John Meyer Partner, Mining Analyst

1. Financing Junior Exploration Private Equity / Venture Capital Financing John MeyerPartner, Mining Analyst

2. Private Equity / Venture Capital Financing • Private, single ownership • Private, multiple ownership • Pre-IPO • Small cap market ( AIM, TSV, ASX ) Private Equity / Venture Capital Seed funding • Entrepreneurs • Funds – Pension funds • Family offices • Endowments • Development finance • Genius traders • Industry insiders Investor types Further funding Growth / Expansion Yet more funding • Trade sale • IPO • Cash Flow generation • Liquidation • Reversal / Merger with listed entity Exit strategy Liquidity event

3. Private Equity / Venture Capital Financing Most of us have been tempted into some form of private equity investment Early stage exploration Can give great returns – but need to be patient and offer on-going funds Processing opportunities More expensive but can give good return and often takes longer than planned Later stage exploration Usually in tougher locations – DRC, Nigeria, Zimbabwe, Cameroon Assets are often known and abandoned by previous miners Quality Producers Private equity can buy mines off owners for the creation of greater value Through injection of new capital, expertise and better management Mines are often starved of cash when privately owned Government ownership is often little better, once the politicians have had their way new capital can give way to an outflow of funds to support other political ideas Service

4. Private Equity / Venture Capital Financing • Opportunistic • Can go into tough places without fearing the exit of shareholders Being Private Value Creation Asset traders • Longer term investment • Less pressure for immediate result • Don’t need to announce every pitfall • This is changing depending on investor types – suggesting a convergence of private and public funding practices • Manage for longer term value gain Time pressure Can take time to maximise value More time can enable better solutions • Some funds have great expertise • Funds can cross-pollinate ideas • Bring further access to funds Expertise Product development can enable better prices • Product marketing • Stock marketing / promotion for investment Marketing Good marketing can add value to your product

5. Private Equity / Venture Capital Financing Exit scenarios Liquidity / Funding • Easier to raise further funds • - even in times of crisis • Investors can buy & sell more easily • Circumstances change and you have an exit Valuations Compliance • Regulators are getting tougher • Am army of lawyers and accountants await you Investor protection Regular news flow transparency • Discipline of a public company forces teams to respect investors. • Good Corporate Governance is demonstrably shown to add value • Board seats, committee members, audits, hedging Discipline Corporate governance RESPECT Why use public markets? VC & PE funds use small company public markets What makes companies work better? RESPECT YOUR INVESTORS

6. Private Equity / Venture Capital Financing Funds - both sides need to play their part in the contract Passive funds Great if you can find them Likely to cause more aggravation but should help to get to end result Will push for involvement and better terms Active funds Vulture funds Best to avoid these – they will pick over your bones Quality Off-take funds Normally very supportive and focused on the production of product Service GLG, Och Ziff type funds, looking for high leverage and quick returns These funds don’t generally do private equity as it takes too long Typical private equity life is +/- 10 years ( 5 years of investment + 5 years post investment ) Hedge funds

7. Private Equity / Venture Capital Financing Valuation driven – keen to help and to see asset development Quarterly reporting is generally required by fund investors now Funds – Advantages: More cash Due Diligence gives new expertise and confidence for new investors Longer investment horizon Help with legal, political, financial and technical issues Quality Experienced management teams in finance and mining – usually! Funds can be tempted to recruit / replace key personnel Incentive planning, alignment of interests with investors Service

8. Private Equity / Venture Capital Financing Funds – Disadvantages: Funding is sometimes offered as debt with tough terms Equity can be offered at opportunistic prices Terms can be tough here Shareholder agreements can be tough and compliance can be expensive, particularly if money is sourced from Agencies Veto rights are normal Quality Board representation can change strategy Drive Ensure focus on production of results for profitability and growth Service

9. Private Equity / Venture Capital Financing New fund developments Funds are changing their form – fees are under pressure Henderson offer Darwin Strategic Anglo Pacific look for Royalties Blackrock invested $110m into London Mining for a 2% revenue related royalty on Iron ore sales from the Marampa mine Quality Service

10. Private Equity / Venture Capital Financing Case Studies Offers for finance are like busses – you don’t see one for ages and then three come along all at once Copper project Chile Raised $20m – offers from Offtakers, Hedge fund, Family office this summer. Vanadium project Kazakhstan Series of investment rounds in London, Family office supported by mining professionals. Ex Rio Tinto team Uramin Sold Namibian uranium mines to Aviva, the French nuclear company Quality Hostile offer from Cathay Fortune Investments (China) Discovery is currently commissioning a copper mine in Botswana Discovery Metals Service Hana Mining Agreed offer from BarCap – Hana holds ground next to Discovery Metals

11. Happy Halloween Any resemblance to a celebrity in the news is entirely coincidental

12. Contact us SP Angel 35 Berkeley Square London W1J 5BF Tel 020 3463 2260 Fax 020 7629 1341 Website www.spangel.co.uk