Segue Resources (ASX:SEG) Presentation Stockwatch Feb 2012

Emang Manganese ProjectBuilding a New Manganese Project in South Africa

February 2012

DISCLAIMER

Disclaimer

•This presentation has been prepared by Segue Resources Limited (Segue or the Company). It contains general information about the Company’s activities current as at the date of the presentation. The information is provided in summary form and does not purport to be complete. This presentation is not to be distributed (nor taken to have been distributed) to any persons in any jurisdictions to whom an offer or solicitation to buy shares in the Company would be unlawful. Any recipient of the presentation should observe any such restrictions on the distribution of this presentation and warrants to the Company that the receipt of the presentation is not unlawful. It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation or any information, opinions or conclusions expressed in the course of this presentation.

•This presentation is not a prospectus, product disclosure document or other offering document under Australian law or under any other law. It has been prepared for information purposes only. This presentation contains general summary information and does not take into account the investment objectives, financial situation and particular needs of any individual investor. It is not financial product advice and investors should obtain their own independent advice from qualified financial advisors having regarding to their objectives, financial situation and needs. Segue nor any of their related bodies corporate is licensed to provide financial product advice.

•This presentation and information, opinions or conclusions expressed in the course of this presentation contains forecasts and forward looking information. Such forecasts, projections and information are not a guarantee of future performance, involve unknown risks and uncertainties. Actual results and developments will almost certainly differ materially from those expressed or implied.

•There are a number of risks, both specific to Segue, and of a general nature which may affect the future operating and financial performance of Segue, and the value of an investment in Segue including and not limited to title risk, renewal risk, economic conditions, stock market fluctuations, manganese demand and price movements, timing of access to infrastructure, timing of environmental approvals, regulatory risks, operational risks, reliance on key personnel, reserve estimations, native title risks, foreign currency fluctuations, and mining development, construction and commissioning risk.

•You should not act or refrain from acting in reliance on this presentation, or any information, opinions or conclusions expressed in the course of this presentation. This presentation does not purport to be all inclusive or to contain all information which its recipients may require in order to make an informed assessment of the prospects of Segue. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation before making any investment decision. Recipients of this presentation must undertake their own due diligence and make their own assumptions in respect of the information contained in this presentation and should obtain independent professional advice before may any decision based on the information. No representation or warranty, express or implied, is made in relation to the fairness, accuracy or completeness of the information, opinions and conclusions expressed in the course of this presentation. To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and, to the maximum extent permitted by law, no responsibility or liability is accepted by the Company or any of its officers, employees, agents or consultant or any other person as to the adequacy, accuracy, completeness or reasonableness of the information in this presentation. To the maximum extent permitted by law, no responsibility for any errors or omissions from this presentation whether arising out of negligence or otherwise is accepted. An investment in the shares of the Company is to be considered highly speculative.

•The exploration targets or conceptual exploration targets in this presentation or expressed during the course of this presentation are subject to completion of the necessary feasibility studies, permitting and execution of all necessary infrastructure agreements. In relation to any statements pertaining to future exploration targets or conceptual exploration targets, the nature of the exploration target means that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

•This presentation and information, opinions or conclusions expressed in the course of this presentation should be read in conjunction with Segue's other periodic and continuous disclosure announcements lodged with the ASX, which are available on the Segue website.

•Some statements in this presentation regarding future events are forward-looking statements. They involve risk and uncertainties that could cause actual results to differ from estimated results. Forward-looking statements include, but are not limited to, statements concerning the Company’s exploration programme, outlook and target sizes. They include statements preceded by words such as “potential”, “target”, “scheduled”, “planned”, “estimate”, “possible”, “future”, “prospective” and similar expressions.

Competent Person Statement

•The information in this report that relates to Exploration Results and Exploration Targets at the Emang Manganese Project is based on information reviewed by Mrs Adelle Mossop, BSc (Hons) Geology, Pr NatSci. Mrs Mossop is a full time employee of Sound Mining Solution and is appointed as consulting geologist to Tenure Minerals Consultants project team. Mrs Mossop has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mrs Mossop consents to the inclusion in this presentation of the matters based on her information in the form and context in which it appears.

•The information in this report that relates to Australian Mineral Resources and exploration results is based on information compiled by Mr Simon Fleming who is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined by the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Fleming consents to the inclusion in this presentation of the information in the form and context in which it appears.

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MANGANESE PRICE OUTLOOK

• Current manganese price is US$4.75/dmtu, as determined by BHP Billiton for China delivery

• Manganese prices have fallen from 2007/08 highs but are still well above historic levels

• Macquarie Bank is forecasting manganese prices into China to increase to US$6.00/dmtu by 2013

• Global production is forecast to increase in line with growth in steel production (4-5% p.a.)

• Manganese represents less than 1% of the cost of steel production for a blast furnace

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MANGANESE PRICE FORECAST

Source: Macquarie Equities

BLAST FURNACE INPUT COSTS

Source: Segue Resources

Japanese price 48% Mn, FOBChinese price 43-44% Mn, CIF

COMPANY HIGHLIGHTS

• Segue Resources (ASX: SEG) is a manganese exploration company, focussed on the Emang Manganese Project in the Postmasburg Manganese Field in South Africa

• Segue Resources is earning a 51% interest by funding the Initial Drilling Programme and Bankable Feasibility Study

• The Emang Project has the potential to contain over 10-15 million tonnes of medium grade manganese ore (28-40% Mn) within 30m of surface1

• A maiden JORC-compliant resource is due to be released in 1Q 2012 – less than six months from commencing drilling

• Segue Resources holds exploration licences in the Pardoo region of Western Australia which contain iron ore (magnetite) and base metals

1. The potential quantity and grade of the above Exploration Target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource

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CORPORATE SUMMARY

ASX stock code: SEG

Share price: A$0.03

Shares on issue: 462.0m

Options on issue: 11.8m (A$0.051, 8/11/14)

Market capitalisation: A$13.9mAs at 1 February 2012

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SHARE PRICE CHART (A¢/SHARE)

SHAREHOLDER ANALYSISCOMPANY OVERVIEW

Source: Iress

Source: Advanced Share Registry

SUBSTANTIAL SHAREHOLDERS

Nigel Tarratt Super Fund 8.4%

MIMO Strategies Pty Ltd 6.0%

Breamline Investments Limited 5.4%

Source: Substantial shareholder notices

EMANG PROJECT – EARLY SUCCESS

• Covers 1,668 hectares on the western limb of the Postmasburg Manganese Field

• Mineralisation close to surface over a significant portion of the project area

• Initial Drilling Programme of 62 reverse circulation and 9 diamond drill holes completed

• Drilling is focussed on an open pittable exploration target of 10-15Mt at 28-40% Mn1

• Intersected considerable manganese mineralisation within 30m of surface

• Maiden JORC-compliant resource due to be released in 1Q 2012

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1. The potential quantity and grade of the above Exploration Target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource

PORT ELIZABETHCAPE TOWN

ACHIEVEMENTS TO DATE

• Fully funded for initial acquisition and first stage of drilling

– A$3.53 million raised to fund the upfront acquisition payment and Initial Drilling Programme

• Exploration contract awarded and drilling commenced in September 2011

– ZAR14 million Initial Exploration Programme awarded to Tenure Mineral Consultants

• Initial drilling programme completed with exceptional results

– 62 RC and 9 diamond holes drilled with ~80% of holes intersecting manganese

• Prospecting right renewed for 2 years to November 2013

– Prospecting right includes the provision for trial mining

• A$/ZAR has strengthened 11% from July 2011

– Expenditure to acquire a 51% interest in Emang has reduced by ~A$0.75m

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OUTSTANDING DRILL RESULTS

• Initial Drilling Programme to earn a 30% interest in the Project at a cost of ZAR14m (A$1.83m)

• A total of 62 reverse circulation and 9 diamond drill holes completed for 2,750m

• 80% of drill holes intersected manganese with an average thickness of 5.9m

• 50% of holes contained multiple intersections with up to 14.0m of total manganese intersected

• Assay results have confirmed significant manganese mineralisation over a zone of 2,700m x 800m

• Initial metallurgical testwork results due 1Q 2012

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DIAMOND DRILL RIG ON SITE

REVERSE CIRCULATION DRILL RIG ON SITE

REVERSE CIRCULATION DRILL INTERSECTIONS

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MPR06 9.0m @ 22.7% Mn from 14.0m

incl. 3.0m @ 32.6% Mn from

15.0mMPR08 11.0m @ 22.3% Mn from 25.0m


25.0mMPR67 7.0m @ 34.1% Mn from 21.0m


27.0mMPR68 6.0m @ 23.4% Mn from 24.0m

incl. 3.0m @ 32.0% Mn from 27.0m

MPR35 4.0m @ 27.1% Mn from 30.0m

incl. 1.0m @ 42.4% Mn from 30.0m

MPR34 16.0m @ 25.9% Mn from 32.0m

incl. 5.0m @ 34.1% Mn from 43.0m

MPR40 12.0m @ 22.8% Mn from 54.0m


58.0mMPR41 13.0m @ 26.3% Mn from 48.0m

incl. 2.0m @ 39.3% Mn from 49.5m

CLOSE TO INFRASTRUCTURE

• Located close to essential infrastructure including rail, water, power and roads

• A rail siding located 2km to the east of the project connects to the main rail haulage lines

• Transnet is considering expanding manganese rail and port export infrastructure to 12Mtpa

• Water available from the Vaal Gamagara pipeline which services Sishen and Postmasburg

• Grid power available adjacent to the property

• Segue is reviewing infrastructure alternatives to establish various transport routes

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MAIN MANGANESE RAIL ROUTES AND EXPORT PORTS

PARTNERING FOR SUSTAINABLE DEVELOPMENT

• Emang Mmogo Mining is Segue’s Black Economic Empowerment partner

• Represents Historically Disadvantaged South Africans

• Mrs Virginia Mongwaketse (Chairperson of Emang Mmogo Mining) is from the Northern Cape Province and brings valuable political experience

• Board and shareholders of Emang Mmogo Mining have extensive knowledge of the Postmasburg and Kalahari Manganese Fields

• Emang Mmogo Mining will enhance the project and assist in exceeding project milestones and timelines

• Emang Mmogo Mining is responsible for the joint venture company meeting all BEE and Broad Based BEE requirements

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PARDOO IRON-ORE AND BASE METALS

• 100% interest in 4 exploration tenements in the Pilbara region of Western Australia

• Pardoo Magnetite Project located 120km east of Port Hedland and 15km from the coast

• Davis Tube Recovery testwork produced average concentrate grade of 66.0% Fe

– 66.0% Fe, 2.84% SiO2, 0.32% AlO2, 0.0037% P

• Pardoo Nickel Project contains inferred resource of 50Mt @ 0.30% Ni and 0.13% Cu

• Red October Resources Ltd currently farming into the Pardoo Nickel Project

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JORC Classification

Cut-off (%Ni)

Material Type

Tonnes (Mt)

Ni(%)

Cu(%)

Co(%)

S(%)

Inferred 0.1 Weathered Sulphide

5.5 0.25 0.18 0.03 0.10

Fresh Sulphide

44.5 0.31 0.12 0.03 2.96

Total 50.0 0.30 0.13 0.03 2.65

Inferred 0.3 Weathered Sulphide

1.4 0.38 0.22 0.04 0.11

Fresh Sulphide

21.7 0.41 0.12 0.03 3.37

Total 23.0 0.41 0.13 0.03 3.18

PARDOO TENEMENT LOCATION

PARDOO NICKEL PROJECT RESOURCE ESTIMATE

EXPERIENCED LEADERSHIP

• Dr Eric Lilford – Chairman– 12 years investment banking and commodities research experience including corporate finance and project finance– Significant operational experience including large underground gold, platinum, copper and coal mines

• Steven Michael – Managing Director– 15 years investment banking and mining research experience with Royal Bank of Canada, Macquarie Bank and

Rothschild– Significant experience in debt and equity financing of mining projects across the global resources sector

• Ian Benning – Executive Director– 16 years investment banking experience, dealing with project origination, technical evaluation and project financing – Head of Investment banking – Mining & Metals for ABSA Capital

• Nicholas Ong – Non-Executive Director– 7 years experience as principal Adviser at the Australian Securities Exchange (ASX)– Previously a member of the ASX JORC Group and has overseen the admission of more than 100 companies on the ASX

• Nikolas Rhodes – Project Manager– 20 years experience in mining operations in South Africa, Fiji Islands, Zambia, DRC and India– 3 years of project work experience in South Africa on Platinum projects

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INVESTMENT HIGHLIGHTS

• Potential to discover a significant quantity of export quality manganese

• Drilling indicates mineralisation is shallow and likely to be suited to open pit mining

• Potential for early cashflow from stockpiles, trial mining and mine gate sales

• Close to infrastructure with multiple transport and export options

• Experienced management team in Australia and South Africa

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OUTCROPPING MANGANESE MINERALISATION

ENTERING EMANG MANGANESE PROJECT

NEXT STEPS

• Maiden JORC-compliant resource estimate

• Second tranche payment to BEE partner

• Commence Scoping Study

• Establish potential for mine gate sales

• Establish export infrastructure options

• Potential to acquire additional manganese tenements

• Assess alternatives for Pardoo Magnetite Project

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1Q 2012

1Q 2012

2Q 2012

1H 2012

1H 2012

Ongoing

1H 2012

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ADDITIONAL SLIDES

FAVOURABLE COMMERCIAL TERMS

• Segue to acquire a 30% interest in the Emang Manganese Project by:

– Payment of R7m (~A$0.97m) on completion of due diligence

– Completing Initial Drilling Programme of R14m (~A$1.83m)

– Payment of R7m (~A$0.86m) on completion of Initial Drilling Programme

– Payment of R7m (~A$0.86m) if a JORC measured & indicated resource of 10Mt at 34% Mn

• Segue to acquire an additional 21% in the Emang Manganese Project by:

– Completing a Bankable Feasibility Study with minimum expenditure of R21m (~A$2.58m)

• Segue to hold three of five seats on the Board of the joint venture company

• A royalty of A$0.75/t payable on measured & indicated resources up to 25Mt

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POSTMASBURG MANGANESE FIELD

• Northern Cape Province contains the bulk of South Africa’s manganese reserves and produces ~20% of global manganese ore1

• Postmasburg Manganese Field was discovered in 1922 and was mined by Assmang and Billiton from 1960 until the 1980’s

• Production ceased due to the discovery of the higher grade Kalahari Manganese Field (+44% Mn)

• Increased demand for medium grade manganese ore (34 − 44% Mn) has lead to renewed exploration activity in the Postmasburg Manganese Field

• Several new manganese mines have commenced production from the Postmasburg Manganese Field in the past 5 years

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Mine Ownership

Macarthy Blackrock Macarthy Limited

Bishop PMG Mining

Morokwa National Mining Limited

Lomoteng Private

Lohatlha Chabua Minerals Limited

Driehoekspan Maremane Mining Limited

Glosam Assmang

Boskop DCD Engineering

Kareepan Private

Manganore Union Mines

PROJECTS IN THE POSTMASBURG MANGANESE FIELD

1. Source: International Manganese Institute

SOUTH AFRICA DOMINATES HIGH GRADE MANGANESE MARKET

• South Africa is the world’s largest producer of high grade (>44% Mn) manganese ore

• China is the largest producer of manganese ore but at a much lower grade (~22% Mn)

• Production of manganese ore is highly concentrated amongst 6 countries

• 85-90% of manganese ore used as an alloying element in the production of steel

• Average manganese content in steel is approx. 7.5kg per tonne of steel

• Manganese demand is highly correlated to steel demand but with only a small cost impact

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FORECAST GLOBAL STEEL PRODUCTION

Source: Hatch Beddows / Assmang

MANGANESE GRADE AND PRODUCTION BY COUNTRY

Source: Hatch Beddows / Assmang

Segue Resources Ltd

ASX Code: SEG

Level 8, 225 St Georges Tce

Perth WA 6000

Phone: +618 9486 4699

Email: [email protected]

Website: www.segueresources.com