Raising finance in today’s market place
RICHARD CHASE
Managing Director
CREATING VALUE ACROSS THE RESOURCES SECTOR

2
“At some point the quantitative
easing will come to an end,
but until it does this bull
market is sponsored by
governments and everyone
Global financial model:
should enjoy it.” 1.Find rainbow
2.Borrow against
expectation of finding
crock of gold

3
New Issues on AIM
Global Mining Offers – Market Share by Number
Global Mining Offers – Market Share by Proceeds

China: Driving demand for natural resources
4
Home Appliances
1%
Iron Ore 58%
Autos & Shipbuilding
5% Other
Energy Coal 38% Metal Goods 6%
6%
Zinc 35%
Construction
Aluminium 35% 48%
Machinery
20%
Copper 28%
Infrastructure
Nickel 27% 14%
Source: BHP Billiton Estimates
0% 10% 20% 30% 40% 50% 60% 70%
Source: CRU, Brook Hunt, IISI, PEL, China Customs, BHP Biliton estimates China’s Urban Residential Floor Space
(Billions of Square Metres)
35
33
30
25
24
20
18
15
10
9
Source: McKinsey & Co, BHP Billiton Estimates
5
2000 2008 2015 2025

Sharp Recovery in Natural Resources Sector
5
China’s Economic Recovery in 2009
Rebound in Natural Resources
(% growth year-on-year to August 2009)
160
Industrial Production +12.3%
140
120
Fixed Asset Investment +33.3%
100
80
Construction Materials Sector +36.6%
60
Passenger Car Sales +90.0% 40
20
Apr 08
Apr 09
Jan 08
Feb 08
Sep 08
Nov 08
Jan 09
Feb 09
Sep 09
May 08
May 09
Jun 08
Jul 08
Jun 09
Jul 09
Mar 08
Dec 08
Mar 09
Aug 08
Oct 08
Aug 09
Exports (23.4%)
FTSE All Share Mining Oil Copper Gold

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www.cartoonstock.com

Equity Finance – Deeply discounted issues in H1 2009
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• UK financings in H1 were dominated by balance sheet repair
• 25% of institutional cash flow was hoovered-up by the top 3 transactions
Current
Price (p) Discount Raised (£m)
Price
RIO TINTO RIGHTS June 1400 50% 7,342 2664
XSTRATA RIGHTS March 210 40% 4,106 916
LONMIN RIGHTS May 900 40% 316 1681
GEM DIAMONDS PLACING April 100 33% 75 248
AQUARIUS PLATINUM PLACING March 180 10% 83 282
AQUARIUS PLATINUM RIGHTS April 115 36% 48 282

Junior Company Equity Finance
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Bank lending has become more
conservative....and expensive
Equity financing can be completed more
quickly....and with less rigour ( !? )
Carpe Diem: gold companies, in particular,
feel an urgency
Quality projects are finding equity financing.

Equity Finance – A Currency for Acquisitions
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Shares are the obvious currency for juniors whose share prices have risen sharply in
the last nine months.
$86.5 million $314.7 million £1.8 million
Avocet Mining plc Sylvania Resources Dwyka Resources Limited
Limited
Recommended all share
Recommended all share offer for Minerva
Recommended all share
offer for Wega Mining Resources
offer by Ruukki Group
Joint Financial Adviser and Financial Adviser, Nominated
Broker Nominated Adviser Adviser and Broker
April 2009 June 2009 July 2009

Equity Finance – Financing for Growth
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• Financing to participate in rights • 100% Equity finance of mine
offer by Extract Resources development and start-up
• World class uranium asset in
Namibia

Equity Finance – Deeply Discounted Rights Issue
11
Pangea DiamondFields
• Critical stage of ramp-up to become cash flow positive
• Massively diluting 15 : 1 open offer
• Fully underwritten by management and key institutions
• Raised £8.7 million at 0.5p/share
• 33% discount
• Repaid loan obligation
• Exercised option to acquire 100% of operations
• Price has recovered to 2p/share

Equity Finance – Rescue Finance
12
African Copper (“ACU”)
• Natasa Mining agrees bridging loan and and equity financing
• ACU offers debt for equity swap to bond holders.
• Natasa buys US$21m secured loan note at 60% face value and calls the loan
• ZCI subscribes for shares at 1p for gross proceeds of £6.76m, giving it 82% interest
• Natasa is repaid in full and releases security over the assets
• ZCI and African Copper agree a re-financing of inter-company loans :
• US$8.4m convertible loan note at 1p for 4 years, with a coupon of 12%
• US$22.7m of ordinary 4 year loan notes with a coupon of 14%

Equity Finance – Choose your broker (and your audience)
13
AIM FTSE Small Cap FTSE 100
% Market Share by
Value
(Thomson Reuters data)

Debt
14
Debt has re-appeared
It is starting to occur further up the
development cycle
The two primary drivers are:
security means debt holders are first in line if the
project is derailed
debt comes with interest payments which
diminish the risk incrementally
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.

Alternative loan options
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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
Gold Participating Bond* • up to 20% of annual mine production
• loan effectively converts to a securitised gold loan
• repaid quarterly as ETF
• pays a coupon
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
* marketed by Canaccord Adams
** marketed by Ambrian

Private Equity
16
Historically avoided cyclical businesses
At the peak they specifically avoid miners because valuations are too high to provide the returns they
seek
And booming investor demand meant smaller companies could obtain capital through share placings
Through high interest rates, private equity financing can provide a solution to the troubles
facing companies at the pre-production / feasibility stage
The expectation is that over a 3 – 5 year timeframe the return will be 2 – 5 times the
investment
The latest development is the tie-up between banking and trading groups with commodity
expertise and Sovereign Wealth Funds (SWF’s) to buy assets

Private equity and investment companies
17
Polo Resources
Aim listed group focused on investing in uranium and coal assets
Capitalised at £120 million
Investments include Extract Resources, West Australian Metals, Impact Minerals, Uranex
Endeavour Financial
Classical merchant bank
Capitalised at US$174 million with cash of US$122m and investments of US$71m
Recently acquired up to 54% of Etruscan Resources through a US$43m finance and restructuring plan

Private equity and investment companies
18
Och Ziff
“Alternative asset” management firm
US$21.7 billion of assets under management
African Global Capital created in January 2008, biased towards natural resources
Noble
Started in 1987, it has moved upstream to secure commodity off take for trading
CIC invested US$850m
Distressed asset acquisitions incldue:
Gloucester Coal (US$430m)
US fuel terminal & storage assets (US$65m)

Sovereign Wealth Funds
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SWF’s have focussed on Resources Companies
An Example
China Investment Corporation
US$200 billion seed with the goal
of improving returns on foreign
exchange reserves
17% of Teck Corporation
14.5% of Noble Group ( for
US$850m at a 8% discount to
market)
US$1.9bn in PT Bumi
Approved investment partners
increase access to global raw
Source: SWF Institute materials (eg: Glencore)
10 = Overweight / 0 = Underweight

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But the last word on why the equity and debt markets are booming must go to Alex.......

Richard.chase@ambrian.com +44 (0)207 634 4700
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CORPORATE FINANCE & EQUITIES COMMODITIES
AMBRIAN PARTNERS LIMITED AMBRIAN COMMODITIES LIMITED AMBRIAN METALS LIMITED
_______________________________________ _______________________________________ _______________________________________
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Equity New Issues - Nickel - Aluminium
Market Making - Lead - Lead
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Research - Zinc
Bullion Dealer
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Seoul and Tokyo
#1 #1
AIM Advisers Extel Sm al l Caps
Basic Materials Metals & Mining
Nomad & Broker Broker
Ambrian Partners Am bri an Partners
April 2009 2009