Investment outlook: what investors are looking for Speaker: Dr Peter Ruxton, Managing Director, Spartacus Capital Mining On Top: Africa - London Summit 25-26 Jun 2013 | London

1. SPARTACUS CAPITAL
Peter Ruxton
June 2013
“MINING ON TOP”
Investment Opportunity in Africa:
Innovative Funding Mechanisms

2. 2
SUMMARY
• Metals Prices holding up, but Equity Prices are depressed
– Cheap Entry Valuations for Investors
• All costs – capital & operating – have risen – diesel & power particularly
• Market down-turn not discriminating between high quality and average
quality assets
• Rush to develop during the Boom Years has led to some average
projects being built, plus a fall in technical standards & judgement
• “Majors” are now aggressively shelving expansion projects which
means less future supply growth – supply side restrictions likely to
support and push commodity prices higher
• Africa is under-explored & under-developed – opportunities to invest in
world class deposits at all stages - plus M&A targets
• Africa still holds some of the best undeveloped assets - so will offer
better returns as markets normalizes
• Attractive opportunities with proven management teams on low
valuations
• Funding challenges – many high quality companies are starved of cash
AFRICANINVESTMENTOPPORTUNITY
SPARTACUS CAPITAL

3. 3
METAL PRICES – STILL HOLDING UP
• Commonwealth Bank of Australia (CBA) created an Index at the start of 1997 that
tracks a basket of commodity prices over time
• While prices peaked in 2011/12 and are now lower, they remain well above the
1997-2004 norm – prices today are 3x the 1997-2004 level (the Index dropped to
2x the norm following the Global Financial Crisis ‘GFC’ in 2009)
AFRICANINVESTMENTOPPORTUNITY
SPARTACUS CAPITAL
When GFC hit,
commodity
prices
collapsed -
however the
Commodity
Index has
bounced back
to well above
GFC lows

4. 4
METAL EQUITY SHARES – MAJOR DISCONNECT
• In contrast to commodity prices, mining and metals equities have cratered!
• As seen in the Australian Stock Exchange (ASX) Resource 300 Index (below) –
which tracks all listed Resource Companies trading in the top 300 ASX entities
• Share price performance over the last 5 years is now back to post-GFC levels,
presenting an exceptional buying opportunity
AFRICANINVESTMENTOPPORTUNITY
SPARTACUS CAPITAL
When the GFC
hit, commodity
prices collapsed
and so to did
Resources
equities
Now most metal
prices are still
relatively strong -
equities however
have retraced
back to GFC
levels

5. 5
MINING EQUITY PRICES – ALL SUFFERING THE SAME FATE
• The ASX 300 Mining Index includes both large diversified producers
(BHP/RIO/NCM) and small exploration companies
• Share prices are down for both large and small – for example in gold stocks - Tier 1
producer Newcrest (NCM) has come down, as have smaller exploration companies
AFRICANINVESTMENTOPPORTUNITY
SPARTACUS CAPITAL
NEWCREST - Tier 1 Producer went as
low as A$18 during GFC then back to
above A$42 in 2011 now back at A$15
PERSEUS - Explorer in Ghana in
2008 – has since successfully gone
into production and share price has
fallen from A$4 down to A$1
AMPELLA - discovered significant gold ozs in Burkina Faso in 2010
and share price went as high as A$3.20, now down to A$0.20 as
though it had discovered nothing - back to 2009 price

6. 6
PRIVATE EQUITY & INNOVATIVE FUNDING MECHANISMS
PRIVATEEQUITY&INNOVATIVEFUNDING
SPARTACUS CAPITAL
• Normal funding options all but closed….
• Equity markets shut for most players
• Debt available – BUT expensive & covenants constraining
• Ideal timing for Private Equity - riding-out the short-term volatility –
investing for growth - 3 to 5 year horizon
• Investments can now be made at rock-bottom prices – 2008/9 equity
valuations - with underlying commodity prices still very robust
• Project Financing for “first-time developers” becoming a real barrier –
companies facing equity raises of 3-5x market capitalizations
• Companies need to look for innovative mechanisms of funding to get new
projects up:
Private Equity
Infrastructure Funding
Off-take Funding
Empowerment Funding
Royalty Financing
Metal Streaming
The role of the Chinese?

7. 7
INFRASTRUCTURE FOR OFF-TAKE FUNDING
TONKOLILI IRON ORE, SIERRA LEONE
CHINESE INVESTMENT OF US$1.5BN FOR 25% EQUITY & OFF-TAKE
INNOVATIVEFUNDING-EXAMPLE
• Shandong Iron & Steel Group (SISG) invests US$1.5bn for a 25% equity in African Minerals
Tonkolili Project iron ore companies – deal closed on 2/4/2012
• SISG secures iron ore LoM off-take of Phase 1 – 2Mtpa, Phase 2 – 8Mtpa and Phase 3 –
10Mtpa for a price discount of between 0-15%
(discount based on iron ore sales price <US$60/t - 0% to >US$120/t – 15% discount)
• Funding secured rail & port infrastructure in Sierra Leone and repayment of early project debt
of US$418m
SPARTACUS CAPITAL

8. 8
SAMSUNG SECURES GOLD OFF-TAKE
STRATEGIC ALLIANCE BETWEEN SAMSUNG & AMARA TO PROVIDE SAMSUNG
WITH A RELIABLE AND LONG-TERM SOURCE OF GOLD OFF-TAKE
INNOVATIVEFUNDING-EXAMPLE
• Samsung invests an initial US$20m to assist Amara Mining to develop the 50-60,000ozpa
Kalsaka-Sega Gold Mine in northern Burkina Faso, in exchange for monthly gold off-take
• Samsung are backing Amara management to deliver a pipeline of West African gold projects
with anticipated further financing for new projects against increased future off-take
commitments
SPARTACUS CAPITAL

9. 9
IDC BACKING BLACK ECONOMIC EMPOWERMENT
STRATEGIC PARTNERSHIP WITH PLATMIN & THE BAKGATLA BA KGAFELA
TRADITIONAL COMMUNITY
INNOVATIVEFUNDING-EXAMPLE
• IDC invests ZAR3.24bn (~US$425m) in to Platmin Ltd – December 4, 2012 - on the
successful consolidation of PGM assets in the NW Bushveld Complex of South Africa
• The investment creates a Strategic Partnership between The Bakgatla Community (27.0%
holders), The IDC (16.2%) and the Pallinghurst Consortium
• Platmin, to be renamed Sedibelo Platinum Mines, has a ~70Moz 4PGM resource base,
largely shallow & low cost to mine, with the potential to create 9,000 direct jobs
SPARTACUS CAPITAL

10. 10
ROYALTY FINANCING
LONDON MINING US$110M ROYALTY FINANCING WITH BLACKROCK
INNOVATIVEFUNDING-EXAMPLE
• Blackrock invested US$110m into London Mining’s Marampa Sierra Leone iron ore project
in exchange for a 2% revenue royalty on August 3, 2012
• The investment backs London Mining expanding from a 5Mtpa to a 9Mtpa iron ore
producer
• There are no covenants or restrictions, no obligation to repay the capital, there is no
interest due, however payments are required life-of-mine regardless of profitability
SPARTACUS CAPITAL

11. 11
METAL STREAMING
SANDSTORM GOLD LTD. PROVIDES UP-FRONT CASH OF US$60M FOR A
METAL OFF-TAKE PRICING DISCOUNT
INNOVATIVEFUNDING-EXAMPLE
• Sandstorm has an agreement to purchase 1.5% of the gold (for US$400/oz) & 35% of
platinum (for US$200/oz) from Colossus Mining’s Brazilian Serra Pelada high grade gold-
palladium-platinum mine in September 2012
• Sandstorm to provide an up-front payment of US$60m
(company has a Put, back to Sandstorm of 50% of the arrangement for US$48.75m – ie
limiting purchase to 0.75% of gold and 17.5% of platinum)
• The metal has to be produced, with physical metal delivered. This mode of financing is
often used for by-product sales – popular in Latin America
SPARTACUS CAPITAL

12. 12
CHINA-DRC JV – INFRASTRUCTURE FOR COPPER
CHINESE GIFTED DRC COPPER ASSETS IN EXCHANGE FOR US$6BN OF
INFRASTRUCTURE & SOCIAL FUNDING
INNOVATIVEFUNDING-EXAMPLE
• Chinese commit US$6bn to DRC for copper assets and off-take. Split US$3bn for copper
project development and US$3bn for Infrastructure
• Infrastructure includes 3,500km road rehabilitation, 3,200km railway, 32 hospitals, 145
health clinics, 2 universities, 2 hydro. dams + rehabilitation of power distribution networks
• Dima Mining Complex - 6.8Mt copper, 0.63Mt cobalt – Kamoya, Dikulume, Mashamba –
1st production in 2015/17 @ 50,000tpa copper, building to 400,000tpa over 2 Decades
• 2009 – US$350m – road refurbishment including N1 & N4 – Central Hospital Kinshasa –
hydro-electric power station refurbishment - Katende
SPARTACUS CAPITAL