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Peculiar Knob Peculiar Knob DSO Iron Ore ProjectDSO Iron Ore Project

ItIt’’s the Grade that Counts!s the Grade that Counts!

Bob DuffinBob DuffinExecutive Chairman Executive Chairman –– WPG Resources LtdWPG Resources Ltd

Presentation to Sydney Mining ClubPresentation to Sydney Mining Club7 October 20107 October 2010

Sydney Mining Club Presentation 7 October 2010 2

Key Corporate InformationDirectors:– Bob Duffin (executive chairman)– Heath Roberts (executive)– Gary Jones (executive)– Bob Richardson (independent non executive)– Len Dean (independent non executive)– Lim See Yong (non executive)– Dennis Mutton (independent non executive)

Executives– Martin Jacobsen (COO)– Greg Harding (CFO)– Myles Fang (Iron Ore Marketing)– Larissa Brown (Company Secretary)– Adrian Horne (PK Mine Manager)

Cash: $13.6 m (30 September 2010)Directors control 23m voting shares (19%)Good core group of top 50 shareholders both

retail and professional

TSR (pa): 212% 1 year, 36% 5years (Bloomberg)

Issued shares 121.7m

Unlisted optionsShare rights

5.8m2.1m

Fully diluted 129.6m

Market capitalisation

$117m(at $0.90/share)


Our Key Project AssetsIRON ORE• DSO: Peculiar

Knob, Buzzard and Tui deposits Magnetite BIF: Kestrel and Goshawk, Harrier, Eagle, Kite and Falcon at Hawks Nest

• Haematite BIF: Buzzard and Tui footwall

COAL• Penrhyn,

Perfection Well, Pidinga, Lochiel

EXPLORATION• Mt Brady,

Windy Valley


Peculiar Knob DSO• BFS updated Sep-Oct 2010• Specular haematite deposit with

silica gangue; high grade Fe with virtually no impurities

• Very sharp break between ore and wall rocks

• Lies beneath 15 to 30 m cover• Effectively all measured and

indicated resource reports to reserves

• LOM W:O strip ratio 4.75:1• Will market all-fines product at

reserve grade


Development Plan – Peculiar Knob• 3.3 mtpa to start late

2011; maximise use of contractors

• We will build haul road to Wirrida Siding

• Accommodation village for 190

• Crushing plant at siding• Rail haulage 11,200

tonnes per train 6 days per week to Port Pirie

• Transhipment to Capesize ships in deep water in Upper Spencer Gulf

• One ship every 3 weeks


Mineral Resource Estimates Peculiar Knob

Category MillionTonnes

Fe %

P %

SiO2%

Al2O3 %

LOl%

Measured resource 13.6 64.0 0.01 7.11 0.27 0.4

Indicated resource 4.1 63.8 0.02 7.69 0.20 0.4

Inferred resource 1.5 64.6 0.03 6.15 0.20 0.2

Total resource 19.2 64.0 0.01 7.16 0.25 0.4

Sulphur: 0.009%; Cu, Pb, Zn, Ni, Cr; V, Cl, Ba, As, Zr, Sr, etc: at or BLD

To WPG’s knowledge, Peculiar Knob is Australia’s highest grade undeveloped Fe deposit


Ore Reserve Estimates Peculiar Knob


Fe %

P %

SiO2%

Al2O3 %

LOl%

Proved reserve 13.5 63.2 0.01 8.2 0.35 0.45

Probable reserve 3.2 63.2 0.02 8.6 0.28 0.40

Total reserve 16.7 63.2 0.01 8.3 0.34 0.44


Permitting and ApprovalsFINALISED• Mining lease• Native title mining agreement• Department of Defence: mining access agreement for mine development, haul

road, accommodation village, rail loader and crusher• Access and compensation agreements with pastoralists• Authorities to build infrastructure on all third party exploration licences• MPLs and EMLs for haul road, infrastructure and borrow pits (offered by PIRSA

and subject to agreeing final documentation)• Stafford borefield – licensed by SA DWLBC (subject to agreeing final

documentation with Defence)• Train paths (reserved)• 10 – 30 year port access agreement for iron ore and coal• Purchase of Port Pirie land (subject to final documentation)

STILL OUTSTANDING• MARP (will be lodged this month)• Port Pirie Development Application (will be lodged in November)


The Importance of Grade

Current price: 62% Fe: US$141/tonne; 58% Fe US$110/t

Premium is US$8/t per 1% change in Fe content

[Don’t fall into the trap of calculating the price of 58% Fe fines by back- calculating the US cents per dmtu price then applying the multiplier: (141/0.62)*0.58 = US$132/tonne, not US$110/tonne!!!]

Iron Ore Prices CNF TianjinSource: The Steel Index

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

Nov-08 May-09 Nov-09 May-10 Nov-10

US$

/tonn

e

62% Fe

58% Fe


Summary of BFSCAPEX:• Site $84.9m• Port Pirie $53.6m• Total capex: $138.5m

WORKING CAPITAL:• Pre-strip, mine, process and transport

first 160,000 t: $29.3m

TOTALS• Total initial capital: $167.8m

FACILITIES• Expect banks to offer a very

satisfactory debt facility

OPEX:• Average cash opex over LOM:

$64.35/t to FOB• Royalties add another $5.61/t• Total cash opex: $69.96/t to FOB• Sea freight $17/t• Cash opex to delivery in China: $87/t

(rounded)

REVENUE• Spot price CNF: US$141/t• In A$: $148/t

MARGIN• Cash operating margin: $61/t• Margin on 3.3 mtpa: $201m pa

Peculiar Knob’s Cash Generation Capacity is Very Strong and it is WPG’s Intention to Monetise the Deposit ASAP!!


PK: Low Capex Intensity is Attractive• Capex site only $84.9m for 3.3

mtpa => US$24/annual tonne• Increases to US$37/annual

tonne if Port Pirie capex of $53.6m is included

• Current benchmark US$70-90/annual tonne (source: Metalytics, London conference Sept 2010)

• For example: MarillanaUS$68/annual tonne (no rail spur) or US$100/annual tonne (with rail spur) (source: BRM ASX announcement 29 Sep 2010)


Port Pirie• Operated by Flinders Ports • We have 30 year agreement

with Flinders Ports to use Berth 7

• State government has agreed to sell LMC land to us to build facilities

• Sale is contingent on approval of MARP and DA

• We will develop facilities with 7 mtpa capacity but will use only half; excess capacity to be offered to others

• Will be suitable for Hawks Nest magnetite and Penrhyn coal exports too


Port Pirie• We will use a transhipment operation

similar to Whyalla• But we will use a small ship, not tugs

and barges• First anchorage 11 nm offshore, top

up 12 nm further out• Capacity 7 mtpa => commercial

opportunity


Port Access is the Key!Iron Ore Ports - WA

0102030405060708090

100

Hedland Dampier Cape Lambert Oakajee Anketell Point SimpleAverage

Capex per Tonne of Annual Capacity

$/to

nne

Coal Ports - NSW and QLD

0102030405060708090

Wiggins Island BalaclavaIsland

Abbott Point Newcastle Port Waratah SimpleAverage

Capex per Tonne of Annual Capacity

$/to

nne

Iron ore ports: $36/annual tonne capacity (average)

Coal ports: $40/annual tonne capacity

Port Pirie: $8/annual tonne capacity – Outstandingly Attractive Metric!


The Upside #1 – Depth Extensions at PK

• Whittle pit optimiser wants to push pit deeper

• Bottom of orebody not defined by drilling to date

• Reserves of 16.7 mt calculated to maximum depth of 175 m but orebody is covered by 20 m of overburden

• So reserve is ~110,000 t per vertical metre in the orebody

• If we extended drilling depth by 60 m there is potential to increase total reserves by ~7 mt

• This would add 2 more years to life of mine


The Upside #2 – Hawks Nest Iron OreBut First Understand the WPA!

• Administered by the Department of Defence and run by the RAAF

• Covers 127,000 km2 - same size as England

• Occupies 13% of South Australia but 25% of Gawler Craton

• It is used for weapons testing, and more often now than 5-10 years ago

• Includes a “Core Area of Operations”


The WPA – Then and Now• Originally covered more than 250,000 km2

(including much of the East Pilbara in WA and also Olympic Dam) but has been halved in size

• Formerly used for Cold War era military activities and some space research; now used for the testing of war materials

• More than 7,000 rockets have been launched there including 2 satellites (1967 and 1971)

• The WPA is the Western World’s largest land-based weapons testing area

• But it is highly prospective for minerals!• The Commonwealth engaged Dr Allan Hawke to

review the WPA in May 2010; report expected this year (interim report this month or early November)

• WPG is optimistic that an outcome satisfactory to both the military and the mining industry will eventuate (time sharing model?)


Mineral Resource Estimates Totals – DSO Deposits

(Peculiar Knob, Buzzard, Tui)


Fe %

P %

SiO2%

Al2O3 %

LOl%

Measured resource 25.7 63.1 0.03 7.6 0.8 0.7

Indicated resource 9.3 61.8 0.05 9.2 0.8 0.8

Inferred resource 2.6 63.1 0.05 7.9 0.5 0.4

Total resource 37.6 62.8 0.04 8.0 0.8 0.7


DSO Ore Reserve Estimates (Peculiar Knob and Buzzard only)


Fe %

P %

SiO2%

Al2O3 %

LOl%

Proved reserve 25.0 62.1 0.03 8.2 0.83 0.68

Probable reserve 4.5 61.5 0.03 8.4 0.95 0.81

Total reserve 29.6 62.0 0.03 8.2 0.85 0.70

NB: Table above excludes Tui – Tui pit not yet designed


Mineral Resource Estimates Magnetite Deposits

• Kestrel

• All magnetite

Category Million Tonnes

Fe %

P %

SiO2%

Al2O3 %

LOl%

Measured resource 100 37 0.06 37 0.8 0.6

Indicated resource 60 36 0.06 38 1.0 0.8

Inferred resource 60 36 0.06 39 1.1 0.8

Total resource 220 36 0.06 38 0.9 0.7

Category Million Tonnes

Fe %

P %

SiO2%

Al2O3 %

LOl%

Kestrel – measured, indicated and inferred

220 36 0.06 38 0.9 0.7

Goshawk - inferred resource

148 35 - - - -

Harrier - inferred resource

54 35 - - - -

Eagle - inferred resource

92 31 - - - -

Kite - inferred resource

30 51 - - - -

Falcon - inferred resource

25 32 - - - -

Total resource 569 36 - - - -

Clear potential to increase total resource to >1 billion tonnes with further drilling


Mineral ResourcesHawks Nest Haematite BIF – EL 4248 and MC 3810


Fe %

P %

SiO2%

Al2O3 %

LOl%

Tui - indicated resource 23.9 38.2 0.03 43.5 0.72 0.51

Tui - inferred resource 2.8 36.7 0.02 45.2 0.92 0.61

Buzzard footwall – inferred resource 29.9 38.9 0.03 41.2 0.97 0.73

Buzzard SE – inferred resource 16.1 35.2 0.11 45.9 1.65 0.73

Buzzard West – inferred resource 29.8 36.6 0.03 45.4 0.86 0.66

Total resource 102.5 37.4 0.04 43.8 0.99 0.66


Exploration TargetsHawks Nest BIF – EL 4248, MC 3809 and MC 3810

Mineralisation Category Exploration Target

Tonnage Range Million Tonnes Fe Grade Range%

Magnetite BIF 790 – 890 32 – 37

Haematite BIF 1,400 – 1,680 22 – 43

Total 2,190 – 2,570 22 – 43

The exploration targets set out above are in addition to the mineral resource estimates set out in the earlier slides. The exploration targets are based on the currently available drill hole data and are conceptual in nature. Except for the resource estimates in the earlier tables, there has been insufficient exploration to define a mineral resource in these areas, and it is uncertain if further exploration will result in the determination of a mineral resource


The WISCO Magnetite Deal – Key Elements• WISCO will fund first $45m to earn a 50% JV interest in the Hawks Nest

tenement (excluding Buzzard DSO)• WISCO cannot withdraw until it has spent $25m and if it does then its

interest will be 28%• WPG’s interest cannot fall below 50% and WISCO’s cannot be >50%• WPG will be manager of the JV (BFS and production stages)• WISCO will subscribe for 12m WPG shares and nominate 1 person to

join WPG’s board• WISCO to have right to purchase part of WPG’s share of cons• WISCO will assist WPG with capex and funding of Port Bonython• Deal fully executed, has NDRC approval and meets FIRB guidelines

but Defence won’t yet support it• Deal swings on outcome of the Hawke Review


The Upside #3 - Penrhyn Coal Project

Coal Category Exploration TargetTonnage Range (mt)

Sub-Bituminous Coal

200 – 300

Permian semi- bituminous coal in the Arckaringa Basin 40 km SW of Coober Pedy and 20 km from Peculiar Knob haul road and rail loader

The exploration target set out above is based on the currently available drill hole data and is conceptual in nature. There hasbeen insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in the determination of a mineral resource


Penrhyn Coal Project

Ash 6.5% - 20%

Moisture 32% - 36%

CV Seam 4: 27.7 MJ/kg; increases to 28.5 MJ/kg after washing

Similar to Lake Phillipson coals (sold to WEC for >$35m August 2010 but no access then on ground)

Water washing is effective in salt removal

WPG sees Penrhyn as domestic power station coal or suitable for upgrading for export using emerging clean coal technology


The Upside #4 – Leverage off Port Access

WPG has a number of opportunities to leverage the 3-4 mtpa spare capacity in its port access agreements:

• Clip the ticket

• Joint venture into projects

• M&A

The port access agreements represent a very valuable asset to the Company.

WPG intends to run the port as a separate profit centre.


Comparison with Portman – DSO Only!

• Same distances mine/siding/port• PMM mining commenced 1995 at 1 mtpa• At Dec 97 PMM resource had grown to 37

mt with reserves 15.1 mt at 63% Fe• WPG’s DSO resource now 37.6 mt at

62.8% and reserves 29.6 mt at 62% Fe• PMM resource grew after mining started

by exploration• PMM acquired

by Cliffs Nov2008 for $3.3bn

• Why can’t WPG reproduce this?

96 km mine/siding; 650 km siding/port

100 km mine/siding; 575 km siding/port


Our Vision• Bring Peculiar Knob into production at 3.3 mtpa in H2 2011• Bring Buzzard into production later so total DSO sales are 3-4 mtpa for minimum 10

year DSO project life• Continue exploration at Hawks Nest to discover more DSO deposits to extend life

beyond 10 years – great exploration prospectivity for DSO• Commence BFS on Hawks Nest magnetite in 2011 and commit to project

development in 2015 so that magnetite sales are 6-10 mtpa for 30 years from 2016-7

• More testwork on Hawks Nest haematite BIF to supplement magnetite concentrates with haematite concentrates and add value

• Define measured/indicated/inferred coal resource at Penrhyn of not less than 200 mt by 2013

• Commit to clean coal technology project at Penrhyn producing ~10 mtpa by 2016• Divert part of magnetite/haematite concentrates and Penrhyn coal to production of

1-2 mtpa seaborne-traded pig iron by 2017


Competent Persons The review of exploration activities and results and the mineral resource estimates for the Peculiar Knob, Buzzard and Tui

DSO deposits and the non-Kestrel magnetite deposits at Hawks Nest contained in this presentation are based on information compiled by Mr Gary Jones, a Member of the Australasian Institute of Mining and Metallurgy. He is Technical Director of WPG Resources Limited and a full time employee of Geonz Associates Limited. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Gary Jones has consented in writing to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.

The mineral resource estimate for the Kestrel magnetite deposit at Hawks Nest contained in this presentation is based on information compiled by Mr Arnold van der Heyden, a Member of the Australasian Institute of Mining and Metallurgy. He is an employee of Hellman & Schofield Pty Ltd. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Arnold van der Heyden has consented in writing to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.

The ore reserve estimate for the Peculiar Knob and Buzzard deposits contained in this presentation are based on information compiled by Mr John Wyche, a Member of the Australasian Institute of Mining and Metallurgy. He is an employee of Australian Mine Design and Development Pty Ltd. He has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). John Wyche has consented in writing to the inclusion in this presentation of the matters based on his information in the form and context in which it appears.

The review of exploration activities and results for the Penrhyn coal deposit contained in this presentation is based on information compiled by Mr Gary Jones, a Member of the Australasian Institute of Mining and Metallurgy. He is Technical Director of WPG Resources Limited and a full time employee of Geonz Associates Limited. He has sufficient experience which is relevant to the style of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Gary Jones has consented in writing to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.


Important Notice This presentation contains forward looking statements concerning the

projects owned by WPG. Statements concerning mineral resources and ore reserves may also be deemed to be forward looking statements in that they involve elements based on specific assumptions

Forward looking statements are not statements of historical fact, and actual events or results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on WPG’s beliefs, opinions and estimates as of the date they are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or reflect other future developments

Data and amounts shown in this presentation relating to capital costs, operating costs and project timelines are based on consultant reports, contractor quotes and internally generated estimates

WPG cannot guarantee the accuracy and/or completeness of the figures or data in this presentation

All dollar amounts indicated in this presentation are in Australian dollars unless otherwise stated.

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