CREATING VALUE ACROSS THE RESOURCES SECTOR

The “Perfect” Mix – An Advisor’s View

FINEX ’10

Richard Chase, Managing Director

2

Investors have millions of investment options but you only have the one thing

to sell

3

Company

The ingredients

Sponsorship / Group

Structure

4What are investors looking for?

Positive Underlying

Market Conditions

Demonstrated Growth & Quality of

Growth

Management Track Record

Size / Scale

Industry / Sector

Momentum

Attractive Business

Profile

Optimal Valuation

5

Gold Mining32%

Coal8%

Diamonds & Gemstones8%

General Mining47%

Platinum & Precious Metals5%

Africa10%

Australia6%

Canada4%

Central & Eastern Europe

5%

Channel Islands1%

China10%

India & Bangladesh5%

Isle of Man3%

Israel2%

Japan1%

Latin America6%

Middle East2%

Other Offshore2%

Russia & CIS8%

South East Asia7%

USA11%

Western Europe15%

Countries and Commodities

Source: London Stock Exchange, as at 31 May 2010

AIM companies as per country of operation (exc. UK)

AIM mining companies as per sub-sector

Investors have an appreciation of companies with a diverse range of risk

6Commodity choices

Source:Minerals, Critical Minerals, and the U.S. Economy (2008) Board on Earth Sciences and Resources (BESR)

Metals that are in the news do not necessarily make the most investable projects

7Company considerations for success in financing?

Investment Story

Maintaining Investors Interest

Size / ScaleManagement &

Shareholder Intentions

Rationale

Corporate Governance

Fair valuation with credible justification

8The Marketing Strategy : Building Momentum

Building momentum from the start is critical in maximising value

Team Responsible

Broker Sales Research

• Equity Research• Company Management• Corporate Finance

• Equity Research• Sales• Broker

•Broker•Sales

Identify key investors

By identifying the key investors early in the process, the right institutions can be given direct

marketing access to management and assets. These investors become the cornerstone for future

fundraising.

Sell the cycle as well as company

For an institution to invest they will need to buy into both the equity story and the basic materials

“super cycle”. Ambrian will utilise its Metals and Mining research team to promote the “stronger for

longer” cycle.

Maximise management impact through well-crafted equity story

Management will have the opportunity to sell the equity story to the most important institutions. A meeting with

management is a key part of a fund’s investment criteria. The roadshow presentation, therefore, must be carefully

crafted to have maximum impact.

Aftermarket Support

Ambrian’ will work to maintain an orderly market through sales and research support long after the initial

market interest has subsided.

9Know your target audience

AIM FTSE Small Cap FTSE 100

(Thomson Reuters data)

One size does not fit all

10

Communication

Timeliness and quality of public reporting

Transparency of ownership and arms length operations

Investor relations

Corporate governance and Communications

Prepare early Ensure that systems and controls are in place

Directors dealing process (adoption of the

Model Code)

Compliance with corporate

governance

Internal reporting

Implementation of business strategy

Effective Board

Appropriate management

Employee incentivisation

Internal External

You can hide poor governance, but good governance is evident in everything you do

11

An Example Investment Case

Strong FundamentalsAttractive copper fundamentals,

growth to be underpinned by Emerging markets

Regionally Advantaged

Copper belt, high grade, low cash cost

Regional LeaderLarge reserve in the African Copper

Belt area

Cash flow generativeRobust financial condition and

high profitability

Integrated CompanyState of the art SX/EW, leaching, HMS, and sulphuric acid plants

Strong Management and Clear Strategy

Successful Central African Cu Belt

company

12Enormous Demand for New Copper Exposure There is a strong appetite for copper equities…

Copper remains THE industrial commodity to play the ‘urbanisation and industrialisation’ of China

Large liquid market preferable to OTC markets such as coal and iron ore Not susceptible to substitution like e.g. platinum in catalytic converters or nickel in steel Equity positions can be hedged with metal derivatives No potential supply overhangs as for nickel (laterite) or aluminium in general

…the London Market understands the Africa opportunity

Long history of operating and investing in Africa

Lower risk-discounts placed on DRC companies because of in-depth coverage in the market

…and M&A has left a void in the market

In the last two years competitors have been taken over (Nikanor, CRC, CAMEC and Kiwara) and have left the market

Only equity exposure is now large-end of mid-cap (First Quantum, Vedanta) and pre-production, small low-grade Southern African stocks

We believe there is a huge appetite for a sub £1bn ‘mid cap’ which offers greater leverage to both the copper price and acquisitions

13

Freeport McMoran 8,172 7,518 92%

First Quantum 5,893 5,402 92%

Lundin 2,410 2,160 90%

Equinox 2,424 2,036 84%

Katanga 1,280 1,280 100%

Anvil 483 272 56%

Metorex 385 266 69%

Tiger 91 81 89%

average: 84%

Free Float Market Cap

(US$m)

Market Cap

(US$m)DRC Copper Players

Free Float as a %

Market Cap

Determining the Size and Scale of free float

In the Metals and Mining space free float at IPO is typically 30%

21

39

82

63

48

2923

10 11

26

0102030405060708090

0-10

%

10%-20%

20-30%

30-40%

40-50%

50-60%

60-70%

70-80%

80-90%

>90%

No

of IP

Os

Size of Free Float for London IPO: 2005-2009

3

5

7

3

5

3 3

0

1

2

3

4

5

6

7

8

0-10% 10%-20% 20-30% 30-40% 40-50% 50-60% >60%

No

of IP

OS

Size of Free Float of Peers (avge free float: 84%)Size of Free Float for London¹ IPO: 2005-2009

Source: Thomson One, Datastream

¹ All marketsSource: Bloomberg,

Liquidity, valuation and growth ambition will define free float

Minimum :- Main Market 25%,- AIM 10%

14Positioning the company

Delivering on its stated strategy, investors will value resources and growth

Source: Thomson One, Company Report

EquinoxFirst quantum

Lundin

Metorex

Katanga

Anvil

Tiger

Shalina

0

200

400

600

800

1,000

1,200

1,400

1,600

2.25x 2.50x 2.75x 3.00x 3.25x 3.50x 3.75x 4.00x

EV /

2P

Rese

rves

(US$

/t)

2011 EV/EBITDA

EV =size of bubbleAs an integrated producer with substantial cash flow generation, an IPO should position the Company appropriately in terms of EV / reserves and EV / EBITDA

The Company will transition to higher valuation as it implements its strategy

EV/EBITDA EV/EBITName Market Cap EV CY2010 CY2011

Equinox Minerals Ltd 2,406.5 3,009.9 5.9x 3.8x

First Quantum Minerals Ltd 5,893.0 6,425.8 3.6x 3.1x

Lundin Mining Corp 2,409.5 2,691.5 4.9x 3.8x

Metorex 384.8 715.3 3.4x 2.5x

Katanga Mng Ltd 1,279.5 1,303.8 3.8x 2.6x

Anvil Mining Ltd 483.0 421.6 n.m 2.5x

Tiger Resources 91.3 80.7 2.9x 2.3x

median 3.6x 2.6x

average 3.5x 3.0x

EBITDA 126.2 168.4

448 465

m US$

Implied value Shalina

15London, a Natural Place for Coal Players

London listings cover a wide spectrum of coal companies, spreading from junior developers to world-scale players

Diversified Miners with Large Coal Businesses

Pure Coal Players Cash Shells Focusing on Coal

16Nature and Structure of UK Coal Sector

London investors are accustomed to coal companies with assets located on every continent

Companies Market Cap(m £)

Listing Location of Key Assets

Commentary

New World Resources

1,782 International Main Market

Poland, Czech Republic

Leading CEE producer

Western Coal 937 AIM Canada, USA, UK Originally Canadian based company consolidating in Europe by acquiring the balance of EnergyBuild Group; having acquired AIM listed Cambrian last year

Coal of Africa 534 AIM South Africa Focused SA coal producer (thermal and coking coal) with processing capacity

Ncondezi Coal 160 AIM Mozambique Coking coal developer . IPO successfully conducted in June 2010

UK Coal 118 Main Market UK Largest thermal coal producer in UK

GCM Resources 83 AIM Bangladesh Holding company focusing on large thermal coal project in Bangladesh with equity stakes in Coal of Africa and Polo resources (cash shell for commodity project)

Churchill Mining 96 AIM Indonesia Thermal coal developer being marketed for sale by shareholder

Caledon Resources

60 AIM Australia Coking coal producer and explorer looking for partnership / merger

EnergyBuild Group

53 AIM UK Board has recently recommended offer from Western Coal

ATH Resources 27 AIM UK Opencast thermal coal producer in UK

Palmaris Capital 24 AIM UK Cash shell with 16.1% stake in Scottish Resources Group (UK coal company)

Bisichi Mining 20 Main Market South Africa Junior coal producer focused on SA

Strategic Natural Resources

11 AIM South Africa Cash shell with a 74% in Elitheni Coal (coal developer) and a 26% stake in a South African engineering firm, which will build boilers to burn anthracite

Atlantic Coal 7 AIM USA Cash shell with US thermal coal asset (Stockton mine)

17Recap: Steps to improve success

Clean up the balance sheet

Have audited accounts

Fill gaps in management

Have technical work audited and / or reported on as a CPR

Raise the company’s public profile

Position the company for the right comparisons

Document the competition

Understand investor’s needs

Examine your company as an investor would

Be prepared for the unsolicited approach

18Ambrian Capital: Full service banking

Single asset Company or greenfield development

Intermediate Producer with small number of operating assets

Development and evolution of AMBRIAN Client Companies

Project Finance

• Equity

• Off-take Finance

• Debt

Structured Facilities with hybrid project and corporate aspects

Major Company with multiple established operating assets

Feasibility Stage Company in the process of completing Feasibility/Bankable

Advisory Services

Ambrian advises on various financial solutions

Equity Financetakes an equity position to fund potential exploration companies

Exploration

19

Richard.chase@ambrian.com +44 (0)207 634 4700

CORPORATE FINANCE

& EQUITIESCOMMODITIES

PRINCIPAL INVESTMENTS

AMBRIAN PARTNERS LIMITED

AMBRIAN COMMODITIES LIMITED

AMBRIAN METALS

LIMITED

AMBRIAN ENERGY

LIMITEDAMBRIAN ASSET MANAGEMENT LIMITED

Nominated Adviser

Corporate Finance

Corporate Broker

Equity New Issues

Market Making

Equity Sales & Trading

Research

Broker-Dealer of LME Futures and Options

- Aluminium

- Copper

- Nickel

- Lead

- Tin

- Zinc

Bullion Dealer

Physical metals merchant

Focus on:

- Copper (wire-rod/

cathode)

- Aluminium

- Lead

Physical oils merchant

Focus on:

- Crude Oil and Refined

Products Structured

Trades

- Strategic Inventory

Management Specialist

- Biofuels supply and

blending

Manages Ambrian Principal Investments Limited, wholly owned Jersey investment company

Ambrian Resources AG, majority owned Swiss subsidiary

- Arranges and manages strategic principal investments

FSA Authorised

Member of the London Stock Exchange

FSA Authorised

Associate Broker Member of the London Metal Exchange

London and Shanghai

Agents in Calcutta, New York, São

Paulo, Santiago, Seoul and

Tokyo

London, Geneva, Hamburg, Singapore

Agents in Istanbul, Johannesburg

FSA Authorised

Office in Zug

LONDON METAL EXCHANGE