Annual General Meeting Addresses
Released
Released
Announcement PDF
AGM Address
21 November 2023
Attached is the presentation and address to be given at today’s Annual General Meeting.
This announcement has been approved by the directors of KGL Resources Limited.
KGL Resources Limited | AGM Presentation
Page 1 of 1
Opening
Welcome to today’s Annual General Meeting of KGL Resources. I respectively acknowledge that we
meet today on the lands of the Turrbal people and pay my respects to their elders, past, present and
emerging. I also acknowledge the traditional custodians of the land in the southern Northern Territory,
represented by the Central Land Council, are the past and present Traditional Custodians of the land on
which Jervois Copper Project is located and pay my respects to their elders, past, present and emerging.
Experienced Development Team
Let me commence our business for today with some introductions. Present are my fellow directors: Mr.
Jeff Gerard, Mr Brian Gell and Mr. Ferdian Purnamsidi and our recently appointed CEO, Mr Nick Spencer
and our new CFO, Mr Chris Dippenaar.
Ferdian has served on the board since April 2016 representing our largest shareholder KMP Investments.
KMP have been and continue to be a strong supporter of the company, participating strongly in the
recent capital raising. Ferdian is MD of Mach Energy Australia with recent experience in developing the
Mt Pleasant coal mine project which is now in production.
Jeff was appointed by the Board as a director of the Company on 31 May 2022 after an extensive career
with Glencore. Brian was appointed by the Board in April 2023 and brings over 40 years of experience in
the mining industry to KGL.
And Nick has been with us since September and has already been to site and met with all of the key
stakeholders in the Jervois Project. Nick has over 30 years of mining experience and has a track record of
successfully developing and operating mining projects.
Also present in the front row is Kylie Anderson, our Company Secretary.
We also have present Mr. Anthony Whyte, representing our auditor BDO.
Developing projects in today’s environment of high cost inflation and labour shortages is challenging,
particularly with copper prices well below the required price to incentivize a material increase in new
production.
We are pleased to have recruited Nick and Chris to the KGL team. We believe we have the right team to
take this project forward and create significant value for shareholders over time without taking on
oversized risks or resorting to massive dilutionary capital raisings at the bottom of the copper cycle to
start construction at any cost. This has not ended well for many projects.
We have successfully concluded a number of capital raisings over the last few years to progress the
project. Where we believe the company is trading at a substantial discount to its inherent value, we
have rewarded shareholders for their continued support with the right of first refusal as we continue to
progress the Jervois Project along the development pathway and grow the value of this exciting Project.
I’d like to thank them for their valuable support.
Jervois Copper Project Update
Since joining the Board in 2015 and becoming a major investor in the company, we have repositioned
Jervois to become a more robust high-grade copper project to maximize operational efficiencies and
shareholder returns. Contrast that today with a growing number of projects considering development
with grades of 0.2%-0.3%. Ore quality is diminishing around the world as existing deposits are depleted.
There has also been a lack of new high grade discoveries over the last 10-15 years.
With an average grade of 2% copper, we are one of the highest grade undeveloped projects in the
country. In an environment of strong inflationary pressures, high fuel costs and labour shortages,
achieving maximum operational efficiency is important to long term sustainability and minimizing KGL’s
carbon footprint.
Since presenting the results of our FS at last year’s AGM, we have focused on Optimisation Studies to
impove key value drivers and target productivity improvements to support financing options. We have
particularly focused on ways to reduce the cost and the number of people due to skilled labour
shortages including doubling the size of the equipment in the open cuts.
Having achieved our goal of a minimum 10 year mine life, we have also expanded our exploration
program to improve our understanding of the geological structures at depth for the Jervois mineral field.
I’ll now hand over to Nick to take us through our plans for 2024.
Copper Market Commentary
The copper market has traditionally been seen as an indicator of economic activity. That is changing with
the emergence of a coordinated effort globally to reduce emissions to Net Zero by 2050 which is
forecast to double the demand for copper by 2035.
However, the industry is going to face significant challenges in meeting that demand.
We have highlighted a number of recent comments on the industry to illustrate the point that this time
its different.
In an article titled “The Green Energy transition has a Chilean Copper Problem”, the author noted that
ore quality is deteriorating around the world as existing deposits are depleted and new ores are more
difficult and costly to develop. The CEO of the world’s largest copper producer, Codelco, noted ”There’s
no easy mining left – not in Chile nor the rest of the world”. Codelco is currently juggling upgrades to
mines that have been operating for over 100 years that are currently running out of profitable ore. The
cost of the upgrades has been estimated at US$19 billion. However, Codelco is getting hammered by
cost overruns, lower production tonnages and rising production costs.
Glencore has recently announced its intention to close its Mt Isa copper mines by 2025 but has
committed to keeping the smelter open until 2030.
Teck recently announced rising costs on its flagship copper project in northern Chile with the capital
costs increasing from $4.7 Bn in 2019 to US$8.8 Bn today.
In terms of meeting demand over the next few years, Gary Nagle, CEO of Glencore, notes that whatever
was planned to be built has been built.
Industry participants are suggesting the copper price needs to rise to US$6-$8/lb to incentivize a
material increase in new copper production.
Derisking the project and growing the value in 2024
In light of these significant industry challenges, we believe KGL is well positoned to progress
development of the Jervois Project as we focus on derisking and growing the value of the Project.
KGL Resources
KGL has made significant progress along the road to becoming an Australian copper producer. Despite
the difficult inflationary environment, global uncertainties and other challenges experienced over the
last couple of years, the FS delivers an extended mine life of 11.75 years with an average grade of
resource of over 2% to achieve a NPV of A$241 million, assuming a long term copper price of A$4.23/lb.
We have confirmed near term growth opportunities based on the most recent exploration drilling
results for resource and mine life extensions. Funding options are being considered.
We have an offtake with Glencore, an experienced development team and a supportive mining
jurisdiction. Glencore has committed to keeping its copper smelter in Mount Isa open until 2030, saying
there was enough third-party work for it to remain profitable
And finally, KGL provides investors with exposure to an exciting independent pure-play copper company
with all necessary approvals leveraged to strong copper market fundamentals driven by a forecast long
term structural deficit in the copper market associated with the clean energy transition to Net Zero by
2050.
Corporate Overview
KGL has 567 million shares outstanding, a market capitalization of A$85 million, cash on hand as at 30
September 2023 of $18.7 million and a very stable and supportive shareholder base. KGL is a tightly held
stock with the top 20 shareholders owning 76% of the company. A large portion of our shareholder base
is represented by high-net-worth investors who have proven to be extremely supportive through
periods of market volatility.
Resource Update
In 2022, we announced a JORC Resource update to support the FS which reflected a 25% increase in Ore
Reserves to 11.7 Mt at 2.1% Cu, 0.29 g/t Au and 29.8% g/t Ag when compared to the Dec 2020 PFS
which was a period severely impacted by COVID restrictions. This chart demonstrates the dramatic
transformation of the project doubling the copper grade from ~ 1.0% in 2015 to ~ 2.0% today.
However, labour shortages continued to hamper productivity of drilling operations in 2022 and the first
half of 2023. We believe we have resolved these issues and we expect the 2024 drilling program to have
three diamond drill rigs onsite to progress infill drilling at Reward to increase the portion of the resource
in the measured category and to expand the exploration program to include additional targets at
Rockface and deep exploration drilling to improve our understanding of the geological structures at
depth.
Located in a Tier One Mining Jurisdiction
KGL also benefits from the location of the Jervois Copper project in a Tier One mining Jurisdiction, in a
highly prospective region for critical energy transition metals, in a low sovereign risk country, close to
processing facilities and on the doorstep of the major growth markets of Asia.
Feasibility Study Highlights
KGL completed the FS for the Jervois Copper project confirming the project is technically robust and
financially viable based on a copper price of US$4.23/lb and supports a high-grade copper mine with
production for 11.25 years.
Sensitivity analysis confirmed the project is leveraged to significant potential upside from expected long
term supply deficits and the need for a higher copper price to incentivize new copper production.
Industry participants are calling for US$6-$8/lb copper as the minimum price range to incentive material
investment into new copper projects. The current copper price is US$3.74/lb.
Despite Robust Medium-Term Outlook for Copper
As demand from the energy transition surges over the next few years driven strongly by the forecast
rapid adoption of electric vehicles, renewable energy and electricity grid build out, we are facing
significant supply challenges arising from a combination of factors including declining grades and a
depletion in reserves from existing mines, a lack of new discoveries despite increased exploration
budgets and an extended approval process of on average 16 years from discovery to production.
Peak mine supply is expected to occur in 2025/2026 (pushed back by project delays).
Given the significant increase in the cost curve with the third quartile of production at about US$3.50/lb
and today’s copper price of US$3.74, a significant increase in the market prices for copper is required to
attract the required investment in new supply to meet forecast demand. However, this is unlikely to be
in time to address the chronic shortages in copper expected to occur from the 2nd half of this decade.
And the recent softening in economic growth forecasts has likely further restrained investment in new
supply.
Optimisation Studies
Mine Plan Optimisation
KGL’s plan is to commence with open pit operations. This reduces up front mining costs, simplifies
operations during commissioning and reduces pre-production capital expenditure. Mine plan
sequencing has been optimized to initially mine the Reward open cut.
Underground operations are progressively scheduled to commence ore production to hopefully achieve
our aspirational target production of 30ktpa. This mine development sequence results in higher grade
underground resources being delayed until later in the mine life but results in reduced Project execution
risk.
Process Plant Optimisation
Project Infrastructrue
Rockface – growth potential
Growing the high-grade copper resource and mine life at Jervois is a key potential value driver for KGL
shareholders.
Rockface is the highest grade copper resource at Jervois with 3.53 Mt @ 3.07% Cu. Recent drilling of the
deepest hole at Rockface intersected high grade copper with gold and silver credits. DHEM Model
confirms conductor correlating with mineralization remains open at depth.
Reward – growth potential
The Reward mineral resource represents approximately 50% of the contained copper in the Total
Mineral Resource. Infill drilling has confirmed the resource model. Reward Deeps is associated with
high-grade copper with significant gold. The deposits at Rewards Deeps and Reward Marshall remain
open at depth.
Exploration Potential
The Jervois mineral field is highly prospective due to its proximity to the large crustal-scale Jervois Fault,
which acted as a plumbing system for mineralising ore-forming fluids.
Proposed 2024 Drilling Program
We are anticipating a more cost-effective drilling program with potentially three rigs.
Focus areas include:
•
•
•
ongoing drilling at Rockface, where high-grade, thick copper was intersected 130 meters below
previous drilling, confirming depth potential.
Ongoing drilling at Reward aimed at increasing the measured resource.
Given the highly prospective nature of the Jervois mineral field, we aim to improve our
understanding of the geological structures at depth.
Summary and Outlook
We’ve highlighted the key workstreams for 2024. A FID is subject to market conditions at that time
including a supportive macroeconomic environment and the availability of labour to complete
construction on time and on budget.
2023 has been a successful year for KGL despite the challenges.
I will hand back to Denis now.
I want to thank the Jervois stakeholders, in particular the Central Lands Council, Bonya community Lucy
Creek and Jervois Station pastoralists and the Northern Territory government for their ongoing support
and I know they are looking forward to helping us deliver the Jervois copper project. I also acknowledge
the native title holders with whom we negotiated an indigenous land use agreement in 2016.
I’d like to thank our employees for their contributions in challenging times and look forward to making
significant progress over the next 12 months in accelerating development of the Jervois Copper Project.
And my sincere thanks to you, our loyal shareholders, for your patience and confidence in the company.
We are one of the few high-grade copper projects in a Tier One jurisdiction with all key approvals in a
position to proceed with development when market conditions improve.
We are looking forward to making progress to achieve FID in 2024, subject to achieving some
normalization in market conditions – more specifically, the availability of labour, pricing of key inputs
and supportive macroeconomic conditions. Should these conditions not be met, KGL will continue to
increase the value of the Project by focusing on its exciting exploration campaign for 2024 with the goal
of expanding the resource and extending the mine life of this high-grade deposit. I’m looking forward to
our future and I hope you are too. I am very confident our patience will be rewarded.
Competent Persons’ Statement and Disclaimer
Competent Person Statement
The Jervois resources information were first released to the ASX on 14/09/2022 and complies with JORC 2012. The company
confirms that it is not aware of any new information or data that materially affects the information included in the original market
announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The company confirms that the form and context in which the
Competent Person’s findings are presented have not been materially modified from the original market announcement
The Jervois Ore Reserves Estimates was first released to the market on 10/11/2022 and complies with JORC 2012. The company
confirms that it is not aware of any new information or data that materially affects the information included in the original market
announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant
market announcement continue to apply and have not materially changed. The company confirms that the form and context in which
the Competent Person’s findings are presented have not been materially modified from the original market announcement.
The following drill holes were originally reported on the date indicated and using the JORC code specified in the table.
Hole
KJCD
KJCD
KJCD
KGL Resources Limited
575W1
556
556D4
Date originally
Reported
08/11/2023
27/09/2022
08/11/2023
JORC Reported Under
2012
2012
2012
Equity Raising 202221 November 2023 AGM presentation
1
Competent Persons’ Statement and Disclaimer
Forward Looking statements
This release includes certain forward-looking statements. The words “forecast”, “estimate”, “like”,
“anticipate”, “project”, “opinion”, “should”, “could”, “may”, “target” and other similar expressions are
intended to identify forward looking statements. All statements, other than statements of historical fact,
included herein, including without limitation, statements regarding forecast cash flows and potential
mineralisation, resources and reserves, exploration results and future expansion plans and
development objectives of KGL are forward-looking statements that involve various risks and
uncertainties. Although every effort has been made to verify such forward-looking statements, there can
be no assurance that such statements will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements. You should therefore not place undue
reliance on such forward-looking statements.
Statements regarding plans with respect to the Company’s mineral properties may contain forward
looking statements. Statements in relation to future matters can only be made where the Company has
a reasonable basis for making those statements.
KGL Resources Limited
21 November 2023 AGM presentation
2
Project Resources
September 2022
* Cut-off grades: 0.5% Cu above 200m RL, 1% Cu below 200m RL; Note: 200m RL is 150m below surface
KGL Resources Limited
Equity Raising 202221 November 2023 AGM presentation
3
Appendices
2024 Exploration Program
Exploration potential of Jervois mineral field
•
The Jervois Mineral Field's formation is closely tied to the
movement of mineralising fluids along the Jervois
Shearzone, a large crustal-scale shearzone extending over
40km and connected to the Delny Shearzone.
•
The Delny Shearzone is part of a crustal-scale flower
structure rooted onto the Moho, the boundary between the
Earth's crust and mantle.
•
The Jervois mineral system experienced several phases of
hydrothermal activity spanning at least a 90 million year
period, as per McGloin et al., 2023.
•
The Attutra Metagabbro, considered an oxidized and
copper-enriched mafic intrusion, along with
felsic/intermediate igneous rocks, was emplaced into an
active, extensional continental back-arc basin at shallow
crustal levels.
•
The intrusion of the gabbro acted as a heat source, driving a
mineralising hydrothermal system around 1.79 Ga, leading
to the formation of exhalites and metalliferous sediments in
a basin floor setting.
•
Continuous intrusion of felsic/intermediate magma from
deeper crustal levels between approximately 1.78-1.77 Ga
further increased the regional temperature, reaching peak-T
conditions at around 1.76 Ga, according to Reno et al.,
2016, and Weisheit et al., 2019.
•
The field includes both polymetallic copper– silver–lead–
zinc (Cu–Ag–Pb–Zn) and copper–tungsten (Cu–W)
mineralisation hosted in Bonya Metamorphics (eg Robertson
1959, Mackie 1984, Peters et al 1985, Bennett et al 2017,
McGloin et al 2019, McGloin et al., 2023).
KGL Resources Limited
Bouguer gravity of Jervois and surrounding structure domains, at
intersection of major crustal-scale structures
Large crustal-scale structures tend to be reactivated over time,
especially the intersections of such large structures from zones of
weakness in the crust along which magmatic bodies intrude and
hydrothermal fluids can flow.
21 November 2023 AGM presentation
5
2024 Exploration Program
Exploration potential of Jervois mineral field
Evolution of Jervois Mineralisation Model
Conceptual Jervois Mineralisation Model
• The Jervois mineralisation model is undergoing adjustments
based on recent papers by the NTGS.
• Significantly, there is growing evidence for extensive late
bimodal magmatic events in the eastern Arunta Region.
Exploration Implications
These magmatic events are viewed as potential drivers for
mineralisation or sources and drivers for mineralisation.
Diagram Insights
• The provided diagram illustrates lithological, hydrothermal,
and structural controls on remobilised Cu mineralisation at
Jervois, particularly post/syn-deformation.
Late-Stage Deformation and Granite Intrusions
• During late-stage deformation and after peak-metamorphism,
granite intrusions play a crucial role.
• These intrusions provide heat and fluids, remobilising Cu from
primary (strata-bound) units.
• The remobilised Cu is channelled via reactivated fault sones
into structural traps, such as anticlinal fold hinges.
Sketch of conceptual Jervois mineralisation model - trapping
of hydrothermal fluids (blue wriggles and arrows) and , driven
by felsic intrusions (pink), into structural traps (red) – foldhinges – and chemical traps – iron-stones (yellow) , altered to
massive magnetite (brown). Analogous to Tennant Creekstyle Au-Cu mineralisation
Role of Exhalites
• Iron-, manganese-, boron-rich exhalites serve as chemical
(redox) traps for the metal-bearing fluids in the system.
KGL Resources Limited
6
21 November 2023 AGM presentation
Copper Market Update
Tesla’s aim is to build 20 million vehicles a year by 2030
If achieved, it would make Tesla twice the size of any automaker in history, accounting for roughly 20% of the global vehicle market.(Reuters)
Tesla's total deliveries in 2022 amounted to 1.31 million cars.
Global electric vehicle (EV) sales increased more than 50 per cent from 2021 to 2022, making up a total of 14 per cent of all new cars sold in the
world. The IEA expects to see 14 million in sales by the end of 2023, with electric cars accounting for 18% of total car sales across the full
calendar year. According to the IEA, the share of EVs in total sales needs to reach around 60% by 2030 to stay the course and reach net zero
CO2 in 2050.
KGL Resources Limited
Equity Raising 202221 November 2023 AGM presentation
7
A huge copper shortage will impact global supply between now and 2030.
Speaking to Bloomberg, Gary Nagle referenced estimates of a cumulative gap between
projected demand and supply of 50 million tons between 2022 and 2030.
Glencore Says This Time Is Different for Coming Copper Shortage. By Jack Farchy (Bloomberg, 7 December 2022).
KGL Resources Limited
21 November 2023 AGM presentation
8
Copper demand expected to double by 2035 ...
•
A recent report by S&P Global estimates that demand
for refined copper will double from 25 million tonnes in
2020 to around 50 million tonnes by 2035 with electric
vehicles and the grid key demand drivers in additional to
traditional demand growth.
•
This increase in demand is in line with global carbon
reduction targets and the push towards a greener
economy, as virtually all governments have committed
to the broad-based adoption of electric vehicles, clean
transportation, and net-zero electricity grids.
•
Copper demand from energy transition markets is
expected to grow from 6.6 Mt in 2020 to reach 21 Mt in
2035, representing almost 60% of demand growth.
•
A World Bank analysis of the mineral intensity of 10 lowcarbon energy technologies classifying copper as a
critical metal found copper was essential to all 10
demonstrating that the clean energy transition will
depend very much on the availability of copper itself.
•
Clean energy technologies are becoming the fastestgrowing segment of copper demand. They are also
more copper intensive with between 4-10x the copper
intensity of traditional fossil fuels..
•
In addition to being critical in achieving global
decarbonisation goals, copper is critical in the longer
term to support ongoing Chinese demand, the
emergence of developing economies such as India and
SE Asia and in modern technologies including
semiconductors, the digital economy and defense
applications.
KGL Resources Limited
Equity Raising 202221 November 2023 AGM presentation
9
..however, supply challenges may short circuit
the clean energy transition ..
Factors affecting copper supply include:
lack of new discoveries (despite elevated exploration
budgets) and investments in greenfield and brownfield
projects
declining head grades in today’s major copper mines
around the world. According to a study by Mining
Intelligence, operating mines currently have an
average grade of 0.53% while copper projects under
development have an average grade of 0.39%.
significant increase in capital intensity required to just
maintain current production levels in many of these
older mines
major copper producing areas face water scarcity and
increasing depth and complexity of development
options
the extensive time it takes for a new mine to go from
discovery to production (est. avg. 16 years)
increased sovereign risk,
the increased risks associated with exploring and
developing new mines further afield in jurisdictions
with increased political risks and a lack of existing
infrastructure.
KGL Resources Limited
The last decade delivered the lowest discovery rate for 30
years. With copper demand expected to outpace refined
copper production, the industry is not making enough new,
high-quality discoveries to support the long-term pipeline.
Equity Raising 202221 November 2023 AGM presentation
10
..with structural deficits forecast beyond 2025
•
Supply expected to peak in 2025/2026 (peak shifting out
due to project delays) before declining due to decreasing
ore grades, protracted permitting timelines and
underinvestment.
•
According to BHP’s chief economist, Dr Huw McKay,
under a plausible upside case for demand, the cumulative
industry wide capex bill out to 2030 could reach one–
quarter of a trillion dollars. Updated analysis, including
both volume assumptions and cost estimates, indicates
that this could well be an under–estimate. **
•
Mine production grew 7 Mt in the last 20 years, mine
supply needs to double that in less than 17 years***
•
Increasing costs will likely push price floor higher – current
prices not moving projects forward
•
A recent study by Goldman Sachs of 50 projects that will
account for most new supply over the next five years found
that the price needed to bring new projects online had
risen by 30% in the past four years because of higher
costs and required returns and delays. They state that the
average incentive price – the amount required to generate
a 15% return – now stands at US$9,000/t ($4.08/lb).
•
But the price needed to bring on enough copper to meet
future demand is projected at US$13,000/t ($5.90/lb).*
•
Industry analysts believe a period of higher prices is
required to incentivize construction of new projects and
that the current bout of softer prices (US$8,000/t or
$3.63/lb) will exacerbate shortages later on.
Long-term supply gap remains unsolved, with
widening mid-term deficits...
…driven by rising green-related copper demand
* Goldman Sachs – Copper: How low can we go? (11 July 2022)
** BHP August Commodity Update (22 August 2023)
*** Teck September 2023 Presentation
KGL Resources Limited
Equity Raising 202221 November 2023 AGM presentation
11
Copper is critical to the clean energy transition
•
Governments are increasingly recognising that dependence on
foreign sources of critical materials creates a strategic vulnerability
for their economy and military in the face of adverse foreign
government actions, natural disasters, and other events that could
disrupt supplies.
•
With chronic shortfalls in copper forecast over the next decade and
challenges in supply from the traditional low-cost markets of Chile
and Peru, Australia has the opportunity to grow its critical minerals
wealth and become an important player in developing secure,
reliable and sustainable global supply chains for copper that are
internationally competitive.
•
Many states in Australia including the NT have recognised Copper
as a critical mineral. The Australian federal government is now
reviewing the Critical Minerals list and in response KGL lodged a
submission on why copper should be included in this list.
•
Mr Wood commented that, “KGL’s Jervois Copper Project is well
positioned with all necessary approvals and permits, to be one of the
few projects that can be in production, subject to final investment
decision, as the market is faced with a chronic shortfall in supply.
•
Given the robust outlook for the copper market, we believe that the
Jervois copper hub, a high-quality project in a Tier One jurisdiction,
will play an important role in supporting jobs and new skills, local
business opportunities and economic development activity in
Northern Australia and provide a secure, reliable and sustainable
supply of critical minerals to our strategic partners to meet their
economic and national security and clean energy needs at a time
when chronic shortages in this critical mineral could disrupt global
supply chains.”
KGL Resources Limited
21 November 2023 AGM presentation
12
Copper Market: Recent Commentary
The Green Energy Transition Has a Chilean Copper Problem. Bloomberg May 16, 2023
Ore quality is deteriorating around the world as existing deposits are depleted and new ones are more dif
Share your feedback
Discover