Home' Australian Resources and Investment : July 2012 Contents 46•AustralianResourcesandInvestment•VOLUME 6 NUMBER 3
CEO and Executive Director
South American Ferro Metals Limited
I'd like to thank the Sydney Mining Club for allowing South
American Ferro Metals to speak. I'd also like to thank Veritas,
who have provided valuable corporate advice since we listed
on the stock exchange in November 2010, and who have
sponsored us today -- to both groups, many, many thanks.
South American Ferro Metals, or SAFM, is unique in many ways. We are
currently the only ASX-listed company that is producing iron ore in Brazil.
With Australia being the biggest producer of iron ore and Brazil being the
second one, it's strange that there aren't more of us over there producing iron ore.
background, I'm a Canadian by accent. I left Canada in 1992. I worked in Canada,
worked in the Arctic and across the country in different roles -- junior roles and
development roles. I've been in Papua New Guinea, Queensland, Western Australia,
South Africa, and now I'm working in Brazil. As my wife likes to put it, this is
my fth continent. So I've had a little bit of travelling time. My background is
predominantly in operations, projects and corporate. I've worked in gold, nickel and
obviously iron ore, with a number of the majors. Most recently I had an eight-year
stint with BHP Billiton. My last role with them was Mine Manager, running the
50-million-tonne per annum Yandi Iron Ore Operation.
Today, I'll just give you a bit of a breakdown on Brazil, why we're in Brazil and
why we've enjoyed a very successful year. Then I'll talk about the company in two
halves: what we're doing right now with our agship asset -- the Ponto Verde mine
site, which is in production and is cash ow-positive -- and then I'll talk about our
growth plans. The two t side-by-side. They tell you what we're doing in the short
term and where we are going to go in the next two to three years.
Just a quick overview -- basically there are a couple of key drivers I would like to
point out. I mentioned earlier that we are the only pure iron ore producer listed in
Australia. We are located in the Iron Ore Quadrilateral. So we're right in the heart
of the iron ore territory in Brazil, and we nd that very helpful for logistics. We have
put out a maiden JORC resource of 230 million tonnes at 44.5 per cent iron. That
is really drilling to about 70 metres and about 60 per cent to 65 per cent of the ore
body to that depth. The ore body actually extends down to about 320 metres. So
we're in phase two of drilling, and over the next couple of years, we'll expand that
out to what will ultimately be around 400 to 450 million tonnes. It's an ore body of
world-class standard. In a second I'll talk about our neighbours Vale, who have the
other two-third of the deposit.
We are in a De nitive Feasibility Study (DFS) right now to expand our
operations initially to eight million tonnes per annum and then right afterward
to the ultimate 16 million tonnes per annum level. Our current licence is 1.5
million tonnes throughput. We plan to expand to eight million tonnes and then,
immediately after that we'll go to our ultimate target production level of 16 million
tonnes. I will outline what that means for us. Prior to this expansion we have a
couple of phases that will grow our cash ow, our strength and our treasury. I will
speak about this in a moment.
I'll talk to you a little bit about Brazil, and again to those who are very intimate
with Brazil, just bear with me for ve minutes. We've chosen Brazil to operate in
because it works very well for us. We think it's the perfect blend of cultures and
societies. People are well aware that Brazil is a BRIC economy along with India,
China and Russia in terms of the emerging economies. The growth rate was terri c
in 2010 at 7.5 per cent. This current year is running at approximately 3.6 per cent.
The European meltdown has slowed this rate somewhat, but it's still a very healthy
growth rate overall.
There are a couple of things that are fascinating about Brazil: they've got a very
strong economic position. If you think about what's going on in Greece, Portugal,
Spain and around Europe, the IMF owes Brazil $14 billion. So that has a lot of
rami cations, but Brazil has got a very successful nancial policy. They've been
destabilised over the last 50 years and have gone through four different currencies;
however, it has stabilised. Brazil is very different to what it was 30 years ago. They
have grown well and are in a position to continue to do so.
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