Junior Miners The Debt Sentence Dr Tim Williams

Junior Miners: The Debt Sentence? Dr Tim Williams Director Global Mining & Metals, Transaction Advisory Services, Ernst & Young LLP +44 (0)20 7951 2922 twilliams@uk. ey. com

Ernst & Young in the mining industry ► A global leader in assurance, tax, transaction and advisory services ► Globally we work for 25 of the top 30 mining and metals companies ► We lead the way in emerging markets, and have advised on key flotations in the sector, including: Xstrata plc; Hochschild Mining Ltd; Kazakhmys plc; Gem Diamonds Ltd; Ferrexpo Ltd; Fresnillo plc; Ruuki Group plc; and on Rio Tinto/BHP and Xstrata/Anglo American proposals ► We have advised on many transactions in the sector, including two of the largest deals in recent years: Falconbridge by Xstrata; and Inco by Vale ► 2 We are recognised as leading advisors in key financial centres: ► We lead the UK mining new listings; 9 of the last 12 ► We work for all of the FTSE 100 mining and metals companies 27 -28 October 2010 FINEX ‘ 10

Don’t be short-termist 3 27 -28 October 2010 FINEX ‘ 10

Copper, what recessions? 4 27 -28 th October 2010 FINEX ‘ 10

Aluminium, the young metal: solid electricity 5 27 -28 October 2010 FINEX 10

Aluminium stock shock 3, 500 5, 000 4, 500, 000 3, 000 4, 000 3, 500, 000 3, 000 2, 500, 000 1, 500 2, 000 1, 500, 000 1, 000 500, 000 27 -28 October 2010 FINEX 10 10 03 /0 1/ 20 09 1/ /0 03 20 08 1/ 20 1/ /0 Aluminium price 03 /0 03 20 07 06 20 1/ 03 /0 Aluminium stocks Source: LME, Thompson Datastream 6 05 04 20 1/ /0 03 03 /0 1/ 20 02 20 1/ /0 03 03 /0 1/ 20 00 20 1/ /0 03 03 0 01 0 Stocks (tonnes) Price US$/t 2, 500

Mining surviving Mining Eye index , gold, copper and LME Index since 2004 Source: Ernst & Young, Thomson Datastream 4, 500 4, 000 Index value 3, 500 3, 000 2, 500 2, 000 1, 500 1, 000 500 Mining Eye 7 27 -28 October 2010 Gold (rebased) FINEX 10 Copper (rebased) LME Index (rebased) 10 20 09 20 08 20 07 20 06 20 05 20 20 04 0 FTSE AIM All-Share

Yo. Y movement in net debt – 1980 to 2009 Recessions 100 80 60 US$ billion 40 20 0 -20 -40 -60 -80 YOY net debt movement Net equity issued Source: Ernst & Young, Worldscope via Thomson Datastream. Forecasts are Reuters consensus estimates, via Reuters Knowledge 2012 F 2011 F 2010 F 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 Forecast 1980 -100

Mining eye looking good 9 27 -28 October 2010 FINEX 10

Miners have been leading AIM in 2010… Mining Eye index and FTSE AIM All-Share index performance, 2010 Source: Ernst & Young, Thomson Datastream 2, 900 2, 700 Index value 2, 500 2, 300 2, 100 1, 900 1, 700 Mining Eye 10 27 -28 October 2010 FINEX ‘ 10 FTSE AIM All-Share (rebased) 10 20 Se p 10 20 Au g Ju l 2 01 0 10 20 n Ju M ay 20 10 01 0 r 2 Ap M ar 20 10 10 20 b Fe Ja n 20 10 1, 500

Mining returning to importance on AIM Value of AIM mining universe and as % of all AIM, 2004 -2010 25, 000 25% 20, 000 20% 15, 000 15% 10, 000 10% 5, 000 5% 0 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 2004 2005 2006 2007 2008 2009 2010 Mining 11 27 -28 October 2010 FINEX 10 Mining as a % of all AIM (RH scale) 0% Mining as % of all AIM Mining market value GB£m Source: Ernst & Young analysis of AIM market statistics; market values as at quarter-end

Ins and outs of the AIM miners AIM mining admissions and delistings since 2006 Source: Ernst & Young analysis of AIM market statistics; includes IPOs, introductions and readmissions; excludes transfers to and from Main Market 14 12 Number of companies 10 8 6 4 2 12 27 -28 October 2010 FINEX 10 20 1 0 0 Q 3 0 20 1 Q 2 9 20 1 Q 1 20 0 Q 4 20 0 9 9 Q 3 9 20 0 Q 2 8 Delistings Q 1 8 20 0 Q 4 20 0 8 Admissions Q 3 8 20 0 Q 2 20 0 7 Q 1 7 20 0 Q 4 7 20 0 Q 3 7 Q 2 6 20 0 Q 1 6 Q 4 6 20 0 Q 3 20 0 Q 2 Q 1 20 0 6 0

AIM mining funds raised; and all AIM funding 1, 400 7, 000 1, 200 6, 000 1, 000 5, 000 800 4, 000 600 3, 000 400 2, 000 200 1, 000 0 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 2004 2005 2006 2007 2008 2009 2010 Mining new issues GB£m 13 8, 000 Source: Ernst & Young analysis of AIM market statistics 27 -28 October 2010 FINEX 10 Mining further issues GB£m AIM total issues GB£m 0 AIM total fund raised GB£m AIM mining funds raised GB£m 1, 600 Quarterly trend of funds raised on AIM: mining and all sectors

Gold remains the target Source: Ernst & Young 14 27 -28 October 2010 FINEX ‘ 10

New mining listings on AIM this year ► Scotgold Scotland £ 0. 7 m ► Bellzone iron ore Guinea £ 34 m ► Kibo gold Tanzania £ 0 m ► Metminco Cu, Au, Mo, Zn Peru, Chile £ 9. 3 m ► Ncondezi Coal coal Mozambique £ 36 m ► Central Asia Metals Cu, Au, Mo Kazakhstan, Mongolia “ Source: press reports 15 27 -28 October 2010 FINEX 10 £ 38 m

AIM mining consolidators: “M” ► Rusina Mining and European Nickel ► Western Coal and Energybuild ► Braemore Resources and Jubilee Platinum ► Hidefield Gold and Minera IRL ► Ridge Mining and Aquarius Platinum ► Cambrian Mining and Western Coal Corp ► Mano River Resources and African Aura Source: press reports 16 27 -28 October 2010 FINEX 10

AIM miners as targets, last 18 months: “A” ► Afnat Resources by Axmin ► Kiwara by First Quantum ► Mowdow Mines by Franco Nevada ► CAMEC by ENRC ► Moto Goldmines by Randgold Resources ► Glencar Mining by Gold Fields ► Minerva Resources by Dwyka Resources ► Cambrian Mining by Western Coal ► Oriel Resources = Source: press reports 17 27 -28 October 2010 FINEX 10 Mechel

Let’s be partners… ► ► ► Jubilee Platinum and Sylvania Resources Mariana Resources and Cliffs Natural Resources Allied Gold Nyota Minerals Petra Diamonds Herencia Resources Serabi Mining Goldstone Resources Triple Plate Junction Karelian Diamonds European Nickel Source: press reports 18 27 -28 October 2010 FINEX 10 – PGMs joint venture – – – exploration partnership IFC IFC Nyrstar Eldorado Gold Bendigo Resources Newcrest Mining: joint venture Rio Tinto: exploration partnership Hunter Dickinson – – –

China! ► ► ► ► ► African Minerals’ Tonkolili iron ore in Sierra Leone – China Railway Materials Commercial Corp African Minerals – Shandong Iron & Steel Oxus Gold’s Amantaytau Goldfields in Uzbekistan – Chinese financiers European Nickel’s Caldag nickel project – Jiangxi Rare Earths and Rare Metals Tungsten Group Toledo Mining’s nickel in Philippines – Jinchuan Group Chromex Mining’s lumpy chrome (offtake) – Suzhou Kaiyuan Chemical Bellzone Mining’s Kalia iron ore in Guinea - China International Fund Kryso Resources’ Pakrut gold in Tajikistan – China Nonferrous Metals Sirius Minerals - potash - Sino-Agri Mining Source: press reports 19 27 -28 October 2010 FINEX 10

Bubble bath? Double bubble trouble? 20 27 -28 October 2010 FINEX ‘ 10

Our views and opinions www. ey. com/miningandmetals

Thank you Michael D Lynch-Bell EMEIA Leader Mining & Metals Ernst & Young LLP +44 (0)20 7951 3064 mlynchbell@uk. ey. com

Disclaimer This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research, or the exercise of professional judgement. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. 23 27 -28 October 2010 FINEX ‘ 10