Mining and metals companies generally cautiously optimistic at Toronto event

A brief synopsis of all the company presentations at this week's Global Mining and Materials Conference in Toronto.

LONDON - 

The two day RBC CM Global Mining and Materials Conference took place in Toronto this week. There was an impressive turnout of speakers with a large number of different companies presenting, as well as a luncheon keynote speaker from Arcelor Mittal on the first day. RBCCM says "the overall tone of the presenting companies on the first day 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.  China has also 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 ONE

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

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-scheduling

• 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.

DAY TWO

Including panel discussions, 16 different companies presented on the second day of the event, highlights of which follow. The morning session consisted of two tracks, one focusing on industrial/equipment/services companies and the other on base and bulk commodity producers. The afternoon session focused exclusively on base metal producers. Similar to Day 1 of the conference, the overall tone of the presenting companies was positive, with cautious optimism in the short term and a clearly bullish long-term view. Companies once again pointed to China as a key source of global demand thus far in 2009.

Teck Resources (TSX: TCK.B; NYSE: TCK) - Don Lindsay, President & CEO

• Management had a bullish view on metallurgical coal prospects as existing sources of are declining. Management also believes that Chinese currency will strengthen on a sustained basis, so Canadian metallurgical coal will become cheaper
• There are four major steel plants under construction in China that are equivalent to the entire US steel industry. These plants need high quality coking coal and cannot use lower grades - each plant will need ~18 Mt
• Furthermore, China is shutting down old, marginal, inland steel plants and transferring that production to new plants under construction on the coast. This will require a large amount of coking coal
• Management noted that steel production appears to be stabilising. Teck recently has started to see a small upturn in US zinc demand. During the downturn, Teck saw that the destocking phase was very extreme for zinc and is finally seeing this reverse, but it is not sure if this is a lasting development
• Teck wants to get back to an investment grade credit rating and its designated way to achieving this is to pay down the acquisition debt as soon as possible
• Teck is in a phase over the next two years where it will have very low sustaining capital, which will allow it to use cash flow to pay off bank debt and get back to investment grade status.
• Company is holding off on finding a partner in the coal business and plans to wait six to 12 months for the steel industry to improve further before bringing in a partner. It claims there is significant interest now from potential partners. Coal partnership could be with a key customer, another global coal producer to combine coal assets (possibly Australian assets), or a financial partner.

Northern Iron Limited (ASX: NFE) - Mick McMullen, Managing Director

• All approvals are in place for the imminent (H2/09) restart of the Sydvaranger iron ore mine, located in the northern part of Norway. This mine was operated by the government from 1910 until its closure in 1997.
• Resource base is just under 500 Mt with a 13-year mine life. Resource is open at depth and along strike, but company is not planning to do drilling this year. A good resource upside exists with 200 Mt reserves expected within the next 12 months. Operating costs stand at $42/t
• A key benefit of the project is that it is low cost as a result of all infrastructure already being in place at time that project was acquired, with minimum refurbishment required
• Mine is located 8 km from the concentrator and the port. Company has a cost plus 15% agreement with the port owner
• First two satellite deposits that have started to be mined are small deposits, but they have high grade and give the company time to undergo stripping on the main large deposit
• Company is subject to a very simple mining code in Norway - no royalties. Furthermore, the company is allowed to explore beyond its land claim as long as it can prove it is the same ore body
• Management would need to spend $140M over two years to double production
• Key for project is it is one of the only magnetite producers coming on stream in the next few years and management believes ther product is of high quality (low deleterious elements).

Gerdau Ameristeel (TSX: GNA) - Mauricio Werneck, Treasurer

• GNA is a leading mini-mill producer and second-largest recycler in North America
• Produce long steel products, which is expected to benefit from infrastructure spending, with limited exposure to flat steel where historical spread is more volatile than long steel spread
• Vertically integrated: 1) scrap/recycling operations with 40% captive supply through parent Gerdau SA (66% ownership of GNA); 2) 19 mini-mills with flexible capacity - operating below 50% capacity; 3) downstream operations in 60 locations covering most of the US
• Long product spreads have fallen less than flat rolled spreads as flat steel is exposed to imports and is a less consolidated industry. GNA believes long steel will generate sustainable returns to its business over the long term.
• GNA has not seen stimulus impact yet and cannot forecast timing of stimulus or its impact on steel pricing, which is more dependent on demand, needing to see credit market improvement; however, the company is confident it stands to benefit from stimulus due to its long steel exposure.

Russel Metals (TSX: RUS; NASDAQ: RUSM) - Brian Hedges, CEO; Marion Britton, CFO

• Three sectors: 1) Metals service centers - traditional selling to manufacturing base; 2) Energy Tubular - sells line pipe to energy industry; and 3) Steel distributors - sells to other service centers and large OEMs
• RUS has no automotive exposure, which differentiates it from other service centers
• RUS Canadian service center demand in tonnes down 37% YTD 2009, similarly in US operations (U.S. MSCI service centre shipments for April/09 down a surprising 47% YoY).
• RUS reacted by cutting labour expenses by 35% from peak, reducing purchase orders, and renegotiated and upsized bank facility with restructuring of fixed charge covenant
• Energy Tubular division - company seeing a slight pickup this month; however, given falling OCTG prices RUS will likely take an inventory write-down in Q3/Q4 2009
• For profitability to be restored: 1) steel demand levels need to improve; 2) steel prices need to stabilize as plate and OCTG prices are still under pressure; 3) gas price increases; 4) existing OCTG inventory overhang reduction; and 5) further liquidity in the financial system.

Major Drilling (TSX: MDI) - Francis McGuire, President & CEO; Denis Larocque, CFO

• Emergence of "Specialised" Drilling with the depletion of most of the accessible mineral reserves around/in the world. MDI's business premise is that new deposits over next 20 years will be in areas difficult to access, and specialised drilling will be larger part of market
• Company's strategy is to dominate specialised drilling, expand effective capacity, modernise conventional fleet and expand footprint in strategic areas
• Crisis occurred in Oct/08 with junior companies' pull-back, which was expected, but senior gold and base metal companies also pulled back even more dramatically, which was less expected
• Q4/F09 revenues down 60% YoY, prices down 20% YoY and utilization down to 30% from 70%
• Expectations for 2009: 1) senior gold companies should slowly increase activities; 2) many base metal companies with debt could focus on debt reduction before return to drilling; 3) junior mining companies will not have significant access to capital until further in the future
• Outlook: If clients carry through with intentions, company should see gradual month-by-month improvement in H2 and 2010 as existing mines continue to be depleted and supply issues come back into focus in 2010/2011.

TOROMONT (TSX: TIH) - Paul Jewer, CFO; Scott Medhurst, President, ToromontCAT

• Total revenue in mining since 2001 has grown ~400% over eight years - contributed by increased mining opportunity and additional focus on underground segment
• During economic downturn - still 60 operating mines, 60+ projects in various stages of development in Ontario, Manitoba, Nunavut, Newfoundland and Labrador
• TIH has a broad product range even outside mining; TIH will and has introduced non-CAT products to fill product gaps if aligned with customer base
• Mining accounted for 15% of the Equipment Group revenues in 2008 and 25% of Customer Support Agreements (CSA) revenues
• Mining takeaways: 1) mining is important revenue driver; 2) strong market share amongst mining companies; 3) mining drives larger equipment = greater product support; and 4) gold represents 40% of TIH's mining opportunity
• TIH continues to diversify revenue base with mining, which may stabilise, but company would expect infrastructure to be a larger slice of business given significant infrastructure spending, which bodes well for TIH's customer base.

Mercator Minerals (TSX: ML) - Mike Surratt, President & CEO

• Mercator is a one-mine producer of copper, molybdenum and silver at its Mineral Park mine in northwest Arizona with 1,200 Mlb of copper and 336 Mlb of molybdenum. Mine has a 25-year mine life with organic growth potential
• April 2009 was the first full month of production during which operation reached 27,000 t/d, above its nameplate of 25,000 t/d. Recoveries and concentrate grades have been above management's expectations
• Company plans to increase production incrementally as equipment arrives, first to 35,000 t/d and then to 50,000 t/d
• Company plans to continue to expand resources and is looking to continue drilling in designated targets next year
• Mining by previous operator means the strip ratio is 0.18. In the last three months the company has not had to strip anything, driving mining cost lower
• Unique layout of mine with the mill in the middle of the ore body means a full 50,000 t/d production will need only 14 trucks (longest haul is some 800 m)
• One disadvantage is electricity cost, which is a large component of its mining costs. Mercator must pay a tariff on electricity and is unable to negotiate a rate better than $0.095/kWh. The company has installed monitoring equipment and is looking at alternative sources of power. This process is expected to take six to 12 months
• Ore is very fragile, which means that only 20% of material is crushed; the rest goes through a screen, which helps keep costs down
• Mercator is not an exploration company. It would like to grow through M&A for a similarly sized company.

Severstal Resources (RTS: CHMF) - Boris Granovsky, Director for Strategy & Corporate Development

• Russian-owned steel producer is self-sufficient in coking coal, selling excess 20% of production to external parties. Has 80%, 15% and 8% of Russian metallurgical coal, iron ore and coking coal markets, respectively
• Has expanded into Europe and North America through acquisitions, and is looking to double or triple coking coal and iron ore production within five years through acquisitions in the developing world, including diversification into other minerals, and sees gold as part of its portfolio only in the near term
• Currently negotiating new 50% grade, 20 Mt/y iron ore project with Liberian government while working on pre-feasibility study. Considers Liberia to be more stable than most assume
• Has restructured the business to match the commodity cycle (i.e., personnel reductions, suspension of excess blast furnace capacity). Sees opportunity to increase efficiencies in Post-Soviet operations. Expects full capacity optimization in Russian iron ore production this month.

Sherritt International Corp. (TSX: S) - Paula Myson, Directory of Investor Relations/Greg Fuhr, Senior Vice President, Coal Division

• Canada's largest thermal coal producer with steady cash flows and long-term, indexed contracts to Western power utilities
• Large presence in Cuba with the Moa 50/50 nickel and cobalt; oil & gas exploration, drilling and production of 23,000 bopd; and 376 MW of electricity production (15-20% of country's total consumption)
• The Ambatovy JV in Madagascar is a world-class nickel project with an expected 27-year mine life. Construction progress is half way, with the project expected to be mechanically completed by late 2010
• Conservative financial position by staggering debt maturities, beginning in late 2012. Keen focus on preserving the corporate balance sheet, and has instructed each division that capital expenditures can only be funded through each division's own free cash flows.

Consolidated Thompson Iron Mines Ltd. (TSX: CLM) - Richard Quesnel, President & CEO

• A debt-free iron ore development and exploration company that owns the flagship Bloom Lake project as well as the Lamelle and Peppler Lake deposits in Labrador Trough, Quebec
• Key points are the strong assets with low costs, advanced funding, and established sales agreements for projects in a suitably located camp that currently produces 5% of world consumption and offers existing infrastructure
• Views drivers of growth in the next five years to be acquisitions, exploration upside and its development projects
• Flagship Bloom Lake project is a world-class deposit with a resource measuring ~910 Mt @ 29.41 Fe (M+I+I). The project promises a low stripping ratio, high recoveries, low costs, excellent margins, and a 30+ year mine life
• Chinese government approval for $240 million WISCO investment expected by mid-July.

Labrador Iron Ore Royalty Income Fund (TSX: LIF.UN) - Bruce Bone, Chairman & CEO

• Offers investors a unique position to gain exposure to the iron ore market through a 15% equity interest in the Iron Ore Co of Canada (IOC) and a 7% overriding royalty on all IOC iron ore sales volumes
• IOC is one of the largest and lowest cost iron ore pellet producers in North America. In addition, it owns its own rail line
• IOC has the capacity to mine 40 Mt/y of ore, with 18.5 Mt/y of concentrate and 14.2 Mt/y of pellets, with the flexibility to vary concentrate/pellet production mix
• Long-term electricity contract, which provides significant cost savings, will be up for another 30-year renewal in 2014, but favourable terms compared to competitors are expected
• Considers the market to still be soft with most of the European and American producers running down inventories. However, starting to see some pickup in demand from both Europe and North America at ~50% of capacity
• Sales in the past have been 30-40% each to North America and Europe, with the balance (~25%) to Asia (and a small portion to the Middle East). Company seeing a shift to 50% of sales into Asia this year.

First Quantum (TSX: FM; LSE: FQM) - Clive Newall, President

• Three growth vehicles: 1) Kolwezi; 2) Lonshi underground; and 3) Kevista
• Lonshi underground was difficult to drill, but the evaluation is expected to be completed soon
• Kevitsa - decision likely to be made in the next two to three months on whether to proceed with project
• Cash cost guidance of $0.80/lb for 2009 does not appear attainable given that the company is shipping concentrates to smelters offshore and incurring incremental $0.22/lb charge for them
• FM is contemplating the idea of building a smelter given local smelter constraints.

Rio Tinto Group (LSE: RIO; NYSE: RTP) - Phillip Strachan, CFO Rio Tinto Alcan

• 2009 aluminium cost curve appears to have shifted down ~$450/t ($0.20/lb) from 2008 levels
• Currently, aluminium inventory is at unprecedented levels, but there are some signs that they have peaked and leveled off
• Rio Tinto Alcan on track to unlock the $1.1 billion in synergies initially estimated when Alcan was acquired; currently 1.5 years into the two-year program to achieve this goal
• Targeting to bring down raw material costs to 2004 levels - currently more work needed on reduce caustic soda costs.

Cameco (TSX: CCO; NYSE: CCJ) - Gerald Grandey, President & CEO

• Commented that demand for uranium has not really been materially impacted in the current economic downturn
• Cameco will remain cautious in this environment
• The company is in the process of plugging the Cigar Lake water inflow and this should be completed by year-end
• Expects to reach commercial production at Inkai this year.

Freeport-McMoRan (NYSE: FCX) - Richard Adkerson, President & CEO

• Since Q3/08, cash costs have dropped by one-third before by-product credits
• China was identified as a significant factor contributing to the current copper price strength
• At $900/oz, gold production at Grasberg covers all operating expenses, implying a negative cash cost
• FCX will ramp up molybdenum production once market conditions warrant; indicated that the company has a good sense of market conditions and would wait until demand picks up and appears sustainable
• Adkerson believes the downside or trough of the cycle should be managed through cost reductions.

John Chadwick is editor/proprietor of International Mining magazine - www.im-mining.com

Disclaimer

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