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Building a diversified carbon steel business Investor Presentation 7 August 2007.

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Presentation on theme: "Building a diversified carbon steel business Investor Presentation 7 August 2007."— Presentation transcript:

1 Building a diversified carbon steel business Investor Presentation 7 August 2007

2 Forward Looking Statement THIS DOCUMENT MAY NOT BE DISTRIBUTED IN THE UNITED STATES OR TO ANY US PERSON This presentation was prepared by Territory Resources Limited ABN ( "Territory” ) and contains information regarding the proposed institutional placement ( "Offer“ ) of securities in Territory. All information contained in this document (including this notice) and discussed at the presentation ( "Information“ ) is confidential. By receiving the Information and attending the presentation you are deemed to agree that you will hold the Information in strict confidence, and keep it secret, and not reproduce, disclose or distribute the Information to any third party or publish the Information for any purpose. The Information is being provided to you as, and by receiving this document you will be deemed to have represented and warranted that you are: (a) if you are in Australia, a professional investor or sophisticated investor (as those terms are defined in s708 of the Corporations Act 2001 (Cwlth) ( "the Corporations Act“ )) or other person specified in s708 of the Corporations Act who does not need to be given a prospectus or other disclosure document under Chapter 6 of the Corporations Act to lawfully receive an offer or recommendation to acquire securities in Territory; or (b) if you are outside Australia: (i) you are not in the United States or a US person (as defined in Rule 902(k) under the United States Securities Act of 1933, as amended ( "US Securities Act“ )) nor acting for the account or benefit of a US Person; and (ii) you are a person to whom an invitation or offer to subscribe for securities in Territory and any issue of such securities is permitted by the laws of the jurisdiction in which you are situated without the need for any registration, lodgment or other formality. This document is not a product disclosure statement or prospectus for the purposes of the Corporations Act and does not constitute an offer, invitation, solicitation or recommendation in relation to the subscription, purchase or sale of securities or other securities in any jurisdiction and neither this document nor anything in it shall form the basis of any contract or commitment. The securities of Territory have not been and will not be registered under the US Securities Act or the securities laws of any state of the United States and may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as defined in Rule 902(k) under the US Securities Act). No public offering of the securities discussed herein is being made in the United States. 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None of Argonaut or Lehman Brothers or any of their respective directors, agents, officers, employees or affiliates have authorised this presentation or are responsible for the issue or making of any statement or contents of this presentation. Except as required by law, no representation or warranty, express or implied, is made by Territory, Argonaut or Lehman Brothers] as to the fairness, accuracy, completeness or correctness of the Information, opinions and conclusions, or as to the reasonableness of any assumption contained in this presentation. By receiving the Information and to the extent permitted by law, you release Territory, Argonaut or Lehman Brothers and their respective directors, officers, employees, agents and affiliates from any liability (including, without limitation, in respect of direct, indirect or consequential loss or damage or loss or damage arising by negligence) arising as a result of the reliance by you or any other person on anything contained in or omitted from this presentation. The forward looking statements included in this presentation involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, Territory, Argonaut or Lehman Brothers and their respective directors, officers, employees, agents or affiliates. Actual future events may vary materially from the forward looking statements and the assumptions on which those statements are based. Given these uncertainties, you are cautioned to not place undue reliance on such forward looking statements. The distribution of this document outside Australia may be restricted by law. In particular, this document or any copy of it must not be taken into or distributed or released in the United States or distributed or released to any US Person as defined in the US Securities Act. Persons who come into possession of this document should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

3 Building a Diversified Carbon Steel Business Led by the team that transformed ConsMin into a near $1b company Financial backing from Noble Group, DCM DECOmetal and Lehman Brothers Significantly re-rated after bringing Frances Creek mine into production (first year expected production of 1.5 mtpa of iron ore) Growth through exploration excellence and M&A opportunities

4 ³ As per the BDO Valuation Report dated 31 July Corporate Overview Capital Structure “ We consider the value of Territory to be between $0.98 and $1.08… [which] closely corresponds to the price underlying the upcoming investment of 200m shares [at $1] by Noble, DCM, and Lehman.” BDO Valuation Report, 31 July 2007 Independent Expert’s View Share Price¹$0.98 Shares Outstandingm198.3 Optionsm4.3 Market Capitalisation (fd)$m196.8 Cash²$m19.8 Debt$m0.0 Net Cash$m19.8 Enterprise Value$m177.0 Shareholders Directors Remaining TTY Shareholders 46% Westoz Investment Company Ltd 5% Confluence Asset Management Ltd 6% OM Holdings Ltd 13% Kiernan 9% Noble Group 21% Michael Kiernan – Chairman Allan Quadrio – Managing Director Designate Bruce McFadzean – Operations Director Julie Wolseley – Non-Executive Director David Macoboy – Non-Executive Director Trevor Tennant – Non-Executive Director ² As at June 30, including $0.4m in option proceeds. ¹ As at 3 August VWAP Analysis 10 Day30 Day60 Day TTY Per Share 3 $1.09 $1.17$1.04

5 Frances Creek Enters Production Frances Creek - Overview LocationNorthern Territory Ownership100% StatusIn production Reserves Resources 61.3% Fe 60.7% Fe ProductionCurrent - 1.5Mtpa Targeting - 3Mtpa Estimated Mine Life5 years (10 years with expansion) InfrastructureExcellent access to rail; Darwin is closest port to China Commenced production in June 2007 First railing of high grade iron ore in July 2007

6 6 Feb 07 Announced $30m Placement to Crawley Resources 28 Feb 07 Enter life-of-mine marketing agreement with Noble Group 27 Mar 07 Agreement with Freight Link to provide rolling stock and rail transport 7 Mar 07 Agreement with NLC and traditional land owners, 13 additional mining leases granted 19 Jun 07 Commenced first production at Frances Creek 6 Jul 07 Reaches agreement with Arafura Resources to acquire three of its tenements. Future royalty obligations terminated 20 Jul 07 Railed first ore to Darwin 31 May 07 Name change to Territory Resources. Crawley Placement approved 2 Jul 07 Enters HoA on the Tambao manganese project in Burkina Faso 17 Jul 07 Announced Bid for ConsMin Territory Re-rated as Milestones Achieved 2 Aug 07 Secures life-of- mine off-take agreement with Noble 3 Aug 07 Independent TTY valuation released Source: IRESS

7 Accessing Strong Global Demand Chinese demand for iron remains exceptionally strong Backed by Noble Group, the world’s largest non-producer provider of Iron Ore “Win – win” marketing and off-take agreement in place Source: Noble Group (million MT) Noble’s Iron Ore Volumes

8 Territory’s $3.55 Offer for ConsMin $3.55 value per CSM share ¹ $2.00 cash & 1.5 TTY shares for every 1 CSM share Total transaction value of $937 million ¹ Consideration Noble Group–$150 million equity ² DCM DECOmetal–$75 million equity ² Lehman Brothers–$100 million convertible bonds ² – $320 million bridge facility 90% minimum acceptance No material adverse change Regulatory approvals ASX Committed Funding Key Conditions Listings 1 Based on Preferred Case in updated independent valuation report by BDO and released to the ASX on 3 August Equity committed at $1 per TTY share.

9 Territory offer price: $ Independent Expert Range 2 $ $2.77 Pallinghurst $3.30 $937 Million Fully Funded Offer 1 Based on Preferred Case in updated independent valuation report by BDO and released to the ASX on 3 August PricewaterhouseCoopers Supplementary Independent Expert’s Report dated 28 June 2007 based on the midpoint CSM value (ex dividend). ConsMin Share Price ($) Privat builds up 13.5% stake

10 Superior Value on all Measures ¹ PricewaterhouseCoopers Supplementary Independent Expert’s Report dated 7 June 2007 based on the midpoint CSM value (ex dividend). ² PricewaterhouseCoopers Supplementary Independent Expert’s Report dated 28 June 2007 based on the midpoint CSM value (ex dividend). ³ Based on equity analyst’s estimates. 4 VWAP to 3 August Based on Preferred Case in updated independent valuation report by BDO and released to the ASX on 3 August % Premium 39% Premium 18% Premium Territory offer price: $ Current Bid Revised Scheme Original Scheme 10% Premium 7% Premium 4

11 Global Investor Group Territory’s financial partners have committed $620 million cash Leading manager in the global supply chain of agricultural, industrial and energy products Enterprise value of US$4.3b with cash of US$600 million International leader in trade of ores, ferro alloys, noble alloys and metals, worldwide Global investment bank, headquartered in New York Listed on the NYSE with a market capitalisation of $32 billion DCM and Noble trade 75% to 80% of ConsMin’s manganese and 100% of its chromite Hold approximately 12% of ConsMin between them Knowledgeable strategic investors

12 Noble, DCM and Michael Kiernan are the original team that led ConsMin for almost a decade Together we created a near $1b company During this time, a $10,000 investment became $133,750 The team are ready to do it again Proven Track Record Graph depicts the value of a $10,000 investment in ConsMin from Michael Kiernan becoming Managing Director in 31 March 1998 until Michael Kiernan’s announced decision to retire as Managing Director on 18 October ConsMin Shareholder Value Created During Michael Kiernan’s Tenure

13 Territory’s Vision for the Combined Group The next step in building a $2.5b carbon commodity supplier Install “hands on” board and management Focus the business on bulk carbon commodities Divest Jabiru shareholding Turnaround Nickel operations prior to divestment Diversify with mineral sands exposure, particularly zircon Digging and delivering Refocused group will be cashed up post divestments Significantly grow production 10Mt per year iron ore producer 1Mt–2Mt manganese producer 250Kt–500Kt chromite producer Ramp up exploration and development activities

14 Summary Territory has achieved a significant capital market re-rating Enters iron ore production BDO values Territory at $1.03 per share (Preferred Case) $937 million fully funded offer Delivers ConsMin shareholders $3.55 value per share and a “ticket to ride” Significant premium across all measures Led by the original team that built ConsMin into a near $1b company Backed by Noble Group, DCM DECOmetal and Lehman Brothers with $645 million cash Refocused group will be cashed up post divestments Building a well capitalised open pit surface miner with vision

15 Michael Kiernan Chairman Ph: (+61 8) Territory Resources Warrick Hazeldine Ph: (+61 8) Fax: (+61 8) Purple Communications


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