© 2014 HDR, Inc., all rights reserved.

All of the information contained in this report is to be considered confidential, and the recipient of this report agrees to retain the information in confidence and will not disclose any of the information to others except as expressly permitted by Salva Resources Pty Ltd. Only the recipient may rely upon this report.

This report is intended to provide general information only. Given that forecasts change on a daily basis, it is not intended to be completely accurate and should not be relied upon as such. Salva Resources Pty Ltd disclaims liability for loss incurred by any person acting in reliance upon the information contained in this paper.

Disclaimer

Manish Garg is the Director consulting for HDR Salva. Manish has more than 25 years’ experience in mining Industry in Australia. Manish have worked in various commodities including copper, lead, zinc, nickel, gold and coal having worked for mining majors including Vedanta, Pasminco, WMC Resources, Oceanagold, BHP Billiton and Rio Tinto.   Manish has wide experience in delivering due diligences, feasibility studies

and project reviews for banks, financial investors and mining companies on global projects, some of these deals are valued at over US$5 billion.

  At present, Manish’s team is working intensively on the biggest listing of a mining company on the main market of Singapore Stock Exchange. Deal size for his transaction is over $2Bn.

Commodities Covered Today:   Zinc   Copper   Nickel

Additional Commodities Covered:   Gold   Iron Ore   Manganese   Graphite

Full Coverage at:

http://www.hdrsalva.com/market-news/

Zinc Consumption

6

7

8

9

10

11

12

13

14

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mt o

f Zin

c

% o

f tot

al Co

nsum

ptio

n Global Zinc Consumption

China Rest of Asia Europe South America

North America Rest of World World (RHS)

  3.8% y-o-y growth

Zinc Consumption

  Growth in China (12%), India & Brazil (6%) accounts for majority of growth

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gro

wth

Rat

e (%

)

Zinc Consumption Growth Rate

Mature Economics Developing Economics Total World

Zinc Demand Outlook

  4% CAGR growth anticipated

13.5 14.1 14.9 15.3 16.3 16.9 17.4 18.1 18.5 19.0 19.5 20.0 20.1

0

5

10

15

20

25

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Mt o

f Zin

c

World Zinc Demand Forecast

World Zinc Demand (Mt)

CAGR 4.0%

Zinc Concentrate Supply

  But supply growth was only 2% growth in 2013 – LME stocks declining!

0

2

4

6

8

10

12

14

16

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mt o

f Zin

c

% o

f pro

duct

ion

Global Zinc Supply

China Rest of Asia Europe South America Australia North America Rest of World World (RHS)

Zinc Mine Closure

  Nearly 2Mt (14% of current world production) of production lost anticipated in next 4 yrs

-­‐442  

-­‐716  

-­‐1310  

-­‐1720  

-­‐1884  

-­‐81   -­‐143   -­‐182   -­‐228  

-­‐470  

-­‐2000  

-­‐1800  

-­‐1600  

-­‐1400  

-­‐1200  

-­‐1000  

-­‐800  

-­‐600  

-­‐400  

-­‐200  

0  

2013   2014   2015   2016   2017  

Kt    

Planned  Mine  Closures  

Zinc  (kt)   Lead  (kt)  

Brunswick  Preservence  Snow/Trout  Lake  El  Monchito    

Lisheen  Kassandra  Angas  Mt  Garnet  

Century  Duck  Pond    Golden  Grove  

Scorpion,  Myra  Falls,    Mae  Sod  ,  El  Toqui,    Mahr  Tunnel,  Raura,  Pomozany  

Cannigton,      Pyhasalmi  Guemassa,  Cayelli  

Zinc Grade

  Ore grades for new projects is lot lower than current operating mines

Source: Presentation by MMG at International Zinc Association, 2014

Zinc Supply Demand Balance

  Increasing Demand Supply Gap

0  

5  

10  

15  

20  

25  

2013   2014   2015   2016   2017   2018   2019   2020   2021   2022   2023   2024   2025  

Mt  o

f  Zinc  

World  Zinc  Demand  (Mt)   World  Zinc  Supply    (Mt)  

Increasing  Demand  Supply  Gap  

Zinc Outlook

Healthy demand, declining production levels and the lack of genuine development opportunities should ensure a more than favourable outlook for zinc in the near future.

A bull market is anticipated!

Copper Consumption

  3.7% CAGR growth for past 10 yrs, 4.5% anticipated!

12

16

20

24

28

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F

Cu

(Mt)

Copper Supply

32%

9%

7% 7% 6%

5% 5%

5% 3%

21%

Copper Ore Production Chile China Peru USA Australia Russia Congo Zambia Canada Others

30%

14%

7% 5% 4% 3%

3% 3%

3%

28%

Refined Copper Production China Chile Japan USA Russia Zambia India Germany Korea Others

Import of Copper Concentrates

0

5000

10000

15000

20000

25000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Thou

sand

Tonn

es

China Japan India Rep. of Korea Spain Germany Brazil Zambia

Copper Supply

12  

16  

20  

24  

28  

2008   2009   2010   2011   2012   2013   2014F   2015F   2016F   2017F   2018F   2019F   2020F  

Cu  (Mt)  

Copper  Supply  (Mt)  

Likely  Case   Possible  Case  

Copper Declining Grade

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

% C

u

Chile China Australia Peru Canada Mexico

  Metal content in 1% Cu Ore is worth $65/t (Marginal economics?)

Copper Projects - Planned

Source: ICSG Directory of Copper Mines and Plants – February 2013

Copper Projects - Uncertainty

  Geopolitical issues + viability of large, low grade Porphyry deposits?

0 100 200 300 400 500 600 700

Brownfield

Greenfield

Likely to be delayed

Copper Demand Supply Balance

  Surplus diminishing on basis on project start up delays

-1500

-1000

-500

0

500

1000

2014F 2015F 2016F 2017F 2018F 2019F 2020F

Cu

Bal

ance

(Kt)

Possible Case Likely Case

Copper Outlook

  Current prices doesn’t support investment in large, low grade copper projects requiring massive capital investments.

  Most of the proposed projects are in high geo-political risk locations. Project delays are likely.

Mr Ivan Glasenberg, CEO of Glencore, recently said he saw no opportunity for new projects. “We can buy them a lot cheaper than we can build them,” he said.

Nickel Demand

66% 12%

7%

5% 3% 7%

Global Nickel Usage

Stainless steel Non-ferrous alloys Plating Alloy Steel Foundry Other

0

500

1,000

1,500

2,000

2,500

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F

kt o

f Ni

Primary Nickel Demand 4% CAGR

Source: International Nickel Study Group, HDR Salva

Source: International Nickel Study Group, HDR Salva

Nickel Supply

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F

Kt o

f Ni

Primary Nickel Supply

Source: International Nickel Study Group, HDR Salva

Nickel Ore Types

Ore Types Processing Routes

Examples

Laterites-Oxides

High Pressure Acid Leach (HPAL)

Goro, Taganito, Ramu, Murrin Murrin

Ferro Nickel PT Inco, Koniambo, SNL

Nickel Pig Iron Chinese Plants

Sulphides Conventional Pyrometallurgy

BHP NW, Norilsk Nickel

Implications of Indonesian Exports Ban

Source: HDR Salva

0

100

200

300

400

500

600

2014F 2015F 2016F 2017F 2018F 2019F 2020F

Kt o

f Ni

Potential Replacement for Indonesian Export Ban

Processed NPI - Indonesia Laterites - Philippines Laterites - PNG Laterites - Guatemala Sulphides - Incremental

  Indonesia exported 400kt Ni in 2013. Replacement tonnes have long lead time.

Demand Supply Balance

Source: HDR Salva

-150 -100

-50 0

50 100 150 200 250

2013 2014F 2015F 2016F 2017F 2018F 2019F 2020F

Kt o

f Ni

Demand Supply Balance

Balance

Indonesia will continue to be the key driver of the nickel price.

Mr Potanin, CEO of Norilsk said: “I see Indonesia as the key nickel price driver for the time being”. Any change in government policy will have a significant impact on prices.

Nickel

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Seaborne Demand

0

200

400

600

800

1000

1200

1400

1600

2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F

Mt o

f Iro

n or

e (Fe

62%

eq)

Seaborne Iron ore demand

China Japan South Korea Taiwan Other Asia Western Europe Others

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Cost Pressure, Changing Supply Location

Source: BHP Billiton Presentation

  High cost production under threat

West Africa Iron Ore – Bigger than Pilbara !

Iron Ore Outlook

China has shown it is determined to acquire iron ore assets no matter how remote or how expensive in a bid to be free of the tentacles of the world’s Big Three producers - Rio, BHP and Vale.

This was evident in its investment in Australia’s Citic Pacific Sino magnetite project and the takeover of Aquila for its API West Pilbara Project as well as the Guinea JV with Rio for the Simandou Project and the $1.5Bn for minority stake in African Minerals in Sierra Leone.

It would be reasonable to assume China will continue to seek out iron ore assets into the future.