THE IMPORTANCE OF PHILIPPINE ORE

PHILIPPINES NICKEL

Presentation Outline:• The nickel mines in the Philippines• 2014 production and estimated 2015

production• Problems with the nickel producers• Can Philippines replace Indonesia?• Moving forward the direction of

Philippine miners.

Philippine Nickel Miners: Zambales & Isabela

Source:dictionarybank.com

Nihao MiningDinapigue mine1.0m WMT/yr

Benguet Mining CorpSta Cruz Nickel Mine1.5m WMT/yr

LnL Mining Corp.Guisguis mine1.0m WMT/yr

Eramen Mining Corp.Candelaria mine1.5m WMT/yr

DMCI MiningAcoje mine1.0m WMT/yr

Source:dictionarybank.com

DMCI MiningBerong mine1.5m WMT/yr

Oriental Peninsula Resources GroupNarra mine2.0m WMT/yr

Oriental Peninsula Resources GroupEspanola mine2.0m WMT/yr

Global Ferronickel Holdings Inc.Ipilan mine3.0m WMT/yr

Nickel Asia Corp.Rio Tuba mine6.0m WMT/yr

Philippine Nickel Miners: Palawan

Source:dictionarybank.com

Century Peak Metals Inc.Casiguran mine 1.0m WMT/yr

Oriental Synergy Mining Corp.Bel-at mine 1.0m WMT/yr

AAM-Phil Natural ResourceLoreto mine 1.0m WMT/yr

HY MiningLibjo mine 1.0m WMT/yr

Libjo MiningLibjo mine 1.0m WMT/yr

Cagdianao Mining Corp.Cagdianao mine 1.5m WMT/yr

Hinatuan Mining Corp.South Dinagat mine 2.0m WMT/yr

Pacific Nickel Phil. Inc.Nonoc mine 2.0m WMT/yr

Philippine Nickel Miners: Dinagat Islands

Source:dictionarybank.com

Hinatuan Mining Corp.Taganaan mine 3.5m WMT/yr

Adnama Mining Resources Inc.Urbiztondo mine 2.5m WMT/yr

Taganito Mining Corp.Claver mine 5.0m WMT/yr

Platinum Group Metals Corp.Cagdianao mine 6.5m WMT/yr

CTP Construction & Mining Corp.Adlay mine 2.5m WMT/yr

CTP Construction & Mining Corp.Dahican mine 2.5m WMT/yr

Carrascal Nickel Corp.Carrascal mine 2.0m WMT/yr

Marcventures Mining & Dev’t Corp.Cantillan mine 3.0m WMT/yr

Philippine Nickel Miners: Surigao del Norte & Sur

Source:dictionarybank.com

SR Metals Inc.Tubay mine 2.0m WMT/yr

Agata Mining Ventures Inc.Tubay mine 1.5m WMT/yr

Alitawitawi Nickel Corp.Tawitawi mine 1.5m WMT/yr

Pax Libera Mining Corp.Languyan mine 1.0m WMT/yr

Philippine Nickel Miners: Agusan del Norte & Tawi Tawi

Production History

Note: 2015 estimated to be 20.6m dmt by SMM

Source:MGB

Production History

The growth in 2014 volume in ore is not reflected in total nickel units due to high production of high iron low grade nickel limonite ore

Problem with the Nickel Producers.• Low grade High Iron (0.6-0.9%Ni & 48%Fe) market disappeared as prices

became uneconomical.

• Mining sites are getting farther from causeway causing mining costs to get higher in the long run.

• Overhang of Executive Order 79 affecting future profitability.• The change has affected the classification of ore and thus mine life is affected.

Can Philippines replace Indonesia?

• The answer is a big NO. Sulawesi’s land area of 174,600 km2 isalready 58% of Philippine’s total land area. Irian Jaya, a muchlarger land area has its own ophiolite belt too. The ophiolite beltof the Philippines would total only around 10,000 km2 or 3.3% oftotal Philippine land area.

• The nickel grades of Indonesia is much higher and the potentialvolume also higher due to a much larger ophiolite belt occurringin Indonesia and the presence of intense faulting.

• Before the NPI and ferronickel plants replace Chinese plants in2020, the Philippines will generally supply lost nickel unitscoming from Indonesia as the ore ban stays. At current pricesproduction from Philippine nickel miners will dwindle as costsescalate due to mining only the 3-4th layer of the laterite anddistance to port increases.

The future of Nickel Miners in the Philippines.

• At current prices from 2016 till 2020 the Philippine miners will behave asin 2008. Production expected to drop in the low range of 140 to 160kcontained nickel from the high of 350k in 2014. In 2008 the Philippinesproduced only 70k mt of contained nickel.

• For 2016 we expect the miners to budget slow down and even closuresfor the Northern Dinagat miners. Tawi tawi region is also expected todrop.

• Depletion will also hit some of the miners.• NPI Blast Furnace producing 1.7-4% Nickel will be the future. Philippine

ore has higher iron than in Indonesia and this will be a trend to addresslow profit margins.

• The future for the Philippines is production to drop to more sustainablelevels and with more value added processing.

Why is the Philippines important to the Ore Supply Chain?

From the hereon forward the source of nickel laterite ore for the NPIindustry of China will come predominantly from the Philippines. Basedon 2013 Philippine contribution of 340k mt of nickel units, at currentprices nickel unit contribution will drop below to 140 to 160k mt outsideof the HPAL producers. This will create a supply squeeze and will affectthe price of nickel moving forward once consumption normalize.

Eventually, when NPI production from China has migrated to Indonesia,the Philippines too will be the low grade NPI producers in the long run.

THE END

Disclaimer: 1The contents herein are intended for qualified investors or buyers

and not for the financially unsophisticated investors. This material is not intendedto be comprehensive and does not purport to contain all the information that aprospective investor may require. The investor should not rely solely thereonwithout making any independent analysis or research on the topic therein. Thismaterial is not intended as a substitute for sound investment or risk managementadvice. No representation or warranty as to its accuracy, reasonableness orcompleteness, express or implied is hereby made.