African Eagle Resources plc Listing on AIM and PLUS a walk on the dark side or progressive enlightenment? Mark Parker Managing Director, African Eagle Resources plc Asa Bridle Mining Analyst, Seymour Pierce Limited

African Eagle Resources plc Disclaimer The views expressed in this presentation are those of the authors and do not necessarily reflect those of African Eagle Resources plc or Seymour Pierce. The information contained herein is compiled from a number of sources and is believed to be correct, but cannot be guaranteed and should not be relied upon. This document does not constitute, or form any part of, and is not to be construed as an offer, invitation or solicitation to buy or sell any securities of any of the companies referred to herein and any opinions expressed are subject to change without notice. The value of any investments referred to herein and the income derived therefrom may fall or rise against the investors’ interest and past performance is not a guide to the future. No representation or warranty, express or implied, is given by African Eagle Resources plc or Seymour Pierce or any of their respective directors, partners, officers, employees or professional advisers as to the accuracy, completeness or fairness of the information or the opinions contained in this document and no responsibility or liability is accepted for any such information or opinions or errors or omissions.

African Eagle Resources plc International markets for mining Funds raised (US$M) and numbers of transactions by mining companies during 2007, by stock exchange

African Eagle Resources plc Background: AIM Launched in 1995 by the LSE 1,638 companies, combined mkt cap £79.1bn 962 have mkt caps less than £25m (59%) 1,184 have mkt caps less than £50m (73%)

African Eagle Resources plc AIM market relative performance

African Eagle Resources plc AIM evolution – companies

African Eagle Resources plc AIM evolution – funds raised

African Eagle Resources plc AIM by sector % based on market value

African Eagle Resources plc Plus Markets Successor to OFEX Started as matched-bargain market operated by stockbrokers John Jenkins. Evolved into an FSA-regulated market by 2002 Lean years after technology bubble Refinanced and rebranded as Plus Enhanced trading platform, December 2005, multiple market-makers Provides primary quotations for smaller companies and a trading platform for companies listed on other markets Plus taking significant fraction of trades from AIM

African Eagle Resources plc AIM Miners – big and small Plus Markets: biggest £10M median £2.3M Median £18.6M

African Eagle Resources plc AIM Mining – where on earth? Africa 40% Americas 17.5% 12% 9% 16%

African Eagle Resources plc AIM Miners – What are they looking for? Operations of Aim minerals companies by commodity

African Eagle Resources plc AIM mining IPOs Jan Aug 2008, 217 Minex companies joined AIM - 10% of all new listings. £1.1bn raised at IPOs since 2001 – 4% of total IPO funds

African Eagle Resources plc AIM mining secondary fundraisings £4.7bn raised in secondary placings since 2001 (19% of total secondary business on AIM) Over £700m raised in 2008 – 25% of total secondary fundraisings.

African Eagle Resources plc Junior mining: ground to make up Note:FTSE Fledgling Mining Index consists of companies capitalised at less than £22 million FTSE Small Cap Mining Index consists of companies capitalised at between £22 million and £89 million Source: Altus Resource Capital

African Eagle Resources plc THE DARK SIDE SHORTCOMINGS OF AIM AND PLUS FOR JUNIOR MINERS

African Eagle Resources plc Liquidity Aim minerals companies by liquidity – July 2008 Median = 1.9% (July 2008 )

African Eagle Resources plc Transaction costs Minimum gain needed to make a trading profit Assuming: £100,000 pot Divided equally among 20 shares, all approximately the same price After trading full amount 10 times Share priceGain needed 2p30% 5p11.5% 10p11.5% 50p6.2% £16%

African Eagle Resources plc The institutional investment gap Fund = £200M Minimum investment = 0.5% = £1M Maximum holding = 10% of any company Hence minimum market cap = £10M But it’s still easier (and more likely) to make £1M though a 10% improvement in a £10M holding than a 100% improvement in a £1M holding.

African Eagle Resources plc AIM shortcomings Poor liquidity Transaction costs – spreads and tax Discrimination against retail investors Over-reliance on institutions Loss of CGT concessions Discrimination against directors

African Eagle Resources plc A message to the Regulators Please …. Improve liquidities End discrimination against retail investors Scrap stamp duty Reduce spreads (abolish market makers?) Ease restrictions on directors dealings

African Eagle Resources plc The future …? Difficult to raise finance for exploration and development. Metals prices unlikely to fall far –High operating costs and supply side constraints –Supply unlikely to exceed demand for several more years Sector likely to offer opportunities Mid-sized and large miners, cash-rich from high metals prices, will snap up promising juniors Increased role for private equity, backing favoured juniors, perhaps de-listing them or using them as vehicles for further consolidation Juniors which survive should thrive

African Eagle Resources plc Listing on AIM and PLUS a walk on the dark side or progressive enlightenment? Mark Parker Managing Director, African Eagle Resources plc Asa Bridle Mining Analyst, Seymour Pierce Limited