state of the market: exploration report' by intierrarmg edition 1 2013

Edition 1, 2013

State of the Market: Exploration ReportComprehensive examination of recent exploration activities and trends, plus the outlook for the next quarter

02State of the Market: Exploration ReportEdition 1, 2013

Driller’s Log 03

Feasibility Studies 04

Capital Raising for Exploration 06

Exploration Hot Spots 07

Exploration Results 11

Assay Share Price Alert 15

Contents

STATE OF THE MARKET: EXPLORATION REPORTReport is published byIntierraRMG Pty Ltd

IntierraRMGAbbey House, 5th Floor74-76 St John StreetLondon, EC1M 4DZTel: +44 (0)20 7780 7470Website: www.intierraRMG.com

ContactChris HindeEditorial DirectorEmail: [email protected]

Kelly ChanMarketing ManagerEmail: [email protected]

CONTRIBUTORSStuart FergusonNarelle GardinerChris HindeGlen JonesGreg KayRichard MurphyPeter Rossdeutscher Jeremy Thompson

This report is supplied on a confidential basis for the subscriber's use only. The contents must not be disclosed to third parties and it must not be copied in whole or in part without the prior written permission of IntierraRMG Pty Limited. Photocopying and electronic forwarding prohibited. Copyright 2013 IntierraRMG.

Copper prices (US$/t)

Coal prices* (US$/t)Iron ore prices* (US$/t)

Gold prices (US$/oz)

Jan 2011 Dec 20128090

100110120130140150 * Australian thermal coal,

(12,000btu/lb, under 1% sulphur, 14% ash, FOB Newcastle/Port Kembla)

* 62% Fe CIF China

Jan 2011 Dec 20121,2001,3001,4001,5001,6001,7001,8001,900

Jan 2011 Dec 20126,8007,3007,8008,3008,8009,3009,800

10,300

Jan 2011 Dec 2012100110120130140150160170180


Driller’s LogThere is light at the end of the tunnel, at last, for the beleaguered

exploration sector but it is far from a beacon

Funds raised for mineral exploration in the three months to end-December registered a welcome improvement compared with the dire September quarter. Moreover, financings by the exploration (junior) companies themselves also saw growth during the latest period.

The upturn in funding for exploration, and by the juniors, will be welcomed throughout the mining sector, and comes just in time for the Prospectors and Developers Association of Canada (PDAC) conference in Toronto at the start of March.

Financing for exploration reached US$1.49 billion in the quarter just ended, compared with only US$0.65 billion in the three months to end-September. The Toronto Stock Exchange (TSE) was the largest source of exploration funds for the quarter (US$586 million) followed by the Australian Stock Exchange (ASX; US$519 million) and the TSX-Venture Exchange (US$319 million); all measured in terms of the primary exchanges for each financing.

There are caveats, however, and although we have surely now passed the worst, the scenario for exploration companies remains extremely difficult.

There are almost 3,500 listed companies in the international mining industry, and the sector had a combined market capitalisation of just over US$2,500 billion at the end of the December quarter. The top 681 companies (those that each had a year-end market capitalisation of over US$100 million), accounted for 98% of the industry's overall market capitalisation, and 84% of the combined financing during the December quarter.

However, the majority of the companies in the industry are extremely small. At the end of

December 2012, IntierraRMG estimated that there were 1,756 companies (ie about half of the total) with a market capitalisation of under US$10 million. There were a further 817 companies (almost one-quarter of the total) with a year-end market capitalisation of US$10-49 million.

The companies that represented the smallest 50% of the industry, raised less than 3% of the total financing in the past quarter, equivalent to just US$102,000 for each company. With funding scarce, many of these smaller companies remain in a period of dormancy as they ride out the current weakness in debt and equity markets. The situation remains especially difficult for those with little prospect of early cash flow.

Even those companies with metals production have been battered by investors' perceptions of disappointing revenue as metals prices fall, narrowing margins as costs continue to rise, and rising operating risk as social tension rise.

As companies went into the December quarter, cash holdings had fallen to under a combined US$2.0 billion for those companies with a market capitalisation of under US$10 million. The just over 1,000 companies that have a market capitalisation of US$10-100 million had combined cash holdings at the end of September 2012 of some US$7.3 billion. This was dwarfed, however, by the US$252 billion held in cash by the largest companies.

With the lacklustre commodity prices, valuations for the smaller companies have remained depressed. This, in turn, has made it difficult to finance projects by raising equity through public offerings. With their large cash holdings; we expect bids from the majors for some of the struggling juniors that have attractive projects.

State of the Market Reports

Each quarterly issue includes:

www.intierraRMG.com

► Market for Mining ► Exploration Hot Spots► Mergers and Acquisitions ► Exploration Results► Mining Finance ► Assay Highlights► Product Updates ► Special Features

The State of the Market Reports detail the state and outlook of the mining industry focusing on data-driven trends in exploration, metals production, mining and finance. The report series provides data and opinion on the closed quarter, plus forward views on the upcoming period. Contributors include Professor Magnus Ericsson and Dr. Chris Hinde.

Upcoming Special Features

• Overview of the mining industry in 2012• Mining royalties and taxation • Special Coverage: Cash cost data• Mid-year examination of the world’s metals stockpiles• Mining methods, and technology developments and trends• Metal prices, grade and tonnage predictions for 2014

State of the Market: Mining and Finance Report

State of the Market: Exploration Report

This quarterly report focuses specifically on exploration activities and trends for the previous and upcoming quarters. It includes data and opinion on exploration hot spots, drilling activity trends and exploration financing.

Each quarterly issue includes:

► Driller’s Log► Feasibility Studies► Capital Raising for Exploration► Exploration Hot Spots and Results► Assay Share Price Alert

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Finance MiningExploration


NUMbER OF NEw DEvELOPMENT PROjECTS

Feasibility StudiesFeasibility studies announced during a quarter are perhaps the best indicator

of the health of the exploration sector; and the jury is out

The exploration scene across the international mining industry is, at best, mixed. In the three months to end-December (Q4), compared with the year-ago equivalent (Q4; 2011), the life-of-mine (LOM) capital expenditure collapsed at feasibility studies* announced for projects in North America (US$12.73 billion to US$3.84 billion; see graph on p5). In contrast, the LOM capex soared at feasibility studies for projects in Asia; from only US$907 million a year ago to US$6.93 billion in the latest quarter.

*In this regard, the graphs on p5 include pre- and bankable- feasibility studies, but do not incorporate preliminary economic assessments or scoping studies.

These figures are reflected in the anticipated net present value (NPV) for the announced feasibility studies (at a discount rate of 8%); see illustration. (Note that exchange rates are taken at the date of the individual announcements.)

One year ago, North American projects dominated these global valuations US$10.17 billion in Q4 2011), but now there is little to choose between the value of projects in Africa, Asia, Europe and North America (all US$2.7-3.4 billion in Q4). The poor relations in the quarter just ended are Australasia (US$1.15 billion) and South America (only US$429 million).

In the qualifying algorithm for the number of new development projects, IntierraRMG has only considered those studies where both a NPV and a capital-cost estimate has been given (this is a limiting factor, especially for projects in South America). Under these rules, there were 26 new global

feasibility studies announced during the December quarter (with Africa leading the way with nine projects), compared with 21 in the year-ago quarter (with North America accounting for ten projects).

In terms of capex and value, Asian projects have featured strongly in each of the past two quarters, with each three-month period being skewed by the announcement of a very significant single feasibility study.

In late August, Newcrest announced the results of a pre-feasibility study (PFS) on the Golpu deposit, located in Papua New Guinea's Morobe Province. The announcement included a new ore reserve estimate for the deposit containing 12.4Moz of gold and 5.4Mt copper (an increase of 11.0Moz gold and 4.7Mt copper, compared with the previous estimate).

The PFS estimated total capital expenditure for the life of the project to be in excess of US$9.8 billion, spread across over 32 years, with a capital cost of nearly US$5 billion to get to first production (estimated to be in 2019).

Another copper-gold project in PNG is Frieda River, and on Christmas Eve a project-update feasibility study was delivered. Key findings included a LOM average output of 204,000t/y copper and 305,000oz/y gold, and capex of US$5.6 billion, based on a 50-60Mt/y plant and a 1.29:1 strip ratio. Further discussions are anticipated this year between Frieda River Joint Venture Participants and the government to determine equity ownership, partnering, permitting and development.

0

2

4

6

8

10

12

DECEMBER Q MARCH Q JUNE Q SEPTEMBER Q DECEMBER Q2011 2012

NORTH AMERICA AFRICA AUSTRALASIA ASIA EUROPE SOUTH AMERICA


LOM CAPEX by LOCATION

PROPOSED NPv by LOCATION

$14B

$12B

$10B

$8B

$6B

$4B

$2B

$0AFRICA ASIA AUSTRALASIA EUROPE NORTH AMERICA SOUTH AMERICA

2011 - December Q 2012 - March Q 2012 - June Q 2012 - September Q 2012 - December Q

$12B

$10B

$8B

$6B

$4B

$2B

$0

AFRICA ASIA AUSTRALASIA EUROPE NORTH AMERICA SOUTH AMERICA

2011 - December Q 2012 - March Q 2012 - June Q 2012 - September Q 2012 - December Q


Capital Raising for ExplorationThe quarter just ended saw very similar exploration financing compared with

a year ago, but the composition of the funding has changed dramatically

The amount of money raised for exploration in the quarter to end-December was US$1.49 billion, very similar to the amount raised in the final period of 2011. However, the contribution from the Toronto Stock Exchange (TSE) has almost doubled to US$586 million (39% of the total) to overtake the contribution from the Australian Stock Exchange (US$519 million, compared with US$638 million in the year-ago quarter).

The past quarter represented a significant improvement on the previous two quarters. Only US$645 million was raised for exploration in the September quarter, and US$559 million in the June quarter (with the ASX and TSX-Venture Exchange, in Vancouver, dominating both periods); see illustration below.

If 'unspecified' destinations for the exploration financing are excluded (US$314 million in the December quarter), three regions dominated the geographical focus in the last three months of the year; Africa (US$381 million), Australasia (US$364 million) and North America (US$314 million). This brought the total amount raised for exploration in 2012 to US$3,956 million.

Fund-raising on the TSE for exploration was dominated in the past quarter by the float of Ivanplats Ltd, which has the near-term objective

of developing two projects in the Democratic Republic of Congo (DRC) and one project in South Africa. Over 60 million common shares were issued, raising in excess of US$300 million.

Ivanplats is focussed on Africa, and its activity during the past quarter is also what caused the African spike in the illustration below. The company is focused on exploration and development of major copper, platinum, palladium, gold, nickel and zinc projects.

The higher ASX fund-raising for exploration in the December quarter, compared with the preceding periods, was reflected in higher exploration expenditure in Australia.

A couple of major financings contributed significantly to this overall picture. Focus Minerals, a leading Australian gold producer and explorer, completed a placement to Shandong Gold, issuing over 4 million new fully-paid ordinary shares (raising some US$225 million). As the company indicated at the time, this funding will allow Focus to accelerate development of its significant land-holdings across two Australian gold producing regions.

A smaller, but still significant, financing was the next step in the fast developing Sirius story. The company issued 22 million new fully-paid ordinary shares (allotted and issued in late December), raising over US$44 million.

EXPLORATION CAP RAISING by REGION

EXPLORATION CAP RAISING by EXCHANGE

$0

$100

$200

$300

$400

$500

$600

$700

ASX TSX TSE London (AIM) Other NYSE

Millio

ns

2011 - DECEMBER Q 2012 - MARCH Q 2012 - JUNE Q 2012 - SEPTEMBER Q 2012 - DECEMBER Q

$0$50

$100 $150 $200 $250 $300 $350 $400 $450 $500

AFRICA ASIA AUSTRALASIA EUROPE NORTH AMERICA SOUTH AMERICA UNSPECIFIED

Millio

ns

2011 - DECEMBER Q 2012 - MARCH Q 2012 - JUNE Q 2012 - SEPTEMBER Q 2012 - DECEMBER Q


Exploration Hot SpotsThere is hope, at last, for the mining sector despite a new low in exploration activity

Last month’s exploration activity represented the lowest monthly total since February 2010, and meant that the number of drilling reports has fallen for three consecutive months.

According to IntierraRMG’s on-line database, IntierraLive, there were drilling reports from a total of 356 prospects in December 2012 (this total includes reports from more than one drilling prospect per project), compared with 675 in December 2011.

There has been a particular slump in drilling at gold prospects, with only 155 being reported in December, compared with the recent peak of 493 in November 2011; see chart on p10. (Note that the sum of the three one-month amounts in any quarter will be considerably greater than the consolidated three-monthly project total shown in the drilling activity tables, because of multiple reports of drilling from the same prospect during the period.)

The slump in drilling reports over the past few months left the total for calendar 2012 well behind the number recorded in 2011, but still well ahead of the industry’s nadir in 2010.

GOLD DOMINaTESAs normal, the search for gold dominated the reports of drilling activity during the quarter to end-December, with a total of 702 prospects (1,111 in the final quarter of 2011). The next most significant exploration targets (in terms of individual drilling prospects) were copper (238), silver (174) and zinc (72); see tables on this page.

Canada led the way in the gold sector, with 192 prospects reporting drilling activity, followed by 114 in Australia and 52 in the US. However, these numbers are dramatically lower than the year-ago period, when the figures were 279, 218 and 88, respectively, for the three countries. Indeed, drilling activity for gold in the whole of North and Central America has fallen from 443 in the final three months of 2011 to just 299 in the quarter just ended.

The next most important region for gold-drilling activity in the December quarter was Australasia (with reports from 116 projects), followed by Africa (108) and South America (88). Nevertheless, Australasia has seen a particularly sharp decline in gold exploration, with drilling reports falling 47% since the year-ago quarter.

Australia remains the leading exploration destination for copper, with 64 prospects reporting drilling activity during the quarter just ended. This total is sharply lower, however, than the year ago figure (94), and leaves the country only just ahead of Canada (60 in the December quarter, and 66 a year ago).

Copper exploration has also fallen sharply in the US, with just 18 prospects reporting drilling during the final quarter of 2012, compared with 29 reports in the year-ago period.

Zinc Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 23 14 24Australia 15 27 22USA 6 5 9Mexico 5 8 17Brazil

N&C America 37 29 50S. America 6 15 9Europe 4 7 7Africa 5 2 3Asia 5 9 7Australasia 15 27 22

TSX/TSX-V* 44 39 52ASX* 21 35 37London* 2 4 3

TOTAL 72 89 98* Primary listing of issuing company

Copper Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 60 50 66Australia 64 83 94USA 18 17 29Mexico 7 8 16Brazil 2 4 7




Lead Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 17 10 16Australia 11 17 14USA 4 3 6Mexico 5 7 19Brazil




QUARTERLy DRILLING REPORTS (Individual Prospects)


Silver Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 39 31 56Australia 18 23 22USA 21 25 26Mexico 47 48 67Brazil




Gold Dec Q 2012 Sep Q 2012 Dec Q 2011Canada 192 198 279Australia 114 209 218USA 52 72 88Mexico 42 44 60Brazil 23 21 32



TOTAL 702 911 1,111* Primary listing of issuing company

Nevertheless, North and Central America again led the way in the search for the metal, with a total of 90 reports during the quarter (113 a year ago), compared with 64 (94) in Australasia, 33 (23) in Africa and 28 (36) in South America.

These targets are illustrated geographically in the ‘Activity Map’ opposite.

Measuring the drilling reports in terms of the primary-listing location of the company making the announcement, it is clear that Canadian companies are in the ascendancy.

Companies listed on the Toronto Stock Exchange (TSX) and TSX-Venture Exchange (together the TMX) accounted for 53% of the 238 copper reports

Exploration Hot Spotscontinued

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ACTIvITy MAP (December Quarter; 2012)

Operational Development Exploration

in the quarter just ended, and 60% of the 702 gold-drilling reports. Companies listed on the Australian Stock Exchange (ASX) accounted for 43% of the copper, and 29% of the gold, reports. Companies listed on the London Stock Exchange and AIM (together abbreviated here as LSE) hardly featured for either metal.

For copper, the year-ago proportions were 48% and 47% for TMX and ASX, respectively, and 55% and 31% for gold drilling.

TMX-listed companies also dominated the drilling reports for lead, silver and zinc; see tables on p7-8.

SLUMP IN REPORTED RESOURCESNot surprisingly, the decline in drilling announcements during the past three months had a knock-on effect on the announcement of mineral resources and ore reserves (see tables on p12).

Contained gold in mineral resources announced during the December quarter were little changed from the September quarter at 79.4Moz. This represents a slump, however, compared with the year-ago period, when announced resources contained 232.4Moz.

The shortfall in gold resources came mainly in the US (down from 35.0Moz to 6.9Moz) and in Canada

(42.5Moz to 20.8Moz). Together with a shortfall in Mexico, this meant announced gold resources in North and Central America had fallen two-thirds between the December quarters of 2011 and 2012.

There was a similar slump in announced gold reserves, which fell to 15.7Moz (contained metal) in the quarter just ended, compared with 78.2Moz a year ago. The damage was caused by massive reductions in the Americas and Africa.

The picture was scarcely any better for copper. Resources reported in the December quarter contained just 22.3Mt, comparing favourably with 16.7Mt in the September quarter but well down on the 107.4Mt reported a year ago.

The reporting of new copper resources collapsed across the globe, with the contained metal in South American falling from 63.1Mt a year ago to 12.5Mt in the period just ended.

Copper reserves were little changed from the previous quarter (5.2Mt, compared with 6.2Mt in the September quarter) but were dramatically lower than a year ago (35.2Mt). Most of the damage was from exploration projects in South America.

There was a similar story for other metals.


GLObAL DRILLING ACTIvITy


TOP-RANKED ASSAyS (December quarter; grade x intersection)

COPPER Company Project HoleGrade

(%)Intersection

(m)Depth

(m) Project Location1 OZ Minerals Ltd Carrapateena DD12CAR090W1 0.90 1,492.0 609.0 65km E Woomera (Australia)2 Blackthorn Resources Ltd Kitumba KITDD_005 3.02 220.0 206.0 180km WNW Lusaka (Zambia)3 Atico Mining Corp El Roble ATDHR-17 5.41 88.7 71.8 75km SW Medellin (Colombia)4 Africo Resources Ltd Kalukundi BH ANTD006 5.29 80.7 25.8 30km ENE Kolwezi (Congo DR)5 Intrepid Mines Ltd Tumpangpitu Sulphide GTD-12-350 0.68 568.9 498.0 209km SE Surabaya (Indonesia)6 CuDeco Ltd Rocklands Group NVB018 7.45 47.0 165.0 17km WNW Cloncurry (Australia)7 Pilot Gold Inc TV Tower (Kucukdag) KCD056 6.96 46.7 102.7 20km SE Çanakkale (Turkey)8 Reservoir Minerals Inc Brestovac-Metovnica (Chukaru) FMTC 1217 3.17 100.0 584.0 5km S Bor (Serbia)9 NovaCopper Inc Bornite (South Reef Zone) DDH RC12-0216 4.45 55.7 671.0 65km ENE Ambler (US)

10 Peel Mining Ltd Mallee Bull MBDD009 3.48 69.0 533.0 105km SSE Cobar (Australia)

GOLD Company Project HoleGrade (g/t)

Intersection (m)

Depth (m) Project Location

1 Pilot Gold Inc TV Tower (Kucukdag target) KCD-50 193.0 12.0 117.5 20km SE Çanakkale (Turkey)2 ABM Resources NL Old Pirate (Golden Hind prospect) GHRC100014 44.0 42.0 0.0 625km NW Alice Springs (Australia)3 Golden Rim Resources Ltd Balogo (Netiana) BDH012 111.0 13.0 56.0 105km S Ouagadougou (Burkina Faso)4 Northquest Ltd Pistol Bay (Vickers) PB-12-22 8.2 156.5 87.0 60km SSW Rankin Inlet (Canada)5 Gran Colombia Gold Corp Marmato MT-1500 1.6 618.1 394.0 85km S Medellin (Colombia)6 Pretium Resources Inc Brucejack (Valley of the Kings) SU-584 187.0 4.7 135.8 240km N Prince Rupert (Canada)7 Atna Resources Ltd Pinson PRC-12-006 47.4 18.3 1.5 42km ENE Winnemucca (US)8 Unity Mining Ltd Henty (Read zone) Z18553 269.0 3.1 105.7 30km N Queenstown (Australia)9 Centerra Gold Inc Kumtor (SB zone) D1653 7.7 109.3 494.1 180km SSE Almaty (Kyrgyzstan)

10 Bralorne Gold Mines Ltd Bralorne-Pioneer UB12-015 386.0 2.1 163.7 74km N Whistler (Canada)

LEAD Company Project HoleGrade

(%)Intersection

(m)Depth

(m) Project Location1 Eurasian Minerals Inc Balya (Hastanetepe) DB-81 13.80 18.0 33.0 28km WNW Balikesir (Turkey)2 El Nino Ventures Inc Murray Brook MB-2012-138 4.58 45.4 179.6 56km WSW Bathurst (Canada)3 Buchans Minerals Corp Lundberg-Engine House H-12-3475 1.34 134.8 59.5 15k E Buchans (Canada)4 US Silver & Gold Inc Galena (Lead Zone) DH49-196 17.40 6.4 78.6 2km W Wallace (US)5 Rathdowney Resources Ltd Olza OLZ-147 3.88 27.3 134.4 Near Zawiercie (Poland)6 Balamara Resources Ltd Brskovo DH3-12 3.63 28.0 111.0 70km NNE Podgorica (Montenegro)7 Silvercorp Metals Inc Ying/SGX (S7-1) ZK07AS7-103 41.50 2.2 203.6 120km SW Luoyang (China)8 Golden Tag Resources Ltd San Diego SD-12-50W 0.55 152.7 818.8 50km SSW Torreon (Mexico)9 MacPhersons Resources Ltd Nimbus East NBRC216 4.70 17.0 205.0 20km ESE Kalgoorlie (Australia)

10 Red Metal Ltd Maronan MRN12003B 4.79 15.9 1,228.0 155km ESE Mt Isa (Australia)

SILVER Company Project HoleGrade (g/t)

Intersection (m)

Depth (m) Project Location

1 Sierra Metals Inc Promontorio (Cuerpo Oriente) B509 753.0 48.9 376.5 20km SSE Cuauhtemoc (Mexico)2 Tahoe Resources Inc Escobal (East) 375 490.0 70.5 699.0 44km ESE Guatemala City (Guatemala)3 Investigator Resources Ltd Peterlumbo PPDH023 2,591.0 10.0 165.0 165km W Port Augusta (Australia)4 MacPhersons Resources Ltd Nimbus East NBRC216 896.0 28.0 200.0 20km ESE Kalgoorlie (Australia)5 Brixton Metals Corp Thorn THN12-83 165.0 150.5 24.0 98km ENE Juneau (Canada)6 Silver Standard Resources Inc Pirquitas (Cortaderas Breccia) DDH-250 206.0 120.8 76.0 207km NW San Salvador de Jujuy (Argentina)7 GoGold Resources Inc San Diego (Chispa De Oro) GGS-056 87.0 194.3 31.2 110km SW Durango (Mexico)8 Hecla Mining Co Greens Creek (South West Bench) GC3364 603.0 22.3 0.0 28km SW Juneau (US)9 Focus Ventures Ltd El Reventon (Reventon Breccia) RC-08-8 71.3 155.4 13.7 55km NE Cosala (Mexico)

10 Hochschild Mining plc Arcata (Alexia) DDH400-S-12 984.0 9.3 0.0 75km NNW Cabanaconde (Peru)

ZINC Company Project HoleGrade

(%)Intersection

(m)Depth

(m) Project Location1 Silver Standard Resources Inc Pirquitas (Cortaderas Breccia) DDH-250 5.0 120.8 76.0 207km NW San Salvador de Jujuy (Argentina)2 Silver Bull Resources Inc Sierra Mojada (Shallow Silver Zone) T12116 13.9 40.4 0.0 190km N Gómez Palacio (Mexico)3 MacPhersons Resources Ltd Nimbus East NBRC216 26.3 17.0 205.0 20km ESE Kalgoorlie (Australia)4 Buchans Minerals Corp Lundberg-Engine House H-12-3475 3.1 134.8 59.5 15km E Buchans (Canada)5 El Nino Ventures Inc Murray Brook MB-2012-138 8.5 45.4 179.6 56km WSW Bathurst (Canada)6 Venturex Resources Ltd Sulphur Springs (copper/zinc mine) SSR002 19.4 11.0 174.0 112km SSE Port Hedland (Australia)7 Golden Tag Resources Ltd San Diego SD-12-50W 1.4 152.7 818.8 50km SSW Torreon (Mexico)8 Hecla Mining Co Greens Creek (South West Bench) GC3451 10.7 16.8 0.0 28km SW Juneau (US)9 Cazaly Resources Ltd Mt Angelo North HCRC0005 2.8 62.0 24.0 35km WSW Halls Creek (Australia)

10 Imperial Metals Corp Ruddock Creek (V zone) RD-12-V38 24.0 6.4 175.3 100km NNW Revelstoke (Canada)

Exploration ResultsSummary of the best assay results during the past quarter, and new resources/reserves


Despite the sharp reduction in drilling activity (as reported) during the quarter just ended, there have been some remarkable intersections during the past few months.

The ten top-ranked assays are shown in the table on p11 for each of five metals (simply measured by taking the average grade multiplied by the intersection length, and taking no account of depth).

Top of the ranking for the copper assays during the December quarter was a drill hole on OZ Minerals’ Carrapateena project in Australia, which returned 0.90% Cu over 1,492m (at a depth of 609m). In second place

was an assay at Blackthorn Resources’ Kitumba project in Zambia which yielded 3.02% Cu over 220m (at 206m). Ranked third was an 89m intersection grading 5.41% Cu at Atico Mining’s El Roble project in Colombia.

The top gold intersection during the December quarter was Pilot Gold’s 193g/t, over 12m (at a depth of almost 118m) on its TV Tower project in Turkey (for a grade-intersection value of 2,316m.g/t). In second place during the quarter (but noteworthy because the intersection was from surface) was 44g/t over 42m at ABM Resources’ Old Pirate project in Australia.

QUARTERLy REvIEw OF RESERvES / RESOURCES ANNOUNCEMENTS

GOLD RESOURCES (oz; contained metal) GOLD RESERVES (oz; contained metal)

Dec Q 2012 Sep Q 2012 Dec Q 2011 Dec Q 2012 Sep Q 2012 Dec Q 2011

Canada 20,811,907 16,972,667 42,486,655 Canada 5,751,064 7,161,921 5,508,473

Australia 9,040,018 3,549,161 10,850,697 Australia 2,451,408 225,951 1,812,461

USA 6,918,025 3,463,209 34,990,622 USA 664,142 24,557,733

Mexico 106,346 316,357 5,950,056 Mexico 4,142,319 478,032

Brazil 8,080,381 4,732,025 8,036,141 Brazil 2,370,125 855,155 2,051,849

N&C America 28,875,291 21,378,822 84,217,187 N&C America 7,882,047 12,075,160 33,241,378

S. America 21,612,522 9,340,498 35,515,569 S. America 2,370,125 1,706,712 19,929,943

Europe 9,619,509 9,148,874 16,790,636 Europe 2,288,185 3,193,644

Africa 4,272,516 18,037,167 49,498,731 Africa 1,192,458 2,988,933 15,084,165

Asia 5,994,715 16,574,851 33,784,548 Asia 1,769,402 14,566,693 4,952,385

Australasia 9,040,018 3,549,161 12,552,027 Australasia 2,451,408 225,951 1,812,461

TOTAL 79,414,571 78,029,373 232,358,698 TOTAL 15,665,440 33,851,634 78,213,976

SILVER RESOURCES (oz; contained metal) SILVER RESERVES (oz; contained metal)


Canada 59,960,804 45,326,851 86,131,090 Canada 52,063,691 1,919,488

Australia 37,421,986 9,672,896 148,594,985 Australia 1,077,214 1,907,375 2,263,412

USA 41,424,856 82,496,983 456,390,869 USA 17,574,792 105,952,706

Mexico 37,160,251 379,747,649 446,601,438 Mexico 387,150,783 45,002,369 44,776,110

Brazil 263,293 Brazil

N&C America 139,809,216 514,125,635 1,016,688,374 N&C America 465,968,234 62,577,161 179,565,248

S. America 113,629,100 62,203,594 525,615,929 S. America 8,240,753 145,811,332

Europe 32,965,357 17,327,272 274,108,874 Europe 9,976,485 4,794,340

Africa 33,808,951 16,798,475 16,236,029 Africa 752,649 5,462,092

Asia 12,120,759 86,132,977 189,699,267 Asia 1,458,459 52,534,110

Australasia 37,421,986 9,672,896 148,594,985 Australasia 1,077,214 1,907,375 2,263,412

TOTAL 369,755,369 706,260,849 2,170,943,458 TOTAL 469,256,556 88,163,866 384,968,442

Exploration Resultscontinued


COPPER RESOURCES (t; contained metal) COPPER RESERVES (t; contained metal)


Canada 344,842 358,759 5,633,152 Canada 2,541,972 943 1,548,578

Australia 225,986 1,754,448 2,991,735 Australia 40,488 49,406 445,271

USA 381,974 5,927,462 2,085,063 USA 109,864 698,208 358,809

Mexico 1,090,298 4,832,905 Mexico 65,592

Brazil 319,752 236,138 Brazil 444,449 75,787

N&C America 726,816 7,510,007 12,694,538 N&C America 5,172,326 786,847 2,422,510

S. America 12,545,239 1,263,608 63,097,753 S. America 670,049 23,168,430

Europe 811,350 87,027 1,984,578 Europe

Africa 4,933,456 737,029 14,210,886 Africa 26,000 83,200 1,631,417

Asia 3,024,759 5,334,250 12,393,819 Asia 4,657,200 7,517,888

Australasia 225,986 1,754,448 2,991,735 Australasia 40,488 49,406 445,271

TOTAL 22,267,606 16,686,369 107,373,309 TOTAL 5,238,814 6,246,702 35,185,516

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Some of the intersections announced during the past quarter had a significant effect on the share price of the project owners (see list below). Ten-day share-price gains of over 60% were recorded by Newera Resources and Greenpower Energy for their projects at Shanagan Uul and Mirboo, respectively. A further eight companies saw their share prices appreciate by more than 25% in the ten days following a drilling announcement.

Indicative of the mooted exploration activity (and markets) in the final weeks of the year, only one of the 28 instances of share prices rising over 12% (measured ten days after an exploration announcement) was in December. There were 17 such share-price rises in October and 10 in November. Indeed, even this one exploration share-price spike in December was by Newera, which had set the quarter’s record price gain during the previous

month. Despite a share-price retreat between the two drilling reports, Newera’s share price doubled; demonstrating the abiding appeal of junior stocks.

PROGNOSISSo, what do the statistics in this report signal?

Even allowing for the skewing effect of a few large exploration results, the numbers are clearly awful. But they do not tell the whole picture. There has been a significant increase recently in funds raised for exploration, which suggests that drilling activity might start rising again in the months ahead.

As noted on p3, the funds raised by exploration companies rose sharply in the quarter to end-December, reaching over US$3.4 billion. This contrasts with the paltry US$1.8 billion raised by exploration companies in the September quarter and is 19% better than the final three months of 2011.

ZINC RESOURCES (t; contained metal) ZINC RESERVES (t; contained metal)


Canada 336,111 969,705 7,543,713 Canada

Australia 108,800 3,451 2,591,072 Australia 66,091 77,600

USA 20,059 668,954 817,240 USA 60,735

Mexico 76,360 2,121,228 1,203,944 Mexico 806,254 30,460

Brazil Brazil

N&C America 432,530 3,759,887 9,564,897 N&C America 806,254 107,703

S. America 27,942 445,421 2,106,765 S. America

Europe 1,978,940 214,246 898,035 Europe 32,420

Africa 2,106,290 591,939 316,124 Africa 579,600

Asia 335,003 25,203 779,889 Asia 35,649

Australasia 108,800 3,451 2,591,072 Australasia 66,091 77,600

TOTAL 4,989,505 5,040,147 16,256,782 TOTAL 872,345 579,600 253,372


IMPACT OF DRILLING RESULTS ON SHARE PRICES (December Quarter)

SHARE PRICE (US$)

COMPANY NAME PROPERTY PRESS RELEASE FROM TO* GAIN (%)

Newera Resources Ltd Shanagan Uul East November 0.021 0.035 66.7

Greenpower Energy Ltd Mirboo October 0.040 0.064 60.0

Aguia Resources Ltd Tres Estradas November 0.130 0.180 38.5

Indico Resources Ltd Maria Reyna October 0.180 0.240 33.3

Newera Resources Ltd Shanagan Uul East December 0.030 0.039 30.0

Cockatoo Coal Ltd Baralaba October 0.140 0.180 28.6

Marmota Energy Ltd Angel Wing October 0.072 0.090 25.0

Stellar Resources Ltd Heemskirk October 0.080 0.100 25.0

Foyson Resources Ltd New Britain November 0.008 0.010 25.0

Merah Resources Ltd Lawlers October 0.200 0.250 25.0

St George Mining Ltd East Laverton October 0.250 0.310 24.0

Navarre Minerals Ltd Bendigo North October 0.130 0.160 23.1

Atrum Coal NL Groundhog October 0.180 0.220 22.2

Hannans Reward Ltd Pahtohavare November 0.015 0.018 20.0

International Goldfields Ltd Latin October 0.027 0.032 18.5

Talga Resources Ltd Nunasvaara October 0.300 0.355 18.3

Blackthorn Resources Ltd Kitumba October 1.100 1.285 16.8

Kalgoorlie Mining Co Bullant October 0.006 0.007 16.7

Haranga Resources Ltd Bayantsogt November 0.155 0.180 16.1

Eagle Hill Exploration Corp Windfall Lake November 0.125 0.145 16.0

Monax Mining Ltd Punt Hill October 0.048 0.055 14.6

Northern Minerals Ltd Browns Range October 0.210 0.240 14.3

Shaw River Manganese Ltd Otjozondu November 0.014 0.016 14.3

Sirius Resources NL Nova October 2.180 2.480 13.8

Emmerson Resources Ltd Orlando November 0.120 0.135 12.5

International Goldfields Ltd Latin November 0.024 0.027 12.5

Latin Resources Ltd Mariela October 0.160 0.180 12.5

Eagle Hill Exploration Corp Windfall Lake November 0.125 0.140 12.0

Sirius Resources NL Nova October 2.180 2.430 11.5

* Share price ten days following assay announcement

assay Share-Price alertMany of the drill intersections announced during the past

quarter had significant share-price impact


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