an investor's guide to the minerals industry (22 aug 2013).pdf

7/27/2019 An Investor's Guide To The Minerals Industry (22 Aug 2013).pdf

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An Investors Guide ToThe Minerals Industry

Listings


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An Investors Guide To

The Minerals Industry

This guide seeks to aid retail investors by providing an introduction into the mineralsindustry and will focus on some of the key issues to consider from an investmentperspective.

In the next few pages, we have described some issues and considerations in sevendifferent sections to help investors better understand the mineral industry:

Mineral industry snapshot from exploration to production

Mineral Resources, Ore Reserves and project studies

Legal and regulatory requirements associated with the minerals industry

Risks and rewards

Reporting obligations

Industry Codes of Practice and relevance to retail investors

Glossary of selected terms and definitions(denoted with an * when used for the first time in the guide)


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Topic Description

Overview The minerals industry operates globally and every country has some form of minerals industryactivity. Some countries are endowed with a diverse range of mineral commodities e.g. China,USA, Canada, Russia, South Africa, India, Brazil, and Australia. Other countries have anendowment of a limited range of mineral commodities e.g. Chile, Philippines, Papua New Guinea,and New Caledonia. Some countries have a very limited endowment of mineral commodities andare dependent on other countries e.g. Japan, Singapore, and Hong Kong.

Mineral commodities comprise:

Precious metals e.g. gold, silver, platinum

Base metals e.g. copper, lead, zinc

Other metals e.g. iron, manganese, aluminium

Energy minerals e.g. coal, uranium, oil shale

Gemstones e.g. diamonds, sapphires, opal

Industrial minerals e.g. limestone, sand, aggregate, building stone.

Organisations of all sizes are involved in the minerals industry, from very large multinationalpublic companies and state owned corporations that are involved in mining many commodities,through to small public and private companies exploiting a single deposit, as well as companiespurely involved in exploration.

Some companies restrict operations to mining only and produce a product for sale that requiresfurther processing. Others are involved in down-stream processing and produce either a semi-

refined or refined product for the market.

Many mining projects are owned and operated by a single entity, however sometimes anindividual mining project will be operated as a joint venture involving two or more partners.

Exploration The aim of exploration is to discover a new mineral deposit and quantify the amount and qualityof the mineral in order to assess if it can be profitably extracted.

Some mineral commodities are located on or very near the surface and are not difficult to explorefor. Examples include construction minerals such as sand, gravel, aggregate, and limestonedeposits. Some minerals can be buried deep below the surface and are very difficult to explorefor, because there is no indication on the surface that they exist. Examples include some types ofgold, silver, copper, lead, zinc, and nickel deposits.

Mineral exploration generally follows a similar approach, but may use quite different tools andmethods depending on the commodity being explored for.

1. Develop a concept or idea for where a new mineral deposit may be located.

2. Complete a desktop analysis of all geological information that already exists in the targetarea and refine the concept or model.

3. Obtain a licence over the target area and all government approvals required to undertakeexploration.

4. Complete preliminary or reconnaissance exploration looking for indications of mineralisation.

5. If successful, complete more detailed exploration on those areas that appear to be attractive.For most minerals this will require drilling holes to assess what lies below the earths surface.

6. If mineralisation is located by these techniques, the next step is to extensively drill the target

area to quantify the size, shape, quality, and quantity of mineralisation.

If exploration drilling is successful, the next step (completion of detailed drilling to define thesize, shape, quality, and quantity of the mineral deposit) can be very expensive. For somecompanies, particularly junior exploration companies, additional fundraising may be required tofinance this stage of exploration.

Section 1 A snapshot of the minerals industry


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Topic Description

MiningThere are three broad categories of mining i.e. surface mining, underground mining, and solutionmining. The most common mining methods are surface and underground mining. The mainfactors to be considered when selecting a mining method are:

How close to the earths surface the deposit is located, the size, and shape of the deposit

The physical properties of the mineralisation and the waste rock surrounding the deposit e.g.hardness and stability

The economic value of the material to be mined

There are a number of surface mining methods:

Open pit mining (also called open cut or open cast mining). This method is used to minemineral commodities where the deposit is located near to the surface

Dredging. This method is often used to mine unconsolidated or soft deposits such as certainmineral sands, tin, and gold deposits

Sluicing and hydraulic mining. This method is used where the rocks are highly weathered, orsoft and friable. Large quantities of water are required

Underground mining methods can be used to selectively mine narrow deposits of moderate tohigh value or bulk mining of large deposits that are deeply buried. There are many undergroundmining methods and the method chosen for a particular deposit is influenced by the size andshape of the deposit, as well as the physical properties of the mineral deposit and the wasterocks that surround it. Some examples of underground mining methods include cut and fill, openstoping, room and pillar, shrinkage stoping, sub-level caving, and block caving.

Processing For many mineral deposits, the valuable component is processed to some degree at the mine site

prior to transport and sale. The processed material may be transported directly to a customer(e.g. coal or iron ore), or may require further processing before it is ready for use (e.g. smeltingand/or refining).

At a mine site the general steps involved in processing the ore involves:

1. Rock size reduction to allow liberation of the valuable mineral from the waste material.The process of reducing material size using mechanical means is called comminution andis achieved primarily by crushing and grinding methods including gyratory crushers, conecrushers, jaw crushers, autogenous and semi-autogenous grinding mills, ball mills, and rodmills.

2. Liberation, separation, and concentration of the valuable mineral components. Methodsused to liberate mineral particles of value from the rest include flotation, leaching, gravityseparation, magnetic separation, and electrical or electrostatic separation. Some ores canbe difficult to treat and are referred to as refractory ores. In these cases, the ore is pre-treatedusing specialised chemical methods to alter the mineralogy of the valuable materials to allowlow cost processing methods to be used.

3. Storage and/or disposal of the waste material, called tailings. Many mining operationsprocess large amounts of rock to recover the valuable component. The waste material mustbe stored at the mine site or disposed of safely.

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Section 2 Mineral Resources, Ore Reserves and levels of project studies

Topic Description

Introduction Retail investors should be aware that the minerals industry uses a number of terms, such asExploration Results, Mineral Resources* and Ore Reserves* (or Mineral Reserves), that havebeen carefully defined and are subject to a range of international Codes and Standards for publicreporting of relevance to the Singapore Exchange e.g.:

JORC Code*, in Australia

CIM Definition Standards (NI43-101*), in Canada

PERC Code*, in Europe

Exploration results Exploration Results include data and information generated by exploration programs that maybe of use to investors. Such information is common in the early stages of exploration when thequantity of data available is generally insufficient to allow for an estimate of Mineral Resources.Examples of Exploration Results include results of outcrop sampling, assays of drill holeintercepts, geochemical results, and geophysical survey results.

Mineral Resources A Mineral Resource is a concentration or occurrence of material of intrinsic economic interest inor on the Earths crust in such form, quality, and quantity that there are reasonable prospectsfor eventual economic extraction. The location, quantity, grade, geological characteristics andcontinuity of a Mineral Resource are known, estimated, or interpreted from specific geologicalevidence and knowledge.

Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred*,Indicated* and Measured* categories.

The term Mineral Resource covers mineralisation, including waste dumps and tailings, which hasbeen identified and estimated through exploration and sampling. The estimation of a MineralResource is a complex process and involves many stages of study to complete:

Data collection, testing, and analysis

Geological interpretation

Statistical analysis of data

Determining the technical parameters to guide the estimate

Estimating the Mineral Resource

Choosing the resource classification and appropriateness of resource categories

Comparisons with previous resource estimates, if appropriate

Completing documentation and a Compliance Statement in accordance with the appropriateCode

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Topic Description

Ore Reserves or MineralReservesAn Ore Reserve (or Mineral Reserve) is the economically mineable part of a Measured and/orIndicated Mineral Resource. It includes diluting materials and allowances for losses, which mayoccur when the material is mined. Appropriate assessments and studies have been carried out,and include consideration of and modification by realistically assumed mining, metallurgical,economic, marketing, legal, environmental, social, and governmental factors. These assessmentsdemonstrate at the time of reporting that extraction could reasonably be justified.

Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves* andProved Ore Reserves*(or Probable Mineral Reserves and Proven Mineral Reserves).

Retail investors should note that the term economically mineable implies that extraction of theOre Reserve has been demonstrated to be viable under reasonable financial assumptions. Whatconstitutes the term realistically assumed will vary with the type of deposit, the level of studythat has been carried out and the financial criteria of the individual company. For this reason,

there can be no fixed definition for the term economically mineable.

In order to achieve the required level of confidence in the Modifying Factors, appropriate studieswill have been carried out prior to determination of the Ore Reserves. The studies will havedetermined a mine plan that is technically achievable and economically viable and from which theOre Reserves can be derived.

Levels of project study If exploration is successful, companies will undertake project assessments and studies to assessif the new discovery can support a viable mining operation. Such studies become progressivelymore detailed and costly as the project advances. Various terminology is used to describe thesestudies, but fundamentally they can be grouped into three levels:

Scoping Study* This assessment is completed at an early stage and is aimed atdetermining if a project can deliver an economically attractive outcome, but without beingable to conclude what the preferred scenario is. The typical range of accuracy is +/- 30% to50%. Normally exploration has defined some level of Mineral Resources for this study, butnot necessarily any Ore Reserves. However, it is acceptable for scoping studies to be basedon very limited information or speculative assumptions in the absence of hard data.

Prefeasibility Study* This assessment tests various scenarios to work out the best one andwhether the project should go to full feasibility study. The typical range of accuracy is +/-20% to 25%. Normally exploration has defined Mineral Resources and the project may havesome level of Ore Reserves for this study.

Feasibility Study* This assessment (based on the best case from the Prefeasibility Study)is to provide a sound basis for decisions on project approval by the company, funding bythe banks (if relevant), and a basis for detailed engineering. The typical range of accuracyis +/- 10% to 15%. Normally exploration has defined Mineral Resources and substantial OreReserves may have already been reported.


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Section 3 Legal and regulatory requirements

Topic Description

Introduction In all countries, there are laws and regulations that control the operation of exploration, mining,and processing activities. These include:

Access to land

Permits and requirements for mining and processing

Most countries operate on a licensing system, not concessions

Distinction between exploration and extraction (licence). Is there a right to move fromexploration (if successful) to extraction?

Community and social obligations

Environmental regulations

Taxation and royalty payments

Export requirements

Restrictions on foreign ownership

Some specific issues are presented below.

Mining legislation issues In many countries, there are regulations that control or may affect the activities of publiccompanies operating in the minerals industry. These include:

Security of tenure

Geopolitical stability and risk

Foreign investment approvals and incentives

Changes in mining laws

Interaction between exploration and mining and other land uses, for instance farming andforestry

The manner in which the State exercises its mineral ownership rights

Foreign investment andcompany structures

Most countries have restrictions and/or controls on foreign ownership, in part due to theownership of the resources being vested with the state.In some countries, foreign companies may invest directly but approval may be required forsubstantial acquisitions or where the national interest is involved. In other countries, particularownership structures are necessary and sometimes an offshore holding company is required.There may be limits on exploring and mining of certain mineral commodities.Investors need to understand the legal system and be assured the company is operating within

the system.

Approvals for exploration andmining

Licensing for exploration and mining will include application and granting of appropriate tenurefrom the recognised authorising bodies. In all regimes, environmental and/or forestry and/orlandowner approvals will also be required.

Other ancillary approvals are commonly necessary, such as import and export licences, foreignexchange approvals, and explosive permits.

Public reporting standardsrecognised by SGX

The SGX Listing Rules require adherence to one of a group of Standards when mineral companiesrelease a public report to comply with the continuous and periodic disclosure obligations. TheseStandards are some of the internationally recognised Reporting Codes and Guidelines (seeSection 6 for more details)


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Section 4 Risks and rewards

Topic Description

Introduction The minerals industry offers retail investors opportunities for substantial investment returns, butalso the possibility of investment losses. The key sources of risk and reward are exploration,technical, financial, environmental, social, political, and sovereign issues.

Exploration Exploration, by its very nature is a risky investment because there are no guarantees that acompany exploring for minerals will find anything of value. For most minerals, exploration isexpensive and the consequence of a failed exploration program is a financial loss.

Exploration success discovering a new mineral deposit or finding additional mineralisation at anexisting mine generates an asset that adds value to a company.

Small companies with limited financial resources are relatively high risk/reward investmentoptions because they cannot survive many failed exploration programs. However, they maygenerate large investment rewards if they are successful in exploration.

Technical Mining and processing of mineral deposits often requires a large capital investment, commonlymore than US$100 million and often more than US$1 billion.

There are a range of technical risks associated with mining and processing. For example:

Mining difficulties can be due to the tonnage, grade, or quality of the mineralisation beingworse than expected; problems excavating the open pit or underground mine, and/ormaintaining stable rock surfaces

Processing difficulties can be associated with achieving less recovery of the mineral thanexpected or the presence of contaminants in the product

However, there is also potential that mining and processing will perform better than expected anddeliver unbudgeted rewards. For example:

Improved mining conditions can be associated with the tonnage, grade, or quality of themineralisation being better than expected, or mining conditions may be better than expected,reducing the cost of mining

Better processing performance can be associated with more recovery of the mineral thanexpected or higher purity of the product commanding a better price in the market thanexpected

Financial The profitability of the mining industry is a function of the difference between revenue and costs.The price of many mineral commodities is volatile and can be subject to large variations. Ifrevenue is tied to short term market pricing, there is a risk associated with a fall in commodityprices and a reward associated with a rise in prices. Some companies can establish long termcontracts with guaranteed minimum pricing to alleviate uncertainty associated with commodityprices. Such contracts generally restrict the opportunity for substantial extra profitability ifcommodity prices rise sharply. Consequently, many mining companies have little control over therevenue they receive they are price takers.

Currency exchange rates can also significantly influence both revenue and costs depending onhow contracts have been negotiated. This is because many contracts are set using US dollarterms.

Mining companies must maintain a strong control over costs because this is the main mechanism

available to them to influence profitability.


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Topic Description

EnvironmentalAll mining activity will have some impact on the local environment and typically this involves theconstruction of surface facilities to support the operation. For example, open pits, waste dumps,tailings dams, buildings, and roads. Some mining activity will also have an environmental impactaway from the actual site as a result of requiring road or rail access to a regional centre.

The main environmental impacts of mining and processing operations are visual pollution,sound and vibration, atmospheric emission, as well as potential surface and groundwatercontamination.

In most countries, there is legislation in place that regulates the obligations of mining operationswith respect to environmental impacts. There are generally strict limits on the allowableemissions associated with mining and processing and typically the company, local community,and government groups are involved in monitoring the environmental impact.

Social Many mining operations are sited close to communities that will be affected by the operation.There are both risks and rewards for a mining company in the way it interacts with the localcommunity.

The key risk is if the community is opposed to the development of a mining operation and takesaction to hinder or stop the development. The key reward is if the community is supportive of themining operation because it sees opportunities for local employment and development of newlocal services, facilities, and infrastructure.

Political and sovereign In all countries, exploration and mining is subject to government regulation the degree ofregulation and control varies.

Some countries are actively supportive of exploration and mining and have established

regulations that provide security of tenure and stability covering issues such as royalties,taxation, and provision of services and infrastructure. Some countries are less supportiveof exploration and mining and pose a political risk to investment because of uncertaintiesassociated with security of tenure, changeable regulations, or taxation and royalty rates.


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Section 5 Reporting obligations

Topic Description

SGX Listing Rulesrequirements for miningcompanies

The SGX Listing Rules include additional reporting requirements for mining companies under thefollowing circumstances:

Prior to listing, an offer document is required and must establish the existence of adequatemineral resources. These resources must be at least categorised as an Indicated Resource.The report must not be more than six months old

Under continuing reporting obligations, a company must announce any material changes toore reserves or mineral resources, including: The basis upon which new material reserves or resources not previously disclosed are

reported; Any change in the reporting Standard adopted, including the reasons for the change and

the impact, if any, on the companys existing stated level of reserves and resources; Appointment or resignation of any qualified person.

In the periodic financial announcements required under the rules a company must alsoinclude: Details of exploration (including geophysical surveys), mining development and/

or production activities undertaken by the issuer and a summary of the expenditureincurred on those activities, including explanations for any material variances withprevious projections, for the period under review.

If there has been no exploration, development and/or production activity respectively,that fact must be stated; and

An update on its reserves and resources, where applicable.

Qualified Person andIndependent Qualified Personreports

Some of the reporting requirements for mining companies require the input of a Qualified Person

(QP) or an Independent Qualified Person (IQP) as presented in the table below.

Reporting Event Type of report required

(IQP/QP) IQP

Initial Listing P

Material changes in reserves or resources P

Reporting of new material reserves or resourcesfor the first time

P

Announcement of a 100% change or more inexisting reserves or resources

P

Major Acquisition or Disposal under Chapter 10 P

Annual Report P

A QP must have the appropriate experience in the type of activity undertaken or to be undertakenby a mineral, oil and gas company, meeting the following minimum requirements:

Is professionally qualified and a member or licensee in good standing of a relevantRecognised Professional Association*;

Has at least five years relevant professional experience in the estimation, assessment andevaluation of: The mineral or minerals, oil or gas that is under consideration; and The activity which the issuer is undertaking; and Has not been found to be in breach of any relevant rule or law by any relevant regulatory

authority or professional association and is not: Denied or disqualified from membership of; Subject of any sanction imposed; The subject of any disciplinary proceedings; or The subject of any investigation which might lead to disciplinary action.


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Topic Description

An IQP must have the same requirements as a QP, but in addition:

The IQP must not be a sole practitioner;

If the IQP producing the report is not a partner or director of his/her firm, the production ofthe report must be directly supervised by a partner or director on behalf of the firm;

The IQP and his firms partners, directors, substantial shareholders and their associates mustbe independent of the listing applicant, its directors, and substantial shareholders;

The IQP and his firms partners, directors, substantial shareholders and their associatesmust not have any interest, direct or indirect, in the listing applicant, its subsidiaries orassociated companies and will not receive benefits other than remuneration paid to the IQPin connection with the report; and

Remuneration paid to the IQP or the IQPs firm in connection with the report must not bedependent on the findings of the report

Section 6 Industry Codes of Practice

Topic Description

Reporting Codes The SGX Listing Rules recognise a number of National industry reporting standards that containspecific information which must be included in a public report and guidance to both the companyand investors on what is expected. Typically these reports will include the technical basis onwhich statements of reserves, resources or exploration results are made.

The three industry codes recognised by the SGX Listing Rules are:

Australasian Code for the Reporting of Exploration Results, Mineral Resources and OreReserves (The JORC Code)

National Instrument NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101*) fromCanada

Pan European Reserves and Resources Reporting Committee Code for the Reporting ofExploration Results, Mineral Resources and Pre Reserves (The PERC Code)

VALMIN Code Reports that deal with technical assessments and valuations of mineral properties are required bythe SGX Listing Rules to be prepared in accordance with the VALMIN Code*.

These reports must be prepared by an IQP and the same principles based approach applicable tothe reporting Codes applies, but the principle of Independence is an additional requirement of theVALMIN Code. The IQP must also visit the property being valued.

Valuation of mineral properties is not a straightforward matter, and for properties not yet inproduction, readers should expect to see several alternative methods of valuation adopted.

The VALMIN Code imposes obligations on the company commissioning the independent report toprovide all the relevant information (whether confidential or not) to the IQP.


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Glossary of common Acronyms and Terms

Term Explanation

Feasibility Study The feasibility study is usually based on the most attractive alternative for the project aspreviously determined. The aim of the study is to remove all significant uncertainties and topresent the relevant information with backup material in a concise and accessible way. Thefeasibility study has several objectives:

To demonstrate with reasonable confidence that the project can be constructed and operatedin a technically sound and economically viable manner

To provide a basis for detailed design and construction

To enable finance for the project to be raised from banks or other sources

To provide the basis for permitting and regulatory approvals

The feasibility study has an estimation accuracy of +/- 10% to +/- 15%.

JORC Code The Australasian Code for the Reporting of Exploration Results, Mineral Resources and OreReserves.

Mineral Resource A Mineral Resource represents a concentration or occurrence of material of intrinsic economicinterest in or on the earths crust in such form, quality, and quantity that there are reasonableprospects for eventual economic extraction. Three categories of mineral resource are defined:

Inferred Mineral Resource An Inferred Mineral Resource is that part of a Mineral Resource for which tonnage, grade, andmineral content can be estimated with a low level of confidence. It is inferred from geological

evidence and assumed but not verified geological and/or grade continuity. It is based oninformation gathered through appropriate techniques from locations such as outcrops, trenches,pits, workings, and drill holes which may be limited or of uncertain quality and reliability (JORCCode).

Indicated Mineral Resource An Indicated Mineral Resource is that part of a Mineral Resource for which tonnage, densities,shape, physical characteristics, grade, and mineral content can be estimated with a reasonablelevel of confidence. It is based on exploration, sampling, and testing information gatheredthrough appropriate techniques from locations such as outcrops, trenches, pits, workings, anddrill holes. The locations are too widely or inappropriately spaced to confirm geological and/orgrade continuity but are spaced closely enough for continuity to be assumed (JORC Code 1).

Measured Mineral Resource A Measured Mineral Resource is that part of a Mineral Resource for which tonnage, densities,

shape, physical characteristics, grade, and mineral content can be estimated with a high levelof confidence. It is based on detailed and reliable exploration, sampling and testing informationgathered through appropriate techniques from locations such as outcrops, trenches, pits,workings, and drill holes. The locations are spaced closely enough to confirm geological andgrade continuity (JORC Code).

Mineral, Oil, and Gas Company A company whose principal activities consist of exploration for or extraction of minerals, oil, orgas. This excludes companies that purely provide services or equipment to other companiesengaged in such activities (SGX Listing Rules definition).

NI 43-101 The Canadian National Instrument NI 43-101 Standards of Disclosure for Mineral Projects.

1 Definitions are those contained in the JORC Code. Other reporting Codes will have different definitions.


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Term Explanation

Ore Reserve (also calledMineral Reserve in somecountries)

An Ore Reserve is the economically mineable part of a resource. It includes diluting materials andallowances for losses which may occur when the material is mined. Appropriate assessmentsand studies have been carried out, and include consideration of and modification by realisticallyassumed mining, metallurgical, economic, marketing, legal, environmental, social, andgovernmental factors. These assessments demonstrate at the time of reporting that extractioncould reasonably be justified. Two categories of ore reserve are defined:

Probable Ore Reserve The economically mineable part of an Indicated, and in some circumstances, a Measured MineralResource. It includes diluting materials and allowances for losses which may occur when thematerial is mined. Appropriate assessments and studies have been carried out, and includeconsideration of and modification by realistically assumed mining, metallurgical, economic,marketing, legal, environmental, social, and governmental factors. These assessmentsdemonstrate at the time of reporting that extraction could reasonably be justified (JORC Code).

Proved (or Proven) Ore Reserve The economically mineable part of a Measured Mineral Resource. It includes diluting materialsand allowances for losses which may occur when the material is mined. Appropriate assessmentsand studies have been carried out, and include consideration of and modification by realisticallyassumed mining, metallurgical, economic, marketing, legal, environmental, social, andgovernmental factors. These assessments demonstrate at the time of reporting that extractioncould reasonably be justified (JORC Code).

PERC Code Pan European Reserves and Resources Reporting Committee Code for the Reporting of ExplorationResults, Mineral Resources and Pre Reserves.

Prefeasibility Study Alternative names used in the industry are Preliminary Feasibility Study and Class 2 Study.Prefeasibility Studies may be used for the following:

As a basis for committing to a major exploration program following a successful preliminaryprogram

To attract a buyer to the project or to attract a joint venture partner or as a basis for a majorunderwriting to raise the required risk capital. A prefeasibility study may also be prepared infull or in part by potential purchasers as part of the due diligence process

To provide a justification for proceeding to a final feasibility study

Features of the Prefeasibility Study are:

Mine design based on a resource model

Most suitable scale of operation investigated

Best mining and processing method selected from a range of alternative methods

Preliminary studies completed on geotechnical, environmental, and infrastructurerequirements

Bench scale metallurgical tests and preliminary process design completed

Cost estimates based on factored or comparative prices

Estimation accuracy +/-20% to +/- 25%

Ready to proceed to final feasibility study


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Term Explanation

Recognised ProfessionalAssociationA self-regulatory organisation of professionals in the mineral, oil, or gas industries which isrecognised by the Exchange. The criteria for a Recognised Professional Association are providedin the SGX Listing Rules Definition and Interpretation section and include the requirement that itmust:

(i) admit members on the basis of academic qualifications and experience;

(ii) require compliance with organisations professional standards of competence and ethicsestablished; and

(iii) have disciplinary powers to suspend or expel a member.

Reporting Standards The SGX Listing Rules require a mineral company adheres to one of a group of Standards tocomply with continuous and periodic disclosure obligations. International Codes and Guidelinesfor disclosure recognised by SGX are the JORC Code, the Canadian National Instrument 43-101,the PERC Code and the VALMIN Code.

Scoping Study Alternative names used in the industry are Conceptual Study, Order of Magnitude Study, Class 1study.

A scoping study may be carried out very early in the project life. For example, it may be usedas a basis for acquiring exploration areas or making a commitment for exploration funding. Atthis stage, the investment risk may be relatively small but it is obviously undesirable to expendfurther funds on a project with no chance of being economic. It is acceptable for scoping studiesto be based on very limited information or speculative assumptions in the absence of hard data.Scoping studies have estimation accuracy not better than +/- 30% to +/- 50%.

VALMIN Code Code for Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities forIndependent Experts Reports.


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Notes:


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Singapore Exchange London Tokyo Beijing

2 Shenton Way, #19-00 SGX Centre 1, Singapore 068804

Main: (65) 6236 8888 Fax: (65) 6535 6994

This document is in regards to companies whose principal activities consist of exploration for mineral, oil or gas.

A company whose principal activities consist of exploration for mineral, oil or gas may not progress to the next stage of development or to a stage where it is able togenerate revenue. Other industry specific risks must also be considered.

This presentation is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or actionwould be contrary to applicable laws or regulations or would subject SGX to any registration or licensing requirement.

This presentation is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This presentation has been is for generalcirculation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financialadviser regarding the suitability of any investment product before investing or adopting any investment strategies. Further information on this investment product may beobtained from www.sgx.com.

Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products isnot indicative of their future performance. Examples provided are for illustrative purposes only.

While SGX and its affiliates have taken reasonable care to ensure the accuracy and completeness of the information provided, they will not be liable for any loss or damage

of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness, orotherwise, any reliance on such information. Neither SGX nor any of its affiliates shall be liable for the content of information provided by third parties. AMC Consultantshad been engaged to produce the materials contained herein

SGX is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore.

The information in this presentation is subject to change without notice.

an investor's guide to the minerals industry (22 aug 2013).pdf

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