Yesterday was the first day of RBCCM’s Global Mining and Materials Conference. There were 23 different companies presenting, as well as a luncheon keynote speaker from Arcelor Mittal. RBCCM says “the overall tone of the presenting companies was positive, with cautious optimism in the short term clearly moving to a bullish long-term view. Given the recent rally in commodity prices and the equity markets, many presenting companies were cautiously optimistic in the short term. China has had a significant positive impact on global demand thus far in 2009.

Despite current uncertainty in the fertiliser markets, companies involved there remain optimistic given long-term agricultural fundamentals. In the long term, the secular bullish outlook appeared to remain intact.

Day 2 of the conference will include a total of 15 companies presenting, broadly classified into three main categories as follows:

• Steel: Gerdau Ameristeel and Russel Metals.
• Services & Suppliers: Major Drilling Group International and Toromont Industries.
• Global Mining: Teck Resources, Northern Iron, Mercator Minerals, SeverStal Resources, Aquila Resources, Sherritt International, Consolidated Thompson, Labrador Iron Ore, First Quantum Minerals, Rio Tinto, Cameco, and Freeport-McMoRan Copper & Gold.

The day will also include an “in conversation with” session with Labrador Iron Ore Royalty Income Fund, as well as a presentation by Mark Standish, President & Co-CEO of RBC Capital Markets as a luncheon keynote speaker.

Company Presentation Highlights form Day 1 of the conference (in order of appearance):

PotashCorp (NYSE: POT; TSX: POT) – Bill Doyle, President & CEO

• Current potash contract negotiations between the potash producers and India and China are ongoing and will depend largely upon current spot market pricing, underlying supply and demand fundamentals and farmer economics
• Canpotex will determine during its fall board meeting whether China should remain on contract pricing given the length in contract negotiations in recent years and the speculation it causes in the market place
• PotashCorp continues to believe that worldwide fertiliser demand will pick up in the second half of 2009 with strong demand following in 2010
• The company believes potash demand from Brazil will come back in July followed by demand from North America and Southeast Asia
• While PotashCorp expects potash prices to remain at current levels for the short term (i.e., during the second half of the year), supply challenges over the next five years could put upward pressure on pricing
• According to PotashCorp, the US Department of Agriculture forecast for US corn yields of 155 bushels/acre for the 2009/10 crop year is too high and will likely come down in the future
• PotashCorp believes that its greenfield opportunity in Bredenbury, Saskatchewan, could be the world’s next greenfield mine
• PotashCorp indicated that its Bredenbury greenfield mine is fully permitted but would require seven years to build and is unjustifiable at current economics
• For an internal rate of return of 15%, PotashCorp believes a potash price of $950/t FOB mine (compared to $534/t realised in Q1/09 by PotashCorp) would be required by a new entrant proposing to build a potash mine in Saskatchewan.

MagIndustries Corp. (TSX-V: MAA) – Jeff Swinoga, Senior Vice President & CFO

• MagIndustries is planning to develop a 600,000 t potash mine in the Republic of Congo with an expected in-service date of 2012
• MagIndustries increased its cost estimate for the potash project by $100 million to $1.2 billion
• The company would prefer to raise the final equity portion of financing (approximately $134 million) through a strategic partnership, which is targeted for this fall
• MagIndustries is in discussions with lenders to raise approximately $800 million in debt
• In addition to its planned potash project, MagIndustries operates a eucalyptus plantation and wood chip mill in the Republic of Congo, is a key participant in the refurbishment and rehabilitation of a hydroelectric station in the Democratic Republic of Congo, and is pursuing a magnesium smelter next to the proposed potash mine
• MagIndustries intends to increase potash production capacity by an additional 600,000 t at a later date.

Methanex (NASDAQ: MEOH; TSX: MX) – Ian Cameron, SVP, Finance & CFO

• Methanex intends to increase methanol production from 4 Mt currently to 8 Mt in the next three to five years
• The additional production from Egypt and Chile should provide significant growth in EBITDA even if methanol prices remain flat (i.e., methanol prices remain at approximately $200/t)
• The company is pleased with its Egyptian methanol project as it remains on budget and on time to begin production in the first half of 2010

• Methanex reiterated that high energy costs would provide support for methanol prices and that the energy price of methanol is approximately $300/t when oil is $80/barrel

• Methanex is in a strong financial position and continues to look to global industrial demand, oil prices and the Chinese cost structure as indicators for a rebound in methanol prices

• Migao Corporation (TSX: TRA) – Randall Smallbone, CFO

• Migao is a high-value processor of potash fertiliser in China that predominantly buys potash from Russia and sells it as potassium nitrate or potassium sulphate for specialty crops including fruits, vegetables and tobacco The company has operating capacity of 320,000 t and plans to increase capacity to 460,000 t within 15 months
• Migao focuses on earning a gross margin of 22%-24% irrespective of the price of potash
• Farmers that purchase Migao’s products are insensitive to pricing as they are contracted by tobacco companies and have offtake agreements to cover costs
• Migao expects Chinese potash prices to remain at current levels in the coming year (i.e., $550-$600/t)

Arcelor Mittal – Lou Schorsch, President/CEO Flat Carbon Americas

• Arcelor Mittal expects Q2/09 to be the bottom of steel market for the company as it is more bullish on improvements in the banking and financial sectors, having been able to raise $11.4 billion in global equity and debt markets recently
• Q1/09 apparent steel demand fell -49% YoY in the US and -43% in the EU, but grew +7% in China with restocking of inventory
• The company is bullish on steel market recovery prospects in the developing world, such as China with its upcoming stimulus plan infrastructure spending and Brazil expected to be running effectively at 100% capacity in Q3, whereas it does not see clear evidence of recovery in the developed world as of yet
• Its multi-unit industrial network allowed for reducing fixed costs in line with cutting production to 50% of capacity in response to the steel slowdown; it has also achieved $2 billion in sustainable cuts in SG&A
• Current focus is on balance sheet strengthening, but company has a long term view that vertical integration is important to differentiation, especially in iron ore and coal businesses
• Arcelor Mittal stands to benefit from a recovery due to its diversification in geography and businesses.

Quadra Mining Ltd (TSX: QUA) – Paul Blythe, President and CEO

• Plans to grow by niche M&A opportunities to build a pipeline of sustainable projects in politically stable jurisdictions
• Company currently has three producing assets: the Robinson (~130 Mlb/y copper) and Carlota (~70 Mlb/y copper) mines in the US and the Franke (~70 Mlb/y copper) mine in Chile, with 2010E combined copper production of ~300 Mlb/y copper and a long-term goal of 500 Mlb/y
• In 2010, management plans to increase throughput at Carlota via a leach pad expansion
• Management is expecting production from Franke in Q3/09, reaching steady state in Q4/09 with a projected mine life of ~nine years, but plenty of upside exploration potential remains
• Relative to Carlota, the ore from Franke is requiring more sulphuric acid for treatment, but risk has been mitigated through a supply agreement with Codelco
• The company has all permits in place for its second major development project, the Malmbjerg molybdenum project in Greenland, but is looking for a sustainable moly price of $15/lb to secure at least a 12% rate of return

FNX Mining Company Inc. (TSX: FNX) – Terry MacGibbon, Chairman and CEO

• Company maintains a strategy of being a mid-tier producer, focused on its greatest strengths: exploration, development and mining of its high grade copper and precious metals deposits in the Sudbury region
• Company does not spend a lot of money to build up a huge reserve and is content to find resources without doing additional drilling
• Major projects are McCreedy West, Podolski and Levack Footwall
• FNX is currently stockpiling ore in the event there are further delays as Vale expects to renegotiate its contract with its largest labour union, which may result in a strike
• Mining at its McCreedy West nickel and Levack nickel contacts is suspended until nickel prices reach sustainable levels of over $6.50/lb.
• Company estimates it would take approximately one quarter to retrain staff and achieve previous production rates once production restarts.

Centennial Coal Company Ltd (ASX: CEY) – Robert Cameron, CEO

• Largest independent Australian coal producer with growing exports to markets in the Asia-Pacific region and Europe
• Company expects an additional 300,000 t/y at its Clarence mine from the implementation of a flexible conveyor train by March 2010
• All coal is thermal coal; 95% is underground and 5% is surface
• The Mandalong mine is currently constrained to supplying domestic costumers due to a lack of export infrastructure
• This export infrastructure is currently being built and will add 2.0 Mt of export sales in addition to the 3.5 Mt of domestic sales already forecast
• Most of Centennial’s export coal is supplied under long-term forecast
• Global financial crisis affected coking coal, but thermal coal has not been significantly affected
• China importing more coal – more in April than Feb/March combined
• What impact would privatisation of power company have in New South Wales? These contracts were inherited. There is export infrastructure in the area, so company sees a repricing of domestic contracts to match export prices.

Cliffs Natural Resources Inc. (NYSE: CLF) – Steve Baisden, Director, Investor Relations & Corporate Communications

• Four strategic imperatives are Diversification, Operational Excellence, Global Execution, and Shareholder Returns
• Demonstrated geographic diversification through presence in North America, Asia-Pacific, and Latin America; product diversification
• Product diversification with production of iron ore and coking coal, and further interest in manganese, ferrochrome, molybdenum that its larger peers may not be interested in
• Owns iron ore mines in Michigan, Minnesota, Labrador, and Australia; coking coal mines in West Virginia and Alabama
• Company sees room for consolidation in Met Coal companies – although its recent attempt to acquire Alpha Natural Resources was not successful (Alpha merged with Foundation Coal), Cliffs still sees consolidation opportunities.

HudBay (TSX: HBM) – Peter Jones, CEO

• Mid-tier zinc and copper miner with 80-year operating history
• Flagship mine is the 777 mine with a mine life to 2019; producing zinc, copper, gold and silver
• Trout lake has been in production for 25 years and is reaching the end of its mine life (mine life to 2011)
• Company is constantly reviewing the potential reopening of the Chisel mine if zinc prices increase to sustainable levels and re-opening can be done quickly
• Key asset for growth is the Lalor deposit, which is a 100% owned sulphide deposit located in Snow Lake, Manitoba.
• Lalor is 15 km from a concentrator and 3 km from road access, giving it very good access to infrastructure
• Construction is currently suspended at Fenix, where focus still remains on community relations.

Lundin Mining (TSX: LUN) – Philip Wright, CEO

• Lundin remains focused on three core assets: Tenke, Neves Corvo, and Zinkgruven
• Tenke is currently exceeding production expectations
• Longer-term, Tenke has the potential to produce in excess of 450,000 – 500,000 t/y of copper, with potential upside from this estimate over the next 10 years
• The company believes that zinc has been hardest hit in the recent downturn, and that over the medium to long term there could be significant upside to zinc given the gap between expected demand and actual zinc reserves

Western Areas NL (ASX: WSA; TSX: WSA) – Craig Oliver, CFO

• Company believes it is on track to be Australia’s second-largest nickel producer by 2011 after BHP by reaching 35,000 t/y Ni production
• $6/lb nickel was the key price at which the company would restart exploration activities
• The company believes it may have stumbled on a high grade nickel discovery in the Central Yilgarn Nickel Province (region is approximately 500 km long).
• Up to this year, company has agreement to sell 10,000 t/y Ni in concentrate to BHP; beyond 2010, company is looking to sell concentrates in excess above 10,000 t/y Ni to other smelters, including smelters in Sudbury and China.

African Rainbow Minerals Ltd (JSE: ARI) – Lincoln Shiels, Executive Director New Business Development

• African Rainbow is a South African, BEE compliant company focused on base metals, platinum and gold with plans on track to double production by 2010, and is actively looking at acquisitions in PGMs
• Company has three development projects: the Khumani project in the ramp-up phase (iron-ore) – making 6 Mt/y and expecting to go to 10 Mt/y and in the 40th percentile of the cost curve; the Nkomati nickel mine, also in the 40th percentile for cash costs; and the Goedgevonden coal mine at 6.7 Mtpa with a 33-year life and in the 25th percentile for costs
• Company notes the ZAR exchange rate is very volatile and believes that it will be profitable with an FX of Rand 8/$ and $1,100/oz price platinum
• Manganese production capacity currently sits at 60%, and ARM believes that long-term potential manganese is intact, but we have recently seen a temporary weakness in manganese prices
• Thoughts on platinum opportunities – ARM believes there will be a number of opportunities (in the junior explorer stage – about 25 companies), as the companies moving on to production now will face some troubling times.

Thompson Creek Metals Company (TSX: TCM) – Kevin Loughrey, Chairman and CEO

• Despite being in a good part of the Thompson Creek orebody, the company had to reduce production given the recent fall in molybdenum prices
• This year sales into China have represented 20% of TCM’s overall sales, versus zero previously
• The company believes that steel companies have ended their de-stocking and that buying now reflects real incremental demand for molybdenum
• TCM is seeing a “gentle improvement” in demand in Western Europe and North America.

Talvivaara Mining Co (LSE: TALV) – Saila Miettinen-Lähde, CFO

• Talvivaara is an up-and-coming base metal company with deposits in Finland
• Only five years old, the company achieved commercial production in February 2009 and is currently ramping up production to 30,000 t/y nickel, 54,000 t/y zinc and 10,000 t copper in 2010
• Its main deposit is low grade, open and very large with estimated mine life of over 60 years
• Company is currently examining manganese recovery technology that it hopes to commercialise over the next couple of years
• Company recently initiated a bio-heap leaching project using native bacteria. The project is working as expected and the critical key to success is temperature control as the process is net exothermic giving off heat. This is a natural process and has very little to patent, but there is a lot of know-how that can be applied at other ore bodies. Management noted their ore body is somewhat unique in that it has a low PH, which makes for a low acid requirement
• Company expects the markets to remain challenging in the near term but remains confident that its cost profile is competitive to ensure profitable operation at Talvivaara as production ramps up toward nameplate capacity later in 2009 and into 2010
• Company has nickel and zinc metal hedges that mature in 2011
• Key risks are volatility of base metals prices, currency exchange rates and poor visibility in markets
• Company does not expect the market environment to improve quickly.

Xstrata (LSE: XTA) – Ian Pierce, Chief Executive Xstrata Nickel

• Reiterated Xstrata’s unique decentralised business mode, which supports quick responses and entrepreneurship
• XTA’s nickel business expects its 2008 cash cost of ~$5.00/lb to decline to ~$2.00/lb in 2010
• Pig-iron producers are integrated with cash costs of as low as $5.00/lb, and are expected to produce 35,000 – 60,000 t of nickel this year
• Longer-term, the production of pig iron does seem sustainable at current prices, thereby acting as a ceiling on prices, but issues regarding the environment and energy consumption make pig iron less reliable.

SNC-Lavalin Group Inc. (TSX: SNC) – Feroz Ashraf, Head of Mining and Metallurgy Division

• SNC is one of the world’s largest engineering & construction firms. Its global workforce has contracted modestly from 22,500 in October 2008 to 21,500 today.
• Focus on growing in India, Middle East, South America and South Asia. Recent acquisitions in Brazil (world-class expertise in mining), Chile (expertise in tailing ponds), and Romania (strong engineering background and a focus on infrastructure)
• Ten years ago, most of SNC’s mining and metallurgy projects were concentrated in the northern hemisphere; today, they are concentrated in the southern hemisphere.
• Leading expert in mining and metallurgy. Focus on four sectors: light metals and minerals, base metals, precious metals and iron ore. Potash and phosphate remain strong sectors (projects in Canada and South America); iron ore projects in Brazil and Malaysia, Mauritania; aluminum is currently weak, but SNC sees lots of opportunity in the Middle East
• One of largest ongoing projects is the Ambatovy nickel mine in Madagascar. Engineering is 95% completed and operations are scheduled to begin in Q1 or Q2/2011.

General Moly, Inc. (AMEX: GMO; TSX: GMO) – Bruce Hansen, CEO

• Positioned to be a global leader in pure-play molybdenum production with strong support from the steel industry for world-class Mt. Hope and Liberty projects, some of the only projects set to come online in the near future
• Strong financial position with $80 million in cash, no debt, and a G&A burn rate of $1million per month, with the aim to secure project or multilateral financing for Mt. Hope by mid-2010 to meet target of 2012 production start
• Current off-take agreements are sufficient and provide significant moly price downside protection, while allowing for upside gains in response to upcoming recovery in the steel market, low inventories, energy reinvestment, and decreased reliance on moly as a by-product of copper mines
• Company believes it is undervalued compared to POSCO and Arcelor investment valuations, EV ratios relative to peers, as well as expectations for future moly price.

Equinox Minerals Ltd. (TSX: EQN) – Kevin van Niekerk, VP IR and Corporate Development

• Lumwana is easily the largest copper project to come on stream in the past two years, and is the largest investment in Zambian history
• Equinox has a solid relationship with the Zambian government and its key value to this “one product country” is employment: building 1,000 homes in the first new town since independence, and creating six or seven support jobs for each person brought in
• Trolley assist trucks are in use to take advantage of 15-year offtake agreement with ZESCO, the Zambian electricity utility that provides cheap electricity, especially relative to rising oil prices
• 2009 debt servicing and repayment costs are now reduced from $225 million to $138 million as a result of debt re-sheduling
• Plans to begin activity at Malundwe and proceed with stage one expansion, bringing total capacity to 24 Mt/y from the current 20 Mt/y, as well as stage two expansion to bring capacity at Chimiwungo deposit to 35Mt/y and prevent a decline in output after Malundwe’s five-year mine life expires.

Straits Resources Limited (ASX: SRL) – Milan Jerkovic, CEO

• Two dividends $0.30 and $0.20 special dividends – one this H2 and $0.20 when it receives $115 million (performance payment) from the sale of coal assets
• Looking at copper gold acquisition, preferably 50,000 t/y
• Spending $20 million on exploration especially focused on copper
• Hillgrove antimony mine – to operate at 600,000-800,000 t/month by August 2009 as commissioning problems are rectified
• Exploration of Goldminco assets – look for news flow over next 12 months
• Drilling Sakoa deposit in Madagascar for feasibility

Ivanhoe Mines Ltd (TSX: IVN; NYSE: IVN) – Robert Friedland, Executive Chairman

• Ivanhoe mines and its strategic partner, Rio Tinto, negotiated an updated draft investment agreement for the Oyu Tolgoi project with a Mongolian Government Working Group in February this year. Management believes that Oyu Tolgoi is the largest metalliferrous discovery in the world. Pending ratification by the Mongolian government, the new agreement will give Rio Tinto and Ivanhoe a 70-year mining license with the Mongolian government on the project

• Two weeks ago, Mongolia elected a new president, Ts Elbegdorj, who was the Prime Minister of the country in 1997. During that time, he passed very progressive mining legislation and company management expects his election to help propel the new Oyu Tolgoi agreement forward

• In December 2008, Ivanhoe found more gold mineralisation that it believes is a candidate to be the largest gold mine in the world, larger than Grasberg. The deposit has not yet been named.
• Ovoot Tolgoi is a large producing coal asset 40 km north of Chinese border with a 125 km strike length and 225 m coal seams. It consists of primarily semi-soft/high vol PCI coal with increased met coal to depth. The company is currently selling material in situ to China at $29/t versus mining costs of $6/t. Infrastructure is currently being built in the area by Germany, Russia, and China.
• Management noted that approximately 400 trucks are hauling Tavan Tolgoi coal for steel mills from Mongolia to China per day.
• Cloncurry, in the northern part of Australia, is the most highly mineralised region in northern Australia. Management believes the Merlin project, located here, is the richest moly discovery in the world. It contains 6 Moz of rhenium and 240 Mlb of moly with grades 20 times higher than any current moly mine in the world.