oxr - in pre-open . why??, page-2

OXIANA RESOURCES NL 2002-11-12 ASX-SIGNAL-G

HOMEX - Melbourne

+++++++++++++++++++++++++
OPEN BRIEFING OXIANA RESOURCES MD ON ADVANCING SEPON

CORPORATEFILE.COM.AU

Last quarter, Oxiana Resources N.L. announced development drilling
results for Discovery West, which is scheduled as the first pit for
the Sepon Gold Project. The drilling outlined several high-grade
intercepts outside the gold resource used in the Bankable Feasibility
Study (BFS). You've also announced some drill results from the Luang
prospect 500 metres from Discovery. How might these results alter
your production, cash cost and mine life assumptions used in the BFS?


MANAGING DIRECTOR OWEN HEGARTY

Infill and pit optimisation drilling results at Discovery West have
been excellent and it's likely that the reserve assumptions we've
used in the BFS will prove conservative. Those assumptions resulted
in an average of 125,000 ounces per annum at a cash cost of around
US$150 per ounce over a mine life of eight years. We are now
evaluating ways to achieve more ounces at a lower cash cost while
recent drilling indicates that the mine life could be considerably
longer than the eight years in the BFS. We still have to do the
definitive technical work to assess what higher production levels we
could achieve.

It was always our intention to firstly define a reserve which was
large enough to satisfy the requirements of a BFS. After that, we
planned to proceed to development and then work on expanding the
reserve base and production potential. Also, the gold price has risen
around US$50 per ounce since we completed the BFS and that
automatically translates to a higher reserve.

The infill and optimisation drilling has returned several high grade
and wide intersections right at the western end of the orebody. We
will eventually calculate revised resources and reserves but we now
view the Sepon Gold Project as a long-life project. Getting into
production is still our primary objective, however we're now starting
planning for the longer term.

CORPORATEFILE.COM.AU

What stage are you at with construction of the Gold Project and when
do you expect first gold production?

MANAGING DIRECTOR OWEN HEGARTY

We're now around two months away from production. We should start
commissioning the various sequences of the plant during
November/December. Our original forecasts were for first production
by the end of 2002 so we're basically on schedule, even though we
lost a little time because of the early wet season.

CORPORATEFILE.COM.AU

Oxiana recently completed the BFS for the Sepon Copper Project
(Khanong resource). How does the project compare with your original
expectations?

MANAGING DIRECTOR OWEN HEGARTY

The project has quite clearly exceeded our original expectations. The
original concept was for an operation producing around 40,000 to
45,000 tonnes per annum of copper metal however the BFS, which was
completed in October, is based on production of 60,000 tonnes per
annum of LME grade copper cathodes. The mining reserve is 13.5
million tonnes at a grade of 5.1 percent copper within a resource of
26 million tonnes at 4.1 percent copper (1.0 percent cut off)
containing 1.1 million tonnes of copper metal. The capital cost
estimate of US$167 million and the cash operating cost estimate of
US$0.38 per pound are both extremely competitive on a world scale.
Estimated recoveries into the 90 percent range are higher than we'd
anticipated.

At a long-term copper price of US$0.85 cents per pound, the copper
project will give an internal rate of return of better than 20
percent, average operating cash flows of US$50 - 60 million per annum
and provide a capital payback in 3 years.

The resource is larger than the earlier pre-feasibility basis and
we've now proven the process design through a pilot plant which
processed ore under a matrix of processing alternatives resulting in
pilot scale cathodes to LME specification.

CORPORATEFILE.COM.AU

How does that copper reserve compare with other world copper
projects?

MANAGING DIRECTOR OWEN HEGARTY

We haven't seen a better mining reserve at the BFS stage. In other
words, we think it's the world's best undeveloped copper orebody. The
grades are world class. There are very few copper resources in the
world with grades this high and particularly with readily extractable
metal. The resource base containing 1.1 million tonnes of copper
metal is sizeable and we expect to substantially add to this. As with
the gold project, we've so far only proved up enough resources and
reserves to satisfy the BFS. We've so far concentrated on the
high-grade chalcocite section of the orebody. The orebody is open in
a number of directions and at depth. We've methodically explored only
one of the six known mineralised systems in the Sepon mineral field.
Khanong copper and the gold orebodies are located in the first
mineralised system.

CORPORATEFILE.COM.AU

So what potential upside is there for gold and copper reserves?

MANAGING DIRECTOR OWEN HEGARTY

The mineralised corridor seems large enough to host a resource of in
excess of 5 million ounces compared with the current Sepon resource
of 3.5 million ounces. The drilling of Discovery West and Luang
demonstrates that there's every prospect for incremental growth in
resources and reserves as we develop the projects and explore the
mineral field.

We currently have copper resources containing 1.1 million tonnes of
metal. We believe there is the opportunity to at least double the
amount of contained copper metal from the current level over time.

Apart from expansion of the Khanong copper resource, there are
several ways we can add to our copper inventory in the district.
Drilling at the Thengkham copper prospect already indicates we may
have another separate copper resource. In the future we'll do a more
detailed assessment of Thengkham and there's potential to delineate
new copper resources within the other four mineralised systems in the
district. Time will tell. Finally, we'll explore for large copper
deposits around the peripheries of the various intrusive systems.

CORPORATEFILE.COM.AU

Oxiana had arranged a US$10 million equivalent short term bridging
loan with ANZ Bank. The loan was guaranteed by Rio Tinto. Why did you
take out a facility with ANZ when you already had a US$30 million
debt facility with the International Finance Corporation (IFC)?

MANAGING DIRECTOR OWEN HEGARTY

The ANZ facility was a bridging facility we used while negotiating
the IFC facility and before options, which raised $59 million, were
exercised. Having that interim facility enabled us to fund the gold
project purely with equity. Project debt could have involved parting
with some equity and could have required us to take out some gold
price hedging. Being unhedged and debt free is a major advantage for
our shareholders. We paid back the ANZ facility as soon as we
received the proceeds from the options.

CORPORATEFILE.COM.AU How will you fund the Sepon Copper Project, also
Oxiana 80 percent - Rio 20 percent?

MANAGING DIRECTOR OWEN HEGARTY Funding the gold project with equity
gives us the capacity to largely debt fund the copper project.

The gold project will generate strong operating cash flow early in
its life. This may then provide an equity contribution towards the
balance of the copper project funding as we construct it over 2003
and 2004.

The copper project is extremely robust. The capital and operating
costs are in the lowest quartile of world copper producers and banks
will be willing to write debt facilities, particularly when we've
already got a significant amount of equity in the gold project, and
will soon have a producing asset. We've already had many banks
showing interest in debt funding the copper project.

Another funding advantage is that the copper project is situated
within a region of high copper demand growth. We will produce high
quality LME-grade copper cathode. We can supply China, Thailand,
Vietnam and other Asian and south-east Asian countries. That opens
the possibility of securing working capital facilities from the
copper buyers and traders, or some form of longer-term subordinated
debt.

The copper growth rates in Asia, China in particular, have astounded
us. Copper demand growth rates in China are double digit per annum
and that's from a country which already consumes around 2 million
tonnes of copper metal per annum and imports around 1 million tonnes
per annum.

CORPORATEFILE.COM.AU

Rio has given the impression it's a passive investor in the Sepon
projects but then it guaranteed the ANZ debt facility. Why the
change? Why didn't Rio do this earlier?

MANAGING DIRECTOR OWEN HEGARTY

Although Rio sold the project to Oxiana they have been happy to
maintain a 20 percent interest and support. But it's also been in
their interest to protect and grow the value of their remaining 20
percent stake. As the value of the Sepon projects have been enhanced,
it's fair to say Rio has taken a less passive role. Rio agreed with
us that under the circumstances it would be wiser funding the gold
project through equity and the best way to achieve that was by Rio
supporting Oxiana's ANZ facility.

CORPORATEFILE.COM.AU

What future role will IFC play in funding the Sepon projects?

MANAGING DIRECTOR OWEN HEGARTY

Although we'd originally planned to use the IFC facility for the gold
project, we've had preliminary discussions about transferring and
expanding the facility on the copper project.

CORPORATEFILE.COM.AU

What potential equity could the Lao government or the IFC acquire in
the Sepon projects?

MANAGING DIRECTOR OWEN HEGARTY

Under the Mineral Exploration and Production Agreement (MEPA) we have
with the Lao Government, it has the option to purchase up to 10
percent of the equity of the operating company, currently owned 80
percent by Oxiana and 20 percent by Rio.

We're working through the project financials with the Government so
it can decide whether it will exercise that option. We've encouraged
the Government to take a stake in the project.


The IFC also had the right to buy a minor stake in the operating
company, as part of the debt facility. It's standard IFC practice to
purchase equity in projects it finances. But nothing has been agreed.

CORPORATEFILE.COM.AU

How will you calculate what the Lao Government will pay if they do
take a stake in the project? Is it a commercial project evaluation
calculation?

MANAGING DIRECTOR OWEN HEGARTY

Under the MEPA the Lao Government will pay an amount based on the
amount of capital Rio and Oxiana have spent on the project since
1992.

CORPORATEFILE.COM.AU

Thank you Owen.

For previous Open Briefings visit www.corporatefile.com.au

For further information on Oxiana visit www.oxiana.com.au