1 April 29 th -30 th New York SME – Current Trends in Mining Finance Peter N. Gray Managing Director Minerals Capital & Advisory Practice 41 West.

1

April 29th -30th � New York

SME – Current Trends in Mining Finance

Peter N. Gray Managing Director

Minerals Capital & Advisory Practice 41 West Putnam Ave Greenwich, CT 06830 (203) 992-1664

What is required of Mining Companies to raise Capital today?

2

Th

e F

ace

of

Min

ing

Fin

an

ce in

20

13

• It’s all in the eyes ……

• Darkness, shadows, gloom.

• Fear, perhaps panic

• Uncertainty

• Hysteria

• Claustrophobia

• Searching for a way out

• But there is light.

• We have a lot of digging out to do, but will emerge into the sunlight

• There is nothing like seeing the sun again.

3

US and Canada Precious Metals M&A: Announced Transaction Totals

4

US and Canada Precious Metals M&A: Sum of Transaction Values

5

US and Canada Base Metals M&A: Sum of Transaction Values

6

US and Canada Base Metals M&A: Sum of Transaction Values

7

8

“There’s a lot of opportunity for M&A out there. The seniors and the intermediates have watched higher metal prices cause their treasuries to fill up and that’s going to burn a hole in their pocket.”

-Rob McEwen CEO, Goldcorp Inc.

Quality is an issue. Ore grades have tumbled from an average of 12 grams per tonne in 1950 to roughly 3 grams in Australia, Canada and the US. In some cases, cutoff grades have dipped to 1 gram per tonne. "The next cutoff grade is dirt…..”

-Pierre Lassonde Chairman, Franco Nevada

“We have a tremendous choice of the things that we can invest in to grow. We are able to select only the best projects so that we actually do get some of the highest capital productivity….”

A slowdown in demand for minerals over the next five years makes cutting costs and boosting productivity a priority.

“I’m committed to drive an agenda of productivity and that will almost certainly be a top theme.”

- Andrew Mackenzie, Chief Executive, BHP Billiton

Exe

cuti

ve D

irect

ions

9

“"To be brutally frank, our industry lags the petroleum, manufacturing and aviation sectors and other more progressive and innovative heavy industry players in terms of operating practices – there is no reason why our industry should not use the best from all of these 'restless innovators'."

-Mark Cutifani CEO, Anglo American

“ …..what a disaster 2012 was for juniors. The market for initial public offerings came to a virtual standstill with volumes down 40% and proceeds collapsing by more than 80% to just $1.3 billion….. A reduction in average proceeds to junior companies to just $4 million….

“The capital strike by many mining and metals companies in the face of rising costs and softer prices in 2012 will continue until commodity prices recover sufficiently to encourage new investment.” -Lee Downham, Ernst & Young

“Appetite for controversy is decreasing…..there’s an expectation that most deals will be smaller and more digestible, triggered by companies with successful track records from both deal and project development.” -Tim Goldsmith, Price Waterhouse Coopers

Exe

cuti

ve D

irect

ions

10Em

erg

ing into

the L

ight

Middle Market Fundraising – Private Equity

11Mid

dle

-Mark

et

Fundra

isin

g1. Despite headwinds both the number of funds closed and

the amount of capital raised increased for the second consecutive year – signs of life

2. Majority of fundraising gains has stemmed from resurgence in larger vehicles – particularly in the USD 1-5 billion range

3. Commodity Traders and Resource Funds are starting to re-commit to the space and direct significant capital allocation.

4. Joint Ventures and Earn-in’s with Off-take contracts are becoming a common alternative financing avenue.

5. Earlier-stage/development capital is selectively available6. Royalty structures/streaming continues to have a seat at

the table, but Resources Funds typically take less of the upside economics.

7. Bridge Finance/Mezzanine finance is becoming more readily available with less stringent covenants/conditions than project finance or traditional bank lending.

12DIS

CIP

LIN

E is

Requir

ed

D - Development, Demand Drivers.

I - Innovation – productivity, grades/recovery, cash costs.

S - Sovereign Wealth, Supply constraints, Strategic partner.

C - Cost Control, Capital Adequacy, Capital Availability, Cash.

I - International Capital – Family Office, Resource Funds

P - Planning, Private Equity, Productivity.

L - Long Life Assets, Liquidity Gap.

I - Investment Growth, Information.

N - Nationalism.

E - Exploration, Execution, Expectations, Emerging Markets.

Minerals and Capital Advisory Team

13

Peter GrayManaging Director

914.263.9428

25+ years in project finance, investment banking and mergers and acquisitions.

Headed KPMG’s Energy and Natural Resources Group in Corporate Finance where he had global responsibilities for mining and metals and developed and implemented a middle-market investment banking strategy in energy advisory focused on emerging mining and energy companies.

Joel SchneyerManaging Director

303.619.4211

30+ years as an investment banker, financial analyst, metals trader and geologist.

Founded Mercantile Resource Finance, an advisory firm to the natural resource sector.

Formerly Manager of Derivative Finance in the metals group of Barclays Bank, and a Senior Analyst in the New Business and Strategic Planning Group, at Billiton Royal Dutch Shell.

Ray McCormickManaging Director

724.933.6600

30+ years of direct mining and energy finance experience, with an international perspective.

Founded Monarch Financial Corporation, a private mining investment banking firm which he managed for over 20 years.

VP and Manager of Mining Section at Mellon Bank.

Consulting mining and geological engineer with John T. Boyd Company

Project Engineer and Mineral Economist with Consol Energy

Ricardo CampoyManaging Director

646.382.4000

34+ years as a mining engineer, investment banker and financial advisor for resources industries, financial institutions, and investment funds.

Former Managing Director and Head of the Mining and Metals Group for WestLB in New York.

Served on a number of mining company boards over the years and currently serves on the boards of General Moly Inc., Forsys Metals Corp., and Endeavour Silver.

Leading Middle Market Investment Bank

Headwaters is a privately owned investment banking firm and member of FINRA

We are the leading firm serving the private wealth industry’s clients who are business owners and entrepreneurs. Our firm’s professionals have over $227 billion of transaction experience. Our national footprint and global reach give us unparalleled access to strategic corporate buyers around the world. Over 20% of our

revenue is generated from cross-border transactions. Excess of $1BN per year in transactions for past 5 years

Mergers & Acquisitions

Proprietary fund: Headwaters Capital Partners

Family office capital

Senior debt / Bank debt Mezzanine debt Private equity Project finance Restructuring advisory

Corporate Finance

Merchant Bank

Managing transition and governance issues for family owned businesses

Providing advice regarding growth strategy: building more valuable companies for family owners

Sister company Headwaters|SC

Integrated Business Services

Sell-side advisory Buy-side advisory Management buyouts Fairness opinions Restructuring advisory

14

Industrials TMT

Consumer RetailHealthcare

Business Services

Energy & Natural Resources

The Headwaters Difference

Award-winning client advice Deep pool of transaction experience (over $227 billion) National footprint (10 offices) Global reach (17 countries, 29 offices) Focused industry coverage (specialists, not generalists) Full product/service offering #1 investment bank for private wealth in the US Proprietary capital: we can invest; unique access to

family office capital Long history of success Teamwork unrivalled in the industry

Capabilities. Culture. Advocacy. Results.

15

INVESTMENT BANK OF THE YEAR

INVESTMENT BANK OF THE YEAR

INTERNATIONAL INVESTMENT BANK OF THE

YEAR