James Allan CEO

From waste to high quality steel

To beneficiate or not to beneficiate ?

That is the question

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This presentation contains “forward-looking information” which may include, but is not limited to, statements with respect to the future financial and operating performance of the Company, its subsidiaries and affiliated companies, and its mineral projects, the future price of platinum group metals, gold and base metals the estimation of mineral resources and ore reserves, the realisation of mineral resource and ore reserve estimates, costs of production, capital and exploration expenditures, costs and timing of the development of new deposits, costs and timing of the development of new mines, costs and exploration capital of mining exploration operations approvals licenses and timing of future exploration, requirements for additional capital, governmental regulation operations and operations, timing and receipt of approvals, licenses, conversions under applicable mineral legislation, environmental risks, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters.

Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries and/or its affiliated companies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; conclusions of economic evaluations and studies; changes in project parameters as plans continue to be refined; future prices of platinum group metals, gold and base metals; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, insurrection or war; delays in obtaining governmental approvals or financing or in the completion of development or construction activities.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this presentation and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise.

There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

Technical disclosure in this presentation has not been prepared in accordance with Canadian National Instrument 43-101 or the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, as published by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (“JORC”) and South African Code for Reporting of exploration Results, Mineral Resources and Mineral Reserves (“SAMREC”).

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Sable Metals Limited

Platinum Projects (SA)

Sable

Vanadium and Iron Ore Projects (SA)

Selebi Phikwe Steel Project (Botswana)

Selebi Phikwe

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Sable Steel Project in Botswana   47 Mtonne dump on surface containing 42% iron

  Cannot be mechanically upgraded because of the chemical structure

  Location means the logistics cost too high for exporting as an ore

  Therefore needs to be converted into a high value steel product for sale into Africa   Sales value ~ $650 /tonne and

  Location becomes an advantage

  Scoping study showed a Blast Furnace operation viable and profitable

  Pre-feasibility underway to determine best economic technology

Steel rebar rods

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Sable – Botswana (Material Balance)

400 kt 400 kt

1 240 kt

1 000 kt

700 kt 470 kt

1 200 kt

2 400 kt

1 400 kt 1 060 kt

Billet Caster

Wire Rod Mill

Rebar Mill

400 kt

480 kt

1 150 kt

BCL Slag

Sales volumes

Production volumes

Raw material input volumes

830 kt

295 kt

$13 m

$45 m

$193 m $196 m

$396 m

$593 m

$ (Annual Cost) m

$(Annual Income) m

$100 m Ore replacement

benefit

$760 m

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DRI Kiln

Sable Botswana -Alternative Iron making process

Hot Metal

DRI Fe 83.72% C 0.04% Si 0.02% Mn 0.00% S 0.02% P 0.06%

DRI

RHF DRI

Electric furnace

BOF

Iron Ore

BCL Slag

Rotary Hearth (FastMet ®)

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IMF Forecasts for Growth of Sub-Saharan Countries 2013-2018

Angola 6.0 Mozambique 8.0 Zambia 7.8 Côte d'Ivoire 7.7 Rwanda 7.0 Nigeria   7.0 Tanzania 6.9 Uganda   6.5 Ethiopia 6.5 Democratic Republic of the Congo 6.5 Malawi 6.3 Ghana 6.3 Kenya 6.2 Zimbabwe 5.5 Morocco 5.2 Egypt 5.1 Senegal 4.7 Mauritius 4.4 Botswana 4.3 Namibia   4.2 Lesotho 3.7 Algeria 3.6 South Africa 3.0 Swaziland 0.3 Source: IMF WEO, Apr&Jul13

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Sable Steel Project in Botswana Competitive Advantage   “Free”iron units on surface

  Royalty on metal produced

  New modern plant   Potential for new tried and tested technology

  Nearest competitors have old ageing plant

  Limited product lines – re-bar and wire rod

  Location   Close to markets – logistics advantage

  Botswana as a favoured investment destination – low country risk

  ‘Growing African market - +6% per annum

Steel rebar rods

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Vanadium and Iron Ore projects- Western Limb of Bushveld Igneous Complex

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South African Iron ore   Concentrated on Northern Cape Iron Ore deposits

  High grade hematite ores

  Large deposits

  Can support infrastructure development required   Dedicated rail line (800km) and port infrastructure

  Bushveld Igneous Complex ignored until recently

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Sable - Magnetite Projects   Vanadium Magnetite Reef (VMR) outcrops on 5 properties

  Infrastructure advantage- rail line   On boundary of Abrina   On Doornpoort

  Close to Bank and Syferfontein and Uitvalgrond

  Potential   Open Pit mines   Magnetite grade 51-55% Fe; 1.7% Vanadium   Crush and screen   Estimated each property could support 1-2 Million tonnes per annum mine   Ore supply agreements – local and export

  Beneficiation option - Smelt on site and produce pig iron if value added

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Sable – Magnetite Projects   Mining costs low

  Shovel and in-pit crushing and screening

  On rail – little infrastructure development required

  Logistics to Witbank and Maputo or Richards Bay

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Example of a Vanadium Magnetite Project Ironveld (Market Cap. GBP30m= R550m)   Published Resource July 2013: 32m tons of

iron in situ = 100m tons resource

  Pre-feasibility published June 2013

  12MW smelter producing 46k tons pig iron/yr by 2015 ($60m) capex

  World class Vanadium grades

  IRR 20%

  By 2019 → 1mtpa pig iron,10ktpa FeV

  Capex $1 billion with 4 x 75MW smelter

  Cost $240/ton pig iron $4.70/kg FeV

  Revenue $450/ton pig iron $35/kg FeV

  NPV @ 10% real of R10 billion – pay back of capital: 7 years

Ironveld Share price Current: 14p

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Iron ore export - Example   Pricing of magnetite ore

  Based on DSO

  Price adjusted for iron content

  Current pricing of DSO $125/tonne

  Adjusted to 52% iron content $105/tonne

  Less freight and marketing commissions FOB Price $86/tonne

  Discount for Titanium content $10/tonne

  Rand FOB price R834/tonne

  Logistics and Mining costs R633/tonne

  Profit for Royalty calculation R201/tonne

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Incentive for beneficiation   Lower royalties for refined products versus ore exports

  Ore formula (0.5+ ((Profit / (Revenue * 9) *100)/100

  Revenue multiplied by 9

  The higher the profit margin the higher the royalty

  Maximum royalty of 7%

  Refined mineral formula (0,5+((Profit/(Revenue * 12,5)*100)/100

  Revenue multiplied by 12,5

  The higher the profit margin the higher the royalty

  Maximum royalty of 5%

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Iron ore export - Example   Rand FOB price R834/tonne

  Profit for Royalty calculation R201/tonne (24% margin)

  Royalty of 3,18% R26/tonne

  Profit for tax R174/tonne

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Beneficiate to produce pig iron for export   Pricing of pig iron

  $450/tonne

  Less freight and marketing commissions FOB Price $422/tonne

  Rand FOB price R4 642/tonne

  Total costs R2 888/tonne

  Profit for Royalty calculation R1 754/tonne (38%)

  Royalty of 3,61% R164/tonne

  Profit for tax R1 590/tonne

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Comparing the two Income Statements   Assume an iron ore mine of 500 000 tonnes per annum compared with 250 000 tonnes

pig iron   Rm Iron Ore Pig Iron Multiple

  Revenue 417 1 161 3

  Costs 317 722 2

  Royalty % 3,18 3,52

  Royalty 13 41

  Profit for tax 77 260

  Tax 22 73

  State 35 114 3

  PAT 56 187 3

  Clearly the fiscus is better off developing the orebody to beneficiate and produce pig iron

  Company has a stronger income statement and much higher profit margin

  But what about the shareholders?

  Does this add value to shareholders?

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Comparing the two Balance Sheets   Assume an iron ore mine of 500 000 tonnes per annum compared with 250 000 tonnes

pig iron   What are the capital costs and the Return on Capital Employed?

  Rm Iron Ore Pig Iron

  Capital costs 200 2 750

  Profit before tax 87 398

  ROCE % 44 14

  Payback period (Years) 2,3 6,9

  As a shareholder/financier which do you prefer ?

  The bigger Income Statement or the better Return on Capital Employed?

  The better ROCE!

  Is the pig attractive?

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This pig is ugly…

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Why choose the beneficiation route?   If Pig Iron generated a higher or comparable ROCE than Iron Ore ……..

  Various “fixed costs”   Capital costs

  Conversion costs

  Freight and port charges

  What are the “variable costs”?   Logistics

  Rail costs per tonne/kilometre and the distance from the port.

  Higher logistics costs reduce the returns for the ore project at a faster rate than the pig iron project

  What about higher revenue from Vanadium and Titanium credits

  At R500/tonne logistics costs both projects are on par

  Government provides the capital for the plant or tax incentives

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Partnering in the beneficiation route   Government provides some of the capital required

  Repayment through the higher tax and royalties received

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Partnering in the beneficiation route   Government provides some of the capital required

  Repayment through the higher tax and royalties received

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The elephant in the room………

Power Shortages

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Conclusion

  Beneficiation is a noble goal

  More $ revenue for South Africa from the same resource base

  Higher revenues for the fiscus and GDP

  Royalty formula does not necessarily encourage beneficiation

  CEO’s will beneficiate if it adds value for shareholders

  Shareholders and investors prefer return on capital employed to a bigger income statement

  To encourage the beneficiation route government should provide capital

  Use the carrot and not the stick

  Create jobs and value where it makes business sense

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Finally the objective is to make the pig pretty