Day 1 - Opening Session: What is the new 'normal' for mining? Raising funds in today's market Objective Capital Global Mining Investment Conference 2010 Stationers' Hall, City of London 28-29 September 2010 Speaker: Ricahrd Chase - Ambrian Partners

1. day 1 – opening session: What is the new ‘normal’ for mining? Raising funds in today’s marketRichard Chase – Managing Director, Ambrian Partners

2. GLOBAL MININGINVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations:

3. Raising funds in today’s market RICHARD CHASE Managing Director CREATING VALUE ACROSS THE RESOURCES SECTOR

5. limited growth

7. change in culture

8. liquidity

11. identifying a suitable asset / buyer

12. timing

14. income or asset backing

16. fiduciary duties

17. dilution of your holding

18. potential capital appreciation

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

20. Joint venture / farm-out

21. restricted by terms of agreement

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

23. dilution of project equity

25. Equity Finance Bank lending has become more conservative....and expensive Equity financing can be completed more quickly....and with less rigour ( !? ) Equity investors are readily financing quality projects Carpe Diem

26. AIM: A brief recap

27. AIM: Outperformance “…the market is ending the year on a high. The Aim index has risen by 62 per cent since January 1, compared with a rise of 22 per cent in the FTSE 100. The rate of secondary fundraisings has been picking up, especially in the natural resources sectors. After the famine of 2008 and 2009, times of plenty might once again return for London’s junior market.” Source: Financial Times, 15 December 2009 AIM has outperformed the FTSE 250, TSX and ASX over the last twelve months

28. London as a source of equity finance

29. Choose your broker (and your audience) FTSE 100 FTSE Small Cap AIM % Market Share by Value (Thomson Reuters data)

30. Alternatives: Private equity and investment companies Vallar Special situation vehicle, IPO in July raised £687m Initial target is one major takeover financed with debt and by issuing additional new shares Endeavour Financial – now re-named Endeavour Mining Classic merchant bank Acquired Etruscan through a finance and restructuring plan Sold 43% Crew Gold for US$215m, giving an annualise rate of return of 124% Noble Started in 1987, it is firmly established as an investor and commodity trader CIC invested US$850m

31. Alternatives: Sovereign Wealth Funds Q3 2009 Q3 2010 Source: SWF Institute 10 = Overweight / 0 = Underweight

32. Current trends Timing has been key Non-deal road shows are essential to “warm-up” investors Include the Private Client Brokers: private investor shareholdings have hit a two-year high Less conventional sources of equity finance have shown clear signs of indigestion Commodity Financing for traded metals has become more common as an alternative to equity finance, and as a cornerstone to equity finance Financing of advanced exploration – especially for gold – is “in”

33. Debt Debt has re-appeared It is starting to occur further up the development cycle The two primary drivers are: securitization means debt holders are first in line if the project is derailed interest payments incrementally diminish the risk for the lender and provide yield The current economic landscape supports debt: a debt investor's exposure is limited to a finite time horizon A potentially inflationary environment makes debt more attractive.

34. Alternative loan options

35. What financiers look for Sponsorship / Group Structure Technical Commodity: demand and price Financial Structure Sovereign & Political Environmental & Social An initial resource estimate is a must Do they know what are doing? Company Transparent markets with prices and volumes quoted Sound financial structure and procedures is essential These risks are increasingly becoming less palatable Key to management’s reputation

37. Off-take Finance

38. Debt Advisory Services Ambrian advises on various financial solutions

39. Richard.chase@ambrian.com +44 (0)207 634 4700 LONDON METAL EXCHANGE

40. GLOBAL MININGINVESTMENT CONFERENCE 2010 Lead sponsors: Media partners: Other sponsors & participating organisations: