Collective Mining | Corporate Presentation - May 2024
Kria & Trevali - Building the Next Intermediate Zinc Producer
1. OCTOBER 2010
Corporate Presentation
DECEMBER 2010
Building the Next Intermediate Base Metal Producer
An Emerging Zinc, Silver, Copper and Lead TSX: TV
TSX: TV
Producer in the Western Hemisphere TSX-V: KIA
2. DISCLAIMER
Certain statements contained in this document, including, without limitation, those concerning
the economic outlook for the mining industry, expectations regarding metal prices and
production, the completion and commencement of commercial operations of certain of Trevali
Resources Corp. (“TV”) and Kria Resources Ltd. (“KIA”) projects, and its liquidity and capital
resources and expenditure, contain certain forward-looking statements regarding TV’s and KIA’s
economic performance and financial condition. Although TV and KIA believes that the
expectations reflected in such forward-looking statements are reasonable, no assurance can be
given that such expectations will prove to have been correct. Accordingly, results could differ
materially from those set out in the forward-looking statements as a result of, among other
factors, changes in economic and market conditions, success of business initiatives, changes in
the regulatory environment and other government actions, fluctuations in metal prices and
exchange rates, and business and operational risk management. TV and KIA undertake no
obligation to update publicly or release any revisions to these forward-looking statements to
reflect events or circumstances after the date of the annual report. All subsequent written or
oral forward-looking statements attributable to TV and KIA or any person acting on its behalf are
qualified by the cautionary statements herein.
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3. TRANSACTION DETAILS
Proposed Plan of Arrangement
Structure:
Tax-free share-for-share exchange (C$)
Exchange Ratio: 0.200 Trevali shares for each Kria share
Approximately C$0.334 per Kria share representing a 33.6% premium
over the Kria closing price on December 15, 2010
Consideration Offered: Transaction value of approximately C$44 million (assuming options
and warrants in the money, on a fully-diluted basis, and on the
closing price of C$1.67 per Trevali share on December 15, 2010)
Break fee of approximately C$1.3 million
Cardero Resource Corporation (“Cardero”) and officers and directors
Other terms: of Kria and Trevali will enter into voting and standstill agreements
Right to match competing offers made to Kria
US$8.0 million Secured Term Loan extended by Cardero
2/3rds approval vote for Kria and Trevali shareholders plus TSX, TSX-V
Transaction Approvals:
and court approval1
Proposed Schedule: Expected closing by the end of March 2011/early April
1In some instances majority, but in others, subject to disinterested shareholder approval for Kria
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4. STRATEGIC RATIONALE
Creates a new zinc company that has:
• Immediate Production and Robust Growth
• Expected production from two operating mines in 2011 – 2012
• Cash flow anticipated in mid-2011 once Halfmile begins supplying ore on a toll
milling basis to Xstrata Zinc’s Brunswick 12 Mill (“BMS”) and Santander begins
commissioning its mill in late-2011
• Robust project pipeline in the short and medium term, including a potential mill
expansion at Santander, and construction of a new mill at Halfmile-Stratmat after
BMS closes
• Resource and Production Growth, Re-rating Opportunity
• Strong re-rating potential via a portfolio of mines, near-term cash flow, increase in
resources and a strong production growth profile
• High potential to increase the current pro-forma NI 43-101 resources of 4.5 billion
lbs zinc, 1.1 billion lbs lead, 31.4 million ounces silver and 625 million lbs copper1
• Operations diversified across two world-leading mining jurisdictions
• Diversified Commodity Mix – Zinc, Silver, Lead, Copper, Gold
• Company is well positioned for the current strong commodity price environment,
and the anticipated near-term zinc commodity price increase
• Proven Management Team and Strong Partners
• World leading partners – Glencore International and Xstrata Zinc
• Experienced management team and board of directors
1See later slides for resource table breakdown
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5. VALUE FOR KRIA SHAREHOLDERS
• Attractive premium of 33.6% over the Kria closing price on December 15, 2010
• Attractive premium of 25.2% based on the 30-day VWAPs of both companies for the
period ended December 15, 2010
• Will own approximately 25.8% of the outstanding shares of the combined company
on a basic basis and approximately 26.9% assuming options and warrants in the
money, on a fully-diluted basis
• Cardero, an insider of both Kria and Trevali, provides an US$8.0 million loan to Kria,
in order to pay the January 2011 Halfmile Lake and Stratmat Property Payment due
to Xstrata Zinc
• Trevali’s balance sheet and its cooperation with Cardero, greatly improve Kria’s
financing alternatives and balance sheet
• Kria’s shareholders gain access to Trevali’s Santander development project, with
restart capital costs estimated at approximately US$19 million (US$12 million
financed by Glencore, the operator and Trevali’s partner)
• Considerable upside potential exists in growing the Santander resource
• Participation in Trevali’s potential growth through further acquisitions
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6. SECURED DEBENTURE
• Cardero will issue to Kria a secured term loan
• Amount of US$8.0 million
• Proceeds to be used to pay the January 2011 Halfmile Lake and Stratmat Property
Payment due to Xstrata Zinc
• One year term loan, payable in full, plus interest, one year after advance (repayable
on or before January 14, 2012)
• Coupon of 10.0% per annum, calculated monthly, not in advance
• Subject to the approval of shareholders of Kria, other than Cardero, the loan terms
will be retroactively modified to bear interest at 8.0% per annum, and Kria will issue
to Cardero approximately 6.4 million warrants, exercisable into common shares of
Kria for a period of one year after the date of issuance of the warrants at a price of
C$0.25/share
• Security is a first charge, mortgage and security interest over all of the assets and
undertaking of Kria
• Subject to completion of satisfactory corporate, technical and legal due diligence by
Cardero on Kria and its assets
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7. ABOUT TREVALI RESOURCES CORP.
• 2,000 tpd Zinc-Silver-Lead production targeted for 2011 from the Santander Project located 215 km
by road from Lima in Peru’s Central Mineral Belt
• Strategic partnership with Glencore International AG providing 2000 tpd plant, contract mining and
manpower in exchange for LOM concentrate offtake agreement – mitigates both financial and
technical risks
• Trevali retains full 100% ownership in Santander project and can acquire ownership of Glencore’s
processing plant via toll charge
• CAPEX – modest due to existing infrastructure and Glencore providing 2,000 tpd processing plant
and contract mining fleet
• OPEX expected to be lower quartile – significant silver/lead credits
• Very significant exploration potential to expand silver-lead-zinc resource. Exploration in 2009 –
2010 resulted in indicated tonnage increasing 53%, inferred up 452%
• Tingo hydroelectric power generating facility – low cost, renewable power supply – surplus capacity
can provide significant future revenue stream or sufficient power for a 4,000 tpd operation
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8. ABOUT KRIA RESOURCES LTD.
• Advanced-stage base metal assets in New Brunswick & Manitoba with low political risk
• Proven mining district in close proximity to world class assets
• Within 40 km of Xstrata’s world class Brunswick 12 mine & mill - historical size of over
130 million tonnes of 8.7% Zn, 3.5% Pb, 0.35% Cu, and 100.7 g/t Ag
• Planning to fast-track development of Halfmile Lake deposit by beginning to custom mill
at Xstrata’s Brunswick 12 mill in mid 2011
• Excellent leverage to rising metal prices
• September 2010 Preliminary Economic Assessment (PEA) on combined
Halfmile/Stratmat deposits (with owned mill and no custom milling at Brunswick)
demonstrated a pre-tax NPV (8%) of C$253 million with an IRR of over 20% at metal
prices of US$1.03/lb Zn, US$3.03/lb Cu, US$0.92/lb Pb and US$15.08/oz Ag
• IRR and NPV increased 28% and 82% respectively over the previous Halfmile PEA
completed in July 2009
Phase I Production – Phase 2 Production –
2011-2012 2012 and beyond
Develop Halfmile Build mill and operate Halfmile/Stratmat
Provide feed to Xstrata’s Brunswick 12 mill in Complete feasibility
early 2011 until BMS closes Mill construction
Generate cash flow for Kria Permitting
Test mining and metallurgical conditions Financing
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11. PROPOSED MANAGEMENT & DIRECTORS
Dr. Mark Cruise, President & CEO
A carbonate-hosted base metal deposit specialist. Project experience from grass-roots exploration through resource definition to
permitting and production in Europe and the America’s on behalf of Pasminco Exploration, Anglo American & the Cardero Group. Part
of the technical team that defined, permitted and put the 22Mt underground Lisheen Zinc – Lead Mine into production (Anglo
American).
Dr. Tony Holler, Chairman
Extensive experience in the M&A (mergers and acquisitions) field. Dr. Holler founded and was the chief executive officer of ID
Biomedical Corp. (that was acquired by GlaxoSmithKline for approx. $1.7 billion), and most recently was chairman and a director of
Corriente Resources (that was acquired by a Chinese group for $679 million).
Anton Drescher, Director – Financial
Mr. Drescher is a Certified Management Accountant, a designation he has held since 1981. He has been a director and officer of a
number of public companies.
Charles Melbye, Director – Mining
A Geological Engineer from the Colorado School of Mines (1950), Charles was Chairman of Corriente Resources from 1992-97 and
previously was president of Anschutz Mining from 1976-84. He has extensive experience on numerous mining operations throughout
North and South America.
Dr. Paul Klipfel, Director – Geology
Holds a Ph.D. Geo. from the Colorado School of Mines (1992). From 1996 to 2002 he was a Senior Geoscientist with Placer Dome
Exploration. He is currently the president of Mineral Resource Services, a private Reno-based company which provides geological
services.
Mike Hoffman, Director
25 years experience in mine operations, corporate development and projects, most recently as Vice President at Yamana Gold, Desert
Sun and Goldcorp.
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12. SANTANDER PROJECT
• 44-sq. km property in the world-class Central Peruvian Polymetallic Belt
• 215 km from Lima by road – government upgrading all access routes
• Multiple exploration targets, including all deposits open at depth
• Fully supported 200-man camp currently being expanded to support mine construction and operation
• Coarse grained mineralogy provides good recoveries to produce clean concentrates
• 90% Lead recovery at 50% concentrate grade with 40-50 oz/t silver
• 85% Zinc recovery at 50-52% concentrate grade
• 80-85% Silver recovery (to lead concentrates)
• Production starts at 2,000 tpd and is to be expanded to 4,000 tpd, with a 20+ year mine life
• Local communities on board, and highly supportive
• All required surface land rights obtained, tailings permitted, water rights permitted and the mine plan
submitted – permit pending
• Detailed processing plant engineering underway – basis for final plant permit
• Glencore has commenced construction with plant commissioning scheduled for approximately Q4 –
2011
• Glencore is financing the US$12M plant construction, and will be repaid US$5.95/tonne milled
• Trevali has secured a long-term concentrate off-take sales agreement whereby Glencore will buy 100%
of the Santander project area life-of-mine production at benchmark terms
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13. TINGO POWER GENERATING STATION
• The Tingo run-of-river hydroelectric generating station is situated 17 km west, down-valley,
from the Santander mine site and has operated since 1958 generating up to 1.6 MW of
electricity – partly servicing the power needs at the Santander mine
• Advanced discussions are underway with several banks for debt financing to increase
generating capacity from current 1.6 MW to approximately 8.8 MW (10 MW peak), upgrade
the existing transmission line, and extend the line to connect to the Peruvian National Energy
Grid allowing for sale of excess power and cash flow to Trevali
• Expansion capital expected to be of US$20-22M (~US$15M expected through debt financing)
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14. HALFMILE-STRATMAT PROJECT
Based on Kria-owned mill
Mining Resource used in PEA
Tonnes Zn Eq Zn% Cu% Pb% Ag (g/t)
Halfmile Lake
• IRR and NPV of the combined Indicated 6,262,043 9.13 8.13 0.22 2.58 30.78
Inferred 6,078,200 7.27 6.69 0.14 1.83 20.51
Halfmile/Stratmat PEA have increased 28% Stratmat
and 82% respectively over the 2009 PEA Inferred 5,524,500 8.16 6.11 0.40 2.59 54.21
Calculated using a 5% Zn Eq cutoff
• Mining / Processing
Ramp and Ventilation Raises
– 2,000 tpd from each deposit
– Halfmile: 75% mechanized cut and fill / 25%
long hole methods
– Stratmat: 20% MCF / 80% long hole
– Estimated mine life of 20 years for Halfmile
and 11 concurrent years for Stratmat
– Milling to be done at 4,000 tpd for first 11
years while Stratmat is in production
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15. HALFMILE-STRATMAT PROJECT
PEA Metal Assumptions
Based on Kria-owned mill, C$ Metal LOM Price Recovery
Zinc US$1.03/lb 90.00%
• Economics Copper US$3.03/lb 85.00%
Lead US$0.92/lb 85.00%
– Operating costs: $57.62 per tonne milled
Silver US$15.08/oz 48.56%
(includes mining $41.91, processing &
ore haulage $13.34 and general & Discount Rate Sensitivity
administration $2.37) Discount rate Value (C$) Pre Tax & Pre Finance
– Capex: pre-production capex of C$187 0% $ 824,649,166
million; C$295 million over mine life for 4% $ 460,518,830
sustaining capital 8% $ 253,403,020
10% $ 184,310,634
– IRR of 20.86%
12% $ 130,584,175
15% $ 70,883,749
• Average annual metal production 18% $ 28,831,086
for 20 year mine life 20% $ 7,754,985
– Zn 134,827,423 lbs/year Gross Metal Values in Concentrates
– Cu 3,905,998 lbs/year Zinc 74.0% US$2,772,404,172
– Pb 40,218,759 lbs/year Copper 6.0% US$236,273,865
Lead 20.0% US$738,682,109
– Ag 682,192 oz/year
Silver 0.2% US$6,603,085
Total US$3,747,360,147
• Zinc = 74% revenue
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16. COMPANY/PROJECT COMPARISONS
Trevali Resources Kria Resources
First Production H2-2011 H1-2011
Production rate 2,000 tpd (expanding to 4,000 tpd) 2,000 tpd (first 2 years, toll-milling)
4,000 tpd (next 11 years, new mill)
2,000 tpd (remaining 7+ years, new mill)
Deposit Santander Halfmile / Stratmat
Ruttan
Resources1 Main deposit Indicated: Halfmile Indicated:
5.9 Mt @ 3.86% Zn, 1.35% Pb, 44 g/t 6.26 Mt @ 8.13% Zn, 2.58% Pb, 0.22% Cu
Ag and 0.08% Cu and 30.78 g/t Ag
Main deposit Inferred: Halfmile Inferred:
4.8 Mt @ 5.08% Zn, 0.44% Pb, 21 g/t 6.08 Mt @ 6.69% Zn, 1.83% Pb, 0.14% Cu
Ag and 0.07% Cu and 20.51 g/t Ag
Tailings deposit Inferred: Stratmat Inferred:
1.7 Mt @ 2.74% Zn 5.52 Mt @ 6.11% Zn, 2.59% Pb, 0.40% Cu
and 54.21 g/t Ag
Ruttan Inferred (currently no planned
production):
19.8 Mt @ 1.47% Zn and 1.17% Cu
1Resources are all NI 43-101 Compliant
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17. COMPARABLE COMPANY ANALYSIS
Zinc Junior/Mid-tier NI 43-101 Resource Sizes
9,000
8,000
Million lbs of Zinc Equivalent NI 43 -101 Resources
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Source: Raymond James Ltd.
Zinc equivalency based on commodity prices of US$1.10/lb Zn, US$2.50/lb Cu, US$0.72/lb Pb, US$1,000.00/oz Au, US$14.00/oz Ag, US$50.00/lb U, and
US$0.50/lb Mn.
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18. KEY MILESTONES
Deposit Timeline Activity
Santander/Tingo 2011+ Exploration of Santander Project at depth
H2 2011 Production and cashflow targeted
H1 2013 Completed 8.8MW expansion of the Tingo Hydroelectric Plant
H1 2014 Completed expansion to 4,000 tpd
Halfmile/Stratmat Q1 2011 Final permitting and development begins
Q2 2011 Phase I production commences – ore to Xstrata BMS; target delivery
of EIA for Halfmile/Stratmat to build new mill/tailings
2011-12 Infill/expansion drilling; work on metallurgy to define mill process;
work on EIA for Kria built mill/tailings
H2 2012 Production stops as BMS goes to closure (estimated)
Q2 2012 Start to develop Stratmat; commence construction of mill/tailings
~Q3 2013 Phase 2 production commences at Stratmat and resumes at Halfmile,
processing through the new mill
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19. CATALYSTS
Increase market value with ongoing exploration & development
Wholly-owned subsidiary Trevali Renewable Energy Inc. offers significant additional upside
Short Term Value Drivers:
• Production and cash flow targeted at TWO mines in 2011
• Major strategic partners – Glencore (world’s largest metal trader, fourth largest Zn
producer) and Xstrata Zinc
• Highly leveraged for predicted Zn and Pb deficits from 2011 – 2015
• Listed on TSX; senior listing on Lima Stock Exchange underway
• Proven team – successful explorationists
• Exposure to silver market
Medium Term Value Drivers:
• Santander: potential for increased capacity (4,000 tpd) and improved efficiencies
• Halfmile/Stratmat: construction of a new mill, and production expansion to 4,000 tpd
• District Consolidation – disciplined approach to acquisitions
• Examine further hydroelectric growth opportunities
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20. Trevali Resources Corp. Kria Resources Ltd.
1920-1188 West Georgia Street 65 Queen Street West
Vancouver, BC, Canada, V6E 4A2 Suite 825, P.O. Box 67
Toronto, Ontario, Canada M5H 2M5
Telephone: 1-604-488-1661 Telephone: 416-861-9500
Fax: 1-604-408-7499 Fax: 416-861-8165
www.trevali.com www. kriaresources.com
Shares outstanding: 56,704,220 Shares outstanding: 98,652,239
Market Cap: C$95 million Market Cap: C$25 million
(at December 15, 2010) (at December 15, 2010)
TSX: TV TSX-V: KIA
Frankfurt: 4TI
OTCQX: TREVF
Lima: Pending
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