Consolidation – Then and Now Robert Champion de Crespigny AC Chairman, Buka Minerals Limited

1. Consolidation – Then and Now Robert Champion de Crespigny AC Chairman, Buka Minerals Limited Sydney Mining Club, 7 October 2004

2. Consolidation – the 1980s • Australian equity markets were a major source of exploration capital • a boom in the small end of the gold business • boom in mining services and finance • … but little equity for established miners seeking to grow, unless you were foreign and had a track record • Placer, Homestake, Newmont, etc • To grow beyond organic growth, you needed (and still need) access to offshore markets - that required size

3. Growing a mining company in the 1990s • Equity capital and premium prices followed the successful miners and explorers • the North American markets began to dominate the equity side of mining finance • North American institutions became the dominant investors and shareholders • … and they were only interested in large capitalisation stocks, preferably home-grown • The result was mass consolidation in Australian mining • between Australian companies seeking to compete • by North American companies using their financial muscle • by South African companies seeking to diversify

4. Consolidation in the global gold sector Newmont (7.5Moz) Barrick (5.7Moz) Placer (3.7Moz) Santa Fe Newmont Gold Normandy Franco-Nevada Battle Mountain LAC Homestake Sutton Getchell Highlands Gold Aurion Gold TVX North Flinders Mt Leyshon Great Central Niugini Mining Homestake Australia Plutonic Prime Resources East Arican Gold Mines Goldfields (Australia) Dalta Gold Anglo Gold (6.0Moz) Gold Fields (4.5Moz) Harmony (4.0Moz) Ashanti Acacia Minorco WMC Gold Ranger Tarkwa ARMgold Evander Elandskraal Kalgold Randfontein Hill 50 New Hampton Bendigo Abelle Source: AME Mineral Economics, N M Rothschild & Sons

5. Australia vs North America in the 1980s & 90s

6. The result • By 2000, the ranks of Australian mining companies had been decimated • large parts foreign owned • the Australian majors had become international • the mid-ranked Australians disappeared • … and a new generation of investors did not understand mining • they didn’t need to and • it didn’t pay, we were in a 10 year bear market

7. The Australian mining industry in 2000-04 • A handful of majors • foreign – Rio, Anglo, the gold majors • Australian – BHPB, WMC • A number of significant company failures (Pasminco, Western Metals, Gympie, Sons of Gwalia) • A tiny mid tier • A diminishing number of active smaller companies

8. In 2004 - Golden times for the industry • The disappearance of the listed Australian mining industry has coincided with a mining boom • … resulting in a high level of industry profitability and major capital investment in new capacity • … but mineral exploration is surprisingly subdued. Why? • the effects of consolidation • the disappearance of the “cashed-up junior explorer” • very few “exciting” discoveries • junior companies focusing on production vs exploration

9. So how do we rebuild an Australian-owned mining industry? • Some seeds were sown in the nickel boom • exploration-driven success with Jubilee and MPI • several strong juniors, but mostly re-working old mines • … and success by enterprising locals offshore (Oxiana, Kingsgate, Pan Aust) • But there has been no broadly-based recovery in the locally-owned mining industry • … and local investors have largely stayed on the sidelines

10. Two underlying issues • The Australian industry has not delivered real exploration success • comparison to the North American majors • distinction between bulk commodities and metals • Australian institutions have not seen the same value in Australian-owned resources assets • cycle-pickers rather than long term investors • thus the need to secure equity offshore • disadvantage relative to North American and UK-based companies (pool of funds, Canadian property, etc)

11. Two prerequisites? • Exploration success • exploration funding will follow success • Aggressive mining entrepreneurs • we have some – Andrew Forrest, Keith Liddell • … but we need more The financial markets won’t lead the charge, but we need them to follow

12. Exploration – the landscape • Australia remains a competitive location for exploration • Macroeconomic stability • Supported by a favourable regulatory environment • pro-development Federal and State governments • Australia and its states always rank well in industry competitiveness surveys • moderate tax and royalty regimes • streamlined native title resolution processes • no corruption

13. … and remains highly prospective & under-explored • Much of country is under cover • New exploration techniques allow exploration under this cover

14. … but there have been few recent discoveries • Exploration expenditure has been low for some years in line with weak prices • Gold exploration dominated, but was mostly around existing mines • Resulting in only a handful of new mine discoveries in this decade • Prominent Hill Au/Cu, S.A. (Minotaur / BHP) • Wingina Well Au, Pilbara (De Grey) • Waterloo Ni, Yilgarn (LionOre) ... who can think of any more?

15. What will change this? • Create a more favourable climate for exploration • South Australian initiatives • taxation incentives and R&D treatment play a part, but not an important one • Encourage investors to support junior explorers • Lion Selection has been a strong supporter • other funds are being established • Encourage producers to re-invest profits in exploration • it is the major driver of long term value creation … but the most important catalyst will be exploration success

16. Exploration Expenditure by State - 2003 South Australian exploration initiative Total Australia $735 million

17. SA initiative – ‘A Plan to Accelerate Exploration’ • Package designed to remove or overcome impediments a. combined State-wide and region-by-region approach • Addresses issues such as • land access • difficulties of exploring under cover • Action plans include • State funded R&D programmes • increased PIRSA staffing • “dollar-for-dollar” partnership on drilling in target regions • Resource Industry Ambassador • Spending $22.5 million over 5 years • Aimed at boosting annual minerals production to $3 billion by 2020

18. Buka - Profile Listed ASX: BKA Issued Capital 138.5 million ord. shares 100.0 million options (at $0.20-$0.225) Market Cap. $48 million $73 million (fully diluted) Board Robert Champion de Crespigny AC, Chairman John Richards, Managing Director Mark Carnegie Angus Collins Tom Klinger Ronald Walker AC CBE Holders Investor Group 30.5% Triako Resources 24.7% Delphic Holdings 16.2%

19. Our strategy at Buka • Buka has traditionally been an explorer-developer • Lady Annie • pre-feasibility study completed on 13,000 tpa SX-EW copper project • ready to go but lacking critical mass • Lady Loretta • JV with Noranda • high quality undeveloped zinc resource • awaiting an improvement in the zinc market

20. Our strategy at Buka • Buka is now a 21st century resource finance house • an investor and financier of resource companies and projects • an opportunistic investor • a friend to emerging mining companies • A very different model from previous mining houses • very small executive team • active Board of Directors • Initial investments • CopperCo • Gympie Gold

21. CopperCo • Buka is the cornerstone shareholder (22%) • Buka’s Lady Annie is the cornerstone asset • A regional exploration play • large land position north of Mt Isa • oxide and sulphide copper focus • … and a strong management team • Brian Rear • Mineral Securities

22. Buka and its partners have relaunched exploration at Gympie Eldorado • Buka is in syndicate with Mizuho and Investec • formed to acquire Gympie Gold debt • now acquiring Gympie Eldorado assets • $4-5 million 2004/05 exploration programme commenced • stop-start exploration history has not done the field justice • key target is South Inglewood prospect

23. Questions?