For personal use only - asx.com.au · Click to edit Master text styles – Second level Important Notice and Disclaimer (cont.) Investment risk An investment in Cobar shares is subject

Cobar Consolidated Resources Limited

Investor Presentation

24 April 2013

For

per

sona

l use

onl

y

► Click to edit Master text styles

– Second level

Important Notice and Disclaimer

This Presentation has been prepared by Cobar Consolidated Resources Limited ACN 118 684 576 (Cobar).

Summary information

This Presentation contains summary information about Cobar and its subsidiaries (Cobar Group) and their activities current as at 24 April 2013.

The information in this Presentation does not purport to be complete or comprehensive, and does not purport to summarise all information that an

investor should consider when making an investment decision. It should be read in conjunction with Cobar’s other periodic and continuous

disclosure announcements lodged with ASX, which are available at www.asx.com.au. All dollar values are in Australian dollars (A$) and financial

data is presented for the financial year ending 30 June 2012 unless stated otherwise.

Not financial product advice

This Presentation is for information purposes only and is not a prospectus, product disclosure statement or other offer document under Australian

law or the law of any other jurisdiction. This Presentation is not financial advice, a recommendation to acquire Cobar shares or accounting, legal or

tax advice. It has been prepared without taking into account the objectives, financial or tax situation or needs of individuals. Before making an

investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial

and tax situation and needs and seek such legal, financial and/or taxation advice as they deem necessary or appropriate to their jurisdiction.

Cobar is not licensed to provide financial product advice in respect of Cobar shares. Cooling off rights do not apply to the acquisition of Cobar

shares.

Past performance

Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon (and is not) an

indication of the Company's views on its future financial performance or condition. Investors should note that past performance, including past

share price performance, of the Cobar Group cannot be relied upon as an indicator of (and provides no guidance as to) future Cobar Group

performance including future share price performance. The historical information included in this Presentation is, or is based on, information that

has previously been released to the market.

Future performance

This Presentation contains certain forward looking statements. The words anticipated, expected, projections, forecast, estimates, could, may,

target, consider and will and other similar expressions are intended to identify forward looking statements. Forward looking statements, opinions

and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are

statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements

including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and

should not be relied on as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ

materially from these statements. The forward looking statements in this Presentation speak only as of the date of this Presentation. To the full

extent permitted by law, Cobar and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking

to release any updates or revisions to the information to reflect any change in expectations or assumptions. Nothing in this Presentation will under

any circumstances create an implication that there has been no change in the affairs of Cobar Group since the date of this Presentation.

Cobar Consolidated Resources 00002222

For

per

sona

l use

onl

y


– Second level

Important Notice and Disclaimer (cont.)

Investment risk

An investment in Cobar shares is subject to investment and other known and unknown risks, some of which are beyond the control of Cobar

Group. Cobar does not guarantee the performance of Cobar or any particular rate of return on the performance on Cobar Group, nor does it

guarantee the repayment of capital from Cobar or any particular tax treatment. Please see the Risk Factors section of this Presentation for further

details.

Not an offer

This Presentation is not and should not be considered an offer or an invitation to acquire Cobar shares or any other financial products and does not

and will not form any part of any contract for the acquisition of Cobar shares. Eligible shareholders will be entitled to participate in the Offer

under the Entitlement Offer Booklet expected to be lodged with ASX, and dispatched, on or about 10 May 2013. Eligible shareholders who wish to

acquire the shares the subject of the Offer should consider the Entitlement Offer Booklet in deciding whether to apply under the Offer and

complete the Entitlement and Acceptance Form which will be in, or accompany, the Entitlement Offer Booklet. This Presentation does not

constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. Cobar shares have not been, and will not be,

registered under the US Securities Act of 1933 and may not be offered or sold in the United States exempt in a transaction exempt from, or not

subject to, the registration requirements of the US Securities Act and applicable US state securities laws.

JORC Code

The information to which this statement is attached that relates to exploration results is based on information compiled by Martin Lenard who is a

Fellow of the Australasian Institute of Mining and Metallurgy. Martin Lenard is an employee of Cobar Consolidated Resources Ltd and has

sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity to which he is

undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore

Reserves” (the JORC Code). Martin Lenard consents to the inclusion in this report of these matters based on the information in the form and

context in which it appears. BM Geological Services was engaged in October 2011 by Cobar Consolidated Resources Ltd, to prepare a mineral

resource estimate for the Wonawinta silver-zinc-lead deposit in New South Wales. A W Bewsher, Senior Geologist, prepared this report. The

mineral resource estimates in this report have been classified and reported in accordance with the JORC Code. The following statement is made in

accordance with Clause 8 of the JORC Code: The information in this report that relates to mineral resources is based on information compiled by

A W Bewsher, who is a Member of The Australian Institute of Geoscientists. A W Bewsher is a full-time employee of BM Geological Services, and

has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to mineral resource

estimation processes to qualify as a Competent Person as defined in the JORC Code. A W Bewsher consents to and has provided his prior written

consent to the inclusion in this report of these matters based on the documentation in the form and in the context in which it appears. The

information in this report that relates to ore reserves is based on information compiled by P W Llewellyn who is a Fellow of The Australasian

Institute of Mining and Metallurgy. P W Llewellyn consults to Cobar Consolidated Resources Ltd and has sufficient experience, which is relevant to

the style of mineralisation and type of deposit under consideration and to ore reserve estimation processes to qualify as a Competent Person as

defined in the JORC Code. P W Llewellyn consents to and has provided his prior written consent to the inclusion in this report of these matters

based on the documentation in the form and in the context in which it appears. Ore Reserves were estimated using all available geological and

relevant drill hole and assay data, including mineralogical sampling and test work on mineral recoveries and final product qualities. Ore Reserve

estimates were determined by the consideration of all of the “modifying factors” in accordance with the JORC Code 2004, including product

prices, mining costs, metallurgical recoveries, environmental consideration, access and approvals.


For

per

sona

l use

onl

y


– Second level

Important Notice and Disclaimer (cont.)

Cautionary note for investors outside Australia regarding reserves and resources

Investors outside Australia should note that while Cobar's reserve and resource estimates comply with the JORC Code, they may not comply with

similar guidelines in other countries, including the United States. The JORC Code and Guide 7, which governs disclosures of mineral reserves in

registration statements filed with the U.S. Securities and Exchange Commission, differ in several significant respects. In particular, Industry Guide

7 does not recognise classifications other than proven and probable reserves and, as a result, the SEC generally does not permit mining

companies to disclose their mineral resources in SEC filings. Information contained in this presentation describing Cobar's mineral deposits may

not be comparable to similar information made public by companies in accordance with Guide 7. You should not assume that quantities reported

as “resources” will be converted to reserves under the JORC Code or any other reporting regime or that Cobar will be able to legally and

economically extract them.

Advisers

Cobar's advisers have not authorised, permitted or caused the issue, lodgement, submission, despatch or provision of this Presentation and do not

make or purport to make any statement in this Presentation and there is no statement in this Presentation which is based on any statement by the

advisers.

To the maximum extent permitted by law, Cobar, its representatives, advisers and their respective officers, directors, employees, agents or

controlling persons (collectively, the Representatives) expressly disclaim all liabilities in respect of, and make no representation or warranty,

express or implied, as to the accuracy or completeness of the information contained in this Presentation or in any other documents furnished by

the foregoing persons. Only those representations and warranties that are made in definitive transaction documents regarding the proposed

investment, when, as and if executed, will have any legal effect.

Statements made in this Presentation are made only at the date of this Presentation. The information in this Presentation remains subject to change

without notice


For

per

sona

l use

onl

y


– Second level

Contents

► Capital Raising Initiatives

► Company Overview and Ramp-up Progress

► Exploration Upside

► Conclusions

► Risk Factors and International Selling Restrictions


For

per

sona

l use

onl

y


– Second level

Capital Raising Initiatives


For

per

sona

l use

onl

y


– Second level

Capital Raising Initiatives

► Cobar today announced a list of funding initiatives that will address short

term working capital requirements and allow the company to meet

scheduled debt repayments.

► These initiatives are:

– Entitlement Offer to raise $12.2 million.

– Realisation of part of Cobar’s hedge book to raise $5.1m.

– Six month deferral of repayments under project finance facility.


For

per

sona

l use

onl

y


– Second level

Entitlement Offer

► Cobar is undertaking a 2 for 5 renounceable pro rata entitlement offer

(Entitlement Offer) to raise approximately $12.2 million.

► The offer price is $0.13 per share, representing:

– A 43.6% discount to the 5 day VWAP of $0.23 as at Thursday 18 Apr 2013.

– A 26.3% discount to the Theoretical Ex-Rights Price (TERP) of $0.18.

► Shareholders can apply for additional shares in excess of their entitlement.

► The offer is underwritten by Cobar’s major shareholder, Magna, at no cost

to Cobar (subject to FIRB approval, which has been applied for).

– The underwriting agreement contains no termination rights relating to a fall

in any market index, Cobar’s share price, or the silver price.

► Magna has committed to taking up its full pro rata entitlement,

representing approximately $2.3 million.

► Magna will have the right to appoint a nominee to the Board of Cobar

following completion of the Entitlement Offer.


For

per

sona

l use

onl

y


– Second level

Other Capital Initiatives

► Cobar has also negotiated changes to its financing facilities with CBA.

These include:

– Restructure of Cobar’s hedge book to raise $5.1m.

� Cobar has entered into new hedging arrangements for 900,000oz of

silver at an average price of A$23.75/oz.

� Cobar continues to hold hedging for approximately 500,000oz at an

average silver price of A$29/oz.

– Deferral of scheduled term loan repayments under its project finance facility

� Next repayment due in December 2013.


For

per

sona

l use

onl

y


– Second level

Use of Funds

Closing cash position as at 31 March 2013 $2.8m

Proceeds from part-sale of hedge book $5.1m

Proceeds from the Entitlement Offer (before costs) $12.2m

Gross proceeds from capital initiatives $20.1m

Costs of the Entitlement Offer ($0.3m)

Outstanding debt balance following debt restructure ($16.8m)

Amount available for working capital purposes

before operating and investing cash flows$3.0m


For

per

sona

l use

onl

y


– Second level

Executive Changes

► Ian Lawrence to step-down as Managing Director on 23 May 2013 after

more than 7 years with the Company.

► Paul Bibby has been appointed as COO in the interim period.

– Will assist the Company in the transition to a new Managing Director.

– Previously CEO of Range River Gold and OceanaGold.

– Has held operating and development roles at Nyrstar, Zinifex and Rio Tinto.


For

per

sona

l use

onl

y


– Second level

Indicative Timetable (Entitlement Offer)

*Dates and times are indicative only and subject to change

Event Date

Announcement 24 April

Shares trade on ASX on an ‘ex’ basis and rights trading starts 30 April

Record date for determining entitlements 6 May

Entitlement Offer opens 10 May

Rights trading ends 21 May

New shares quoted on a deferred settlement basis 22 May

Entitlement Offer closes 28 May

Announce results of Entitlement Offer 31 May

Allotment of new shares under the Entitlement Offer 5 Jun

Trading of new shares under the Entitlement Offer 6 Jun


For

per

sona

l use

onl

y


– Second level

Company overview & Ramp-up progress


For

per

sona

l use

onl

y


– Second level

Company Overview

► Cobar Consolidated Resources is the owner and operator of the Wonawinta

Silver Mine in western New South Wales, Australia.

► We have successfully transitioned from junior explorer to developer and

producer in 5 years.

► We are moving to become a profitable ASX-listed

silver producer benefitting from a silver

price that is underpinned by a compelling story

for sustained long term demand.


For

per

sona

l use

onl

y


– Second level

Investment Highlights

► Solid mineral inventory*.

– 10Mt at 80g/t for 26Moz Ag - probable ore reserve estimate.

– 53Moz - indicated and inferred resource estimate.

► Plant constructed and operational.

– Mining from a series of shallow open pits.

– Conventional carbon-in-leach (CIL) to produce silver dore.

– Ball mill expected to be operational by July 2013, increasing production and

silver revenues.

► Rapid transition from developer to producer.

– Definitive feasibility study completed December 2010.

– First silver poured in July 2012.

► Significant exploration upside.

– First phase of resource expansion drilling complete.


*As at January 2012. As at March 2013, 532kt of ore at an average grade of 88.3 g/t has been extracted from the reserve base

(1.5Moz of silver), of which 397koz is contained in the oversize ore stockpile

For

per

sona

l use

onl

y


– Second level

Why Silver?

► Silver’s unique properties are relevant in today’s modern world and will

underpin demand well into the future.

– Highest electrical conductivity of all the metals (critically important in the

miniaturisation of circuits) and is non corrosive.

– Superior thermal conductivity (transfers heat effectively; doesn’t overheat).

– Highest reflectivity (94%) in visible light (Gold 72%, Aluminium 92%).

► “Silver helps make today’s interconnected lifestyle possible and is a vital

component of virtually every automobile, cell and smartphone, computer

and laptop, appliance and electronic device we use.

Further, silver’s antibacterial properties are finding new uses in textiles,

medical instruments and hospital equipment, providing an effective tool

in combatting infection and bacteria”*

Source: The Silver Institute 2011

*Michael DiRienzo, the Silver Institute (March 2013)


For

per

sona

l use

onl

y


– Second level

Resource and Reserve Base (Jan 2012*)


Reserve Tonnes Grade Grade Cont Cont

Classification Mt Ag g/t Pb % Ag Moz Pb ‘000t

Probable 10.1 80 1.1 25.9 107

Resource Tonnes Grade Grade Cont Cont

Mt Ag g/t Pb % Ag Moz Pb ‘000t

Indicated 16.9 66 0.9 36.0 148

Inferred 9.1 58 0.7 16.8 61

Total 26.0 63 0.8 52.8 209

► Underpins current operation.

► Provides platform to consider expansion options.

► Exploration activity will potentially add to resource/reserve base.

*Ore Reserves are included in the Mineral Resource; Cut-off grade of 22 g/t silver equivalent using a silver price of A$30/oz

and a lead price of A$1,869/tonne; A global dilution factor of 3 g/t silver has been applied; As at March 2013, 532kt of ore at an

average grade of 88.3 g/t has been extracted from the reserve base (1.5Moz of silver), of which 397koz is contained in the

oversize ore stockpile

For

per

sona

l use

onl

y


– Second level

Ramp-up Progress

► Progressive ramp up in silver production July through December 2012.

► Tougher clays were recognized soon after production started.

► The mill installation was brought forward from Y3 to Y1.

► A number of interim solutions have been implemented.

– Crusher on the ROM pad.

– High pressure sprays.

– Gravity circuit commissioned.

– Dis-integrator installed.

► A stockpile of oversize material has accumulated.

► Ball mill installation expected in June 2013 (operational from July 2013)

will deal with harder ore and eliminate over-size altogether.


For

per

sona

l use

onl

y


– Second level

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

oz

Cum Actual Production Cum Prod'n - had there been no oversize ore

Impact of Oversize Ore on Production (FY13)


586koz

948koz

+363koz

For

per

sona

l use

onl

y


– Second level

Silver Production (FY13)


*As with prior months, Cobar has a certain level of silver contained in concentrate on hand. At March 2013, this was 36koz

0

20,000

40,000

60,000

80,000

100,000

120,000

Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

oz *

Silver production in the March quarter has been significantly constrained by the level of oversize ore.

For

per

sona

l use

onl

y


– Second level

Ball Mill


► The ball mill has arrived on site and is expected to be installed in June

2013 and operational in July 2013.

– The ball mill will deal with harder limestone ore and eliminate oversize clay ore.

– This will increase silver production and consequently revenues, and reduce operating costs per ounce.

For

per

sona

l use

onl

y


– Second level

March 2013 Quarterly Results


Operating

parameters

Sep ‘12 Dec ‘12 Mar ‘13 Comment

Ore mined (t) 129,035 198,765 204,290 �

Ore grade (g/t) 72 90 97 �

Ore processed (t) 75,561 177,919 171,398 Debottlenecking required

Ore grade (g/t) 83 93 101 �

Recovery (%) 90 81 79 84% achieved in March

Silver in oversize (oz) 56,666 112,232 228,102 Ball mill to process

Silver produced (oz) 76,850 277,473 231,253 Refer comment below

Cash at bank ($M) 12.7 9.7 2.8 Capital raising announced

As at 31 March there was 36,000oz of silver contained in concentrate and 397,000oz of silver contained in oversize ore.

For

per

sona

l use

onl

y


– Second level

Exploration upside


For

per

sona

l use

onl

y


– Second level

Cobar Basin Exploration

► Cobar Basin poly-metallic mineral field.

► Three operating underground and one

open cut mine; two advanced projects.

► CCR tenements >900km2 on western

margin of basin.

► 70 strike km of prospective basin-

bounding structures.

► Exploration Objectives:

– Extend mine life – increase silver

reserve/resource inventory.

– Increase silver output.

– Grow project portfolio (new discovery) –

pursue blue sky base metal potential at

Wonawinta and Gundaroo.


For

per

sona

l use

onl

y


– Second level

Wonawinta Resource Expansion

► A 110 hole RC program totaling 6,429m

was recently completed in the Wonawinta

area.

► Two objectives for the program:

– Identify areas within the existing resource

with the potential for upgrading from

inferred to indicated resource.

– Locate new areas with the potential for

additional oxide silver resources.

► Results highlights:

– Most significant result at the Southern end

of Target 1D, where CCRC959 intersected

5m @ 139g/t Ag from a depth of 26m.

– Drilling at 2D identified a new zone of

oxide mineralisation over a strike length of

2.5km and an E-W extent of 100-300m.

Grades are generally low at <50g/t Ag.


For

per

sona

l use

onl

y


– Second level

Wonawinta Resource Expansion - Regional

► Two drillholes spaced 300m apart were

completed at the Southern end of the

Junction prospect located 5km NE of the

Wonawinta mine.

– CCRC996 intersected 12m @ 13g/t Ag.

Presence of silver mineralisation and

favourable host rocks at shallow depths in

this grass-roots target is regarded as highly

encouraging.

– No mineralisation intersected at CCRC997.

► Further drilling is required on Smith’s Tank

line (Target 2E) to define the higher grade

mineralisation.

► Targets 2F and 2G are yet to be tested.


For

per

sona

l use

onl

y


– Second level

Conclusions


For

per

sona

l use

onl

y


– Second level

Conclusions

► The Wonawinta operation is transitioning to nameplate capacity.

– The level of oversize ore is constraining silver production.

– The priority is the ball mill installation, which will allow for the treatment of

oversize ore.

► Capital initiatives will provide immediate working capital and fund

scheduled repayments of debt facilities.

► Exploration upside.

– Silver and base metals.

► Revenue is leveraged to silver price.

– More than two-thirds of production is un-hedged.


For

per

sona

l use

onl

y


– Second level

Risk factors and Selling restrictions


For

per

sona

l use

onl

y


– Second level

Risk Factors

Cobar is a minerals exploration and production company with a primary focus on silver. Due to the nature of Cobar’s business activities

and mineral exploration interests, investment in the Company carries with it risks reasonably expected of an investment in a business of

this type. An investment in the Company should be considered speculative. Shareholders should consider the risk factors described

below, together with the Company's other periodic and continuous disclosure announcements lodged with ASX and other publicly

available information on Cobar’s website at www.ccrlimited.com.au, before investing in the Company.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

Additional requirements for capital

The size of the Entitlement Offer is sufficient to meet the Company’s working capital requirements and debt repayment schedule under its

current business plan, but with a minimal cash buffer for contingencies. The Company’s actual capital requirements will depend on

numerous factors. Depending on the Company’s ability to generate income from its operations, the cost of exploration activities, and other

acquisition opportunities, the Company may require further financing in due course in addition to amounts raised under this capital

raising. Any additional equity financing may dilute shareholdings. In addition, there is limited scope for the Company to increase its debt

financing under its current debt arrangements. If the Company is unable to obtain additional financing as needed, it may be required to

reduce the scope of its operations or scale back its exploration programs, as the case may be.

Production and operating risks

Shareholders should understand that mining projects are high-risk undertakings. Actual future production may vary materially from

targets and projections of future production for a variety of reasons. The failure of the Company to achieve its production estimates could

have a material adverse effect on any or all of its future cash flows, profitability, results of operations and financial conditions. Actual

production may vary from estimates for a variety of reasons, including: the availability of certain types of ores; the actual ore mined

varying from estimates of grade or tonnage; variations in metallurgical and other characteristics from those expected and recovery rates;

short‐term operating factors such as the need for sequential development of ore bodies and the processing of new or adjacent ore grades

from those planned; equipment failures; industrial accidents; natural phenomena such as inclement weather conditions, floods, droughts,

rock slides and earthquakes; encountering unusual or unexpected geological conditions; changes in power costs and potential power

shortages; shortages of principal supplies needed for mining operations, including explosives, fuels, chemical reagents, water, equipment

parts and lubricants; plant and equipment failure; the inability to process certain types of ores; labour shortages or strikes; lack of

required labour; civil disobedience and protests; and restrictions or regulations imposed by government agencies or other changes in the

regulatory environment. Such occurrences could also result in damage to mineral properties or mines, interruptions in production, injury

or death to persons, damage to property of the Company or others, monetary losses and legal liabilities in addition to adversely affecting

mineral production. These factors may cause a mineral deposit that has been mined profitably in the past to become unprofitable forcing

the Company to cease production. Of particular relevance to the Company, production from Wonawinta has been below budget because

of the level of stockpiling of oversized ore which cannot at present be processed through the leaching and elution circuit. Further,

production experience from the Boundary pit has indicated variability in the ore grade from the current resource/reserve block modelling

resulting in higher mining losses than originally estimated.


For

per

sona

l use

onl

y


– Second level

Risk Factors (cont.)

Water

The Company’s water rights under its existing licenses are sufficient to meet the current water requirements of its operations. Should

additional water be required for its current operations, expansion activities and/or exploration activities, the Company would require

additional water rights. There is no guarantee that the Company will be able to increase the amount of water available to it at a reasonable

price, within a reasonable timeframe or otherwise.

New ball mill ramp-up and capacity

To address issues related to oversized ore, the Company raised funds in September 2012 to purchase and install a ball mill. The ball mill

has been purchased, refurbished, transported to site and is currently being installed. The stockpile of oversize, high-grade ore currently

contains around 400,000oz of silver. The amount of oversize ore and its impact on silver production has been greater than expected which

has resulted in reduced silver revenues. This stockpiled ore and any future oversize will be treated by the ball mill, which is expected to

be operating by July 2013. However, delays in the ramp up of the ball mill compared to current expectations will adversely impact the

financial position of the Company. In addition, there is a risk that the ball mill may be ineffective in treating the oversize ore and its

capacity may prove insufficient to handle the ore feed when the feed rate increases to the targeted level, dependent on the relative

proportions of clay and limestone ores fed to the plant.

Business plan risk

The Company estimates its future costs of production based on various assumptions underpinning its business plan, including input costs

and volume and productivity rates. By their nature, these estimates and assumptions are subject to significant uncertainties and,

accordingly, the actual costs may materially differ from these estimates and assumptions. No assurance can be given that the cost

estimates and the underlying assumptions, including targeted production rates, will be realised in practice, which may materially and

adversely affect the Company’s earnings and therefore viability.

Silver price volatility and exchange rate risk

The revenue the Company derives through the sale of silver exposes the potential income of the Company to silver price and separately

exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors

include supply and demand fluctuations for silver, technological advancements, forward selling activities and other macro-economic

factors. Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and

expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and

volatility of the rate of exchange between the United States dollar and the Australian dollar, as determined by international markets. As at

18 April 2013, the last day of trading in Cobar’s shares prior to the date of this presentation, the silver price was around A$22.6/oz, which

represents a 29% decline from the price of A$29.1/oz at 1 January 2013. Should the recent price decline be sustained for a prolonged

period of time, the Company’s sales revenue would be adversely impacted.


For

per

sona

l use

onl

y


– Second level


Upgrading resource categories and conversion of resources to reserves

Reserve and resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates which

were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their

very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. The

category of Inferred Mineral Resources described in this Investor Presentation is the lowest level of confidence under the JORC Code for

resource reporting. The evaluation of these resources with the intention of upgrading resource categories and converting them to

reserves is impacted by a number of issues, including the underlying silver price (of which a price of A$30.00/oz was used in the

calculation of the Company’s current resource and reserve base) mining dilution, metallurgical recovery and grade variability. There can

be no guarantee that the resources will be developed to the point of production.

Potential change in ownership

Shareholders should be aware that the Entitlement Offer, in particular the underwriting arrangements relating to the Entitlement Offer,

may result in Magna potentially increasing its relevant interest in the voting shares of the Company from 19% before the Entitlement Offer

to up to a maximum of 42%. In the event that Magna’s percentage shareholding in the Company is sufficiently large the Company may lose

the opportunity to obtain a substantial takeover premium for its shares in any potential change of control context.

Contractor risk

The Company utilises various specialist contractors in the conduct of its mining operations. Any significant failure by any of these

contractors to comply with its obligations under the operating agreement (whether as a result of financial or operational difficulties or

otherwise), any termination or significant breach of agreements by a contractor or any failure by the Company or any of its contractors to

renew the operating agreement when the agreement expires (and the Company is unable to find a satisfactory replacement contractor)

could materially and adversely affect its business, financial condition, results of operations and prospects. The activities of contractors

have a material impact on the ability of the Company to comply with the requirements of the applicable mining licences. If the Company is

unable to comply with its requirements and obligations under the applicable mining licences due to the actions or failures of contractors,

and if the Company does not have any recourse against its contractors whose action or failure caused loss, then the Company’s operations

and prospects may be materially and adversely affected.

Change in key personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its

Directors and its key personnel. The Company has announced that the current Managing Director, Mr Ian Lawrence, will step down from

his position on 23 May 2013. There can be no assurance that the Company will find a new Managing Director with equivalent skills and

experience as Mr Lawrence and/or that there will be no detrimental impact on the Company following Mr Lawrence’s, or indeed any other

key employee’s, departure.


For

per

sona

l use

onl

y


– Second level


Trading liquidity

As a small entity, there is likely to be only limited trading liquidity in the Company’s shares. The Company might not be covered by a

broad base of research analysts which may make it harder for shares to be traded.

Tenement title

Interests in tenements in Australia are governed by Federal and State legislation and are evidenced by the granting of licences or leases.

Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions

requiring compliance. Consequently, the Company could lose title to or its interest in tenements if licence conditions are not met or if

insufficient funds are available to meet expenditure commitments as and when they arise. Further, mining and exploration tenements are

subject to periodic renewal. There is no guarantee that current or future tenements will be approved. Renewal of the term of a granted

tenement is at the discretion of the relevant government authority. Renewal conditions may include increased expenditure or work

commitments or compulsory relinquishment of the areas comprising the Company's projects. The imposition of new conditions or the

inability to meet those conditions may adversely affect the operations, financial position and/or performance of the Company.

Market conditions

The market price of the shares in the Company can fall as well as rise and may be subject to varied and unpredictable influences on the

market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future

performance of the Company or any return on an investment in the Company.

Environmental risks

The operations and proposed activities of the Company are subject to Australian State and Federal laws and regulations concerning the

environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the

environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to

the highest standard of environmental obligation, including compliance with all environmental laws, in order to minimise damage to the

environment and risk of liability. Nevertheless, there are certain risks inherent in the Company’s activities which could subject the

Company to extensive liability.

Native title

The Company is not aware of any native title rights which it expects to materially adversely affect its current operations or performance.

Whilst the Company holds this view, no guarantee can be given that these native title rights (nor any native title rights over areas in which

the Company may in future acquire an interest in) will not affect the Company.


For

per

sona

l use

onl

y


– Second level


Occupational health and safety

The mining industry has become subject to increasing occupational health and safety responsibility and liability. The potential for liability

is a constant risk. If Cobar fails to comply with necessary OH&S legislative requirements, it could result in fines, penalties and

compensation for damages as well as reputational damage.

Litigation risk

Exposure to litigation brought by third parties such as contractors, regulators, or employees could negatively impact on the Company and

its operations and licences. Legal claims, if successful, could adversely impact the profits or financial position of the Company.

Economic and political risks

General economic conditions, movements in interest and inflation rates, currency exchange rates, and changes in Government policy may

have an adverse effect on the Company’s exploration, development, production and marketing activities, as well as on its ability to fund

those activities. If activities cannot be funded, there is a risk that tenements may have to be surrendered or not renewed. Furthermore,

share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance.

Share market conditions are affected by many factors such as (a) general economic outlook; (b) interest rates and inflation rates; (c)

currency fluctuations; (d) changes in investor sentiment toward particular market sectors; (e) the demand for, and supply of, capital; (f)

terrorism or other hostilities; and (g) government fiscal, monetary and regulatory policies.


For

per

sona

l use

onl

y


– Second level

International Selling Restrictions

This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be

unlawful. New Shares may not be offered or sold in any country outside Australia except to the extent permitted below.

New Zealand

The New Shares are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with

registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Securities Act (Overseas

Companies) Exemption Notice 2002 (New Zealand). The offer of New Shares is renounceable in favour of members of the public.

This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978

(New Zealand). This document is not an investment statement or prospectus under New Zealand law and is not required to, and may not,

contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

Singapore

This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in

Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with

the offer or sale, or invitation for subscription or purchase, of New Shares may not be issued, circulated or distributed, nor may these

securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to

persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and

Futures Act, Chapter 289 of Singapore (the "SFA"), or as otherwise pursuant to, and in accordance with the conditions of any other

applicable provisions of the SFA.

This document has been given to you on the basis that you are an existing holder of the Company's shares. In the event that you are not

such a shareholder, please return this document immediately. You may not forward or circulate this document to any other person in

Singapore.

Any offer is not made to you with a view to the New Shares being subsequently offered for sale to any other party. There are on-sale

restrictions in Singapore that may be applicable to investors who acquire New Shares. As such, investors are advised to acquaint

themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.

United States

This document may not be released in the United States. Any securities described in this document have not been, and will not be,

registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or

not subject to, registration under the US Securities Act and applicable US state securities laws.


For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

Documents

For personal use only - asx.com.au · Click to edit Master text styles – Second level Important Notice and Disclaimer (cont.) Investment risk An investment in Cobar shares is subject