titan read between the lines, page-8

Titan Resources Limited
ABN 77 007 247 154
RO/ASXTIR/ann59/11:11
11 November 2005
The Manager
Company Announcements Office
Australian Stock Exchange Limited
10th Floor
20 Bond Street
SYDNEY NSW 2000
By ASX Online Pages: 29
Dear Sir
2005 ANNUAL GENERAL MEETING – PRESENTATION TO SHAREHOLDERS
Please find attached a copy of the following presentations which were given at today’s
Annual General Meeting of shareholders:
1. Chairman’s Address by Mr Donald M Watt
2. Managing Director’s presentation given by Mr Jeffrey J Gresham
Yours faithfully
Rob Orr
CFO/Company Secretary
Page 1 of 3
TITAN RESOURCES LIMITED
ANNUAL GENERAL MEETING
11 NOVEMBER 2005
CHAIRMAN’S ADDRESS
Ladies and gentlemen, shareholders and guests welcome to this our 17th
Annual General Meeting. This is my first meeting as both a director and
chairman of your company having assumed both positions in early June this
year. I am pleased to be able to provide you an overview of the activities of
your company for the year but I will focus on the considerable progress made
over recent months in clearly identifying exploration and development
opportunities amongst our extensive tenement portfolio at Widgiemooltha.
Our Managing Director, Jeff Gresham, will elaborate on many of the points I
will cover in an illustrated presentation immediately following my address.
Armstrong Nickel Project
You will be aware that the failure of the Armstrong ore to meet the
specifications of the BHPBilliton offtake agreement resulted in the abrupt
cessation of mining activities in December last year. The fact that the
Company’s cash resources had been depleted through the pre-stripping of the
open pit necessitated recapitalisation of the Company through a rights issue.
Although this was an extremely disappointing series of events we were
pleased with the response by our existing shareholders and the market to the
rights issue.
In the first half of 2005 discussions and negotiations with regard to
participation in the Armstrong Project were held with various parties.
Consolidated Nickel Pty Ltd, a wholly owned subsidiary of Consolidated
Minerals Ltd entered into an option to purchase agreement with us and
following a phase of successful due diligence activities we were pleased to
announce at the end of September, that they had exercised their option to
acquire a 50% interest in the Armstrong Nickel Project. A Joint Venture has
been formed to progress the continued development of the project. We
remain confident that Armstrong will eventually be a productive and profitable
nickel mine.
Legal Review and Current Status
Given the destruction of shareholder value that resulted from development of
Armstrong, the previous Board of your company initiated a major review of the
events leading to the mining of the out of specification ore at Armstrong. This
review was then subject to legal analysis by the Company’s solicitors and
subsequently an opinion was sought from Senior Counsel.
The Senior Council’s opinion was that the Company may have cause for
action against certain third parties. Your new Board has critically reviewed
these documents but at this stage does not feel it is either justified or in the
best interest of our shareholders to initiate action. However this matter will be
kept under review.
Page 2 of 3
Financial Results, Nickel Market and Industry Costs
The events surrounding the Armstrong project resulted in the writing off of the
$13.9 million of development costs associated with the project. This write off
was the major factor in the $16.2 million loss incurred by the Company last
financial year. Despite this loss, with the exercise of the Armstrong option by
Consolidated Nickel the Company had a sound cash position of approximately
$4 million at the end of the September quarter. This affords us the opportunity
to pursue our exciting exploration and evaluation programs at Widgiemooltha.
The nickel price has softened considerably in the past 3 months from around
A$20,000/t to around A$16,000/t. However most market analysts predict
continuing solid demand for the metal, particularly from China, that should see
prices maintained at attractive levels particularly in Australian dollar terms.
Despite these attractive prices the increasing cost of diesel fuel and the
demand for mining personnel will put pressure on production costs within the
nickel mining industry. These increasing cost pressures will also make the
hurdle for commencement of new projects more difficult to clear.
Widgiemooltha
Now, turning to the recent exciting exploration and evaluation developments
at Widgiemooltha. We recently completed a comprehensive review of our
nickel resources at Widgiemooltha. This work, based on revised
interpretations of the deposits carried out by our geologists, was performed by
independent resource consultants. This resulted in revised, JORC compliant
estimates for 8 separate deposits giving the very substantial resource of
123,000 tonnes of contained metal. These estimates give us a sound basis
for prioritising our drilling programs and making early assessments as to the
potential economic viability of the deposits.
Our recent drilling programs have focussed on Munda, Widgie Townsite and
most recently 132 North. All programs have been successful in intersecting
significant intercepts and we are now progressing all of these deposits
through preliminary scoping studies to assess their economic potential. The
data we have generated to date indicates that the mineralisation in all 3 of
these resources generally falls within the specifications of the BHPBilliton off
take agreement. We would hope that our work on these deposits over the
next 6 months will result in progressing one or more of these deposits to a full
feasibility study.
These deposits, together with the Armstrong deposit provide a real
opportunity for your Company to become a successful and profitable long
term nickel producer from our Widgiemooltha tenements.
In addition to the detailed assessment and drilling of known nickel
occurrences a comprehensive review of the regional geological, geochemical
and geophysical data sets for our Widgiemooltha tenements has been carried
out. This has resulted in the identification of multiple new exploration targets
for follow up in early 2006.
Page 3 of 3
BioHeap
Excellent progress has been made both with regard to the commercialisation
of this exciting technology and to the listing of the parent company on the
London AIM market. Two licensing agreements, with royalty streams from
potential production, were finalised during the year and significant joint
ventures with Chinese groups are being worked on that could generate
substantial projects in the future. Additional seed capitalists, introduced
recently to the Company, have diluted Titan’s interest to below 50%. On
listing early in 2005 Titan will retain a significant shareholding of
approximately 20%. Your directors will continue to be involved with the
technical and commercial aspects of this business in ensuring that the
maximum value is generated for Titan’s shareholders from BioHeap’s
activities.
Company Shareholding
The company’s previous major shareholder, CS First Boston elected not to
take up their rights at the time of the rights issue and subsequently sold off
their shareholding in the company. Consolidated Nickel Pty Ltd increased
their shareholding to 19.9% of the company and we are pleased to have them,
both as our major shareholder, and JV partner at Munda and Armstrong. It
was pleasing to note the company’s other major shareholders did take up their
rights and we appreciate their continued support.
Conclusion
2004/05 was not without significant difficulties for our company. However
from my comments, and subsequently Jeff’s presentation, I am sure you will
agree that significant progress has been made, firstly in recovering from a
financially precarious position in late 2004, and subsequently achieving
significant exploration success resulting in the generation of a pipeline of
potential development opportunities. I, and my fellow directors, are looking
forward to working closely with management over the coming months towards
re-establishing Titan as a successful nickel producer and adding further value
to your company.
I will now call on Jeff to make a more detailed, illustrated report on recent
activities.
Titan Resources Limited
ANNUAL GENERAL
MEETING
11 NOVEMBER 2005
Certain forward-looking statements may be contained in the presentation
which include, without limitation, expectations regarding metal prices, the
estimation of mineral reserves and resources, estimates of production,
operating expenditure, capital expenditure and projections regarding the
completion of capital projects as well as the financial position of the
companies.
Although Titan Resources Limited believes that the expectations reflected in
such forward-looking statements are reasonable, no assurance can be given
that such expectations will prove to be accurate. Accordingly, results could
differ from those projected as a result of, among other factors, changes in
economic and market conditions, changes in the regulatory environment,
delays in obtaining government and financial approvals and other business
and operational risks.
Disclaimer
Shares on Issue: 373.5 million
ASX Code: TIR
Market Cap: ~A$20 million
Major Shareholders: Consolidated Nickel Pty Ltd 19.9%
Yandal Investments Pty Ltd 4.0%
Trucking Nominees Pty Ltd 3.9%
Directors Don Watt (Non-Executive Chairman)
Jeff Gresham (Managing Director)
Peter Leonhardt (Non-Executive Director)
Colin Smith (Non-Executive Director)
Management Rob Orr (CFO/Company Secretary)
Peter McMickan (Exploration Manager)
New Board – New Management
Corporate
Armstrong Nickel Project
• Consolidated Nickel Pty Ltd acquired 50% for total of $3.5 million. Due
Diligence being finalised and development options being assessed
Widgiemooltha Resources
• Updated resource estimates for 8 deposits indicate resource inventory of 8.2
million tonnes at 1.49% Ni for 123,000 tonnes of contained metal
Exploration
• Significant drill results at Widgie Townsite, Munda and Widgie 3. Regional
GIS data compilation/assessment identifies multiple targets for evaluation in
2006
BioHeap
• Outokumpu Technology and RAB Capital subscribe $US2.25 million into
BioHeap Ltd. Good progress being made towards full commercialisation of
BioHeapTM
Recent Activities
• Widgiemooltha North acquired
2001, other Widgiemooltha
tenements purchased 2003
• Dominant land position - 223 sq km
• Past nickel production - 40,364 Ni
tonnes from 3 mines
• 10 advanced prospects, 8 with
defined resources
• $3 million exploration budget in
2005/06
Widgiemooltha Project
• Consolidated Nickel Pty Ltd Option to Purchase Agreement signed 30 June 2005
• Payment of $500,000 option fee, largely for Due Diligence activities
• Option exercised 30 September 2005 with payment of $3.0 million for 50%
Armstrong Nickel Project – Option to Purchase
• 5 resource confirmation holes completed. Best intersection 20.85m @ 4.79% Ni
• Metallurgical test work continuing on representative samples. Indicated recoveries >
80% at 10% Ni in concentrate. Improving recoveries – concentrate grade with depth
Armstrong Nickel Project – Due Diligence
• Resource/reserve review and reassessment completed
• Review of project economics
• Pursuit of alternative treatment options
Armstrong Nickel Project – Due Diligence
• Standardised, JORC compliant resources calculated for 8 deposits by
independent resource consultants Hellman and Schofield
• Resource estimates based on new geological interpretations of preexisting
and, where available, Titan confirmatory drilling
• Resource inventory now totals 8.23mt @ 1.49% Ni for 123,000 tonnes of
contained nickel metal (at 1% Ni cutoff)
• Resource models affords opportunity to identify potential for resource
expansion within and adjacent to known deposits
• Models allow for preliminary economic assessment hence focussing
exploration towards more prospective and economically attractive
deposits
Widgiemooltha Resources
Widgiemooltha Resources
TOTAL 35,000 2.14 495,000 1.88 7,695,000 1.47 8,225,000 1.49
Widgie 3 641,000 1.46 641,000 1.46
Munda 256,000 1.94 256,000 1.94
132N 396,000 1.54 396,000 1.54
Zabel 580,000 1.81 580,000 1.81
McEwen 3,350,000 1.35 3,350,000 1.35
Armstrong (underground)2 35,000 2.14 384,000 1.92 56,000 2.26 475,000 1.98
Armstrong (open pit)1 111,000 1.72 26,000 1.76 137,000 1.73
Cooke 196,000 1.29 196,000 1.29
Widgie Townsite 2,194,000 1.48 2,194,000 1.48
Tonnes % Ni Tonnes % Ni Tonnes % Ni Tonnes % Ni
Measured Indicated Inferred Total
DEPOSIT
123,000 tonnes contained nickel metal
MINERAL RESOURCES AS AT 31 JULY 2005
• JORC Compliant Inferred Resource 2.2Mt @ 1.48% Ni (32,500 tonnes Ni)
• Thicker, higher grade zones close to surface
• Initial confirmatory drilling completed. Positive results including 12.8m @ 2.94% Ni
• Immediate follow up drilling in progress
Widgiemooltha Townsite – Long Section
• Amenable to bulk tonnage stoping methods
• Mineralisation generally conforms to BHPB offtake specifications
• Economic scoping studies in progress
Widgiemooltha Townsite – Cross Section
• High grade material remains immediately below pit
• Potential for pit expansion or underground development off existing pit
• Confirmatory drilling in progress
• Economic scoping studies planned
132 N Prospect
• Open pit 62,000t @ 1.9% Ni, underground 14,000t @ 4% Ni
• Resource of 641,000t @ 1.46% Ni
• Latest drill intercept 7.3m @ 2.93% Ni
• Assessing potential for deepening open pit
Widgie 3 Prospect
• Major historical producer (26,000 t Ni)
• Sub vertical ore zones with limited
strike length
• Limited surface expression
• Potential for remnant resources
• Decline provides shorter lead time to
access remnant ore
• 3D geological modelling planned
Mt Edwards Deposit
• Titan own nickel and gold rights 100%
• CSM earning 50%. $1 million cash,
$1 million expenditure by January
2006
• Major exploration program to advance
nickel and gold potential
• Nickel resource 256,000t @ 1.94% Ni
• Drilling to define gold resource in
progress
Munda JV
• Early RC and diamond drilling confirms nickel grades and thicknesses
• Subsequent drilling extends mineralisation at depth
• Mineralisation generally conforms to BHPB offtake specifications
Munda Long Section - Nickel
• Significant gold mineralisation spatially separate to nickel
• Open pit potential, dual commodity synergies
• Economic scoping studies planned
Munda Prospect – Gold and Nickel
• Progressive compilation of new
generation GIS data sets complete
• Assessment of surface geochemistry
by consultants io Geochemistry
defined 48 targets
• Assessment of drill hole geochemistry
gave 22 targets
• Reassessment of magnetics generated
27 targets for follow up
• 4 broad target areas defined for further
detailed examination
• New exploration targets for follow up in
2006
6520000 6530000 mN 6525000 mN 0 mN 6515000 mN 6510000 mN 6505000 mN
365000 mE 370000 mE
365000 mE 370000 mE
00 mE 360000 mE
6520000 mN 6525000 mN 6530000 mN
360000 mE
6505000 mN 6510000 mN 6515000 mN
Mt Edwards
132N
Armstrong
McEwen
Zabel
Larkinville
Widgie Townsite
Widgie 3
Miitel
Munda
Metasedimentary rocks
Granitoids
Conglomerate
Geology Legend
Komatiite
Mafic volcanics
Felsic volcanics
Widgie 3
Mt Edwards
Widgiemooltha Regional Assessment
• Explore / evaluate advanced
prospects
- Widgie Townsite
- Munda
- 132 N
- Widgie 3
• Systematic regional exploration:
focus on 30,000t Ni targets
• 100 strike km of prospective contact
to explore - long term commitment
• 2005/06 Budget $3 M - including
Munda JV
Titan Resources Limited
Widgiemooltha Exploration – Evaluation Strategy
Target Generation
Exploration
Resource Definition
Resource Confirmation
Scoping Studies
Feasibility Armstrong
Widgie Townsite
Munda
132N
Widgie 3
Cooke
Zabel
McEwen/Cipollini
Bettini
4 priority target areas
Widgiemooltha Project Pipeline
• Located 80km northeast of
Kalgoorlie
• Ni - Cu mineralisation associated
with large layered mafic intrusive
(cf. Voisey Bay)
• Historic production 210,000t @
1.44% Ni and 0.46% Cu.
Resource 816,000t @ 1.11% Ni
• Key target is basal contact
mineralisation - not effectively
tested
• Yilgarn earning 51% through
$3.5 million spend over 4 years.
Minimum $0.5 million in 2005/06
Carr Boyd
• Titan previously owned 100% of BioHeap™ technology and patents
• Titan limited financial exposure and provided seed capital of $1.5 million
• Other seed investors being introduced, Outokumpu US$1.0 million, RAB
Capital US$1.25 million
• Agreement with Sherlock Bay Nickel Corporation for first commercial
application of BioHeap™. Second licence agreement with Fox
Resources Ltd
• Significant activity in China and Mongolia, JV’s with Baiyin Non-Ferrous
Metals Group and China Western Mining. Heads of Agreement with
Erdenet Copper
• Ultimate objective is separate listing on AIM early 2006
• Titan will retain ± 25% of listed entity and right to utilise technology
BioHeapTM – Status and Plans
• New board and management with clear focus on Widgiemooltha
• Titan aims to become a major nickel producer - Armstrong and others
• Excellent potential to achieve sustained, long-term nickel production from
prospective tenement holdings
• Systematic prospect evaluation programs implemented - encouraging early
results at Munda, Widgie Townsite and Widgie 3
• Regional assessment generating new opportunities for evaluation starting
2006
• Value creation divestment strategy for BioHeapTM on track
• Well funded with ≈ $4 million cash at bank
Summary - Moving Forward : The Future
Titan Resources Limited
ANNUAL GENERAL
MEETING
11 NOVEMBER 2005