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Technical Reports

FINEX ‘10 Exploration meets the City. Technical Reports. Who needs them?. An early miner. UGH !. The first technical report?. Las Medullas, Leon, Spain. Roman gold mine. Hydraulic mining. Las Medullas, Leon, Spain. Major alluvial gold mine Over 1km across 500 million m 3 extracted

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Technical Reports

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

  2. An early miner Finex '10 October 2010

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

  4. Las Medullas, Leon, Spain Roman gold mine Finex '10 October 2010

  5. Hydraulic mining Finex '10 October 2010

  6. Las Medullas, Leon, Spain • Major alluvial gold mine • Over 1km across • 500 million m3 extracted • Grade 3 g/t • 60,000 workers (slaves) • 200,000 oz p.a. Roman gold mine Finex '10 October 2010

  7. Mediaeval mining-Agricola 1555 Finex '10 October 2010

  8. The Industrial Revolution Finex '10 October 2010

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

  10. 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 The Stock Exchange, London Finex '10 October 2010

  11. London-global mining finance Finex '10 October 2010

  12. London capital backed: • Californian gold rush 1849 London-global mining finance Finex '10 October 2010

  13. London capital backed: • Klondike gold rush 1897 London-global mining finance Finex '10 October 2010

  14. 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 London-global mining finance Finex '10 October 2010

  15. Prospectus issued 1887 • £250,000 raised for 230,000 shares • Promotors took only 200 founder shares • But retained 3/15 (20%) of any profits Gold Fields of South Africa Ltd Finex '10 October 2010

  16. 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” Where was the CPR? Finex '10 October 2010

  17. 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 London-global mining finance Finex '10 October 2010

  18. 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 Chapter 19 Finex '10 October 2010

  19. Consolidated Gold Fields • Anglo American • Union Corporation • General Mining • Selection Trust Reign of the Mining Finance House Finex '10 October 2010

  20. 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 Canada and Australia Finex '10 October 2010

  21. 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 London’s response Finex '10 October 2010

  22. Suitability for listing • No minimum free float • Working capital • Independent Competent Persons Report • Ongoing reporting obligations Requirements for mining listing on AIM Finex '10 October 2010

  23. Competent Persons Report • Exploration updates • Resource estimates Technical reports vital Finex '10 October 2010

  24. Convergence in Australia, Canada, South Africa • US regulators much more restrictive • Russia-an acquired taste • China-not yet Standards vary Finex '10 October 2010

  25. The Russian system Finex '10 October 2010

  26. 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) Russian reserves Finex '10 October 2010

  27. 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) Western reserves Finex '10 October 2010

  28. Chinese system Finex '10 October 2010

  29. 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) Australian resources Finex '10 October 2010

  30. Total mineral resources 25.253Mt • 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) Recalculation to Chinese standard Finex '10 October 2010

  31. 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? An Australian lesson Finex '10 October 2010

  32. Impact of Bre-X Finex '10 October 2010

  33. Management experience • Is the in house “qualified person” qualified? • Track record • Do the directors know what they are doing? • Have they done it before What to look out for Finex '10 October 2010

  34. Beware of silence after a run of news What to look out for Finex '10 October 2010

  35. Independent oversight • Ensure the consultant really is competent What to look out for Finex '10 October 2010

  36. Are the samples selective? • Is the cut off grade stated? • Are they true widths? What to look out for Finex '10 October 2010

  37. 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 What to look out for Finex '10 October 2010

  38. Conclusions Finex '10 October 2010

  39. Investors today are given more information than ever before Conclusions Finex '10 October 2010

  40. Investors today are given more information than ever before • It takes knowledge, experience and effort to make the most of it Conclusions Finex '10 October 2010

  41. Agricola put his finger on it- “Those who take an interest in … mining … should read studiously and consult expert mining people” Conclusions Finex '10 October 2010

  42. Ask yourself-does it look too good to be true? Lastly Finex '10 October 2010

  43. Mark Twain’s immortal words Always bear in mind Finex '10 October 2010

  44. The definition of a mine is a hole in the ground that belongs to a liar! Finex '10 October 2010

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