rcr quarterly report- oct-10-copper

Copper Company ReviewExploration, Development & ProductionOctober 2010

Resource Capital Research


Suite 1306 183 Kent Street Sydney, NSW 2000

Tel: +612 9252 9405 Fax: +612 9251 2859 Email: [email protected]: www.rcresearch.com.au

Resource Capital Research ACN 111 622 489

Copper Company ReviewOctober 2010

Resource Analyst (Copper): John Wilson

Resource Analyst: Dr Tony ParryResource Analyst: Dr Trent Allen

This report is subject to copyright and may not be redistributed without written permission from RCR. The information contained in this report is for use by US, Canadian and Australian residents only. Copies are available for purchase from RCR.

13 October 2010


October 2010 RCR Copper Company Review Disclaimer and disclosure attached. Copyright© 2010 by Resource Capital Research Pty Ltd. All rights reserved. 2

Contents Contents .............................................................................................................................. 2

Overview and Investment Comment ........................................................................................ 3

RCR October Featured Copper Company Summary .................................................................... 4

Comparative Charts ............................................................................................................... 6

Financial Data ....................................................................................................................... 7

Company Statistics ................................................................................................................ 7

Reserves, Resources and Historic Mineralisation ........................................................................ 8

Valuation and Performance Data ............................................................................................. 8

Exploration, Development and Production Companies

Altona Mining Limited................................................................................................... 9

[Avalon Minerals Limited ..................................................................................... ………….] [Blackthorn Resources Limited ......................................................................... ………………] Discovery Metals Limited ............................................................................................ 11

Equinox Minerals Limited* .......................................................................................... 13

Gunson Resources Limited .......................................................................................... 15

Sandfire Resources NL ............................................................................................... 17

[Thundelarra Exploration Limited ............................................................................... …..] [Tiger Resources Limited ............................................................................................ …] Venturex Resources Limited ........................................................................................ 19

YTC Resources Limited ............................................................................................... 21

Copper Price Fundamentals................................................................................................... 23

[Smelting and Refining - TC/RCs……………………………………………………………………………………………….….…….37]

[Copper Property Transactions: Global 2010 (January 1 to September 24)…………………………………………] [Copper Capital Raisings: Global 2010 (January 1 to September 27)……........................................] [Copper Company Share Price Performance Tables ..................................................................... ] Report Contributors ............................................................................................................. 33

Disclosure and Disclaimer ..................................................................................................... 34

* Indicates companies with detailed financial projections and valuation available.

[This is the Abridged Report version of the October RCR Copper Company Review. The quarterly purchase price to all RCR’s Subscriber Reports (uranium, gold, rare and minor metals, and iron ore) is A$110. The annual subscription rate to all RCR research is A$440 – commodities covered may vary from quarter to quarter. Purchase details and research services for institutional investors can be found at www.rcresearch.com.au].



Overview and Investment Comment

Equity market performance

A broad global copper mining index is up 40% over the past 3 months (to 13 Oct), half of the gain (20%) coming in the past 1 month. The index is up 29% over the past 12 months. (HSBC Global Mining Copper Index, USD, covers globally listed copper mining stocks). The valuations of Australian copper equities appear to have partially priced in, perhaps prematurely, a recovery in the US economy and subsequently, expectations of a weaker Australian dollar. This is against recent market trends in which the AUD/USD has strengthened to near parity and suggests potential for partial retracement of recent AUD copper gains if the US recovery does not proceed as anticipated. Market volatility remains the key uncertainty for copper equities’ outlook. While potentially slowing into 2011, the global economy is nevertheless, currently expected to report robust growth (IMF forecast 2011 GDP 4.2%, down from a forecast 4.8% for 2010). Copper price outlook

The spot LME copper price hit a 27 month high of US$3.81/lb (13 Oct), and is up 28% over the past 3 months. About a third of the gain (10%) occurred over the past month. The copper price is up 34% over the past 12 months. The gains are driven by a strong demand outlook, constrained new supply and declining LME stocks. The copper market is forecast to move from small surplus in 2010 to a deficit of 400kt 2011 (ICSG), reflecting a continuing surge in Chinese demand and tight supply. The copper price is expected to remain strong, at around current levels and above, for at least several years. Global copper demand is forecast to grow to 18.9mt in 2010, up from 18.2mt (+3.8% or +692kt) in 2009, and is expected to grow a further 4.5% (+847kt) in 2011 to 19.7mt. The global demand growth in copper is expected to be in the range of 3-5%pa, representing an incremental annual consumption increase of 600kt to 900kt, prompting RIO to comment that the copper market is expected to remain tight till 2020. The main market growth is expected from China, which now accounts for 36% of global copper consumption, compared to North America which accounts for only 10%. China’s continuing urbanisation and forecast GDP growth of ~10%pa is expected to drive per capita copper consumption in China from ~5kg/capita currently to 10kg/capita 2020 In comparison to the scale of market demand growth, the largest project expected to come online in the next few years is Oyu Tolgoi (Mongolia), starting 2013 and forecast to produce 436ktpa copper. There are many smaller and mid size projects that are moving towards production, though against a general industry background of declining head grades, projects of increased technical difficulty and cost, and higher sovereign risk jurisdictions. This suggests the trend of long development lead times and project delays will continue to hamper a timely supply response to global demand growth.

Copper mining equities have risen strongly in the past few months (up 40%). Performance has been driven by a surging copper price – now at a 27 month high of US$3.81/lb (13 Oct). Despite the AUD/USD rising to near parity, Australian copper company valuations appear to be pricing in a substantially weaker exchange rate… …reflecting market confidence in the US economic rebound - post QE2. China accounts for 36% of global copper consumption, and is the main driver of copper demand growth projections for the next decade.



RCR October Featured Copper Company Summary

AUSTRALIA

Company Code Comment

Altona Mining Limited AOH DFS (2 Projects), Advanced Exploration

AOH's copper inventory is >1mt contained Cu; it is targeting production

within 18 months. Potential ramp to 50ktpa Cu output in 4 years. Our

assessed NAV of A$0.56/share and an enterprise value of only US$55/t Cu

suggest it is still not being recognised as a near term producer.

Avalon Minerals Limited AVI PFS

PFS imminent on the flagship Viscaria copper-iron project, Sweden.

Resource: 66mt for 1.3bnlbs Cu & 2.4mt Fe. Near term Exploration Target

100mt. Open pit - base case 15ktpa Cu plus iron ore. Production potential

2013. Regional exploration upside.

Blackthorn Resources Limited BTR Advanced Exploration

BTR's half-built Perkoa Zn project is back on track with Glencore agreeing to

take a 50.1% stake, but we see most upside coming from BTR's Zambian

IOCG Cu-Au discovery (big enough to attract BHP as an enthusiastic

partner) plus exciting Burkina Faso gold exploration.

Discovery Metals Limited DML Bankable Feasibility Study

Boseto copper project (DML 100%, Botswana): 36ktpa Cu, 1.1mozpa Ag

production expected from 1Q12. Project financing underway. Strong

exploration upside near mine and regional in Kalahari Copper Belt. Two new

exploration targets - drilling 4Q10.

Equinox Minerals Limited EQN Production

Lumwana project (EQN 100%), Zambia, is expected to produce ~140kt Cu in

conc 2010. A 2 phase expansion program is underway with potential to

increase production to ~200kt Cu from 2014. Good, near mine and regional,

copper (and uranium) exploration upside.

Gunson Resources Limited GUN DFS, Advanced Exploration

GUN's currently 100% owned ~A$170m Coburn Zircon Project in WA is now

looking strategically attractive (DFS completed) with a potential zircon

supply deficit looming. This will boost GUN's plans to bring in a big brother,

which if succesful will also boost a languishing share price.

Sandfire Resources NL SFR Advanced Exploration

SFR holds a strategic 400km2 in the emerging DeGrussa VMS copper-gold

district in WA. The project is shaping up as world-class since discovery Apr

'09; high grade copper resource 10.7mt @ 5.7% Cu. Excellent exploration

upside. DFS 1H11.

Tiger Resources Limited TGS Imminent Production

TGS is constructing the US$30m Stage 1 Kipoi high grade copper Project

(60%) in the Democratic Republic of Congo with full project financing in

place. Stage 1 output ~35ktpa Cu opex ~US$0.34/lb. Current resource is

842kt Cu with excellent potential to expand.

Thundelarra Exploration Limited THX Mid-Advanced Exploration

We think the market may be undervaluing THX's Degrussa look-alike at Red

Bore, near Sandfire's high grade Cu/Au discovery. Further drilling success

could highlight this, and on the uranium front the inaugural resource for the

high grade Thunderball deposit is due 4Q10.

Venturex Resources Limited VXR Advanced Exploration

VXR controls a large (50 x 20km) VMS district in the Pilbara (WA) with

significant exploration upside. Current resource 180kt Cu Eq grading 1.1%

Cu (2.2% Cu Eq). Potential 15ktpa Cu Eq production from 1Q12. LOM 8

years. Scoping study expected 4Q10.

YTC Resources Limited YTC Pre-Feasibility Study

Mining in 2H11 is possible at the Hera Project (Au, Cu-Pb-Zn-Ag), which has

a 560koz AuEq resource with upside from drilling at Hera and historic

Nymagee Mine (recent hits +8% Cu). The 6.5km Hera-Nymagee corridor is

prospective for Cobar-style deposits. Target A$0.73/share.



Explorers’ Development Cycle: Conceptual market capitalisation versus development stage; October 2010



Comparative Charts

The surge in the copper price since June has driven copper equities in recent months. The HSBC index of copper mining equities is up 40% over the past 3 months and 20% in the past month (to Oct 13) reflecting strong performance across the sector.

Many companies are trading at, or near, 12 month highs. Generally, producers and those with near term production visibility have been the strongest performers. Some, like Sandfire, have been driven by expectations of exploration success and possible corporate activity.



Financial Data

Company Statistics

C OM P A N Y Share Price (LC$/share)3

2 Fully

Diluted

M arket

Cap Book

Enterprise

Value

ExchangesCode Status1 Yr End 52 week Current Shares Opt+W2 C. Notes2 Shares (undiluted) Cash Debt Value (Undiluted)

13 Oc to ber 2010 Hi Low (m) (m) (m) (m) (LC$m)3 (LC$m)3 (LC$m)3 (LC$m)3 (LC$m)3

AUSTRALIA (A$)

Altona M ining Limited AOH E June ASX FSE BLN No 0.29 0.09 0.28 245 7 0 252 67 11.0 0.0 32 67

Avalon M inerals Limited AVI E June ASX No 0.30 0.15 0.22 152 3 0 155 34 4.4 0.0 12 34

Blackthorn Resources Limited BTR E June ASX No 1.03 0.33 0.77 107 5 0 112 82 10.6 0.0 50 82

Discovery M etals Limited DM L E June ASX AIM No 1.35 0.42 1.18 302 9 0 311 356 36.6 0.0 73 356

Equinox M inerals Limited EQN P Dec ASX TSX No 6.25 3.40 6.12 708 16 0 724 4331 217.6 470.7 854 4802

Gunson Resources Limited GUN E June ASX No 0.17 0.06 0.10 173 4 0 178 17 0.5 0.0 25 17

Sandfire Resources NL SFR E June ASX No 7.85 2.81 7.64 130 12 19 160 993 40.9 0.0 57 993

Tiger Resources Limited TGS I June ASX TSX No 0.37 0.15 0.36 596 110 0 706 212 28.3 19.0 41 231

Thundelarra Explorat ion Limited THX E Dec ASX THXOA 1.04 0.36 0.74 151 28 0 179 111 20.0 0.0 46 111

Venturex Resources Limited VXR E June ASX No 0.14 0.06 0.09 655 77 0 732 56 5.0 0.0 25 56

YTC Resources Limited YTC E June ASX No 0.34 0.17 0.28 164 6 0 170 46 5.9 0.0 28 46

Total: Aust ralia 380.8 489.7 1242 6796

Total: (US$)4 373 480 1218 6660

(1) P: Producer; E: Explorer; I: Imminent - includes companies with bankable feasibility studies and likely to be in product ion within 3 years; IHC: Investment Holding Company

(2) Fully Diluted (shares, options + warrants (opt . + w), convert ible notes (Conv. N), other obligat ions)

(3) L.C. - Local Currency unit ; End of quarter forecast. (4) AUD/USD: 0.98

Exchanges

C OM P A N Y

(A) Exploration (L.C.$m)7 (B) Corporate (L.C.$m)7Drilling ('000 m)Code Land (A)/(A+B) %

13 Octo ber 2010 ('000 ha)6 Sep-10 Dec-10 2011 2012 Sep-10 Dec-10 2011 2012 Sep-10 Dec-10 2011 2012 Dec-10 2011 2012

AUSTRALIA (A$)

Altona M ining Limited AOH 215 8.0 8.0 32.0 na 1.0 1.0 4.0 4.0 0.9 0.9 3.6 3.6 52.6 52.6 52.6

Avalon M inerals Limited AVI 20 4.0 4.0 16.0 29.0 1.3 1.5 6.8 6.0 0.5 0.5 1.8 1.8 77 79 77

Blackthorn Resources Limited BTR 114 11.0 17.0 53.0 50.0 1.0 1.0 4.2 4.6 0.8 0.8 3.2 3.4 56 56 58

Discovery M etals Limited DM L 966 11.3 11.3 45.0 45.0 2.0 2.0 8.0 8.0 1.2 1.2 4.6 4.6 63.5 63.5 63.5

Equinox M inerals Limited EQN 331 20.0 20.0 80.0 70.0 1.4 1.4 5.6 5.6 2.9 2.9 11.6 11.6 32.6 32.6 32.6

Gunson Resources Limited GUN 273 0.5 0.5 2.0 na 0.3 0.4 1.5 2.0 0.1 0.1 0.4 0.4 77.8 78.9 83.3

Sandfire Resources NL SFR 40 20.0 58.0 195.0 100.0 13.2 6.0 29.2 24.0 0.6 0.6 2.4 2.4 90.9 92.4 90.9

Tiger Resources Limited TGS 155 5.0 5.0 20.0 10.0 0.5 0.5 1.8 1.8 0.9 0.8 3.2 3.2 36 36 36

Thundelarra Exploration Limited THX 950 15.0 12.0 42.0 40.0 1.5 2.0 9.0 9.0 0.7 0.7 2.8 3.0 74.1 76.3 75.0

Venturex Resources Limited VXR 34 5.0 3.5 15.5 15.5 1.3 1.3 5.0 5.0 0.5 0.4 1.7 1.6 75.8 74.6 75.8

YTC Resources Limited YTC 174 7.0 7.0 28.0 20.0 2.2 2.0 8.2 8.0 0.4 0.6 2.1 2.2 78.4 80.0 78.4

Total: Australia 107 146 529 380 25 19 83 78

Total: (US$)4

(6) To convert hectares to acres, mult iply by 2.47; eg 100 thousand hectares ('000 ha) = 247 thousand acres ('000 ac)

(7) L.C. - Local Currency unit

(A) Exploration (L.C.$m)7 (B) Corporate (L.C.$m)7Drilling ('000 m)



Reserves, Resources and Historic Mineralisation

Valuation and Performance Data

C OM P A N Y Total - Gold Product ion

Code Status1 Other Other Other Equivalent 3 Commencement

13 Octo ber 2010 M lb kt M lb kt M lb kt M lb kt (M oz) Year

AUSTRALIA

Altona M ining Limited AOH E 889 403 2,229 1,011 0.0 0.0 2,229 1,011 6.3 na

Avalon M inerals Limited AVI E 0 0 1,326 602 2.4mt Fe 0.0 0.0 1,326 602 3.8 na

Blackthorn Resources Limited BTR E 0 0 2,145 973 988kt Zn 0.0 0.0 2,145 973 6.1 na

Discovery M etals Limited DM L E 671 304 12.7moz Ag 3,190 1,447 57.1moz Ag 0.0 0.0 3,190 1,447 9.0 na

Equinox M inerals Limited EQN E 4,740 2,150 13,408 6,082 0.0 0.0 13,408 6,082 38.0 2008

Gunson Resources Limited GUN E 0 0 3.7mt HM 366 166 12.3mt HM 0.0 0.0 366 166 1.0 na

Sandf ire Resources NL SFR E 0 0 Au, Ag 1,331 604 Au, Ag 0.0 0.0 1,331 604 3.8 na

Tiger Resources Limited TGS P 0 0 505 229 0.0 0.0 505 229 1.4 2011E

Thundelarra Explorat ion Limited THX E 0 0 0.0 0.0 1mlb U3O8 0.0 0.0 0.0 0.0 0.0 na

Venturex Resources Limited4 VXR E 258 117 394 179 0.0 0.0 394 179 1.1 na

YTC Resources Limited YTC E 0 0 280 127 280koz Au 0.0 0.0 280 127 0.8 na

Average: Australia

Total/Total Average 6,558 2,975 25,175 11,419 0 0 25,175 11,419

(1) P: Producer; E: Explorer; I: Imminent - includes companies with bankable feasibility studies and likely to be in product ion within 3 years; IHC: Investment Hold ing Company

(2) Reserves, resources and mineralised material published by the relevant company. Tonnes are metric (2204.6 pounds).

The applicable mineral resource codes are by country: Australian: JORC, Canadian: NI 43-101, South Africa: SAM REC

(3) For copper only. Assumes a uranium price of US$3.80/ lb and a gold price of US$1340/oz * M ineral resource est imates are inclusive of the mineral reserve.

(4) Venturex resources are stated as copper equivalent. Refer to VXR note in this report for conversion parameters.

(All M ineralisat ion)1

Total Copper (Cu)

Copper (Cu) Copper (Cu) Copper (Cu)

Reserves (Equity)2 Resources (Equity)2

Historical/M ineralised M aterial

(Equity)2

COM P A N Y EV-Cash EV-Cash EV-Cash

Code P/Book P/Net Cash /Reserves /Res'v+resources /Total Cu Spot 3M fwd

13 Oc to ber 2010 (x) (x) US$/lb US$/lb US$/ lb 3.81 3.82 1 month 3 month 6 month 12 month Hi Lo

AUSTRALIA

Altona M ining Limited AOH 2.1 6.2 0.06 0.02 0.02 1 1 67 175 67 20 5 209

Avalon M inerals Limited AVI 2.9 7.6 na 0.02 0.02 1 1 22 38 0 31 26 47

Blackthorn Resources Limited BTR 1.7 7.8 na 0.03 0.03 1 1 14 4 -15 121 25 133

Discovery M etals Limited DM L 4.9 9.7 0.47 0.10 0.10 3 3 26 79 36 151 12 181

Equinox M inerals Limited EQN 5.1 -17.1 0.95 0.34 0.34 9 9 11 31 31 55 2 80

Gunson Resources Limited GUN 0.7 32.8 na 0.04 0.04 1 1 20 41 15 4 39 79

Sandfire Resources NL SFR 17.4 24.3 na 0.70 0.70 18 18 24 86 96 108 3 172

Tiger Resources Limited TGS 5.1 22.8 na 0.39 0.39 10 10 51 69 42 103 4 145

Thundelarra Exploration Limited THX 2.4 5.6 na na na na na -8 36 39 4 29 104

Venturex Resources Limited4 VXR 2.3 11.4 0.20 0.13 0.13 3 3 8 -3 -18 -18 36 43

YTC Resources Limited YTC 1.6 7.8 na 0.14 0.14 4 4 12 65 12 33 18 70

Average: Aust ralia 0.42 0.19 0.19 5 5 22 56 28 56 18 115

Total/Total Average

Valuat ion (%) of Cu

Price (USD)

Res'v+resources

(%)

Share Price Performance Current Share Price

% off 12 month



Altona Mining Limited

0.29

Debt (A$m) - Sep 10F

Enterprise value (A$m)

Avg monthly volume (m)

Cash (A$m) - Sep 10F

Price/Cash (x) Cash (A$m)

Price/Book (x)

Listed Company options: Net asset backing (Ac/share)

^Assumes Con. Notes (maturity June 2011) converted at nominal 20cps * 2011 shares on issue assumes converting notes converted at A$0.20/share in June 2011.

$11M exploration budget for 2008.

Experienced board and management.

* Contained gold in reserves is 152koz, Zn 25.2kt, Ni 6.2kt, Co 12.6kt.

Resources (includes proved and probable reserves)

Kuhmo Nickel Project: 6.0mt @0.6% Ni; 33kt contained Ni

** Contained gold in resources is 429koz, Zn 45.4kt, Ni 16.8kt, Co 20.2kt.

Mineralised Material (est., non compliant w ith JORC)

Contacts Directors

Dr Alistair Cowden (MD) K Maloney (Non Exec Chair)

Tel: 61 (8) 9486 8400

West Perth, WA, Australia P Ingram (Non Exec Dir)

J Brewer (Non Exec Dir) Cu,Au,Zn,Ni

F Harris (Non Exec Dir)

H Solin (Non Exec Dir)

5,000Drilling - Other/Diamond (m) *

none

0.00

Funding from JV partners (A$m)

Capital raisings (A$m)

Cash backing (Ac/share)

12.7

5.2

Shares on issue (pr end) (m shares)

15,000

0.90 1.08 5.71

43

245.3 245.3

20,000

100%

Kuhmo Nickel Ni, Pt Priv.

100%

Project

95%

Kylylhati

100/49%

Cu

Total Resources **

100%

Roseby

Roseby SEEP Med. Term Expl.

Adv Expl.

0.0

ProjectProcess

Status Location

0.00

0

10.2

5.6

105104.9

906

DFS, Financing

1,997906.0

739

4.5 2.0

-

Cu,Au

none

Xstrata

kt

150

1,0112,228

Flot'n

Outokumpu Project

Key Projects

Metal

JV

Partner

Aus(Qld)

Route

Cu,Au,U none

www.altonamining.com

0.00.0

Flot'n

DFS

TypeA Cowden (MD)

Target

Total Reserves *

Roseby

Roseby

Meas+ind+inf

Meas+ind+inf

100%

100%

47.9 0.70

Kylylhati

Proved & Prob.

Cu,Au

Probable

Option

Ownership/

Converting notes (m) 0.136 9

Classification

3.96

0

5.2

2.3

2.49

0

11.0 12.7

Copper CuOreProject

12.9

ktReserves

(JORC)

c/off

KLP Asset Management (4.1%), Pareto Grow th (3.3%) -

215Land holding ('000 ha) *

Tenement costs ($k per year)

Code for reporting mineral resources - Australian:

0

AOH.AUCopper,Gold, Uranium

Finland, Australia (QLD)

DFS (2 Projects), Advanced Exploration

13 October 2010

245.3

52 week range (A$/share) 0.09

Exchanges: ASX:AOH, FRF:URZ, BLN:URZ, NOR:URLA

Capital Profile

to

Number of shares (m)

Share price (A$) 0.275

67.5

67.5

Options and warrants (m) 6.5

321.6Fully diluted (m)

0.0

Market capitalisation (undiluted) (A$m)

AOH expects to be in production by 1H12.

Outokumpu Copper Project (Finland) is a low risk, low

capex brownfields development. Capex A$46m, opex

US$1.33/lb Cu.

Outokumpu Project production: 8ktpa Cu, 8.4kozpa Au,

1.6ktpa Zn, ~A$33mpa EBITDA (AOH forecasts).

Roseby (0.9mt Cu current resource) is one of the largest

undeveloped open pit Cu resources in Australia.

Roseby DFS Optimisation Studies likely to focus on

increasing resources to ~200mt Conatined Cu and large

scale bulk mining for >40ktpa Cu.

Major exploration upside in Aust and Finland.

Enterprise Value only ~US$60/t contained Cu,

production companies typically >>US$150/t.

RCR assessed NAV is A$0.56/share (fully diluted) using

base case US$2.50/lb Cu, A$/US$ = 0.80 long term.

Kumho Nickel Project in Finland - established resource.

33

6.2

Investment Points

2.1

11.0

No

Major shareholders: Tulla Resources Group (4.8%)

Aus(Qld)

Aus(Qld)

Finland

Finland

Mt Isa Inlier Regional Early Expl.na100%

Flot'n

53

Analyst: Dr Tony Parry

Flot'n

[email protected]

%

0.7

Altona Mining Limited

1.3

0.26 1.00 2.13 4.36Exploration and Evaluation (A$m)

0.68

IOCG

403.0

0.5

335.1

67.9

1.25

0.68

335.1

%

0.00

13.2 13.2

Mlb

VMS

VMS

Sed, IOCG

0.3

1.564.3

2010F

AOH's copper inventory is >1mt contained Cu; it is targeting

production within 18 months. Potential ramp to 50ktpa Cu output

in 4 yrs. NAV is A$0.56/sh and EV is only US$55/t Cu suggesting

AOH is still not being recognised as a near term producer.

Jun-10a 2011FYEAR END: June

0.7

Exploration/(Expl.+ Corporate) (%)

2.73 3.60

66

0.7 67.9

0.3

0.3

0.3

889

231

-

3,000

33.9

Equity

5,000

1.20

-

0

130215

Drilling - RAB (m)

Funding duration at current burn (years)

Mt

Reserves and Resources/Mineralised Material

Company Comment

Cu

21,000

0.3

215 215

58

5,000

132.5

100% 8.4

140.9 1,011

-

403.0

Corporate (A$m)

12,000

20,000 20,000

Eqty

672.3 245.3 315.0

0.3

4.00

A$ 0.275

Production and Financial Forecasts

Sep-10F 2009a

0.000

0.050

0.100

0.150

0.200

0.250

0.300

Oc

t-09

No

v-0

9

Dec

-09

Jan

-10

Ma

r-1

0

Ap

r-10

May

-10

Jun

-10

Aug

-10

Sep

-10

Oc

t-10

Sh

are

Pri

ce (

$/S

ha

re)

AOH - Altona Mining Limited

Source: Bloomberg

Overview: Altona Mining was formed from the merger of Universal Resources Limited and Vulcan Resources Limited, bringing together two copper-focused companies which were listed on the ASX in 2002. It now has two advanced copper projects and is expecting to be in production in 2012. Outokumpu Copper Project (Finland): The Kylylhati copper ore body was discovered by Outokumpu in 1984 and acquired by Vulcan Resources in 2005. After undertaking a DFS in 2008 and then acquiring the Luikonlahti processing plant (43km away) in January 2010, AOH has optimised the DFS and is now committed to commence production as a low risk brownfields project involving refurbishing the processing plant and establishing a relatively straightforward underground mining operation, utilising longhole open stoping and access via a decline. The key operating parameters from the optimised DFS are summarised on the following page. The low estimated capex of A$46m and cash opex of US$1.33/lb Cu suggest that the project is readily financeable. AOH expects to commence production in 1H12, producing 8ktpa Cu, 8.4kozpa gold and 1.6ktpa zinc, all in concentrates. Current AOH modelling gives a project NPV of A$94.5m (pre tax, unleveraged) using 8% real discount rate and Cu price US$3.00/lb, Roseby Project: Roseby is the major copper asset of AOH and likely to be the ultimate ‘company maker’ The 2008 DFS undertaken on the Roseby Project was based on 5mtpa ore treatment to give ~27ktpa contained copper and 6kozpa gold. AOH is now undertaking an Optimisation Study on Roseby to focus on larger scale open pit bulk mining techniques (similar to PanAust’s Phu Kam Project in Laos) to produce in excess of 40ktpa contained copper. The current 0.9mt contained Cu resource and 0.3mt reserve could be expanded by using lower cut-off grades and incorporating additional higher recovery sulphide resources below the current resource envelope. AOH is targeting increasing the total resource from 132mt to >200mt. This could support a processing plant of 8-10mtpa capacity, but most importantly, a lower capex per tonne of copper produced. AOH is particularly encouraged by recent drilling by Xstrata(SEEP JV) which intersected major thicknesses of non-refractory sulphide mineralisation below the current predominantly weathered resource envelope, including total intercepts of 235m @ 0.45% Cu from 2m, and 198m @ 0.84% Cu from 4m. The 2008 DFS indicated capex of A$214m, cash opex (C1) of ~US$1.52/lb. Based on the DFS parameters, our assessed after tax NPV using 10% nominal discount rate and US$2.50/lb Cu price, A$/US$ 0.85, was A$165m (RCR URL Report October 2009). Exploration Upside: Large highly prospective strategic base metals (and uranium) exploration holdings in Queensland and Finland. Kuhmo Nickel (33kt Ni) resource established in Finland. Investment Comment: Our assessed NAV for AOH is A$0.56/share, assuming US$2.50/lb long term copper price, A$/US$ = 0.80 and allowing for converting note dilution assuming conversion in July 2011 at A$0.20share. If we ascribe zero value for Roseby, the valuation still comes to A$0.30/share. Recent share price gains suggest the market is slowly waking up to the fact that AOH is moving rapidly to production status and not just another copper exploration hopeful. The re-rating still has a way to go.



ALTONA MINING VALUATION

Target

Copper Copper Resource Reserve Price

Equity Resource Reserves Valuation Valuation A$m

Projects (mlbs) (mlbs) US$/lb US$/lb

+ Outokumpu Copper Project 100% 324 150 0.17 0.37 57.5

+ Roseby Copper Project 100% 1,997 739 0.04 0.11 82.5

+ Kuhmo Nickel 95% 7.0

+ Other Finland assets 100% 10.0

+ Roseby Exploration - Xstrata JV 3.0

+ Roseby Regional Exploration 7.0

Sub Total 167.0

+ Cash (Sep '10F) 11.0

+ Finland Government Grant 3.6

+ Tax Losses 15.4

- Corporate 19.6

Sub Total 10.3

AOH NET ASSET VALUE 177

Capital Structure

Shares 245.3

Fully Diluted Shares* 321.6

AOH NET ASSET VALUE PER SHARE :A$/share 0.72

AOH NET ASSET VALUE DILUTED :A$/share fully diluted* 0.56

*Fully diluted shares assumes con. notes converted at June 2011 maturity at A$0.20/share

RCR Valuation AssumptionsOutokumpu Project: We have used AOH quoted NPV, adjusted for RCR Cu price forecast US$2.50/lb, A$/US$ = 0.80, after tax.

Roseby Project: Based on a 50% discount to assessed NPV - RCR financial modelling of Roseby using 2008 DFS parameters.

Roseby modelling uses 10% nominal discount rate, US$2.50/lb long term Cu price, A$/US$ = 0.80 long term.

Other Exploration Projects: based on RCR assessment of nominal value.

KYLYLHATI COPPER PROJECT - UPDATED 2010 DFS PARAMETERS

RESERVE ESTIMATESCopper resources and reserves

Copper Copper Zinc Gold

Mt % kt kt koz

Resources 8.40 1.25 105.0Probable Reserves 4.34 1.56 67.85 25.2 90.8

Life of Mine: 8-9 years based on Probable Reserves

MINING METHOD Underground - longitudinal longhole open hole stoping

Cemented rock fill

PROCESS METHOD Dedicated concentrator (refurbished Luikonlahti plant)

Rod mill and 2x pebble mills - wet comminution.

Conventional sulphide flotation circuitsProduces separate copper, zinc and nickel cobalt concentrates

PRODUCTION RATE :mtpa 0.55

:ktpa Cu 8.0 Contained in concentrate.

:kozpa Au 8.4 Contained in concentrate.

:ktpa Zn 1.6 Contained in concentrate.

CAPITAL COSTS :A$m 46 Plus sustaining capex of ~A$6mpa (A$11/t).

RECOVERY - COPPER :% 91.5 (Au recovery is 72%)

DIRECT OPERATING COSTS :US$/t 17.36 (not incl. royalties, TC/RC)

:US$/lb 1.33 (C1 cash cost after by product credits).

TOTAL ROYALTIES (Gov't & Vendor) :% 0.00 No royalties payable in FinlandTAX :% 26 Finland

MINE LIFE (Based on Probable Reserves only) :Years 8-9

TARGET COMMISSION DATE : 1Q12

Contained Metal

Source: Altona Mining Ltd



Discovery Metals Limited

1.35






Price/Book (x)

Listed company options: Net asset backing (Ac/share)

*Copper prospective tenements only; held and under application. Quarters refer to calendar year.

Average silver grade of Reserve 18.2g/t


Dikoloti Nickel Project: Inferred resource: 4.1mt grading 0.7% Ni, 0.5% Cu, 1.2ppm PGE's

Average silver grade of Resource 17.3g/t

Contacts Directors

Mr. Brad Sampson

Managing Director

Tel: 61 (0) 7 3218 0200

Brisbane, QLD, Australia Xstrata/JOGMEC

3479.8158

Boseto (above 3 deposits) Measured 100% 4.0 1.6 0.6

Project

Mt

Zeta Proved + Probable 100% 10.5 1.5

0.75

39.3

13.1

24.6

Plutus and Petra Proved + Probable 100%


24.4

11.3

78

301.0

0

11,250

1,010

1.4

0.6

Mlb

671304

64

1.4


Equity

0.6

0.6 147

24.6

(JORC)

100.00

%

0.75

39.3

0.00



966

63

Drilling - RAB (m). Est.


0

9.20

11,250

-

Discovery Metals Limited

Boseto copper project (DML 100%, Botswana): 36ktpa Cu,

1.1mozpa Ag production expected from 1Q12. Project financing

underway. Strong exploration upside near mine and regional in

Kalahari Copper Belt. Two new exploration targets - drilling 4Q10.

11.05 8.008.00Exploration and evaluation (A$m)

A$ 1.18


2012FSep-10F 2010aJun-10a 2011F

4.605.33 4.60

4.00

1.16

Ag

67

2.4

301.0

45.10

0

1,010

Cu

0

13.1

0.6

141.1

571.0

1.4

3241.3

12.7

-

1,447

2.9

40.00

34.0

1,124

0.75

7.9

52 week range (A$/share) to

13 October 2010

0 Exploration/(Expl.+ Corporate) (%)

1.48

Ore

Options and warrants (m)

1.18

0.42

DML.AU

9

Copper, Nickel

Botswana

Bankable Feasibility Study

Exchanges: ASX:DML, BSE:DML, AIM:DME

Capital Profile

Convertible notes (m)

YEAR END: June

80.3


Drilling - Other/Diamond (m). Est.

Land holding ('000 ha)*

Share price (A$)

Number of shares (m) 302

21.8

Indicated

Corporate (A$m)

2.00

1.15

301.0

0.00

356.4

311

Transamine (8.3%), Citi Group Global Markets (7.0%), Investec (5.1%)

0.0


Major shareholders: Macquarie Bank (11.4%), Taurus Fund (11.0%)

63

428.3

0

36.6

63

-

2.75.3

966

-

0

45,000

-

391.9

45,000

966

Cu-Ag

40

Fully diluted (m)

356.4

ProjectProcess

na

Target

Flotation

0.0 0.0

100% 18.5 259 10.6

102.8

100%

1.4

57.1

9.7

Investment Points

4.9

No

Company Comment

25.1

12.2

66.8

41.7

17.0

Botswana Cu-Ag focus. Exploration budget A$8mpa.

BFS Aug 2010: DML NPV US$251m (Cu price

US$3.00/lb). 5 year LOM. Production 35ktpa Cu and

1mozpa Ag. Payback under 2 years.

DML Development Plan: 15 years LOM, assumes

conversion of open pit inferred resources, and

underground mining to 650m depth. Capex US$175m

(+$40m for power), opex US$1.42/lb (C1 - est. LOM).

Boseto Resource 3.19bn lbs Cu at 1.4%. Upgrade

expected 1Q11.

Prospective strike horizon 1,300km; less than 300km

explored. Potential for another Boseto. Drilling 4Q10.

Botswana: Strong democracy. Stable mining/taxation

policy and legislation - unchanged since 1999.

NAV A$1.15/share (US$2.50/lb Cu price, 10% r/i); rising

to A$2.00/sh on commissioning 1Q12 at spot prices.

Copper (Cu)


Boseto (above 3 deposits)

Reserves

Classification

Boseto (above 3 deposits)

%

RouteTypePartner

Botswana

Metal

85%/40%

Location

100%

Early Expl. Botswana

Development

Ni

none

36.6


Key Projects

3,190

Cu

0.0

2,478.443.6

2.9

JV

Option

Dikoloti Nickel Project

Ownership/

Boseto Copper Project

G Galt (Non-Ex Chairman)

B Sampson (MD)

J Shaw (Non-Ex Dir)

Total

M Cordiner (Non-Ex Dir)

www.discoverymetals.com.au J Read (Non-Ex Dir)

Project

R Gabonowe (Non-Ex Dir)

Analyst: John [email protected]


Total

Cut Off

Inferred

Kt

Cu Eqty

Moz

Status

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Oct-

09

No

v-0

9

Dec-0

9

Feb

-10

Mar

-10

Ap

r-10

May-1

0

Jun

-10

Jul-

10

Aug

-10

Sep

-10

Sh

are

Pri

ce (

$/S

hare

)

DML - Discovery Metals Limited

Source: Bloomberg

Overview: DML listed on the ASX Dec ‘03. Its main project is the Boseto copper project in the Kalahari Copper Belt of north-west Botswana. Initial project tenements were granted to DML September 2005. Boseto copper project (Botswana): DML has a strategic land position in the Kalahari Copper Belt (10,100km2) extending over 300km of strike prospective for Cu-Ag mineralisation and is similar in style to the better known deposits of the Central African Copper Belt and Zambia and DRC. Boseto mineralisation occurs mostly as chalcocite, with minor bornite and other copper sulphides. Boseto BFS: (SRK Consultants) Based on open pit mine using Zeta and Plutus measured and indicated resources – economic pit shells (designed at US$2.50/lb) contain a large mineral resource of 55mt grading 1.41% Cu (which has been partially drilled to Reserve status for 20.4mt @ 1.4% Cu). Mill throughput 3mtpa from 1H12 to 4Q16 – 5 years – exclusively from open pit to ~120m depth. Open pit mineralization is sub-vertical between 5 and 15m thick, ore and waste requires drill and blast. DML’s Development Plan: It is anticipated that open pit reserves will increase significantly (>40mt – as in pit resources are converted to reserves), and production from open pit and underground is expected to extend LOM to 2026. Zeta underground mining expected to commence 3Q14 at 1.5mtpa. Positive scoping study completed March ‘10; DFS expected June ‘11. Focused on high grade >1.5% Cu, over 2km strike at 100m to 650m depth. Plutus - prospective u/g yet to be drilled at depth. Exploration: Plutus mineralisation remains open at depth. Zeta underground infill drilling to upgrade resource to M&I expected 1Q11. Inferred resource is currently to ~400m depth with continuity of mineralisation expected to at least 650m. Regional exploration with potential to define new standalone projects – strong anomalies at Ophion (12km strike, 40km from Zeta) and Ourea (4km2, a further 50km from Zeta). Drilling 4Q10 – targeting the “prospective horizons” of the D’Kar Formation. Investment Comment: RCR values DML at A$1.15/share (based on LT copper price of US$2.50/lb, A$:US$0.80, 10% nom. r/i) assuming parameters in DML’s Development Plan – 15 years LOM, 3 mtpa plant capacity (detailed assumptions on facing page). Sensitivity analysis discounting US$3.50/lb copper for LOM, A$:US$0.98, increases NAV to A$2.00/share. We have factored in assumed plant capacity expansion in scenarios where the copper price is over US$2.50/lb LOM. Given the positive copper price outlook, potentially through 2020, we expect DML’s share price to trade at A$1.50-2.00 with successful plant commissioning 1Q12 - or earlier on good regional exploration results.



Base#Resource Base NPV Adjusted

Equity Val'n NPV Factor Value

(%) (US$/lb) (A$m) (%) (A$m)

Assumptions

Long Term Copper Price : US$/lb 2.50 2.50 1.50 2.00 3.00 3.50

Exchange rate: AUUS 0.80 0.80 0.80 0.80 0.80 0.80

Projects

Boseto project (based on DML : NPV @10%* 100% 0.16 288 80% 230 10 60 375 478

Development Plan).

Resources and Exploration

Boseto project (assume. +100%) : NPV @10%* 100% 0.07 63 70% 44 10 18 114 169

Other 75 75 1 50 110 135

Sub-total Exploration 138 119 11 68 224 304

Assets

+ Cash 39 39 39 39 39 39

+ Tax Losses 6 6 6 6 6 6

Liabilities

- Debt 0 0 0 0 0 0

- Corporate 38 38 38 38 38 38

- Reclamation 0 0 0 0 0 0

DML Net Assets 432 356 28 136 606 789

Fully diluted shares (m) 311.3 311.3 311.3 311.3 311.3 311.3

Cash on Option Conversion 4.3 4.3 4.3 4.3 4.3 4.3

DML Net Asset Value per share : A$/share 1.43 1.18 0.09 0.45 2.01 2.61

DML Net Asset Value Diluted : A$/share dil 1.40 1.16 0.10 0.45 1.96 2.55

* 10% nominal discount rate. # Resource base assumes 1.429bn lbs Cu - DML Development Plan.

Sensitivity of Net Asset Value to Equity Raising Price:

DML Net Asset Value (assuming A$80m capex raised through share issue at A$1.10) 1.13 0.28 0.56 1.79 2.26



RESOURCE ESTIMATES Copper Resource Grade Copper

Cutoff Mlbs

BFS - Reserves Boseto - Reserves 0.30% 710

DML Development Plan Assumptions Boseto - Resource na 1,429

MINING METHOD OPEN PIT from 1Q12; plus UNDERGROUND in DML Development Plan - commences 2014.

PROCESS METHOD

BFS DEVELOPMENT PLAN^

EVALUATED OPERATING PERIOD 5 years 15 years

RESOURCE CONVERSION :% 70

TONNAGE DILUTION :% na

GRADE UPLIFT :% 4

DML KEY ASSUMPTIONS

PRODUCTION RATE :mtpa 3.0 3.0

AVERAGE HEAD GRADE - Cu (diluted) :% 1.46 1.44

AVERAGE HEAD GRADE - Ag (diluted) :g/t 18.7 20.2

RECOVERY - COPPER :% 81.1 83.6

RECOVERY - SILVER :% 61 61

COPPER PRODUCTION :ktpa 34.4 36.4

SILVER PRODUCTION :Moz pa 1.0 1.1

CAPITAL COSTS :US$m 175 215* *Includes US$40m coal fired power plant (funded from cashflow)

SUSTAINING CAPEX :US$/t 1.30 1.20 RCR estimate

OPERATING SITE COSTS :US$/t 34.83 34.68

SMELTING :US$/t conc. 45 45

REFINING :Usc/lb Cu 4.50 4.50

CONCENTRATE TRANSPORT :US$/t conc. 180 180

CASH COST (C1) :US$/lb 1.28 1.23

ROYALTY :% 3% for copper; 5% for silver

TAX :% 25% minimum, increasing with profitability based "Twelth Schedule".

TAX HOLIDAY No tax payable till capex and pre-production expenditure recovered.

MINE LIFE :Years 5 Years 15 Years

COMMISSION PROJECT : 1Q 2012 18 month ramp-up.

These figures are based on the Bankable Feasibility Study (August 2010) and DML's Development Plan. DML's Development Plan assumes conversion of

Inferred Resources and related operating assumptions and are preliminary in nature and intended to provide only a general indication of project scale and

economic robustness. Considerable refinement may result from subsequent drilling and operating activities.

COPPER PLANT: 1. Three stage crushing. 2. Flotation nad concentration.

Highgrade forecast 3Q12-4Q13 during debt repyment period.

Development Plan breakdown: mining US$1.35/t mined; plant &

power US$11.72/t ore; admin US$1.36/t ore

^DM L forecast 3Q12-4Q13 during debt repyment period.

24.1 1.3

45.0 1.44 (diluted)

Offtake in place with metals trader Transamine.

BOSETO COPPER PROJECT KEY ASSUMPTIONS (derived from BFS and DML Development Plan, August 2010)

Tonnes

Mt % Cu

DISCOVERY METALS LIMITED VALUATION

Adjusted

Copper Price Sensitivity

(A$m)



Equinox Minerals Limited*

6.25



Major shareholders: National Nominees (5.56%)



Price/Cash (x) Drilling - RAB (m). Est.

Price/Book (x)

Company options: Land holding ('000 ha)*

Quarters refer to calendar year. * Copper projects only. AU/US:

Total In-Pit Reserves

Uranium (U3O8) Resources

Malundwe Ind + Inf

Chimiwungo

Lumwana Uranium Resources within the Copper Pits (2008 UFS)

Contacts Directors

C Williams (Pres., CEO)

D McAusland

B Penny

[email protected]

West Perth, Australia

Kevin van Niekerk (VP IR) Cu/Co/U

2.50 5.5 5.5

3.55

51.50

Kt

2.0

In-pit resources Inferred 100%

Lumwana Reserves: In-pit

Bn lb

*Subject to a 70% claw back option to Anglo American.

Inferred 0.63 0.2

Option Status

Lumwana

U3O8

563.1 7.8

%%

5.7

Mr Craig Williams (Pres., CEO)

Tel: 61 (0) 8 9322 3318 Location

342.5 0.74

13 October 2010

70,000

331.2

Investment Points

19.9

5.0


4801.8

470.7

217.6

105.7

240

0.2

%

0.2

ppm

Cut OffOre

200.2

305.9

1 (416) 865 3393, Toronto

www.equinoxminerals.com

100%

1.24

100%

100%

EQN is focused on production, development and

exploration of copper (and by-product U) in Zambia.

Lumwana is one of the world's largest copper mines

(top 20) - target production 150ktpa over 37 year LOM.

Phase 1 expansion: Increasing mill throughput from

20mtpa to 24mtpa (debottlenecking) by Dec 2011.

Phase 2 expansion: DFS expected March '11. Potential

throughput rate 35mtpa (+46%) from 2014. Indicative

capex <US$400m. Cu production ~200ktpa.

EQN growth opportunities include local and regional

exploration upside and acquisitions. Potential for

significant resource upgrade at Chimiwungo 2Q11.

Mufupanda IOCG exploration target - tenement granted

Nov '09 (Zambia). Adjacent to BHP/BTR project.

12 month share price target A$7.00. Assumes

significant resource upside and US turnaround.

Cut OffClassification/

Company Comment

Cu

A$ 6.12

Mlb

2.72.7

7.8

na

Zambezi Project*

Mufupanda

No

Equity

Cu Eqty

Cu/Co/U na

Cu/U

4331.1

Exploration and Evaluation (US$m)

38

P/CF (x)

EV/EBITDA (x)

Yield (%)

80,000

5.6

0.0%

-

40,000 40,000

0.98

OreCopper (Cu)


331.2331.2

Code for reporting mineral resources - NI 43-101 and JORC

331.2

-

Mt

331.2

CuCu

Bn lbMt

5.5

5.6

80,000

0.0%

-

0.0%

5.6

7.1

71

93

52

18.2

66

0 0

8.6

0.0

10.1

-

0.0%

na na

-

0.0

na

0.0%

EQN.AU

16


2012F2009a 2010F 2011F

790

Equinox Minerals Limited

Share price (A$)

Copper, Uranium, Gold

Zambia

Production

Exchanges: ASX:EQN, TSX:EQN

Capital Profile

YEAR END: Dec6.12

0Equity Production (t)

3.4052 week range (A$/share) to2008a

Fully diluted (m) 724




0

100%

Project

EBIT (US$m)

EPS (norm) (A¢/share)

CFPS (A¢/share)

PER (x)

Dividends (A¢/share)

Net Profit (norm) (US$m)

Geology

41

Chimiwungo Pit

Proven + Probable

Proven + Probable

Malundwe Pit

Resources (inclusive of in-pit reserves and resources above)

Inferred

0.86

0.62

0.073

0.2

na

na


151

244 -36

-56

0

2

173

0

12.9

0

0

243

34

Lumwana project (EQN 100%), Zambia, is expected to produce

~140kt Cu 2010. A 2 phase expansion program is underway with

potential to increase production to ~200kt Cu from 2014. Excellent

near mine and regional copper (and uranium) exploration upside.

143

402

166

589

109

9.3 5.0

0

376

122

100%

517

0.2

100%

7.2

8.6

na Early Expl.na

Route

Ownership/

Lumwana LML

Lumwana Copper Proj

Project

100%

100%

Metal

IOCG

nana Adv Expl.

na

Zambia

Zambia

na

100%

JV

0.056 1.2120

Cap.

Key Projects

2.7

Zambia

ZambiaDevelopment

na

Flotation

J Pantelidis

Analyst: John Wilson

0.70

13.105.9

Plant

na Adv Expl.

120100%

Process

0.104

Proven + Probable 100%

U3O8

417.2 0.60

Project

4.7

5.6

kt

0.91 2.0

U3O8 Eqty

Measured + Ind 100% 0.2 2.53

Cu

2.15

Malundwe + Chimiwungo

Lumwana 5.6

Probable and Inf

4.7

13.955.6

P Tomsett (Non Exec Ch)

D Mosher

20Mtpa

na

15.9

Partner

2.2

Mt

6.3

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

Oc

t-0

9

No

v-0

9

Dec

-09

Jan

-10

Ma

r-1

0

Ap

r-1

0

May

-10

Jun

-10

Jul-

10

Au

g-1

0

Se

p-1

0

Sh

are

Pri

ce

($/S

har

e)

EQN - Equinox Minerals Limited

Source: Bloomberg

Overview: Equinox is an international copper mining and exploration company. Its flagship project is the Lumwana copper mine in Zambia, located 220km west of the Zambian Copperbelt. Lumwana Copper Project: Nameplate production of 20mtpa achieved Apr ‘10. Initial mining is from the Malundwe pits which extend over a 4km strike. Production of 140kt of copper in conc. expected in 2010, with mill throughput rate at 20mtpa. LOM copper grade is 0.70%, pit shells were designed several years ago usingUS$1.20/lb Cu and reserves calculated at a 0.20% cut-off grade. Uranium, which occurs in discrete lenses within the pits, is being stockpiled potentially for treatment through a dedicated uranium plant. Development decision deferred pending stronger uranium price outlook. Chimiwungo pit production 4Q12. Optimisation plans: Phase 1 expansion from 20mtpa to 24mtpa mill throughput by debottlenecking and optimisation of the existing plant is effectively a continuation of the mine ramp up. It is expected to be achieved by Dec ’11 at minimal capital cost. Anticipated copper production will increase to 140-160ktpa.Phase 2 expansion study is underway (Ausenco) and is expected March ’11. EQN anticipates mill expansion to 35mtpa throughput at a cost of US$300-400m, with commissioning 2014. Copper production ~200ktpa. Exploration: Lumwana Mining Licence covers 1,355km

2 and contains numerous, near surface high grade

targets within 25km radius of the plant. There is also good potential for additional uranium resources. EQN announced (June ’10) acceleration of the extension exploration drilling program to test for ore body extensions to the south and east of the Chimiwungo pit designs. There are currently 6 rigs on site and there is potential for a significant resource upgrade 2Q11 – based on infill and extension drilling, redesigned pit shells using a copper price of US$2.50/lb, and potentially lowering the cut-off grade from the current 0.2% Cu. Regional: Mufupanda IOCG (1,957km

2). Tenements granted Nov ‘09 – early stage. Airborne magnetic,

radiometric and gravity surveys planned for 2010. Adjacent to more advanced BHP/Blackthorn (ASX:BHP/BTR) Kitumba and Mushingashi IOCGU projects. Investment Comment: Lumwana project appears now to be well on track following production shortfalls dueto a severe wet season 2009, excess early stage transitional material (~30%) impacting mill recoveries, and poor availability of the contract mining fleet (now resolved with Hitachi providing 5 additional trucks). Given the positive outlook for the copper price, the impetus for the next share price re-rating (to >$7.00/share) could be a possible large reserve/resource upgrade at Lumwana 2Q11, coupled with a turnaround in US economic prospects leading to a weaker A$/US$ (timing unclear). Discounting spot market prices, RCR’s NAV is ~A$5.25/share (10% r/i, discounting spot A$/US$0.98, and spot Cu ~US$3.80/lb).



Equinox Minerals Limited

A SSUM P T ION S 2009a 2010F 2011F 2012F 2013F F IN A N C IA L R A T IOS 2009a 2010F 2011F 2012F 2013FA$/US$ 0.80 0 .9 0 0.93 0.87 0.82

Copper price (US$/lb) 234 3 3 3 368 388 390 Net debt/equity (%) 9% 5% 2% -2% -6%

Net debt/ net debt + equity (%) 9% 5% 2% -2% -6%

Current rat io (x) 1.3 3 .8 5.0 6.5 8.0

EBIT/interest (x) -0.5 9 .2 11.4 15.4 15.5

EQUIT Y P R OD UC T ION Debt/operat ing cashflow (%) 545% 16 2 % 84% 66% 64%

Lumwana production (kt Cu) 109.3 14 3 .4 151.1 166.2 171.5 Explorat ion/total overhead (%) 30% 29% 33% 33% 33%

EV/EBITDA (x) 453.9 10.1 7.1 5.5 5.4

EQN equity production copper (kt ) 109.3 14 3 .4 151.1 166.2 171.5 M arket cap/net cash (x) -10.6 - 19 .1 -43.6 62.0 17.8

M arket cap/book (x) 6.4 5.0 4.6 4.2 3.8

P R OF IT A N D LOSS (A $ m) F IN A N C IA L SEN SIT IVIT IESRevenues 595 8 6 5 1093 1310 1367

Operating costs -212 - 3 4 3 -355 -372 -412 % Change in EPS for a 10% increase in:

Depreciat ion/amort izat ion -47 - 74 -84 -90 -95

Explorat ion expensed -5 - 5 -6 -6 -6

Corporate -12 - 13 -12 -12 -12 Copper Price 22% 19% 20%

Other (incl. royalt ies) -356 - 2 7 -48 -41 -43

EB IT - 3 6 4 0 2 58 9 79 0 79 9

Interest 77 4 4 51 51 51 % Change in NPV for a 10% increase in f orecast minelife

Op erat ing p rof it / loss - 113 3 59 53 7 73 9 74 8 commodity assumpt ions for:

Tax 57 - 116 -161 -222 -224 B ase + 10 %

M inorit ies 0 0 0 0 0 A $/ share A $/ share %

N et pro f it / loss - 56 2 4 3 3 76 517 52 3 Copper Price US$2.50/lb 3.83 4.34 13%

Net abnormals/extaordinaries 0 0 0 0 0

Net prof it / loss (reported) -56 2 4 3 376 517 523

B A LA N C E SH EET ( A $ m) VA LUA T ION (US$ m) Q3 10 C ash and depo sit s 10 9 2 3 5 3 6 2 53 1 70 4

Total current assets 327 4 3 6 564 733 906 A ssumpt ions B ase " W hat if "

PP&E 110 3 10 78 10 2 5 9 52 8 74 Long Term Copper Price :US$/lb 2 .50 3.50

Total non-current assets 1131 110 5 1052 979 901 Long Term AUUS 0 .8 0 0.80

Total assets 1458 154 1 1615 1712 1807 Pro ject s

Total current liabilit ies 270 16 7 167 167 167 Lumwana copper project 100% NPV@10% 2 14 3 3000

Reclamation reserves 0 0 0 0 0 Based on reserves only

Long t erm debt 4 0 5 3 4 8 3 4 8 3 4 8 3 4 8 R esources and Exp lo rat io n

Total non-current liabilit ies 507 50 9 509 509 509 Lumwana regional 100% 3 0 0 600

Total liabilit ies 777 6 76 676 676 676 Other Zambia 100% 50 75

Eq uit y 6 8 1 8 6 6 9 4 0 10 3 6 113 1 Uranium stockpile/project 100% 50 75

Other 5 5

To t al d ebt 519 4 6 1 4 6 1 4 6 1 4 6 1 A sset s

Net debt 410 227 99 -70 -243 Cash and deposits 2 13 213

Average shares (fully diluted) (m) 684 72 3 723 723 723 Rehabilitat ion fund 0 0 Other - 3 1 -31

F LOW OF F UN D S (A $ m) Liab ili t ies

EB ITD A 11 4 77 6 73 8 8 1 8 9 4 Debt - 4 6 1 -461

Cash f low from operat ing act ivit ies Corporate - 8 2 -82

Operat ing surplus 383 52 2 739 939 954 Reclaimation reserve 0 0

Corporate -12 - 13 -12 -12 -12 N et A sset s ( U S$) 2 18 7 3394

Net borrowing cost -24 - 58 -75 -88 -103 N et A sset s ( A $) 2 73 4 4243

Net tax paid 57 - 111 -141 -213 -226

Net explorat ion paid 0 - 6 -6 -6 -6 Fully diluted shares (m) 72 4 724

Other non cash items -309 - 50 40 78 108 N et asset s/ share ( A $/ shar e) 3 .8 3 5.91

N et cash f ro m op erat ing act ivit i es 9 5 2 8 4 54 6 70 0 716

Cash f low from invest ing act ivit ies

Capital expenditure -50 - 4 9 -31 -18 -18 Valuation/Reserve lb :US$/lb 0 .4 6 0.72

Asset Sales & Other 0 - 6 -6 -6 -6 Valuation/Reserve & Resource lb :US$/lb 0 .16 0.25

N et cash f ro m invest ing act ivit ies - 50 - 54 - 3 6 - 2 3 - 2 3

Cash f low from f inancing act ivit ies

Net proceeds from issue of shares 157 0 0 0 0

Dividends paid 0 0 0 0 0

Net proceeds from borrowings -145 - 13 7 -382 -507 -520

N et cash f ro m f inancing act ivit ies 13 - 13 7 - 3 8 2 - 50 7 - 52 0

Net change in cash 58 9 3 127 169 173

P R OD UC T ION ST A T IST IC SLumwana 10 0 %

Ore treated (mt ) 13.69 18.00 20.25 22.25 24.00

Copper head grade (%) 0.94% 0.88% 0.80% 0.79% 0.76%

Recovery (%) 85% 91% 93% 94% 94%

Recovered grade (g/t ) 0.80% 0.80% 0.75% 0.75% 0.71%

Total contained copper (kt) 109.4 143.4 151.1 166.2 171.5

Eq uit y Prod uct io n ( kt ) 10 9 .4 14 3 .4 151.1 16 6 .2 171.5

C ash C ost s ( C 1) ( U S$/ lb ) 1.4 9 1.3 3 1.2 9 1.3 0 1.3 8

To t al C ost incl D &A ( U S$/ lb ) 1.8 2 1.6 6 1.6 4 1.6 6 1.75

Cash c osts inc. royalty & tc/rc (A$/t) 32.99 25.85 22.80 24.49 26.53

EQN Share EBIT (US$m) 284.3 417.2 626.0 776.6 770.7

YEAR END: Dec Year Year



Gunson Resources Limited

0.17




Cash (A$m) - Sep 10F *


Price/Book (x)

Listed Company options: Net asset backing (Ac/share)

* A$0.6m w as raised at A$0.06/share in July 2010. * Assumes nominal A$1.5m further equity capital raised in1Q11.

Reserves

Resources

1.1

18.7

25.1

Total Resources 44.9

Note: MG14 & Windabout contain 0.04% and 0.05% Cobalt respectively

Coburn Zircon Project

Coburn Zircon Project

* Zr % and Ilm. % are the % of total contained heavy minerals that are zircon and ilmentite respectively

Contacts Directors

Mr David Harley

(Managing Director)

Tel: 61 (0) 8 9226 3130

West Perth, WA, Australia

Resource - M & I

Reserves - Pr & Prob 0.80

979.0 1.26

187

328 149 161

23 483.7

Mount Gunson - MG14

Mount Gunson - Windabout

Mount Gunson JV

Indicated 100% 1.00

Inferred 49%

19

1.31 0.5

534

187

HM mt

0.5

100%Indicated

0.2

% %

(JORC)

Option PartnerMetal

Cut OffHeavy Minerals

100% 308.0 1.20

0

2,000

8 19

366

kt

85

1.0

242

Zr %*

BFS underway

Mid Expl.

Aust(SA)

Location

Aust(SA)

Aust(SA)

Status

0.0

HM%

1.70

1.19

none

Mt Gunson MG14/W'about 100%

Fowlers Bay Nickel 100%

nanone

Mount Gunson JV

D Harley (MD) Project

Coburn

49%/25%

100%P Harley (Non-Exec Dir)

Analyst: Dr Tony Parry

www.gunson.com.au

DFS Aust(WA)

Early Expl.

0.5

2.10

0.3

Flotation

na

Cu

mt

0.3

0.3

Ore Cu

0.3

Classification Project

Equity

0.5


0.3

Cut Off

15.116.1

Gravity

0.80

H. MetalsZr

Equity

Type

W Cunningham (Chairman) Ownership/

FlotationCu,Co Xstrata

JV ProcessTarget

0.7

No

GUN has spent ~10 years and nearly A$20m bringing

the Coburn Zircon Project ("CZP") in WA to DFS stage.

CZP estimated capital expenditure is ~A$170m, quoted

NPV is A$163m which is ~A$1.00/share.

CZP is strongly underpinned by positive price outlook for

zircon (67% of revenue).

CZP could be in production by 4Q12 if GUN finds a

development partner by end 2010.

Xstrata exploring for deep IOCG Olympic Dam style

deposits at Mount Gunson (SA),(49% GUN).

GUN looking to get small scale copper operation (~8ktpa

Cu) started at Mount Gunson 100%-owned ground

(MG14-Windabout).

GUN looking for partners to progress MG14-Windabout

BFS and move to production in ~2 years.

GUN is suffering from small company-large project

syndrome. If it finds a development partner for the CZP,

then we see major share price upside.


87

0.5

79

-

500

0.400.10

0.25

0.532.5

Investment Points

0.30.1

273

- -

194.9163.5

0

-

15.1

0.2

Cu,Co none

Ni

8

Fully diluted (m)

4,850

Company Comment

14.914.6

0.1

Copper

0.5

2.550.00Capital rais ings (A$m) *

273

0.0

273

0


1.01

Drilling - RAB (m)


Bruce Birnie P/L (2.3%), Directors (2.3%).

0

138.0163.5

Drilling - Other/Diamond (m)

Land holding ('000 ha)

17.2


596

0


0.10

0.0652 week range (A$/share)



Major shareholders: John Tillbrook (9.2%), HSBC Nominees (2.4%),

17.2


177.9

0.0

GUN.AU

4.4

Zircon, Copper,Gold,Nickel

Australia

DFS, Advanced Exploration

Exchanges: ASX:GUN

Capital Profile

Share price (A$)

Number of shares (m) 173.5

13 October 2010

0.2

173.5

0.60

273 273

75

to

0.69Exploration and Development (A$m)

71

YEAR END: June

82

Sep-10F 2009aJun-10a 2010F

A$ 0.10

0.600.57


Gunson Resources Limited


0.15Corporate (A$m)

GUN's 100% owned ~A$170m Coburn Zircon Project in WA is now

looking strategically attractive (DFS completed) with a potential

zircon supply deficit looming. This will boost GUN's plans to bring

in a big brother, which could also boost a languishing share price.

1.70 1.502.23

0.1

2011F

100%

Tennant Creek 100% Cu,Au

Ilm. %*12.3

Early Expl. Aust (NT)

Key Projects

[email protected]

Project

0.00.0

kt mlb

554

-

1.7

Cu Cu Eq

IOCG

none

Cash backing (Ac/share) 0.2

IOCG

Ore mt

Route

0

2

4

6

8

10

12

14

16

Oct

-09

No

v-09

De

c-09

Jan

-10

Ma

r-10

Apr

-10

May

-10

Jun

-10

Jul-1

0

Aug

-10

Sep

-10

Sh

are

Pri

ce ($

/Sh

are)

GUN - Gunson Resources Limited

Source: Bloomberg

Overview: GUN (originally a spin-off of mineral assets from Stuart Petroleum NL) was listed on the ASX in May 2000. GUN’s two key assets at listing – the Coburn Zircon Project and the Mount Gunson Copper Project - have been the primary focus of GUN’s subsequent development expenditure and have both reached an advanced stage. Coburn Zircon Project (100%): GUN’s Coburn tenements cover ~1,200km

2 of fossil coastline

approximately 700km north of Perth. GUN has spent nearly A$20m on this advanced project since commencing drilling in 2000. The Coburn Zircon Project (“CZP”) is mainly located on granted mining leases with government environmental approvals. A DFS was completed in 4Q09 and GUN is now seeking to bring in a development partner (possibly an end user through establishing offtake agreements) to support a project financing and conceivably bring it into production by the end of 2012. GUN has appointed RFC as its advisor in this process. A number of significant parties have expressed interest in the CZP and have entered a more detailed data assessment phase. The DFS was based on 17.5mtpa mining rate (17.5 year mine life), dedicated wet concentrator and mineral separation plant to produce 40ktpa zircon, 90ktpa ilmentite and 9ktpa rutile. Capex is estimated at A$169m (not incl. working capital). Quoted NPV (at 8% DR) was A$163m (~A$1/share), ungeared IRR 16.8%. Assumed A$/US$ long term is 0.72. GUN believes that the outlook for ilmentite prices, and zircon prices in particular, is very positive with negligible identifiable new zircon supply sources in the next 2-3 years. This positive view is shared by Iluka, and bodes well for GUN’s efforts to attract a development partner. Mount Gunson Copper Project (49%): This 1,320km

2 project area is located in the 500km long Olympic

copper-gold belt in South Australia, which currently hosts ~75% of known copper resources in Australia with the world class Olympic Dam, Prominent Hill and Carrapeteena deposits. Xstrata has earnt a 51% JV interest A$3.5m spent). Xstrata can earn a further 24% by expenditure of A$6.5m over three years. Xstrata drilled two very deep diamond core holes (1,100-1200m depth) in 3Q09, and got tantalising ‘sniffs’ of high grade copper mineralisation, but widths were narrow (e.g. 7m @ 2.2%Cu from 974m). Xstrata will conduct geophysical surveys in the remainder of CY10, drilling to recommence 1H11. Mount Gunson Copper Project – Excised Area (100%): In 3Q09 GUN completed a PFS on treating only the shallow flat sheet-like MG14 deposit (19kt Cu resource). This indicated a two year mine life (550ktpa treatment of 1.1mt resource) and full capital pay-back assuming 67% copper recoveries, US$2.70/lb Cu price, A$/US$ = 0.86. The plan would be then to proceed to treat the larger, deeper Windabout deposit (187kt Cu resource) using underground mining. GUN is seeking development partners to fund a BFS over the next 12 months and potentially take equity in the project Investment Comment: The market often has trouble valuing small companies with potentially big projects. This seems to be the case with GUN and its ~A$170m capex Coburn Zircon Project. GUN is capitalised at only ~A$17m, putting little value on this project, plus its potential copper mine and copper exploration. We could see huge price upside if GUN is successful in attracting a development partner.



GUN’s Project portfolio is headlined by the advanced Coburn mineral sands project in WA (zircon is the key mineral) and the Mount Gunson copper exploration project in SA’s Olympic Dam territory, where GUN has a small scale production project BFS underway. Fowler’s Bay is early stage nickel exploration, and

Tennant Creek early stage copper-gold exploration.

The Mount Gunson Copper project (49% GUN) is situated in the 500km long Olympic Copper-Gold Province in South Australia which contains ~75% of the known copper resources in Australia – including the

Olympic Dam, Prominent Hill and Carrapeteena deposits. The latter, potentially containing >4mt Cu (drilled by Teck Cominco), is only 20km east of GUN’s tenements.



Sandfire Resources NL

7.85



Major shareholders: Oz Minerals (19.7%), POSCO (16.7%)




Price/Book (x)


* LS Nikko Copper raising (18.7m shares) subject to shareholder approval *Copper prospective tenements only; held and under application. Quarters refer to calendar year.

Contacts Directors

Mr Karl Simich

Managing Director

Tel: 61 (0) 8 6430 3800

West Perth, WA, Australia

* MIN option to earn 70% of any Mn.

249.5

13 297.3 655.5Conductor 1 Ind and Inf 100% 6.12 4.9

DeGrussa Primary Indicated 100% 1.38 8.2 2.4

19.4

DeGrussa Chalcocite Indicated 100% 0.25 17.6 2.6 97.0

8.8

130.0

0

20,000

43.7

40

-

26.73

0

55.8

42.9

[email protected]

%

3.0 21

Resources

Mlb

0.00.0

Equity

0.00

40

(JORC)

DeGrussa Oxide Inferred 100% 0.10 8.8

55.8

g/t

0

43.743.7

42.9 18.8

44.0

21 113.2

1.7

21 44.0

2.2

1.7



Au

31.5

24.4

0

0.00

Drilling - RAB (m). Est.



Sandfire Resources NL

SFR holds a strategic 400km2 in the emerging DeGrussa VMS

copper-gold district in WA. The project is shaping up as world-class

since discovery Apr '09; high grade copper resource 10.7mt @

5.7% Cu. Excellent exploration upside. DFS 1H11.

27.59 24.00


Exploration and evaluation (A$m)

A$ 7.64


2012FSep-10F 2010aJun-10a 2011F

2.402.95 2.40

9.61

0.77

90

29.20

9693 91

130.0

84.42

80,000

40

0

20,000

0

0.0

161.173.1

5.7

0.0

148.1

0.0

18.7 Exploration/(Expl.+ Corporate) (%)

0

Ore

0.0

Cu

Mt

SFR.AU

12

Copper, Gold, Manganese

Australia (WA)

Advanced Exploration

Exchanges: ASX:SFR

Capital Profile


13 October 2010

Share price (A$)



7.64

2.81

Corporate (A$m)

13.20

0.60

LS Nikko* (m)

YEAR END: June

1.78



92

1.10.8

100,000

100%

100%

1.05

-

993.3

160

0.0


1.8

-

130.0


Cu,Au,Ag

40.9

-

Ind and Inf

Project

100,000

-

130.0

95,000

40

15

Fully diluted (m)

993.3

133.8

0

40

ProcessTarget

flotation

0.0 0.0

VMS

24.3

Investment Points

17.4

No

Inferred

Company Comment

64.3

11

67.2

Reserves

Classification Project

10.68 151.9

90% copper focus. Exploration budget A$20-30m FY11.

DeGrussa: Established WA mining region. Good

infrastructure. Modest capex and opex.

Dominant 400km2

tenement package in Bryah Basin -

emerging copper-gold district. Large VMS districts can

contain 4 to 12 deposits, aggregating >5mt of metal.

Four deposits discovered to date within 1.5km strike of

6km priority corridor: containing 600kt Cu metal, 660koz

gold, 5.1moz silver (Sep '10). In-situ value ~US$6bn.

Major exploration campaign underway across 6km

priority corridor at DeGrussa. Plus 12 regional targets

identified. Drilling 2010-12.

Resource + reserve upgrades expected 4Q10. Project

development expected 1H11.

Strategic shareholders - potential for corporate activity.

Copper


Conductor 5

DeGrussa none

Partner

MIN*

Aus (WA)

Metal

100%

Location

100%

Route

29.6

JV

Option

Pb-Zn-Ag

TypeProject

40.9


Key Projects

1,330.6

Ag

0

Conductor 4

22.1

30.00

Borroloola Project

Ownership/

Early Expl. Aus (NT)

Adv. Expl.

12

J. Jong (Non Ex Dir)

www.sandfire.com.au R. Scott (Non Ex Dir)

D. La Feria (Non Ex Chair)

K. Simich (MD)

W.J. Evans (Dir)


0.0

4.1

6.4

g/t

Cu

603.6

Cu Eqty

Kt

Status


Total DeGrussa

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Oc

t-0

9

No

v-0

9

De

c-0

9

Jan

-10

Ma

r-10

Ap

r-1

0

May

-10

Jun

-10

Ju

l-1

0

Au

g-1

0

Se

p-1

0

Sh

are

Pri

ce

($

/Sh

are

)

SFR - Sandfire Resources NL

Source: Bloomberg

Overview: SFR listed on the ASX Mar ‘04. Its lead project, the high grade DeGrussa copper project, is one of the most spectacular exploration discoveries in Australia in recent years DeGrussa (WA): 900km NE of Perth, is in an established mining district with good infrastructure. The resource, containing 4 deposits (aggregate 600kt Cu grading 5.6%) announced Sep ’10 is the third resource statement since project discovery Apr ’09. The latest resource includes the Conductor 5 pod discovered Jun ’10 – with significant upside potential. Volcanogenic massive sulfide (VMS) deposits typically occur as clusters containing a number of discrete metal sulphide pods. Major Canadian VMS districts frequently contain 4 to 20 pods (average 12), with an average base metal content of >5mt, and the largest pod in each district, on average, contains 65% of the total metal. Exploration: SFR controls a dominant 400km

2 land position in the region. The DeGrussa resource to date

is defined over 1.5km of a 6km priority zone which is being systematically drilled. Since Apr ‘09, SFR has drilled around 150,000m. SFR has identified multiple regional conductive features and has defined 14 initial regional targets for drilling – the first two are currently being drilled. Regional geophysical surveys 2H10 include EM over 10km strike length. Deep drilling 1,600-2,000m 2Q11. Development outlook: proposed open pit of secondary (Chalcocite) and underground mining operation of primary sulphides. The pit is planned to 140m depth. Preliminary infrastructure/site works are expected to commence late 2010, followed by pre-strip 1H11; and DSO of high grade chalcocite cap 2H11-1Q12 (151kt @ 25.6% Cu for 39kt metal) potentially leading to early cashflow. Underground development is scheduled to commence 2Q11. An on-site concentrator is expected to be commissioned 2Q12, with concentrate trucked to Geraldton. PFS expected 4Q10. DFS 1Q11. Cornerstone investors in place. Strategic alliance with POSCO. LS Nikko Copper (Korean copper smelter, subject to approval of joint boards), SFR to issue 18.7m shares at $5.02/share - unlikely to proceed given recent share price surge. Investment Comment: SFR’s share price has more than doubled since OZL purchased a 19% stake early July (avg price paid $3.85/sh). The price has risen from $3.42/share July 1, to $7.64 currently (+123%). With high grade and attractive exploration prospects, buoyant copper market and gold prices, and a share registry dominated by major industry players, SFR trades at a high premium to other explorers and potential near term producers – adjusted EV/resource US$0.70/lb. A lot of good news is already priced into the stock and consolidation might be expected ahead of the PFS/reserve statement 4Q10.



DeGrussa Cu-Au project (WA): 900km northeast of Perth in a well-established mining area. Development timetable: Preliminary site works Dec ‘10. Open cut 1Q11; Underground mining 2Q11. Early cashflow 3Q11

from high grade DSO chalcocite cap (151kt @ 25.6% Cu, 2.6g/t Au, 21g/t Ag).

DeGrussa project (WA): Location of 4 deposits discovered to date along 1.5km strike, within 6km priority corridor. Resource 10.6mt @ 5.7% Cu for 600kt metal (Sep ’10). Comparison with global VMS projects indicates potential for large scale districts to host >5mt metal. SFR exploration budget $20-30m FY11.



Venturex Resources Limited

0.14






Price/Book (x)


*Copper prospective tenements only; held and under application. Quarters refer to calendar year.

Contacts Directors

Dr Tim Sugden

Managing Director

Tel: 61 (0) 8 6389 7400

West Leederville, WA, Australia

A Trench (Non-Ex Dir)

Project

3.3

8.46

1.4

1.8


Cu Eq*

kt

Status Location

BrazilClosed mine

0.0


%

Total - Pilbara VMS

www.venturexresources.com

A Kiernan (Non Ex Chair)

T Sugden (MD)

A Reilly (Dir)

M Mulroney (Non-Ex Dir) Scoping Study Aus (WA)

Scoping Study

0.60

0

0.7

6.00

5.9

Liberty-Indee

Whim Creek Heap L.

Mons Cupri

Ownership/

Salt Creek 100%

Whim Creek

Project

100%

none

5.0


Key Projects

393.5

Salt Creek

4.0

none

50%

100%

Cu-Zn-(Pb)

Cu

none

100%

Au

70/90% Cu-Zn

Aus (WA)

RouteType

VMS

VMS

Flotation

Flotation Scoping Study

VMS

Option Partner

Aus (WA)Refurbishing

Aus (WA)

Metal

Oxide

Oxide

4.2

Cu*

Target

Flotation

0.0

0.60

ProjectProcessJV

WA copper focus: FY11 exploration budget $5m: 90%

directed to Pilbara VMS copper (drilling 20,000m).

Scoping study and resource upgrade expected 4Q10.

BFS and development decision expected 2Q11.

Substantial infrastructure in place. Low capex ~A$70m.

Pilbara VMS: Open pit ore reserves: 3.47mt @ 2.2% Cu

Eq (Whim Creek and Mons Cupri pits) - support first 5

years mine life. C1 costs <US$1.00/lb Cu Eq*.

VXR has defined 5 deposits to date. VMS districts of

similar scale typically contain 8-19 economic deposits.

Exploration upside on 36km prospective VMS horizon;

and at depth (>150m). Multiple drill ready targets.

Drilling Mons Cupri corridor 4Q10 (5,000m) - potential for

significant open pit resource additions (+2.5mt, +50%) -

extending low cost, open pit mine life by 1-3 yrs.

Blue sky gold discovery potential in Brazil.

Copper


Liberty-Indee

Reserves

Classification

0.60

11.9

Investment Points

2.4

No

Inf and Ind

Scoping Study

70%

Inf and Ind 100%

0.66

Cu-Zn-Pb none

Cu-Zn-(Pb)

WASCO

Jatoba Gold Mine

9

Fully diluted (m)

59.0

59.0

0.90.9

34

-

0

15,500

-

735.0

15,500

34

76

Ourwest VMS Flotation Aus (WA)

815.0

0

5.0

75

-

732

Straits Mineral Investments (16.3%)

0.0


Major shareholders: Nefco Nominees (19.3%),

Corporate (A$m)


1.25

0.50


YEAR END: June

1.83



Company Comment

Share price (A$)

0.06

VXR.AU

77

Copper, Zinc, Gold

Australia (WA), Brazil

Advanced Exploration

Exchanges: ASX:VXR

Capital Profile


13 October 2010

0



0.09

0

Ore Cu

Mt

59

1.3

-

655.0

134.561

1.1

38.625

2.2

3.6

80

1.50

635.7

10.90

13,395

34

0

2012FSep-10F 2010aJun-10a 2011F

1.702.01 1.60

1.05

0.46

Venturex Resources Limited

VXR controls a large (50 x 20km) VMS district in the Pilbara (WA)

with significant exploration upside. Current resource 180kt Cu Eq

grading 1.1% Cu (2.2% Cu Eq). Potential 15ktpa Cu Eq production

from 1Q12. LOM 8 years. Scoping study expected 4Q10.

2.88 5.005.00Exploration and evaluation (A$m)

A$ 0.09



3.7



34

71


Drilling - RAB (m)



7.50

1.0

(JORC)

0

6.3

0.8

6.2

0

0

5,000

3.7

1.0 0.8

Rio Pombo

MlbEquity %

186

%

100% Au none Oxide Mid Expl. [email protected]

69

635.7

0

6,264

3.7

34

-

8.98

0

6.3

Mons Cupri IIM 100% 4.94 0.9 1.6 176.4

Whim Creek Inf and Ind 100% 1.03 1.4 1.9 0.60 20 44.1

Whim Creek Probable 100% 0.69 1.7 2.2 0.85 15 33.5

0.85

Mons Cupri Probable 100% 2.78 1.1 2.2

117

0.85 61 134.6

Salt Creek Probable 100% 1.40 1.3 2.9

4.87 1.3 2.4 258


Cu Eq* Cut Off

*Metal prices: Copper US$6612/t; Zinc US$1983/t; Lead US$1983/t; Silver US$18/oz; Gold US$1200/oz

*Cu Equivalent = Cu% + Zn% x 0.28 + Pb% x 0.26 + Ag(ppm) x 0.008 + Au(ppm) x 0.513. NSR returns to be conf irmed.

41 89.5

Total - Pilbara VMS

0.04

0.05

0.06

0.07

0.08

0.09

0.10

0.11

0.12

Oc

t-0

9

No

v-09

De

c-09

Feb

-10

Mar

-10

Ap

r-1

0

Jun

-10

Jul-

10

Aug

-10

Sep

-10

Sh

are

Pri

ce (

$/S

har

e)

VXR - Venturex Resources Limited

Source: Bloomberg

Overview: VXR listed on the ASX April 2007. Lead projects are VMS base metals in the Pilbara. It purchased Whim Creek and Salt Creek from Straits Resources (ASX:SRL) Aug ’09 for $8m in shares (on deal closure) and $3m in shares or $3.5m cash on decision to mine. Pilbara VMS province (WA): 120km from Port Hedland. VXR holds 3 project areas prospective for VMS base metals, viz, Whim Creek, Salt Creek and Liberty-Indee; within 25km of Whim Creek Mining Lease where a previous open pit (2004/5, SRL), crushing circuit, and infrastructure are situated; 5km to electric grid. The Pilbara deposits occur in clusters, are shallow dipping, undulating planes, not difficult or expensive to explore at increasing depths. VXR has high potential for discovery of additional pods as limited exploration has occurred at depths below 150m, and from surface where there are numerous gossans. Scoping Study: Expected 4Q10 (Snowden) for a centralized plant producing Cu, Pb and Zn concentrates at Whim Creek. Expected capex A$50m to A$80m. The study is drawing on feasibility work completed by Straits in 2007. Proposed production rate is 600ktpa grading over 2% Cu Eq from 1Q12. LOM 8 years. Initial production is expected from open pit mining at Mons Cupri, Whim Creek and Evelyn in years 1-5; and subsequently from high grade underground ore at Salt Creek in years 5 - 8. There is good potential to extend open pit life, by 1 to 3 years, especially in the Mons Cupri corridor. Whim Creek: contains the main Mons Cupri resource (4.94mt, 58% of total resource) – the sulphide zone is open at depth (below 250m), to the north and northwest. Resource upgrade Sep ’10 added 67% to in-pit reserves and +54% to Whim Creek pit reserves. Liberty-Indee project: 12km VMS horizon with multiple gossans at surface. Salt Creek project: Potential for selective, narrow vein underground mining. High grade zinc – drill intercepts include 4.75m @ 47.8% Zn 2Q10. Whim Creek Heap Leach: (VXR 50%, free carried) Small-scale SX-EW (operated by WASCO) to produce 1-2ktpa Cu cathode from 1Q11. LOM 2-3 years. Potential cashflow to VXR ~$3mpa. Brazilian gold projects: Generating a lead gold project. VXR team and properties in place. Rio Pombo: large soil anomaly; good trenching results, further trenching underway; targeting granite hosted system. Investment Comment: VXR offers exploration upside with production visibility 1Q12 and leverage to the rising copper price. The company is trading at a 50-70% discount to preliminary estimates of project NPV: >A$100m at a copper price of US$3.00/lb and >A$150m at spot copper price (~US$3.75/lb). Drilling Oct ’10 northwest of Mons Cupri with potential for significant resource additions (+2.5mt, +50%). Further resource and reserve revisions imminent for Salt Creek and Evelyn deposits.



Pilbara VMS project (WA): VXR holds 3 project areas prospective for VMS base metals: Whim Creek, Salt Creek and Liberty-Indee - within 25km trucking distance of an established mine site at Whim Creek. VXR has defined 5 deposits to date. VMS districts of similar scale typically contain 8-19 economic deposits.

VXR: Pilbara VMS project timeline to production. Potential production 1Q12, expected from open pit

mining at Mons Cupri (currently 58% of total resource), Whim Creek and Evelyn in years 1-5; and subsequently from high grade underground ore at Salt Creek in years 5 - 8.



YTC Resources Limited

0.34





Price/Cash (x) Cash (A$m)*

Price/Book (x)

Lis ted company options: Net asset backing (Ac/share)

Quarters stated on calendar year basis. *Cash 2011F assumes post capital raising to build Hera Project

* Includes 15.6g/t Ag; 2.8% Pb, 3.9% Zn, 0.2% Cu for 8.0g/t Au_Eq and 560koz Au_Eq. Indicated is 72.7% of total.


Contacts Directors

Mr Rimas Kairaitis

Chief Executive Officer

Tel: +61 (0)2 6361 4700

Orange, NSW, Australia

R Chambers (Non Exec)

[email protected]

Analyst: Dr Trent Allen C Ng (Non Exec)

Resources

none

JV

none

Ausmindex/MMG

Cut Off

0.00.0

100%

Ore

Jun-10a 2011F

Mid Expl.

R Hill (Non Exec)

Target

Lode, porph.

Gravity/float

Porphyry

Option Metal

7075

YTC Resources Limited

Mining in 2H11 is possible at the Hera Project (Au, Cu-Pb-Zn-Ag), which

has a 560koz AuEq resource with upside from drilling at Hera and

historic Nymagee Mine (recent hits +8% Cu). The 6.5km Hera-Nymagee

corridor is prospective for Cobar-style deposits. Target A$0.73/share.

5.01 8.00

A$ 0.28

2010a


2012F

2.18

0.40

Sep-10F

3.8

0.54 2.052.10

78



89.2

257.5

8.181.66

164.2

80

2.20

84

1.2

-

174

7,000 20,000

164.2164.2

2.3

25.29

0.00.0

-

0.00

0.0

-


na

RoutePartner

na

Gold, base metals

34.6

Au

Cobar

Code for reporting mineral resources - Australia:

280

0.0

Wonderful Investments (9.8%), Yunnan Tin YTC Holdings Pty Ltd (6.0%)

0

Equity

0 0

46.00

2.2

46.0

0.00

0

174

-

174

5,000

6


YTC.AU

6

Gold, Base Metals, Silver

Australia (NSW)

Pre-Feasibility Study

Exchanges: ASX:YTC

Capital Profile

52 week range (A$/share)

13 October 2010

Number of shares (m)

Exploration/(Expl.+ Corporate) (%)Convertible notes (m)

YEAR END: June0.28

0.17

Corporate (A$m)

0

to

Exploration and evaluation (A$m)

Share price (A$)

Fully diluted (m)

40.1



Drilling - RAB (m)



170


Major shareholders: Yunnan Tin Group (15%),

164


Classification

(JORC)

Project

5.1

17.1

5.9


No

0.0 0.0

g/t

0.0

t

8.7 280

Aus (NSW)

100%

na

none

Au, Cu

na

na

na

Lode, alluv.

none

GCP,SRL

Epitherm.

Skarn

A$125/t

Type

Mid Expl.

Early Expl.

100%Giant's Den

Baldry

Doradilla

Sn (Au)

Au, Ag

70% & 75% Adv Expl.

Mid Expl

0.00

Aus (NSW)

174

28,000

8.7

257.5

Au

174

0

100%

20,000

-

0.0

Aus (NSW)na

Mt A$/t

Company Comment

Sn, Ni

Au EqtyAu

28.0

42.4

34.8

8.48.4 5.9

5.1

0.0

16.5

koz

Mid Expl. Aus (NSW)

Pre-feasibility

4.00

7.8

Investment Points

1.6

Focused on gold and base metal exploration in NSW,

including the Hera Project near Cobar.

Hera Project and Nymagee JV: purchased 3Q09. Hera is

an advanced stage, undeveloped gold and Pb-Zn-Ag-Cu

deposit, with an AuEq

resource ~560koz Au grading 8g/t.

A Hera DFS is in progress (updated Oct '10), for

production of 50.2koz Au_Eq. A decline has been

permitted: underground mining is possible from late

2011.

Drilling at former Nymagee Copper Mine (6.5km from

Hera) shows +8% Cu (with Ag, Au). DFS scope

expanded to consider potential satellite feed for Hera.

Exploration upside on 6km corridor between Hebe (near

Hera) and Nymagee, including gravity anomalies. Hera-

Nymagee resource drilling spend A$4.8m out to Jun '11.

NSW exploration portfolio: drilling 4Q10 at Doradilla

(porphry target) and 1Q11 at Baldry (epithermal targets).

Strategic alliance with China's Yunnan Tin Group (YTG)

W Gao (Chair)

A Wehby (Vice Chair)

Reserves

Indicated + inferred

R Kairaitis (CEO)

G Zhang (Non Exec)

www.ytcresources.com S Woodham (Non Exec)

Project

Hera

Tallebung

Nymagee

4.2

Hera*

Ownership/

Key Projects

17.1

0.0

koz

17.1

3.6

100%

Aus (NSW)

Sn (W)

100%

Au-base

80%/90% Au-base

Aus (NSW)

Status

Cobar

Process

Kadungle

Aus (NSW)

Project

Location

0.10

0.15

0.20

0.25

0.30

0.35

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Sh

are

Pri

ce

($/S

hare

)

YTC – YTC Resources Limited

Source: Bloomberg

Overview: YTC listed on the ASX May ’07 and is focused on the exploration and development of gold and base metal projects in NSW. Its flagship is the Hera Project and Nymagee JV (Au, Ag, Pb, Zn, Cu), 100km SE of Cobar in a world class gold and base metal province that includes Glencore’s +40 year running CSA Copper Mine, which produces ~50kt Cu/yr. YTC bought Hera plus 80% interest in the Nymagee JV for A$12m in Jun ’09.It has updated the Hera resource and started a Definitive Feasibility Study (update released Oct ’10). Resource status and metallurgy: Hera was found by Pasminco (2001) and developed by Triako and CBH Resources, which established JORC resources. Known mineralisation extends from surface to +500m depth as 1-12m wide sub-vertical lenses, and measures 800m (N-S strike) by 300m. The current resource (Jun ’10) is 2.18mt @ 4g/t Au for 280koz, with significant sliver and Cu-Pb-Zn. All-in gold equivalence is 8g/t Au_Eq for 560.7koz (at 15-month buyer LME base metal prices in April ’10). Cut off is recoverable ore value (A$125/t at AU/US 0.85). A higher cut off (US$200/t) leaves 372.5koz Au_Eq grading 10.2g/t. Of the lower grade resource, 72% is in Indicated category, which could convert to a Probable mining reserve. Metallurgy shows good recoveries at a coarse 250µm grind: 65% of gold by gravity (GRG); 98% by leaching of gravity concentrate; and total 99% including flotation. Other recoveries (flotation) are Cu 79%, Pb 82%, Zn 87.3%, Ag 72.7%. Resource upside, exploration: The Hera deposit is open at depth, and along strike. Drilling is ongoing. Recent findings that could enlarge the resource include high grade gold in the upper Far West Lens (10m @ 10.65g/t Au, 38g/t Ag, 6.52% Pb and 12.83% Zn from 594m depth) and shallow oxide gold (45m @ 1.5g/t Au from 9m depth). The 1km-distant Hebe Prospect has drilling 7m @ 3.26g/t Au and +2% Pb and Zn. Beyond the near-mine area,gravity survey of the 6km Hera-Nymagee Corridor found prospective anomalies, eg. Zeus (1.5km SSW Hera). Nymagee JV: The case for developing Hera has been augmented by recent high grade copper hits beneath underground workings at the historic Nymagee Copper Mine, 4.5km from Hera. The mine produced 0.42mt @ 5.8% Cu in 1880-1917 and has a historic resource of 0.82mt @ 2.3% Cu as well as Pb-Zn lodes. Drilling in 3Q10 located massive sulphides on the Nymagee Lode included 7m @ 8.3% Cu, 46gt Ag and 0.32g.t Au from 345m depth. The campaign has been extended (drilling 7,000m), aiming to define a JORC resource in 2Q11. DFS update (Oct ’10): The DFS was expected Sep ’10 but has been put back to incorporate Nymagee and the Far West Lens at Hera. DFS fundamentals (in A$): annual production 350ktpa for 50.2kozpa Au_Eq; opex $97.1/t or $676/oz Au_Eq; pre-production capex $25m, process and infrastructure capex $34.9m (total $59.9m). Mining is via single decline access and uphole bench stoping with use of Cemented Rock Fill (CRF) to increase high-grade recovery. Processing includes grind, gravity and leach (Au) and flotation (base metals). If Nymagee can support a satellite operation, it could provide copper-rich feed to a Hera mill. YTC has said it plans to mine Hera in 2011.There is already a permit for a decline – final permits could be achieved May-June 2011. Investment Comment: Based on the DFS update and current Hera resource, the base NPV of the Hera Projectis A$0.31/share (RCR long term assumptions: Au US$900/oz, exchange 0.8, 5% disc nominal). This is where the stock is sitting now, pushed up from $0.2/share in Sep ’10 when the potential of Nymagee became clear (i.e. Hera satellite or even a large CSA-style deposit). The question for investors, and when revising our A$0.50 price target from 1H10: what’s coming in the next 6-12 months? A possible answer: resource statements for Hera and Nymagee (extending mine life from 7 to, say, 10 years); and an increase in Hera’s copper head grade (e.g. 0.2% to 1.2%) via blending high grade from Nymagee. These advances suggest a target of A$0.73/share (risk adjustment increased from -30% to -50% for the undefined mineralisation). De-risking via a DFS, permitting and project funding could push the NPV higher, though potential dilution during financing returns us close to the target. Further exploration of the Hera-Nymagee Corridor and regional projects in 4Q10 may bring good news.



Location of YTC’s Hera Project (NSW): The Cobar Basin hosts numerous gold and base metal deposits, including CSA Mine (35mt @ 3% Cu in 1995) and the Cobar Gold Field, with ~7moz Au Eq production. The

Cobar Field and Hera-Nymagee Corridor are of similar scale and on the same structure, 90km apart.

Hera NPV sensitivity to Au price: base valuation is A$0.31/share, increasing to A$0.57 by lifting Cu grade +1% (to 1.2%) with high grade Cu from Nymagee. Upside to A$0.73 by extending mine life to 10 yrs from

7yrs. Note: lower gold prices increase the gold equivalent grade of the base metals (a natural price hedge).

HERA PROJECT VALUATION

Equity

LONG TERM GOLD PRICE^ :US$/oz 600 800 1000 1200 1400

EXCHANGE RATE (RCR long term) :AUUS 0.80 0.80 0.80 0.80 0.80

LONG TERM GOLD PRICE :A$/oz 750 1000 1250 1500 1750

Gold equivalent grade of resource :Au g/t 11.5 9.6 8.5 7.8 7.2

RESOURCE @ 5% NOMINAL** :A$m 100% 43 48 57 69 79

RESOURCE @ 5% NOMINAL** :US$m 100% 34 39 46 55 63

NPV/SHARE :A$/share 0.25 0.28 0.34 0.41 0.47

NPV/SHARE, Cu grade +1% (blending from Nymagee?) :A$/share 0.55 0.58

** Includes a pre-DFS discount of 30% of the project valuation: 30%

^Gold price forecasts are US$1225/oz in calendar 4Q10 and long term price indicated from 4Q13, w ith linear change betw een.

HERA PROJECT, KEY ASSUMPTIONS

RESOURCE ESTIMATES

(Gold only)

Mt g/t koz koz

Hera Indicated Resource^ 1.6 7.9 402 209

Remainder Hera Resource (Inferred) 0.6 8.2 157 71

Total 2.2 8.0 560

MINING METHOD Underground

PROCESS METHOD Crush, gravity and leach for gold, flotation for base metal concentrates (with silver)

PRODUCTION RATE :mtpa 0.35

:kozpa Au 50.2 Average gold equivalent production*

CAPITAL COSTS :A$m 59.9 Pre-production $25m, process and infrastructure $34.9m

RECOVERY - GOLD :% 98 60% by gravity

RECOVERY- BASE METALS :%

:% 95

OPERATING COSTS :A$/oz 676 Gold equivalent

:A$/t 97.1

TAX :% 30

ROYALTY :% 4 New South Wales

MINE LIFE :Years 7+

Sensitivity

Gold Equivalent*

* These figures are early stage in nature and are intended to provide only a general indication of project potential scale and economic robustness.

Considerable refinement may result from the ongoing Definitive Feasibility Study in 2010.

Gold and base metal targets

*YTC metal price assumptions for calculating Au Eq, or value of commodity in terms of Au, are: Au = US$1125/oz, Cu = US$6,500/t, Pb = US$1,775/t, Zn = US$1,878/t, Ag = US$17.85/oz.

^ Cut of f is recoverable ore value (A$125/t at AU/US 0.85. YTC price assumptions are 15-month buyer LME base metal prices in April ’10).

Cu 79% (97% payable), Pb 82% (95% payable), Zn 87.3% (85% payable)



Copper Price Fundamentals Recent market trends Price Outlook The positive copper price outlook is buoyed by demand from strong economic growth in China and constrained global supply. Other than for the period around the GFC (2008-09), this has been the central theme of the copper market since the early 2000’s and is likely to be the theme throughout this decade. Indeed, Rio Tinto recently remarked that it expects the copper market to remain tight through 2020. The positive demand outlook is driven by strong growth projections for China (and India), partially offset by expected decelerating OECD growth and declining demand for copper. Further, the likely prospect of quantitative easing, increasing money supply in advanced economies could see increased defensive financial market demand for all commodities, including copper. Tightening copper supply has driven the price to 27 months highs, US$3.81/lb (13 Oct, ~US$8,400/t) and is likely to take the copper price above US$9,000/t (US$4.08/lb) over the next 12 months. The price has risen 34% over the past 12 months from US$2.85/lb to US$3.81/lb, and is up nearly 3 fold from late 2008. The economic outlook for the USA and the OECD remains upward trending. At this point, a double dip recession appears unlikely, though market conditions remain volatile. While US employment and aspects of the economy remain weak, particularly the construction sector, the direct impact on copper markets is not great since North America accounts for only about 10% of global copper consumption. In contrast, the USA alone accounted for around 20% of global copper demand in the 1990’s. In terms of Australian copper equities, valuations appear to be partially pricing in a recovery in the US economy and subsequently expectations of a weaker Australian dollar. This compares to recent market trends for the AUD which has strengthened to near parity. With the Australian dollar potentially returning over time to a long term forecast of AUD/USD 0.80, miner’s margins will be further boosted. RCR’s copper price and Australian dollar modelling assumptions are shown below. RCR base case price assumptions

2009A 2010F 2011F 2012F 2013F Long Term

Copper price :US$/lb 2.34 3.33 3.68 3.88 3.90 2.50

A$/US$ 0.80 0.90 0.93 0.87 0.82 0.80

The copper spot price is currently US$3.81/lb....

...and is expected to move over US$4.00/lb in 2011.

RCR’s long term copper price forecast is US$2.50/lb and long term AUD/USD forecast is 0.80.



World balance of refined copper production and use, 2009-2011

1/ Based on a formula for the difference between the projected copper availability in concentrates and the projected use in primary refined production; 2/ Based on supply deviations over the previous 5 years.

Source: International Copper Study Group, Date 1 October 2010

LME spot copper price, 12 months to 13 October 2010, (US$/t)

The copper market is expected to remain tight through 2020.

Source: Rio Tinto

Global copper demand is expected to grow by at 3-5% CAGR in-line with global GDP and increasing intensity of use in developing countries.

The market is expected to be in deficit by 435kt 2011, down from a surplus of 200kt expected in 2010.

The copper price has risen from a recent low of US$6091/t (US$2.76/lb) June 8 and is currently trading over US$8,400/t (US$3.81/lb).

We expect the copper price to exceed US$9,000/t in 2011.

Growth in copper mine supply is dependent on greenfield projects, which are subject to frequent delays and long development timeframes.



Demand • Global copper demand is forecast to grow to 18.9mt in 2010, up from 18.2mt (+3.8% or +692kt) in 2009, and is expected to grow a further 4.5% (+847kt) in 2011 to 19.7mt.

• Copper consumption in the US is declining, falling from 250,000t per month at the beginning of 2000, to 150,000t per month currently (refer to chart: WBMS US Refined Copper Consumption, 2000-2010). North America accounts for 10% of global copper consumption.

• The decline in US copper consumption is more than offset by the growth in copper demand in China, which has risen from 100,000t per month in early 2000 to around 600,000 to 700,000t per month currently (refer to chart: WBMS China Refined Copper Consumption, 2000-2010). China accounts for 36% of global copper consumption.

Economic outlook – positive growth, but slowing • ABARE global GDP growth forecasts (Sep ’10): 2010: 4.3%; 2011: 3.7%. ABARE is less optimistic about global growth than the IMF. However, both forecast global growth will weaken in 2011 compared to 2010.

• IMF global GDP growth forecasts (Oct ’10): 2010: 4.8%; 2011: 4.2%. The IMF has warned that some of the largest advanced economies (e.g. US and Japan) are “slowing noticeably”, suggesting further downside risk to forecasts. IMF world GDP growth projections, % (Oct 2010)

2010 2011

World output 4.8 4.2

US 2.6 2.3

Euro zone 1.7 1.5

Japan 2.8 1.5

China 10.5 9.6

India 9.7 8.4

• Global GDP growth is heavily skewed to China, and Asia in general, compared to the West. Chinese growth, in particular, is supporting net growth in global copper demand. GDP in China is forecast to increase by US$7.5 trillion over the current decade.

• Global copper demand growth is proportional to global GDP growth. China and India together account for over 40% of global copper end-use demand.

• Urbanisation of China and India are expected to continue to drive copper demand growth over next 20 years.

Increasing intensity of use in developing countries

• Increasing GDP per capita will increase the intensity of copper consumption in developing countries, i.e., China and India. The per capita intensity of copper demand in China is expected to double in the current decade from ~5kg/capita now to ~10kg/capita.

Global copper demand is forecast to grow 4.5% in 2011 to 19.7mt, an increase of 874kt over 2010.

GDP growth, particularly in China, is driving growth in copper demand.

China accounts for 36% of global copper consumption.

Chinese per capita copper consumption is set to double over the next decade as GDP increases by US$7.5t - rising from ~5kg/capita to ~10kg/capita.



Long term outlook for copper demand is robust

Source: BHP Billiton, Brook Hunt

World refined copper usage per capita, 1950 to 2008 (kg/person)

Source: ICSG, US Census Bureau

Global copper demand by region, 2009 Global copper demand by end-use, 2009

In 2009, China accounted for 36% of global copper consumption, compared to only 10% for North America.

As developing countries grow and urbanise, copper consumption per capita is expected to increase strongly.

The slowdown in US construction activity has relatively little impact on global copper consumption trends – a very different story from 10 years ago.



Supply • Mine supply of copper is forecast to grow to 16.2mt in 2010, up from 15.9mt (+2.3%) in 2009, and is expected to grow a further 5.2% in 2011 to 17.1mt.

• Global copper demand is expected to grow between 3-5%pa, in-line with global GDP growth. Global growth in copper demand is expected to equate to between 600kt to 900ktpa, and increase beyond this later in the decade.

• The largest 16 copper mines account for 44% of global production – the top 3 (2009 production figures) being Escondida (Chile, 1,330kt), Codelco Norte (Chile, 900kt), and Grasberg/Ertsberg (Indonesia, 750kt).

• The major copper mining countries’ production 2009:

Copper mine production – top 5 countries, 2009 (mt, %)

kt %

Chile 5390 34%

Peru 1275 8%

USA 1178 7%

China 980 6%

Indonesia 971 6%

• China produces 980kt of copper (6% of global total) but accounts for about 36% (6,600kt) of consumption, and Chinese share of global consumption is expected to increase as per capita income increases. As such, Chinese investment interest in global copper projects is expected to remain strong.

Strong constraints on mine supply:

• Mine head grades are declining across the sector, including major producers. Average head grades across all projects globally have fallen from ~1.6% Cu in 1980 to ~1.1% Cu 2010, and are expected to decline further.

• Increasing supply from developing countries. New deposits in jurisdictions with increased sovereign risk – eg DRC, Afghanistan.

• Increasing capital costs. • Increasing technical difficulty with deeper mines and blind or covered discoveries.

Global reserves and resources being sustained: • Global copper reserves and resources stand at 1.95bt (billion tonnes). Reserves have a weighted average grade of 0.94% Cu with total contained copper of 475mt. Resources have a weighted average grade of 0.71% Cu with total contained copper of 1,036mt. Chile has the largest reserve and resource base accounting for 34% of global total, the USA and Peru each hold 9% in second place. China has 4%.

• Global reserves to production ratio has remained reasonably constant at between 30 and 40 years from 1980 through 2009, due to increased exploration expenditures and technological advances.

Mine supply is forecast to increase 5.2% in 2011 to 17.1mt Cu.

Chile is the world’s largest supplier of mined copper – accounting for 34% of global supply.

Mine head grades are falling and production costs are increasing suggesting “long term” copper price forecasts will continue to be revised upwards.



Copper mine production by process, 1970 - 2008 (‘000 metric tonnes)

Source: ICSG

Copper mine industry cost data, 2010

Source: Rio Tinto, Brook Hunt Metals

Copper mine capacity by region, 1980 and 2009 (‘000 metric tonnes)

Source: ICSG

Global copper mine production is expected to increase to 17.1mt in 2011, up 5.2% from 16.2mt in 2010.

The industry cost curve rises sharply at ~US$4000/t (US$1.80/lb) and cumulative production of ~15mt Cu.

Long term copper price forecasts have risen from around US$1,750 ($0.80/lb) in 2000, to US$5,500/t ($2.50/lb) in 2010.

The largest growth in mine supply over the past 30 years is in Latin America (primarily Chile) and Asia (primarily Indonesia and China).



Copper content of world mine production, 1989 – 2009 (‘000 short tons*)

* Short tons: 2,000lbs; Metric tonnes: 2,204.6lbs Source: Copper Development Association



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Copper metal and share prices and economic indices

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Oct

-00

Ma

y-01

Nov

-01

Jun-

02

Jan-

03

Jul-0

3

Feb

-04

Sep

-04

Ma

r-0

5

Oct

-05

Ma

y-06

Nov

-06

Jun-

07

Jan-

08

Jul-0

8

Feb

-09

Sep

-09

Ma

r-1

0

Oct

-10

(US

$/t)

LME Copper Price Spot Official (US$/t)

Source: Bloomberg

0

500

1000

1500

2000

2500

3000

3500

4000

Oct

-00

Apr

-01

Nov

-01

Ma

y-02

Dec

-02

Jun-

03

Jan-

04

Jul-0

4

Feb

-05

Aug

-05

Ma

r-0

6

Sep

-06

Apr

-07

Oct

-07

Ma

y-08

Nov

-08

Jun-

09

Dec

-09

Jul-1

0

HSBC Global Mining Copper Index (US$ )

Source: Bloomberg

0

20

40

60

80

100

120

140

Oct

-00

Ma

y-01

Nov

-01

Jun-

02

Jan-

03

Aug

-03

Feb

-04

Sep

-04

Apr

-05

Oct

-05

Ma

y-06

Dec

-06

Jun-

07

Jan-

08

Aug

-08

Feb

-09

Sep

-09

Apr

-10

(US

$/s

har

e)

Freeport McMoran share price (US$/share)

Source: Bloomberg

400

600

800

1000

1200

1400

1600

1800

Oct

-00

Jul-0

1

Apr

-02

Feb

-03

Nov

-03

Aug

-04

Ma

y-05

Feb

-06

Dec

-06

Sep

-07

Jun-

08

Ma

r-0

9

Dec

-09

Oct

-10

Morgan Stanley World Index

Source: Bloomberg

4000

6000

8000

10000

12000

14000

16000

Oct

-00

Jul-0

1

Apr

-02

Feb

-03

Nov

-03

Aug

-04

Ma

y-05

Feb

-06

Dec

-06

Sep

-07

Jun-

08

Ma

r-0

9

Dec

-09

Oct

-10

Dow Jones Index

Source: Bloomberg

0

1000

2000

3000

4000

5000

6000

7000

8000

Oct

-00

Jul-0

1

Apr

-02

Feb

-03

Nov

-03

Aug

-04

Ma

y-05

Feb

-06

Dec

-06

Sep

-07

Jun-

08

Ma

r-0

9

Dec

-09

Oct

-10

S&P ASX/200 Index

Source: BloombergSource: Bloomberg

0

1

2

3

4

5

6

7

Oct

-00

Jul-0

1

Ma

y-02

Ma

r-0

3

Dec

-03

Sep

-04

Jul-0

5

Apr

-06

Feb

-07

Nov

-07

Sep

-08

Jun-

09

Apr

-10

(%)

US Federal Funds Rate

Source: Bloomberg

0

1

2

3

4

5

6

7

Jan-

03

Oct

-03

Jul-0

4

Ma

y-05

Feb

-06

Nov

-06

Sep

-07

Jun-

08

Apr

-09

Jan-

10

(%)

US Discount Rate

Source: Bloomberg



Copper production and consumption statistics, and major currency exchange rates

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Oct

-00

Jun-

01

Feb

-02

Oct

-02

Jun-

03

Feb

-04

Oct

-04

Jun-

05

Feb

-06

Oct

-06

Jun-

07

Feb

-08

Oct

-08

Jun-

09

Feb

-10

(me

tric

ton

ne

s/m

on

th)

WBMS China Refined Copper Consumption (tonnes per month)

Source: Bloomberg

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1,600,000

1,700,000

1,800,000

Oct

-00

Jun-

01

Feb

-02

Oct

-02

Jun-

03

Feb

-04

Oct

-04

Jun-

05

Feb

-06

Oct

-06

Jun-

07

Feb

-08

Oct

-08

Jun-

09

Feb

-10

(me

tric

ton

ne

s/m

on

th)

WBMS Global Refined Copper Consumption (tonnes per month)

Source: Bloomberg

0

50,000

100,000

150,000

200,000

250,000

300,000

Oct

-00

Jun-

01

Feb

-02

Oct

-02

Jun-

03

Feb

-04

Oct

-04

Jun-

05

Feb

-06

Oct

-06

Jun-

07

Feb

-08

Oct

-08

Jun-

09

Feb

-10

(me

tric

ton

ne

s/m

on

th)

WBMS US Refined Copper Consumption, 2000-2010 (tonnes per month)

Source: Bloomberg

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

Oct

-00

Jun-

01

Feb

-02

Oct

-02

Jun-

03

Feb

-04

Oct

-04

Jun-

05

Feb

-06

Oct

-06

Jun-

07

Feb

-08

Oct

-08

Jun-

09

Feb

-10

(me

tric

ton

ne

s/m

on

th)

WBMS Global Copper Production, 2000-2010 (tonnes per month)

Source: Bloomberg

0.00

0.20

0.40

0.60

0.80

1.00

1.20

Oct

-00

Feb

-01

Jul-0

1N

ov-0

1A

pr-0

2A

ug-0

2Ja

n-03

Ma

y-03

Oct

-03

Feb

-04

Jul-0

4N

ov-0

4A

pr-0

5A

ug-0

5D

ec-0

5M

ay-

06S

ep-0

6F

eb-0

7Ju

n-07

Nov

-07

Ma

r-0

8A

ug-0

8D

ec-0

8M

ay-

09S

ep-0

9F

eb-1

0Ju

n-10

(A$/

US

$)

Exchange Rate, Australia/USA

Source: Bloomberg

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Oct

-00

Feb

-01

Jul-0

1N

ov-0

1M

ar-

02

Aug

-02

Dec

-02

Ma

y-03

Sep

-03

Jan-

04Ju

n-04

Oct

-04

Feb

-05

Jun-

05N

ov-0

5M

ar-

06

Jul-0

6D

ec-0

6A

pr-0

7A

ug-0

7D

ec-0

7M

ay-

08S

ep-0

8F

eb-0

9Ju

n-09

Oct

-09

Ma

r-1

0Ju

l-10

(So

les

/US

$)

Exchange Rate, Peru/USA

Source: Bloomberg

0.0000

0.0005

0.0010

0.0015

0.0020

0.0025

Feb

-01

Jul-0

1N

ov-0

1A

pr-0

2A

ug-0

2D

ec-0

2M

ay-

03S

ep-0

3F

eb-0

4Ju

n-04

Nov

-04

Ma

r-0

5Ju

l-05

Dec

-05

Apr

-06

Sep

-06

Jan-

07Ju

n-07

Oct

-07

Ma

r-0

8Ju

l-08

Dec

-08

Apr

-09

Sep

-09

Jan-

10Ju

n-10

(Pe

so

s/U

S$)

Exchange Rate, Chile/USA

Source: Bloomberg

0.10

0.11

0.12

0.13

0.14

0.15

0.16

Oct

-00

Feb

-01

Jul-0

1N

ov-0

1M

ar-

02

Jul-0

2D

ec-0

2A

pr-0

3A

ug-0

3D

ec-0

3M

ay-

04S

ep-0

4Ja

n-05

Jun-

05O

ct-0

5F

eb-0

6Ju

n-06

Nov

-06

Ma

r-0

7A

ug-0

7D

ec-0

7A

pr-0

8S

ep-0

8Ja

n-09

Ma

y-09

Sep

-09

Feb

-10

Jun-

10

(Yu

an/U

S$)

Exchange Rate, China/USA

Source: Bloomberg



Report Contributors

John Wilson: John has a background in mining, finance and equity research. He worked on Wall Street for 6 years and has covered US, Australian and Latin American mining stocks. He has also worked with BHP in their minerals division. Qualifications include an MBA from the Wharton School of the University of Pennsylvania and a Bachelor of Engineering from the University of Sydney. Tony Parry: Tony has extensive experience in metallurgical process development, (working with MIM Limited for five years) and in mining equity research, equity sales and mining corporate finance (working in London for five years and subsequently Perth). He was a founding Director and CEO of an ASX listed exploration company and has been engaged extensively as a strategic planning consultant to many small-medium enterprises. Tony’s qualifications include a BSc (Hons) in Metallurgy and a PhD in Metallurgy from the University of NSW. Trent Allen: Trent has a BSc (Hons) and a PhD from the University of Sydney, specialising in the petrology, trace-element geochemistry and economic geology of alkaline igneous rocks. His Australian mining industry experience includes several years with Newcrest’s Cadia Valley gold/copper mines, where he was engaged in resource definition and geotechnical engineering. Trent has also worked as an exploration consultant, university lecturer in geology and civil engineering, and as a newspaper editor with Fairfax in Sydney. Murray Brooker: Murray has a background in mining and consulting as a geologist. He worked for North Limited (now part of Rio Tinto) for 10 years and for Parsons Brinckerhoff (a global engineering consultancy). He has 20 years’ experience assessing exploration projects in Australia, New Zealand, Mexico and South America. Murray has an MSc in Geology (James Cook University, Qld) and an MSc in Hydrogeology (UTS, Sydney). He was also a founding Director of an unlisted Australian geothermal company.



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