Asian Capital and Australian Projects

This presentation has been prepared by PCF Capital Group Pty Ltd ("PCF“). The information contained in this presentation is confidential to PCF and is provided for information purposes only. Accordingly, it is provided on the basis of no liability whatsoever to PCF, or the directors, officers and employees of PCF who will not be responsible for any damages arising from any use made of the information herein. While all care has been taken in its preparation, this information has not been independently audited and PCF, or the directors, officers and employees of PCF make no representation and give no warranty or undertaking, express or implied, nor assume any responsibility for the authenticity, origin, validity, accuracy or completeness, or for any errors or omissions contained in the information. The assumptions that were made in its preparation were based on either publicly available information. The presentation is published for information purposes and is not intended to solicit an offer to buy or sell securities mentioned. To the extent any recommendations or statements of opinion or fact made by PCF constitutes financial product advice, they constitute general advice and not personal financial advice in any form. As such, any recommendations or statements do not take into account the financial circumstances, investment objectives, tax implications, or any specific requirements of the recipient. This presentation cannot be reproduced, copied or provided to a third party without the prior written consent of PCF.

Disclaimer

• Resource sector junior and mid cap valuations remain at long term low levels. Investor interest is on the rise but focused on production and near production opportunities

• Despite slowing Chinese GDP, plus $500 Billion of Outbound Chinese DFI is expected over the next 5 years

• Since 2006, 75% of Chinese DFI has gone into a small number of very large deals. We expect to see an increasing number of small to medium deals and with growing confidence and deal sophistication

• Energy and Power deals are currently the focus of Chinese M&A and this trend is likely to continue

Key Themes

• Asian capital will continue to underwrite the Australian Mining and Energy sectors for the foreseeable future with Australia in the top 3 preferred destinations for DFI for China

Resources Stocks Continue to Underperform

27% 28% 30%

6%

-40%

-55%

-45%

-35%

-25%

-15%

-5%

5%

15%

25%

35%

Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14

Dow Jones S&P/ASX 200 S&P/ASX 50 S&P/ASX 200 RESOURCES S&P/ASX SMALL RESOURCES

Relative Sector Performance

Index 2 Year Change

S&P/ASX 200 HealthCare ↑ 54%

S&P/ASX 200 Telecoms ↑ 54%

S&P/ASX 200 Consumer Discretionary ↑ 46%

S&P/ASX 200 Information Technology ↑ 38%

S&P/ASX 200 Financials ↑ 38%

S&P/ASX 200 A-REIT ↑ 25%

S&P/ASX 200 Industrial ↑ 24%

S&P/ASX 200 Utilities ↑ 21%

S&P/ASX 200 Consumer Staples ↑ 20%

S&P/ASX 200 Resources ↓ -7%

S&P/ASX 200 Materials ↓ -8%

S&P/ASX 200 Energy ↓ -13%

Capital raisings in 2014, both primary and secondary, are improving in comparison to previous years.

Source: ASX

Capital Raisings – Activity is Improving

$19,897

$2,458

$7,509

$25,048

$14,674

$7,146

$24,037

$14,456

$62,528 $60,019

$98,629

$31,428 $33,101 $31,452 $32,844

$21,675

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

2007 2008 2009 2010 2011 2012 2013 2014

Initial (M) Secondary (M)

2014 Initial (m) Secondary (m)

January $23 $788

February $219 $2,327

March $449 $3,895

April $2,550 $4,260

May $3,893 $4,907

June $2,708 $3,299

July $4,614 $2,199

Total $14,456 $21,675

Source: Bloomberg

Global Mining Deals

$230

$151

$89

$164

$216

$184

$79

$35

1,992

1,711

1,569

1,932

1,766

1,501

1,323

375

$-

$50

$100

$150

$200

$250

0

500

1,000

1,500

2,000

2,500

2007 2008 2009 2010 2011 2012 2013 2014

$ Billion Deal Count

Iron Ore Prices – Remain Volatile but Stabilising

-34%

9%

-19%

-40%

-20%

0%

20%

40%

60%

Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

Iron Ore (A$/t) Large Cap Index (BHP, FMG, RIO) Mid Cap Index (AGO, BCI, GBG, MGX, NFE)

Equity Trading Multiples for Explorers, Developers & Producers

Copper (U$/lb)

Gold(U$/oz)

Iron Ore (U$/t)

Nickel (U$/lb)

$0.000

$0.020

$0.040

$0.060

$0.080

$0.100

$0.120

Aug-13 Nov-13 Feb-14 May-14 Aug-14

Explorers

Developers

Producers

$0

$20

$40

$60

$80

$100

$120

Aug-13 Nov-13 Feb-14 May-14 Aug-14

ExplorersDevelopersProducers

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Aug-13 Nov-13 Feb-14 May-14 Aug-14

Explorers

Developers

Producers

$0.000

$0.100

$0.200

$0.300

$0.400

$0.500

$0.600

$0.700

Aug-13 Nov-13 Feb-14 May-14 Aug-14

ExplorersDevelopersProducers

In terms of leverage and upside, quality exploration projects have historically provided the best returns prior to moving into the Feasibility Study phase. Current project pricing according to MinesOnline.com is as follows:

Question of Value

2014 may well be a market turning point, funds are flowing back into the producer sector and shortly into developers and the exploration sector

DSO Iron Exploration Projects are being acquired for less than 25c/T versus longer term average multiple of $1.00/T.

Copper Exploration Projects are being acquired for less than 2.5c/lb versus longer term average multiple of 9c/lb.

Gold Exploration Projects are being acquired for less than $2.50/oz versus longer term average multiple of $25/oz.

Chinese direct investment in Australia by year

Chinese investment in Australia declined in 2013 as total M&A deals out of China slowed following efforts by the Peoples Republic of China to moderate overseas spending.

Source: The China Global Investment Tracker compiled by the American Enterprise Institute and The Heritage Foundation. Deals < US$100M excluded.

Chinese Direct Investment into Australia

3%

15%

1%

27%

17%

5%

12% 12%

8%

10%

0%

5%

10%

15%

20%

25%

30%

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US$M

% of Global

2005 – 2012 2013-2014

While SOE’s continued to dominate investment by value, the number of Chinese private enterprise deals is increasing particularly in commercial real estate. 62% of the number of deals done in 2013 were small to medium transactions. 2013/14 is the first time in 9 years that Chinese Foreign Investment was not concentrated in mining.

The mining industry no longer dominates Chinese direct investment in Australia

There has been an increase in direct investment by Chinese private enterprise

Chinese Direct Investment into Australia (cont’d)

Source: The China Global Investment Tracker compiled by the American Enterprise Institute and The Heritage Foundation

Energy 39%

Metals 53%

Real estate 2%

Transport 2%

Agriculture 3%

Other 1%

Energy 49%

Metals 39%

Real estate 4%

Transport 8%

Chinese investors are increasingly showing that they are willing to take a more pro-active and sophisticated approach to their investments.

After a series of unsuccessful investments in the past, evidence is building to show that Chinese investors are increasingly willing to take advice or partner up with local enterprises to gain local knowledge and expertise to help their investments succeed.

Chinese Investment – Changing attitudes

Examples:

Sino Iron Project

Chinese investors are increasingly showing that they are willing to take a more pro-active and sophisticated approach to their investments.

Chinese ODI – Increased Confidence & Sophistication

5 May 14: Baosteel and Aurizon make joint $3.40 unsolicited cash bid for Aquila 12 Jun 14: Min Res purchase 12.78% Aquila stake on market 13 Jun 14: Baosteel advises no extension of offer beyond 11 Jul 18 Jun 14: Min Res advise of discussions re a $3.75 per share scrip offer for Aquila 18 Jun 14: Min Res advises of the termination of discussions with Aquila 3 Jul 14: Min Res advises that it has accepted into the Baosteel offer ($18.4M)

Year Buyer Target Transaction Commodity Interest Value

2014 Cheung Kong Group consortium

• Off-market cash take over offer at $1.32 per share Energy - Utilities

100% US$2,372M

2014 Baosteel & Aurizon • Off-market cash take over offer at $3.40 per share Metals - Steel 100% US$1,420M

2014 China Merchants Group & Hastings Funds Management

• Successful bidders for a 98-year lease a The New South Wales government auction

Transport - shipping

98 year lease

US$1,600M

2013 State Grid Intl Dvlp Ltd (CSOE)

• Asset divestment process • at least 50% of the new board members must be a resident in

Australia Energy & Power 60% US$2,856M

2013 State Grid Intl Dvlp Ltd (CSOE)

• Asset divestment process • at least 50% of the new board members must be a resident in

Australia Energy & Power 19.9% US$810M

2013 CNOOC (CSOE)

Queensland Curtis LNG

• Equity and LNG sale agreement • CNOOC will now own 50% of the first LNG production train at

QCLNG, and option to take up to 25% of potential expansion. Energy & Power 25% US$1,930M

Chinese Deals in Australia

• Exploration and Development projects still present outstanding value based on historical averages

• Australia will continue to present attractive destination for Chinese DFI over the next 5 years

• Increasing number of smaller deals from the Chinese private sector growing confidence and deal sophistication

• Expect fewer but larger strategic deals by SOE’s and a focus on Energy and Power. More JV’s and alliances anticipated

Closing Comments

• Market sentiment is on the up and funds are starting to switch out of yield plays and focus on growth – mining stocks

THANK YOU!