FORWARD LOOKING STATEMENTS This presentation, and the information contained herein, is not for release, distribution or publication into or in the United States or any other jurisdiction where applicable laws prohibit its release, distribution or publication. This presentation (“Presentation”) is being issued by Otterburn Resources Corp. (the “Company”) for information purposes only in relation to the Company’s proposed private placement (“Placing”) of special warrants of the Company (the “Warrants”). Reliance on this Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. This Presentation is not a prospectus or an advertisement and is being provided for information purposes only and does not constitute or form part of, and should not be construed as, an offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any Warrants in Canada, the United States or any other jurisdiction. Neither this Presentation, nor any part of it nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment whatsoever in relation to any securities of the Company. No representation or warranty, expressed or implied, is given by or on behalf of the Company, its directors and affiliates or any other person as to the accuracy or completeness of the information or opinions contained in this Presentation and no liability whatsoever is accepted by the Company, its directors and affiliates or any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. No final decision has been made to proceed with the Placing. Such a decision will be taken only after assessing market feedback and prevailing market conditions. This Presentation does not constitute a recommendation regarding the Warrants or an investment therein. The Company is not and will not be registered under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, none of the Company’s securities have been and none will be registered under the US Securities Act of 1933, as amended (the “Securities Act”). Consequently, the Warrants may not be offered, sold or otherwise transferred within the United States or to, or for the account or benefit of, US persons, except pursuant to an exemption from the registration requirements of the Securities Act and under circumstances which will not require the Company to register under the Investment Company Act. No public offering of the Warrants is being made in the United States. The contents of this Presentation are confidential and may not be copied, distributed, published or reproduced in whole or in part, or disclosed or distributed by recipients to any other person. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this Presentation or on its completeness, accuracy or fairness. No person should treat the contents of this Presentation as advice relating to legal, taxation or investment matters, and must make their own assessments concerning these and other consequences of investing in securities of the Company, including the merits of investing and the risks. Prospective investors are advised to consult their own personal legal, tax and accounting advisors and to conduct their own due diligence and agree to be bound by the limitations of this disclaimer. Certain statements, beliefs and opinions in this Presentation (including those contained in graphs, tables and charts) are forward-looking, which reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this Presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of
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new information, future events or otherwise. No person should place undue reliance on forward-looking statements, which speak only as of the date of this Presentation. Examples of forward-looking information include metal price assumptions, cash flow forecasts, projected capital and operating costs, metal or mineral recoveries, mine life and production rates, none of which are based on any preliminary economic assessment, pre-feasibility study, or feasibility study. Completion of the acquisition of K92 Holdings International Limited (the “Acquisition”) is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested shareholder approval. The Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all. Readers are cautioned that, except as disclosed in any Management Information Circular or Filing Statement to be prepared in connection with the Acquisition, any information related or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative. The TSX Venture Exchange has not, in any way, passed upon the merits of the proposed Acquisition and has neither approved nor disapproved the contents of this Presentation. The geological data in this Presentation is based on a technical report prepared in accordance with National Instrument 43-101 (“NI 43-101”) by Anthony Woodward, MAIG. Readers are encouraged to review the full text of that report, which is available under the Company’s profile on SEDAR. Brian Lueck is the qualified person who has reviewed the geological data summarized in this Presentation on behalf of the company and has approved the written disclosure of the written scientific and technical information. Exploration information and data verification for the Kainantu Project is provided in the Technical Report filed on the Company's website.
Risk Factors There are a significant number of legal, political, environmental, or other risks that could materially affect the potential development of the Kainantu project, many of which are beyond the control of the Company, including, but not limited to: § All of the exploration licences comprising part of the Kainantu project are subject to renewal applications with the PNG government. There is no assurance that renewals or extensions will be granted on terms acceptable to the Company, or at all. § § §
§ § § § §
Prior operators of the Kainantu project have failed to operate it economically. There are inherent risks involved with mineral exploration and mining. There are significant political, regulatory and country risks involved in undertaking business in PNG. No definitive agreement has been reached with local landowners as to the compensation to be paid for use of their land forming any part of the Kainantu project. Any planned mining operations could by stalled by protests or legal actions. Resource estimates may prove to be inaccurate. Unexpected delays and cost overruns with refurbishing the Kainantu mine and production facilities. Reduction in the long term market price of gold and copper would negatively impact on the economic viability of the Kainantu project. Exploration and mining activities are subject to environmental and other requirements that may increase costs and restrict operations. There is no feasibility study on the project and there is no certainty that the proposed operation will be economically viable.
INVESTMENT HIGHLIGHTS Mining Lease to Past Producing Mine
Existing Mine & Infrastructure
§ § § § §
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K92’s principal project is the Kainantu Gold Mine located in the Eastern Highlands province of Papua New Guinea Mining leases and associated permits renewed for 10 years on February 16th, 2015 Environmental permit valid, with 40 years remaining Secured with no peace or order issues NI 43-101 report estimates resources of 1.84Moz @ 11.6 g/t AuEq. Inferred, and 240,000oz @ 13.3 g/t AuEq. Indicated
§ Previously mined by Highlands Pacific Limited and Barrick Gold Corporation from 2006 to 2009 § Existing infrastructure includes camp, process plant, offices, partially filled mine store, workshops, power delivered to site via hydro power supply, and underground development*
Minimal Capital Expenditures
§ Detailed work to establish limited capital demands for mine and mill refurbishment and upgrading with additional underground expansion work completed § Mining, maintenance and plant refurbishment contractors on site, detailed mine planning, refurbishment and modifications to process plant to improve performance underway § Onsite work program is designed to advance the project towards near term production § Off-take agreement, including working capital facility signed
Exploration Potential with Multiple Targets Present
§ Kainantu is located in an area of large mines as evidenced by the underlying geology and presence of nearby major projects operated by global majors Barrick, Newcrest and Harmony § Exploration and expansion potential within the ML 150 intrusive vein system § Additional porphyry and gold vein exploration targets throughout the property
Board and Management
§ Experienced management team has built over 20 mines and has been involved in buyouts worth over $5B combined § Board of Directors includes Tookie Angus, Chairman (Chairman of Nevsun Resources), Ian Stalker, CEO, and Mark Eaton (Chairman of Belo Sun Mining) § Advisory board includes Alex Davidson (former EVP Exploration and Corporate Development at Barrick) and Doug Kirwin (member of discovery team for Hugo Dummett deposit at Oyu Tolgoi)
* Some refurbishment and rehabilitation required
COMPANY BACKGROUND Company Overview
§ K92 Holdings International Limited ("K92") is a Vancouver-based gold exploration and development company operating in Papua New Guinea ("PNG") § K92 was purpose built for the acquisition of the Kainantu gold project (the "Project") from Barrick, K92’s only mineral property
Reverse Takeover
§ On August 21, 2014, K92 entered into an agreement with Otterburn Resources Corp. ("Otterburn") whereby Otterburn will acquire all the outstanding shares of K92 in exchange for shares of Otterburn on a one-for-one basis § The transaction amounts to a reverse takeover of Otterburn by K92 § The reverse takeover is conditional upon the proposed financing and on receiving TSX-V approval
Acquisition of Barrick (Kainantu) Limited
§ Barrick (Kainantu) Limited ("BKL"), a former subsidiary of Barrick, owns the mining leases, licenses and infrastructure that comprise the Kainantu gold project § On March 6, 2015, K92 acquired all of the outstanding shares of BKL for an initial US$2M cash payment, and the potential payment of up to an additional US$60M payable as: • US$20M upon exceeding 1M gold equivalent ounces (reserves or measured and indicated resources plus cumulative production) within 10 years, and • US$5M for every 250,000 incremental ounces identified within 10 years, up to a maximum of US $40M § K92 has agreed to honour a 5% carried interest in the Project by the local landowners in the form of a 5% equity interest in BKL, which will be negotiated on commercial terms. The Project is also subject to a 2% NSR and a levy of 0.25% of gross mine revenue, both payable to the PNG government
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BOARD, MANAGEMENT AND ADVISORS Management §
Ian Stalker, CEO
§
Bryan Slusarchuk, President
§
John Lewins, COO
§
Justin Blanchet, CFO
§
Peter (Duppie) du Plessis, GM of Kainantu Mine
Board of Directors § Tookie Angus, Chairman § Ian Stalker § John Lewins § Graham Wheelock § Bryan Slusarchuck § Mark Eaton § Saurabh Handa Advisors § Alex Davidson § Doug Kirwin § Andrew Vigar § Daisy Taylor
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KAINANTU MINE
“
The structures hosting the lodes strike for several kilometres and have known vertical extents of hundreds of metres, and are open beyond this. This indicates additional resource potential proximal to the existing resource, and the probability of discovering parallel veins is high. Further, when analyzing drill results, I was very impressed with the consistency of the grade intercepts at Kora." – DOUG KIRWIN
Former Executive VP, Ivanhoe Mines & current K92 Advisor
PAPUA NEW GUINEA - FACTS §
Land of large mines
§
Commonwealth country
§
Democratic government with the Prime Minister as Head of Government
§
Population of approximately 7 million people over a land area of 462,840 km2
§
Mining a major source of economic activity with multiple major mining companies operating large mines
§
Mining and petroleum industry contributes over one third of government tax revenue
§
Competitive tax and regulatory environment
§
Mining licenses issued under the terms of the Mining Act 1992
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PEERS IN PAPUA NEW GUINEA
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Lihir (Au) Porgera (Au) Barrick
Frieda
(Cu-Au) Xstrata/Highlands
Kainantu
OK Tedi (Cu-Au) OTML
Wafi-golpu (Au-Ag) Newcrest/Harmony
Hidden valley (Au-Ag) Newcrest/Harmony
KAINANTU GOLD PROJECT OVERVIEW
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§
The Kainantu gold project covers a total area of 405km2 in the Eastern Highlands province of PNG, 180km northwest of Lae (second largest city in PNG) and 110km northwest of the Wafi-Golpu deposit
§
Mineralization includes gold, silver and copper occurring in epithermal Au telluride veins; Au-Cu-Ag sulphide veins and related porphyry Cu-Au systems; and alluvial gold
§
Existing infrastructure includes underground mine development, mill processing facility, staff housing, licensed tailings pond, office space, paved access roads and reliable hydro supply via a dedicated power line
KAINANTU GOLD PROJECT MINERAL RESOURCE ESTIMATE Deposit
Resource Mining Category Method
Kora / eutompi
Inferred
Irumafimpa
Indicated
Inferred
Cut Off Tonnes
Au
grade
Cu
AuEq (g/t)
(Moz)
(Moz)
(Mlb)
Cu
AuEq
(%)
Au
contained
Ag
Ag
g/t
Mt
(g/t)
(g/t)
(Moz)
Wide
5&6
3.36
7.1
32.9
2.2
11.5
0.77
3.55
161
1.24
Narrow
5&6
1.06
7.2
40.0
2.3
12.0
0.25
1.37
55
0.41
Wide
6
0.01
11.5
2.2
0.3
12.1
0.00
0.00
0
0.00
Narrow
6
0.56
12.6
8.9
0.3
13.3
0.23
0.16
3
0.24
Wide
6
0.07
7.2
7.4
0.2
7.7
0.02
0.02
0
0.02
Narrow
6
0.45
11.3
9.6
0.3
12.0
0.16
0.14
3
0.17
Notes 1. AuEq. Resource shown on a 100% basis and using long-term metal prices of US $1240/oz Au, US $23/oz Ag, and US $3.13/lb Cu (as per March 2015 NI 43-101 technical report) 2. Above table from the NI 43-101 Independent Technical Summary Report, March 6th, 2015 3. Author, Anthony Woodward, Nolidan Mineral Consulrants
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MINING & EXPLORATION LICENSES Located in the Eastern Highlands Province of Papua New Guinea, 180km northwest of Lae
4 Exploration Licenses 1 Mining Lease 2 Mining Easements 1 Lease for Mining Purposes 405 km2 Total Land
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Substantial investment to date § Barrick purchased project for USD $141.5 million in December 2007 § USD $100 million invested in underground mine development along with processing facilities infrastructure § USD $41.3 million invested in exploration drilling and definition drilling with the current resource estimate based on 78,935m of drilling via 767 drill holes § Additional investment via camp, office and support facilities and Barrick's 2009-2015 care and maintenance of mine, mill and camp facilities
PROJECT HISTORY
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GOLD PRICE
April 2015:
January 2006:
Commercial production
2005 2005: Highland
2006
Pacific spends estimated US $80 million on the Project
Otterburn raises $1.27m via June 2014: subscription Agreement by receipts at Barrick to sell to C$0.35 per K92 for US$2M in receipt & cash and US$60M advances the in earn-out funds to K92 payments
December 2007: Sold to Barrick for US$141.5M
December 2007 -June 2014:
Barrick spends ~US$100M on the Project
2007
2008
2009
January 2008: December 2008: Barrick refurbishes the mine and then operates for 6 months
Placed on care & maintenance by Barrick
2010
2011
2012
2013
2014
August 2014:
K92 announces proposed reverse takeover
February 2016:
K92 completes $10.5M finaning w/ Cartesian Capital Group to restart Kainantu Gold Mine
2015
MARCH 2015:
2016 MAY 2015:
Independent K92 completes the acquisition Technical Report, of the Project Resource Estimate & Summary of from Barrick Mining Facilities submitted
Source: www.GoldPrice.org
MINE INFRASTRUCTURE & SITE ACCESS Reliable main hydro power supply Last industrial tariff 11 cents / kWh Capacity of power station being doubled Paved highway from Lae to camp (2 hour drive) Airstrip and helicopter pad established at site Fully updated and established IT system Site workshops, first aid/hospital/safety set up, fully catered camp § Permitted water extraction from nearby river source § § § § § § §
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350 person camp
Tankaunen Porphyry Timpa Breccia
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ß Camp 3km
Tailings Storage
EXPLORATION PROCESS WATER YARD
ACTIVE LAYDOWN
STORES
MAINTENANCE MILLING, FLOTATION & DISPATCH LABS
WORKSHOP
FINE ORE BIN
OFFICES FUEL
ROM & PRIMARY CRUSH
POWER
MILL, PROCESSING PLANT & OFFICES (ROOM FOR EXPANSION) K A I N A N T U O P E R AT I O N S I T E C I R C A 2 0 1 2
UNDERGROUND MINE DEVELOPMENT EXISTING TODAY Mineral Resources
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PLANNING FOR SUCCESS – RESTART OF OPERATIONS
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Mining §
AMC Study
- - - -
Potential for underground to sustain production of 200,000 tpa from Irumafimpa Orebody Target historical mined grade previously achieved by Highlands: 7.5 - 8 g/t Au Continue with conversion to mechanised mining – Long Hole Stoping Production access from lower portal
Processing § § § §
Historical data shows plant achieved throughput rates of 25 tph over sustained periods and up to 30 tph on a daily basis Recoveries of up to 96% achieved over sustained periods when operation stable Plant condition overall very good, estimated cost to recommission
