Technical Reports Who needs them? FINEX ‘10 Exploration meets the City

An early miner Finex '10 October 20102

The first technical report? Finex '10 October 2010 UGH ! 3

Roman gold mine Las Medullas, Leon, Spain Finex '10 October 20104

Hydraulic mining Finex '10 October 20105

Roman gold mine Las Medullas, Leon, Spain Finex '10 October 2010 Major alluvial gold mine Over 1km across 500 million m 3 extracted Grade 3 g/t 60,000 workers (slaves) 200,000 oz p.a. 6

Mediaeval mining-Agricola 1555 Finex '10 October 20107

The Industrial Revolution Finex '10 October 20108

Britain 17 th and 18 th century Finex '10 October 2010 Britain leads the world in mineral production Iron ore Coal Copper Tin 9

The Stock Exchange, London Started in a coffee house in 1698 South Sea Bubble had grown and burst within 25 years Adopted formal name in 1773 Formal membership introduced in 1801 First Rule Book introduced in 1812 Finex '10 October

London-global mining finance Finex '10 October

London-global mining finance London capital backed : ◦Californian gold rush 1849 Finex '10 October

London-global mining finance London capital backed : ◦Klondike gold rush 1897 Finex '10 October

London-global mining finance London capital backed : ◦Californian gold rush 1849 ◦Klondike gold rush 1897 ◦Australian gold rushes ◦ Victoria 1850’s ◦ Kalgoorlie 1890’s ◦Kolar Gold Fields, India 1870’s ◦Witwatersrand, S.Africa gold 1880’s Finex '10 October

Gold Fields of South Africa Ltd Prospectus issued 1887 £250,000 raised for 230,000 shares Promotors took only 200 founder shares But retained 3/15 (20%) of any profits Finex '10 October

Where was the CPR? The Company is formed for the purpose of acquiring and dealing with certain auriferous and other mineral properties, interests and rights in South Africa, and also for carrying on general exploration with a view to making further investments of a similar nature £25,000 spent on purchases and options but “opportunities exceed capacity of private capital” Finex '10 October

London-global mining finance London capital backed : ◦Californian gold rush 1849 ◦Klondike gold rush 1897 ◦Australian gold rushes ◦ Victoria 1850’s ◦ Kalgoorlie 1890’s ◦Kolar Gold Fields, India 1870’s ◦Witwatersrand, S.Africa gold 1880’s ◦Malaysian tin from 1870’s ◦Nigerian tin mines from 1900’s ◦Zambian Copper Belt discovered 1928 Finex '10 October

Chapter 19 Special LSE Rules for mining companies Exempt from 3 year trading record Listing particulars must contain a Competent Person’s Report Required to demonstrate proven reserves for at least 2 years operation Aggregate value of proven and probable reserves must exceed 50% of the expected market capitalisation Finex '10 October

Reign of the Mining Finance House Consolidated Gold Fields Anglo American Union Corporation General Mining Selection Trust Finex '10 October

Canada and Australia Local mining industries Need for local capital Listing of exploration companies allowed Boom and bust in various commodities Attracted unwary international investors Little regulation of trading or reporting Poseidon nickel boom Led to tighter regulation in Australia Finex '10 October

London’s response Still unable to list exploration companies Major changes in 1995 OFEX market set up LSE established AIM European market of choice for resources Unique regulatory model Relatively light & flexible Regulated by Nominated Advisers Finex '10 October

Requirements for mining listing on AIM Suitability for listing No minimum free float Working capital Independent Competent Persons Report Ongoing reporting obligations Finex '10 October

Technical reports vital Competent Persons Report Exploration updates Resource estimates Finex '10 October

Standards vary Convergence in Australia, Canada, South Africa US regulators much more restrictive Russia-an acquired taste China-not yet Finex '10 October

The Russian system Finex '10 October

Russian reserves VMS deposit C1 +C2 “reserves” 24.0Mt 5.87% Zn (1.41Mt Zn) 0.67% Pb (161,000t Pb) 106 g/t Au (81.8M oz Ag) 0.3 g/t Au (232,000 oz Au) Finex '10 October

Western reserves 9.7Mt 8.94% Zn (865,000t Zn) 3.58% Pb (346,000t Pb) 161 g/t Ag (50.5M oz Ag) 0.37 g/t Au (115,000 oz Au) Finex '10 October

Chinese system Finex '10 October

Australian resources Volcanic hosted sulphide deposit Measured, indicated and inferred resource (90% inferred) Total resources 6.897Mt 4.4% Zn (303,000t Zn) 3.5% Pb (241,000t Pb) 34g/t Ag (7.5M oz) Finex '10 October

Recalculation to Chinese standard Total mineral resources Mt 3.08% Zn (778,000t) 3.02% Pb (763,000t) 51g/t Ag (41.4M oz) 4.6% S (1.16Mt) Of which the “controlled intrinsic resource” is 4.5Mt (2.41% Zn, 3.57% Pb, 64g/t Ag) and the “inferred intrinsic resource is 20.7Mt (3.23% Zn, 3.57% Pb, 48g/t Ag) Finex '10 October

An Australian lesson An alluvial tin project Periods of historic production Massive historic database of drilling CPR by reputable consultant Measured and indicated resources Upgrade to reserve status Plant construction Outcome? Finex '10 October

Impact of Bre-X Finex '10 October

What to look out for Management experience ◦Is the in house “qualified person” qualified? Track record ◦Do the directors know what they are doing? ◦Have they done it before Finex '10 October

What to look out for Beware of silence after a run of news Finex '10 October

What to look out for Independent oversight ◦Ensure the consultant really is competent Finex '10 October

What to look out for Are the samples selective? Is the cut off grade stated? Are they true widths? Finex '10 October

What to look out for Beware of gross, in the ground values Metal equivalent ◦Base metal equivalent better than precious ◦In Australia includes an adjustment for recovery ◦In Canada it does not Is reserve/resource terminology sloppy Finex '10 October

Conclusions Finex '10 October

Conclusions Investors today are given more information than ever before Finex '10 October

Conclusions Investors today are given more information than ever before It takes knowledge, experience and effort to make the most of it Finex '10 October

Conclusions Agricola put his finger on it- “Those who take an interest in … mining … should read studiously and consult expert mining people” Finex '10 October

Lastly Finex '10 October Ask yourself-does it look too good to be true?

Always bear in mind Mark Twain’s immortal words Finex '10 October

The definition of a mine is a hole in the ground that belongs to a liar! Finex '10 October