ZAZU METALS CORPORATION
CORPORATE PRESENTATION | MARCH 2017
LIK ZINC-LEAD DEPOSIT
RED DOG DISTRICT, ALASKA
ZAZ – TSX.V
Forward Looking Statements
This presentation contains "forward-looking information" (also referred to as "forward looking statements") which may include, but are not limited to, statements with
respect to the future financial or operating performance of Zazu Metals Corporation, its subsidiaries and its projects (the “Company” or “Zazu”), the future price of metals,
the estimation of mineral reserves and resources, the realization of mineral reserve estimates, costs and timing of future exploration, the timing of the development of
new deposits, requirements for additional capital, foreign exchange risk, government regulation of mining and exploration operations, environmental risks, reclamation
expenses, title disputes or claims, insurance coverage and regulatory matters. Often, but not always, forward-looking statements can be identified by the use of words
such as "plans", "hopes", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative
variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking information involves and is subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current
exploration activities and feasibility studies; assumptions in economic evaluations which prove to be inaccurate; fluctuations in the value of the United States dollar and
the Canadian dollar relative to each other; future prices of metals; possible variations of ore grade or recovery rates; accidents, labour disputes or slow downs and other
risks of the mining industry; climatic conditions; political instability, insurrection or war; arbitrary decisions by governmental authorities; delays in obtaining governmental
approvals or financing or in the completion of development or construction activities. Although the Company has attempted to identify important factors that could cause
actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results
to differ from those anticipated, estimated or intended. Forward-looking information contained herein is made as of the date of this presentation and the Company
disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. There can be no
assurance that forward-looking information or statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in
such information or statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Mr. Wayne Corso, P.E., of JDS Energy and Mining Inc., is an independent consultant and “Qualified Person” under National Instrument 43-101 and has approved the
technical information contained in this presentation. This presentation uses the terms "Measured", "Indicated" and "Inferred" Resources. United States investors are advised that while such terms are recognized and required
by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of
uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be
upgraded to a higher category. 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.
The securities of the Company have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws
and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
2
CORPORATE OVERVIEW
Corporate Overview
CAPITAL STRUCTURE
Exchange:
Issued & Outstanding:
Options:
TSX.V: ZAZ
55.40mm
4.99mm
Warrants:
Fully Diluted:
Current Market Cap: (1)
nil
60.39mm
C$16.2mm
Ownership:
Directors & Officers:
17.5%
Zebra Holdings: (2)
19.9%
(1)
(2)
As of February 28, 2017
A company controlled by a trust settled by the
late Adolf H. Lundin
CANADIAN BASED EXPLORATION COMPANY FOCUSED ON DEVELOPMENT OF ITS
INTEREST IN THE LIK ZINC-LEAD PROJECT – RED DOG DISTRICT, ALASKA
4
Advanced Stage Project: Lik
•
Large tonnage, high grade
•
Open-pitable resources
•
Significant underground expansion potential
•
Clean metallurgy
•
Existing infrastructure
•
Prepared for permitting
•
High sensitivity to zinc price
5
Zazu Milestones
2006 – Pre-IPO Due Diligence, Raised US$28.4mm, (28.5mm shares outstanding) to acquire GCO’s interest
in Lik.
2007 – IPO. Raised C$4.5mm, 31mm shares outstanding.
2008 – 58 hole Exploration program, geophysics, environmental studies & initial metallurgical testing
completed.
2009 – NI 43-101 Resource Estimate, initial capacity analysis of DMTS completed, concentrate
marketability study completed. Continuation of environmental studies.
2010 – Completion of DMTS study, positive completion of metallurgical study, continuation of
environmental studies.
2010 – Positive conclusion of project assessment study by AIDEA. Access corridor study, metallurgical
study and ARD study initiated. 57 hole exploration and infill drilling program completed. Raised
C$10.1mm, 44.5mm shares outstanding.
2012 – Positive completion of Air Quality Study, Approval of data collection methods, continuation of
multi year studies.
2013 – Initiation of PEA, continuation of multi year studies.
2014 – Completion of positive PEA, AIDEA completes capacity analysis of Road and Port, ARD initial
characterization completed, continuation of mine plan optimization, environmental &
metallurgical studies.
2015 – Continuation of regional infrastructure analysis, ARD study, mine design, environmental &
metallurgical studies in preparation for permitting. Raised C$1.6mm, 55.4mm shares outstanding.
2016 – Positive completion of ARD study, continuation of environmental, mine design, ARD and
metallurgical studies in preparation of permitting.
6
Management
GIL ATZMON (3)
Founder, Chairman & CEO
MATTHEW FORD (3)
President
RALF LANGNER (3)
CFO
JOE BRITTON
VP Exploration
JOSHUA CRUMB
Director
ROBERT GIUSTRA (2)
Director
BRYAN MORRIS (1) (2)
Director
DENNIS PETERSON (1) (2)
Director
PAUL SAXTON (1) (2) (3)
Director
(1)
(2)
(3)
▪ Over 30 years’ experiences as a mining executive, investment banker, institutional
equity salesman, mining fund manager and geologist
▪ 22 years experience, including founding an exploration company, through which he
worked as a geologist in West Africa, Australia and the UK
▪ Certified General Accountant with over 25 years of accounting and finance experience,
20 of which have been in the metals sector
▪ 35 years of mineral exploration and development experience, principally in Alaska
▪ Principal geologist for the Company’s Lik property since 1978
▪ Held various positions within the Lundin group of companies, such as Corporate
Development at Lundin Mining Corp. and directly with group chair, Lukas Lundin.
▪ Founded, developed, and managed publicly traded companies for over 20 years,
currently serving as the CEO of Columbus Gold Corporation
▪ Most recently worked for Teck Cominco Limited as VP Business Development and held
a variety of roles within the organization prior to that
▪ Securities lawyer and the principal of Peterson Law Professional Corporation, a
securities law boutique focusing on resources companies
▪ Mining engineer who held executive positions since 1969, most recently at Lincoln Gold
Corp. and Pinnacle Mines Ltd.
Audit Committee Member, Compensation Committee Member
Nominating and Corporate Governance Committee Member
Disclosure Committee Member
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LIK DEPOSIT
LARGE TONNAGE, HIGH GRADE, OPEN PIT POTENTIAL
Lik: Deposit Location
Lik is comprised of mining
claims covering 2,225 ha,
located within the Red Dog
District of Northern Alaska:
✓ 22km from Teck’s
Red Dog Mine
and related
infrastructure
✓ Region highly
supportive of
mining activity
9
Lik: Deposit Ownership
Zazu meets spending
commitments,
triggers exercise of option
• 50/50 Joint venture (JV) with Teck through the 1983 Lik Block Agreement
• Zazu’s one way right to earn an additional 30% interest is met by spending
commitments totalling US$25mm pre-inflation adjustment (est. US$45mm
post-inflation adjustment) by 2018
–
Approximately US$22mm balance remains
–
3rd party expenditures counts toward total
• Zazu is the operator in all scenarios
10
Lik: Large Tonnage, High Grade
Location
Cut-off %
Pb + Zn
Indicated Resources
Inferred Resources
Mt
% Zn
% Pb
g/t Ag
Mt
% Zn
% Pb
g/t Ag
Potential Open Pit
Lik South
5%
16.85
8.04
2.70
50.1
0.74
7.73
1.94
13.4
Lik North
5%
0.44
10.03
2.77
59.0
2.13
8.88
2.94
45.8
17.29
8.09
2.70
50.3
2.87
8.59
2.68
37.5
Sub-Total
Additional Resource
Lik South
7%
0.69
8.04
3.15
51.0
0.51
6.97
1.59
11.3
Lik North
7%
0.13
8.93
2.93
37.5
1.96
9.22
2.99
45.8
Sub-Total
0.82
8.18
3.12
48.9
2.47
8.76
2.70
38.7
Total
18.11
8.10
2.72
50.2
5.34
8.66
2.69
38.0
Notes:
1.
2.
3.
CIM Definitions were followed for Mineral Resources
Mineral Resources are estimated using an average long-term zinc price of $2.65/kg, lead price of
$2.65/kg and silver price of $0.95/g.
A density value of 3.5g/cm3 (0.109 tons/ft3) was used.
Source: Preliminary Economic Assessment Technical Report – Zazu Metals Corporation, Lik Deposit Alaska, USA Dated April 23,
2014 and effective March 3, 2014, prepared by Robert L. Matter, PE (JDS Energy and Mining, Inc.) Tony Loschiavo, P.Eng. (JDS Energy
and Mining, Inc.) , Neil Gow, P.Geo. (Roscoe Postle and Associates, Inc.) and Michael Travis, PE (Travis Peterson Environmental
Consulting, Inc.) (herein referred to as the “PEA”)
11
Lik: Expansion Potential
• Property: 22.5 km2
• Drilling: 229 DDH / 38,000m
–
Lik North
210 DDH in Lik South
• 2014 PEA does not consider Lik North,
which would be mined using
underground methods if economics
proved viable
Inferred resource
outline (underground)
–
Lik South
(within the 2010
optimized pit shell)
12
Has the potential to extend mine life
Lik: Clean Metallurgy
Lik (1)
Red Dog (2)
Metallurgy
Recovery (%)
Concentrate (%)
Recovery (%)
Concentrate (%)
Zinc
85.0
53.4
83.6
55.0
Lead
69.7
61.1
61.4
56.1
Notes:
(1) See PEA
(2) Red Dog NI 43-101 Filing, March 2007, Figures for 2006
13
Lik: Access to Infrastructure
• An infrastructure capacity study was
commissioned by the Alaskan Industrial
Development and Export Authority (AIDEA)
in January 2015
–
Positive results relating to the nearby
state-owned, purpose-built haul road and
port, the Delong Mountain Transportation
System
–
Determined current trasportation system
has sufficient available capacity
–
Multi-user scenario fesable
• Zazu and AIDEA will continue to collaborate
–
14
AIDEA conceivably funds connection road to
Lik
Lik: Permitting Stage
• Property prepared for rapid development
• Initial State Level
–
Mine Plan developed for submission to Alaskan Large Mines Group
• Second State Permits
–
EA/EIS data already gathered and report developed for submission
–
State level and Federal level evaluation
15
Lik: PEA Highlights
Zinc Sensitivity
$0.90/lb
$0.92/lb (1)
(3-yr avg.)
$1.00/lb
$1.10/lb
$1.33/lb (2)
8.1%
9.7%
14.4%
20.0%
32.3%
6.3
5.8
4.5
3.4
2.2
US$1mm
US$25mm
US$99mm
US$195mm
US$434mm
Post Tax IRR
Post Tax Payback (yrs)
Post-Tax NPV @8%
(1) Lesser of November 3-year trailing average and spot price as of 12/30/2013. For lead: US$1.01 /lb, silver US$19.43per troy ounce
(2) Feb 13th 2017 Spot Zinc Price (Kitco.com). Not shown in PEA. Zazu Estimate.
Analysts’ average forecast for zinc in 2017 is $1.12/lb (Bloomberg February 20, 2017) with a range of $0.91 to $1.29/lb
PRODUCTION
▪
▪
MINE LIFE
234,000 tonnes p/a of Zn concentrate
55,800 tonnes p/a of Pb concentrate
▪
▪
OPEX
▪
▪
9 years using Lik South only
Underground potential not considered
CAPEX
$0.63/lb of zinc, net of by-products
Inclusive of transport to port
▪
▪
▪
$352mm, including 20% contingency
5,500 tpd mill, infrastructure and equipment
Mining 2,200,000 tpa
Source: PEA currently available on SEDAR. The preliminary economic assessment is preliminary in nature, in that it includes
inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment
will be realized.
16
COMPETITIVE LANDSCAPE
Zinc Market Outlook
• Zinc market moving into a deficit, providing significant upside potential for zinc
prices
• Potential for attractive global inventory balance as Lik development continues
Supply
• Reserve exhaustion, fall in refined production
• Production curtailment by majors
• Chinese smelter cuts due to a lack of feed
Demand
• Rebound of global demand of 2.7% in 2016 (1)
• Chinese industrial production growth trending higher
• Global growth positively correlates to greater demand
(1)
RBC Metal Prospects: Zinc Market Outlook (January 30, 2016) estimate
18
Standout Project on a Global Basis
Deutsche Bank:
Identified only 39 ‘possibles’
Only 10 are >100ktpa zinc
Only 3 of the 10 positive IRR at
$1.00 zinc
Only 1 of the 10 <US$500M in
CAPEX
Only 1 of 10 on brownfield site
Only Lik met the above criteria.
Note:
All projects given equal likelihood of
development, irrespective of project specific
challenges.
19
Zn Development Peers
20
Peer Group Comparison
Source: Haywood Securities Inc.
21
Why Zazu?
Development
Stage
Property
Low Political
Risk
Existing
Infrastructure
Zn
Attractive
Economics
Established
Mining District
Management
Experience
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CONTACT US
Zazu Metals Corporation
Email: [email protected]
Tel: (604) 878-9298
Web: www.zazumetals.com