Exploration and Mining Trends in the Digital Age: Global Outlook and Issues in Copper

Issues and Trends Impacting Mining Exploration Today

CESCO Exploration Forum Santiago, Chile

7 April 2014

Tim AlchV.P. & Senior Minerals Business Analyst

Behre Dolbear & Co.+1.845.480.1434

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2

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Behre Dolbear

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sponsor mineral development

– Our capabilities span managerial, technical, and financial issues

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More information about Behre Dolbear is shown at the end herein

and at our website www.dolbear.com and available upon request

3

http://www.dolbear.com/

Recent and current trends

All resources are not economic

Issues to examine and consider

4

Overview

5

Metals Prices Rose in Past 10 Years, Especially

Relative to Price Cycles Since 1970

Data Source: USGS and LME

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

$ P

er T

on

ne

Nic

kel

$ P

er T

on

ne

(Cop

per

, L

ead

, Z

inc,

Alu

min

um

)

Nominal Industrial Metal Average Prices

1970 – 2012

Aluminum Copper Lead Zinc Nickel

Capital

Destruction

Capital

Creation

Capital

Destruction?

Global Economic Growth Improving

GDP growth best since Global Financial Crisis

China 7+% today is greater than 10% in 2005

USA steady modest growth may be leading

Europe appears to be healing, growing

Emerging Markets may surprise too

6

Growth Uneven Since Global Financial Crisis,

Is Forecast to Strengthen(Real GDP Growth - Year over Year %)

’00- ’09 2009

GFC

2010 2011 2012 2013e 2014 f 2015f

USA 1.9% -3.5% 2.5% 1.8% 2.8% 1.9% 2.8% 3.0%

EuroUnion 1.0% -4.2% 1.9% 1.6% -0.6% -0.4% 1.1% 1.4%

OECD 1.3% -3.7% 2.9% 1.8% 1.4% 1.2% 2.1% 2.2%

Non-OECD 3.8% -1.5% 5.6% 4.8% 3.5% 2.5% 3.3% 3.7%

Brazil 2.9% -0.2% 7.5% 2.7% 0.9% 2.2% 2.4% 2.7%

Mexico 1.3% -6.1% 5.1% 4.0% 3.8% 1.4% 3.4% 3.8%

Peru 4.8% +0.9% 8.8% 6.9% 6.3% 4.9% 5.5% 5.9%

China 9.4% +9.2% 10.4% 9.3% 7.7% 7.7% 7.7% 7.5%

India 7.4% +9.1% 9.1% 7.0% 5.3% 4.9% 5.8% 6.5%

World 2.3% -2.3% 4.3% 3.0% 2.5% 2.4% 3.2% 3.4%

Source: World Bank Global Economic Outlook January 2014, June 2012

8

Emerging Markets Are Where Most

People Live and Economic Growth Is

Source: The Economist

Urbanization, industrialization in China, Asia, India, the Americas, Mid East, Africa, etc. drive industrial metals and energy demand

Security and stability of supply concern China, Korea, Japan, Mid East, etc. and of some industrial companies, e.g., technology or critical metals, fertilizer minerals, energy fuels (coal, uranium), etc.

Constraining supply: Declining ore grades and spending; High costs; Few large deposits; Governments; Changing Politics; etc.

Metals supply may struggle to meet demand in longer term

Prices may stay above long term average

Sporadic price spikes may/can/do occur

9

Reasons To Be Optimistic About

Industrial Metals Demand, Longer Term

China’s Population Continues to Urbanize

10

China’s Largest Mass Migration in History is Not

Done, Nor Are the World’s Rising Middle Class

In next 20 years, ~325 million more people to move to China’s urban areas

China’s middle class may double to 600+ million people by 2020

Worldwide ~2 Billion more people will be in urban areas in 2030

11

Worldwide Trend: More Money, More Consumers, More

Infrastructure = More Metals Consumed

Greater Per Capita GDP = More

TVs, Phones, Refrigerators, Heaters, Air

Conditioners, etc.

13

Source: Teck Investor Day Presentation November 2013: Dragonomics

We All Want Clean Clothes, AC, Hot Water,

Fresh Food, TV – Modern LivingDeveloping countries will continue to drive

long term demand for metals

14

Copper Used in a Typical New Apartment in China

(Source: Goldman Sachs, Bloomberg)

Kilograms

(kg)

Pounds

(lbs)

Stove 4.6 10

Water Heater 0.5 1

Air Conditioner 20.0 44

Washing Machine 0.8 2

Refrigerator 2.0 4

Flat Screen TV 0.1 0

Apartment Wiring 13.0 29

Total 41.0 90

15

As the World Modernizes, We Use More and

More Steel and Copper 1900 - 2012(Steel Use LHS : Copper Use RHS)

Source: World Steel Association, International Copper Study Group – Presented at Glencore Investor Day Presentation 10 Sept 2013

In Least Robust Scenario to 2030,

11 MT of More Copper May Be Needed

16

Source: International Copper Study Group – Presented at Glencore Investor Day Presentation 10 Sept 2013

World Copper Mine Production: 1900-2012

Production in 2013e ~18.0MT

17

Since 1900, when world production was less than 500 thousand tonnes copper, world copper mine

production has grown by 3.2% per year to 16.7 million tonnes in 2012. SX-EW production, virtually

non-existent before the 1960s, reached nearly 3.7 million tonnes copper in 2012.

Source: International Copper Study Group – ICSG Copper Fact Book 2013 & PR 20 March ‘14

Refined Copper Usage by Region

1960, 1980 and 2012

18

Source: International Copper Study Group – ICSG Copper Fact Book – 2013

Growth in refined copper usage has been especially strong in Asia, where demand has expanded more than five-fold over the last 30 years.

Slower Growth 7+% in China Today,

In Absolute Terms Is Double 2005

19

Source: Ministry of Commerce and Industry & CEIC Generate – Presented at Teck Investor Day November 2013

China Consumes Half the World’s Metals, Energy

Source: UBS

20

Copper Mine Production by Top 20 Countries 2012 (000 tonnes)

21


Chile accounted for over one-third of world copper mine production in 2012 with mine output of over 5.4 million tonnes copper.

22

Copper Mine Production by Region

1960, 1980, and 2012 (000 tonnes)


From less than 750,000 tonnes copper in 1960, copper mine production in Latin America rose to

more than 7 million tonnes in 2012. What China produces it consumes.

China’s Share of Global

Metals Use May Level Off

Source: The Economist and UBS

23

Mining Capex Lagged Rising Metal PricesNow Many Projects Are Being Cancelled

Since prices softened in ~2011

So have funding commitments

Projects have been cancelled

Exploration spending severely cut

Per Unit of Annual Production (US$)

Metal Prices Are Off Their Peak and

Down Since Last Year2006

Avg

Price

2007

Avg

Price

2008

Avg

Price

2009

Avg

Price

2010

Avg

Price

2011

Avg

Price

2012

Avg

Price

2013

Avg

Price

2014

Mar 26

2014

Mar 26

vs

2013 Avg

2014

Mar 26

vs

2011 Avg

Aluminum

($/lb)1.16 1.21 0.83 0.83 0.99 1.09 0.92 0.84 0.80 -5% -27%

Copper

($/lb)3.05 3.25 1.62 2.34 3.42 3.99 3.61 3.32 3.04 -8% -24%

Lead

($/lb)0.58 1.18 0.56 0.78 0.97 1.09 0.94 0.97 0.93 -4% -15%

Nickel

($/lb)11.01 17.25 4.62 6.65 9.87 10.38 7.95 6.81 7.12. +5% -31%

Zinc

($/lb)1.48 1.50 0.52 0.75 0.98 0.99 0.88 0.87 0.90 +2% -9%

Gold

($/oz)604 695 736 973 1,225 1,573 1,670 1,413 1,295 -8% -18%

Silver

($/oz)11.55 13.38 9.31 14.64 20.10 35.12 31.15 23.79 19.82 -17% -44%

25

As Capital Costs Rose So Did Sustaining and Operating Costs

26

Capital Intensity of Copper Projects

Almost Tripled From 2002 to 2011

Source: Dundee Securities Xstrata

Copper Mined Today Is From Lower Grade

Deposits = More Movement, Processing, Costs

27

Source: Wood Mackenzie – Presented at Glencore Investor Day Presentation 10 Sept 2013

28

Copper Cash Cost Curves 2000, 2007 and 2011 (US¢/pound)

C1 refers to cash costs, i.e., labour, energy, mining, processing

Source: Brook Hunt

Mining is Cyclical, Impacted by Many Risks

What happened since 2002 is in the past

The near term may/can be very different

You can lose a fortune being optimistic

Many already have, especially in the past two years

Risks in mining are technical and non-technical and vary

Behre Dolbear does not forecast prices. We focus on geo-technical, operating, business, financial risks and issues impacting exploration, development and operations

29

Metals and Mining Equities Are Down

Drying Up Funds For Exploration

Since 4Q11, investors had less interest in Global and North American mining equities and favored broad general market indices

A risk-off attitude is plaguing mining equities – still today – directly impacting capital available to fund exploration, development etc.

30

ACWI = iShares MSCI ACWI ETF (worldwide equity index) BWMING = Bloomberg LP worldwide mining index

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1/1/2010 1/1/2011 1/1/2012 1/1/2013

S&P 500 vs. TSX Global Mining ETF

TSX Global Mining Index ETF S&P500 ETF

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1/1/2010 1/1/2011 1/1/2012 1/1/2013

World Mining Index

BWMING Index ACWI

Current Environment for Mining Investment in

Exploration, Development etc. is Challenging

2013 was plagued with less GDP growth, weaker metals prices

– China’s GDP is at ~7.5%; transitioning, shifting priorities

– Commodity prices are off from recent highs

• Regulatory, political, and resource nationalism risks are rising

Investor focus is on returns, Growth at any, all cost, is not enough

– Mining companies have been writing down assets

– Expansion plans, new projects have been curtailed

– Many Junior miners lack sufficient capital

Margins are under pressure, as are Boards and Executives

Strengthening cash flow, Optimizing operations, Cutting costs, Sales of marginal assets, Reduced capex are goals

Selective, opportunistic M&A and investments can occur with Private Equity, SWFs, and SOEs taking greater interest in mining

31

Shift From Growth to Cost & Capex Control

Executives cut capex, refocused spending on higher quality assets, suspended projects and are partnering on certain projects

Private equity may capitalize on low valuations

Alternative, non-traditional investors SOE, SWF may opportunistically fill the gap

Strategic transactions may drive M&A

Tough markets may continue into 2015

Plus energy, power, water, labor, local issues impact funding and raising uncertainty

32

33

Top Ten Risks Facing the Mining and Metals Industry

Over Six Years – by E&Y 2013-2014(in red remained in top 10 over 6 years)

2008 2013

1. Skills shortage

2. Industry consolidation (not threat in ‘13)

3. Infrastructure access

4. Maintaining social license to operate

5. Climate change concerns (under radar in ‘13)

6. Rising costs (margin improvement)

7. Pipeline shrinkage (under radar in 2013)

8. Resource nationalism

9. Access to secure energy (under radar in ‘13)

10. Increased regulation (under radar in ‘13)

1. Capital dilemmas – Capital allocation and access – (new in 2009)

2. Margin protection and productivity improvement (was cost inflation)

3. Resource nationalism

4. Social license to operate

5. Skills Shortage

6. Price & currency volatility (new in 2010)

7. Capital project execution

8. Sharing the benefits (new in 2012)

9. Infrastructure access

10. Threat of substitutes (new in 2013)

Not All Resources Are Economic

• Markets are not static, nor are prices or costs

• There are many variables and a long period of time is involved. If it sounds too good, it likely is

• Inexperience, misleading statements, questionable practices require knowing who you are dealing with

• Best to have local presence, know how to do business

• No good substitute for independent technical opinions about geologic assumptions, methods, estimates by qualified experts re reasonableness, business potential

• Investors want/need independent verification

34

35

Finding and Evaluating Ore Is Costly

and Risky, With No Guarantees

36

Exploration To Discovery Is Just The Start,

From Discovery to Start Up Can Be ~17 Years Smaller, Discrete Targets Can Be Quicker

Depending on the Location, etc.

Source: Stephen Enders from Eurasian Minerals at SME

Current Trends in Mining Finance Conference April 2013

Study Technical & Non-Technical issues with expert, trained eyes

• Property Information

• Stable Regulatory Environment

• Geology and Resources

• Mining

• Mineral Processing and Metallurgy

• Infrastructure

• Products, Markets, and Sales

• Environmental and Permitting

• Financial Issues

• Development Costs and Schedule

• Political and Social Considerations

• Market

• Project Economics – Opex and Capex

Many, most projects today are delayed for non-technical reasons

37

Success Is Driven Not Only By Geology

Given the Time and Large Capital Involved

Mining Companies Need Stable Rule of Law

Projects and investors need to have stable rule of law to

earn competitive returns and maintain access to capital

thru cycles and volatile market conditions

Attracting investment is competitive and is impacted by

local economic and political systems, societal

issues, taxes, rules and regulations re

permits, corruption, etc.

Planning for different, changing risks is difficult

38

Mining companies, investors need confidence they have stable agreements that accommodate variable market conditions over long periods

Stakeholders evaluate projects in a risk-adjusted manner seeking to reduce risk exposure

Changing taxes, royalties, etc. deters investors

Countries perceived to have lowest political risk, all other things being equal are able to attract more of the global mineral investment and realize a premium for resources over countries where perceived instability exists

39

Uncertainty in Mining Deters Investment

The Americas is a Favorite Investment Destination

As shown in International Council on Metals and Mining (ICMM) Oct 2012

article ‘Mining’s Contribution to Sustainable Development’ about Regional

Project Investments in 2011 (based on Raw Materials Advisory Group data)

Canada, Brazil, Chile, Mexico, Peru consistently rank among the highest

40

RegionInvestments (US$ Billions)

Share(%)

Lain America 192 28

North America 124 18

Oceania 113 17

Africa 99 15

Europe 75 11

Asia 73 11

Total 676 100

Mining And Exploration Is Core To Building Wealth

There is a positive correlation between growth of a nation’s wealth and prosperity of its mining and minerals processing industry

Countries that stifle mining with detrimental political, economic, financial, and regulatory policies should be challenged to make changes that are more accommodative to its success

Only when a country recognizes critical need to adapt and restructure burdensome policies – will it truly optimize its economic potential

41

Attracting Investment Today is Very Competitive

• Investors can feel stymied by inconsistent, convoluted and changes in mining policy and terms and require trust with local stakeholders

• Changing taxes, royalties, etc. deters investors that require stability and consistency to earn a return and access to capital markets

• Local, state and federal level governments should work with and know operators and investors respond to stakeholder expectations

• To increase investment consistent, efficient law enforcement is best:

– Certainty – Security of Title/Tenement

– Confidence – Development Approvals

– Confidence – Social and Environmental Issues

– Confidence – Tax/Royalty Regime

– Acceptable Level of Sovereign Risk

42

Many People with Different Goals and Horizons

Geologists optimistically look for lode

Developers look for funds and mines

Bankers, Investors look for returns

Local people want jobs and stake

Governments want a piece

Mother & Human Nature can be at odds

43

Important Is To Have A Strategy To Realize Value

44

45

Applicable Valuation Methods By Stages

Exploration Stage

Development Stage

Feasibility Stage

Operating Properties

Company Reclamation Royalty

Properties

Income Approach Cash Flow

X X X X X

Market-Related Transactions

X X X X X

Market Multiples X X X Option/Real Option Values

X

Monte Carlo X X Replacement Cost X X

46

Relative Values By Stage Precious & Base Metals Indicative, Very Rough, Rules of Thumb

Precious Metals Base Metals

Early Exploration

Inferred Resources

Measured & Indicated Resource

Feasibility

Production

5.0 – 7.5

1.5 – 2.5 1.0 – 2.0

2.5 – 5.0 2.0 – 3.0

3.0 – 5.0

10.0 – 15.0 5.0 – 7.5

20.0 + 10.0 +

47

Valuations Should Utilize

More Than One Valuation Method

Theories Do Not Pay You

What is Some One Willing to Pay You?

No good substitute exists in-place of hands on knowledge, work, field experience when advising mining companies, investors, lenders, governments. All benefit from qualified expertise to:

Evaluate the inherent, unknown, business risks

Act as resident skeptic, test reasonableness of estimates, etc.

Rate, rank and opine on whether various project risk(s) are:

– High Risk - pose an immediate danger of failure, if uncorrected, may have a material effect (>15%) on project cash flow, performance and could lead to project failure

– Moderate Risk - if uncorrected can have significant effect (10%) on project cash flow and performance unless mitigated by some corrective action

– Low Risk - if uncorrected, may have little or no effect on project cash flow and performance

48

Truly Independent Opinion is Invaluable

Often experts are called on to the scene when:

– A property, project, transaction is off course

– Lenders and investors are out of patience

– Company and owners are out of money

– Despair has set in

Always best to be prepared and sleep at night

49

When To Call An Expert

Not exhaustive, rather indicative checklists. Each require trained, qualified experts’ review:

– Conceptual/Scoping Study

– Pre-feasibility Study

– Feasibility Study

Feasibility or Definitive Study – in very broad terms – is the document:

– Upon which a mine is approved by the Board of a mining company developing the mine

– If financing is required, that is evaluated by financial institutions in their decision-making process

– To which a completed and commissioned mine plan is compared to determine its commercial status

Caveat Emptor – If it sounds too good to be true – Get a 2nd opinion

50

Three Levels of Engineering Studies

Seeing Into the Future is Hard

51

Characteristics of Scoping, Pre-Feasibility,

and Feasibility Studies (1)

CATEGORY – Illustrative not exhaustiveCONCEPTUAL

STUDY/SCOPING STUDYPRE-FEASIBILITY STUDY FEASIBILITY STUDY

INTRODUCTION

Location, Topography, and Climate

Site location map

Ownership and Royalties

Claims list

Claims map

Current Status and History

Historical chronology

Information on past production, if any

•Yes

•No

No

No

No

•Yes

•No

Yes

No

No

•Yes

•Yes

Yes

Yes

Yes

GEOLOGY AND RESOURCES

Geological Description

Geological map

Geological cross-sections

Drilling, Sampling, and Assaying

Parameters

Drill hole location map

Sampling/assaying flow diagram and assessment

Assay check assessment and graph

Mineral Resource Estimate

Resource methodology determination and approach

Geologic model limits

Lithology/tonnage factors/code

Cumulative frequency of samples verses grade

Variograms

Resource Estimate

Yes

No

Yes

Yes

No

No

Yes

Yes

No

No

No

Industry Standards (NI 43-

101, JORC, etc.)

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes


101, JORC, etc.)

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes


101, JORC, etc.)

52




STUDY/SCOPING STUDY

PRE-FEASIBILITY

STUDYFEASIBILITY STUDY

MINING

Ore Reserve Estimate

Reserve and resource calculation parameters

Cutoff grade equations

Reserve and resource estimate

Mining Method and Plans

Mining parameters

Hydrology/geotechnical parameters

Mining equipment list

Consumables list

Material handling systems

Material handling equipment

Personnel list

Surface mining

Final pit and dump outlines

Incremental pit and dump outlines

Underground mining

General mine development

Mining approach (stoping, cut and fill, etc.)

Production Schedule

Historical production, if any

Annual ore and waste tonnage and grade

Mining Capital and Operating Cost Estimates

Mining operating cost estimates

Mining capital cost estimates

Assumed Values

No

Industry Standards

Yes, minimal engineering basis

No

No

No

No

No

No

No

Yes, simple outline

No

Yes, general outline

Yes, general approach

Yes

Yes, division of total

Yes, factored ±45%

Yes, factored ±45%

Test-Based Values

Yes

Industry Standards

Yes, some geotechnical data

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes, ±30%

Yes, from engineering

manuals ±30%

Test-Based Values

Yes

Industry Standards

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes, ±15%

Yes, from vendor quotes and

take-offs ±15%

53





PROCESSING

Ore Sampling and Test Work

Test work data

Processing Methods and Plans

Processing methods

Processing parameters

Equipment list

Consumables list

Personnel list

Material balance

Flow diagram

Site plan

General arrangement drawings

Production Schedule

Historical production, if any

Annual production tonnage and grade

Off-site Processing Cost Estimates

Concentration charges

Smelting and refining charges

Other charges

Material handling and transport

Insurance and sales charges

Processing Capital and Operating Cost Estimates

Processing operating cost estimates

Processing capital cost estimates

No, assumed values

Yes, general approach

Yes, minimal engineering

No

No

No

No

No

Yes, simple block diagram

No

No

Yes

Yes, division of total

No

No

No

No

Yes, factored ±45%

Yes, factored ±45%

No, preliminary data

Yes

Yes

Yes

No

Yes

Yes

Yes

Yes

No

Yes

Yes

Yes, preliminary estimate




No

Yes, ±30%


manuals ±30%

No, preliminary data

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes, quote

Yes, quote

Yes, quote

Yes, quote

Yes, quote

Yes, ±15%

Yes, from vendor quotes and

take-offs ±15%

54





INFRASTRUCTURE

Industrial Infrastructure Facilities

Facilities list

Power and water parameters

Full site plan

Social Infrastructure Facilities

Facilities list

Housing

Schools

Hospitals

Other

Infrastructure Capital and Operating Cost Estimates

Consumables list

Personnel list

Infrastructure operating cost estimates

Infrastructure capital cost estimates

Yes, with minimum detail

Yes, preliminary

No

Yes, with minimum detail

No

No

No

No

No

No

Yes, factored ±45%

Yes, factored ±45%

Yes

Yes

Yes

Yes

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes

Yes

Yes, ±30%


manuals ±30%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes, ±15%

Yes, from vendor quotes &

take-offs ±15%

MANAGEMENT, LABOR & ADMINISTRATION

Personnel

Personnel lists

Training requirements

Personnel Capital & Operating Cost Estimates

Consumables list

Personnel operating cost estimates

Personnel capital cost

No

No

No

Yes, factored ±45%

Yes, factored ±45%

Yes

Yes

No

Yes, ±30%

Yes, ±30%

Yes

Yes

•Yes

Yes, ±15%

Yes, ±15%

55



CATEGORY – Illustrative not exhaustive

CONCEPTUAL

STUDY/SCOPING STUDY

PRE-FEASIBILITY STUDY FEASIBILITY STUDY

MARKETS, PRODUCTS AND SALES

Markets, Products and Sales

Products

Volume

Prices

Sales organization

Sales Related Capital and Operating Cost Estimates

Personnel list

Consumables list

Sales related operating cost estimates

Sales related capital cost estimates

Yes, preliminary

Yes, preliminary

Yes, preliminary

No

No

No

Yes, factored ±45%

Yes, factored ±45%

Yes

Yes

Yes

Yes, preliminary

Yes

No

Yes, ±30%

Yes, ±30%

Yes

Yes

Yes

Yes, preliminary

Yes

No

Yes, ±15%

•Yes, ±15%

ENVIRONMENTAL AND PERMITTING

Environmental

Permit list

Environmental Impacts

Environmental Compliance Cost Estimates

Personnel list

Environmental related operating cost estimates

Environmental related capital cost estimates

No

Yes, preliminary

No

Yes, factored ±45%

Yes, factored ±45%

Yes

Yes

Yes

Yes, ±30%

Yes, ±30%

Yes

Yes

Yes

Yes, ±15%

Yes, ±15%

56





DEVELOPMENT SCHEDULE AND COSTS

Development Schedule

Development methodology

Development schedule

Development Costs

Personnel list

Development related operating cost estimates

Development related capital cost estimates

•Yes, preliminary

Yes, preliminary

No

No

No

•Yes

Yes

Yes

Yes, ±30%

Yes, ±30%

•Yes

Yes

Yes

Yes, ±15%

Yes, from vendor quotes &

take-offs ±15%

PROJECT ECONOMICS

Financial Issues

Taxes

Royalties

Fees

Licenses

Economic Issues

Economic parameters

Discount rate determination

Cash flows

Investor returns

Debt analysis

1.Sensitivities

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes, preliminary

Yes, preliminary

No

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

Yes, preliminary

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

57





SUMMARY AND RECOMMENDATIONS

Operational Parameters

Title and ownership

Geology

Ore reserves

Mining and processing rates

Development period and mine life

Metal/mineral recoveries

Sales

Operating cost estimates

Capital cost estimates

Financial Parameters

Cash Flows

NPV, IRR, and ROI

Mostly assumed and factored

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Some engineering basis

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Some engineering basis

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

As an operator and or investor it is important to know and

beware of geo-technical issues, costs, availability of secure

low cost power, skilled labor, infrastructure, local issues etc.

that impact investor returns. Today, in certain places:

New regulations, agencies, enforcement

officials, mechanisms create uncertainty and add to cost

Changing taxes, tariffs, royalties, takings, etc.

Licenses, permits and titles are less certain

Local opposition discouraging investment

Corruption, lack of transparency & accountabilty exist

All divert exploration dollars from going into the ground

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Know Your Neighborhood

Future is Bright, Focus on Local Risks

Our Modernizing World needs copper and other metals

Investors, lenders favor projects in areas where

governments, industry and local people are working to

create favorable investment environment

Management of political, regulatory, local risks, have in

place quality assurance/quality controls and procedures

and demonstrate good local stewardship are essential

Think long term and act with local conditions in mind

The combination of managing technical & non-technical

issues and risks help increase odds of project success

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Behre Dolbear

Provide technical, operating, financial, management

quality assurance/control risks and valuation studies

Advise clients in

mining, banking, investment, financial, legal and

accounting sectors and government agencies

We provide specialized and complementary services

– Technical Consulting

– Engineering Services

– Valuation and Financial Advisory

– Management Consulting

– Environmental and Societal Services

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Behre Dolbear

To meet client requirements, we select, integrate and manage our highly qualified and experienced specialists

– Each selected for specific skill-set and ability to give highest levels of insight, advice & recommendations

– Have experience in all technical & non technical issues & risks impacting brown & greenfield projects and providing lender due diligence, project monitoring and management advisory roles

– If other skills and experience are needed, our depth of talent and flexibility allows us to deliver them swiftly and efficiently

Tim AlchV.P. & Senior Minerals Business Analyst

Behre Dolbear & Co. +1.845.480.1434

[email protected]

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mailto:[email protected]

Behre Dolbear - A Worldwide Resource

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Exploration and Mining Trends in the Digital Age: Global Outlook and Issues in Copper

Business

industrial metals demand

metals supply

global economic growth

critical metals

china source

global financial crisis

industrial minerals

industrial companies