USD - -
Orion - - $850 USD $13.00 USD -
Kemess Underground - - $1100 USD $20.00 USD $2.80 USD
Notes to Reserves and Resources: • Mineral Reserves and Resources have been stated as at December 31, 2011. • AuRico acquired Capital Gold Corporation, including the El Chanate and Orion properties, in April 2011. AuRico acquired Northgate Minerals Corporation, including the Young-Davidson,
Fosterville, Stawell and Kemess properties, in October 2011. • Mineral Resources are in addition to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability when calculated using Mineral
Reserve assumptions. • Following the completion of a joint venture agreement , which is anticipated in early Dec. 2012, Minera Frisco will acquire a 50% interest in the Orion project. • Reserves have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. In addition, while the terms “Measured”, “Indicated and “Inferred”
Mineral Resources are required pursuant to NI 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and Mineral Resources disclosed in accordance with the requirements of the SEC. Investors should understand that “Inferred” Mineral Resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, investors are cautioned not to assume that any part or all of AuRico Gold’s Mineral Resources constitute or will be converted into Reserves.
The following metal prices were used for the calculation of Reserves and Resources:
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