RCR Quarterly Report- Oct-10-Copper

Copper Company Review
Exploration, Development & Production
October 2010

Resource Capital Research

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13 October 2010

Copper Company Review
October 2010

Resource Analyst (Copper): John Wilson

Resource Analyst: Dr Tony Parry
Resource Analyst: Dr Trent Allen


Suite 1306
183 Kent Street
Sydney, NSW 2000

Tel: +612 9252 9405
Fax: +612 9251 2859
Email: info@rcresearch.com.au
Web: www.rcresearch.com.au

ACN 111 622 489


Contents
Contents .............................................................................................................................. 2
Overview and Investment Comment ........................................................................................ 3
RCR October Featured Copper Company Summary .................................................................... 4
Comparative Charts ............................................................................................................... 6
Financial Data ....................................................................................................................... 7
Company Statistics ................................................................................................................ 7
Reserves, Resources and Historic Mineralisation ........................................................................ 8
Valuation and Performance Data ............................................................................................. 8
Exploration, Development and Production Companies

Altona Mining Limited................................................................................................... 9
[Avalon Minerals Limited .....................................................................................………….]
[Blackthorn Resources Limited ......................................................................... ………………]
Discovery Metals Limited ............................................................................................ 11
Equinox Minerals Limited* .......................................................................................... 13
Gunson Resources Limited .......................................................................................... 15
Sandfire Resources NL ............................................................................................... 17
[Thundelarra Exploration Limited............................................................................... …..]
[Tiger Resources Limited ............................................................................................ …]
Venturex Resources Limited........................................................................................ 19
YTC Resources Limited ............................................................................................... 21

Copper Price Fundamentals................................................................................................... 23
[Smelting and Refining - TC/RCs……………………………………………………………………………………………….….…….37]
[Copper Property Transactions: Global 2010 (January 1 to September 24)…………………………………………]
[Copper Capital Raisings: Global 2010 (January 1 to September 27)……........................................]
[Copper Company Share Price Performance Tables ..................................................................... ]
Report Contributors ............................................................................................................. 33
Disclosure and Disclaimer ..................................................................................................... 34

* Indicates companies with detailed financial projections and valuation available.

[This is the Abridged Report version of the October RCR Copper Company Review. The quarterly purchase price
to all RCR’s Subscriber Reports (uranium, gold, rare and minor metals, and iron ore) is A$110. The annual
subscription rate to all RCR research is A$440 – commodities covered may vary from quarter to quarter.
Purchase details and research services for institutional investors can be found at www.rcresearch.com.au].

©
October 2010 RCR Copper Company Review Disclaimer and disclosure attached. Copyright 2010 by Resource Capital Research Pty Ltd. All rights reserved. 2


Overview and Investment Comment
Equity market performance

A broad global copper mining index is up 40% over the past 3 months
Copper mining
(to 13 Oct), half of the gain (20%) coming in the past 1 month. The
equities have risen
index is up 29% over the past 12 months. (HSBC Global Mining Copper
strongly in the past
Index, USD, covers globally listed copper mining stocks).
few months (up
40%).
The valuations of Australian copper equities appear to have partially
priced in, perhaps prematurely, a recovery in the US economy and
subsequently, expectations of a weaker Australian dollar. This is against
Performance has been recent market trends in which the AUD/USD has strengthened to near
driven by a surging parity and suggests potential for partial retracement of recent AUD
copper price – now at copper gains if the US recovery does not proceed as anticipated.
a 27 month high of
US$3.81/lb (13 Oct). Market volatility remains the key uncertainty for copper equities’
outlook. While potentially slowing into 2011, the global economy is
nevertheless, currently expected to report robust growth (IMF forecast
2011 GDP 4.2%, down from a forecast 4.8% for 2010).

Despite the AUD/USD Copper price outlook
rising to near parity, The spot LME copper price hit a 27 month high of US$3.81/lb (13 Oct),
Australian copper and is up 28% over the past 3 months. About a third of the gain (10%)
company valuations occurred over the past month. The copper price is up 34% over the past
appear to be pricing 12 months. The gains are driven by a strong demand outlook,
in a substantially constrained new supply and declining LME stocks.
weaker exchange
rate… The copper market is forecast to move from small surplus in 2010 to a
deficit of 400kt 2011 (ICSG), reflecting a continuing surge in Chinese
demand and tight supply. The copper price is expected to remain
strong, at around current levels and above, for at least several years.
…reflecting market
Global copper demand is forecast to grow to 18.9mt in 2010, up from
confidence in the US
18.2mt (+3.8% or +692kt) in 2009, and is expected to grow a further
economic rebound -
4.5% (+847kt) in 2011 to 19.7mt. The global demand growth in copper
post QE2.
is expected to be in the range of 3-5%pa, representing an incremental
annual consumption increase of 600kt to 900kt, prompting RIO to
comment that the copper market is expected to remain tight till 2020.

The main market growth is expected from China, which now accounts
for 36% of global copper consumption, compared to North America
China accounts for which accounts for only 10%. China’s continuing urbanisation and
36% of global copper forecast GDP growth of ~10%pa is expected to drive per capita copper
consumption, and is consumption in China from ~5kg/capita currently to 10kg/capita 2020
the main driver of
copper demand In comparison to the scale of market demand growth, the largest
growth projections project expected to come online in the next few years is Oyu Tolgoi
for the next decade. (Mongolia), starting 2013 and forecast to produce 436ktpa copper.

There are many smaller and mid size projects that are moving towards
production, though against a general industry background of declining
head grades, projects of increased technical difficulty and cost, and
higher sovereign risk jurisdictions. This suggests the trend of long
development lead times and project delays will continue to hamper a
timely supply response to global demand growth.
©


RCR October Featured Copper Company Summary
AUSTRALIA
Company Code Comment
Altona Mining Limited AOH DFS (2 Projects), Advanced Exploration
AOH's copper inventory is >1mt contained Cu; it is targeting production
within 18 months. Potential ramp to 50ktpa Cu output in 4 years. Our
assessed NAV of A$0.56/share and an enterprise value of only US$55/t Cu
suggest it is still not being recognised as a near term producer.

Avalon Minerals Limited AVI PFS
PFS imminent on the flagship Viscaria copper-iron project, Sweden.
Resource: 66mt for 1.3bnlbs Cu & 2.4mt Fe. Near term Exploration Target
100mt. Open pit - base case 15ktpa Cu plus iron ore. Production potential
2013. Regional exploration upside.

Blackthorn Resources Limited BTR Advanced Exploration
BTR's half-built Perkoa Zn project is back on track with Glencore agreeing to
take a 50.1% stake, but we see most upside coming from BTR's Zambian
IOCG Cu-Au discovery (big enough to attract BHP as an enthusiastic
partner) plus exciting Burkina Faso gold exploration.

Discovery Metals Limited DML Bankable Feasibility Study
Boseto copper project (DML 100%, Botswana): 36ktpa Cu, 1.1mozpa Ag
production expected from 1Q12. Project financing underway. Strong
exploration upside near mine and regional in Kalahari Copper Belt. Two new
exploration targets - drilling 4Q10.

Equinox Minerals Limited EQN Production
Lumwana project (EQN 100%), Zambia, is expected to produce ~140kt Cu in
conc 2010. A 2 phase expansion program is underway with potential to
increase production to ~200kt Cu from 2014. Good, near mine and regional,
copper (and uranium) exploration upside.

Gunson Resources Limited GUN DFS, Advanced Exploration
GUN's currently 100% owned ~A$170m Coburn Zircon Project in WA is now
looking strategically attractive (DFS completed) with a potential zircon
supply deficit looming. This will boost GUN's plans to bring in a big brother,
which if succesful will also boost a languishing share price.

Sandfire Resources NL SFR Advanced Exploration
SFR holds a strategic 400km2 in the emerging DeGrussa VMS copper-gold
district in WA. The project is shaping up as world-class since discovery Apr
'09; high grade copper resource 10.7mt @ 5.7% Cu. Excellent exploration
upside. DFS 1H11.

Tiger Resources Limited TGS Imminent Production
TGS is constructing the US$30m Stage 1 Kipoi high grade copper Project
(60%) in the Democratic Republic of Congo with full project financing in
place. Stage 1 output ~35ktpa Cu opex ~US$0.34/lb. Current resource is
842kt Cu with excellent potential to expand.

Thundelarra Exploration Limited THX Mid-Advanced Exploration
We think the market may be undervaluing THX's Degrussa look-alike at Red
Bore, near Sandfire's high grade Cu/Au discovery. Further drilling success
could highlight this, and on the uranium front the inaugural resource for the
high grade Thunderball deposit is due 4Q10.

Venturex Resources Limited VXR Advanced Exploration
VXR controls a large (50 x 20km) VMS district in the Pilbara (WA) with
significant exploration upside. Current resource 180kt Cu Eq grading 1.1%
Cu (2.2% Cu Eq). Potential 15ktpa Cu Eq production from 1Q12. LOM 8
years. Scoping study expected 4Q10.

YTC Resources Limited YTC Pre-Feasibility Study
Mining in 2H11 is possible at the Hera Project (Au, Cu-Pb-Zn-Ag), which has
a 560koz AuEq resource with upside from drilling at Hera and historic
Nymagee Mine (recent hits +8% Cu). The 6.5km Hera-Nymagee corridor is
prospective for Cobar-style deposits. Target A$0.73/share.

©


Explorers’ Development Cycle: Conceptual market capitalisation versus development stage; October 2010

©


Comparative Charts

The surge in the copper price since June Many companies are trading at, or near,
has driven copper equities in recent 12 month highs. Generally, producers
months. The HSBC index of copper mining and those with near term production
equities is up 40% over the past 3 visibility have been the strongest
months and 20% in the past month (to performers. Some, like Sandfire, have
Oct 13) reflecting strong performance been driven by expectations of
across the sector. exploration success and possible
corporate activity.

©


Financial Data
2
Fully M arket Ent erprise
COM P AN Y Share Price (LC$/ share) 3 Dilut ed Cap Book Value

Code St at us 1 Yr End Exchanges 52 week Current Shares Opt +W 2 C. Notes2 Shares (undilut ed) Cash Debt Value (Undilut ed)
13 Oc t o be r 2010 Hi Low (m) (m) (m) (m) (LC$m)3 (LC$m)3 (LC$m) 3 (LC$m) 3 (LC$m) 3

AUSTRALIA (A$)

Alt ona M ining Limit ed AOH E June A SX FSE BLN No 0.29 0.09 0.28 245 7 0 252 67 11.0 0.0 32 67
Avalon M inerals Limit ed A VI E June A SX No 0.30 0.15 0.22 152 3 0 155 34 4.4 0.0 12 34
Blackt horn Resources Limit ed BTR E June A SX No 1.03 0.33 0.77 107 5 0 112 82 10.6 0.0 50 82
Discovery M etals Limit ed DM L E June A SX A IM No 1.35 0.42 1.18 302 9 0 311 356 36.6 0.0 73 356
Equinox M inerals Limit ed EQN P Dec A SX TSX No 6.25 3.40 6.1 2 708 16 0 724 4331 21 7.6 470.7 854 4802
Gunson Resources Limit ed GUN E June A SX No 0.17 0.06 0.1 0 173 4 0 178 17 0.5 0.0 25 17
Sandfire Resources NL SFR E June A SX No 7.85 2.81 7.64 1 30 12 19 160 993 40.9 0.0 57 993
Tiger Resources Limited TGS I June A SX TSX No 0.37 0.15 0.36 596 110 0 706 212 28.3 19.0 41 231
Thundelarra Explorat ion Limit ed THX E Dec A SX THX OA 1.04 0.36 0.74 151 28 0 179 111 20.0 0.0 46 111
Venturex Resources Limit ed VX R E June A SX No 0.14 0.06 0.09 655 77 0 732 56 5.0 0.0 25 56
YTC Resources Limited YTC E June A SX No 0.34 0.17 0.28 1 64 6 0 170 46 5.9 0.0 28 46

Tot al: Aust ralia 380.8 489.7 1242 6796

Tot al: (US$)4 373 480 1218 6660

(1) P: Producer; E: Explorer; I: Imminent - includes companies wit h bankable feasibilit y studies and likely to be in product ion wit hin 3 years; IHC: Investment Holding Company
(2) Fully Diluted (shares, options + warrant s (opt . + w), convert ible not es (Conv. N), ot her obligat ions)
(3) L.C. - Local Currency unit ; End of quart er forecast. (4) AUD/ USD: 0.98

Company Statistics

C OM P A NY
Code Land Drilling ('000 m) (A) Exploration (L.C.$m) 7 (B) Corporate (L.C.$m) 7 (A )/(A+B ) %
13 O ct o ber 20 10 ('000 ha) 6 Sep-10 Dec-10 2011 2012 Sep-10 Dec-10 2011 2012 Sep-10 Dec-10 2011 2012 Dec-10 2011 2012

AUSTRALIA (A$)

A ltona M ining Limit ed AOH 215 8.0 8.0 32.0 na 1.0 1.0 4.0 4.0 0.9 0.9 3.6 3.6 52.6 52.6 52.6
A valon M inerals Limited AV I 20 4.0 4.0 16.0 29.0 1.3 1.5 6.8 6.0 0.5 0.5 1.8 1.8 77 79 77
B lackthorn Resources Limited BTR 114 11.0 17.0 53.0 50.0 1.0 1.0 4.2 4.6 0.8 0.8 3.2 3.4 56 56 58
Discovery M etals Limit ed DM L 966 11.3 11.3 45.0 45.0 2.0 2.0 8.0 8.0 1.2 1.2 4.6 4.6 63.5 63.5 63.5
Equinox M inerals Limit ed EQN 331 20.0 20.0 80.0 70.0 1.4 1.4 5.6 5.6 2.9 2.9 11.6 11.6 32.6 32.6 32.6
Gunson Resources Limited GUN 273 0.5 0.5 2.0 na 0.3 0.4 1.5 2.0 0.1 0.1 0.4 0.4 77.8 78.9 83.3
Sandfire Resources NL SFR 40 20.0 58.0 195.0 100.0 13.2 6.0 29.2 24.0 0.6 0.6 2.4 2.4 90.9 92.4 90.9
Tiger Resources Limited TGS 155 5.0 5.0 20.0 10.0 0.5 0.5 1.8 1.8 0.9 0.8 3.2 3.2 36 36 36
Thundelarra Exploration Limited THX 950 15.0 12.0 42.0 40.0 1.5 2.0 9.0 9.0 0.7 0.7 2.8 3.0 74.1 76.3 75.0
V ent urex Resources Limited VX R 34 5.0 3.5 15.5 15.5 1.3 1.3 5.0 5.0 0.5 0.4 1.7 1.6 75.8 74.6 75.8
Y TC Resources Limited YTC 174 7.0 7.0 28.0 20.0 2.2 2.0 8.2 8.0 0.4 0.6 2.1 2.2 78.4 80.0 78.4

Total: A ustralia 107 146 529 380 25 19 83 78

4
Total: (US$)

(6) To convert hect ares to acres, mult iply by 2.47; eg 100 thousand hectares ('000 ha) = 247 thousand acres ('000 ac)
(7) L.C. - Local Currency unit

©


Reserves, Resources and Historic Mineralisation
Hist orical/ M ineralised M at erial
C OM P A N Y Reserves (Equit y) 2 Resources (Equit y) 2 (Equit y)2 Tot al Copper (Cu) Tot al - Gold Product ion
Cod e St at us1 Copper (Cu) Ot her Copper (Cu) Ot her Copper (Cu) Ot her (All M ineralisat ion) 1 Equivalent 3 Co mmencement
13 O c to ber 2 010 M lb kt M lb kt M lb kt M lb kt (M oz) Year

AUSTRALIA

Alt ona M ining Limit ed AOH E 889 403 2,2 29 1,011 0.0 0.0 2,2 29 1,011 6.3 na
Avalon M inerals Limit ed AVI E 0 0 1,3 26 602 2.4mt Fe 0.0 0.0 1,3 26 602 3.8 na
Blackt horn Resources Limit ed BTR E 0 0 2,145 973 988kt Zn 0.0 0.0 2,145 973 6.1 na
Discovery M et als Limited DM L E 671 304 12.7moz Ag 3,190 1,447 57.1moz Ag 0.0 0.0 3,190 1,447 9.0 na
Equino x M inerals Limit ed EQN E 4,740 2,150 13,4 08 6,082 0.0 0.0 13,4 08 6,082 38.0 2008
Gunson Resources Limit ed GUN E 0 0 3.7mt HM 3 66 166 1 .3mt HM
2 0.0 0.0 3 66 166 1.0 na
Sandf ire Resources NL SFR E 0 0 Au, Ag 1,331 604 Au, Ag 0.0 0.0 1,331 604 3.8 na
Tiger Resources Limit ed TGS P 0 0 505 229 0.0 0.0 505 229 1.4 20 11E
Thundelarra Explorat ion Limit ed THX E 0 0 0.0 0.0 1mlb U 3O8 0.0 0.0 0.0 0.0 0.0 na
Vent urex Resources Limit ed 4 VXR E 2 58 117 3 94 179 0.0 0.0 3 94 179 1.1 na
YTC Resources Limit ed YTC E 0 0 2 80 127 280koz Au 0.0 0.0 2 80 127 0.8 na

Average: Aust ralia

Tot al/ Tot al Average 6,558 2 ,975 25,175 11,419 0 0 25,175 11,419

(1) P: Producer; E: Explorer; I: Imminent - includ es co mpanies wit h bankable f easibilit y st udies and likely t o be in prod uct ion wit hin 3 years; IHC: Invest ment Hold ing Comp any
(2) Reserves, resources and mineralised mat erial p ublished by the relevant company. To nnes are met ric (2204 .6 po unds).
The ap plicable mineral resource codes are b y count ry: Aust ralian: JORC, Canadian: NI 43-101, Sout h Af rica: SAM REC

(3) Fo r cop per o nly. Assumes a uranium price of US$3.8 0/ lb and a gold p rice of US$1340/ oz * M ineral resource est imates are inclusive of t he mineral reserve.

(4) Vent urex resources are st at ed as copper equivalent. Ref er t o VXR not e in t his report f or conversion parameters.

Valuation and Performance Data
Valuat ion (% of Cu
)
Price (USD)
COM P A N Y EV-Cash EV-Cash EV-Cash Res'v+resources Share Price Perf ormance Current Share Price

Code P/Bo ok P/ Net Cash /Reserves / Res'v+resources / Tot al Cu Sp ot 3M fwd (%) %off 1 mo nth
2
13 Oc to be r 2 0 10 (x) (x) US$/lb US$/lb US$/ lb 3.81 3.82 1 mo nt h 3 mont h 6 month 1 mo nt h
2 Hi Lo

AUSTRALIA

Alt ona M ining Limit ed AOH 2 .1 6.2 0.06 0.0 2 0.02 1 1 67 175 67 20 5 20 9
Avalon M inerals Limit ed A VI 2.9 7.6 na 0.0 2 0.02 1 1 22 38 0 31 26 47
Blackthorn Reso urces Limit ed BTR 1.7 7.8 na 0.0 3 0.03 1 1 14 4 -15 121 25 133
Discovery M et als Limited DM L 4.9 9.7 0.47 0.10 0.10 3 3 26 79 36 151 12 1 1
8
Equinox M inerals Limited EQN 5.1 -17.1 0.95 0.3 4 0.34 9 9 11 31 31 55 2 80
Gunson Resources Limit ed GUN 0.7 32.8 na 0.0 4 0.04 1 1 20 41 15 4 39 79
Sandfire Resources NL SFR 17.4 24.3 na 0 .70 0.70 18 18 24 86 96 108 3 172
Tiger Reso urces Limit ed TGS 5.1 22.8 na 0.3 9 0.39 10 10 51 69 42 103 4 1 5
4
Thundelarra Exploration Limit ed THX 2.4 5.6 na na na na na -8 36 39 4 29 104
Vent urex Reso urces Limit ed 4 VXR 2.3 11.4 0.20 0.13 0.13 3 3 8 -3 -18 -1 8 36 43
YTC Resources Limited YTC 1.6 7.8 na 0.14 0.14 4 4 12 65 1 2 33 18 70

Averag e: A ust ralia 0.42 0.19 0.19 5 5 22 56 28 56 18 115

Tot al/Total Average

©


Altona Mining Lim ited
AOH.AU
Altona Mining Limited
A$ 0.275

13 October 2010 AOH's copper inventory is >1mt contained Cu; it is targeting
Copper,Gold, Uranium
production within 18 months. Potential ramp to 50ktpa Cu output
Finland, Australia (QLD)
DFS (2 Projects), Advanced Exploration in 4 yrs. NAV is A$0.56/sh and EV is only US$55/t Cu suggesting
Exchanges: ASX:AOH, FRF:URZ, BLN:URZ, NOR:URLA AOH is still not being recognised as a near term producer.

Capital Profile Production and Financial Forecasts
Share price (A$) 0.275
YEAR END: June Jun-10a Sep-10F 2009a 2010F 2011F
52 week range (A$/share) 0.09 to 0.29
Num ber of s hares (m) 245.3 Exploration and Evaluation (A$m) 0.26 1.00 2.13 4.36 4.00
Options and warrants (m) 6.5 Corporate (A$m ) 2.73 0.90 1.08 5.71 3.60
Converting notes (m) 0.136 Exploration/(Expl.+ Corporate) (%) 9 53 66 43 58
Fully diluted (m) 321.6 Funding duration at current burn (years ) 0.7 1.3 0.7
Market capitalis ation (undiluted) (A$m) 67.5 Shares on is sue (pr end) (m s hares ) 245.3 245.3 672.3 245.3 315.0
Debt (A$m) - Sep 10F 0.0 Drilling - RAB (m) 5,000 3,000 20,000 15,000 12,000
Enterpris e value (A$m) 67.5 Drilling - Other/Diamond (m) * 5,000 5,000 21,000 20,000 20,000
Major s hareholders : Tulla Resources Group (4.8%) Land holding ('000 ha) * 215 215 130 215 215
KLP Asset Management (4.1%), Pareto Grow th (3.3%) Tenement cos ts ($k per year) - - - - -
Avg monthly volume (m) 33 Capital rais ings (A$m) 0.00 0.00 2.49 3.96 0.00
Cas h (A$m ) - Sep 10F 11.0 Funding from JV partners (A$m) 0 0 0 0 0
Price/Cas h (x) 6.2 Cas h (A$m ) 12.7 11.0 2.3 12.7 5.6
Price/Book (x) 2.1 Cas h backing (Ac/s hare) 5.2 4.5 0.3 5.2 2.0
Listed Company options : No Net as set backing (Ac/share) 13.2 12.9 0.5 13.2 10.2
^Assumes Con. Notes (maturity June 2011) converted at nominal 20cps * 2011 shares on issue assumes converting notes converted at A$0.20/share in June 2011.

Investment Points Company Comment
Overview: Altona Mining was formed from the merger of Universal Resources Limited and Vulcan
AOH expects to be in production by 1H12. Resources Limited, bringing together two copper-focused companies which were listed on the ASX in
2002. It now has two advanced copper projects and is expecting to be in production in 2012.
Outokumpu Copper Project (Finland) is a low risk, low Outokumpu Copper Project (Finland): The Kylylhati copper ore body was discovered by Outokumpu in
capex brownfields development. Capex A$46m, opex 1984 and acquired by Vulcan Resources in 2005. After undertaking a DFS in 2008 and then acquiring
the Luikonlahti processing plant (43km away) in January 2010, AOH has optimised the DFS and is now
US$1.33/lb Cu. committed to commence production as a low risk brownfields project involving refurbishing the
processing plant and establishing a relatively straightforward underground mining operation, utilising
Outokumpu Project production: 8ktpa Cu, 8.4kozpa Au, longhole open stoping and access via a decline. The key operating parameters from the optimised DFS
1.6ktpa Zn, ~A$33mpa EBITDA (AOH forecasts). are summarised on the following page. The low estimated capex of A$46m and cash opex of US$1.33/lb
Cu suggest that the project is readily financeable. AOH expects to commence production in 1H12,
producing 8ktpa Cu, 8.4kozpa gold and 1.6ktpa zinc, all in concentrates. Current AOH modelling gives a
Roseby (0.9mt Cu current resource) is one of the largest project NPV of A$94.5m (pre tax, unleveraged) using 8% real discount rate and Cu price US$3.00/lb,
undeveloped open pit Cu resources in Australia. Roseby Project: Roseby is the major copper asset of AOH and likely to be the ultimate ‘company
maker’ The 2008 DFS undertaken on the Roseby Project was based on 5mtpa ore treatment to give
~27ktpa contained copper and 6kozpa gold. AOH is now undertaking an Optimisation Study on Roseby
Roseby DFS Optimisation Studies likely to focus on to focus on larger scale open pit bulk mining techniques (similar to PanAust’s Phu Kam Project in Laos)
increasing resources to ~200mt Conatined Cu and large to produce in excess of 40ktpa contained copper. The current 0.9mt contained Cu resource and 0.3mt
scale bulk mining for >40ktpa Cu. reserve could be expanded by using lower cut-off grades and incorporating additional higher recovery
sulphide resources below the current resource envelope. AOH is targeting increasing the total resource
from 132mt to >200mt. This could support a processing plant of 8-10mtpa capacity, but most importantly,
Major exploration upside in Aust and Finland. a lower capex per tonne of copper produced. AOH is particularly encouraged by recent drilling by Xstrata
(SEEP JV) which intersected major thicknesses of non-refractory sulphide mineralisation below the
Enterprise Value only ~US$60/t contained Cu, current predominantly weathered resource envelope, including total intercepts of 235m @ 0.45% Cu
production companies typically >>US$150/t. from 2m, and 198m @ 0.84% Cu from 4m. The 2008 DFS indicated capex of A$214m, cash opex (C1) of
~US$1.52/lb. Based on the DFS parameters, our assessed after tax NPV using 10% nominal discount
rate and US$2.50/lb Cu price, A$/US$ 0.85, was A$165m (RCR URL Report October 2009).
RCR assessed NAV is A$0.56/share (fully diluted) using Exploration Upside: Large highly prospective strategic base metals (and uranium) exploration holdings
base case US$2.50/lb Cu, A$/US$ = 0.80 long term. in Queensland and Finland. Kuhmo Nickel (33kt Ni) resource established in Finland.
Investment Comment: Our assessed NAV for AOH is A$0.56/share, assuming US$2.50/lb long term
copper price, A$/US$ = 0.80 and allowing for converting note dilution assuming conversion in July 2011
AOH - Altona Mining Limited at A$0.20share. If we ascribe zero value for Roseby, the valuation still comes to A$0.30/share. Recent
share price gains suggest the market is slowly waking up to the fact that AOH is moving rapidly to
0.300 production status and not just another copper exploration hopeful. The re-rating still has a way to go.

Kumho Nickel Project in Finland - established resource.
0.250 Reserves and Resources/Mineralised Material
Share Price ($/Share)

Code for reporting mineral resources - Australian: (JORC)
$11M exploration budget for 2008.
0.200 Copper Classification Project Ore Cu c/off Cu Cu Eqty
Reserves Equity Mt % % kt Mlb kt
Experienced board and management.
0.150 Ros eby Proved & Prob. 100% 47.9 0.70 0.3 335.1 739 335.1
Kylylhati Probable 100% 4.3 1.56 0.7 67.9 150 67.9
0.100 Total Reserves * 33.9 1.20 0.3 403.0 889 403.0
* Contained gold in reserves is 152koz, Zn 25.2kt, Ni 6.2kt, Co 12.6kt.

0.050 Resources (includes proved and probable reserves)
Ros eby Meas +ind+inf 100% 132.5 0.68 0.3 906.0 1,997 906
Kylylhati Meas +ind+inf 100% 8.4 1.25 0.3 104.9 231 105
0.000
Total Resources ** 140.9 0.68 0.3 1,011 2,228 1,011
Oct-09

Nov-09

Dec-09

Jan-10

Apr-10

Jun-10

Aug-10

Sep-10

Oct-10
Mar-10

May-10

Kuhmo Nickel Project: 6.0m t @0.6% Ni; 33kt contained Ni
Source: Bloomberg ** Contained gold in resources is 429koz, Zn 45.4kt, Ni 16.8kt, Co 20.2kt.
Mineralised Material (est., non compliant w ith JORC) 0.0 0.0 0.0

Contacts Directors Key Projects
Dr Alistair Cowden (MD) K Maloney (Non Exec Chair) Ownership/ JV Target Process Project
Tel: 61 (8) 9486 8400 A Cowden (MD) Project Option Metal Partner Type Route Status Location
West Perth, WA, Australia P Ingram (Non Exec Dir) Ros eby 100% Cu,Au none Sed, IOCG Flot'n DFS Aus (Qld)
www.altonamining.com J Brewer (Non Exec Dir) Outokumpu Project 100% Cu,Au,Zn,Ni none VMS Flot'n DFS, Financing Finland
F Harris (Non Exec Dir) Kuhmo Nickel 95% Ni, Pt Priv. VMS Flot'n Adv Expl. Finland
Analyst: Dr Tony Parry H Solin (Non Exec Dir) Ros eby SEEP 100/49% Cu,Au Xs trata IOCG Flot'n Med. Term Expl. Aus (Qld)
tonyparry@rcresearch.com.au Mt Is a Inlier Regional 100% Cu,Au,U none na na Early Expl. Aus (Qld)
©


ALTONA MINING VALUATION

Target
Copper Copper Resource Reserve Price
Equity Resource Reserves Valuation Valuation A$m
Projects (mlbs) (mlbs) US$/lb US$/lb

+ Outokumpu Copper Project 100% 324 150 0.17 0.37 57.5
+ Roseby Copper Project 100% 1,997 739 0.04 0.11 82.5
+ Kuhmo Nickel 95% 7.0
+ Other Finland assets 100% 10.0
+ Roseby Exploration - Xstrata JV 3.0
+ Roseby Regional Exploration 7.0
Sub Total 167.0

+ Cash (Sep '10F) 11.0
+ Finland Government Grant 3.6
+ Tax Losses 15.4
- Corporate 19.6
Sub Total 10.3

AOH NET ASSET VALUE 177

Capital Structure
Shares 245.3
Fully Diluted Shares* 321.6

AOH NET ASSET VALUE PER SHARE :A$/share 0.72
AOH NET ASSET VALUE DILUTED :A$/share fully diluted* 0.56
*Fully diluted shares assumes con. notes converted at June 2011 maturity at A$0.20/share

RCR Valuation Assumptions
Outokumpu Project: We have used AOH quoted NPV, adjusted for RCR Cu price forecast US$2.50/lb, A$/US$ = 0.80, after tax.
Roseby Project: Based on a 50% discount to assessed NPV - RCR financial modelling of Roseby using 2008 DFS parameters.
Roseby modelling uses 10% nominal discount rate, US$2.50/lb long term Cu price, A$/US$ = 0.80 long term.
Other Exploration Projects: based on RCR assessment of nominal value.

KYLYLHATI COPPER PROJECT - UPDATED 2010 DFS PARAMETERS

RESERVE ESTIMATES
Copper resources and reserves Contained Metal
Copper Copper Zinc Gold
Mt % kt kt koz
Resources 8.40 1.25 105.0
Probable Reserves 4.34 1.56 67.85 25.2 90.8

Life of Mine: 8-9 years based on Probable Reserves
MINING METHOD Underground - longitudinal longhole open hole stoping
Cemented rock fill
PROCESS METHOD Dedicated concentrator (refurbished Luikonlahti plant)
Rod mill and 2x pebble mills - wet comminution.
Conventional sulphide flotation circuits
Produces separate copper, zinc and nickel cobalt concentrates
PRODUCTION RATE :mtpa 0.55
:ktpa Cu 8.0 Contained in concentrate.
:kozpa Au 8.4 Contained in concentrate.
:ktpa Zn 1.6 Contained in concentrate.
CAPITAL COSTS :A$m 46 Plus sustaining capex of ~A$6mpa (A$11/t).
RECOVERY - COPPER :% 91.5 (Au recovery is 72%)
DIRECT OPERATING COSTS :US$/t 17.36 (not incl. royalties, TC/RC)
:US$/lb 1.33 (C1 cash cost after by product credits).
TOTAL ROYALTIES (Gov't & Vendor) :% 0.00 No royalties payable in Finland
TAX :% 26 Finland
MINE LIFE (Based on Probable Reserves only) :Years 8-9
TARGET COMMISSION DATE : 1Q12
Source: Altona Mining Ltd
©


Discovery Metals Limited
Discovery Metals Limited

DML.AU A$ 1.18

13 October 2010 Boseto copper project (DML 100%, Botswana): 36ktpa Cu,
Copper, Nickel
1.1mozpa Ag production expected from 1Q12. Project financing
Botswana
Bankable Feasibility Study underway. Strong exploration upside near mine and regional in
Exchanges: ASX:DML, BSE:DML, AIM:DME Kalahari Copper Belt. Two new exploration targets - drilling 4Q10.

Num ber of shares (m) 302 Exploration and evaluation (A$m) 4.00 2.00 11.05 8.00 8.00
Options and warrants (m ) 9 Corporate (A$m ) 1.16 1.15 5.33 4.60 4.60
Convertible notes (m ) 0 Exploration/(Expl.+ Corporate) (%) 78 63 67 63 63
Fully diluted (m) 311 Funding duration at current burn (years) 2.4 5.3 2.7
Market capitalisation (undiluted) (A$m ) 356.4 Shares on issue (pr end) (m shares) 301.0 301.0 301.0 391.9 428.3
Debt (A$m ) - Sep 10F 0.0 Drilling - RAB (m). Est. 0 0 0 0 0
Enterprise value (A$m ) 356.4 Drilling - Other/Diamond (m). Est. 11,250 11,250 0 45,000 45,000
Major shareholders: Macquarie Bank (11.4%), Taurus Fund (11.0%) Land holding ('000 ha)* 1,010 966 1,010 966 966
Transamine (8.3%), Citi Group Global Markets (7.0%), Investec (5.1%) Tenem ent costs ($k per year) - - - - -
Avg m onthly volume (m) 40 Capital raisings (A$m ) 9.20 0.00 45.10 100.00 40.00
Cash (A$m) - Sep 10F 36.6 Funding from JV partners (A$m) 0.75 0.00 1.48 0.75 0.75
Price/Cash (x) 9.7 Cash (A$m ) 39.3 36.6 39.3 66.8 34.0
Price/Book (x) 4.9 Cash backing (Ac/share) 13.1 12.2 13.1 17.0 7.9
Listed company options: No Net asset backing (Ac/share) 24.6 24.4 24.6 41.7 25.1
*Copper prospective tenements only; held and under application. Quarters ref er to calendar year.

Botswana Cu-Ag focus. Exploration budget A$8mpa. Overview: DML listed on the ASX Dec ‘03. Its main project is the Boseto copper project in the Kalahari
Copper Belt of north-west Botswana. Initial project tenements were granted to DML September 2005.
Boseto copper project (Botswana): DML has a strategic land position in the Kalahari Copper Belt
BFS Aug 2010: DML NPV US$251m (Cu price (10,100km2) extending over 300km of strike prospective for Cu-Ag mineralisation and is similar in style
US$3.00/lb). 5 year LOM. Production 35ktpa Cu and to the better known deposits of the Central African Copper Belt and Zambia and DRC. Boseto
1mozpa Ag. Payback under 2 years. mineralisation occurs mostly as chalcocite, with minor bornite and other copper sulphides.
Boseto BFS: (SRK Consultants) Based on open pit mine using Zeta and Plutus measured and
indicated resources – economic pit shells (designed at US$2.50/lb) contain a large mineral resource of
DML Development Plan: 15 years LOM, assumes 55mt grading 1.41% Cu (which has been partially drilled to Reserve status for 20.4mt @ 1.4% Cu). Mill
conversion of open pit inferred resources, and throughput 3mtpa from 1H12 to 4Q16 – 5 years – exclusively from open pit to ~120m depth. Open pit
underground mining to 650m depth. Capex US$175m mineralization is sub-vertical between 5 and 15 m thick, ore and waste requires drill and blast. DML’s
(+$40m for power), opex US$1.42/lb (C1 - est. LOM). Development Plan: It is anticipated that open pit reserves will increase significantly (>40mt – as in pit
resources are converted to reserves), and production from open pit and underground is expected to
extend LOM to 2026. Zeta underground mining expected to commence 3Q14 at 1.5mtpa. Positive
Boseto Resource 3.19bn lbs Cu at 1.4%. Upgrade scoping study completed March ‘10; DFS expected June ‘11. Focused on high grade >1.5% Cu, over
expected 1Q11. 2km strike at 100m to 650m depth. Plutus - prospective u/g yet to be drilled at depth.
Exploration: Plutus mineralisation remains open at depth. Zeta underground infill drilling to upgrade
resource to M&I expected 1Q11. Inferred resource is currently to ~400m depth with continuity of
Prospective strike horizon 1,300km; less than 300km mineralisation expected to at least 650m. Regional exploration with potential to define new standalone
explored. Potential for another Boseto. Drilling 4Q10. projects – strong anomalies at Ophion (12km strike, 40km from Zeta) and Ourea (4km2, a further 50km
from Zeta). Drilling 4Q10 – targeting the “prospective horizons” of the D’Kar Formation.
Botswana: Strong democracy. Stable mining/taxation Investment Comment: RCR values DML at A$1.15/share (based on LT copper price of US$2.50/lb,
A$:US$0.80, 10% nom. r/i) assuming parameters in DML’s Development Plan – 15 years LOM, 3 mtpa
policy and legislation - unchanged since 1999. plant capacity (detailed assumptions on facing page). Sensitivity analysis discounting US$3.50/lb
copper for LOM, A$:US$0.98, increases NAV to A$2.00/share. We have factored in assumed plant
NAV A$1.15/share (US$2.50/lb Cu price, 10% r/i); rising capacity expansion in scenarios where the copper price is over US$2.50/lb LOM. Given the positive
to A$2.00/sh on commissioning 1Q12 at spot prices. copper price outlook, potentially through 2020, we expect DML’s share price to trade at A$1.50-2.00
with successful plant commissioning 1Q12 - or earlier on good regional exploration results.
DML - Discovery Metals Limited Reserves and Resources/Mineralised Material
1.40 Code f or reporting mineral resources - Australian: (JORC)
Copper (Cu) Classification Project Ore Cu Cut Off Cu Ag Cu Eqty
1.20
Equity Mt % % Kt Moz Mlb

1.00 Reserves
Plutus and Petra Proved + Probable 100% 11.3 1.3 0.6 147 2.9 324
0.80
Zeta Proved + Probable 100% 10.5 1.5 0.6 158 9.8 347
0.60
Total 21.8 1.4 304 12.7 671
0.40 Average silver grade of Reserve 18.2g/t
Resources (includes proved and probable reserves)
0.20
Boseto (above 3 deposits) Measured 100% 4.0 1.6 0.6 64 2.9 141.1
0.00 Boseto (above 3 deposits) Indicated 100% 18.5 1.4 0.6 259 10.6 571.0
Boseto (above 3 deposits) Inferred 100% 80.3 1.4 0.6 1,124 43.6 2,478.4
Oct-09

Apr-10
Nov-09

Dec-09

Jun-10

Jul-10

Aug-10

Sep-10
Feb-10

Mar-10

May-10

Total 102.8 1.4 1,447 57.1 3,190
Dikoloti Nickel Project: Inf erred resource: 4.1mt grading 0.7% Ni, 0.5% Cu, 1.2ppm PGE's
Source: Bloomberg
Average silver grade of Resource 17.3g/t

Mr. Brad Sampson G Galt (Non-Ex Chairman) Ownership/ JV Target Process Project
Managing Director B Sampson (MD) Project Option Metal Partner Type Route Status Location
Tel: 61 (0) 7 3218 0200 J Shaw (Non-Ex Dir) Boseto Copper Project 100% Cu-Ag none Flotation Development Botswana
Brisbane, QLD, Australia M Cordiner (Non-Ex Dir) Dikoloti Nickel Project 85%/40% Ni Xstrata/JOGMEC na Early Expl. Botswana
www.discoverymetals.com.au J Read (Non-Ex Dir)
R Gabonowe (Non-Ex Dir)
Analyst: John Wilson
johnwilson@rcresearch.com.au
©

DISCOVERY METALS LIMITED VALUATION

Base
#
Resource Base NPV Adjusted Adjusted
Equity Val'n NPV Factor Value Copper Price Sensitivity
(%) (US$/lb) (A$m) (%) (A$m) (A$m)
Assumptions
Long Term Copper Price : US$/lb 2.50 2.50 1.50 2.00 3.00 3.50
Exchange rate: AUUS 0.80 0.80 0.80 0.80 0.80 0.80

Projects
Boseto project (based on DML : NPV @10%* 100% 0.16 288 80% 230 10 60 375 478
Development Plan).
Resources and Exploration
Boseto project (assume. +100%) : NPV @10%* 100% 0.07 63 70% 44 10 18 114 169
Other 75 75 1 50 110 135
Sub-total Exploration 138 119 11 68 224 304
Assets
+ Cash 39 39 39 39 39 39
+ Tax Losses 6 6 6 6 6 6
Liabilities
- Debt 0 0 0 0 0 0
- Corporate 38 38 38 38 38 38
- Reclamation 0 0 0 0 0 0
DML Net Assets 432 356 28 136 606 789

Fully diluted shares (m) 311.3 311.3 311.3 311.3 311.3 311.3
Cash on Option Conversion 4.3 4.3 4.3 4.3 4.3 4.3
DML Net Asset Value per share : A$/share 1.43 1.18 0.09 0.45 2.01 2.61
DML Net Asset Value Diluted : A$/share dil 1.40 1.16 0.10 0.45 1.96 2.55
* 10% nominal discount rate. # Resource base assumes 1.429bn lbs Cu - DML Development Plan.
Sensitivity of Net Asset Value to Equity Raising Price:

DML Net Asset Value (assuming A$80m capex raised through share issue at A$1.10) 1.13 0.28 0.56 1.79 2.26

BOSETO COPPER PROJECT KEY ASSUMPTIONS (derived from BFS and DML Development Plan, August 2010)

RESOURCE ESTIMATES Copper Resource Tonnes Grade Copper
Cutoff Mt % Cu Mlbs
BFS - Reserves Boseto - Reserves 0.30% 24.1 1.3 710
DML Development Plan Assumptions Boseto - Resource na 45.0 1.44 (diluted) 1,429

MINING METHOD OPEN PIT from 1Q12; plus UNDERGROUND in DML Development Plan - commences 2014.
PROCESS METHOD COPPER PLANT: 1. Three stage crushing. 2. Flotation nad concentration.

BFS DEVELOPMENT PLAN^
EVALUATED OPERATING PERIOD 5 years 15 years
RESOURCE CONVERSION :% 70
TONNAGE DILUTION :% na
GRADE UPLIFT :% 4
DML KEY ASSUMPTIONS
PRODUCTION RATE :mtpa 3.0 3.0
AVERAGE HEAD GRADE - Cu (diluted) :% 1.46 1.44 Highgrade forecast 3Q12-4Q13 during debt repyment period.
AVERAGE HEAD GRADE - Ag (diluted) :g/t 18.7 20.2
RECOVERY - COPPER :% 81.1 83.6
RECOVERY - SILVER :% 61 61
COPPER PRODUCTION :ktpa 34.4 36.4
SILVER PRODUCTION :Moz pa 1.0 1.1
CAPITAL COSTS :US$m 175 215* *Includes US$40m coal fired power plant (funded from cashflow)
SUSTAINING CAPEX :US$/t 1.30 1.20 RCR estimate
OPERATING SITE COSTS :US$/t 34.83 34.68 Development Plan breakdown: mining US$1.35/t mined; plant &
power US$11.72/t ore; admin US$1.36/t ore
SMELTING :US$/t conc. 45 45 Offtake in place with metals trader Transamine.
REFINING :Usc/lb Cu 4.50 4.50
CONCENTRATE TRANSPORT :US$/t conc. 180 180
CASH COST (C1) :US$/lb 1.28 1.23
ROYALTY :% 3% for copper; 5% for silver
TAX :% 25% minimum, increasing with profitability based "Twelth Schedule".
TAX HOLIDAY No tax payable till capex and pre-production expenditure recovered.
MINE LIFE :Years 5 Years 15 Years
COMMISSION PROJECT : 1Q 2012 18 month ramp-up.
^DM L fo recast 3Q12-4Q1 during debt repyment perio d.
3

These figures are based on the Bankable Feasibility Study (August 2010) and DML's Development Plan. DML's Development Plan assumes conversion of
Inferred Resources and related operating assumptions and are preliminary in nature and intended to provide only a general indication of project scale and
economic robustness. Considerable refinement may result from subsequent drilling and operating activities.
©


Equinox Minerals Limited
Equinox Minerals Limited*

EQN.AU A$ 6.12

13 October 2010 Lumwana project (EQN 100%), Zambia, is expected to produce
Copper, Uranium, Gold
~140kt Cu 2010. A 2 phase expansion program is underway with
Zambia
Production potential to increase production to ~200kt Cu from 2014. Excellent
Exchanges: ASX:EQN, TSX:EQN near mine and regional copper (and uranium) exploration upside.

YEAR END: Dec 2008a 2009a 2010F 2011F 2012F
Num ber of shares (m ) 708 Equity Production (t) 0 109 143 151 166
Options and warrants (m ) 16 EBIT (US$m ) 244 -36 402 589 790
Convertible notes (m) 0 Net Profit (norm ) (US$m ) 173 -56 243 376 517
Fully diluted (m ) 724 EPS (norm ) (A¢/s hare) 0 0 34 52 71
Market capitalisation (undiluted) (A$m ) 4331.1 CFPS (A¢/share) 41 2 66 93 122
Debt (A$m) - Sep 10F 470.7 Dividends (A¢/s hare) 0 0 0 0 0
Enterpris e value (A$m ) 4801.8 PER (x) na na 18.2 12.9 8.6
Major shareholders : National Nom inees (5.56%) P/CF (x) na na 9.3 7.2 5.0
Yield (%) 0.0% 0.0% 0.0% 0.0% 0.0%
Avg m onthly volum e (m) 38 EV/EBITDA (x) na na 10.1 7.1 5.5
Cas h (A$m ) - Sep 10F 217.6 Exploration and Evaluation (US$m ) 0.0 0.0 5.6 5.6 5.6
Price/Cash (x) 19.9 Drilling - RAB (m ). Est. - - - - -
Price/Book (x) 5.0 Drilling - Other/Diam ond (m ). Est. 40,000 40,000 80,000 80,000 70,000
Com pany options: No Land holding ('000 ha)* 331.2 331.2 331.2 331.2 331.2
Quarters refer to calendar year. * Copper projects only. AU/US: 0.98

Overview: Equinox is an international copper mining and exploration company. Its flagship project is the
EQN is focused on production, development and Lumwana copper mine in Zambia, located 220km west of the Zambian Copperbelt.
exploration of copper (and by-product U) in Zambia. Lumwana Copper Project: Nameplate production of 20mtpa achieved Apr ‘10. Initial mining is from the
Malundwe pits which extend over a 4km strike. Production of 140kt of copper in conc. expected in 2010, with
Lumwana is one of the world's largest copper mines mill throughput rate at 20mtpa. LOM copper grade is 0.70%, pit shells were designed several years ago using
US$1.20/lb Cu and reserves calculated at a 0.20% cut-off grade. Uranium, which occurs in discrete lenses
(top 20) - target production 150ktpa over 37 year LOM. within the pits, is being stockpiled potentially for treatment through a dedicated uranium plant. Development
decision deferred pending stronger uranium price outlook. Chimiwungo pit production 4Q12.
Phase 1 expansion: Increasing mill throughput from Optimisation plans: Phase 1 expansion from 20mtpa to 24mtpa mill throughput by debottlenecking and
20mtpa to 24mtpa (debottlenecking) by Dec 2011. optimisation of the existing plant is effectively a continuation of the mine ramp up. It is expected to be
achieved by Dec ’11 at minimal capital cost. Anticipated copper production will increase to 140-160ktpa.
Phase 2 expansion study is underway (Ausenco) and is expected March ’11. EQN anticipates mill expansion
Phase 2 expansion: DFS expected March '11. Potential to 35mtpa throughput at a cost of US$300-400m, with commissioning 2014. Copper production ~200ktpa.
2
throughput rate 35mtpa (+46%) from 2014. Indicative Exploration: Lumwana Mining Licence covers 1,355km and contains numerous, near surface high grade
capex <US$400m. Cu production ~200ktpa. targets within 25km radius of the plant. There is also good potential for additional uranium resources. EQN
announced (June ’10) acceleration of the extension exploration drilling program to test for ore body
extensions to the south and east of the Chimiwungo pit designs. There are currently 6 rigs on site and there
EQN growth opportunities include local and regional is potential for a significant resource upgrade 2Q11 – based on infill and extension drilling, redesigned pit
exploration upside and acquisitions. Potential for shells using a copper price of US$2.50/lb, and potentially lowering the cut-off grade from the current 0.2%
2
significant resource upgrade at Chimiwungo 2Q11. Cu. Regional: Mufupanda IOCG (1,957km ). Tenements granted Nov ‘09 – early stage. Airborne magnetic,
radiometric and gravity surveys planned for 2010. Adjacent to more advanced BHP/Blackthorn
(ASX:BHP/BTR) Kitumba and Mushingashi IOCGU projects.
Mufupanda IOCG exploration target - tenement granted Investment Comment: Lumwana project appears now to be well on track following production shortfalls due
Nov '09 (Zambia). Adjacent to BHP/BTR project. to a severe wet season 2009, excess early stage transitional material (~30%) impacting mill recoveries, and
poor availability of the contract mining fleet (now resolved with Hitachi providing 5 additional trucks). Given
12 month share price target A$7.00. Assumes the positive outlook for the copper price, the impetus for the next share price re-rating (to >$7.00/share) could
be a possible large reserve/resource upgrade at Lumwana 2Q11, coupled with a turnaround in US economic
significant resource upside and US turnaround. prospects leading to a weaker A$/US$ (timing unclear). Discounting spot market prices, RCR’s NAV is
~A$5.25/share (10% r/i, discounting spot A$/US$0.98, and spot Cu ~US$3.80/lb).
EQN - Equinox Minerals Limited

6.50
Reserves and Resources/Mineralised Material
Code for reporting mineral resources - NI 43-101 and JORC
6.00 Copper (Cu) Classification/ Project Ore Cu Cut Off Cu Cu Cu Eqty

Geology Equity Mt % % Mt Bn lb Bn lb
5.50
Lumwana Reserves: In-pit
5.00
Malundwe Pit Proven + Probable 100% 105.7 0.86 0.2 0.91 2.0 2.0
Chim iwungo Pit Proven + Probable 100% 200.2 0.62 0.2 1.24 2.7 2.7
4.50 Total In-Pit Reserves Proven + Probable 100% 305.9 0.70 0.2 2.15 4.7 4.7
In-pit resources Inferred 100% 417.2 0.60 0.2 2.50 5.5 5.5
4.00
Resources (inclusive of in-pit reserves and resources above)
3.50 Lum wana Meas ured + Ind 100% 342.5 0.74 0.2 2.53 5.6 5.6
Lum wana Inferred 100% 563.1 0.63 0.2 3.55 7.8 7.8
3.00 Uranium (U3O8) Resources Ore U3O8 Cut Off U3O8 Cu U3O8 Eqty
Nov-09

Jan -10

Jun -10
Oct-09

Mar-10

Ap r-10

May-10

Jul-10
Dec-09

Aug-10

Sep-10

Mt % ppm Kt kt Mlb
Malundwe Ind + Inf 100% 8.6 0.073 120 6.3 55.6 13.9
Chim iwungo Inferred 100% 2.2 0.056 120 1.2 15.9 2.7
Source: Blo omberg
Lumwana Uranium Resources within the Copper Pits (2008 UFS)
Malundwe + Chim iwungo Probable and Inf 100% 5.7 0.104 240 5.9 51.50 13.10

Mr Craig Williams (Pres., CEO) P Tomsett (Non Exec Ch) Ownership/ JV Plant Process Project
Tel: 61 (0) 8 9322 3318 C Williams (Pres., CEO) Project Option Metal Partner Cap. Route Status Location
West Perth, Australia D McAusland Lum wana Copper Proj 100% Cu/U na 20Mtpa Flotation Developm ent Zam bia
Kevin van Niekerk (VP IR) D Mosher Lum wana LML 100% Cu/Co/U na na na Adv Expl. Zam bia
1 (416) 865 3393, Toronto B Penny Zam bezi Project* 100% Cu/Co/U na na na Adv Expl. Zam bia
www.equinoxminerals.com J Pantelidis Mufupanda 100% IOCG na na na Early Expl. Zam bia

Analyst: John Wilson
johnwilson@rcresearch.com.au *Subject to a 70% claw back option to Anglo American.

©


Equinox M inerals Lim ited

YEAR END: Dec Year Year
A S S UM P T IO N S 2 0 0 9 a 2 0 10 F 2 0 11F 2 0 12 F 2 0 13 F F IN A N C IA L R A T IO S 200 9a 2 0 10 F 2 0 11F 2 0 12 F 2 0 13 F
A$/ US$ 0.8 0 0 .9 0 0.93 0.8 7 0.82
Co pper p rice (US$/ lb ) 234 333 36 8 388 390 Net deb t / equit y (% ) 9% 5% 2% -2% -6%
Net deb t / net debt + equit y (% ) 9% 5% 2% -2% -6%
Current rat io (x) 1.3 3 .8 5.0 6.5 8.0
EBIT/ int erest (x) -0 .5 9 .2 1 .4
1 15.4 15.5
E Q UIT Y P R O D UC T IO N Debt / op erat ing cashf low (% ) 54 5% 16 2 % 84 % 66% 64%
Lumwana product ion (kt Cu) 1 .3
09 14 3 . 4 1 .1
51 1 .2
66 1 .5
71 Explorat ion/ t o t al overhead (%) 30 % 29 % 33 % 33% 33%
EV/ EBITDA (x) 453 .9 10.1 7.1 5.5 5.4
EQN equit y pro duct io n cop per (kt ) 1 .3
09 14 3 . 4 1 .1
51 1 .2
66 1 .5
71 M arket cap/ net cash (x) -1 .6
0 - 19 . 1 -43.6 62.0 17.8
M arket cap/ b ook (x) 6 .4 5. 0 4.6 4.2 3.8

P R O F IT A N D LO S S ( A $ m ) F IN A N C IA L S E N S IT IV IT IE S
Revenues 595 865 1 93
0 1 310 1367
Op erat ing cost s -212 -343 -3 55 -372 -41 2 %Chang e in EPS f or a 1 increase in:
0%
Depreciat ion/ amort izat ion -4 7 - 74 -8 4 -90 -95
Explorat ion exp ensed -5 -5 -6 -6 -6
Co rporat e -12 - 13 -12 -12 -12 Copper Price 22 % 19% 20%
Ot her (incl. royalt ies) -356 -27 -4 8 -41 -43
EB I T -36 402 58 9 79 0 79 9
Int erest 77 44 51 51 51 %Chang e in NPV f or a 1 increase in f orecast minelif e
0%
Op er at i ng p r o f i t / l o ss - 113 3 59 53 7 73 9 74 8 commod it y assumpt ions f o r:
Tax 57 - 116 -161 -22 2 -224 B a se + 10 %
M inorit ies 0 0 0 0 0 A $/ s har e A $/ shar e %
N e t p r o f i t / l o ss - 56 243 3 76 517 52 3 Copper Price US$2.50/ lb 3.83 4.3 4 13%
Net abno rmals/ ext aordinaries 0 0 0 0 0
Net prof it / loss (repo rt ed) -56 243 3 76 517 523

B A LA N C E S H E E T ( A $ m ) V A LUA T IO N ( US $ m ) Q 3 10
C ash and d ep o si t s 10 9 235 362 53 1 70 4
To t al current asset s 32 7 436 56 4 733 906 A ssump t i o ns B as e " W hat i f "
PP&E 110 3 10 78 10 2 5 9 52 8 74 Long Term Copper Price :US$/ lb 2 .50 3.50
To t al non-current asset s 1 31
1 110 5 1 52
0 979 901 Long Term A UUS 0 .8 0 0.80
To t al asset s 1458 154 1 1 1
6 5 1 2
71 1807 P r o j ec t s
To t al current liabilit ies 270 16 7 1 7
6 167 167 Lumwana copp er pro ject 1 0%
0 NPV@1 0% 2 14 3 3000
Reclamat ion reserves 0 0 0 0 0 Based on reserves only
Lo ng t er m d eb t 405 348 348 348 348 R eso ur ces and E xp l o r at i o n
To t al non-current liab ilit ies 507 50 9 50 9 509 509 Lumwana regio nal 1 0%
0 300 600
To t al liab ilit ies 777 6 76 6 76 676 676 Ot her Zambia 1 0%
0 50 75
Eq ui t y 681 866 940 10 3 6 113 1 Uranium st ockpile/ p roject 1 0%
0 50 75
Ot her 5 5
T o t al d eb t 519 461 461 461 461 A sset s
Net debt 410 227 99 -70 -243 Cash and deposit s 2 13 213
Average shares (f ully dilut ed ) (m) 684 72 3 72 3 723 723 Rehab ilit at ion f und 0 0
Ot her -31 -31
F LO W O F F UN D S ( A $ m ) Li ab i l i t i es
EB I T D A 11 4 77 6 73 881 894 Debt -46 1 -461
Cash f low f rom operat ing act ivit ies Corp orat e -82 -82
Operat ing surplus 383 52 2 73 9 939 954 Reclaimat io n reserve 0 0
Corporat e -1 2 - 13 -12 -12 -12 N et A s set s ( U S$ ) 2 18 7 3394
Net bo rrowing cost -24 - 58 -75 -88 -1 03 N et A s set s ( A $) 2 73 4 4243
Net t ax paid 57 - 111 -141 -213 -226
Net exp lorat ion paid 0 -6 -6 -6 -6 Fully dilut ed shares (m) 72 4 724
Ot her non cash it ems -30 9 - 50 40 78 108 N et as set s/ shar e ( A $ / shar e) 3 .8 3 5.91
N e t cas h f r o m o p er at i ng ac t i vi t i es 9 5 284 54 6 70 0 716
Cash f low f rom invest ing act ivit ies
Capit al expendit ure -50 -49 -3 1 -18 -18 V aluat io n/ Reserve lb :US$/ lb 0 .4 6 0.72
A sset Sales & Ot her 0 -6 -6 -6 -6 V aluat io n/ Reserve & Reso urce lb :US$/ lb 0 . 16 0.25
N e t cas h f r o m i nv est i ng act i vi t i e s - 50 - 54 -3 6 -23 -23
Cash f low f rom f inancing act ivit ies
Net pro ceeds f rom issue o f shares 1 57 0 0 0 0
Dividends paid 0 0 0 0 0
Net pro ceeds f rom borrowings -1 5
4 - 13 7 -3 82 -50 7 -520
N e t cas h f r o m f i nanci ng act i vi t i e s 13 - 13 7 -3 82 - 50 7 - 52 0
Net change in cash 58 93 1 7
2 169 173

P R O D UC T IO N S T A T IS T IC S
Lumwana 10 0 %
Ore t reat ed (mt ) 1 9
3.6 18.00 20 .25 22 .25 24.00
Co pper head g rade (%) 0.94 % 0 .88% 0.8 0% 0.79 % 0.76%
Recovery (%) 85% 91% 93 % 94% 94%
Recovered grade (g/ t ) 0.80 % 0 .80% 0.75% 0.75% 0.71%
To t al cont ained copp er (kt ) 1 .4
09 143.4 1 .1
51 1 .2
66 1 .5
71
Eq ui t y Pr o d uct i o n ( kt ) 10 9 . 4 14 3 . 4 151. 1 16 6 . 2 171. 5
C a sh C o st s ( C 1) ( U S$ / l b ) 1. 4 9 1. 3 3 1. 2 9 1. 3 0 1. 3 8
T o t al C o st i ncl D &A ( U S$/ l b ) 1. 8 2 1. 6 6 1. 6 4 1. 6 6 1. 75
Cash c o st s inc. royalt y & t c/ rc (A$/ t ) 32.9 9 25.85 22 .80 24.4 9 26.53
EQN Share EBIT (US$m) 284 .3 417.2 62 6.0 776 .6 770.7

©


Gunson Resources Limited
Gunson Resources Limited

GUN.AU A$ 0.10

13 October 2010 GUN's 100% owned ~A$170m Coburn Zircon Project in WA is now
Zircon, Copper,Gold,Nickel
looking strategically attractive (DFS completed) with a potential
Australia
DFS, Advanced Exploration zircon supply deficit looming. This will boost GUN's plans to bring
Exchanges: ASX:GUN in a big brother, which could also boost a languishing share price.

52 week range (A$/s hare) 0.06 to 0.17
Number of s hares (m) 173.5 Exploration and Development (A$m) 0.69 0.25 1.70 2.23 1.50
Options and warrants (m) 4.4 Corporate (A$m) 0.15 0.10 0.57 0.60 0.40
Convertible notes (m) 0.0 Exploration/(Expl.+ Corporate) (%) 82 71 75 79 87
Fully diluted (m) 177.9 Funding duration at current burn (years) 0.2 0.1 0.3
Market capitalisation (undiluted) (A$m) 17.2 Shares on iss ue (pr end) (m shares ) 163.5 173.5 138.0 163.5 194.9
Debt (A$m) - Sep 10F 0.0 Drilling - RAB (m) 0 0 0 0 0
Enterpris e value (A$m) 17.2 Drilling - Other/Diamond (m) 596 500 554 4,850 2,000
Major s hareholders: John Tillbrook (9.2%), HSBC Nominees (2.4%), Land holding ('000 ha) 273 273 273 273 273
Bruce Birnie P/L (2.3%), Directors (2.3%). Tenement cos ts ($k per year) - - - - -
Avg monthly volume (m) 8 Capital rais ings (A$m) * 0.00 0.60 1.01 2.55 2.10
Cash (A$m) - Sep 10F * 0.5 Funding from JV partners (A$m) 0.1 0.1 0.2 1.7 0.5
Price/Cas h (x) 32.5 Cash (A$m) 0.3 0.5 0.5 0.3 0.5
Lis ted Company options : No Net ass et backing (Ac/share) 15.1 14.6 16.1 15.1 14.9
* A$0.6m w as raised at A$0.06/share in July 2010. * Assumes nominal A$1.5m further equity capital raised in1Q11.

Overview: GUN (originally a spin-off of mineral assets from Stuart Petroleum NL) was listed on the ASX
GUN has spent ~10 years and nearly A$20m bringing in May 2000. GUN’s two key assets at listing – the Coburn Zircon Project and the Mount Gunson Copper
the Coburn Zircon Project ("CZP") in WA to DFS stage. Project - have been the primary focus of GUN’s subsequent development expenditure and have both
reached an advanced stage.
2
CZP estimated capital expenditure is ~A$170m, quoted Coburn Zircon Project (100%): GUN’s Coburn tenements cover ~1,200km of fossil coastline
approximately 700km north of Perth. GUN has spent nearly A$20m on this advanced project since
NPV is A$163m which is ~A$1.00/share. commencing drilling in 2000. The Coburn Zircon Project (“CZP”) is mainly located on granted mining
leases with government environmental approvals. A DFS was completed in 4Q09 and GUN is now
CZP is strongly underpinned by positive price outlook for seeking to bring in a development partner (possibly an end user through establishing offtake agreements)
zircon (67% of revenue). to support a project financing and conceivably bring it into production by the end of 2012. GUN has
appointed RFC as its advisor in this process. A number of significant parties have expressed interest in
the CZP and have entered a more detailed data assessment phase. The DFS was based on 17.5mtpa
CZP could be in production by 4Q12 if GUN finds a mining rate (17.5 year mine life), dedicated wet concentrator and mineral separation plant to produce
development partner by end 2010. 40ktpa zircon, 90ktpa ilmentite and 9ktpa rutile. Capex is estimated at A$169m (not incl. working capital).
Quoted NPV (at 8% DR) was A$163m (~A$1/share), ungeared IRR 16.8%. Assumed A$/US$ long term
is 0.72. GUN believes that the outlook for ilmentite prices, and zircon prices in particular, is very positive
Xstrata exploring for deep IOCG Olympic Dam style
with negligible identifiable new zircon supply sources in the next 2-3 years. This positive view is shared by
deposits at Mount Gunson (SA),(49% GUN). Iluka, and bodes well for GUN’s efforts to attract a development partner.
2
Mount Gunson Copper Project (49%): This 1,320km project area is located in the 500km long Olympic
GUN looking to get small scale copper operation (~8ktpa copper-gold belt in South Australia, which currently hosts ~75% of known copper resources in Australia
with the world class Olympic Dam, Prominent Hill and Carrapeteena deposits. Xstrata has earnt a 51%
Cu) started at Mount Gunson 100%-owned ground
JV interest A$3.5m spent). Xstrata can earn a further 24% by expenditure of A$6.5m over three years.
(MG14-Windabout). Xstrata drilled two very deep diamond core holes (1,100-1200m depth) in 3Q09, and got tantalising ‘sniffs’
of high grade copper mineralisation, but widths were narrow (e.g. 7m @ 2.2%Cu from 974m). Xstrata will
GUN looking for partners to progress MG14-Windabout conduct geophysical surveys in the remainder of CY10, drilling to recommence 1H11.
BFS and move to production in ~2 years. Mount Gunson Copper Project – Excised Area (100%): In 3Q09 GUN completed a PFS on treating
only the shallow flat sheet-like MG14 deposit (19kt Cu resource). This indicated a two year mine life
(550ktpa treatment of 1.1mt resource) and full capital pay-back assuming 67% copper recoveries,
GUN is suffering from small company-large project US$2.70/lb Cu price, A$/US$ = 0.86. The plan would be then to proceed to treat the larger, deeper
syndrome. If it finds a development partner for the CZP, Windabout deposit (187kt Cu resource) using underground mining. GUN is seeking development partners
then we see major share price upside. to fund a BFS over the next 12 months and potentially take equity in the project
Investment Comment: The market often has trouble valuing small companies with potentially big
projects. This seems to be the case with GUN and its ~A$170m capex Coburn Zircon Project. GUN is
GUN - Gunson Re s ources Limited capitalised at only ~A$17m, putting little value on this project, plus its potential copper mine and copper
exploration. We could see huge price upside if GUN is successful in attracting a development partner.
16

14

12
Copper Classification Project Ore Cu Cut Off Cu Cu Cu Eq
10 Equity mt % % kt mlb kt

8 Reserves 0.0 0.0 0.0

6 Resources
Mount Guns on - MG14 Indicated 100% 1.1 1.70 1.0 19 8 19
4 Mount Guns on - Windabout Indicated 100% 18.7 1.00 0.5 187 85 187
2 Mount Guns on JV Inferred 49% 25.1 1.31 0.5 328 149 161
Total Resources 44.9 1.19 534 242 366
0 Note: MG14 & Windabout contain 0.04% and 0.05% Cobalt respectively
Jan-10

Mar-10

May-10

Jun-10
Oct-09

Nov-09

Dec-09

Apr-10

Jul-10

Aug-10

Sep-10

Heavy Minerals Equity Ore mt HM% Cut Off HM mt Zr %* Ilm. %*
Coburn Zircon Project Resource - M & I 100% 979.0 1.26 0.80 12.3
Source: Bloomberg
Coburn Zircon Project Reserves - Pr & Prob 100% 308.0 1.20 0.80 3.7 23 48
* Zr % and Ilm. % are the % of total contained heavy minerals that are zircon and ilmentite respectively

Mr David Harley W Cunningham (Chairman) Ownership/ JV Target Process Project
(Managing Director) D Harley (MD) Project Option Metal Partner Type Route Status Location
Tel: 61 (0) 8 9226 3130 P Harley (Non-Exec Dir) Coburn 100% Zr none H. Metals Gravity DFS Aust(WA)
West Perth, WA, Australia Mount Guns on JV 49%/25% Cu,Co Xs trata IOCG Flotation Mid Expl. Aust(SA)
www.gunson.com.au Mt Guns on MG14/W'about 100% Cu,Co none Flotation BFS underway Aust(SA)
Fowlers Bay Nickel 100% Ni none na Early Expl. Aust(SA)
Analyst: Dr Tony Parry Tennant Creek 100% Cu,Au none IOCG na Early Expl. Aust (NT)
tonyparry@rcresearch.com.au
©


GUN’s Project portfolio is headlined by the advanced Coburn mineral sands project in WA (zircon is the
key mineral) and the Mount Gunson copper exploration project in SA’s Olympic Dam territory, where GUN
has a small scale production project BFS underway. Fowler’s Bay is early stage nickel exploration, and
Tennant Creek early stage copper-gold exploration.

The Mount Gunson Copper project (49% GUN) is situated in the 500km long Olympic Copper-Gold Province
in South Australia which contains ~75% of the known copper resources in Australia – including the
Olympic Dam, Prominent Hill and Carrapeteena deposits. The latter, potentially containing >4mt Cu (drilled
by Teck Cominco), is only 20km east of GUN’s tenements.

©


Sandfire Resources NL
SFR.AU
Sandfire Resources NL
A$ 7.64

13 October 2010 SFR holds a strategic 400km2 in the emerging DeGrussa VMS
Copper, Gold, Manganese
Australia (WA)
copper-gold district in WA. The project is shaping up as world-class
Advanced Exploration since discovery Apr '09; high grade copper resource 10.7mt @
Exchanges: ASX:SFR 5.7% Cu. Excellent exploration upside. DFS 1H11.

Number of s hares (m) 130 Exploration and evaluation (A$m) 9.61 13.20 27.59 29.20 24.00
Options and warrants (m) 12 Corporate (A$m) 0.77 0.60 2.95 2.40 2.40
LS Nikko* (m) 18.7 Exploration/(Expl.+ Corporate) (%) 93 96 90 92 91
Fully diluted (m) 160 Funding duration at current burn (years ) 1.8 0.8 1.1
Market capitalisation (undiluted) (A$m) 993.3 Shares on is s ue (pr end) (m s hares) 130.0 130.0 130.0 130.0 133.8
Debt (A$m) - Sep 10F 0.0 Drilling - RAB (m). Es t. 0 0 0 100,000 0
Enterprise value (A$m) 993.3 Drilling - Other/Diamond (m). Es t. 20,000 20,000 80,000 95,000 100,000
Major s hareholders: Oz Minerals (19.7%), POSCO (16.7%) Land holding ('000 ha)* 40 40 40 40 40
Tenement cos ts ($k per year) - - - - -
Avg monthly volume (m) 15 Capital raisings (A$m) 26.73 0.00 84.42 0.00 30.00
Cash (A$m) - Sep 10F 40.9 Funding from JV partners (A$m) 0 0 0 0 0
Price/Cas h (x) 24.3 Cash (A$m) 55.8 40.9 55.8 24.4 29.6
Price/Book (x) 17.4 Cash backing (Ac/s hare) 42.9 31.5 42.9 18.8 22.1
Lis ted company options : No Net ass et backing (Ac/s hare) 43.7 44.0 43.7 43.7 64.3
* LS Nikko Copper raising (18.7m shares) subject to shareholder approval *Copper prospective tenements only; held and under application. Quarters ref er to calendar year.

90% copper focus. Exploration budget A$20-30m FY11. Overview: SFR listed on the ASX Mar ‘04. Its lead project, the high grade DeGrussa copper project, is
one of the most spectacular exploration discoveries in Australia in recent years
DeGrussa (WA): 900km NE of Perth, is in an established mining district wi th good infrastructure. The
DeGrussa: Established WA mining region. Good resource, containing 4 deposits (aggregate 600kt Cu grading 5.6%) announced Sep ’10 is the third
infrastructure. Modest capex and opex. resource statement since project discovery Apr ’09. The latest resource includes the Conductor 5 pod
discovered Jun ’10 – with significant upside potential. Volcanogenic massive sulfide (VMS) deposits
2 typically occur as clusters containing a number of discrete metal sulphide pods. Major Canadian VMS
Dominant 400km tenement package in Bryah Basin - districts frequently contain 4 to 20 pods (average 12), with an average base metal content of >5mt, and the
emerging copper-gold district. Large VMS districts can largest pod in each district, on average, contains 65% of the total metal.
2
contain 4 to 12 deposits, aggregating >5mt of metal. Exploration: SFR controls a dominant 400km land position in the region. The DeGrussa resource to date
is defined over 1.5km of a 6km priority zone which is being systematically drilled. Since Apr ‘09, SFR has
drilled around 150,000m. SFR has identified multiple regional conductive features and has defined 14
Four deposits discovered to date within 1.5km strike of initial regional targets for drilling – the first two are currently being drilled. Regional geophysical surveys
6km priority corridor: containing 600kt Cu metal, 660koz 2H10 include EM over 10km strike length. Deep drilling 1,600-2,000m 2Q11.
gold, 5.1moz silver (Sep '10). In-situ value ~US$6bn. Development outlook: proposed open pit of secondary (Chalcocite) and underground mining operation of
primary sulphides. The pit is planned to 140m depth. Preliminary infrastructure/site works are expected to
commence late 2010, followed by pre-strip 1H11; and DSO of high grade chalcocite cap 2H11-1Q12
Major exploration campaign underway across 6km (151kt @ 25.6% Cu for 39kt metal) potentially leading to early cashflow. Underground development is
priority corridor at DeGrussa. Plus 12 regional targets scheduled to commence 2Q11. An on-site concentrator is expected to be commissioned 2Q12, with
identified. Drilling 2010-12. concentrate trucked to Geraldton. PFS expected 4Q10. DFS 1Q11. Cornerstone investors in place.
Strategic alliance with POSCO. LS Nikko Copper (Korean copper smelter, subject to approval of joint
boards), SFR to issue 18.7m shares at $5.02/share - unlikely to proceed given recent share price surge.
Resource + reserve upgrades expected 4Q10. Project Investment Comment: SFR’s share price has more than doubled since OZL purchased a 19% stake
development expected 1H11. early July (avg price paid $3.85/sh). The price has risen from $3.42/share July 1, to $7.64 currently
(+123%). With high grade and attractive exploration prospects, buoyant copper market and gold prices,
Strategic shareholders - potential for corporate activity. and a share registry dominated by major industry players, SFR trades at a high premium to other explorers
and potential near term producers – adjusted EV/resource US$0.70/lb. A lot of good news is already
priced into the stock and consolidation might be expected ahead of the PFS/reserve statement 4Q10.
SFR - Sandfire Resources NL

9.00
8.00
Copper Classification Project Ore Cu Au Ag Cu Cu Eqty

7.00 Equity Mt % g/t g/t Kt Mlb
6.00
Reserves 0.0 0.0 0.0 0.0 0.0 0.0
5.00
Resources
4.00 DeGrus sa Oxide Inferred 100% 0.10 8.8 2.2 11 8.8 19.4
3.00 DeGrus sa Chalcocite Indicated 100% 0.25 17.6 2.6 21 44.0 97.0
2.00 DeGrus sa Primary Indicated 100% 1.38 8.2 2.4 21 113.2 249.5
Conductor 1 Ind and Inf 100% 6.12 4.9 1.7 13 297.3 655.5
1.00
Conductor 4 Ind and Inf 100% 1.78 4.1 1.7 12 73.1 161.1
0.00 Conductor 5 Inferred 100% 1.05 6.4 3.0 21 67.2 148.1
Oct-09

Nov-09

Dec-09

Apr-10
Jan-10

Jun-10

Jul-10

Aug-10

Sep-10
Mar-10

May-10

Total DeGrussa 10.68 5.7 1.9 15 603.6 1,330.6

So urce: Bloomberg Mineralised Material (est., non compliant w ith JORC) 0.0 0.0 0.0

Mr Karl Simich D. La Feria (Non Ex Chair) Ownership/ JV Target Process Project
Managing Director K. Simich (MD) Project Option Metal Partner Type Route Status Location
Tel: 61 (0) 8 6430 3800 W.J. Evans (Dir) DeGrus sa 100% Cu,Au,Ag none VMS flotation Adv. Expl. Aus (WA)
West Perth, WA, Australia J. Jong (Non Ex Dir) Borroloola Project 100% Pb-Zn-Ag MIN* Early Expl. Aus (NT)
www.sandfire.com.au R. Scott (Non Ex Dir)

Analyst: John Wilson * MIN option to earn 70% of any Mn.
johnwilson@rcresearch.com.au
©


DeGrussa Cu-Au project (WA): 900km northeast of Perth in a well-established mining area. Development
timetable: Preliminary site works Dec ‘10. Open cut 1Q11; Underground mining 2Q11. Early cashflow 3Q11
from high grade DSO chalcocite cap (151kt @ 25.6% Cu, 2.6g/t Au, 21g/t Ag).

DeGrussa project (WA): Location of 4 deposits discovered to date along 1.5km strike, within 6km priority
corridor. Resource 10.6mt @ 5.7% Cu for 600kt metal (Sep ’10). Comparison with global VMS projects
indicates potential for large scale districts to host >5mt metal. SFR exploration budget $20-30m FY11.

©


Venturex Resources Limited Venturex Resources Limited
VXR.AU A$ 0.09

13 October 2010 VXR controls a large (50 x 20km) VMS district in the Pilbara (WA)
Copper, Zinc, Gold
with significant exploration upside. Current resource 180kt Cu Eq
Australia (WA), Brazil
Advanced Exploration grading 1.1% Cu (2.2% Cu Eq). Potential 15ktpa Cu Eq production
Exchanges: ASX:VXR from 1Q12. LOM 8 years. Scoping study expected 4Q10.

Number of shares (m) 655 Exploration and evaluation (A$m) 1.05 1.25 2.88 5.00 5.00
Options and warrants (m) 77 Corporate (A$m ) 0.46 0.50 2.01 1.70 1.60
Convertible notes (m ) 0 Exploration/(Expl.+ Corporate) (%) 69 71 59 75 76
Fully diluted (m) 732 Funding duration at current burn (years) 1.3 0.9 0.9
Market capitalisation (undiluted) (A$m ) 59.0 Shares on issue (pr end) (m shares) 635.7 655.0 635.7 735.0 815.0
Debt (A$m) - Sep 10F 0.0 Drilling - RAB (m) 0 0 0 0 0
Enterprise value (A$m) 59.0 Drilling - Other/Diam ond (m) 6,264 5,000 13,395 15,500 15,500
Major shareholders: Nef co Nominees (19.3%), Land holding ('000 ha)* 34 34 34 34 34
Straits Mineral Investments (16.3%) Tenement costs ($k per year) - - - - -
Avg m onthly volum e (m) 9 Capital raisings (A$m ) 8.98 1.50 10.90 7.50 6.00
Cash (A$m ) - Sep 10F 5.0 Funding from JV partners (A$m ) 0 0 0 0 0
Price/Cash (x) 11.9 Cash (A$m) 6.3 5.0 6.3 6.2 5.9
Listed com pany options: No Net asset backing (Ac/share) 3.7 3.7 3.7 4.0 4.2
*Copper prospective tenements only; held and under application. Quarters ref er to calendar year.

WA copper focus: FY11 exploration budget $5m: 90% Overview: VXR listed on the ASX April 2007. Lead projects are VMS base metals in the Pilbara. It
purchased Whim Creek and Salt Creek from Straits Resources (ASX:SRL) Aug ’09 for $8m in shares
directed to Pilbara VMS copper (drilling 20,000m). (on deal closure) and $3m in shares or $3.5m cash on decision to mine.
Pilbara VMS province (WA): 120km from Port Hedland. VXR holds 3 project areas prospective for
Scoping study and resource upgrade expected 4Q10. VMS base metals, viz, Whim Creek, Salt Creek and Liberty-Indee; within 25km of Whim Creek Mining
BFS and development decision expected 2Q11. Lease where a previous open pit (2004/5, SRL), crushing circuit, and infrastructure are situated; 5km to
electric grid. The Pilbara deposits occur in clusters, are shallow dipping, undulating planes, not difficult
or expensive to explore at increasing depths. VXR has high potential for discovery of additional pods as
Substantial infrastructure in place. Low capex ~A$70m. li mited exploration has occurred at depths below 150m, and from surface where there are numerous
gossans. Scoping Study: Expected 4Q10 (Snowden) for a centralized plant producing Cu, Pb and Zn
Pilbara VMS: Open pit ore reserves: 3.47mt @ 2.2% Cu concentrates at Whim Creek. Expected capex A$50m to A$ 80m. The study is drawing on feasibility
work completed by Straits in 2007. Proposed production rate is 600ktpa grading over 2% Cu Eq from
Eq (Whim Creek and Mons Cupri pits) - support first 5 1Q12. LOM 8 years. Initial production is expected from open pit mining at Mons Cupri, Whim Creek and
years mine life. C1 costs <US$1.00/lb Cu Eq*. Evelyn in years 1-5; and subsequently from high grade underground ore at Salt Creek in years 5 - 8.
There is good potential to extend open pit life, by 1 to 3 years, especially in the Mons Cupri corridor.
VXR has defined 5 deposits to date. VMS districts of Whim Creek: contains the main Mons Cupri resource (4.94mt, 58% of total resource) – the sulphide
zone is open at depth (below 250m), to the north and northwest. Resource upgrade Sep ’10 added 67%
similar scale typically contain 8-19 economic deposits. to in-pit reserves and +54% to Whim Creek pit reserves. Liberty-Indee project: 12km VMS horizon
with multiple gossans at surface. Salt Creek project: Potential for selective, narrow vein underground
Exploration upside on 36km prospective VMS horizon; mining. High grade zinc – drill intercepts include 4.75m @ 47.8% Zn 2Q10.
and at depth (>150m). Multiple drill ready targets. Whim Creek Heap Leach: (VXR 50%, free carried) Small-scale SX-EW (operated by WASCO) to
produce 1-2ktpa Cu cathode from 1Q11. LOM 2-3 years. Potential cashflow to VXR ~$3mpa.
Brazilian gold projects: Generating a lead gold project. VXR team and properties in place. Rio Pombo:
Drilling Mons Cupri corridor 4Q10 (5,000m) - potential for large soil anomaly; good trenching results, further trenching underway; targeting granite hosted system.
significant open pit resource additions (+2.5mt, +50%) - Investment Comment: VXR offers exploration upside with production visibility 1Q12 and leverage to
extending low cost, open pit mine life by 1-3 yrs. the rising copper price. The company is trading at a 50-70% discount to preli minary estimates of project
NPV: >A$100m at a copper price of US$3.00/lb and >A$150m at spot copper price (~US$3.75/lb).
Drilling Oct ’10 northwest of Mons Cupri with potential for significant resource additions (+2.5mt, +50%).
Blue sky gold discovery potential in Brazil. Further resource and reserve revisions imminent for Salt Creek and Evelyn deposits.

VXR - Venturex Resources Limited Reserves and Resources/Mineralised Material
0.12 Code for reporting mineral resources - Australian: (JORC)
Copper Classification Project Ore Cu Cu Eq* Cut Off Cu* Cu Eq*
0.11
Equity Mt % % % kt Mlb

0.10 Reserves
0.09 Whim Creek Probable 100% 0.69 1.7 2.2 0.85 15 33.5
Mons Cupri Probable 100% 2.78 1.1 2.2 0.85 61 134.6
0.08
Salt Creek Probable 100% 1.40 1.3 2.9 0.85 41 89.5
0.07 Total - Pilbara VMS 4.87 1.3 2.4 117 258
0.06
Resources (includes proved and probable reserves)
Whim Creek Inf and Ind 100% 1.03 1.4 1.9 0.60 20 44.1
0.05 Mons Cupri IIM 100% 4.94 0.9 1.6 0.60 80 176.4
0.04 Salt Creek Inf and Ind 100% 1.83 1.4 3.3 0.60 61 134.5
No v-09

Jun-10

Jul-10
Oct-09

Feb-10

Mar-10

Apr-10

Liberty-Indee Inf and Ind 70% 0.66 1.8 3.6 0.60 25 38.6
Dec-09

Aug-10

Sep-10

Total - Pilbara VMS 8.46 1.1 2.2 186 393.5
Mineralised Material (est., non compliant w ith JORC) 0.0 0.0
Source: Bloomberg
*Cu Equivalent = Cu% + Zn% x 0.28 + Pb% x 0.26 + Ag(ppm) x 0.008 + Au(ppm) x 0.513. NSR returns to be conf irmed.
*Metal prices: Copper US$6612/t; Zinc US$1983/t; Lead US$1983/t; Silver US$18/oz; Gold US$1200/oz

Dr Tim Sugden A Kiernan (Non Ex Chair) Ownership/ JV Target Process Project
Managing Director T Sugden (MD) Project Option Metal Partner Type Route Status Location
Tel: 61 (0) 8 6389 7400 A Reilly (Dir) Whim Creek 100% Cu-Zn-(Pb) none VMS Flotation Scoping Study Aus (WA)
West Leederville, WA, Australia M Mulroney (Non-Ex Dir) Mons Cupri 100% Cu-Zn-(Pb) none VMS Flotation Scoping Study Aus (WA)
www.venturexresources.com A Trench (Non-Ex Dir) Salt Creek 100% Cu-Zn-Pb none VMS Flotation Scoping Study Aus (WA)
Liberty-Indee 70/90% Cu-Zn Ourwest VMS Flotation Scoping Study Aus (WA)
Whim Creek Heap L. 50% Cu WASCO Oxide Refurbishing Aus (WA)
Analyst: John Wilson Jatoba Gold Mine 100% Au none Oxide Closed m ine Brazil
johnwilson@rcresearch.com.au Rio Pombo 100% Au none Oxide Mid Expl. Brazil

©


Pilbara VMS project (WA): VXR holds 3 project areas prospective for VMS base metals: Whim Creek, Salt
Creek and Liberty-Indee - within 25km trucking distance of an established mine site at Whim Creek. VXR
has defined 5 deposits to date. VMS districts of similar scale typically contain 8-19 economic deposits.

VXR: Pilbara VMS project timeline to production. Potential production 1Q12, expected from open pit
mining at Mons Cupri (currently 58% of total resource), Whim Creek and Evelyn in years 1-5; and
subsequently from high grade underground ore at Salt Creek in years 5 - 8.

©


YTC Resources Limited
YTC Resources Limited
YTC.AU A$ 0.28

13 October 2010 Mining in 2H11 is possible at the Hera Project (Au, Cu-Pb-Zn-Ag), which
Gold, Base Metals, Silver
Australia (NSW) has a 560koz AuEq resource with upside from drilling at Hera and
Pre-Feasibility Study historic Nymagee Mine (recent hits +8% Cu). The 6.5km Hera-Nymagee
Exchanges: ASX:YTC
corridor is prospective for Cobar-style deposits. Target A$0.73/share.

Number of shares (m) 164 Exploration and evaluation (A$m) 1.66 2.18 5.01 8.18 8.00
Options and warrants (m) 6 Corporate (A$m ) 0.54 0.40 2.10 2.05 2.20
Convertible notes (m) 0 Exploration/(Expl.+ Corporate) (%) 75 84 70 80 78
Fully diluted (m) 170 Funding duration at current burn (years)3.8 2.3 1.2 8.7 4.2
Market capitalis ation (undiluted) (A$m) 46.0 Shares on issue (pr end) (m shares) 164.2 164.2 164.2 257.5 257.5
Debt (A$m ) - Sep 10F 0.0 Drilling - RAB (m) 0 0 0 0 0
Enterpris e value (A$m ) 40.1 Drilling - Other/Diamond (m ) 5,000 7,000 20,000 28,000 20,000
Major shareholders: Y unnan Tin Group (15%), Land holding ('000 ha)* 174 174 174 174 174
Wonderful Investments (9.8%), Y unnan Tin YTC Holdings Pty Ltd (6.0%) Tenement costs ($k per year) - - - - -
Avg monthly volume (m ) 6 Capital raisings (A$m ) 0.00 0.00 25.29 46.00 0.00
Cash (A$m) - Sep 10F 5.9 Funding from JV partners (A$m) 0.0 0.0 0.0 0.0 0.0
Price/Cas h (x) 7.8 Cash (A$m)* 8.4 5.9 8.4 89.2 42.4
Lis ted company options: No Net asset backing (Ac/share) 17.1 17.1 17.1 28.0 34.8
Quarters stated on calendar year basis. *Cash 2011F assumes post capital raising to build Hera Project

Focused on gold and base metal exploration in NSW, Overview: YTC listed on the ASX May ’07 and is focused on the exploration and development of gold and base
metal projects in NSW. Its flagship is the Hera Project and Nymagee JV (Au, Ag, Pb, Zn, Cu), 100km SE of
including the Hera Project near Cobar. Cobar in a world class gold and base metal province that includes Glencore’s +40 year running CSA Copper
Mine, which produces ~50kt Cu/yr. YTC bought Hera plus 80% interest in the Nymagee JV for A$12m in Jun ’09.
Hera Project and Nymagee JV: purchased 3Q09. Hera is It has updated the Hera resource and started a Definitive Feasibility Study (update released Oct ’10).
an advanced stage, undeveloped gold and Pb-Zn-Ag-Cu Resource status and metallurgy: Hera was found by Pasminco (2001) and developed by Triak o and CBH
Eq Resources, which established JORC resources. Known mineralisation extends from surface to +500m depth as 1-
deposit, with an Au resource ~560koz Au grading 8g/t. 12m wide sub-vertical lenses, and measures 800m (N-S strike) by 300m. The current resource (Jun ’10) is 2.18mt
@ 4g/t Au for 280koz, with significant sliver and Cu-Pb-Zn. All-in gold equivalence is 8g/t Au_Eq for 560.7koz (at
A Hera DFS is in progress (updated Oct '10), for 15-month buyer LME base metal prices in April ’10). Cut off is recoverable ore value (A$125/t at AU/US 0.85). A
higher cut off (US$200/t) leaves 372.5koz Au_Eq grading 10.2g/t. Of the lower grade resource, 72% is in
production of 50.2koz Au_Eq. A decline has been Indicated category, which could convert to a Probable mining reserve. Metallurgy shows good recoveries at a
permitted: underground mining is possible from late coarse 250µm grind: 65% of gold by gravity (GRG); 98% by leaching of gravity concentrate; and total 99%
2011. including flotation. Other recoveries (flotation) are Cu 79%, Pb 82%, Zn 87.3%, Ag 72.7%.
Resource upside, exploration: The Hera deposit is open at depth, and along strike. Drilling is ongoing. Recent
findings that could enlarge the resource include high grade gold in the upper Far West Lens (10m @ 10.65g/t Au,
Drilling at former Nymagee Copper Mine (6.5km from 38g/t Ag, 6.52% Pb and 12.83% Zn from 594m depth) and shallow oxide gold (45m @ 1.5g/t Au from 9m depth).
Hera) shows +8% Cu (with Ag, Au). DFS scope The 1km-distant Hebe Prospect has drilling 7m @ 3.26g/t Au and +2% Pb and Zn. Beyond the near-mine area,
expanded to consider potential satellite feed for Hera. gravity survey of the 6km Hera-Nymagee Corridor found prospective anomalies, eg. Zeus (1.5km SSW Hera).
Nymagee JV: The case for developing Hera has been augmented by recent high grade copper hits beneath
underground workings at the historic Nymagee Copper Mine, 4.5km from Hera. The mine produced 0.42mt @
Exploration upside on 6km corridor between Hebe (near 5.8% Cu in 1880-1917 and has a historic resource of 0.82mt @ 2.3% Cu as well as Pb-Zn lodes. Drilling in 3Q10
Hera) and Nymagee, including gravity anomalies. Hera- located massive sulphides on the Nymagee Lode included 7m @ 8.3% Cu, 46gt Ag and 0.32g.t Au from 345m
Nymagee resource drilling spend A$4.8m out to Jun '11. depth. The campaign has been extended (drilling 7,000m), aiming to define a JORC resource in 2Q11.
DFS update (Oct ’10): The DFS was expected Sep ’10 but has been put back to incorporate Nymagee and the
Far West Lens at Hera. DFS fundamentals (in A$): annual production 350ktpa for 50.2kozpa Au_Eq; opex $97.1/t
NSW exploration portfolio: drilling 4Q10 at Doradilla or $676/oz Au_Eq; pre-production capex $25m, process and infrastructure capex $34.9m (total $59.9m). Mining is
(porphry target) and 1Q11 at Baldry (epithermal targets). via single decline access and uphole bench stoping with use of Cemented Rock Fill (CRF) to increase high-grade
recovery. Processing includes grind, gravity and leach (Au) and flotation (base metals). If Nymagee can support a
Strategic alliance with China's Yunnan Tin Group (YTG) satellite operation, it could provide copper-rich feed to a Hera mill. YTC has said it plans to mine Hera in 2011.
There is already a permit for a decline – final permits could be achieved May-June 2011.
YTC – YTC Re sources Limited Investment Comment: Based on the DFS update and current Hera resource, the base NPV of the Hera Project
is A$0.31/share (RCR long term assumptions: Au US$900/oz, exchange 0.8, 5% disc nominal). This is where the
stock is sitting now, pushed up from $0.2/share in Sep ’10 when the potential of Nymagee became clear (i.e. Hera
0.35 satellite or even a large CSA-style deposit). The question for investors, and when revising our A$0.50 price target
from 1H10: what’s coming in the next 6-12 months? A possible answer: resource statements for Hera and
Nymagee (extending mine life from 7 to, say, 10 years); and an increase in Hera’s copper head grade (e.g. 0.2%
0.30

to 1.2%) via blending high grade from Nymagee. These advances suggest a target of A$0.73/share (risk
adjustment increased from -30% to -50% for the undefined mineralisation). De-risking via a DFS, permitting and
0.25 project funding could push the NPV higher, though potential dilution during financing returns us close to the target.
Further exploration of the Hera-Nymagee Corridor and regional projects in 4Q10 may bring good news.
0.20
Code for reporting mineral resources - Australia: (JORC)
0.15
Gold, base metals Classification Project Ore Au Cut Off Au Au Au Eqty
Equity Mt g/t A$/t t koz koz
0.10
Jan-10

Mar-10

May-10

Jun-10
Oct-09

Nov-09

Dec-09

Apr-10

Jul-10

Aug-10

Sep-10

Reserves 0.0 0.0 0.0
Resources
Hera* Indicated + inferred 100% 2.2 4.00 A$125/t 8.7 280 280
Source: Bloomberg * Includes 15.6g/t Ag; 2.8% Pb, 3.9% Zn, 0.2% Cu for 8.0g/t Au_Eq and 560koz Au_Eq. Indicated is 72.7% of total.

Mr Rimas Kairaitis W Gao (Chair) Ownership/ JV Target Process Project
Chief Executive Officer A Wehby (Vice Chair) Project Option Metal Partner Type Route Status Location
Tel: +61 (0)2 6361 4700 R Kairaitis (CEO) Hera 100% Au-base na Cobar Gravity/float Pre-feasibility Aus (NSW)
Orange, NSW, Australia G Zhang (Non Exec) Nymagee 80%/90% Au-base Ausmindex/MMG Cobar na Mid Expl. Aus (NSW)
www.ytcresources.com S Woodham (Non Exec) Tallebung 100% Sn (W) none Lode, porph. na Mid Expl. Aus (NSW)
R Chambers (Non Exec) Kadungle 100% Au, Cu none Porphyry na Mid Expl Aus (NSW)
R Hill (Non Exec) Doradilla 70% & 75% Sn, Ni GCP,SRL Skarn na Adv Expl. Aus (NSW)
Analyst: Dr Trent Allen C Ng (Non Exec) Baldry 100% Au, Ag none Epitherm. na Early Expl. Aus (NSW)
trentallen@rcresearch.com.au Giant's Den 100% Sn (Au) none Lode, alluv. na Mid Expl. Aus (NSW)
©


Location of YTC’s Hera Project (NSW): The Cobar Basin hosts numerous gold and base metal deposits,
including CSA Mine (35mt @ 3% Cu in 1995) and the Cobar Gold Field, with ~7moz Au Eq production. The
Cobar Field and Hera-Nymagee Corridor are of similar scale and on the same structure, 90km apart.

Hera NPV sensitivity to Au price: base valuation is A$0.31/share, increasing to A$0.57 by lifting Cu grade
+1% (to 1.2%) with high grade Cu from Nymagee. Upside to A$0.73 by extending mine life to 10 yrs from
7yrs. Note: lower gold prices increase the gold equivalent grade of the base metals (a natural price hedge).

HERA PROJECT VALUATION
Equity Sensitivity
LONG TERM GOLD PRICE^ :US$/oz 600 800 1000 1200 1400
EXCHANGE RATE (RCR long term) :AUUS 0.80 0.80 0.80 0.80 0.80
LONG TERM GOLD PRICE :A$/oz 750 1000 1250 1500 1750
Gold equivalent grade of resource :Au g/t 11.5 9.6 8.5 7.8 7.2

RESOURCE @ 5% NOMINAL** :A$m 100% 43 48 57 69 79
RESOURCE @ 5% NOMINAL** :US$m 100% 34 39 46 55 63
NPV/SHARE :A$/share 0.25 0.28 0.34 0.41 0.47
NPV/SHARE, Cu grade +1% (blending from Nymagee?) :A$/share 0.55 0.58
** Includes a pre-DFS discount of 30% of the project valuation: 30%
^Gold price forecasts are US$1225/oz in calendar 4Q10 and long term price indicated f rom 4Q13, w ith linear change betw een.

HERA PROJECT, KEY ASSUMPTIONS

RESOURCE ESTIMATES Gold and base metal targets
Gold Equivalent* (Gold only)
Mt g/t koz koz

Hera Indicated Resource^ 1.6 7.9 402 209
Remainder Hera Resource (Inferred) 0.6 8.2 157 71
Total 2.2 8.0 560
*YTC metal price assumptions for calculating Au Eq, or value of commodity in terms of Au, are: Au = US$1125/oz, Cu = US$6,500/t, Pb = US$1,775/t, Zn = US$1,878/t, Ag = US$17.85/oz.
^ Cut of f is recoverable ore value (A$125/t at AU/US 0.85. YTC price assumptions are 15-month buyer LME base metal prices in April ’10).
MINING METHOD Underground

PROCESS METHOD Crush, gravity and leach for gold, flotation for base metal concentrates (with silver)

PRODUCTION RATE :mtpa 0.35
:kozpa Au 50.2 Average gold equivalent production*
CAPITAL COSTS :A$m 59.9 Pre-production $25m, process and infrastructure $34.9m

RECOVERY - GOLD :% 98 60% by gravity
RECOVERY- BASE METALS :% Cu 79% (97% payable), Pb 82% (95% payable), Zn 87.3% (85% payable)
:% 95
OPERATING COSTS :A$/oz 676 Gold equivalent
:A$/t 97.1

TAX :% 30
ROYALTY :% 4 New South Wales
MINE LIFE :Years 7+

* These figures are early stage in nature and are intended to provide only a general indication of project potential scale and economic robustness.
Considerable refinement may result from the ongoing Definitive Feasibility Study in 2010.

©


Copper Price Fundamentals
Recent market trends

Price Outlook

The positive copper price outlook is buoyed by demand from strong
economic growth in China and constrained global supply. Other than for
the period around the GFC (2008-09), this has been the central theme
of the copper market since the early 2000’s and is likely to be the theme
The copper spot price
throughout this decade. Indeed, Rio Tinto recently remarked that it
is currently
expects the copper market to remain tight through 2020.
US$3.81/lb....
The positive demand outlook is driven by strong growth projections for
China (and India), partially offset by expected decelerating OECD
growth and declining demand for copper. Further, the likely prospect of
quantitative easing, increasing money supply in advanced economies
could see increased defensive financial market demand for all
commodities, including copper.
...and is expected to
move over Tightening copper supply has driven the price to 27 months highs,
US$4.00/lb in 2011. US$3.81/lb (13 Oct, ~US$8,400/t) and is likely to take the copper price
above US$9,000/t (US$4.08/lb) over the next 12 months. The price has
risen 34% over the past 12 months from US$2.85/lb to US$3.81/lb, and
is up nearly 3 fold from late 2008.

The economic outlook for the USA and the OECD remains upward
trending. At this point, a double dip recession appears unlikely, though
market conditions remain volatile. While US employment and aspects of
the economy remain weak, particularly the construction sector, the
direct impact on copper markets is not great since North America
accounts for only about 10% of global copper consumption. In contrast,
the USA alone accounted for around 20% of global copper demand in
the 1990’s.

In terms of Australian copper equities, valuations appear to be partially
pricing in a recovery in the US economy and subsequently expectations
of a weaker Australian dollar. This compares to recent market trends for
the AUD which has strengthened to near parity. With the Australian
dollar potentially returning over time to a long term forecast of
AUD/USD 0.80, miner’s margins will be further boosted.

RCR’s long term RCR’s copper price and Australian dollar modelling assumptions are
copper price forecast shown below.
is US$2.50/lb and
long term AUD/USD RCR base case price assumptions
forecast is 0.80.
2009A 2010F 2011F 2012F 2013F Long Term

Copper price :US$/lb 2.34 3.33 3.68 3.88 3.90 2.50
A$/US$ 0.80 0.90 0.93 0.87 0.82 0.80

©


World balance of refined copper production and use, 2009-2011

Global copper demand
is expected to grow
by at 3-5% CAGR in-
line with global GDP
and increasing
intensity of use in
developing countries.

The market is
expected to be in
deficit by 435kt 2011,
down from a surplus
of 200kt expected in 1/ Based on a formula for the difference between the projected copper availability in concentrates and the projected
2010. use in primary refined production; 2/ Based on supply deviations over the previous 5 years.
Source: International Copper Study Group, Date 1 October 2010

LME spot copper price, 12 months to 13 October 2010, (US$/t)

The copper price has
risen from a recent
low of US$6091/t
(US$2.76/lb) June 8
and is currently
trading over
US$8,400/t
(US$3.81/lb).

We expect the copper
price to exceed
US$9,000/t in 2011.

The copper market is expected to remain tight through 2020.

Growth in copper
mine supply is
dependent on
greenfield projects,
which are subject to
frequent delays and
long development
timeframes.

Source: Rio Tinto

©


Demand

Global copper demand • Global copper demand is forecast to grow to 18.9mt in 2010, up from
is forecast to grow 18.2mt (+3.8% or +692kt) in 2009, and is expected to grow a
4.5% in 2011 to further 4.5% (+847kt) in 2011 to 19.7mt.
19.7mt, an increase of • Copper consumption in the US is declining, falling from 250,000t per
874kt over 2010. month at the beginning of 2000, to 150,000t per month currently
(refer to chart: WBMS US Refined Copper Consumption, 2000-2010).
North America accounts for 10% of global copper consumption.
• The decline in US copper consumption is more than offset by the
growth in copper demand in China, which has risen from 100,000t
per month in early 2000 to around 600,000 to 700,000t per month
currently (refer to chart: WBMS China Refined Copper Consumption,
2000-2010). China accounts for 36% of global copper consumption.

Economic outlook – positive growth, but slowing

GDP growth, • ABARE global GDP growth forecasts (Sep ’10): 2010: 4.3%; 2011:
particularly in China, 3.7%. ABARE is less optimistic about global growth than the IMF.
is driving growth in However, both forecast global growth will weaken in 2011 compared
copper demand. to 2010.
• IMF global GDP growth forecasts (Oct ’10): 2010: 4.8%; 2011: 4.2%.
The IMF has warned that some of the largest advanced economies
(e.g. US and Japan) are “slowing noticeably”, suggesting further
downside risk to forecasts.

IMF world GDP growth projections, % (Oct 2010)

2010 2011
World output 4.8 4.2
US 2.6 2.3
Euro zone 1.7 1.5
Japan 2.8 1.5
China 10.5 9.6
India 9.7 8.4

China accounts for • Global GDP growth is heavily skewed to China, and Asia in general,
36% of global copper compared to the West. Chinese growth, in particular, is supporting
consumption. net growth in global copper demand. GDP in China is forecast to
increase by US$7.5 trillion over the current decade.
• Global copper demand growth is proportional to global GDP growth.
China and India together account for over 40% of global copper end-
use demand.
• Urbanisation of China and India are expected to continue to drive
Chinese per capita copper demand growth over next 20 years.
copper consumption is
set to double over the Increasing intensity of use in developing countries
next decade as GDP
increases by US$7.5t • Increasing GDP per capita will increase the intensity of copper
- rising from consumption in developing countries, i.e., China and India. The per
~5kg/capita to capita intensity of copper demand in China is expected to double in
~10kg/capita. the current decade from ~5kg/capita now to ~10kg/capita.

©


Long term outlook for copper demand is robust

In 2009, China
accounted for 36% of
global copper
consumption,
compared to only
10% for North
America.

Source: BHP Billiton, Brook Hunt

As developing World refined copper usage per capita, 1950 to 2008
countries grow and (kg/person)
urbanise, copper
consumption per
capita is expected to
increase strongly.

The slowdown in US
construction activity
has relatively little
impact on global
copper consumption
trends – a very
different story from
10 years ago.

Source: ICSG, US Census Bureau

Global copper demand by region, 2009 Global copper demand by end-use, 2009

©


Supply

• Mine supply of copper is forecast to grow to 16.2mt in 2010, up from
Mine supply is forecast 15.9mt (+2.3%) in 2009, and is expected to grow a further 5.2% in
to increase 5.2% in 2011 to 17.1mt.
2011 to 17.1mt Cu. • Global copper demand is expected to grow between 3-5%pa, in-line
with global GDP growth. Global growth in copper demand is expected
to equate to between 600kt to 900ktpa, and increase beyond this
later in the decade.
• The largest 16 copper mines account for 44% of global production –
the top 3 (2009 production figures) being Escondida (Chile, 1,330kt),
Codelco Norte (Chile, 900kt), and Grasberg/Ertsberg (Indonesia,
750kt).

• The major copper mining countries’ production 2009:

Copper mine production – top 5 countries, 2009 (mt, %)
Chile is the world’s
largest supplier of
kt %
mined copper – Chile 5390 34%
accounting for 34% of Peru 1275 8%
global supply. USA 1178 7%
China 980 6%
Indonesia 971 6%

• China produces 980kt of copper (6% of global total) but accounts for
about 36% (6,600kt) of consumption, and Chinese share of global
consumption is expected to increase as per capita income increases.
As such, Chinese investment interest in global copper projects is
expected to remain strong.

Strong constraints on mine supply:

• Mine head grades are declining across the sector, including major
Mine head grades are producers. Average head grades across all projects globally have
falling and production fallen from ~1.6% Cu in 1980 to ~1.1% Cu 2010, and are expected
costs are increasing to decline further.
suggesting “long • Increasing supply from developing countries. New deposits in
term” copper price jurisdictions with increased sovereign risk – eg DRC, Afghanistan.
forecasts will continue • Increasing capital costs.
to be revised upwards. • Increasing technical difficulty with deeper mines and blind or covered
discoveries.

Global reserves and resources being sustained:

• Global copper reserves and resources stand at 1.95bt (billion tonnes).
Reserves have a weighted average grade of 0.94% Cu with total
contained copper of 475mt. Resources have a weighted average
grade of 0.71% Cu with total contained copper of 1,036mt. Chile has
the largest reserve and resource base accounting for 34% of global
total, the USA and Peru each hold 9% in second place. China has 4%.
• Global reserves to production ratio has remained reasonably constant
at between 30 and 40 years from 1980 through 2009, due to
increased exploration expenditures and technological advances.

©


Copper mine production by process, 1970 - 2008 (‘000 metric
tonnes)

Global copper mine
production is
expected to increase
to 17.1mt in 2011, up
5.2% from 16.2mt in
2010.

Source: ICSG

Copper mine industry cost data, 2010
The industry cost
curve rises sharply at
~US$4000/t
(US$1.80/lb) and
cumulative
production of ~15mt
Cu.

Long term copper
price forecasts have
risen from around
US$1,750 ($0.80/lb)
in 2000, to
US$5,500/t
($2.50/lb) in 2010.

Source: Rio Tinto, Brook Hunt Metals

Copper mine capacity by region, 1980 and 2009 (‘000 metric
tonnes)
The largest growth in
mine supply over the
past 30 years is in
Latin America
(primarily Chile) and
Asia (primarily
Indonesia and China).

Source: ICSG

©


Copper content of world mine production, 1989 – 2009 (‘000 short tons*)

* Short tons: 2,000lbs; Metric tonnes: 2,204.6lbs Source: Copper Development Association

©


Copper metal and share prices and economic indices

LM E Copper Price Spot Official HSBC Global Mining Copper Index
(US$/t) (US$ )
40 00
10 000
90 00 35 00
80 00 30 00
70 00
25 00
60 00
(US$/t)

50 00 20 00
40 00 15 00
30 00
10 00
20 00
10 00 50 0

0 0
Oct-00

Jul-03
Feb-04

Mar-05
Oct-05

Jul-08
Feb-09

Mar-10
Oct-10
Nov-01
Jun-02
Jan-03

Sep-04

Nov-06
Jun-07
Jan-08

Sep-09
May-01

May-06

Oct-00
Apr-01

Jul-04
Feb-05

Mar-06

Apr-07
Oct-07

Jul-10
Nov-01
May-02
Dec-02
Jun-03
Jan-04

Aug-05

Sep-06

May-08
Nov-08
Jun-09
Dec-09
Source: Bloomberg Source: Bloomberg

Fre e port McMoran s hare price Morgan Stanley World Index
(US$/share )
14 0 18 00

12 0 16 00

10 0 14 00
(US$/share)

80 12 00

60 10 00

40 80 0

20 60 0

0 40 0
Feb-04

Feb-09
Oct-00

Apr-05
Oct-05

Apr-10
May-01
Nov-01
Jun-02
Jan-03
Aug-03

Sep-04

May-06
Dec-06
Jun-07
Jan-08
Aug-08

Sep-09

Oct-00

Jul-01

Apr-02

Feb-03

Feb-06

Mar-09

Oct-10
Nov-03

Aug-04

Dec-06

Sep-07

Jun-08

Dec-09
May-05

S&P ASX/200 Index Dow Jone s Index

80 00 16 000

70 00
14 000
60 00
12 000
50 00

40 00 10 000

30 00
8000
20 00
6000
10 00

0 4000
Oct-00

Jul-01

Apr-02

Feb-03

Feb-06

Mar-09

Oct-10

Oct-00

Jul-01

Apr-02

Feb-03

Feb-06

Mar-09

Oct-10
Nov-03

Aug-04

May-05

Dec-06

Sep-07

Jun-08

Dec-09

Nov-03

Aug-04

May-05

Dec-06

Sep-07

Jun-08

Dec-09


US Fe der al Funds Rate
US Dis count Rate
7 7

6 6

5 5

4 4
(%)

(%)

3 3

2 2

1 1

0 0
Oct-00

Jul-01

Mar-03

Jul-05

Apr-06

Feb-07

Apr-10

Oct-03

Jul-04

Feb-06

Apr-09
May-02

Dec-03

Sep-04

Nov-07

Sep-08

Jun-09

Jan-03

May-05

Nov-06

Sep-07

Jun-08

Jan-10


©


Copper production and consumption statistics, and major currency exchange rates

WBMS China Re fined Copper Consumption WBM S Global Refine d Copper Consumption
(tonne s per month) (tonne s per month)
900,00 0 1,8 00,000

800,00 0 1,7 00,000

700,00 0 1,6 00,000

(metric tonnes/month)
(m etric tonnes/month)

1,5 00,000
600,00 0
1,4 00,000
500,00 0
1,3 00,000
400,00 0
1,2 00,000
300,00 0
1,1 00,000
200,00 0 1,0 00,000
100,00 0 90 0,00 0
0 80 0,00 0
Feb-02

Feb-04

Feb-06

Feb-08

Feb-10
Oct-00

Oct-02

Oct-04

Oct-06

Oct-08

Feb-02

Feb-04

Feb-06

Feb-08

Feb-10
Jun-01

Jun-03

Jun-05

Jun-07

Jun-09

Oct-00

Oct-02

Oct-04

Oct-06

Oct-08
Jun-01

Jun-03

Jun-05

Jun-07

Jun-09

WBM S US Re fine d Copper Consumption, 2000-2010 WBMS Global Coppe r Production, 2000-2010
(tonne s per m onth) (tonnes per m onth)
30 0,000 1,5 00,0 00

1,4 00,0 00
25 0,000

1,3 00,0 00
20 0,000
1,2 00,0 00
15 0,000
1,1 00,0 00
10 0,000
1,0 00,0 00

50 ,000 90 0,00 0

0 80 0,00 0
Feb-02

Feb-04

Feb-06

Feb-08

Feb-10
Oct-00

Oct-02

Oct-04

Oct-06

Oct-08
Jun-01

Jun-03

Jun-05

Jun-07

Jun-09
Oct-00

Feb-02

Oct-02

Feb-04

Oct-04

Feb-06

Oct-06

Feb-08

Oct-08

Feb-10
Jun-01

Jun-03

Jun-05

Jun-07

Jun-09


Exchange Rate , Australia/USA Exchange Rate , Pe ru/USA
1.20 0.4 0

0.3 5
1.00
0.3 0
0.80
0.2 5
(Soles/US$)
(A$/US$)

0.60 0.2 0

0.1 5
0.40
0.1 0
0.20
0.0 5

0.00 0.0 0
Feb-01
Jul-01

Feb-04
Jul-04

Feb-07

Mar-08

Feb-10

Oct-00
Feb-01
Jul-01

Mar-02

Oct-04
Feb-05

Mar-06
Jul-06

Apr-07

Feb-09

Oct-09
Mar-10
Jul-10
Oct-00

Apr-02

Oct-03

Apr-05

Nov-01

Aug-02
Dec-02

Sep-03
Jan-04
Jun-04

Jun-05
Nov-05

Dec-06

Aug-07
Dec-07

Sep-08

Jun-09
Nov-01

Aug-02
Jan-03
May-03

Nov-04

Aug-05
Dec-05
May-06
Sep-06

Jun-07
Nov-07

Aug-08
Dec-08
May-09
Sep-09

Jun-10

May-03

May-08


Exchange Rate , Chile/USA Exchange Rate , China/USA
0.0 025 0.1 6

0.1 5
0.0 020

0.1 4
0.0 015
(Pesos/US$)

(Yuan/US$)

0.1 3
0.0 010
0.1 2

0.0 005
0.1 1

0.0 000 0.1 0
Feb-01
Jul-01

Apr-02

Feb-04

Mar-05
Jul-05

Apr-06

Oct-07
Mar-08
Jul-08

Apr-09
Nov-01

Aug-02
Dec-02

Sep-03

Jun-04
Nov-04

Dec-05

Sep-06
Jan-07
Jun-07

Dec-08

Sep-09
Jan-10
Jun-10

Feb-01
Jul-01

Mar-02
Jul-02

Feb-06

Mar-07

Feb-10
May-03

Oct-00

Nov-01

Dec-02
Apr-03

Dec-03

Oct-05

Nov-06

Dec-07
Apr-08
Aug-03

May-04
Sep-04
Jan-05
Jun-05

Jun-06

Aug-07

Sep-08
Jan-09
May-09
Sep-09

Jun-10


©


Report Contributors
John Wilson: John has a background in mining, finance and equity research. He worked on Wall
Street for 6 years and has covered US, Australian and Latin American mining stocks. He has also
worked with BHP in their minerals division. Qualifications include an MBA from the Wharton School
of the University of Pennsylvania and a Bachelor of Engineering from the University of Sydney.

Tony Parry: Tony has extensive experience in metallurgical process development, (working with MIM
Limited for five years) and in mining equity research, equity sales and mining corporate finance
(working in London for five years and subsequently Perth). He was a founding Director and CEO of
an ASX listed exploration company and has been engaged extensively as a strategic planning
consultant to many small-medium enterprises. Tony’s qualifications include a BSc (Hons) in
Metallurgy and a PhD in Metallurgy from the University of NSW.

Trent Allen: Trent has a BSc (Hons) and a PhD from the University of Sydney, specialising in the
petrology, trace-element geochemistry and economic geology of alkaline igneous rocks. His
Australian mining industry experience includes several years with Newcrest’s Cadia Valley
gold/copper mines, where he was engaged in resource definition and geotechnical engineering.
Trent has also worked as an exploration consultant, university lecturer in geology and civil
engineering, and as a newspaper editor with Fairfax in Sydney.

Murray Brooker: Murray has a background in mining and consulting as a geologist. He worked for
North Limited (now part of Rio Tinto) for 10 years and for Parsons Brinckerhoff (a global engineering
consultancy). He has 20 years’ experience assessing exploration projects in Australia, New Zealand,
Mexico and South America. Murray has an MSc in Geology (James Cook University, Qld) and an MSc
in Hydrogeology (UTS, Sydney). He was also a founding Director of an unlisted Australian
geothermal company.

©


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Resource Capital Research Pty Limited (referred to as “we”, “our”, or “RCR” herein) ACN 111 622 489 holds an Australian Financial Services Licence
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Resource Capital Research Suite 1306 Tel: +612 9252 9405
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www.rcresearch.com.au

Suite 1306
183 Kent Street
Sydney, NSW 2000

T: +612 9252 9405
F: +612 9251 2859
E: info@rcresearch.com.au

ACN 111 622 489

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