Canada in Africa – Benchmarking Canada in Africa – Benchmarking Africa’s Progress and Africa’s Progress and

Development Against Canadian Development Against Canadian Best PracticeBest PracticeBruce Shapiro

PresidentCanada-South Africa Chamber of

Business&

Principal, MineAfricaToronto, Ontario, Canada

Presentation OutlinePresentation Outline

Key trends in the Canadian mining Key trends in the Canadian mining sectorsector

Raising funds – exchange pros & consRaising funds – exchange pros & cons The high risk culture of Canada’s junior The high risk culture of Canada’s junior

mining sector mining sector Canadians in AfricaCanadians in Africa Useful websitesUseful websites Case study – First UraniumCase study – First Uranium

Key Trends in theKey Trends in theCanadian Mining SectorCanadian Mining Sector

Canadian mining and processing industry Canadian mining and processing industry contributes 4% of the national gross contributes 4% of the national gross domestic productdomestic product

Total production is $60 billion – most of Total production is $60 billion – most of which is exportedwhich is exported

200 producing mining operations200 producing mining operations World leader in potash and uraniumWorld leader in potash and uranium Top 5 in aluminum, nickel, pgm, zinc, Top 5 in aluminum, nickel, pgm, zinc,

diamondsdiamonds

Key Trends continued…Key Trends continued… Global acquisitions of Canadian minersGlobal acquisitions of Canadian miners

CVRD - INCO, Xtstrata - Falconbridge, CVRD - INCO, Xtstrata - Falconbridge, Norilsk/Xstrata – LionOreNorilsk/Xstrata – LionOre

Leads to increased mergers of mid-sized Leads to increased mergers of mid-sized producersproducers

Also leads to profit-taking by shareholders Also leads to profit-taking by shareholders which frees up money available to re-which frees up money available to re-invest in junior miners (which grow into invest in junior miners (which grow into mid-sized miners)mid-sized miners)

Offshore exploration and acquisition to Offshore exploration and acquisition to diversify portfoliosdiversify portfolios

Corporate social responsibilityCorporate social responsibility

Key Trends continued…Key Trends continued…

Diamond production – 17.5 million Diamond production – 17.5 million carats/yearcarats/year Ekati, Diavik, Jericho in productionEkati, Diavik, Jericho in production Snap Lake, Victor, Gahcho Kue plannedSnap Lake, Victor, Gahcho Kue planned

Ontario Bill 187 – Diamond Royalty BillOntario Bill 187 – Diamond Royalty Bill Unpredictable tax regimeUnpredictable tax regime Only one diamond company in OntarioOnly one diamond company in Ontario Increases royalty rate from 5% to 13% after $1 Increases royalty rate from 5% to 13% after $1

billion investment decision madebillion investment decision made Ontario mining tax is 5% for new remote mines, Ontario mining tax is 5% for new remote mines,

and 10% for non-remote minesand 10% for non-remote mines

Analyzing the High Risk Analyzing the High Risk Culture of Investment in Culture of Investment in

Canada’sCanada’sJunior Mining SectorJunior Mining Sector

Flow through share financingFlow through share financing 1,100 junior mining exploration companies1,100 junior mining exploration companies Politically stable, safe, mineral richPolitically stable, safe, mineral rich However, Canadian companies are looking However, Canadian companies are looking

at other continents (diversification)at other continents (diversification) Canadians tolerance for riskCanadians tolerance for risk Exploration and service sector expertise – Exploration and service sector expertise –

Toronto-based and globalToronto-based and global

TSX – TSX VentureTSX – TSX Venture More mature, sophisticated market for More mature, sophisticated market for

mining finance, biggest in the worldmining finance, biggest in the world TSX Venture (junior exchange) – good for TSX Venture (junior exchange) – good for

early stage projectsearly stage projects TSX – good for later stage, or producing TSX – good for later stage, or producing

mine or greater capital requirementsmine or greater capital requirements Excellent service sector in Toronto – Excellent service sector in Toronto –

exploration, technical, legal, financial, exploration, technical, legal, financial, marketing, analysts, mediamarketing, analysts, media

Good liquidity on secondary market – traded Good liquidity on secondary market – traded $369 billion in mining company stocks in $369 billion in mining company stocks in 20062006

Global Mining Financing TrendGlobal Mining Financing Trend1999-20061999-2006

Source: Gamah International, 1999-2006, compiled by TSX

$2.9 $3.1 $3.5

$8.4$9.6

$10.8$9.7

$26.5

0

5

10

15

20

25

30

1999 2000 2001 2002 2003 2004 2005 2006

Equit

y r

ais

ed (

US$

Bill

ions)

52% 36% 28%

26% 43%

Percentage of worldwide total raised through TSX and TSX Venture

47%

There was a dramatic increase in equity financing for mining

companies in 2006

• 38% of total world equity capital for mining in 2006 was raised for TSX/TSX Venture issuers

41%38%

ASX10%

Nasdaq1%

NYSE3%

TSX-TSX Venture

Exchange40%

Other19%

Amex1%

LSE- AIM26%

Number of Equity Financings

5-Year (2002 to 2006)Total = 10,261 Deals

Value of Equity Financings5-Year (2002 to 2006)Total = US$64.9 Billion

Source: Gamah International, 2002- 2006Compiled by TSX Group

ASX10%

Nasdaq0.5%

NYSE0.4%

TSX-TSX Venture

Exchange81%

Other1%

Amex0.5%

LSE- AIM8%

TSX Group is the leading exchangeTSX Group is the leading exchangegroup for mining financinggroup for mining financing

LSE - AIMLSE - AIM

Listing rules are relatively short and Listing rules are relatively short and simplesimple

Affinity and familiarity with AfricaAffinity and familiarity with Africa Logistics – better time zoneLogistics – better time zone Large capital poolLarge capital pool Less stringent listing requirements than Less stringent listing requirements than

TSXTSX Less expensive than TSXLess expensive than TSX

JSE – ALT-XJSE – ALT-X Lower fee listing jurisdictionLower fee listing jurisdiction Familiarity of investors with Africa and mineral Familiarity of investors with Africa and mineral

regionsregions Rapidly increasing involvement in resource Rapidly increasing involvement in resource

companies by pension funds and asset mgt companies by pension funds and asset mgt companiescompanies

Lower multiples for resource companies than one Lower multiples for resource companies than one gets on AIM or TSXgets on AIM or TSX

Investor pool is smaller than Toronto or LondonInvestor pool is smaller than Toronto or London It is a mature financing market but primarily for It is a mature financing market but primarily for

advanced-stage companies not explorationadvanced-stage companies not exploration Lower liquidity for mining stocksLower liquidity for mining stocks

CNQCNQ Canada’s newest alternative exchangeCanada’s newest alternative exchange Started in 2003Started in 2003 Market cap just reached $1 billionMarket cap just reached $1 billion Considerably lower listing feesConsiderably lower listing fees Minimal ongoing feesMinimal ongoing fees Simple listing procedureSimple listing procedure Less liquidityLess liquidity Minimal marketing benefits or recognition Minimal marketing benefits or recognition

from listingfrom listing

Canadians in AfricaCanadians in Africa

Canadians are in Africa in a big way in Canadians are in Africa in a big way in mining and infrastructure - $30 billion mining and infrastructure - $30 billion Bombardier – lead partner in Gautrain - Bombardier – lead partner in Gautrain - SNC Lavalin – Pebble Bed Reactor -SNC Lavalin – Pebble Bed Reactor - Sherrit/Dynatec – Ambatovy Nickel Project in Sherrit/Dynatec – Ambatovy Nickel Project in

MadagascarMadagascar CIC Energy Corp.– coal plant in BotswanaCIC Energy Corp.– coal plant in Botswana Alcan – COEGA aluminum smelter - Alcan – COEGA aluminum smelter - Hatch – South African port infrastructureHatch – South African port infrastructure MAG Industries – hydro plant in DRCMAG Industries – hydro plant in DRC

Canadians in Africa Canadians in Africa continued…continued…

150 TSX listed mining companies in 150 TSX listed mining companies in Africa active in 37 African countriesAfrica active in 37 African countries Anooraq, Anvil, Banro, Barrick, Cassidy Gold, Anooraq, Anvil, Banro, Barrick, Cassidy Gold,

Dynatec, Etruscan, First Uranium, Forsys Dynatec, Etruscan, First Uranium, Forsys Metals, Goldbelt Resources, Homeland Metals, Goldbelt Resources, Homeland Energy, High River Gold, Hunter Dickinson, Energy, High River Gold, Hunter Dickinson, MAG Industries, Nevsun Resources, Platinum MAG Industries, Nevsun Resources, Platinum Group Metals, Riverstone Resources, Group Metals, Riverstone Resources, Rockwell Diamonds, SouthernEra Diamonds, Rockwell Diamonds, SouthernEra Diamonds, SXR Uranium One, Teal Exploration and SXR Uranium One, Teal Exploration and MiningMining

Canadians in Africa Canadians in Africa continued…continued…

A total of $45 billion of new mining A total of $45 billion of new mining investments planned for next five yearsinvestments planned for next five years Canadians accounting for $13 billion of this totalCanadians accounting for $13 billion of this total

By 2010 Canadian mining interests in Africa By 2010 Canadian mining interests in Africa will doublewill double

Canadian companies account for 24% of all Canadian companies account for 24% of all exploration expenditures in Africaexploration expenditures in Africa

Capital assets of $10 billionCapital assets of $10 billion Some key countries: Algeria, Angola, Burkina Some key countries: Algeria, Angola, Burkina

Faso, DRC, , Ghana, Guinea, Kenya, Faso, DRC, , Ghana, Guinea, Kenya, Madagascar, Mali, Nigeria, South Africa, Madagascar, Mali, Nigeria, South Africa, Tanzania, Uganda, ZambiaTanzania, Uganda, Zambia

Mining Companies by Mining Companies by OriginOrigin

33

13

10

107

5

5

Canada Australia South Africa

USA Europe Latin America

Other

Companies with market capitalization of more than US$1 billion, Jan 2007

Total = 83

Source: TSX, based on Gamah International Limited

Equity Financing Raised for Mining Companies, Selected Regions of the World,2006 = $11.1 billion

Canada - a Global Player:Canada - a Global Player:Equity FinancingEquity Financing

South Africa2%

Hong Kong*32%

Others1%

Canada41%

Australia7%

UK17%

*Includes China Shenhua Energy US$3 billion IPO, 31%

Stock of Canadian Capital Stock of Canadian Capital Mining Assets in AfricaMining Assets in Africa

2006$7 billion

2010 $16-17 billion

$100 M to $500 M

$500 M to $1 billion

More than $1 billion

Less than $10M

$10 M to $100 M

No identifiable assets

Sources: Natural Resources Canada

Case Study – First Case Study – First UraniumUranium

First Uranium Corporation - TSX: FIUFirst Uranium Corporation - TSX: FIU Listing Date - December 19, 2006Listing Date - December 19, 2006 Listing Type - IPOListing Type - IPO $233 Million total proceeds $233 Million total proceeds FIU was the largest mining IPO on TSX in FIU was the largest mining IPO on TSX in

20062006 Market Cap - $1.1 Billion (as at January Market Cap - $1.1 Billion (as at January

29, 2007)29, 2007) Secondary listing on JSESecondary listing on JSE

Case Study continued…Case Study continued…

Focused on the development of Focused on the development of uranium and gold projects in South uranium and gold projects in South AfricaAfrica

The re-opening and development of the The re-opening and development of the Ezulwini underground mine and the Ezulwini underground mine and the construction of the Buffelsfontein construction of the Buffelsfontein tailings recovery facility tailings recovery facility

Identify and acquire additional uranium Identify and acquire additional uranium projects in South Africaprojects in South Africa

Case Study continued…Case Study continued… Simmer & Jack Mines Limited, a JSE listed Simmer & Jack Mines Limited, a JSE listed

company, transferred two development company, transferred two development stage uranium and gold assets located in stage uranium and gold assets located in South Africa to First UraniumSouth Africa to First Uranium

Structured to allow the SA company to Structured to allow the SA company to access the North American equity markets, access the North American equity markets, while at the same time it will remain while at the same time it will remain compliant with South African Reserve Bank compliant with South African Reserve Bank capital control requirements (50% required capital control requirements (50% required ownership) and BEE requirements ownership) and BEE requirements (required ownership is 26%). This is (required ownership is 26%). This is accomplished by Simmer and Jacks accomplished by Simmer and Jacks controlling interest in First Uranium controlling interest in First Uranium

Case Study continued…Case Study continued…

The management team is comprised of The management team is comprised of several high profile South African several high profile South African mining executives and the board will be mining executives and the board will be supported by four Canadian mining supported by four Canadian mining executives. CFO and corporate executives. CFO and corporate secretary are based executive offices in secretary are based executive offices in Toronto.Toronto.

Case Study continued…Case Study continued…

Underwriting syndicate: Underwriting syndicate: RBC Capital Markets, Canaccord Capital RBC Capital Markets, Canaccord Capital

Corporation, National Bank Financial Inc., Corporation, National Bank Financial Inc., GMP Securities L.P., Sprott Securities Inc., GMP Securities L.P., Sprott Securities Inc., Orion Securities Inc., Raymond James Ltd., Orion Securities Inc., Raymond James Ltd., Wellington West Capital Markets IncWellington West Capital Markets Inc

Legal advisors: Legal advisors: Fasken MartineauFasken Martineau

Useful WebsitesUseful Websites MineAfrica- www.mineafrica.com

Canada-South Africa Chamber of Business www.canadasachamber.com

Prospectors and Developers Association of Canada www.pdac.ca

Toronto Stock Exchange - www.tsx.com

Natural Resources Canada - www.nrcan.gc.ca

Ontario Ministry of Northern Development & Mines www.mndm.gov.on.ca

Bruce ShapiroBruce ShapiroPresidentPresident

Canada-South Africa Chamber of BusinessCanada-South Africa Chamber of Businessandand

PrincipalPrincipalMineAfricaMineAfrica

Tel: 416-588-7749Tel: 416-588-7749Fax: 416-588-7504

Email: bruce@mineafrica.comWeb: www.mineafrica.com

Web: www.canadasachamber.com

Special thanks to David Kaiser of TSX, Michel Miron of Natural Resources Canada, Darryl Levitt of Fasken Martineau, and Wayne

Floreani, MineAfricafor inputs into this presentation