vulcan resources presents to diggers & dealers …otc.nfmf.no/public/news/8993.pdf · vulcan is...

ABN 60 100 072 624 Ground Floor, 1 Altona Street, West Perth WA 6005 Telephone: +61 8 9485 2929 www.vulcanresources.com.au

Australian Securities Exchange: VCN, Frankfurt Stock Exchange: VUA (WKN: A0HHEF), Norwegian OTC: VCNR VRL1647D-AC

NEWS RELEASE

6 August 2008

VULCAN RESOURCES PRESENTS TO DIGGERS & DEALERS FORUM Vulcan Resources Limited (ASX: VCN, FSE: VUA, WKN: A0HHEF, Norwegian OTC: VCNR) is pleased to announce that Managing Director, Dr Alistair Cowden, will present a corporate overview at the Diggers & Dealers Forum today in Kalgoorlie, Western Australia. Attached is a copy of investor materials delivered at the Forum. This will also be available on the Company’s website www.vulcanresources.com.au.

- ENDS - Please direct enquiries to: Alistair Cowden Managing Director Tel: +61 8 9485 2929 Email: [email protected]

Charlotte Knudsen Crux Communications Norway Tel: +47 (97) 56 19 59

Sven Olsson AXINO AG Germany Tel: +49 711-25 35 92-41

John Phaceas Porter Novelli Tel: +61 8 9386 1233 Mobile: +61 411 449 621

About Vulcan

Vulcan Resources Limited is a base and precious metals development and exploration company in Finland.

The Company’s primary focus is the development of the 800,000 tpa 100% owned Kylylahti copper-cobalt project located in eastern Finland which has a Resource of 7.85 million tonnes grading 1.17% copper, 0.24% cobalt, 0.22% nickel, 0.49% zinc and 0.70 g/t gold.

A Definitive Feasibility Study has been completed on a 10 year underground mine and concentrator producing copper-gold and zinc-cobalt-nickel concentrate for sale. All environmental and mining permits for the Project are in place and production is planned to commence in late 2010.

The Kuhmo Nickel Project is 95% owned by Vulcan and has a Resource containing 38,000 tonnes of nickel metal and over 80,000 ounces of platinum and palladium (for a detailed breakdown of the Measured, Indicated and Inferred Resources, see ASX release dated 26/06/07).

Vulcan also has extensive iron-vanadium-titanium and nickel-copper projects in northern Finland.

Vulcan is listed on the Australian Stock Exchange (VCN), the Frankfurt Stock Exchange (VUA) and the Norwegian OTC (VCNR).

http://www.vulcanresources.com.au/

mailto:[email protected]

Building a new Nordic Mining House Vulcan Resources LimitedAlistair Cowden, Managing DirectorDiggers & Dealers 2008

2 © Copyright 2008 Vulcan Resources Limited Diggers & Dealers - August 2008

Inmet 2002New Boliden 2003Agnico Eagle 2006Talvivaara listed 2007Norilsk 2007Yara 2007First Quantum 2008

Finland – back on the mining map


Finland’s Mining Industry

Pyhäsalmi Cu-Zn-pyrite Inmet 1962Kemi Chromite Outokumpu 1967Hitura Nickel Belvedere 1970Siilinjärvi Phosphorus Yara 1979Orivesi Gold Dragon 1994 & 2007Kittilä Gold Agnico Eagle mid 2008Talvivaara Nickel Talvivaara late 2008Kylylahti Copper-Cobalt-Nickel Vulcan 2010/2011

Mine Owner Production start


Finnish Business EnvironmentExcellent first world infrastructure & commercial environment, EU member & Euro zone, top ranked global economyFinancial assistance potentially available from GovernmentNo royalties, 26% corporate taxMining, processing & technology skills, high productivity mines but shortage of mining professionalsLocal equipment & suppliers; Outotec, Metso, Sandvik, Larox, Tamrock, etcMining Licence & Mining Licence Extension granted


A unique value proposition for the Australian marketVulcan - a value proposition


Vulcan: Building a Base Metal Mining House in Finland

Kylylahti copper-cobalt-nickel project in development, first ore in late 2010Kuhmo nickel project, defining shallow open pit Resources & exploring a 150km nickel beltSeeking partners for extensive & shallow iron-vanadium depositsUS$36m cash, 227m shares on issue at 30 June 2008Listed ASX, Frankfurt, Oslo OTC


Experienced Mining BoardBarry EldridgeChairmanMining Engineer, director Cleveland Cliffs, ex CEO Portman, ex Norths Ltd

Alistair CowdenManaging DirectorGeologist, ex WMC, Delta, Archaean Gold

Heikki SolinNon-Executive Director, Chairman of Finnish SubsidiariesLawyer, ex Business Development Manager Outokumpu

Michael BlakistonNon-Executive DirectorLawyer, director Platinum Australia & Aurora Oil, Axiom Properties

Fiona HarrisNon-Executive DirectorAccountant, ex director Alinta, Portman

Eric HughesChief Financial Officer / Joint Co. SecAccountant, ex BHPB, Amity Oil, Roebuck, Ironclad, director Platinum Australia


Internationally Experienced Management

Campbell BairdGeneral Manager, OperationsMining Engineer, ex WMC, Norths, SRK

John BrodziakProject Manager, KylylahtiEngineer, ex Rio Tinto, Portman

Jarmo VesantoManager, FinlandEx Outokumpu

Nick WalkerExploration ManagerGeologist, Ex Outokumpu

Seppo TuovinenMining Manager, FinlandMining Engineer, ex Outokumpu

Eric HughesChief Financial OfficerAccountant, ex BHPB, Amity, Roebuck, Ironclad


Top 10 Shareholders

Verdipapirfondet KLP Norway 17.8 7.8Board & Management Australia/Finland 11.3 5.0Range UK 10.8 4.8Pareto Growth AS Norway 10.8 4.8Finnish Industry Investment Ltd Finland 10.7 4.8Sempra Metals USA 10.7 4.8Holberg Norden Norway 8.2 3.6Skagenf Vekst Norway 7.7 3.4LinQ Resources Australia 6.7 2.9SEB Private Bank S.A. Norway 6.6 2.9

Top 10 hold 45%, Top 40 71%, 227 million shares on issue

Country No. of Shares % Issued Capital(millions)


Kylylahti Copper-Cobalt-Nickel– on the road to production


Project StatusFully permittedStraightforward underground mine & concentratorLow sovereign risk, government & community supportRobust economics, rapid paybackLeverage to copper, cobalt & nickel, metal mix is a natural hedgeClose to smelters & refineries, advanced negotiations for sale of copper-gold & cobalt-nickel-zinc concentrates10 year mine life, potential for 15 yearsEngineers appointed, work commencedFinancing negotiations in progress


A Long Mining History- 80mlbs Cu, 1moz Au since 1914


History of Outokumpu RegionDiscovery of Kivisalmi ore boulder 1908Discovery of Outokumpu (Keretti) orebody 1910First mining at Outokumpu 1913Outokumpu invents flash furnace 1947Open Luikonlahti & Vuonos 1958/1973Kylylahti discovery 1984Close Luikonlahti, Vuonos, Keretti 1983-1989Outokumpu withdraws from mining business 2003Vulcan acquisition 2004Kylylahti PFS 2005Kylylahti DFS 2008


Project Location


Schematic Cross Section

Complex polyphase deformationUpper Amphibolite metamorphism for 200MaNo modern analogue

Local Geology


Kylylahti Drill Core

OKU927 drill core showing spectacular sulphide accumulations


Metal Intensity - Long section showing copper equivalent multiplied by thickness

Potential Extensions

Current Resource 7.85Mt @1.17% Cu, 0.24% Co, 0.22% Ni, 0.49% Zn, 0.7 g/t Au

Kylylahti is growing;targeting 10Mt

Extensions?


Nickel & gold not always assayed

Regional Resources

Tonnes Cu Co Ni Zn Au(Mt) (%) (%) (%) (%) (g/t)

Kylylahti 7.9 1.2 0.24 0.22 0.5 0.7Saramaki 3.4 0.7 0.10 0.10 0.8 -Vuonos 0.8 1.8 0.14 - 1.3 -

TOTAL 12.2 1.1 0.19 - 0.6 -

250m lbs contained copper


Regional Growth

2 billion lbs Cu, 1m oz Au produced (1914-1995) from Outokumpu fieldTwo satellite depositsCommanding tenement portfolioNumerous prospects & targets


A Straightforward Project

Site from the air


Definitive Feasibility StudySNC-Lavalin Australia – managing engineer

Subcontractors – SRK Mining, Golder Associates, Outotec, Ammtec, Quantitative Group, etc

18 month study including review & optimisation

15km Vulcan drilling, 45km Outokumpu Oy historic drilling (JORC Resource)

Peer reviews; AMC, Minproc, Ahma Engineering, etc

Post DFS value engineering complete


Kylylahti Resources & Reserves

Reserves are a subset of Resources* See ASX announcement dated 14 April 2008

0.700.490.220.241.177,854,000Total0.960.620.230.281.34195,000Inferred 0.720.500.220.241.176,973,000Indicated 0.500.360.220.241.17686,000Measured

Au(g/t)

Zn(%)

Ni(%)

Co(%)

Cu(%)

TonnesResource Classification

0.700.490.200.241.176,945,809Total0.720.500.200.241.176,342,095Probable 0.500.360.200.231.11603,714Proven

Au(g/t)

Zn(%)

Ni(%)

Co(%)

Cu(%)

TonnesReserve Classification


Mine Design800,000 tpa steady state production10 year mine life, potential for additional life from extensions & satellite ResourcesMining from 110 to 700m below surfacePaste & waste rock fillContract mining to year 3, thereafter owner operator


Process Flow

Sheet


Operating Costs

Mining 22.9Processing 13.9Administration & Overhead 2.5Concentrate transport, sale costs, etc 6.2

Total 45.5

(Costs estimated in Euro, average Euro:US$ of 1.2 assumed for production period)

(Costs do not include offsite charges & deduction s made by customers against metal revenues, eg TC/RC)

US$/tonne


Capital Costs

Box cut, decline to 1st production & mine infrastructure 40.0Concentrator, infrastructure, utilities, etc 69.3Paste Plant & Tailings 11.2Owners Costs 14.6EPCM 16.5Contingency 18.5

Total 170.1

(Costs estimated in Euro. Euro:US$ of 1.40 assumed for construction period)

US$ (m)


Copper-gold Concentrate:Copper 8,800 tGold 11,900 oz

Bulk Concentrate:Cobalt 1,900 tNickel 1,350 tZinc 3,800 tCopper 1,700 t

Kylylahti Annual Metal Production

Copper Flotation


DFS Metal Prices (US$)

Copper (lb) 3.80 2.60 2.50Cobalt (lb) 51.25 18.60 16.00Nickel (lb) 14.80 9.10 8.50Zinc (lb) 1.26 0.90 0.75Gold (oz) 955.00 722.00 650.00Euro:US$ 1.55 1.23 1.15

* Forecasts for production period of 2010-2022

Current Price Average Price Long Term Price*


Annual RevenuesNickel US$ 11mCopper US$ 57mCobalt US$ 73mZinc US$ 5m Gold US$ 8m

US$ 154m

(at long term prices)


Key DFS FinancialsAfter tax real NPV (8%) US$149mAfter tax IRR 29.5%Average EBITDA (yrs 1-5) US$84mpaCopper Equivalent Cash Operating Cost US$1.05/lb Cu eqOperating Cost US$46/tCapital Cost US$170mPayback from 1st production In year 3Life of Mine Revenues US$1,286m

• Financials are pre-financing costs• See appendix for copper equivalent calculation


Why we are Base Metal Bulls!

Supply: constrained by aging mines, falling grades, power & infrastructure constraints;Costs: escalating & compounded by financial markets & growing sovereign riskDemand: China, India, etc … relentless growth in intensity of metal usage


Cobalt MarketsCobalt market in deficit, record high pricesExceptional demand growth driven by batteries in devices & hybrid vehicles & high tech alloys; new supply neededCongo projects struggling with security, power supply, costs, title risk, complexity of producing cobalt intermediate products, non government organisation opposition to artisan mining, etcNew supply from nickel laterites challenged by spiralling acid &other costsCRU has price remaining strong to 2012


Cobalt – Exceptional demand growth, supply challenges

A by-product is not free!


Kylylahti financials have little cobalt price risk

Vulcan uses prices reverting toMarginal cost of production

Historic cobalt prices

TODAY


Cost Comparison – Cobalt Equivalent

Kylylahti

CRU Cost Curve 2007


Copper PriceDemand growth requires new annual production from an Escondida every 2 yearsAnalyst forecasts range from US$3.00-$4.50/lb to 20123 year average US$3.20/lb (US$7,000/t)


Cost Comparison – Copper Equivalent

Vulcan @US$46/t opex


0

5

10

Cost Comparison Nickel Equivalents

Flying

Fox

(WSA)

Kylylah

ti(V

CN)

Long

(IGO)

Radio

Hill

(Fox

)

Mincor Sall

ay

Malay

(Pan

)

Lanfr

anch

i

(Pan

)

Ope

ratin

g C

ost/l

b N

i

3.6


Strong Local Support


Community & EnvironmentEnvironmental & building permits granted, environmental monitoring ongoingSupportive local government & community, 17% local unemploymentApproximately 130 jobs during constructionApproximately 200 permanent jobs


Kuhmo - defining sulphide nickel Resources


Project Outline49 granted Claims, 26 Reservations37,000t of nickel metal in 5 shallow historic Resources12 drilled komatiite hosted nickel sulphide occurrencesConcept of central processing plant, multiple open pits & subsequent underground mines95% owned, 5% free carried interest to Dragon Mining


Analogous to Australia

150km long greenstone belt similar to Cosmos, Kambalda & Forrestania camps

Abundant targets, under-explored, well understood geological model

Australian experience reinforces that sulphides lead to mine discoveries


Outstanding Exploration PotentialMany recent high-grade nickel deposits discovered in similar terrains in Canada & AustraliaNo discoveries in Finland as no systematic exploration using modern geophysical tools - only sporadic company exploration since 1970’s & geological survey work in the 1990’sGeological model indicates high potential– High Mg komatiites– Multiple sulphide occurrences over 150km– Variety of styles – Kambalda, Mt Keith, Raglan– Extensive geochemical anomalism– Immature exploration


Tonnes(Mt)

Location Ni(%)

Cu(%)

Co(%)

Pt(%)

Pd(%)

Vaara1 6.10 0.35 0.03 0.01 0.15 0.10Peura-aho1 0.60 0.51 0.22 0.03 0.18 0.40Hietaharju1 1.00 0.53 0.28 0.03 0.19 0.26Sika-aho2 0.17 0.66 0.01 n/a n/a n/aArola3 1.50 0.46 n/a n/a n/a n/a

Total 9.38 0.40 contained nickel 37,765 tonnes

1 Indicated & Inferred Resources. For a breakdown see Resource estimate by Snowden & Associates in ASX Release 23 November 2006.2 GTK, 1998 Polygonal Resource Estimate, available in Public domain but not reported under JORC Code. Vulcan review classified as Inferred Resource.3 Outokumpu, Polygonal Resource Estimate, available in Public domain but not reported under JORC Code. Vulcan review classified as Inferred Resource

Mineral Resources 2006


Recent Drilling

Peura-aho – high grade shallow massive sulphides (58m @ 1.3% Ni)

Hietaharju – massive sulphides & high PGE (5m @ 6.4g/t Pt + Pd)

Vaara – thick low grade intercepts (43m @ 0.43% Ni)


Massive Nickel Sulphides

Results include: 22.1m @ 1.8% Ni, 0.6% Cu, 2.8g/t PGE (Hietaharju)6.0m @ 2.2% Ni, 0.6% Cu, 4.1g/t PGE (Peura-aho)


Winter drilling at Hietaharju

Next StepsDrill out shallow open pitsMetallurgical testworkEnvironmental baseline studiesResource estimates & pit optimisationsBrownfield & regional exploration


Vulcan’s Vanadium AssetsSyöte - Porttivaara – 13 Granted claims covering 30km of very large Fe-Ti magnetite deposits in the Kollisma complex. Mustavarra mine is a small excision from Vulcan’s tenement position. Lapland – Claims covering Akanvaara & Koitelainen deposits, small high V grade, potential PGE, Cu & Ag creditsOtanmäki – Claims covering remnant shallow mineralisation & old Vuorokas underground mine


How to measure Vulcan?Kylylahti production equivalent to

9,000tpa of nickel Equates to Independence (A$575m) or

Albidon (A$860m)

www.vulcanresources.com.au


Metal EquivalenceMetal equivalence is a useful measure of the combined value of the five metals (Cu, Co, Ni, Zn, Au) that to contribute to the revenue for the Kylylahti Project. It permits the comparison of Kylylahti with other copper or nickel dominant base metal projects.

In order to account for the varying degree to which different metals contribute to revenue, costs are adjusted by a revenue factor. Revenue is calculated after accounting for metallurgical recovery, smelter & refinery deductions & charges & concentrate transport charges etc. Metal prices assumed & metallurgical recoveries are detailed in the presentation.

The revenue factor adjusts for the relative contribution of all metals to revenue expressed as if the revenue was contributed by an individual metal such as copper.

The calculation is: Metal eq cost = cost/(copper in concentrate x Revenue factor

Revenue factor = Revenue attributable to all metals

Revenue attributable to individual metal only


Competent Person StatementThe information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr Alistair Cowden BSc (Hons), PhD, MAusIMM, MAIG, Mr Nicholas Walker, BSc (Hons), MSc, MAIG and Mr Jarmo Vesanto, MSc, MAusIMM, who are full time employees of the Company and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as CompetentPersons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Alistair Cowden, Mr Nicholas Walker and Mr Jarmo Vesanto consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Vulcan Resources Limited“This presentation and information contained in it is being provided to shareholders and investors for information purposes only.Shareholders and investors should undertake their own evaluation of this information and otherwise contact their professional advisers in the event they wish to buy or sell shares.

To the extent the information contains any projections the Company has provided these projections based upon the information that has been provided to the Company. The Company does not make any representations as to the accuracy or otherwise of that third party information”.

vulcan resources presents to diggers & dealers …otc.nfmf.no/public/news/8993.pdf · vulcan is...

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