Cerro del Gallo
CERRO RESOURCES NL
Developing gold & silver production +
Exploring for precious metals
CJO – TSX.V & ASX
October 2011
Cerro Resources NL
Forward Looking Statements
All information contained in this presentation is of a general nature. Potential investors are cautioned against using the content of this presentation, in isolation, for
making investment decisions.
Best efforts have been made to ensure the accuracy of information contained (at the time of preparation). Where forward targets and/or assumptions have been
included – all such instances are indicative only and subject to alteration and/or cancellation as and when the management of Cerro Resources NL determines.
Research and advice of a qualified financial advisor or accountant are strongly recommended to anyone considering investing in listed company securities, including
those of Cerro Resources NL.
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr John Skeet (as it relates
to process related material), who is a Member of the Australasian Institute of Mining and Metallurgy; Mr Bill Fleshman (as it relates to the San Anton Project &
Namiquipa), who is a Fellow of the Australasian Institute of Mining and Metallurgy; and Mr Trevor Leahey (as it relates to the Mt Isa Project), who is a Member of the
Australasian Institute of Mining and Metallurgy. Mr Skeet is the Chief Operating Officer of Cerro Resources NL. Mr Fleshman and Mr Trevor Leahey are consultants to
Cerro Resources NL. They have sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity,
which they are undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves” and “qualified persons” as this term is defined in Canadian National Instrument 43-101. Mr Skeet, Mr Fleshman and Mr Leahey consent
to the inclusion in the report of the matters based on their information in the form and context in which it appears.
This presentation contains contain certain forward-looking information within the meaning of applicable Canadian securities legislation (collectively referred to as
“forward looking statements”). Generally, forward-looking statements can be identified by the use of words such as "plans", "expects", "budget", "scheduled",
"estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or
statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved.
Forward-looking statements in this presentation include, but are not limited to, statements with respect to Cerro Resources’ plan and strategy, its plan to complete
technical studies and mine development, and its capacity to raise additional funds to pursue its objectives. By their very nature, forward-looking statements require
Cerro Resources to make assumptions that may not materialize or that may not be accurate. Although Cerro Resources believes that the expectations reflected in the
forward-looking statements in this presentation are reasonable, no assurance can be given that these expectations will prove to have been correct, as actual results
and future events could differ materially from those anticipated in the forward looking statements. Accordingly, viewers are cautioned not to place undue reliance on
forward-looking statements. Cerro Resources does not undertake to update publicly or to revise any of the included forward-looking statements, except as may be
required under applicable securities laws.
Cautionary Note to U.S. Investors
This presentation uses the term "measured", "indicated" and "inferred" resources. We advise U.S. investors that while these terms are recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into reserves. In addition, "inferred" resources have a great amount of uncertainty as to their existence,
and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of inferred mineral resources will ever be upgraded to a
higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility or other economic study. U.S. investors are
cautioned not to assume that any part or all of an inferred mineral resource exists or is economically or legally mineable.
Cerro Resources - TSXV & ASX: CJO
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Cerro Resources
____ ________
______ ____ Summary
____ ___ ____ __
Cerro
Resources
Summary
____ _____ ________ _____ ___ ___ ___
Near-BFS Gold/Silver 2-stage heap + CIL project:
Cerro del Gallo, Mexico - ~90,000oz p.a Aueq, 14-yr LOM
•
57% IRR, $US292M Net Cash Flow 1st stage Heap Leach feasibility 1
→ 4Q11/1Q12 - Bankable Feas. Study (1st Stg)
Cerro del Gallo – 132Mt Gold-Silver domain
resource, low strip ratio deposit
(1 Based on LT Metal Prices of $US1,293Au/$US23.87Ag as reported in April 2011 N43-101)
Under Active Exploration :
Espiritu Santo Gold/Silver, Mexico (new acquisition Oct. 2011)
•
•
Greenfield prospect – 3 x 2km of veined strike area identified
Reconnaisance exploration and drill target identification this quarter
Namiquipa Silver/Lead/Zinc, Mexico
•
•
2.5km linear strike identified by initial exploration
Drilling results anticipated this quarter
Mt Isa - Mt Philp Iron Haematite, Qld
Jalisco state, Mexico – site of the
Espiritu Santo gold/silver project
•
•
25.4Mt @ 36.6% Fe partial JORC inferred resource announced Oct 11
1.25km of added southern strike area to be included in resource
Cerro Resources - TSXV & ASX: CJO
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Cerro del Gallo Project Development
Project data:
Cerro del Gallo
•
66% CJO - 34% Goldcorp (CJO earning to 90%)
•
253sq km, 12-concession ‘San Anton’ package
located in Guanajuato state, 270km NW Mexico City
•
World class silver and gold district
Cerro del Gallo (‘Hill of the Rooster’)
•
132Mt M&I JORC gold/silver domain resource
•
High sulphidation epithermal mineralisation with low
sulphide material at/near surface due to weathering
•
114,000m of drilling – 433 drill holes
•
Significant exploration upside around mine area
Cerro Resources - TSXV & ASX: CJO
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Cerro
del
Reserves
& In-Pit
Cerro
delGallo
Gallo ______
Reserves
& In-Pit
Resources
____
________
____
____ ___
____ __
____ _____ ________ _____
___ ___ ___
Resources
Cerro del Gallo in-pit
resource
Total
Category
M
Tonnes
Au
g/t
Feasibility Proven and
Probable
32.22
0.69 0.71
14.82 15.34
Preliminary Assessment
M&I Resources
45.01
0.66 0.95
13.83 20.02
Total
Au
(Moz)
Ag g/t
Total
Ag
(Moz)
Proven & Probable reserves and Preliminary Assessment (PA) measured and indicated
resources are reported using gold equivalent cut-off grades of 0.21 and 0.29 g/t for
weathered and partially oxidized material respectively. The gold equivalent cut-off grade
for the measured and indicated resources fresh rock material is 0.35 g/t. Metal prices used
are US$1,020/oz gold and US$16.40/oz silver.
The total In-Pit Resources were prepared by Mr Tim Carew of Reserva International LLC
using a Whittle optimization. The Proven & Probable reserves and the PA Measured &
Indicated resources were estimated by Mr Thomas Dyer of MDA
Cerro Resources - TSXV & ASX: CJO
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Cerro del Gallo Key Features
Project advantages:
Project Benefit:
Heap leachable
‘weathered’ material
= Lower capex/opex
At/near surface
mineralisation
= Low operating costs
2 years spent on
detailed project dev.
= Facilitate ‘fast-track’
to mining
Jurisdiction
= Investment/jobs
demand + stable area
Cerro Resources - TSXV & ASX: CJO
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Cerro del Gallo Flow sheet Stage 1
Cerro Resources - TSXV & ASX: CJO
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Cerro del Gallo April Stage 1 Feasibility
& Stage 2 P.A. Study
Project economics1 – Stage 1 Heap Leach
Estimated 14.3 yr Life of Mine Production1
@ $US1,293 Au/ $US23.87 Ag
Net Cash Flow undiscounted
and before tax (US$M)
292
Net Present Value
(6% discount rate) (US$M)
200
Internal Rate of Return (%)
First Stage Capital Payback
(years)
1.
2.
3.
– Stage 1 Heap Leach + Stage 2 CIL+ HL2
57.5
1.7
Metal Sold
Year
Material
Processed
K Tonnes
Strip
Ratio
Avg.
5,400
1
Gold
(koz)
Silver
(koz)
Gold Eq.
(koz)3
0.74
78.8
703
90.8
4,512
0.05
55
534
64
2
4,442
0.22
76
790
89
3
4,466
0.33
67
750
80
4
4,500
0.44
54
749
67
Gold Sold (koz)
444.6
5
7,188
1.02
100
913
116
Silver Sold (koz)
5,317
6
6,878
1.76
103
1,001
120
7
6,325
1.64
96
1,156
116
8
6,273
1.38
94
992
111
9
5,181
0.99
77
652
89
10
4,902
0.75
68
479
77
11
4,712
0.74
69
415
76
12
5,312
0.45
79
504
88
13
5,294
0.36
76
451
84
14
6,138
0.17
87
533
96
15
1,107
0.04
24
128
268
Total
77,231
0.74
1,127
10,048
1,299
Excerpt from NI43-101, April 2011 (pp. 13,19).
NB: Stage 1 project economics calculations reflect outcomes derived from
P&P reserves and an optimised pit calculated using metal prices of
US$1,020/oz gold and US$16.40/oz silver.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability
The gold equivalent ounces were calculated using the 2 year historic gold
and silver prices US$1,157/oz gold and US$19.81/oz silver resulting in
price ratio of 58.4 (58.4 oz of silver is equal in value to 1 ounce of gold).
Cerro Resources - TSXV & ASX: CJO
Cerro
del Gallo Cerro
Project
Flow
____ ________
______
____ ___
____ __
del____
GalloCash
____ Feasibility
_____ ________
___Correlation
___ ___
Study
&_____
PAPrice
Highlights
Metal
Cerro del Gallo Gold Silver project Net Free Cashflow
(100% basis) sensitivity analysis ($USD)
April 2011 – Feasibility study
1st Stage Heap Leach
• 4.5Mtpa, 8 year heap leach
• 0.45 Moz Gold and 5.32 Moz Silver produced
•$US87.6M Capex (100% project basis incl 20%
contingency)
•$US491 per ounce Au Eq Opex
1000
800
$M
549
600
400 229
200 162
410
• 0.68 Moz gold and 4.73 Moz silver (based on
pit optimised @ $US1,020/oz Gold &
$US16.40/oz Silver)
302
214
292
2nd Stage Estimate - Heap Leach / CIL
• 10 year expansion with 3Mtpa CIL from Yr 4
409
0
$1060Au/17.77Ag $1157Au/$19.81Ag $1293Au/$23.97Ag $1424Au/$35.81Ag
(a)
(a)
(a)
(b)
2nd Stage Dual Heap Leach/CIL estimate (c)
1st Stage Feasibility Heap Leach (est 1-8 years)
Cerro Resources - TSXV & ASX: CJO
• 45.0Mt additional in-pit M&I resource
• $US83M capex expansion (100% project basis
incl 20% contingency)
• $US541 per oz Au Eq Opex for expansion
(*) Net Cash flow estimate on 100% project basis, post
capital payback, pre tax, undiscounted
(a) Historic 3,2,1-yr average prices up to 31st March, 2011
(b) Average spot prices for March, 2011
(c) Mineral resources that are not mineral reserves do not
have demonstrated economic viability
9
____ ________
______–____
___ ____ __
Cerro Resources
Cerro____
del Gallo
Cerro
del
Gallo
Comparisons
____Comparable
_____ ________
_____
___ ___ ___
Mexican
Operations
Mexican Gold Heap Leach comparisons - Grade + P&P Reserve &
In-Pit M&I Resource scale
Mexican Gold Heap Leach Life of Mine
OPEX comparisons
1.2
Camino Rojo (G),
75Mt
Cerro del Gallo,
(CJO), 77Mt
0.8
El Chanate (GAM),
71Mt
0.6
0.4
0.2
0
El Castillo (AR),
105Mt
Operating costs ($USD/oz)
Resource Grade: Gold eq g/t
600
1
500
400
300
200
100
0
Cerro del Gallo, (CJO)
El Castillo (AR)
El Chanate (GAM)
Camno Rojo (G)
Cerro figures used above are based on the 2011 feasibility study and PA.
Comparison project data from respective NI43-101 Tech. Rep. Feb 24, 2011 (AR), NI43-101 Tech. Rep. Nov 27, 2009 (GAM), NI43-101 Tech. Rep. PA Nov 30, 2009 (G).
Cerro Resources - TSXV & ASX: CJO
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450
400
350
300
250
200
150
100
50
0
200
180
160
140
120
100
80
60
40
20
0
EV/Reserves
Cerro Resources - TSXV & ASX: CJO
EV ($USD) per Resource Ounce
(P+P + In-pit M&I)
C
e
H rro
a
N mb R e
o v l so
aG ed ur
ol on ces
d M
R in
e in
D sou g
e t rc
E
ou e
ur
rG s
op
ea G old
C n G ab
e n o rie
D
u n Gr tam ld fi l
d e
i el
C ee at B n E d s
hi P a g
na re s yp
G cio in G t
ol u
d s old
In M
te e t
A
rg G rna als
R o n -r tio
ub a e
ic ut so na l
o
R u
G n M es rce
re in o s
ys e urc
ta ral e
rR s s
e C
C so orp
h a ur
r c
A
lh K aa t es
am e G
br nto old
a rG
re o
so ld
ur
ce
s
EV ($USD) per Reserve Ounce
(P+P + In-Pit M&I)
____ ________
______–____
___ ____ __
Cerro Resources
Cerro____
del Gallo
Cerro
del
Gallo
Comparisons
____Comparable
_____ ________
_____
___ ___ ___
Mexican
Operations
Enterprise Value to Reserve/Resource Ounce Ratio
EV/Resources
Source: Independent Cerro Resources NL broker initiation report
11
Cerro Resources – Cerro del Gallo
Cerro del Gallo
Regional Targets
Regional Targets
Secondary priority but previous scout drilling has
shown promise
Prospective
target areas
• 1.5m @ 590g/t Ag and 3.40g/t Au
• 4.6m @ 428g/t Ag and 3.52g/t Au
• 3.6m @ 359g/t Ag and 1.57g/t Au
• 4.6m @ 239g/t Ag and 1.91g/t Au
• 6.0m @ 243g/t Ag and 1.70g/t Au
• 3.1m @ 200g/t Ag and 1.05g/t Au
• 7.6m @ 168g/t Ag and 1.51g/t Au
Cerro Resources - TSXV & ASX: CJO
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Espiritu Santo
New Acquisition
Project data
• 5,800 ha land package
•
Located within the Mascota-Navidad
Mining district in Western Jalisco, Mexico
•
130 km W. of Guadalajara and 50 km East
of Puerto Vallarta
•
3x2km of known mineralized strike length
•
Within the heart of gold/silver district
crossing the Sierra Madre Occidental & the
Neovolcanic Axis of Mexican Republic
•
Good road access (20km paved and 20
gravel to property campsite)
•
Area worked by small mining companies
and prospectors but little-no modern
exploration techniques/efforts undertaken
Espiritu
Santo
The small, high grade San Quiteria Mine in San Sebastien del Qeste continues today.
Navidad area discovered in early 1900’s and developed at low scale until 1946
Cerro Resources - TSXV & ASX: CJO
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Namiquipa
Drilling underway
• 4,400 ha silver-lead-zinc exploration project
• Located 145 km WNW of Chihuahua city, Chihuahua state, Mexico
• Includes site of former high grade La Venturosa Silver mine
Historic production:
- 14.37moz silver +
- 32,550t lead (produced from 1.16mt mined
oxide/sulphide material) +
- 43,530t zinc (from just sulphide material)
• Cerro controls north/south extensions of known vein systems
• Prospective for Fresnillo-style silver-lead-zinc vein systems
• Complementary to Cerro del Gallo potential cash flow
(2012/2013)
Cerro Resources - TSXV & ASX: CJO
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Namiquipa
•
•
•
•
2.5km+ Strike
2.5km+ of primary vein strike potential identified by initial 3hole scout drilling + ground magnetic & IP program
(11 Aug 2011)
Broad intervals of significant grade mineralisation intersected,
including
• 92.87g/t AgEq over drilled length of 65.7m (NAM-003)
• 109.93g/t AgEq over drilled length of 23m(NAM-002) &
• 72.63g/t AgEq over drilled length of 11.05m (NAM-001); &
• 63.87g/t AgEq over drilled length of 6.5m (NAM -001)
Excellent enriched grade zones encountered, including
• 1754.07g/t AgEq over drilled length of 0.82m– including
1730g/t Ag, from 166.18m to 167.0m (NAM-003)
• 1388.9g/t AgEq over drilled length of 0.47m– including
1350g/t Ag, from 164.53m to 165.0m (NAM-003)
• 356.96g/t AgEq over drilled length of 1.24m, from 236.5m
- 237.74m (NAM-002)
2nd drill rig added end of July to increase core drilling rates
Cerro Resources - TSXV & ASX: CJO
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Mt Philp
Fast-track Resource Growth
• 25.4Mt @ 36.6% Fe partial inferred JORC resource (Oct
2011)
• Northern 2.75km of 4 km strike haematite iron outcrop
• 68% average iron content post simple beneficiation
(crushing/ screening) in recent test work (Dec 2010)
• <25km of Mt Isa/ Townsville rail/electricity
• 1.25km of additional strike to south now under
interpretation for inclusion in resource
• Commercialisation studies underway
Cerro Resources - TSXV & ASX: CJO
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Cerro Resources NL
Common Shares:
Options:
748M
46M ($0.12-$0.60)
High/Low (Oct 2010-pres): $0.37/$0.11
3 Mth Avg ASX Volume: 1.8M
Share Structure
Market Cap: $123M
Price Sep 20th: $0.14.5
Cash Avail: $15M as of Sep 30, 2011
Cerro Resources - TSXV & ASX: CJO
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Cerro Resources NL
A Team With Over
300 Years Experience
Norman A Seckold, Non-Executive Chairman (Since July 2001)
Norman Seckold graduated with a Bachelor of Economics degree from the University of Sydney in 1970. He has spent over 25 years in the full
time management of natural resource companies, both in Australia and overseas. Mr Seckold has been the Chairman and Director of 9
previously publicly listed companies, including Bolnisi Gold NL and Palmarejo Silver & Gold which successfully merged with Coeur D’Alene Mines
in 2007; and Mogul Mining NL which drilled out the Magistral and Ocampo Gold deposits in Mexico. Mr Seckold is also currently Chairman and
Director of Cockatoo Coal Limited, Augur Resources Ltd and Planet Gas Ltd.
James A Crombie, Executive Vice Chairman (Since October 2010)
Mr Crombie graduated from the Royal School of Mines, London, in 1980 with a B.Sc. (Hons) in Mining Engineering. Post a 20 year career within
multinational mining companies and as a mining analyst and investment banker, Mr Crombie held the position of President and CEO of Ariane
Gold Corp and Palmarejo Silver and Gold Corporation. He is currently President, CEO and a director of Reunion Gold Corporation, Avala
Resources and Odyssey Resources Limited, CEO, Executive Vice Chairman, and Director of Queensland Minerals Limited, and a director of Arian
Silver Company and Sutter Gold.
Anthony J McDonald, CEO and Managing Director
(Since October 2010)
Tony McDonald graduated from the Queensland University of Technology, Brisbane, in 1981 with a Bachelor of Laws degree and was admitted as
a solicitor in 1982. Mr McDonald has been involved in the natural resources sector in Australia and internationally for many years and in the past
10 years has been actively involved in management in the resources sector. He was an executive director of Kings Minerals NL (now Cerro
Resources NL) from 1996 until March 2007. Currently, Mr McDonald is a non-executive director of Industrea Limited and Planet Gas Limited.
Cerro Resources - TSXV & ASX: CJO
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Cerro Resources NL
A Team With Over
300 Years Experience
Craig J McPherson, Alternate Director, Corporate Secretary and CFO (Corporate Secretary since March 2007)
Craig McPherson graduated with a Bachelor of Commerce degree from the University of Queensland and is a member of the Institute of
Chartered Accountants in Australia. Prior to joining Cerro Resources, Mr McPherson spent 10 years in senior management positions as a
chartered accountant. Over this time he developed extensive experience in areas of business, financial and strategic management.
Mr McPherson was a Director of San Anton Resource Corporation Inc which completed a Business Combination with Kings Minerals NL (now
Cerro Resources NL) in September 2010.
John S Skeet, Chief Operating Officer (Since May 2009)
Mr Skeet is a Metallurgist with more than 20 years experience in the mining and resources sector. Formerly Project Manager for Bolnisi Gold NL
and managing the Palmarejo Silver and Gold Project prior to the successful merger with Coeur D’Alene, Mr Skeet has also been responsible for
the successful development of Bolnisi’s gold heap leach operation in the Republic of Georgia and was the General Manager for Valdora Minerals
NL’s projects and operations where he was responsible for the first gold production in the famous gold producing city of Ballarat, Victoria, in over
80 years. He has significant and relevant experience with the types of projects Cerro Resources NL is developing.
Non-executive directors
Richard E Keevers
Robert M Bell
John F Cook
Nicholas Tintor
Cerro Resources - TSXV & ASX: CJO
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Cerro Resources NL
Summary/Conclusion
 Seasoned team - many years of Mexico-specific experience
 Near-to-’decision-to-mine’ gold/silver production
 Good scale, low OPEX project with excellent DCF leverage to gold price &
significant exploration upside surrounding project mine site
Next steps
 Namiquipa drilling
 Espiritu Santo exploration
 Mt Philp resource update
 Cerro del Gallo BFS Stage 1 HL
- Continuing 2011/2012
- Drill target identification 4Q2011
- 4Q2011
- 4Q2011/1Q2012
Cerro Resources - TSXV & ASX: CJO
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Cerro Resources NL
Contact Information
North America:
Australia/Asia/Europe :
Jim Crombie, Executive Vice Chairman
[email protected]
Tel: 514-825-4222
Fax: 450-677-2601
Tony McDonald, Managing Director / CEO
[email protected]
Tel: +61 7 3252 0122
Fax: +61 7 3252 0166
Gerri Paxton, Manager – Investor Relations
[email protected]
Tel: 514-544-2696
Cell: 514-862-8560
Greg Germon, Gen. Mgr – Investor Relations
[email protected]
Tel: +61 2 9300 3341
WEBSITE: WWW.CERRORESOURCES.COM
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