This document summarizes three case studies conducted by Gorham & Partners regarding nickel market and product strategies. The case studies evaluated: 1) product and commercialization options for nickel and cobalt from the Alpha mine, 2) product options for laterite nickel from the Sigma mine, and 3) Gorham & Partners' work assisting mining companies with strategic questions like securing finance and alternative paths to funding. The summaries included market analyses, customer interviews, pricing forecasts, and recommendations.

1. Three
case
studies
demonstra0ng
Gorham
&
Partners’
recent
work
on
nickel
market
and
product
strategies
Summer
2013
Gorham
and
Partners
Nickel
Case
Studies

2. What
Gorham
does
Slide
2
• Over
20
years’
experience
• 10
years
focusing
exclusive
on
mining
and
metals
Global
metals
and
mining
consultants
• We
supplement
engineering-­‐led
evalua>on
projects
with
• Data-­‐driven
compe>tor
analysis
• Deep
understanding
of
end-­‐users
and
other
par>cipants
in
the
value
chain
(gained
through
face
to
face
mee>ngs
and
economic
modelling)
Focus
on
strategic
ques0ons
• For
junior
miners,
securing
finance
post
the
global
financial
crisis
is
the
key
challenge
• Gorham
has
a
twofold
approach
to
assist
in
the
search
for
funds
• Through
our
rigorous
work
down
the
resource
value
chain,
we
are
able
to
iden>fy
and
introduce
non-­‐tradi>onal
investors
who
will
directly
benefit
from
the
development
of
your
project
• We
also
have
a
rigorous
process
to
introduce
exci>ng
mineral
projects
to
a
wide
range
of
high
net
worth
global
investors,
currently
struggle
to
iden>fy
higher
risk/
return
opportuni>es
for
their
porMolios
Alterna0ve
paths
to
funding

3. Evalua0ng
the
product
and
commercial
op0ons
for
nickel
and
the
cobalt
by
product
from
the
Alpha
mine
May
2012
Gorham
and
Partners
Nickel
Case
Studies
1
1

4. What
we
set
out
to
deliver
Slide
4
Accurate
and
detailed
analysis
to
support
detailed
feasibility
study
1.
Market
analysis
for
nickel
hydroxide
precipitates
(NHP)
vs
nickel
market
2014-­‐2018
2.
Customer
tes0ng
and
development
for
NHP
and
cobalt
(10-­‐20
interviews
for
NHP,
5-­‐10
for
cobalt)
3.
Op0mal
strategy
for
commercialisa0on
of
cobalt
by-­‐products
4.
Price
outlook
NHP/
nickel
metal/selected
cobalt
product
op0ons
5.
Recommended
strategy
for
Alpha
6.
Sales
forecast
for
Alpha,
2014-­‐18

5. How
we
went
about
it
Slide
5

6. What
we
found
Slide
6
Drivers
of
global
Ni
market
Ni
price
outlook
2014-­‐21
Market
impact
of
non-­‐ferrous
Ni
alloys
Impact
of
nickel
pig
iron
on
ferronickel
market
Economics
of
direct
feed
vs.
intermediate
products
Customer
preferences
for
intermediate
Ni
products
Economics
of
alterna0ve
cobalt
products
Op0mal
product/
market
strategy
for
Alpha
Price
forecasts
for
chosen
strategy
Resultant
sales
forecasts
for
Alpha

7. What
we
wrote
Slide
7

8. What
happened
• Reframed
Alpha’s
view
of
the
market
for
intermediate
products
• Opened
possibility
for
radically
different
go-­‐to-­‐market
op>ons,
with
huge
implica>ons
for
feasibility
study
• Increased
price
forecasts
for
contained
Ni
and
Co
metal
• Improved
compe>>ve
outlook
• Changed
geographic
focus
for
marke>ng
effort
• Opened
doors
to
new
sources
of
partnership
and
finance
Slide
8

9. Evalua0ng
the
product
op0ons
for
laterite
nickel
from
the
Sigma
mine
December
2012
Gorham
and
Partners
Nickel
Case
Studies
2
2

10. What
we
set
out
to
deliver
Slide
10
Evaluate
alterna0ve
product
op0ons
for
new
laterite
nickel
project
(Sigma
mine)
1.
Quan0fy
degree
to
which
stainless
steel
producers
will
shi]
towards
lower
grade
Ni
feeds
2.
Evaluate
feedstock
alterna0ves
for
relevant
stainless
steel
producers
3.
Outline
latest
view
of
global
nickel
outlook
and
client’s
posi0on
within
that,
including
compe0tor
analysis
4.
Price
for
nickel
based
on
refreshed
understanding
of
supply
and
demand
5.
Compara0ve
evalua0on
of
product
op0ons
for
the
Sigma
mine
6.
Evalua0on
of
strategic
op0ons
for
Sigma’s
parent
company
7.
Recommended
course
of
ac0on
for
Sigma

11. How
we
went
about
it
Slide
11
Ni
NPI
FeNi
STS
Scrap
Associa0on
+
Expert
9
9
8
9
9
Ni
Producer
2
1
1
1
0
STS
Producer
13
7
9
13
9
Trader
2
2
1
0
1
Recycler
1
0
0
0
1
Product
Info
Value
Chain
Level
Structure
of
the
inves0ga0on
Interviewing
5
experts
on
the
G&P
nickel
expert
panel
Market
inves>ga>on
• 8
Interviews
in
China
• 8
Interviews
in
India
• 5
Further
Asian
interviews
• 5
Interviews
in
ROW
Desktop
research
Quan>ta>ve
and
qualita>ve
analysis

12. What
we
found
Slide
12
1.
Will
STS
producers
switch
feeds?
2.
Alterna>ve
STS
feeds:
2a.
Stainless
steel
scrap
2b.
Nickel
Pig
Iron
2c.
Ferronickel
2d.
Nickel
Oxide
2e.
MSP
and
nickel
metal
3.Nickel
supply,
demand
compe>tor
analysis
4.
Nickel
price
forecast
5.
Evalua>on
of
op>ons
for
Sigma
project
5.
Strategic
op>ons
&
rec.s

13. What
we
wrote
Slide
13

14. What
happened
• Sigma
project
is
under
development
for
one
of
the
top
5
global
Nickel
producers
• Clarified
product
op>ons
available
to
Sigma,
highlighted
importance
of
considering
end
user
economics
and
preferences
in
final
decisions
• Established
framework
for
client
to
make
that
decision
when
needed
Slide
14

15. Evalua0ng
the
Commercial
and
Processing
Op0ons
for
the
Lambda
Nickel
Project
October
2008
Gorham
and
Partners
Nickel
Case
Studies
2
3

16. What
we
set
out
to
deliver
Slide
16
Evaluate
alterna0ve
product
op0ons
for
new
laterite
nickel
project
(Lambda)
1.
What
markets/
applica0ons
should
Lambda
aim
at?
2.
Which
products/
process
routes
should
Lambda
make/
follow?
3.
What
compe00ve
environment
will
Lambda
be
facing
in
2015
onwards?
4.
What
price
structure
will
Lambda
be
able
to
achieve
for
its
full
product
range
in
2015
onwards?

17. How
we
went
about
it
Slide
17
Forecasted costs for the
duration
of the investment
Revenue stream from
selected product -market
combination (s)
NPV of each product -
market combination
Sales forecasting
Demand forecasting
Benchmarking the
forecasted sales
(Competitor Analysis)
Price forecast for Ni
products in their
selected markets
Expert interviews on the
forecasted sales
Interest rate forecast
Nickel price forecast
Market characteristics Supplier power
• Company size
• Financial strength
• Resource bank
• Potential for
differentiation
• Specific customer ties
• Power of suppliers’
suppliers
Customer power
• Customer concentration
• Financial health
• Ability to switch materials
• Ability to switch suppliers
• Sensitivity to price
• Access to captive supply
Strength of Ni Product
• Availability of substitutes
• Relative price of
substitutes
• Range of substitute
application
• Environmental regulation
• Technical vulnerability
Degree of rivalry
• Strength of competition
• Potentially realisable sales
• Sustainability of sales
Market & sales
evaluation model -
Porter’s 5 Forces or
Product market
dynamics analysis Competitor analysis
Demand supply price
analysis
Client’s task
G&P task
• Size
• Growth
• Stability
• Geography
• Demand-supply balance
• Uniformity of product
• Barriers to entry
Value chain and
process option analysis
simplified versions of
the Porter model
What
Markets/Applications
shouldSNPaimat?
Which
Products/Process
RoutesshouldSNP
make/follow?
WhatCompetitive
EnvironmentwillSNP
befacingin2015
onwards?
WhatPriceStructure
willSNPbeableto
achieveforitsfull
productrangein
2015onwards?

18. What
we
found
Slide
18
1.
Which
are
the
most
aerac>ve
products
and
markets
2.
How
compe>tors
will
be
posi>oned
3.
Impact
of
new
wave
of
laterite
producers
on
produc>on
op>ons
4.
Medium
term
price
outlook
and
scenarios
5.
Outlook
for
sulphur
6.
Outlook
for
Cobalt
7.
Strategic
evalua>on
of
product
op>ons
for
Lambda
8.
Recommended
ac>ons

19. What
we
wrote
Slide
19

20. What
happened
• Lambda’s
owners
subsequently
sold
a
controlling
stake
in
the
project
to
one
of
the
global
nickel
majors,
beeer
posi>oned
to
exploit
the
market
opportuni>es
iden>fied
• The
project
remains
on
track
for
development
Slide
20

21. About
Gorham
and
Partners
A
specialist
consul>ng
prac>ce
with
a
successful
20
year
track
record
advising
the
global
metals
and
mining
sector
on
strategic,
commercial,
financial
and
marke>ng
issues.
In
addi>on
to
the
nickel,
we
advise
clients
across
all
the
main
metals
and
precious
metals
sectors
including
copper,
zinc,
lead,
chromium,
molybdenum,
cobalt,
steel,
stainless
steel,
gold,
pla>num
and
diamonds
We
address
the
big
strategic
issues
faced
by
nickel
businesses,
especially
product
mix
and
market
strategy.
Our
insights
into
rapidly
changing
markets
have
led
to
a
new
approach
to
seeking
finance
for
early
stage
projects
Demand/supply
and
pricing
studies
not
just
for
Ni
and
Co
metal,
but
all
alterna>ve
intermediate
products
|
In-­‐depth
understanding
of
end-­‐user
demands
and
trends
|
Customer
segmenta>on
and
alterna>ve
‘go-­‐to-­‐market’
strategies
|
Analysis
of
the
product
and
market
strategies
of
compe>tors
|
Commercial
and
marke>ng
sec>ons
of
pre-­‐feasibility
and
feasibility
studies
|
Market
entry
strategy
Successful
consul>ng
projects
for
our
nickel
and
base
metals
sector
clients
which
add
value
to
their
businesses
Including
Rio
Tinto
|
Sherrie
|
ENK
|
BHPBilliton
|
Corus
|
Rotex
Minerals
Deep
experience
advising
and
managing
strategic
projects
in
the
sector
–
we
partner
you
to
find
the
answers
you
need
Alec
Campbell
–
25+
years
advising
senior
management
with
special
focus
on
metals
and
sales
and
marke>ng
strategies
J-­‐P
Mar0ns
-­‐
20
years
advising
senior
management,
ex
senior
strategic
manager
in
Rio
Tinto
Khush
Nathadwarala
–
6
years
consul>ng
exclusively
to
the
mining
and
metals
sector
Slide
21

22. Contact
us
A
|
104
Lancaster
Gate
London
W2
3NT
P
|
+44
(0)20
7298
5180
F
|
+44
(0)20
7298
5189
E
|
consult@gorhampartners.com
W
|
www.gorhampartners.com
Slide
22