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Fabulous Way Limited/ Wiseking Mining Investment Co. Ltd Disclaimer This presentation has been prepared by Asiasons Capital Group (Asiasons), and the information.

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Presentation on theme: "Fabulous Way Limited/ Wiseking Mining Investment Co. Ltd Disclaimer This presentation has been prepared by Asiasons Capital Group (Asiasons), and the information."— Presentation transcript:

1 Fabulous Way Limited/ Wiseking Mining Investment Co. Ltd Disclaimer This presentation has been prepared by Asiasons Capital Group (Asiasons), and the information contained herein is professional opinion only and is given in good faith. Information in this document has been derived from third parties and though Asiasons believes it to be reliable as at the date of this document, we make no representation or warranty as to the accuracy, reliability or completeness of information in this document or for updating any information or correcting any error or omission which may become apparent after the document has been issued. To the extent permitted by law, Asiasons and their respective officers, employees, related bodies corporate and agents (Agents) disclaim all liability, direct, indirect or consequential (and whether or not arising out of the negligence, default or lack of care of Asiasons and/or any of their Agents) for any loss or damage suffered by a Recipient or other persons arising out of, or in connection with, any use or reliance on this presentation or information. The Recipient agrees that it shall not seek to sue or hold Asiasons or its Agents liable in any such respect for the provision of this presentation or any other information. September 2009 Executive Summary Strictly Confidential

2 Table of Contents 2 1.Introduction 2.Overview of Mining Assets 3.Production 4.Financial Information 5.Key Management Profile 6.Recent Developments

3 Section 1: Introduction 3

4 Introduction Company Overview 4 Fabulous Way Limited (Fabulous) and its subsidiaries are mainly involved in the mining of molybdenum mineral (Moly) in Kuandian Manchu Automonous County, Zhenjiang Town, Wanbao Village which is in the north east of Liaoning Province in China. Moly is a mineral commonly used as an alloy agent for steel products. Moly was first discovered in 1995 at the mine. The Moly mine, known as the Kuandian Wanbao Zhenxing Molybdenum Mine (Zhenxing Moly Mine) covers a total area of approximately 0.46 km 2. The Zhenxing Moly Mine was previously operated by a state owned company in the 1970s mining mainly gold and copper. In the 1980s, ownership was transferred to an individual who then sold his rights to Wanbaoyuan Mining Co. Ltd. (Wanbaoyuan) in 2006.

5 Introduction 5 95% 5% Zhenxing Moly Mine (Moly Mine) Zhenxing Moly Mine (Moly Mine) 100% Wiseking Mining Investments Co. Ltd., (Hong Kong) Wiseking Mining Investments Co. Ltd., (Hong Kong) Stark Moly Ltd. Fabulous Way Ltd., (Cayman Islands) Fabulous Way Ltd., (Cayman Islands) Kuan Dian Sanwang Mining Co. Ltd., (processing plant for Moly) (PRC) Kuan Dian Sanwang Mining Co. Ltd., (processing plant for Moly) (PRC) Xiamen Weihuang Investment Co. Ltd., (PRC) Wanbaoyuan Mining Co. Ltd. (PRC) Wanbaoyuan Mining Co. Ltd. (PRC) 100% Kuan Dian Dalei Mining Co. Ltd., (processing plant for Copper & Iron) (PRC) Kuan Dian Dalei Mining Co. Ltd., (processing plant for Copper & Iron) (PRC) 100% Dragonrider Opportunity Fund L.P. Monz Investments Ltd. SIG China Investment One, Ltd. Lam Fung (founder) Lam Fung (founder) Addgood Holdings Ltd. 71.9%9.0%8.8%5.0%3.3%2.0% Off-shore entities On-shore entities Taichang Gold and Copper Mine (Gold and Copper Mine) Taichang Gold and Copper Mine (Gold and Copper Mine) Corporate Structure

6 Introduction Corporate Structure 6 Fabulous was incorporated on 3 August 2007 in the Cayman Islands. The shareholders of Fabulous are Mr. Lam Fung (71.9%), Dragonrider Opportunity Fund L.P. (managed by Asiasons Private Equity as the general partner) (9.0%), Stark Moly Limited (8.8%), Monz Investments Ltd (5.0%), SIG China Investment One, Ltd (3.3%) and Addgood Holdings Limited (2.0%). Wiseking Mining Investment Co. Ltd. (Wiseking) was incorporated on 9 June 2005 in Hong Kong. It is a wholly-owned subsidiary of Fabulous. Wanbaoyuan was incorporated on 17 August 2006 in PRC as a sino-foreign joint venture company. It is a 95%-owned subsidiary of Wiseking. Kuan Dian Sanwang Mining Co. Ltd. (Sanwang) was incorporated on 16 August 2005 in PRC. It is a wholly-owned subsidiary of Wanbaoyuan. Sanwang holds the processing plant. Kuan Dian Dalei Mining Co. Ltd. (Dalei) was incorporated on 16 August 2005 in the PRC. It is a wholly-owned subsidiary of Wanbaoyuan. Dalei owns 2 exploration licenses to 16.06 sq km of mining land surrounding the Zhenxing Moly Mine and also mining licenses for 2 other copper and iron mines south of the 16.06 sq km area covers 0.094 sq km and 0.117 sq km respectively. Dalei is also involved in the production of iron and copper concentrate. The Group holds the Taichang Gold and Copper Mine covering an area of 0.3964 sq km and its relevant assets including the mining rights under a lease arrangement with Kuandian County for 20 years expiring 31 December 2025 (to be extended for a further 20 years).

7 Section 2: Overview of Mining Assets 7

8 Overview of Mining Assets 8 Introduction Zhenxing Moly Mine has a 15-year mining rights up to May 2023, granting rights to extract up to 30m tonnes of resources. In addition to the existing 0.46 sq km production block, Dalei owns the exploration licenses to 16.06 sq km of mining land surrounding the Zhenxing Moly Mine and also mining licenses for 2 other iron and copper mines south of the 16.06 sq km area covers 0.094 sq km and 0.117 sq km respectively. Dalei is also involved in the production of iron and copper concentrate. Wanbaoyuans current financial projections do not include any production from Dalei. Summary Moly resources and production data as at 31 December 2008 Area of Zhenxing Mine0.46 km 2 Area of Dalei Mine16.06 km 2 Total moly ore resources82,368 kt Moly ore resources with category 332 and above 40,089 kt Daily moly ore production1,300 t Annual moly ore production301,196 t Total moly contained metal83,524 t Moly contained metal with category 332 and above 49,544 t Grade of moly ore0.124% *The information on Moly resources is only in relation to Zhenxing Moly Mine which have not included Dalei Mine. Preliminary exploration work has been conducted on Dalei Mine, which is believed to have Moly potential.

9 Overview of Mining Assets 9 Mining and Exploration Assets A narration on the mining and exploration assets outlined in the map is as follows: Wanbaoyuan owns Zhenxing Moly Mine covering a total area of approximately 0.46 km 2 which is outlined in pink in the previous slide. Taichang Gold and Copper Mine controlled by Wanbaoyuan under the lease arrangement is outlined in orange. Dalei has 2 exploration licenses to explore the 16.06 km 2 region which is outlined in a black dotted line. The map shows the current mineralisation targets that have been identified as being prospective in light yellow. Dalei also owns 2 mining licenses for the assets outlined in green, which cover areas of 0.117 km 2 and 0.94 km 2 respectively relating to iron and copper assets respectively.

10 Section 3: Production 10

11 Production 11 Introduction Current moly ore resources of Zhenxing Moly Mine is 82.4 million tons, up to a depth of 115 meters (the depth permitted pursuant to the mining license is 280 meters. Preliminary exploration work has been conducted on Dalei Mine, which is believed to have Moly potential. Daily moly ore production volume is 2,700 tons The average grade of moly at YE 2008 is 0.12%. Besides moly, Wanbaoyuan also has rights to mine other minerals such as copper and iron ore from the Tai Chang Mine and Dalei Mine. ProductAnnual production for the year ended 31 December 2008 (tonne) Moly ore301,196 Moly concentrate754 Copper ore75,576 Copper concentrate1,995 Iron concentrate28,765

12 Production 12 Production and Processing Capacity Production capacity by productsAnnual production for the year ending 31 December 2009 (tonne) Daily Moly ore capacity 2,700 Moly ore 222,750 Moly concentrate 545 Daily Copper ore capacity 700 Copper ore 174,572 Copper concentrate 4,609 Iron concentrate 66,443 Phase 1 – 3,700 tons/day (tpd) in Q4 2010 Phase 2 – 5,700 tpd in Q4 2011 Phase 3a – 7,200 tpd in Q4 2012 Phase 3b – 8,700 tpd in Q4 2013 The current infrastructure at the mine is capable of producing 2,700 tons of ore per day. The mine and processing plants are in the process of being upgraded. The capacity of mine and processing plant will be increased as follows:

13 13 Section 4: Financial Information

14 Financial Information 14 Profit and Loss Summary FYE 31 December RMB0002007(A)2008(A)*2009(F)*2010(F)2011(F) Revenue199,373142,497114,664391,537468,384 Cost of Sales56,95739,15861,467144,888192,561 Gross Profit142,416103,33953,197246,649275,822 Operating Expenses13,04610,9939,2389,87410,090 EBIT129,37092,34643,960236,775265,732 Net other Income/ (expenses)3,36320,3924,1593,0292,682 Profit before tax132,733112,73848,119239,803268,413 Income tax6,2395,5178,72949,09456,299 Profit after tax126,495107,22139,390190,710212,114 Production capacity: - Moly (tpd)8001,3502,7003,700 (Q4)5,700 (Q4) - Average Moly price (RMB/ton grade)4,0503,9202,5003,0122,710 - Copper & Iron (tpd)300 700 Note:* Wanbaoyuan was ordered by the Government to stop work on its mines on 28 September 2008 due to the collapse of tailing dam of an unrelated iron ore mine in Shanxi on 8 September 2008 to facilitate investigation. Wanbaoyuan passed all inspections and received approval to resume operations on 17 March 2009. Wanbaoyuan resumed iron and copper production in April 2009 and Moly in July 2009.

15 Financial Information 15 Mega 15 Mega has a 15 Year DCF of US$426mn based on the following key assumptions: UBS moly price forecast from 2010 to 2023. UBS suggested WACC discount rate of 10%. Moly production expansion plan and budget based on the mining development plan. The moly production will be increased as follows: expected to increase to : Phase 1 – 3,700 tons/day (tpd) in Q4 2010 Phase 2 – 5,700 tpd in Q4 2011 Phase 3a – 7,200 tpd in Q4 2012 Phase 3b – 8,700 tpd in Q4 2013

16 Financial Information 16 15 Year DCF Valuation of Mega Mega has a 15 Year DCF of US$426mn @ 10% WACC discount rate.

17 Financial Information 17 Future Plans Improve mining extraction rate Wanbaoyuan has plans to improve the extraction rate of Moly concentrate from Moly ore. This is expected to improve the yield factor of Moly concentrate. Improve production capacity The Group intends to increase its Moly processing capability of 3,700 tpd in 2010, 5,700 tpd in 2011 and 8,700 tpd in 2013. Wanbaoyuan plans to achieve this by constructing new production facilities and a new mining shaft. In addition, Wanbaoyuan is also planning with various design institutes to explore new methods in processing moly ore. When resources are utilised efficiently, the rate of extraction of Moly concentrate is expected to improve. This is expected to translate into higher processing capacity, hence better profits. Explore Dalei Mine The Company has basically completed exploration work on the 16.06 sq km Daleis mines. The company intends to invest for further exploration work. Upon obtaining the detailed resource report, the Companys Moly reserves will increase tremendously and hence increase the profitability of the Company. Acquisition of new mines The Company plans to work with local Government to integrate mining resources, and at the same time looking for new acquisition opportunities, hence building a sizeable mining company in conjunction with the Governments effort in promoting integration within the mining industry.

18 Section 5: Key Management Profile 18

19 Key Management Team Summary Profile 19 Lam Fung (Director) A Qualified Engineer graduated from the Guangxi Architecture Institute. Established Huixin International Group Ltd in Hong Kong in 1992, a real estate investment and construction company. Has extensive experience in the management of project development and was involved in various property development projects in China. Participated in initial iron mining research activities in Hunan. Lin Jie (Director) Chairman of Wanbaoyuan Mining in August 2006. General Manager of Guangzi Xinhui Real Estate Development between 1997 to 2006. General Manager of Three Well Decoration Engineering between 1992 to 1997. Held various engineer and technician positions between 1981 to 1992 with various engineering and construction companies and bureaus. A Qualified Engineer graduated from the Chinese University in Guangzhou (specialised in civil engineering). Ke De Yu (Director) Graduated from Southern YeJin University, China in 1975 Assumed senior positions in various mining companies and for past 32 years since 1975 including Zijin Mining which is listed on the Stock Exchange of Hong Kong. Appointed as Chairman of Supervision Committee of Wanbaoyuan in 2006 Appointed as Deputy Director of China Mining Technical Committee

20 Key Management Team Summary Profile 20 Peng Guozhong (Chief Engineer) Graduated from Beijing Institute of Geology in Minerals and Geological Exploration and is qualified as a senior geology engineer. Has extensive experience in mining exploration and has discovered several major minerals deposits in Xiangxi area and has made significant contributions to the development of the mining industry in the Hunan area. Entitled to special governmental allowances since 1993. Held various positions in the mining sector amongst others: Deputy Chief Engineer and Director of Fujian Mining Devt Co, Team Leader for the Dept of Geological Exploration – Nanling Lead and Zinc Ore Research Team, Chief Engineer of Dept of Geology, Hunan. Zhang Guoru (General Manager of Safety and Environmental Protection) Graduated from Shenyang Non-ferrous Metals Industrial and Beijing University of Economics and a qualified mining engineer and senior economist. Has extensive experience in mining and management of mines. Held various positions in the mining sector amongst others: Mine Manager of Jianping County Yuanshengyuan Mining, Team Leader of Wulong Gold Mine and Bureau of Metallurgical Machinery of Dandong City. Vincent Wong (Chief Financial Officer) Graduated from Monash University, Australia in 1995. Certified Public Accountant of Hong Kong Institute of Certified Public Accountants and a Member of Australian Society of Certified Practising Accountants. He has over 12 years of working experience in audit and finance. He has served as Financial Controller of Sino Hua-An International Berhad, China based metallurgical coke group of companies listed on Bursa Malaysia.

21 Key Management Team Summary Profile 21 Hu Zhe (Deputy CEO and General Manager of Mining Production) Graduated from Zhongnan University in Mining Engineering and is qualified as a senior geology engineer. Has extensive experience in mining industry specialising in management and mining technology. Has published a number of articles on mining technology and has received numerous awards for his achievements in this field. He was awarded Outstanding Scientific and Technology Contribution Award 1994. Held various positions in the mining sector in Fujian Zijin Mining Group, Ruilong Mining Company, Hubei Non-ferrous Metals Company. Xu Ruining (Deputy CEO and General Manager of General Services) Graduated from Guangxi University in Electric Engineering and a qualified engineer. Has extensive experience in electric engineering of various industries and is an experienced manager. Held various positions in the management positions amongst others the General Manager of Xiamen Property Devt, Deputy General Manager of the Dept manager of Mechanical Electric Engineering Dept. Xu Hungbo (General Manager of Mechanical Electric Engineering and Equipment) Graduated from Shenyang Non-ferrous Metals Industrials in Mining Engineering and is qualified as a senior geology engineer. Has extensive experience in maintenance management of mining machinery. Has published numerous articles and training manuals and operating procedures for gold mining and mining workers. Held various senior positions in the mining sector as Engineer of Liaoning Wulong Gold Mining and Liaoning Youshi Xindian Gold Mine.

22 Key Management Team Summary Profile 22 Tong Ting (Deputy Chief Engineer) Graduated from Wuhan Institute of Geology in Electric Engineering and a qualified engineer. Has discovered four and assisted in six medium-large sized minerals deposits of gold ore, silver ore, lead-zinc and molybdenum ore. Has published articles on gold and silver ore exploration specifications, district exploration and general geo-chemist survey specifications. Held various positions in the management positions amongst others as the Head of Geo-physical Exploration Team for the Hubei Bureau of Geology and Mineral Resources. Cheng Youping (General Manager of Geology) Graduated from Xian Geological Institute in Engineering and us a qualified geological engineer. Has extensive administrative and operating experience in exploration and mine development and received numerous awards for studies on mining techniques and processes. Had successfully designed and developed exploratory iron ore mines in the Sishan Wanbao Kuanyu Dalei area. Was previously with Kuanyu Dalei Ming Company and the Exploration Group of Hebei Tangshan Iron & Steel Corporation.

23 Section 6: Recent Developments 23

24 Recent Developments Key Milestones 24 Mining Rights and Permits Extended 15-year mining rights from 2008 to 2023 for 30.163 million tonnes of Moly with the Liaoning Land and Resource Bureau and negotiated for a lower total fee of RMB217.49 million. (This is one of the longest tenure mining license to be issued and it was made at a favourable rate equivalent to RMB7.19 per tonne.) Applied for the transfer and renewal of mining rights for Dalei Zhenjiang Copper Mine, Zhenxing Calcite mining rights as well as the transfer and renewal of exploration rights for 16 sq km surrounding the (Zhenxing) mine. Re-applied for mining rights for increase in mining limit for Zhenjiang Copper Mine, Zhenxing Calcite, Taichang Gold and Copper Mine, issued new resource report, proposals for mining. Expansion of Zhenxing Moly Mine from 1,500 to 4,500 tonnes Completed the additional 3,000 tonnes main shaft upgrade for the increase in mining capacity, technical improvement including environmental impact assessment report, geological report, feasibility report. Completed the main inclined shaft hoist room steel structure, and acquisition of new hoist and necessary equipment to accommodate additional 3,000 tpd hoist. Expansion of Sanwang Processing Plant from 1,350 to 2,700 tonnes Completed the Sanwang plant upgrade to 2,700 tpd. Commenced construction in November 2007, completed steel structure plant on 30 July 2008, including new equipment, flotation pillar, 1,200 tpd mill ball, 3,000 tpd crusher have been installed and tested, acquisition of 88 mu of land, compensation and demolition for relocation, to ensure smooth future development.

25 Recent Developments Key Milestones 25 Conversion of Taichang Processing Plant and Wanbaoyuans Zhenxing Processing Plant into 400 tpd Copper and Iron Processing Plant In view of the tax rebate enjoyed by Wanbaoyuan for income generated from iron and copper, the Management has converted two (2) Moly processing plant, namely Taichang Processing Plant and Wanbaoyuans Zhenxing Processing Plant into 400 tpd copper and iron processing plant. Hence, the processing capacity of copper and iron increased from 300 tpd to 700 tpd. Resources In order to upgrade resources of 333 and 334 category, the Company has drilled 16 big holes and 5 small holes, and discovered 0.62% to 0.68% high grade new orebody in May 2008. This has resulted in an improved resources with industrial ore grade from 61.3 million tonnes to 71.2 million tonnes (based on the supplemental geological report issued by Liaoning Non- Ferrous Tieling Geological Exploration Institute). Further to that, the resources of higher grade categories of 122b and 332 have also increased whereas the lower industrial grade category of 333 has reduced. Completed the geophysical and geochemical exploration and prelim high-precision magnetic measurement Field work for Daleis 16 square kilometers surrounding Wanbaoyuan, Tieling Institute Court has issued a preliminary exploration report. The geological team has confirmed Taichang Gold and Copper Mine has iron and copper ore resources of 531,882 tonnes and Xishan Copper and Iron Mine (Calcite Mine) has iron and copper ore resources of 406,564 tonnes.

26 Recent Developments Key Milestones 26 Environment and Safety Issues Completed the tailing dam for Sanwang plant and the 1,500 m tailing dam transfer system, land transfer and obtained lands use rights. Reinforcement, drainage, precipitation, piling, planting as well as stability analysis work have been completed. Completed the construction of a water treatment plant which comply with the relevant requirements and allow for the reuse of the treated water. Obtained the necessary administrative permission for cultivating, relocation, compensation, forestry planning. Completed the safety permits for Zhenxing Moly Mine, Taichang Gold & Copper Mine, Zhenjiang Copper Mine. Completed the environmental impact assessment for sewage treatment plant, 2,000 tpd expansion project, 1,000 copper iron plant and other related safety approvals. Maintain zero explosion incident record since incorporation in 2006. Rectified more than 80 areas at the mines which were discovered with potential safety issues. Sub-Station Completed a new sub-station of to accommodate for increase in additional 3,000 tonne Moly processing capacity as well as 6,000 tonne compressor and switching house. Administration and Accommodation Completed 3-storey dormitory, canteen, office, gym, basketball court multi-purpose building.


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