for personal use only - vital metals limited · pdf filethe information that refers to mineral...

TUNGSTEN IS VITAL

EGM 27 AUGUST 2015

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Disclaimer

Competent Person’s Statement The information that refers to Mineral Resources in this presentation was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the

information has not materially changed since last reported. The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Mark

Strizek, a Competent Person who is a Member or The Australasian Institute of Mining and Metallurgy. Mr Strizek is a full time employee of the Company. Mr Strizek has sufficient experience that is relevant to the style of

mineralisation and type of deposit under consideration and to the activity being undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral

Resources and Ore Reserves”. Mr Strizek consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears. The information in this presentation that relates to

Mineral Resources for the Watershed Deposit is based on information evaluated by Mr Simon Tear who is a Member of The Australasian Institute of Mining and Metallurgy (MAusIMM) and who has sufficient experience relevant

to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of

Exploration Results, Mineral Resources and Ore Reserves”. Mr Tear is a Director of H&S Consultants Pty Ltd and he consents to the inclusion of the estimates in the report of the Mineral Resource in the form and context in

which they appear. This Ore Reserves statement has been compiled in accordance with the guidelines defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code –

2012 Edition). The Ore Reserves have been compiled by Mr Steve Craig of Orelogy Group Pty Ltd, who is a Fellow of Australasian Institute of Mining and Metallurgy. Mr Craig has had sufficient experience in Ore Reserve

estimation relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore

Reserves”. Mr Craig consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears.

Forward looking statements Certain written statements contained or incorporated by reference in this presentation, including information as to the future financial or operating performance of the Company and its projects, constitute forward-looking

statements. All statements, other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”,

“schedule” and similar expressions identify forward-looking statements. Forward-looking statements include, among other things, statements regarding targets, estimates and assumptions in respect of tungsten, gold or other

metal production and prices, operating costs and results, capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates. Forward-looking statements are necessarily based upon a

number of estimates and assumptions related to future business, economic, market, political, social and other conditions that, while considered reasonable by the Company, are inherently subject to significant uncertainties and

contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements. Such factors include, but are

not limited to: competition; mineral prices; ability to meet additional funding requirements; exploration, development and operating risks; uninsurable risks; uncertainties inherent in ore reserve and resource estimates;

dependence on third party smelting facilities; factors associated with foreign operations and related regulatory risks; environmental regulation and liability; currency risks; effects of inflation on results of operations; factors relating

to title to properties; native title and aboriginal heritage issues; dependence on key personnel; and share price volatility and also include unanticipated and unusual events, many of which are beyond the Company's ability to

control or predict. For further information, please see the Company's most recent annual financial statement, a copy of which can be obtained from the Company on request or at the Company's website: www.vitalmetals.com.au.

The Company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. All forward-looking statements made in this presentation are

qualified by the foregoing cautionary statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, not to put undue reliance on such statements.

Cautionary Statement The Definitive Feasibility Study (DFS) referred to in this presentation is based on a Proved and Probable Ore Reserve derived from a Measured and Indicated Mineral Resource, plus a small proportion of mining inventory, which

comprises material that is currently classified as Inferred Mineral Resource. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will

result in the determination of Indicated Mineral Resources or that the production target itself will be realised. The Company advises that the Proved and Probable Ore Reserve provides 93% of the total tonnage and 93% of the

total WO3 metal underpinning the forecast production target and financial projections, and that the additional life of mine plan material comprises less than 7% of the total tonnage and WO3 metal. Furthermore, in the first five

years of production, 95% of the material planned to be processed is based on Proved and Probable Ore Reserves. As such, the dependence of the outcomes of the DFS and the guidance provided in this announcement on the

lower confidence Inferred Mineral Resource material contained in the life of mine plan is minimal. The Company confirms that all the material assumptions underpinning the production target, and the forecast financial information

derived from the production target continue to apply and have not materially changed.

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Watershed tungsten project is located in Queensland Australia a mining friendly country

Highly experienced management team with an average of over 20 years in the mining industry

Access to a highly skilled workforce

High metallurgical recovery delivering a high quality scheelite concentrate

JOGMEC (Japanese Government agency holding 30% project interest) running process to secure a strategic long-term Japanese partner in Watershed Tungsten Project

Significant structural supply / demand imbalance forecast to continue in medium to long term

Technology metal with limited substitution risk in key applications

Limited number of tungsten production ready sites outside of China

Development ready with Mining Lease and Environmental Approvals in place

Ongoing improvements to the development plan for the mine and processing plant

High exploration potential with drill ready prospects

Key Investment Highlights F

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Company Overview

Capital Structure

ASX Code: VML

Share price (21 August 2015): A$0.034

Shares on Issue: 316M

Options on Issue: 80M

Debt: A$3M

Market Cap (undiluted): ~A$10M

Directors

David Macoboy: Non-Exec Chairman (Finance)

Mark Strizek: Managing Director (Geology)

Peter Cordin: Non-Exec Director (Engineering)

Andrew Simpson: Non-Exec Director (Marketing)

Management

Ian Hobson – Company Secretary

Jamie Williamson – Exploration Manager

Major Shareholders - fully diluted*

1 Year Chart

*Assumes following options are exercised:

• Macquarie Bank Limited 58.8M unlisted options

• Vital Directors and Management 20.7M unlisted options

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Tungsten – accept no substitutes

Tungsten (chemical symbol W) is a corrosion-resistant,

dense material with the highest melting point of any metal

and is sought for both its mechanical and refractory

properties:

Tungsten’s density is comparable to Uranium and

Gold

It is the 2nd hardest known substance in the form of

tungsten carbide

Virtually no substitution for many of its applications

Its most important use is in tungsten carbides

(hardmetals).

Tungsten does not occur in its pure metallic form in nature,

but only as a constituent of a wide range of minerals. Of

those, two are of economic importance as they can form

mineable deposits. Those two minerals are scheelite

(Watershed) and wolframite.

Vital will take advantage of scheelite’s UV fluorescence

and high density during exploration and the planned mining

and processing operations at Watershed

Mineral Scheelite Wolframite

Formula CaWO4 (Fe,Mn)WO4

WO3 content (wt.%) 80.5 76.6

Density (g/cm3) 6.1 7.5

Colour Colourless, white, pale yellow

Brown-black

Mohs hardness 4-5 4.5

UV Fluorescence Blue, yellow if Mo-bearing Non fluorescent

Tungsten is a metal that has outstanding properties,

very hard, very tough and heat-resistant

UV Fluorescence Density

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The following industries rely on technology metals (tungsten

carbides) to achieve high productivity and reliability in use.

Automotive Industry:

Tungsten carbide based tools used to manufacture automobile parts

Industrial Engineering:

Cutting tools used in all areas thanks to robustness, strength and wear resistance

Mining & Road Construction:

Strength and wear resistance make carbide tools the first choice in this industry

Aviation:

Hi-tech materials worked using tungsten tools

Super alloys

Energy Oil & Gas:

Needs high wear resistance tungsten carbide tools

Health:

Needs high wear resistance tungsten carbide tools

Agriculture:

wear parts

Defence Applications:

Armour piercing and armour plating

How tungsten is used

China’s consumption of tungsten carbide has yet to catch up

to usage rates in North America, Europe and Japan

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Tungsten pricing is based on the Metric Ton Unit (MTU),

which is equal to 1% of a metric tonne, or 10 kilograms

There is no terminal market for tungsten such as the LME

Reference is made to the London Metal Bulletin (LMB) which

publishes twice weekly the price for Chinese ammonium

paratungstate (APT), an intermediary product

This published price reflects concluded transactions of the

previous half week reported by producers, consumers, and

traders. The price quotation is presented as a range

between high and low prices

The LMB quotation is based on a relatively small percentage

of world production thought to be in the order of around 10%

Tungsten concentrates are refined into intermediate

products before being used in final applications

Tungsten metal consumers prefer to have long term

contracts with primary producers to ensure security of

supply

Tungsten market

Source: Tungsten Market Research

More tungsten concentrates will be required

to meet increasing tungsten demand

Recycling which currently accounts for around 34% of supply cannot meet tungsten demand due to losses including: Dissipation (wear loss, arc erosion, loss due to oxidation) Dilution (loss in general steel melts) Discard (difficult or uneconomic to collect)

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Primary supply of tungsten comes from the mining of

scheelite and wolframite with concentrates accounting for

around 66% of total tungsten demand with the balance

coming from scrap

China dominates the World supply of primary tungsten

production, accounting for 84% of mine production in 2013

China prohibits the export of tungsten concentrate

meaning that non-Chinese consumers must rely on non-

Chinese supply

Most non-Chinese tungsten mines are generally small

scale artisanal or low output semi mechanised operations

Measures are being taken to stop the supply of tungsten

that has been mined under conditions of armed conflict and

human rights abuses: Section 1502 of the Dodd–Frank Wall Street Reform and Consumer

Protection Act

EU legislation requiring European importers of metals such as tungsten to

certify there supply chain is conflict metal free

The recent closure of the Cantung mine will put further

pressure on the supply of tungsten concentrates

Tungsten supply World Mine production of tungsten concentrates,

by country, 2002 to 2013


Source: ITIA

Artisanal mining

China does not allow the export of tungsten concentrates

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Chinese tungsten concentrate is used to feed domestic demand

which has grown to such a level that China has been a net importer

of tungsten concentrate since 2008

China’s focus is to move from being a supplier of raw materials into

value added finished products

This has been implemented via export quotas and tariffs. Last year

the WTO found against Chinese trade practices and this has resulted

in the replacement of export quotas with a new 6.5% resource tax

Chinese tungsten enterprises tend to be vertically integrated and

produce intermediate products with six companies accounting for the

majority of production

Chinese tungsten ores now require more beneficiation, are more

complex and have lower utilisation value

Rising costs and declining ore grades at current mines mean that

Chinese producers are struggling to maintain output

There is a growing application and enforcement of taxation, safety

and environmental protections

Chinese supply unable to meet its own needs

Average site cash costs for a typical Chinese operation

were estimated to be around US$165/mtu to produce a

65% WO3 concentrate in 2013 -

10,000

20,000

30,000

40,000

50,000

60,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

RM

B

Ratio of export volume to domestic consumption

Now a net

importer

Chinese average yearly wages

Source: Tungsten Market Research, ITIA

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There is a strong link between tungsten

consumption and GDP with consumption having

grown by 4% between 2004 and 2013

Chinese tungsten consumption increased sharply

over this time as the country experienced rapid

economic development

U.S. consumption of tungsten has steadily

increased in line with increasing GDP

Japan is the highest user of tungsten on a per

capita basis being a large exporter of high value

tungsten tools

Chinese tungsten consumption is expected to

continue to grow as the Chinese economy moves

into a consumption based economy

Assuming it follows U.S. levels of consumption

China will require an additional 12,000 tonnes of

tungsten per annum

Indian consumption is expected to increase on

the back of increasing economic development

Tungsten demand linked to GDP

There is a close link between increasing tungsten

consumption and increasing GDP

Japanese consumption of tungsten on a per capita basis is high however most tungsten tends to be exported as carbide tools

Source: World Bank, ITIA, USGS, Tungsten Market Research

Tungsten use per Capita against GDP per Capita

Forecast Chinese

consumption

Indian consumption

starting to grow

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Tungsten demand case study: Automobiles

Automobile manufacture is not possible without the use of tungsten in

the form of tungsten carbide cutting tools

Increasing worldwide automobile production has lead to ever

increasing demand for tungsten in the form of carbide tools

Vehicle motorisation rates in China (93 vehicles / 1,000 inhabitants)

and India (20 vehicles /1,000 inhabitants) are low compared to rates

in the U.S. (790 vehicles /1,000 inhabitants)

Watch for Indian growth

production in 2014

Source: OICA

Asia

Oceania

produced

47 million

vehicles

in 2014

Chinese tungsten demand

2004 to 2012

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Tungsten demand: past and future

Automobile manufacture is not possible without the

use of tungsten in the form of tungsten carbide cutting

tools

Source: USGS, ITIA, Argus Media, Tungsten Market Research

World tungsten demand, by country, 2004 to 2013

North America Europe Russia Japan China

Tungsten Carbides 66% 67% 54% 76% 54%

Mill Products 20% 11% 3% 3% 11%

Steels/alloys 9% 11% 37% 20% 28%

Other 5% 11% 6% 1% 7%

Est Tonnes W content

14,400

17,600

1,700

5,800

49,200

World tungsten demand, by end use, 2013

World forecast tungsten market supply / demand, 2004 to 2018

APT price outlook

forecast

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Large, low-cost, long life project

Fully permitted with all Mining Leases, Environmental Authority

and Indigenous Land Use Agreements in place

Highly visible ore with simple geology, mining and metallurgy

49.3Mt @ 0.14% WO3 for 70,400 tonnes WO3*

High metallurgical recovery delivering a high quality scheelite

concentrate

10 year LOM* with estimated total production 24,900 tonnes

WO3

DFS has identified upside on Resource, costs and LOM*

Experienced management team with focus on development and

production

Local community and Queensland Government is supportive of

the Project

Japanese Government agency JOGMEC (30% project interest)

introducing strategic JV partner

Investment decision and commencement of site establishment

earthworks anticipated in 2016

Watershed Tungsten Project, Queensland

*Notes:

• See Appendix for full details of Mineral Resource Estimate and Ore Reserve Statement

• Updated DFS figures reported in ASX release 22 January 2015, 29 June 2015

• See accompanying Forward Looking and Cautionary Statements

Watershed is located around 115km NW from

Cairns

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Proposed mine site is ideally

located close to the growing

centres of Cairns, Port

Douglas and Mareeba

Cairns has an International

and domestic airport

Watershed is located around

24km from the State highway

and Ergon 132kv grid power

line

The Project has minimal

infrastructure requirements:

24km track upgrade

24km grid power

connection

Process plant

Mine development

Accommodation camp

Water dams

Watershed infrastructure F

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Scheelite is the sole economic tungsten bearing mineral

present within the deposit.

Significantly it is a molybdenum-free variety and fluoresces

a brilliant blue-white (molybdenum in scheelite attracts

penalties from APT smelters)

Scheelite is hosted by calc-silicate and albite-muscovite

altered units as well as by quartz-feldspar veins contained

within these altered units

Three styles of mineralisation are observed:

East-west orientated quartz-scheelite vein swarms (a

and below right) with some locally developed north-

south veins. The highest tungsten grades occur where

veins are hosted by the calc-silicate altered units and

biotite is present, and

Disseminated scheelite mineralisation (b) within the

calc-silicate altered calcareous limestone and

arenaceous units.

Albitised felsic dyke (not shown)

Veins carrying scheelite are between a few mm to 1m in

true thickness, with most being between 1 cm and 30 cm

Watershed Geology

Veins carrying scheelite can host bonanza grades

Examples of Watershed scheelite mineralisation

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Scheelite mineralisation intersected by exploration drilling

can be of high grade

Within the resource database:

Over 300 composite intervals exceed 5m length and

have an average grade of 0.5% WO3

160 composites with a length exceeding 5m having an

average grade of 1.0% WO3

High grade scheelite mineralisation has also been

intersected at a grade control drill spacing level (10 metres

east by 10 metres west) at three different areas (located

within the current Mineral Resource)

Extensive high-grade scheelite mineralisation hosted in

cross-cutting quartz-vein structures was encountered in the

drilling program. Some of the best intersections previously

reported* in the Northern zone included:

7m at 0.56% WO3 from 19m

13m at 0.42% WO3 from surface and 7m at 1.59% WO3

from 29m in the same hole

High grade mineralisation from surface

High grade scheelite mineralisation is targeted

early in the DFS mine plan

* ASX Announcement 26 February 2008

Surface sampling and RC drilling traces (grade control spacing)

showing scheelite mineralisation intercepts (North Zone)

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Vital believes there is good potential for the future

development of an underground operation at Watershed

Exploration drill testing has been able to demonstrate that

the tenor and width of scheelite mineralisation increases at

depth

Vital’s drill testing of vein style scheelite mineralisation was

able to identify continuity over a zone extending 175 metres

west and 125 metres depth from previously known drill

intercepts

Drill hole MWD119 reported mineralisation intermittently

over 286 metres from 91 to 377 metres down-hole with the

best interval being 20 metres at 1.27% WO3 from 302

metres (including 2 metres at 5.33% WO3 and 7 metres at

1.79% WO3)*

This high grade vein style scheelite mineralisation is around

100 metres below the pit and remains open at depth and

along strike

Further exploration drilling has the potential to convert this

into the Mineral Resources required to support an

underground operation

High grade mineralisation at depth

Scheelite mineralisation is

open along strike and

at depth

* ASX Announcement 19 February 2007

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Open pit mining

Low cost open cut mining will use a 200t hydraulic excavator and 5 x 100t dump

trucks to feed a 2.5Mtpa processing plant over 10 years

Highly visible ore will assist with selective mining

Waste to ore ratio is around 2.87 to 1 LOM

Mining studies for the Project have included:

Geotechnical drilling and modelling

Mining cost modelling

Optimisations and scheduling

Pit design and waste rock dump designs

Rock conditions are good and may allow pit slopes to be steeper than forecast

Ore is visible

assisting mining

operations

Simple low cost

open cut mining

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DFS flowsheet - low cost high recovery

Extensive metallurgical test work has been completed with over 150

tonnes of material sourced from an underground adit and 11 metallurgical

holes

DFS flowsheet maximises scheelite concentrate grade, recovery and

minimises power consumption (low Opex)

2.5Mtpa ROM ore feed passed over X-Ray ore sorters and spirals to

reject 84% of the material (2.1Mtpa of barren gangue) prior to flotation

400,000 tonne feed grading around will be around 1% WO3 fed to small

oxide flotation circuit

Flotation produces premium 65% WO3 concentrate at average recovery of

73.6%

Underground Adit X-Ray showing scheelite (dark)

-80mm to

+ 10 mm

-0.5mm

-0.125mm

Mass Balance

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Premium scheelite concentrate

Around 3,800 tonnes of scheelite concentrate

grading 65% WO3 will be produced annually

Concentrate produced using the DFS flowsheet will

be very marketable as it is a high grade (>65%

WO3), high quality product with most penalty

elements either close to trace or well within

acceptable levels

Molybdenum (Mo) is at trace levels and well below

any penalty threshold (Mo is a major penalty

element which if too high will result in a shipment

being rejected)

Radioactivity is at trace levels with combined U and

Th being well below trigger levels (Radioactivity

above specification can also result in a shipment

being rejected)

Arsenic in the concentrate is also well below any

penalty thresholds

As a result of this the concentrate product will be

able to sold at a premium and shipped anywhere in

the world

Watershed Tungsten Project

Watershed ticks the boxes; producing a clean high

grade scheelite concentrate that can be shipped

anywhere in the world

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Japan has a world class tungsten industry that produces high technology tungsten metal products for domestic and international consumption

Japan has no domestic tungsten mining industry and relies 100% on imports to supply its industry

Japanese tungsten industry is dominated by Mitsubishi and Sumitomo group companies who produce tungsten carbide tooling, primarily for the automotive industry in Japan and exported internationally

Mitsubishi and Sumitomo group companies have conversion facilities that can convert tungsten concentrate into intermediary products such as APT

Strategic tungsten stockpiles in Japan have steadily decreased since 2012 and are now at low levels representing around 60 days of production

JOGMEC (30% project interest) is running a tender process to secure a Japanese company as a joint venture partner in the Watershed Tungsten Project:

JOGMEC earn in agreement was signed in May 2011 and expires 31 December 2015

JOGMEC earnt a 30% interest in the Watershed Tungsten Project by spending $5.4M and maintain their interest by contributing to expenditure on a pro-rata basis

JOGMEC hold rights to transfer their project interest to one or more Japanese companies

JOGMEC expected to select tender winner by end of September 2015

Strategic Japanese JV partner

Japan currently relies on tungsten imports from China

to sustain its tungsten industry

“JOGMEC Seeks a Stable Supply of Natural Resources for Japan”

* Companies involved in the Japanese tungsten industry are listed for information

purposes only and does not imply a commercial arrangement with Vital Metals Ltd

Japan has a vibrant tungsten industry*

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Relentless focus - improving the bottom line

Market conditions conducive for up to 20% operating

cost reduction over DFS* baseline: Diesel

Grid electricity charges

Labour availability

Competitive market conditions

Continuous review of the DFS has identified savings in

the pre-production capital costs: Significant surplus capacity amongst mining and construction

contractors

Reduction in demand for mining and plant equipment with a large

amount of surplus and second-hand equipment in the market

Improved labour availability for construction and mine site jobs

Falling input costs mean this is a great time to

back and build a mining project in Australia..

Project Capital Cost

Estimates

DFS Sep 2014 DFS Update

June 2015

Mining $2.2M $2.2M

Processing Plant $130.5M $105M

Site Infrastructure $36.2M $32.8M

Working Capital $3.4m $3.4M

Total $172.3M $143.4M

*Notes:


• An exchange rate of A$1:US$0.76 has been assumed

• Capital costs are on an 100% equity basis


Watershed Tungsten Project APT Breakeven Price

Our target

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Project 15

Targeting up to 15 year open cut mine life

Mining and processing rate assumptions

unchanged from DFS*

Current long term pricing assumption of

US$325/mtu and FX US$0.70

Boost to NPV and free cashflow, potentially

100% increase

Tungsten metal output up around 135%

Conversion of Inferred Resources will add

more again

Potential satellite open pits and underground

to add further life

With mineralisation open along strike and at depth,

Watershed has all the ingredients to be a significant

long life operation... Notes:

• ASX Announcement 17 September 2014


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Cash cost curve

Vital C1 first 3 years US$124*


World cost curve for tungsten production, 2013 (US$/mtu)

*Notes:




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Watershed Tungsten Project is ready to go

Excellent opportunity to leverage growing tungsten demand

JOGMEC (30% interest in project) key to securing partnership with Japanese

company that will provide off-take and assist with project financing

Good opportunity to grow beyond the 10-year open pit operation identified in DFS

Significant exploration potential to add additional mineral resources near to the

proposed mine development

Clear pathway to commence development in 2016, subject to successful

completion of project finance

Vital – why invest

Transfer of JOGMEC Interest

to JV Partner

Project Financing

Construction Mining

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Mineral Resources and Ore Reserves

Project Capital and Operating Costs

Watershed financial scenarios

Exploration Potential

Appendix F

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Mineral Resources and Ore Reserves

Mineral Resources Tonnage Mt WO3%

Measured 9.5 0.16

Indicated 28.4 0.14

Sub Total: Measured and Indicated 37.8 0.15

Inferred 11.5 0.15

Total: Measured, Indicated and Inferred 49.3 0.14

Ore Reserves Tonnage Mt WO3%

Proved 6.4 0.16

Probable 15 0.14

Total: Proved and Probable 21.3 0.15

Notes to accompany Mineral Resources and Ore Reserves • Mineral Resources first reported in ASX release 30 July 2012

• Ore Reserves first reported in ASX release 17 September 2014

• Mineral Resources are inclusive of Ore Reserves

• Mineral Resources and Ore Reserves reported at a cut-off grade of 0.05% WO3

• Please refer to Competent Persons statement accompanying this presentation

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Project Capital and Operating Costs

Project Capital Cost Estimates A$M US$M

Mining 2.2 1.7

Processing Plant 105 79.8

Site Infrastructure 32.8 24.9

Working Capital 3.4 2.6

Total 143.4 109.0

C1 Cash Cost Estimates – Life of Mine A$/ t ore A$/mtu US$/mtu

Mining 12.8 111 85

Processing 7.5 69 52

Administration and Transport Charges 1.5 14 11

Total 20.9 194 148

Notes to accompany Capital and Operating Costs • Updated DFS figures reported in ASX release 22 January 2015, 29 June 2015


• Capital costs are on an 100% equity basis

• Operating costs are on a life of mine basis


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Watershed financial scenarios

APT US$300/mtu

FX US$0.76

APT US$325/mtu

FX US$0.76

APT US$350/mtu

FX US$0.76

APT US$375/mtu

FX US$0.76

Pre Tax Post Tax Pre Tax Post Tax Pre Tax Post Tax Pre Tax Post Tax

NPV @ 8% $68M $37M $119M $73M $170M $109M $221M $145M

IRR 18.3% 14.1% 25.1% 19.4% 31.4% 24.4% 37.3% 29.0%

Payback Years 4.1 2.8 2.5 2.3

Free Cashflow $178M $125M $258M $181M $337M $237M $416M $292M

Cash Costs US$/ mtu 148

Total Costs US$/ mtu 192

Notes to accompany financial scenarios: • Figures reported in ASX release 29 June 2015 and are on a 100% equity basis

• Operating costs are on a life of mine basis

• Please refer to accompanying Forward Looking and Cautionary Statements

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Exploration potential

Name Tenement Element of Interest Tonnage Range (kt) Grade Range Comments

Watershed Deeps* ML20536 W 10,500 – 14,000 0.14 - 0.25% These Exploration

Targets are conceptual

in nature, and there has

been insufficient

exploration to define a

Mineral Resource. It is

uncertain if further

exploration will result in

the estimation of a

Mineral Resource.

Watershed South* MDL127 W 830 - 1,000 0.06 - 0.15%

Desailly North* MDL127 W 830 - 1,000 0.06 - 0.15%

Desailly* MDL127 W 1,150 – 1,500 0.06 - 0.15%

Mt Elephant* EPM 14735 W, Sn 1,000 - 3,000 0.06 - 0.15%

Slaty Range* EPM 25102 W, Sn 35,000 – 60,000 0.10-0.18%

Exploration Potential exclusive of current Mineral

Resource W 49,000 – 80,000 0.10-0.19%

* Notes to accompany Exploration Potential • Exploration Targets reported 25 November 2013, AGM Presentation. Slaty Range reported 13 October 2014 • Please refer to Competent Persons statement accompanying this release

For

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Exploration potential F

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