GLOBAL MININGINVESTMENT CONFERENCE 2010

STATIONERS’ HALL ● CITY OF LONDON ● TUESDAY-WEDNESDAY, 28-29 SEP 2010

www.ObjectiveCapitalConferences.com

Investment Conferences

Raising funds in today’s marketRichard Chase – Managing Director, Ambrian Partners

DAY 1 – OPENING SESSION: WHAT IS THE NEW ‘NORMAL’ FOR MINING?

Other sponsors & participating organisations:

GLOBAL MININGINVESTMENT CONFERENCE 2010

Lead sponsors:

Media partners:

CREATING VALUE ACROSS THE RESOURCES SECTOR

Raising funds in today’s market

RICHARD CHASE

Managing Director

4Expansion and Capital Raising

Raise funds with no loss of control, but• limited availability• income or asset backing • timing

Source of capital and expertise, but • sentiment towards the sector• limited growth • ultimate exit route

Access to capital markets and raises profile, but• cost• change in culture• liquidity• need to augment the management team

• all of the above, and... • dealing with residual liabilities

Raise funds with no loss of control, but• short term solution• identifying a suitable asset / buyer• timing• one off raise modest quantum of funds

Private equity

IPO

Reverse takeover

Sell existing assets

Raise debtMarket to private

funds

Market to trade

Joint Venture

Acquisitions

Expansion and Capital raising

5The basic forms of capital

Project finance

restrictions on what you can do

no dilution of your holding

loan has to be repaid, but interest should be tax deductible

Generally only after (bankable) feasibility study

Private Equity

restrictions on what you can do

dilution of your holding

may have onerous clauses attached (negotiate hard and read the small print!)

Public equity

fiduciary duties

dilution of your holding

potential capital appreciation

easier exit (subject to lock-ins and black-outs)

Joint venture / farm-out

restricted by terms of agreement

Unlikely to provide significant cash injection – but can avoid further cash expenditure

dilution of project equity

dependent on performance of farm-in partner

6Diversity is key in tricky markets

£98.0 million

Nautical Petroleum plc

Secondary Offering raising £30.4 million and £16.3 million Placing of

existing sharesJoint Broker

August 2010

US$47.6 million

Pangea DiamondFields plc

Merger with International Gold by Disposal of

AssetsFinancial Adviser

April 2010

US$40.0 million

Weatherly International plc

Disposal of Namibia Custom Smelters

Financial Adviser

March 2010

7Equity Finance

Bank lending has become more conservative....and expensive

Equity financing can be completed more quickly....and with less rigour ( !? )

Equity investors are readily financing quality projects

Carpe Diem

8AIM: A brief recap

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 to Aug

-

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

0.0

20,000.0

40,000.0

60,000.0

80,000.0

100,000.0

120,000.0

Average daily value £m Average daily shares traded (millions) Market value (£m) (RHS)

9AIM: Outperformance

80

90

100

110

120

130

140

150

16014

Sep

28 Se

p12

Oct

26 O

ct09

Nov

23 N

ov07

Dec

21 D

ec04

Jan

18 Ja

n01

Feb

15 Fe

b01

Mar

15 M

ar29

Mar

12 A

pr26

Apr

10 M

ay24

May

07 Ju

n21

Jun

05 Ju

l19

Jul

02 A

ug16

Aug

30 A

ug13

Sep

Price

(reb

ased

to

100)

AIM Basic Resources ASX All Ord TSX Composite FTSE 250

“…the market is ending the year on a high. The Aim index has risen by 62 per cent since January 1, compared with a rise of 22 per cent in the FTSE 100.

The rate of secondary fundraisings has been picking up, especially in the natural resources sectors.

After the famine of 2008 and 2009, times of plenty might once again return for London’s junior market.”

Source: Financial Times, 15 December 2009

AIM has outperformed the FTSE 250, TSX and ASX over the last twelve months

10London as a source of equity finance

2010 (YTD)

2009 2008 2007 2006 2005 2004 20030.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

90,000.00

Further Money Raised IPO Money raised

2010 (YTD)

2009 2008 2007 2006 2005 2004 20030

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Further Money Raised IPO Money raised

11Choose your broker (and your audience)

AIM FTSE Small Cap FTSE 100

IndividualsMarket Makers

INVESCOBlackRock

ArtemisAviva

FidelityAXA Framlington

SchroderLansdowne Partners

JPMorgan AMF&C

GartmoreM & G

Standard LifeJupiter

HendersonOctopus

LangholmUBS

Hargreave HaleInsight

0% 2% 4% 6% 8%Legal & General

Individuals

Standard Life

M & G

F&C

Schroder

Barclays G.I.

JPMorgan AM

Insight

Aberforth

BlackRock

Market Makers

Aviva

Rathbone

Artemis

Scottish Widows

AXA Framlington

Henderson

Fidelity

INVESCO

Rensburg

Threadneedle

0%1%2%3%4%5%6%7%8%

Legal & General

Barclays G.I.

Capital

M & G

AXA Framlington

State Street

Fidelity

Standard Life

Norges Bank

BlackRock

Insight

Scottish Widows

INVESCO

Capital World Investors

Aviva

UBS

Threadneedle

Schroder

F&C

Newton

USS

Gov't of Singapore

0% 2% 4% 6% 8%

% Market Share by Value

(Thomson Reuters data)

12Alternatives: Private equity and investment companies

Vallar

Special situation vehicle, IPO in July raised £687m

Initial target is one major takeover financed with debt and by issuing additional new shares

Endeavour Financial – now re-named Endeavour Mining

Classic merchant bank

Acquired Etruscan through a finance and restructuring plan

Sold 43% Crew Gold for US$215m, giving an annualise rate of return of 124%

Noble

Started in 1987, it is firmly established as an investor and commodity trader

CIC invested US$850m

13Alternatives: Sovereign Wealth Funds

Source: SWF Institute10 = Overweight / 0 = Underweight

Q3 2009 Q3 2010

14Current trends

Timing has been key

Non-deal road shows are essential to “warm-up” investors

Include the Private Client Brokers: private investor shareholdings have hit a two-year high

Less conventional sources of equity finance have shown clear signs of indigestion

Commodity Financing for traded metals has become more common

as an alternative to equity finance, and as a cornerstone to equity finance

Financing of advanced exploration – especially for gold – is “in”

15Debt

Debt has re-appeared

It is starting to occur further up the development cycle

The two primary drivers are:

securitization means debt holders are first in line if the project is derailed

interest payments incrementally diminish the risk for the lender and provide yield

The current economic landscape supports debt: a debt investor's exposure is limited to a finite time horizon

A potentially inflationary environment makes debt more attractive.

16Alternative loan options

Instrument Comments

Equity Swap • legally binding subscription for shares • subscription reference price at a premium to the prevailing price• monthly “swap” of equity for cash• cash receipt adjusted according to prevailing price in relation to the agreed reference price

Convertible loan note • unsecured• typically 10 -12% coupon• can limit future corporate flexibility

Metal Off-take Financing / Commodity Financing

• pre-payment for future metal off-take• unsecured • pricing mechanism and term of the off-take can have a significant economic impact

Gold Exchangeable Bond • gold secured loan• exchangeable into physical metal at holder’s option• callable by the issuer at trigger price• can be utilised for any exchange traded commodity

17

Company

What financiers look for

Sponsorship / Group

Structure

Sovereign & Political

Technical

Commodity: demand and price

Environmental & Social

Financial Structure

An initial resource estimate is a must

Transparent markets with prices and volumes quoted

Key to management’s reputation

Sound financial structure and procedures is

essential

These risks are increasingly

becoming less palatable

Do they know what are doing?

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 ENERGYLIMITED

AMBRIAN ASSET MANAGEMENT LIMITED

Nominated AdviserCorporate FinanceCorporate BrokerEquity New IssuesMarket MakingEquity Sales & TradingResearch

Broker-Dealer of LME Futures and Options - Aluminium - Copper - Nickel - Lead - Tin - ZincBullion 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

Other sponsors & participating organisations:

GLOBAL MININGINVESTMENT CONFERENCE 2010

Lead sponsors:

Media partners: