Patersons Resources Review May 2011

Patersons Resources Review
May 2011
Telephone (+61 8) 9263 1111

Facsimile (+61 8) 9325 6452
Email research@psl.com.au
Website www.psl.com.au
Patersons Resources Review - May 2011
Contents
Page
Investment Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recommendation Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary of Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Global Economic Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commodity Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Stock Valuation and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Company Reviews:
Adamus Resources Limited ..................................................... 12 MacArthur Coal Limited .........................................................56
African Iron Limited ................................................................ 14 Mantra Resources Limited ......................................................58
Alacer Gold Corporation ......................................................... 16 Meridian Minerals Limited .....................................................60
Ampella Mining Limited ......................................................... 18 Minara Resources Limited...................................................... 62
Aquila Resources Limited .......................................................20 Mincor Resources NL ............................................................. 64
Atlas Iron Limited ................................................................... 22 Mirabela Nickel Limited ......................................................... 66
Bandanna Energy Limited ...................................................... 24 Mount Gibson Iron Limited ................................................... 68
Brockman Resources Limited ................................................ 26 New Hope Corporation Limited ........................................... 70
Cape Lambert Resources Limited ......................................... 28 Noble Mineral Resources Limited ......................................... 72
Cerro Resources NL ............................................................... 30 Northern Star Resources Limited ...........................................74
Chalice Gold Mines Limited....................................................32 Olympus Pacific Minerals Inc ..................................................76
Coalspur Mines Limited ......................................................... 34 Orocobre Limited ....................................................................78
Cockatoo Coal Limited .......................................................... 36 OZ Minerals Limited .............................................................. 80
Dragon Mining Limited ...........................................................38 Paladin Energy Limited........................................................... 82
Equinox Minerals Limited ......................................................40 Panoramic Resources Limited ................................................ 84
Extract Resources Limited ..................................................... 42 Regis Resources Limited ........................................................ 86
Fortescue Metals Group Limited ...........................................44 South American Ferro Metals Limited ...................................88
Gindalbie Metals Limited ....................................................... 46 St Barbara Limited ..................................................................90
Gloucester Coal Limited ........................................................ 48 Tanami Gold NL ..................................................................... 92
Grange Resources Limited ..................................................... 50 Troy Resources NL.................................................................. 94
Independence Group NL ........................................................52 Western Areas NL .................................................................. 96
Lynas Corporation Limited .................................................... 54
Explorers and Developers:

Altona Mining Limited ......................................................... 100 NuCoal Resources NL ...........................................................120
Ausgold Limited ....................................................................102 Nyota Minerals Limited......................................................... 122
Azimuth Resources Limited ..................................................104 Sherwin Iron Limited............................................................. 124
Bannerman Resources Limited .............................................106 Stanmore Coal Limited ......................................................... 126
Bassari Resources Limited ..................................................... 108 Stonehenge Metals Limited .................................................. 128
Breakaway Resources Limited................................................110 Uranex NL ............................................................................. 130
Cokal Limited ......................................................................... 112 Western Desert Resources Limited ...................................... 132
Dart Mining Limited............................................................... 114 YTC Resources Limited......................................................... 134
Guildford Coal Limited........................................................... 116 ZYL Limited .......................................................................... 136
MetroCoal Limited ................................................................. 118
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without
any responsibility or liability on any account whatsoever on the part of this firm or any member or employee thereof.
Patersons Resources Review - May 2011 1
Investment Highlights
Since our last resources book in December 2010 there have been GOLD
a number of global events (weather, natural disasters and political)
that have helped shape the resources landscape. The gold price continues to benefit from global sovereign debt
pressures and inflation concerns. We remain positive on the future
prospects for the gold price. Issues in Europe and Japan are also
Weather and Natural Disasters
likely to place pressures on the Euro and Yen. We continue to have
In Australia, there have been severe weather conditions (QLD Floods, a preference for offshore operations given the continued strength
Cyclone Yasi, Floods in Pilbara and Kimberley) that have negatively of the AUD leading to deteriorating margins. Buy TRY, TAM and
affected production for a range of commodities (coal, uranium, iron ADU.
ore, gold and nickel). In Japan, we saw the third largest earthquake
on record and subsequent tsunami which triggered the Fukushima
nuclear disaster. Japan is Australia’s second largest trading partner
IRON ORE
and is a large consumer of Australia’s commodities. We believe iron ore stocks have run hard with valuations looking
stretched unless we factor in higher prices beyond 2015/16 when
Geopolitical Tensions expanded production comes online. This said FMG has unparalleled
growth available to it and we continue to see upside in this stock.
Northern African and the Middle East geopolitical tensions have Buy FMG, AGO.
increased significantly with events in Egypt, Sudan, Syria, Libya,
Ivory Coast and Burkina Faso. Namibia is looking to introduce
legislation to nationalise new mining and exploration permits by BASE METALS
the end of 2011 (uranium, copper, gold, zinc and coal). Over the
The outlook for base metals is mixed. We prefer copper in this
past 6 months the market has applied a large discount to resource
space given that the Chinese do not control the supply side.
companies operating in these areas/regions, whereas previously
However, there are only a limited number of domestic investment
the market applied premiums.
opportunities in copper. Based on our analysis we believe the
following stocks represent value in the copper space: AOH and
Appreciation of the AUD YTC.
Domestically, the most significant event for resources companies We are neutral on nickel despite it being a good performer over
has been the continued appreciation of the AUD/USD. Since the last 6 months. Our preference here is MBN given its offshore
December the currency has appreciated by ~12%; this compares project, large growth profile and long mine life. MRE continues to
to 16% in the preceding six months. This has resulted in eroding have some attraction but prefer investors switch into MBN with the
margins and commodity prices mixed. This has also been coupled high AUD impacting. PAN remains a HOLD and MCR a SELL.
with domestic inflationary pressures from wage increases and
labour supply constraints. This has had a negative impact on the
value of Australian producers. URANIUM
STOCK PICKING - look for companies with production growth The events of 11 March in Japan have significantly affected the
and management to deliver. outlook for uranium. On average, equities have decreased by
25-30% since the events of Fukushima. We believe Fukushima
The net effect of the above events has been a contraction in NAV, concerns will continue to linger over the uranium market. Therefore
additionally there has been an evaporation of market premiums we have a HOLD on PDN and a SELL on BMN. We have upgraded
attributed to some resources stocks. Therefore we believe the EXT to a BUY as we believe they own a tier 1 asset and a recent
market is ripe for “stockpickers”. In our view investors should decline in price means the stock is more attractive. We have a
accumulate selected resource companies with the following SPEC BUY on SHE based on potential to develop its project in South
attributes: Korea. Our Top pick from our last book MRU is under takeover from
1. offshore projects with limited exposure to currency ARMZ with the deal expected to close in June.
2. significant organic growth profiles
3. significant long life projects COAL
4. significant margins
Coking coal is set to remain in tight supply particularly as a result
Our preferred picks for our resources book are listed in the table of the floods in QLD. China is turning from being self sufficient
below: AQA, COK, FMG, MBN, ORE, TAM. to being an importer. Main beneficiaries include MCC, AQA, and
COK.
OUR TOP PICKS (BUY)

Company ASX Code Price Target Company ASX Code Price Target
Aquila Resources Ltd AQA $10.79 Mirabela Nickel Ltd MBN $3.38
Cockatoo Coal Ltd COK $0.75 Orocobre Ltd ORE $3.95
Fortescue Metals Group Ltd FMG $7.59 Tanami Gold NL TAM $1.81
2 Patersons Resources Review - May 2011
Recommendation Changes
CHANGES TO RECOMMENDATIONS SINCE DECEMBER 2010 RESOURCES REVIEW
Stock Change New Old Reason
AGO ▲ BUY New Coverage Emerging Iron Ore producer. Producing at the rate of 6Mtpa aiming to double production by 2012.
AKI ▲ BUY New Coverage Targeting 5Mtpa of DSO Iron from mid-2013 from its Mayoko Iron Ore project, Republic of Congo.
AQA ▲ BUY HOLD Purest valuation leverage plays to coking coal and iron ore with a stable of potentially long life assets.
AQG ▲ BUY New Coverage Merger of AVO and Anatolia. Trading in line with price target.
BRM ▲ BUY New Coverage Targeting first production from its Marillana project from 2014 at the rate of 17Mtpa of fines production.
CFE ▲ BUY New Coverage Asset incubation in Africa. Strategy is to aqcuire and invest in undervalued and distressed assets and add value.
CHN ▼ SPEC BUY BUY Negative investor sentiment towards risk in North Africa. Agreement with ENAMCO yet to be finalised.
CJO ▲ BUY New Coverage Silver leverage moving to production in end 2012.
EQN ▼ SELL BUY Accept Barrick’s offer.
EXT - BUY BUY We placed EXT as HOLD following Site Visit in Feb. Returns to BUY Tier 1 Asset 5th largest uranium resource in world.
MCR ▼ SELL HOLD Production, cost and staffing issues. Higher grade material towards end of year but question mark on production.
MGX ▲ BUY SELL Board issues resolved. Moving to bring on its third production centre at Extension Hill. Strong cash generation.
MII ▲ SPEC BUY New Coverage HOA to sell Lennard Shelf and buy Russian gold project.
MRU ▼ SELL BUY Top pick in Dec 2010 book. Under ARMZ Takeover expected to be completed in June.
NST ▲ BUY New Coverage Targeting production of 70kozpa from their recently acquired Paulson’s Gold Mine.
Two operating gold mines in Vietnam, a development asset in Malaysia and a significant exploration project in the
OYM ▲ BUY New Coverage
Philippines.
RRL ▲ BUY HOLD New team. Low cost producer at Moolart Well (100kozpa) and new Garden Well project (1.2Moz resource) in Laverton.
SBM ▲ BUY HOLD Moving into a high grade (8g/t) part of Marvel Loch postive for production and costs.
SFZ ▲ BUY New Coverage Junior iron ore producer, ramping up production at Ponte Verde itabirite project in southern Brazil. 6Mtpa from 2013.
TAM ▲ BUY New Coverage Growth Story: Targeting >150,000ozpa from its Central Tanami Project in NT starting in mid-2012.
TRY ▲ BUY New Coverage Argentinean silver and gold producer. Performance to turnaround in the coming year.
Explorers and Developers
AOH ▲ SPEC BUY New Coverage Production of 8ktpa Cu from Outokumpu, Finland is expected to begin in early 2012. Roseby production from 2014.
AUC ▲ SPEC BUY New Coverage Potential to have the largest new Australian discovery since Tropicana at its Katanning Project 320km from Perth.
Guyana: 11,000km2 prospective for gold and uranium. West Omai most advanced project we expect 600koz resource by
AZH ▲ SPEC BUY New Coverage
August.
BRW ▲ NR New Coverage Focused on Two Projects 1) The Leinster Nickel Project; Drilling Continuing 2) Cloncurry Copper Project (2H/CY11 Drilling).
BSR ▲ NR New Coverage Multi-Million Ounce Gold Potential in Senegal, West Africa. 240koz Au (2.3g/t) at its 70%-owned Makabingui project.
CKA ▲ NR New Coverage Actively defining metallurical coal resouce in Kalimantan, Indonesia with an aim to bring into production by 2013.
DTM ▲ NR New Coverage Victorian focussed precious and base metals explorer; Focused on the Unicorn Mo-Cu-Ag Discovery. Drilling in May.
GUF ▲ NR New Coverage Production of +2Mtpa ROM from Mongolian mine and definition of Queensland coking and thermal coal resources this year.
MTE ▲ SPEC BUY New Coverage Growing thermal coal resource in the Surat Basin.
NCR ▲ NR New Coverage Building asset base in the established Hunter Coalfield region with the recent acquisition.
NYO ▲ SPEC BUY New Coverage Gold developer focused in Ethiopia. Developing the 1.2Moz Tulu Kapi project. Excellent exploration upside.
SHD ▲ NR New Coverage Roper River region in the Northern Territory; Resource of 106.6Mt at 47% Fe expected to expand.
SHE ▲ SPEC BUY New Coverage Own the 60mlb Daejon project in South Korea. Vanadium credit key to bring costs down to below $25/lb.
Progressing from an exploration company to a producer of Australian coking and thermal coal in the Bowen and Surat
SMR ▲ NR New Coverage
basins.
UNX ▲ NR New Coverage Focused on the Mkuju Uranium Project in Tanzania. Next to MRU. Drilling underway.
WDR ▲ SPEC BUY New Coverage Own the Rope Bar project in NT with DSO production in mid-2013; Resoruce 312Mt at 40%.
Focussed on two gold and base metals projects near the town of Cobar in NSW: 1) Hera (500koz Au) and 2) Nymagee
YTC ▲ SPEC BUY New Coverage
Copper JV.
ZYL ▲ SPEC BUY New Coverage Developing Anthracite in South Africa, open cut, close to rail and port.
Summary of Recommendations
Top Picks Code Share Price Analysts View
Long life coking coal development assets are under valued by the
Aquila Resources Ltd AQA $8.15
market, with asset sales pending to close the gap.
Recovering from floods, will expand production, cheapest coal

Cockatoo Coal Ltd COK $0.48
producer in Australia.
Company’s Pilbara operations are set to expand by 3x in the

Fortescue Metals Group Ltd FMG $6.27
medium term, off-setting expected price decline.
Nickel growth story in Brazil looking to increase production by

Mirabela Nickel Ltd MBN $2.07
60% to 25ktpa Ni by 2013.
Clearly valued as an explorer when in fact it’s a near term

Orocobre Ltd ORE $2.44
producer of an in demand commodity - lithium.
Significant Australian gold growth story targeting 150,000ozpa

Tanami Gold NL TAM $0.83
with the team to deliver.
BUY SPECULATIVE BUY

Adamus Resources Limited* ADU $0.68 Altona Mining Limited AOH $0.31
African Iron Limited* AKI $0.23 Ausgold Limited* AUC $1.50
Alacer Gold Corporation AQG $8.89 Azimuth Resources Limited AZH $0.29
Ampella Mining Limited* AMX $2.22 Chalice Gold Mines Limited CHN $0.39
Aquila Resources Limited AQA $8.15 Meridian Minerals Limited MII $0.14
Atlas Iron Limited AGO $3.57 MetroCoal Limited* MTE $0.41
Bandanna Energy Limited BND $2.09 Nyota Minerals Limited NYO $0.27
Brockman Resources Limited BRM $4.10 Olympus Pacific Minerals Inc OYM $0.37
Cape Lambert Resources Limited CFE $0.51 Stonehenge Metals Limited* SHE $0.12
Cerro Resources NL* CJO $0.28 Western Desert Resources Limited* WDR $0.34
Coalspur Mines Limited* CPL $1.70 YTC Resources Limited YTC $0.58
Cockatoo Coal Limited* COK $0.48 ZYL Limited* ZYL $0.23
Dragon Mining Limited DRA $1.28
Extract Resources Limited EXT $7.49 HOLD
Fortescue Metals Group Limited FMG $6.27
Gindalbie Metals Limited GBG $0.95
Grange Resources Limited* GRR $0.67
Gloucester Coal Limited GCL $9.90
Independence Group NL IGO $6.20
New Hope Corporation Limited NHC $4.85
Lynas Corporation Limited LYC $2.10
Noble Mineral Resources Limited* NMG $0.63
MacArthur Coal Limited MCC $11.50
OZ Minerals Limited OZL $1.43
Minara Resources Limited MRE $0.81
Paladin Energy Limited PDN $3.34
Mirabela Nickel Limited MBN $2.07
Panoramic Resources Limited PAN $2.08
Mount Gibson Iron Limited MGX $1.98
Northern Star Resources Limited NST $0.37
Orocobre Limited* ORE $2.44
SELL
Bannerman Resources Limited BMN $0.36
Regis Resources Limited RRL $2.40
Equinox Minerals Limited EQN $7.91
South American Ferro Metals Limited* SFZ $0.30
Mantra Resources Limited MRU $6.84
St Barbara Limited SBM $1.99
Mincor Resources NL MCR $1.15
Tanami Gold NL TAM $0.83
Troy Resources NL TRY $3.68
Western Areas NL WSA $6.25
* Disclosure: Patersons Securities Limited may have received fees for corporate transactions undertaken with these companies. Please refer to
individual research notes for full disclosures.
MARKET HAS GAINED SINCE JULY 2010

Despite commodity prices continuing to rally since late 2010, the appreciating AUD has resulted in the market trading sideways since
November 2010. We see the current state of play as a stockpickers market with valuations, production growth and trade record of delivery
major factors in identifying top picks.
220%
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80%
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All Ordinaries ASX300 Resources LME Index Spot Gold (US$/oz) AUDUSD
NAV VS TP
Our top picks are those companies that are trading at a discount to our price target, have near term catalysts and are weighted against
risk for reward. The ‘cheapest’ companies under coverage for instance are not necessarily our top picks.
40%
20%
0%
Discount / Premium
-20%
-40%
-60%
-80%
-100%
AKI
OYM
TAM
SFZ
CHN
SRQ
DRA
CJO
NST
MBN
ORE
COK
CFE
BRM
ADU
SBM
AMX
LYC
MGX
AQA
TRY
BND
MII
PDN
RRL
AGO
MCC
FMG
AQG
WSA
CPL
EXT
MRE
GBG
OZL
RIV
NHC
EQN
GCL
MRU
NMG
PAN
GRR
IGO
MCR
NAV 1.0x Target Price
PRICE PERFORMANCE % SINCE DECEMBER 2010 RESOURCES REVIEW

Since our last resources book in December 2010 our top picks performed well:
1. SRQ/SRL increased by 61% which included a $1.72/sh dividend.
2. MRU is under takeover by ARMZ and has increased by 3%. However, ARMZ lowered its initial bid by 12.5% due Fukushima so investors
had the opportunity to sell at higher prices.
3. COK was down by 3.9% due to significant flooding in QLD. This is a temporary setback with COK remaining one of our top picks.
The average price movement of our BUY rated stocks was 8.3% outperforming the ASX300 Resources Index, LME Index and ASX S&P 300.
Our HOLD rated stocks decreased on average by 7.5%, with our SELL rated stocks down 15%.
SRQ/SRL – BUY
NMG – BUY
BND – BUY
LYC – BUY
EQN – BUY
MBN – BUY
AVO/AQG – BUY
RRL – HOLD
RIV – BUY
WSA – HOLD
MGX – SELL
MRE – BUY
ASX300 Res. (4.4%)
LME Index (3.1%)
MRU – BUY
S&P300 (2.5%)
FMG – HOLD
NHC – HOLD
CPL – BUY
MCC – BUY
AUD Gold (-2.4%)
COK – BUY
PAN – HOLD
GCL – HOLD
OZL – HOLD
NEC – BUY
AVG. MOVEMENT
IGO – BUY
BUY 8.3%
GRR – BUY HOLD -7.5%
AQA – HOLD SELL -15.0%
ADU – BUY
ORE – HOLD
EXT – BUY
GBG – HOLD
SBM – HOLD
DRA – BUY
PDN – HOLD
AMX – BUY
MCR – HOLD
BMN – SELL
CHN – BUY
-75% -50% -25% 0% 25% 50% 75% 100%
Global Economic Outlook

RESOURCES – PRICES TO RANGE ON MIXED ECONOMIC OUTLOOK
Commodities bounced significantly higher following the Global Precious metals have been supported as hedging options against
Financial Crisis (GFC) as governments spent up big with fiscal rising background macro risk factors. Although recently, while gold
and monetary policies designed to stimulate demand. Much of prices have remained buoyant, silver prices have traded down
the money spent on the fiscal side was focused on infrastructure strongly as the CME futures exchange lifted margin requirements
projects creating commodity demand and this effect is slowly forcing traders out of the market. Traders also moved heavily out
starting to abate through the global economy. Commodity markets of Silver ETFs on the price move down.
are as such very focused on growth projections, this is significantly
a measure of how well the private sector picks up demand following Industrial metals have been significantly influenced by weaker
government stimulatory efforts. demand due to continued slow US housing construction numbers
and effects from the Japanese earthquake. Japanese factory
The International Monetary Fund (IMF) continues to forecast global
output fell 15.3% from February, the biggest drop since data
growth slowing through to the third quarter of 2011 as stimulatory
began in 1953. Household spending slid 8.5% from a year
expenditure effects decline. The IMF forecasts the world economy
earlier, and the Bank of Japan cut its growth estimate for the
to average just above 4% growth in 2012. The global economy
year ending March 2012 to 0.6% from a January prediction of
remaining “two speed” with emerging country growth expected to
1.6%, and increased its inflation forecast for fiscal 2011 to 0.7%
run above 6%, and developed country growth just above 2%.
from an earlier estimate of 0.3%. Reports of supply shortages,
Figure 1: IMF Growth Forecasts such as car parts, continue. However, it is expected that while
10 there has been an initial drop off in metals demand due to the
8 earthquake, reconstruction efforts will ultimately see a demand
recovery.
6
4 Rising stock levels for industrial metals, including copper where

stocks are at their highest level since June 2010, have pressured
(%)
2
the industrial metals market. Copper prices had moved higher
0
on supply disruptions, but concerns over global growth, greater
-2
use of scrap copper, and rising stock levels have taken the upside
-4 pressure off prices. Chinese imports of refined copper concentrates
-6 fell 31% year-on-year in the first quarter of 2011, while scrap
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imports lifted.
World Advanced economies Emerging economies US housing construction numbers remain very weak at
Source: IMF approximately 500 000 units per year, construction failing to
bounce in a “V” profile, unlike every other downturn since the
The post-GFC commodity boom continues to be driven by high 1950s. The US S&P/Case-Shiller Index of property values in 20
emerging country demand, particularly related to China, production cities fell 3.3% from February 2010, the biggest year-over-year
and supply delays, investment demand focused on instruments decline since November 2009. Meaning the sector is close to a
such as commodity Exchange Traded Funds (ETF), and investment double dip in prices, this not supporting a rapid recovery in housing
hedging activity on currency, debt and inflation risks. construction numbers.
Copper is often considered the “canary indicator” for the metals

A mixed metals performance
market and weaker copper prices generally pressure the rest of
While commodity prices have recovered strongly since the GFC, in the complex lower.
the past approximately six months the performance of the metals
complex has been significantly mixed.
The US dollar influence
Figure 2: Metals Price Performance - January to May 2011
Assisting metal prices is weakness in the US dollar Trade Weighted
20
Index (the value of a basket of currencies against the US dollar).
15 Traders buy commodities as a hedge against forecast US dollar
10
weakness driving demand higher.
5 Impacting on the value of the dollar has been increasing interest

(%)
rate differentials. The FOMC has signalled it intends to hold

0
the Federal Funds rate between 0.0-0.25% for an “extended
-5 period”. Given the EU, China, Australia and many other countries
-10 have lifted interest rates the differential between US and other
countries interest rates has expanded, this acting to place
-15
pressure on the US dollar. While US debt concerns have pressured
Silver
Fines
Iron Ore
Tin
Aluminium
Gold
A$/US$
Nickel
Copper
Lead
Zinc
the market sending the dollar lower, other countries have similar
debt concerns. Given the current FOMC view on interest rates the
outlook for the US dollar is likely to be reasonably weak, although
Source: Patersons
a patchy performance in some parts of the Australian economy
and the close linkage to commodity prices may see the local The balance between supply/demand in the metals complex
currency decline from current levels. The strong performance of remains slightly in favour of the demand side, assisted by a slow
the Australian dollar has taken some of the edge off commodity supply recovery, buoyant growth in the emerging markets and
returns for Australian producers. the flow on effects from government stimulatory expenditure.
However, in the short term we see continued weakness on EU
Deficit pressures in the US, EU and Japan are expected to overhang
debt concerns, reduction in stimulatory expenditure effects, and
the metals market for many years. With countries running high
Japanese demand declines. This is expected to see stocks build
deficits, fiscal expenditure is likely to decline taking some support
before the market becomes better supported later in 2011 as
out of the metals market. At the same time there is a general
Japanese demand returns. This assumes macro influences do not
trend for central banks to lift interest rates to tackle rising inflation
overrun the market.
pressures. The effect on prices of interest rate increases by central
banks will be highly dependent on how aggressive central banks We continue to believe the US dollar will not permanently weaken,
are in terms of monetary policy. On balance however, give high given considerable challenges remain for the Japanese, EU and
developed country debt levels, there could be a tendency for UK economies. We do continue to see a positive outlook for the
central banks to run monetary policy a little behind inflationary defensive metals such as gold, give the structural imbalances
forces, holding inflation slightly high. This would be commodity remaining in the global economy and the risks associated with
price supportive. managing these challenges, including ongoing inflation pressures.
The pace of Chinese growth and global sovereign debt problems,

US growth slows reflected in the Bond markets, remain the primary risk factors for
US GDP grew at an annual rate of 1.8% in the first quarter of 2011, industrial metals commodities. However, assuming Chinese growth
according to advance estimates. This follows a growth rate of 3.1% rates remain at a reasonable pace, and Bond market concerns can
in the fourth quarter of 2010. An overview of the US economy continue to be pushed further into the future through activities like
continues to suggest an economy in weak recovery, however the quantitative easing, we see the metals markets as reasonably well
pace of this recovery appears to be slowing. While manufacturing balanced and this is likely to be reflected by ranging price patterns
output is recovering it has not yet reached pre-recession highs and around current levels in the six months ahead.
although Non-Farm payroll numbers have been improving, taken
on a numbered “whole of economy” view, conditions remain very
weak, with unemployment returning to 9%. Andrew Quin
Research and Strategy Coordinator
China buoyant, but with continued inflation pressures
Chinese GDP continues to expand at a good pace of 9.7%, however
inflation remains a challenge with the CPI running at 5.3% and PPI
at 6.8%. The Chinese Government has made successive increases
in commercial bank Reserve requirements, and lifted base interest
rates since October to 6.31% in an effort to control inflation
pressures. The Chinese PMI for April came through at 52.9 slightly
lower than consensus at 53.9. Concerns remain regarding the
potential for a property bubble to eventually hurt Chinese economic
growth, however currently the country continues to perform well
partly supporting commodity prices and adding some background
support to the Australian stock market.
Macro economic factors remain the major risk

We expect most metals across the complex to set up ranging
patterns reflecting a broad balance between supply and demand.
We see strong growth from developing countries such as China
as likely to persist, though remain concerned that ultimately this
and wider economic growth could be significantly influenced by
structural problems in the global Bond market.
We continue to watch macro risks closely and remain concerned

with the sovereign Bond markets, debt accumulation, and potential
for a self-reinforced lift in Bond yields. However, the timing of such
an event, if it were to occur at all, is extremely difficult to forecast.
We have of course recently seen the beginning of such an event in
the EU periphery countries, although the extent to which this could
spread to other countries is highly unpredictable. Both Greece and
Ireland are working on renegotiated bailout funding terms.
Commodity Overview
GOLD Australian gold producers - mine life vs production rate
We have also examined Australian gold producers and compared
Relative performance of equities and spot prices Enterprise Value to current production rate and implied mine
Since our last resources review in December 2010, we have life. The strong correlation of 0.77 between EV and production
upgraded our long term gold price from US$800/oz to US$1,000/ rate indicates the market assigns higher value to gold producers
oz in line with our positive outlook for defensive metals. The gold with higher production rates. We highlight SBM, TAM and TRY.
price has performed strongly up 25% from 12 months ago, while Figure 6: Implied mine life vs production rate for Australian small
our Gold Producers Index is up 6% (Figure 3). More recently small gold producers
gold producers have significantly underperformed the gold price.
35
Figure 3: Patersons small gold producers index and spot gold price RRL
30 ALD
150%
r = 0.68
25
Implied mine life (yrs)

140%
KCN
20
130% TAM
15
SBM
120% AQG
TRY SLR
10 SAR RSG
110% NGF
DRA
NGX
5 NST
100% UML
OYM FML
Patersons Small Gold Producers Index 0

90% - 50 100 150 200 250 300 350 400 450
Gold Price (spot)
Production rate (kozpa)
80%
Bubble size indicates EV ($m). Source: Bloomberg, Company Reports
05/10
06/10
07/10
08/10
09/10
10/10
11/10
12/10
01/11
02/11
03/11
04/11
05/11
Source: Bloomberg
COPPER
Gold resource size and enterprise value Relative performance of equities and spot prices
EV is strongly positively related to the total Au resource size for gold
Since our last resources review we have upgraded our long term
producers (Figure 4), but this relationship is weaker for the gold
copper price from US$2/lb to US$2.50/lb in line with consensus.
explorers (Figure 5). The average EV/oz Au resource is A$178/oz.
The copper price has performed strongly and is up 25% from 12
Although not shown here, the average EV/oz Au reserve is A$375/
months ago, while our Copper Developers Index is up 17% over
oz.
the same period. Copper prices have mostly outperformed our
Figure 4: Average Au resource grade vs resource size for Australian Developers Index over the period.
small gold producers
Figure 7: Patersons copper developers index and copper price
6
NST NGX 150%
DRA SBM
r = 0.93
5 140%
SLR
130%
4
120%
Au Grade g/t
TAM
3 AQG
110%
TRY
RSG
FML 100%
2 SAR NGF
RRL ALD 90%
KCN
OYM
1 80% Patersons Copper Developers Index
Copper Price (spot)
70%
0
0.0 2.0 4.0 6.0 8.0 10.0
60%
05/10
06/10
07/10
08/10
09/10
10/10
11/10
12/10
01/11
02/11
03/11
04/11
05/11
Resource size (Au Moz)

Source: Bloomberg
Figure 5: Average Au resource grade vs resource size for gold
developers Copper resource size and enterprise value
Figure 8 shows that the market value is positively related to the
6
CHN
5
total Cu resource size as well as average grade. The average
EV/t Cu Resource is A$525/t for producers and $152/t for non-
4
producers.
Au Grade g/t
NYO
3 LGM
IGR
GRY CQT
AZM RMS SBL CRE
2
AUC PXG ADU
NAV NMG
ATV AMX
1
ALK
CJO
ABU
0
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Resource size (Au Moz)
Figure 8: Average Cu grade vs resource size for Australian copper

developers
IRON ORE
8 Patersons expects iron ore spot prices to peak in 2011, before
7
SFR
declining on rising production volumes towards 2013. This
assumption is based on a large pipeline of new projects anticipated
6
to come on-stream, producers being able to supply product to the
Cu Eq. resource grade (%)
5 market from increasingly remote locations, this being primarily

a legal, capital and infrastructure challenge. Future supply is
4
expected to deteriorate in grade as reduced hematite and increased
3
magnetite production comes online. China is expected to continue
VXR OZL
2
SRQ
ABY
EQN to drive seaborne iron ore demand. It is possible declining prices
RCP KZL
AOH
towards 2015 will force industry consolidation among the smaller
1
PNX
HGO HAV
RXM
PNA producers and efforts to differentiate ore to meet steel makers
0
- 1 2 3 4 5 6 7
specific requirements, given smelters will be adjusting production
Cu Eq. Resource (mt) technologies to account for anticipated generally declining ore
Bubble size indicates EV. Source: Bloomberg, Company Reports
quality. The spot market is expected to grow in dominance as a
pricing mechanism with financial institutions offering more products
as the market moves towards greater pricing volatility.
NICKEL Figure 11: Expanding iron ore projects: CAPEX v OPEX and relative
size of the project
Relative performance of equities and spot prices
100
Since our last resources review, we have upgraded our long 90
term average nickel price from US$7/lb to US$8/lb in line with CXM
80
consensus. The nickel price is up 10% from 12 months ago, while WPG
our Nickel Index is up 19%. Equities have outperformed the nickel

70
price from June 2010 to February 2011, but have more recently 60 RIO
OPEX A$/t
come back in line with the nickel price.

AGO
50 CFE
FMG
BRM BHP
40 FMS
AKI
Figure 9: Patersons nickel index and nickel price
SDL
30
145%
20
r = 0.81 AQA JV
Patersons Nickel Index LML
135% 10
Nickel Price (spot)
0
125% 0 50 100 150 200 250
CAPEX A$/t production
115%
Source: Bloomberg, Company Reports
105%
95% COAL
85% In Figure 12 the performance of the Patersons All Coal index is
compared to spot thermal coal prices as reported by McCloskey.
75%
As expected, the correlation is quite strong at 0.86 but the
05/10
06/10
07/10
08/10
09/10
10/10
11/10
12/10
01/11
02/11
03/11
04/11
05/11
companies have outperformed, with the index up 30% over the

Source: Bloomberg last 12 months compared to the spot price up only 12%. A
lot of the divergence occurred in May-August last year, which
Nickel resource size and enterprise value we attribute to the spate of takeovers, both successful and
Figure 10 shows that EV is positively related to the total Ni resource attempted, in that period, as well as some upward revisions of
size, but is also strongly influenced by average grade. The average earnings expectations in the run up to Full Year reporting.
EV/t Ni Resource is A$1,046/t or A$1,505/t for producers and Figure 12: Patersons coal index vs coal price
$654/t for non-producers. 160%
r = 0.86
Figure 10: Average Ni grade vs resource size for Australian nickel 150%
companies Patersons Coal Index
140% McCloskey Spot Thermal Index
6
Note: HRR Offscale at 10Mt of Ni
130%
5 AUZ
120%
4 MCR
110%
Grade (% Ni)
100%
3
WSA
PAN 90%
2
BRW MRE 80%

MLX
05/10
06/10
07/10
08/10
09/10
10/10
11/10
12/10
01/11
02/11
03/11
04/11
05/11
MBN
GME
1 IGO
FXR
SEG MLM
Source: Bloomberg
0
- 0.5 1.0 1.5 2.0 2.5 3.0
Resource (Contained Ni Eq. Mt)
Bubble size indicates EV. Source: Bloomberg, Company Reports
In the chart below (Figure 13), we compare the market values Figure 14: Patersons uranium index vs spot uranium price
for different coal companies with their resource base. Generally, 180
producers and those with metallurgical coals are to the right and 170
PSL Uranium Index r = 0.86
explorers, thermal coal, and/or stranded deposits on the left of

UxC Spot Price (Weekly)
the scale. The market has raised considerably the value it is 160
willing to attribute to in-situ coal resource over the past 2 years 150
and exploration ground is now being valued at between A$1-2/t 140

depending on quality, depth, and nearness to production.
130
Figure 13: EV/tonne measured and indicated coal resources 29%
120
9.00
110
8.00
3.4%
7.00 100
07/10
08/10
08/10
08/10
09/10
09/10
10/10
10/10
11/10
11/10
12/10
12/10
01/11
01/11
02/11
02/11
03/11
03/11
03/11
04/11
04/11
05/11
6.00
5.00 Source: Bloomberg, UxC
4.00
We have upgraded our long term uranium price to $70/lb consistent
3.00 with our long term adjustment to the exchange rate. Our current
2.00
spot price deck is: 2011 US$50/lb; 2012 US$60/lb and 2013 and
LT US$70/lb.
1.00
0.00 In Figure 15, we highlight the performance of the PSL uranium

AVA
BLK
CWK
MTE
CCC
RES
SRK
REY
GLL
NEC
KRL
CPL
COK
BND
AAL
RIV
CEY
CCD
ZYL
HUN
EOC
CNA
NHC
GNM
CZA
FLX
MCC
AZT
AQA
PRC
WHC
GCL
AJM
BTU
EER
SMR
NCR
index since uranium price began to move upward in July 2010.

Source: Bloomberg, Company Reports Figure 15: Uranium resource size vs grade for Australian nickel
companies
URANIUM 1000
EME
Uranium equities dropped 29% following the events at Fukushima 800
BLR
(Figure 14). There will be an extensive review globally of the 440

SMM
reactors the majority of which are ageing and generate about 14%
MTN
EXT
600
Grade (ppm)
of the world’s electricity. We believe the disaster will impact on the TOE EMA
BKY
MRU
uranium market in the short to medium term (12-24 months). PEN

400 MGA.T
However, over the longer term build plans by the developing EMX
USA
SHE GGG
nations (China, Russia, India, South Korea) are unlikely to change CUY
PNN
EVE
DYL
BMN
ACB
with 61 reactors currently under construction. Therefore longer
200 MHC FSY.TSX
MEY AEE
UNX
term the outlook for uranium is positive. We expect spot prices will
trade in the US$50-60/lb range in the short to medium term. 0
0 50 100 150 200 250 300 350 400 450
Resource (mlb U3O8)
Table 1: Patersons Commodity Price Assumptions (year ending June 30)

LT Dec
2009A 2010A 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E LT Avg
2010
A$:US$ 0.75 0.89 0.99 1.05 1.00 0.96 0.93 0.92 0.91 0.90 0.90 0.80 0.90
Aluminium US$/lb 0.85 0.91 1.06 1.09 1.09 0.99 0.93 0.95 0.97 0.99 1.01 0.76 0.86
Copper US$/lb 2.23 3.04 4.00 4.31 4.20 3.70 3.32 3.01 2.81 2.86 2.92 2.00 2.50
Lead US$/lb 0.66 0.95 1.10 1.20 1.18 0.93 0.76 0.77 0.79 0.80 0.82 0.60 0.70
Zinc US$/lb 0.64 0.94 1.03 1.11 1.11 1.02 0.97 0.99 1.01 1.03 1.05 0.75 0.90
Nickel US$/lb 6.03 8.75 11.12 11.75 11.43 9.76 8.64 8.81 8.99 9.17 9.35 7.00 8.00
Cobalt US$/lb 24.69 12.92 15.52 15.26 15.57 15.88 16.20 16.52 16.85 17.19 17.53 12.50 15.00
Tin US$/lb 6.59 7.33 12.27 14.71 12.67 8.27 6.48 6.61 6.74 6.88 7.01 2.40 6.00
Gold US$/oz 873 1,093 1,356 1,483 1,507 1,548 1,605 1,382 1,123 1,147 1,169 800 1,000
Gold A$/oz 1,184 1,220 1,369 1,410 1,508 1,614 1,726 1,508 1,241 1,275 1,299 1,000 1,111
Silver US$/oz 12.6 17.3 29.8 42.6 42.5 42.4 42.2 37.5 31.0 24.6 20.5 12.00 17.5
Platinum US$/oz 1,152 1,452 1,541 1,542 1,661 1,694 1,728 1,762 1,797 1,833 1,870 1,500 1,600
Palladium US$/oz 239 369 568 595 350 350 350 350 350 350 350 350 650
Iron Ore Fines US$/t 85.0 76.4 119.5 107.1 70.6 72.0 73.5 74.9 76.4 77.9 79.5 65.0 68.0
Iron Ore Lumps US$/t 114.7 89.7 143.8 129.7 88.2 90.0 91.8 93.6 95.5 97.4 99.4 75.0 85.0
Coking Coal US$/t 257.0 151.0 248.8 302.5 211.3 176.3 155.3 173.5 176.9 180.5 184.1 140.0 157.5
Steaming Coal US$/t 111.3 77.0 106.0 122.5 97.5 87.5 82.9 92.9 94.8 96.7 98.6 75.0 84.4
Oil WTI US$/bbl 69.8 75.4 91.7 101.3 96.2 98.1 100.1 102.1 104.1 106.2 108.3 80.0 95.0
Uranium US$/lb 67.5 61.9 60.0 62.5 66.4 68.8 70.2 71.6 73.0 74.5 76.0 65.0 70.0
Source: IRESS, LME, Patersons Estimates
Stock Valuation and Recommendations

PATERSONS SECURITIES INVESTMENT OBJECTIVE While this method is essentially a capitalisation of earnings
approach and still somewhat subjective, it does give a valid
As a stockbroking firm with a national presence, our primary estimate of the future value of the business.
investment objective is to research emerging mid-cap
companies across the country. Our analysts focus particularly
on companies with a compelling story that have not ‘hit the
MEASURING RISK
radar’ of the broader market. Where there is an opportunity to Where appropriate we apply a multiple of between 0.75-1.5x
add value for our clients, we will research large-cap companies to our NAV on resource stocks under coverage. The multiple
where we can identify a ‘niche’, or stocks that enhance our represents what we believe the market would be willing to
coverage of a sector. pay for a stock based on the risk. There are many factors that
influence this measure, which changes over time, we discuss
PATERSONS SECURITIES RECOMMENDATIONS several of these below:
Investment ratings are a function of Patersons expectation

1. Commodity outlook and pricing:
of total return (forecast price appreciation plus dividend
yield) within the next 12 months. The investment ratings are In a rising commodity price environment the market may
Buy (expected total return of 10% or more), Hold (-10% to be willing to pay a premium for exposure to a particular
+10% total return) and Sell (>10% negative total return). commodity. In a falling market stocks can trade at a
In addition we have a Speculative Buy rating covering higher discount.
risk stocks that may not be of investment grade due to low
market capitalisation, high debt levels, or significant risks in 2. Greenfields vs Brownfields project:
the business model. Investment ratings are determined at the
Projects next to a mine or infrastructure can be more
time of initiation of coverage, or a change in target price. At
valuable than preverbal moose pastures. Although “new
other times the expected total return may fall outside of these
provinces” can also attract a premium.
ranges because of price movements and/or volatility. Such
interim deviations from specified ranges will be permitted but
will become subject to review by Research Management. 3. Country risk:
Stocks in riskier political jurisdictions tend to trade at a
STOCK VALUATION CRITERIA discount whereas in favourable mining regions a premium.
In valuing our universe of stocks we focus on discounted

4. Strategic value:
cashflow analysis.
Large very long life projects can be of strategic value to the
mega-miners. Likewise projects in close proximity to existing
Discounted cashflow
operations can create synergies. Finally as an example, TSX
Our discounted cashflow is modelled using a life of mine (LOM) gold producers tend to trade at a premium and as such
scenario of the company’s current and future production base. have been acquiring other gold and copper miners to attract
A set of appropriate exchange rate and commodity price higher multiples on these projects.
assumptions (refer page 10) are used to derive operational
cashflows that are expressed in present value terms. Account
is taken of the time value of money and the riskiness of those
future cashflows.
Recommendation
Stock is undervalued on all investment criteria, and likely to appreciate by more than 10% in the
BUY
next twelve months.
HOLD Sound investment fundamentals but needs a catalyst in the next twelve months.
SELL Stock is overvalued and likely to underperform by at least 10% in the next twelve months.
Stock may not be of investment grade due to low market capitalisation, high levels of debt or
SPECULATIVE BUY
significant risks in the business model, but appears attractively priced.
Adamus Resources Limited ADU ($0.68)

Recommendation: BUY
Multiple growth avenues Analyst: Alex Passmore, Gary Watson
OUR VIEW
ADU is successfully making the transition from gold explorer to gold producer following the completion of the Nzema plant
commissioning and recording its maiden gold pour. We anticipate ADU’s share of gold production of circa 30koz for H2
FY2011 increasing to 96koz for FY2012. We see ADU’s continued growth coming from the ongoing near mine and regional
exploration which continues to yield positive results. Ongoing drilling along the Salman trend is proving up further resources,
as are the nearby prospects at Akropon, Avribo and Aliva. Additionally, the scoping study for the Sulphide project has
commenced to evaluate the possible scenarios to mine and process the deeper refractory ore of the Salman trend. Further
growth opportunities lay in Liberia where ADU was recently granted mineral reconnaissance licences covering 3,107km2.
With ~A$20m in the bank and near term positive cashflow from production ADU is well situated to fund ongoing exploration
to increase its 2.1Moz resource. A resource update for the Nzema gold project is due in mid CY2011. We retain our BUY
rating with a price target $1.01/sh.
Investment Highlights Investment Summary

• Nzema plant operating well above nameplate. The
commissioning of the Nzema plant was completed in the Year End June 30 2010A 2011F 2012F 2013F
March Q 2011. The first gold pour from the plant was
Reported NPAT ($m) (6.3) (6.5) 19.0 34.8
announced in late January and since then the focus has been Recurrent NPAT ($m) (6.3) (6.5) 19.0 34.8
on process optimisation. The plant is currently operating Recurrent EPS (cents) (2.0) (1.4) 4.0 7.3
above nameplate capacity of 2Mtpa, producing around EPS Growth (%) na na na 82.8
24koz per Q. We estimate 30koz gold production for H2 PER (x) (34.2) (49.8) 17.1 9.4
FY2011 before ramping up to 96koz for FY2012 (ADU’s 90%
share). EBITDA ($m) (5.0) 3.5 40.5 54.2
EV/EBITDA (x) (38.7) 107.7 8.8 6.0
• Near mine exploration to increase resource. ADU is
aggressively drilling near mine target zones to increase
Capex ($m)
Free Cashflow
40.7 86.1
(57.7) (102.4)
3.1
22.8
3.1
39.4
its 2.1Moz resource at Nzema, with the resource update FCFPS (cents) (18.1) (21.4) 4.8 8.2
expected by mid CY2011. The company has a diamond PFCF (x) (3.8) (3.2) 14.3 8.3
and RC rig operating 24hrs a day drilling at the various
DPS (cents) 0.0 0.0 0.0 0.0
locations over the Salman trend and has identified several Yield (%) 0.0 0.0 0.0 0.0
areas for follow up. Drilling at the Aliva prospect, 9km south- Franking (%) 100.0 100.0 100.0 100.0
east of Nzema, has revealed a possible new zone of oxide
mineralisation which is coincident with a 4.5km soil anomaly.
Planning is also underway for resource drilling of the Anwia
prospect in May 2011. Additional holes to test the depth Company Statistics & Performance
extensions of the Bokrobo prospect are also in planning.
Shares on issue (m) 478.6 3mth ADT ($m) 0.64
Market Cap. ($m) 325.5 Debt est ($m) 55.6
• Sulphide project update. A scoping study has been
commissioned by ADU to evaluate the sulphide ore zones 52 week range $0.44 - $0.89 Cash est ($m) 28.1
which appear at depth along the Salman trend. AMEC-Minproc
will be conducting the study and results are expected in mid
CY2011. Three diamond holes were drilled to test the depth 1.00 8000
extensions of the Teberru 04 and Salman Central and South
sulphide zones. The three holes were testing for extensions
100m down dip of all previous drilling and intersected further
sulphidic ore zones, with results yet to be released. 0.75 6000
Share Price (A$)
• Growth becomes the focus. ADU remains focused on

Volume '000
increasing its 2.1Moz resource inventory with several near

mine and regional exploration programs underway. The 0.50 4000
highest probability of success comes from the extensional
drilling in previously inaccessible areas between the Salman
North, Tebberu and Nugget Hill deposits. Regional exploration
has begun on the Hotopo, Asanta and Apa Tam licences and 0.25 2000
the first phase results are due shortly. Additionally ADU has
secured reconnaissance licenses in Liberia covering 3,107km2
of ground in known areas of gold mineralisation.
0.00 0
• Valuation. We have incorporated production of 1Moz at
the project level in our NPV for the Salman project. We
12 Months
value the residual ounces (2Moz in resources) at A$90/

oz and sulphide and regional targets at A$70m.
Adamus Resources Limited $0.68 Year End June 30

Valuation A$m A$/sh Commodity Assumptions 2010A 2011F 2012F 2013F
Salman 284.1 0.59 A$:US$ 0.89 0.99 1.05 1.00

Exploration 152.3 0.32 Gold (US$/oz) 1093 1356 1483 1507
Unpaid capital 17.8 0.04 Silver (US$/lb) 17.28 29.77 42.63 42.53
Corporate (27.5) (0.06) Gold (A$/oz) 1222 1368 1409 1507
Forwards (53.5) (0.11)
Cash 28.1 0.06 Target Price Sensitivity -10% 0% +10% % Chg
Debt (55.6) (0.12)
NPV 345.6 0.72 FX (A$:US$) 1.15 1.01 0.89 (12)
(@ 8% discount rate) Gold Price 0.92 1.01 1.11 10
Price Target 1.01 Gold Grade 0.95 1.01 1.07 6
Operating Costs 1.03 1.01 0.99 (2)
NPV Sensitivity Recovery 0.91 1.01 1.11 10
NPV (nom) @ 5% disc. 0.79 EV:Reserve (A$/oz) 319

NPV (nom) @ 0% disc. 0.93 EV:Resource (A$/oz) 163
Hedging koz % Reserve Production Summary 2010A 2011F 2012F 2013F
Committed Production 290,000 27 Production (koz) Attrib 90%

Salman 0 30 96 100
Valuation Summary of Operating Assets
Total 0 30 96 100
Cost Summary
Exploration Cash Costs (US$/oz) na 767 676 593
33% Total Costs (US$/oz) na 1019 930 839
Salman Price Received (US$/oz) na 1,276 1,271 1,293
61%
Profit & Loss (A$m) 2010A 2011F 2012F 2013F
Sales Revenue 0.0 36.5 116.3 129.0

Other Income 3.2 1.4 1.3 1.0
Cash Operating Costs 0.0 23.9 68.4 66.7
6% Exploration Exp. 0.2 1.6 2.5 2.8
Corporate/Admin 8.0 9.0 6.1 6.3
Gold Production Summary EBITDA (5.0) 3.5 40.5 54.2
Depn & Amort 0.2 5.7 16.4 17.0
150 1400 EBIT (5.3) (2.3) 24.1 37.2
Interest 1.1 4.3 5.1 2.4
125 1200 Abnormals (pre-tax) 0 0 0 0
Operating Profit (6.3) (6.5) 19.0 34.8
100 1000 Tax expense 0.0 0.0 0.0 0.0
(US$/oz)
(koz)
75 800 Abnormals (post-tax) (76.1) 0.0 0.0 0.0

NPAT (82.5) (6.5) 19.0 34.8
50 600
Normalised NPAT (4.4) (4.6) 13.3 24.3
25 400
0 200 Cash Flow (A$m) 2010A 2011F 2012F 2013F

2011F 2012F 2013F 2014F 2015F 2016F 2017F
Total Cash Costs (US$/oz) Price Received (US$/oz)
Adjusted Net Profit (4.4) (4.6) 13.3 24.3
+ Interest/Tax/Expl Exp 1.3 5.8 7.6 5.3
- Interest/Tax/Expl Inc 2.1 12.9 17.4 15.0
Reserves & Resources + Depn/Amort 0.2 5.7 16.4 17.0
+/- Other 0.0 0.0 0.0 0.0
Reserves Mt Au g/t Au koz Operating Cashflow (5.0) (5.9) 19.9 31.7
Salman 16.5 2.0 1,069 - Capex (+asset sales) 40.7 86.1 3.1 3.1
Total 16.5 2.0 1,069 - Working Capital Increase 10.1 8.5 0.0 0.0
Free Cashflow (55.8) (100.4) 16.8 28.5
Resources Mt Au g/t Au koz - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Salman 37.2 1.7 2,092 + Equity raised 65.8 31.5 0.0 0.0
Total 37.2 1.7 2,092 + Debt drawdown (repaid) 1.5 69.9 (16.9) (36.9)
Net Change in Cash 11.5 0.9 (0.1) (8.3)
Directors Cash at End Period 23.0 23.9 23.8 15.5
Net Cash/(LT Debt) 21.5 (47.4) (30.6) (2.1)
Name Position
John Hopkins Non-Executive Chairman Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Mark Connelly Managing Director
Anthony Harwood Non-Executive Director Cash/Bullion 23.0 23.9 23.8 15.5
Peter Tredger Non-Executive Director Total Assets 111.1 198.6 195.0 182.5
Peter Rowe Non-Executive Director Total Debt 0.0 71.4 54.4 17.6
Martin Reed Non-Executive Director Total Liabilities 90.2 150.8 133.9 97.0
Shareholders Funds 20.9 47.8 61.1 85.5
Substantial Shareholders %
Macquarie Bank 12.0 Ratios
Robert Gardiner 9.0 Net Debt/Equity (%) na 99.2 50.1 2.4
Interest Cover (x) na na 4.7 15.3
Return on Equity (%) na na 31.1 40.7
Disclosure: Patersons acted as joint lead manager to a placement of 29m ADU shares at $0.55/sh which raised $15.95m in September
2010. The transaction was completed in conjunction with a 1:15 rights issue at the same price to raise a total of $31.3m. Patersons
received a fee for this service.
African Iron Limited AKI ($0.225)

Recommendation: BUY
Near term producer Analyst: Alex Passmore, Tim McCormack
OUR VIEW
AKI’s principal asset is the 80% owned (remainder owned by government) Mayoko Iron Ore Project located in the Republic
of Congo, West Africa. The Mayoko Project is located 2kms from an underutilised heavy haulage railway terminating at
the deep water port of Pointe-Noire. Proximity to infrastructure offers the opportunity for near term project development.
Preliminary studies on the rail network indicate haulage capacity of 10Mtpa can be achieved without any significant capex
requirements. AKI is aiming to develop a 5Mtpa direct shipping iron ore operation by mid-2013 leveraging off the projects
proximity to existing rail and port infrastructure. The March Q marked the beginning of a 30,000m resource drilling program
designed to increase the oxidised DSO hematite resource and delineate a maiden resource estimate for the underlying
enriched BIF. The 2010 drilling program confirmed two of the mineralised horizons within the Mayoko Project require
beneficiation and AKI is undertaking extensive metallurgical testing to determine the most effective means of upgrading
the resource to a saleable product. With near term production prospects and low capex requirements we rate the stock
as a BUY - price target $0.99.

• Essential rail study confirms 10Mtpa capacity. AKI
recently announced preliminary results of a key study Year End June 30 2011F 2012F 2013F 2014F
examining the line capacity of the Republic of Congo rail
network. The study undertaken by Egis International Reported NPAT ($m) (0.5) (8.2) 6.9 108.3
Recurrent NPAT ($m) (0.5) (8.2) 6.9 108.3
confirmed the network has a capacity of 10Mtpa with the
Recurrent EPS (cents) (0.1) (1.1) 1.0 15.1
potential for further expansion. These findings are significant EPS Growth (%) na na na 1,465.4
given it provides a direct transport route to market from the PER (x) (244.0) (19.7) 23.3 1.5
Mayoko Project (production Q2 2013) via the deep water
port at Pointe Noire. AKI will need to provide further clarity EBITDA ($m) (0.5) (4.9) 33.2 254.4
on costs; with signaling, telecommunications and spur lines EV/EBITDA (x) (161.6) (27.2) 6.1 0.3
being key areas to watch. We expect the rail MoU with Capex ($m) 0.0 129.6 71.0 4.3
Chemin de Fer Congo Ocean regarding access to be replaced Free Cashflow (2.8) (145.0) (67.6) 119.3
with a binding Heads of Agreement by August 2011. FCFPS (cents) (0.5) (20.2) (9.4) 16.7
PFCF (x) (44.6) (1.1) (2.4) 1.4
• Drilling Program to provide ongoing news flow. In
March 2011 AKI commenced a 30,000m resource drilling DPS (cents) 0.0 0.0 0.0 0.0
program at Mayoko which is aimed at upgrading the Yield (%) 0.0 0.0 0.0 0.0
supergene hematite DSO resource (currently 33Mt) and Franking (%) 0.0 0.0 0.0 0.0
defining an initial resource for the underlying enriched
hematite BIF. Positive results from the program will augment
a feasibility study for the project due in Q4 2011, following Company Statistics & Performance
which AKI should move to production in Q2 2013. Given the
scope of the drilling program we expect a steady news flow Shares on issue (m) 479.5 3mth ADT ($m) 0.31
of drilling results and resource upgrades throughout 2011. Market Cap. ($m) 107.9 Debt est ($m) 0.0
52 week range $0.09 - $0.42 Cash est ($m) 43.6
• Metallurgical Test Work. The 2010 diamond drilling
program confirmed 3 horizons of mineralization; DSO
oxide cap (56% Fe), enriched BIF (40-45% Fe) and
underlying magnetite mineralization (30-36% Fe). The 0.50 27000
latter two require beneficiation to achieve saleable
grades, and the first of a three stage bulk metallurgical
22500
testing program is currently being carried out by Bateman 0.40
Engineering. Forthcoming results will serve as a guide
Share Price (A$)
for processing plant development and optimization, and 18000

Volume '000
underpin the longer term value of the project. 0.30
• Low capital intensity. With substantial existing

infrastructure and close proximity to critical rail networks, AKI
13500
has lower capital intensity than peer iron ore developers. Our 0.20
estimates suggest AKI can bring the project into production 9000
for ~US$250m. With AKI targeting 5Mtpa (US$50/t of annual
capacity) in the near term, excess rail capacity may spread 0.10
capital intensity through developmental synergies with other 4500
iron players looking to utilise spare rail capacity.
• Strong Team in Place. AKI has a management team in

place with sound knowledge and operational experience
0.00
12 Months
0
in West Africa. The company has expanded its search

for a new MD and remains committed to an appointment
before the end of FY2011.
African Iron Limited $0.225 Year End June 30

Valuation A$m A$/sh Commodity Assumptions 2011F 2012F 2013F 2014F
Mayoko Hematite 710 0.99 A$:US$ 0.99 1.05 1.00 0.96

Mayoko Magnetite 0 0.00 Iron Ore Fines (US$/t FOB) 119.53 119.53 119.53 114.64
Mayoko Pellet Plant 0 0.00 Iron Ore Lump (US$/t FOB) 143.82 143.82 145.22 140.81
Exploration 100 0.14 Magnetite Pellets (US$/t) 158.94 177.80 180.97 182.72
Corporate (40) (0.06) Magnetite Conc [bmk] (US$/t)127.00 127.00 127.00 121.81
Unpaid Capital 132 0.18
Cash 44 0.06
Debt 0 0.00 Production Summary 2011F 2012F 2013F 2014F
NAV 946 1.32
Price Target (25% discount to NPV) 709 0.99 AFI Share of Production (kt)
Mayoko Hematite 0 0 400 3000
Mayoko Magnetite 0 0 0 0
Valuation Summary of Operating Assets Mayoko Pellet Plant 0 0 0 0
Cost Summary (A$/t)

Mayoko Hematite na na 35.98 37.05
Mayoko Magnetite na na na na
Conc Price Received 140.94 132.73 139.70 139.57
Mayoko Hematite
88% Exploration
12% Profit & Loss (A$m) 2011F 2012F 2013F 2014F
Sales Revenue 0.00 0.00 51.72 369.91

Other Income 1.1 4.1 4.9 4.3
Operating Costs 0.0 0.0 14.4 111.2
Exploration Exp. 0.3 0.8 0.7 0.2
Iron Ore Production Summary (AFI share) EBITDA (0.5) (4.9) 33.2 254.4
Depn & Amort 0.0 0.0 2.3 17.0
6000 140
EBIT (0.5) (4.9) 30.9 237.3
Interest 0.0 3.2 6.5 4.9
5000 120 Operating Profit (0.5) (8.2) 24.4 232.5
Tax expense 0.0 0.0 9.6 69.7
100
4000 Minorities 0.0 0.0 7.9 54.4
Abnormals 0.0 0.0 0.0 0.0
(A$/t)
80
(kt)
3000 NPAT (0.5) (8.2) 6.9 108.3

60
2000 Normalised NPAT (0.5) (8.2) 6.9 108.3
40
1000 20
0 0 Cash Flow (A$m) 2011F 2012F 2013F 2014F

2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F
Mayoko Hematite Cost (A$/t) Fines price (FOB PH)
+/- Other 0.0 0.0 0.0 0.0
Mayoko Magnetite Mt % Fe Operating Cashflow (3.3) (15.5) 3.1 123.5
Reserves - Capex (+asset sales) 0.0 129.6 71.0 4.3
Resources 40.0 - Working Capital Increase (0.5) 0.0 0.0 0.0
Exploration target 900-1300 Free Cashflow (2.8) (145.2) (67.9) 119.2
Mayoko Hematite Mt % Fe - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Reserves + Equity raised 89.1 130.0 0.0 0.0
Resources 33 55.0 + Debt drawdown (repaid) 0.0 120.0 0.0 (80.0)
Net Change in Cash 35.8 104.8 (67.9) 39.2
Cash at End Period 42.1 146.9 79.0 118.3
Directors Net Cash/(LT Debt) 42.1 26.9 (41.0) 78.3
Name Position
Ian Burston Non-Executive Chairman Balance Sheet (A$m) 2011F 2012F 2013F 2014F
Joe Ariti Non-Executive Director
Anthony Sage Non-Executive Director Cash/Bullion 42.1 146.9 79.0 118.3
Total Assets 197.3 439.1 446.1 446.1
Substantial Shareholders Shares (m) (%) Total Debt 0.0 120.0 120.0 40.0
Cape Lambert 120.0 25.0 Total Liabilities 92.5 212.5 212.5 212.5
JP Morgan 45.0 9.4 Shareholders Funds 104.8 226.7 233.6 233.6
Deutsche Bank AG 26.2 5.5
Ratios
Net Debt/Equity (%) na (11.9) 17.5 (33.5)
Interest Cover (x) na (1.5) 4.8 48.9
Disclosure: Patersons acted as joint lead manager for the re-listing of AKI a spin-out from CFE. In addition, Patersons acted as joint
lead manager to AKI’s recent $96m equity raising at $0.30/sh. It received fees for these services.
Alacer Gold Corporation AQG ($8.89)

Recommendation: BUY
Aiming to double gold sales by 2015 Analyst: Alex Passmore, Gary Watson
OUR VIEW
The much anticipated merger between Avoca Resources (AVO) and TSX listed Anatolia Minerals (ANO) to create Alacer
Gold (AQG) was completed on 18 February 2011 with overwhelming shareholder support. AQG has emerged as a leading
intermediate gold producer with a diversified asset portfolio in Australia and Turkey. Large, long mine life operations with
strong inherent value enhance the company’s growth prospects, with AQG forecasting production ramp up to 600koz Au
by CY2013 then 800koz Au by CY2015. With the company looking to increase its inventory base in line with production
depletion, the March Q saw drilling deliver an overall reserve increase from 3.5Moz to 5.7Moz Au and a resource position
of 13Moz Au. April 1 2011 marked the beginning of commercial production from the Çöpler operation in Turkey with AQG
targeting 135koz Au in 2011 at cash operating costs of US$460/oz. Long term viability of the Çöpler operation is underpinned
by the development of its sulphide project which is currently in the detailed feasibility phase. Overall we see AQG trading
at fair value and view it a robust mid-tier gold producer. BUY, Price target $10.57.

• Strong first production month. March Q saw group
gold production of 91.2koz. This represents an annualised
Year End June 30 2010A 2011F 2012F 2013F
production rate of more than circa 365kozpa, putting Reported NPAT ($m) 68.3 140.7 275.1 330.3
the company in good stead to reach a production rate Recurrent NPAT ($m) 51.8 140.7 275.1 330.3
of 400kozpa as Çöpler ramps up. We are expecting gold Recurrent EPS (cents) 17.8 61.9 121.0 137.7
production to approach 100koz during the June Q, with EPS Growth (%) na 246.9 95.6 13.8
production in the 1H FY2012 expected to improve further PER (x) 49.8 14.4 7.3 6.5
due to improved recoveries. EBITDA ($m) 142.6 268.3 478.2 558.7
EV/EBITDA (x) 18.1 7.1 3.5 2.5
• Aggressive growth strategy. AQG is targeting a rapid
ramp up in production which will see group gold production at
Capex ($m)
Free Cashflow
58.9
20.6
23.9
111.0
108.8
229.0
25.8
385.5
800kozpa by CY2015. With cash flow underpinning aggressive FCFPS (cents) 7.1 48.8 100.7 160.8
drilling programs at all of its assets, we see AQG building PFCF (x) 125.2 18.2 8.8 5.5
its resource base in line with increased production. Of the
DPS (cents) 0.0 0.0 0.0 0.0
Australian assets, the Vine open pit is in pre-strip phase, Yield (%) 0.0 0.0 0.0 0.0
dewatering is nearing completion at the Chalice underground, Franking (%) 0.0 0.0 0.0 0.0
and cutback mining is in progress at the South Kalgoorlie
operation which will significantly lift the production profile
heading into CY2012. With commercial production at Çöpler Company Statistics & Performance
declared from April 1, group exploration spend of A$35
for CY2011, and expected resource upgrades, AQG is well Shares on issue (m) 239.8 3mth ADT ($m) 4.24
positioned to deliver on its forecasted production ramp up. Market Cap. ($m) 2131.6 Debt est ($m) 46.5
• Positive preliminary study at Çöpler. Results from a
study into the viability of developing a sulphide operation at
the Çöpler Project were released in March. Positive outcomes 12.00 1.8
included a gold reserve increase from 2.2Moz to 4.6Moz,
1.6
indicative life of mine cash costs (on a by-product basis) of 10.00
US$430/oz, and a mine life increase to 16 years. Management 1.4
is proceeding with a detailed feasibility study and metallurgical
Share Price (A$)
test work, with ongoing drilling likely to give rise to further 8.00 1.2
Volume '000
resource and reserve upgrades. Results of the study are due

1.0
in 2H FY2012, and we view a positive outcome as critical to 6.00
strengthen the long term value of the project. 0.8
• Appreciating AUD inflates cash costs for the Australian

operations. Cost guidance for the Australian operations of
4.00 0.6
US$460/oz provided by the company in December has been 0.4

2.00
revised to US$580/oz on the back of the surging Australian 0.2
dollar. The adjustment was compounded by higher energy
and labour costs associated with operating in Australia. 0.00 0.0
12 Months
• Strong balance sheet after the merger. AQG consolidated
its financial position subsequent to the merger, reporting a
cash position of US$105m at the end of the March Q.
Alacer Gold Corporation $8.89 Year End June 30

Higginsville Gold 420.6 1.66 A$:US$ 0.89 0.99 1.05 1.00

Frogs Leg 111.2 0.44 Gold (US$/oz) 1093 1356 1483 1507
South Kal 282.6 1.12 Silver (US$/oz) 17.28 29.77 42.63 42.53
Copler Gold Mine 814.4 3.21 Gold (A$/oz) 1222 1368 1409 1507
Exploration 189.1 0.75 Silver (A$/oz) 19.33 30.03 40.50 42.53
Unpaid Capital 31.6 0.12
Corporate (3.4) (0.01) Sensitivity -10% 0%+10%Delta +10%
Forwards 0.0 0.00
Listed Investments 7.9 0.03 FX (A$:US$) 10.27 10.27 10.27 0
Cash est 105.7 0.42 Gold Price 8.77 10.27 11.77 15
Debt est (46.5) (0.18) Grade 9.77 10.27 10.77 5
NPV (@ 8% Discount rate) 1913 7.55 Operating Costs 10.43 10.27 10.11 (2)
Price Target (1.4 x NAV) 10.57
Production Summary 2010A 2011F 2012F 2013F
Hedging koz Strike Cover
Gold Production
Put Options 287 A$830 to CY11 Higginsville Gold 186 159 177 179
Frogs Leg 22 45 32 32
Valuation Summary of Operating Assets South Kal 21 42 91 153
Copler Gold Mine 0 75 172 172
South Kal
Total Production (koz) 229 321 472 536
16%
Copler Gold Mine
45% Cost Summary
Frogs Leg
H’ville Cash Cost (A$/oz) 468 540 574 577
6%
Group Cash Cost (A$/oz) 743 568 496 504
Group Total Cost (A$/oz) 849 773 684 693
Higginsville Gold Price Received (A$/oz) 1,218 1,396 1,483 1,507

23%
Exploration Profit & Loss (US$m) 2010A 2011F 2012F 2013F
10%
Sales Revenue 284.3 464.8 729.3 836.1
Gold Production Summary Other Income 8.1 3.9 11.1 23.9
Operating Costs 142.2 194.5 256.1 295.0
600 1000
500
800 EBITDA 142.6 268.3 478.2 558.7
400 Depn & Amort 75.4 63.3 84.0 93.6
600 EBIT 67.2 205.0 394.1 465.1
300 Interest 6.8 4.1 1.1 0.0
400 RSPT 0.0 0.0 0.0 0.0
200
Operating Profit 60.4 200.9 393.0 465.1
100
200 Significant Items 16.4 0.0 0.0 0.0
FX Adjustment 0.0 0.0 0.0 0.0
0 0 Tax expense 8.6 60.3 117.9 134.9
2010A 2011F 2012F 2013F 2014F Reported NPAT 68.3 140.7 275.1 330.3
Total Production (koz) Group Cash Cost (A$/oz)
Normalised NPAT 42.3 140.7 275.1 325.6
Reserves & Resources
Cash Flow (US$m) 2010A 2011F 2012F 2013F
Reserves Equity Mt Au g/t Au koz
Higginsville 100% 6.0 4.16 803 Adjusted Net Profit 68.3 140.7 275.1 330.3
Frogs Leg 49% 5.0 5.06 399 + Interest/Tax/Expl Exp 19.7 68.4 123.1 139.0
South Kal 100% 2.0 1.63 106 - Interest/Tax/Expl Inc 24.6 69.7 144.4 151.5
Copler 100% 40.8 1.65 2,169 + Depn/Amort 75.4 63.3 84.0 93.6
Total 6.0 4.12 3,477 +/- Other 0.0 0.0 0.0 0.0
Operating Cashflow 138.8 202.6 337.8 411.4
Resources Mt Au g/t Au koz - Capex (+asset sales) 73.3 23.9 108.8 25.8
Higginsville 100% 14.3 3.42 1,572 - Working Capital Increase 44.8 67.7 0.0 0.0
Frogs Leg 49% 2.3 6.34 230 Free Cashflow 20.6 111.0 229.0 385.5
South Kal 100% 68.7 2.04 4,516 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Copler 95% 125.0 1.50 5,739 + Equity raised 2.1 0.0 0.0 0.0
Cevizlidere 100% 445.7 0.11 1,576 + Debt drawdown (repaid) (28.9) 1.3 (48.3) 0.0
Karakartal 100% 31.6 0.38 386 Net Change in Cash (14.7) 112.2 180.7 385.5
Total 687.6 0.66 14,019 Cash at End Period 42.0 154.2 334.9 720.4
Net Cash/(LT Debt) (5.1) 105.9 334.9 720.4
Directors
Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Name Position
Robert Reynolds Non-Executive Chairman Cash/Bullion 42.0 154.2 334.9 720.4
Ed Dowling Managing Director Total Assets 414.2 674.4 906.6 1239.3
Rohan Williams Chief Strategic Director Total Debt 47.0 48.3 0.0 0.0
David Quinlivan Non-Executive Director Total Liabilities 145.4 264.9 222.0 229.1
Stephanie Unwin Non-Executive Director Shareholders Funds 268.9 409.5 684.6 1010.2
Jan Castro Non-Executive Director
Timothy Haddon Non-Executive Director Ratios
Richard Graff Non-Executive Director Net Debt/Equity (%) 1.9 na na na
Jay Kellerman Non-Executive Director Interest Cover (x) 9.9 50.1 348.4 na
Return on Equity (%) 25.4 34.3 40.2 32.7
Substantial Shareholders Shares (m) (%)
Pala Investments AG 47.7 21.0
Ampella Mining Limited AMX ($2.22)

Recommendation: BUY
Burkino Faso unrest impacts market sentiment Analyst: Alex Passmore, Byron Benvie
OUR VIEW
AMX’s share price has retraced by 35% since mid-April as news of political unrest in Burkina Faso has severely dented
investor sentiment. While developments in the political situation should be closely monitored, AMX’s flagship Batie West
project is 455km away from the Ouagadougou and remains largely unaffected and accordingly the company has continued
to progress project development. AMX recently announced a 2.2Moz (1.6g/t Au) resource at for Konkera and is now working
towards a PFS by Q3 2011. Current estimates have gold production commencing late in 2013. Exploration momentum also
continues with an aggressive drilling programme likely to extend the Konkera mineralisation down to 400m depth during
2011 additionally the programme could add circa 300koz by July 2011. The market has had overly high expectations of the
resource announcements from AMX and this has seen some recent selling in the stock, but we see them delivering on the
expected ounces over time. We continue to rate AMX a BUY with a price target of $3.17/sh (1.25x NAV) and see project
growth as driving the fortunes of the company in 2011. Operating in West Africa undoubtedly presents a risk although
projects the size of Batie West are hard to find in stable jurisdictions.

• Unrest in Burkina Faso since February 2011. The
capital of Burkina Faso (Ouagadougou) has seen activist Year End June 30 2010A 2011F 2012F 2013F
activity step up due to high living costs and demands for the Reported NPAT ($m) (15.8) (22.2) (24.6) 15.5
current president to resign. This has been widely reported Recurrent NPAT ($m) (15.8) (22.2) (24.6) 15.5
in the media and has coincided with a subdued risk appetite Recurrent EPS (cents) (8.9) (10.2) (9.3) 5.9
towards AMX. While the risks of operating in West Africa EPS Growth (%) na na na na
shouldn’t be downplayed we note the company’s flagship PER (x) (24.8) (21.7) (23.8) 37.8
Batie West project is 455km by road from the capital
and remains stable and operable. If the political situation EBITDA ($m) (15.5) (22.1) (24.6) 24.3
improves and perceived security risks abate the decline in EV/EBITDA (x) (24.4) (20.5) (20.1) 26.4
Capex ($m) 1.1 0.9 0.4 166.4
value will present a solid buying opportunity. Free Cashflow (16.4) (18.0) (25.0) (150.4)
FCFPS (cents) (9.3) (8.3) (9.5) (56.9)
• 2.2Moz announced at Konkera. AMX released an interim
resource of 42.4Mt at 1.6g/t Au for 2.22Moz Au (0.5g/t Au PFCF (x) (23.9) (26.8) (23.4) (3.9)
cut-off), at Konkera in February. At a 1g/t Au cutoff the total DPS (cents) 0.0 0.0 0.0 0.0
resource now contains 1.9Moz Au, an increase of 0.7koz Au. Yield (%) 0.0 0.0 0.0 0.0
Within the resource is a higher grade zone that contains Franking (%) 100.0 100.0 100.0 100.0
10.4Mt at 3.0 g/t Au for approximately 1Moz Au (applying a
2.0g/t Au cut-off), and the ore body is shaping up to be very
amenable to mining in our opinion. This resource increase Company Statistics & Performance
reflects 83,000m of drilling over 5 prospects covering 4.9km
of strike, and is contained within the top 200m vertical depth Shares on Issue (m) 205.3 3mth ADT ($m) 1.53
at Konkera North (top 100m at Konkera main). A further Market Cap. ($m) 456 Debt ($m) 0.0
update to the Konkera deposit is expected in mid 2011. 52 Week Range $1.33 - $3.33 Cash (est.) ($m) 40.1
• Short term valuation impact of resource upgrade.

The increase in resource has reduced the company’s
3.50 6,000
premium rating to A$199/oz (was $447/oz) versus the
sector average of A$194/oz. We note however that the
average grade of the resource has dropped from 2g/t Au 3.00 5,000
to 1.6 g/t Au by adding the additional ounces, an effect
not captured by this metric. 2.50
Share Price (A$)
4,000
Volume '000
• Pre-feasibility studies underway. PFS at Konkera was

announced on 3 May 2011, and aims to be completed by 2.00
Q3 2011. AMX also aim to complete a DFS by Q3 2012. 3,000
1.50
• Our forecasts. Our valuation for AMX factors in a 50Mt
at 2g/t Au mining and processing operation at Batie West 2,000
1.00
(3Mtpa). We believe unit costs of production will be in
the order of US$550-600/oz and capex for construction 1,000
of the project circa US$200-220m. 0.50
• Aggressive A$30m exploration program during 2011.

225km of core, RC and auger drilling over the year from 7
0.00 -
12 Months
rigs will likely extend Konkera mineralisation down to 400m
vertical depth, as well as test 16 priority gold exploration
targets.
Ampella Mining Limited $2.22 Year End June 30

Batie West 572.0 2.05 A$:US$ 0.89 0.99 1.05 1.00

Expl (BW regional, Mabera, Doubema) 156.5 0.56 Gold (US$/oz) 1093 1356 1483 1507
(assume $120m funding at 95% SP) Gold (A$/oz) 1222 1368 1409 1507
Corporate (22.4) (0.08)
Forwards 0.0 0.00 Target Price Sensitivity -10% 0% +10% % Chg
Cash (est.) 40.1 0.18
Debt 0.0 0.00 FX (A$:US$) 4.48 3.96 3.58 (10)
NPV (@ 8% discount rate) 872.3 3.17 Gold Price 3.47 3.96 4.49 13
Price Target (1.00x NAV) 872.3 3.17 Gold Grade 3.48 3.96 4.49 13
Operating costs 4.14 3.96 3.79 (4)
NPV Sensitivity Capex 4.03 3.96 3.94 0
NPV(nom) @ 5% disc. 3.77 EV:Reserve (A$/oz) na

NPV(nom) @ 0% disc. 5.37 EV:Resource (A$/oz) 207
Hedging koz 1-Year3-years % Reserve Production Summary 2010A 2011F 2012F 2013F
Committed Production na na na na Production (koz)

Batie West 0 0 0 35
Total 0 0 0 35
Cost Summary
Cash Costs (A$/oz) na na na 554
Batie West
Total Costs (A$/oz) na na na 647
Expl (BW regional,
75% Mabera, Doubema)
20% Profit & Loss (A$m) 2010A 2011F 2012F 2013F
Sales Revenue 0.0 0.0 0.0 53.5

Other Income 0.4 2.4 1.8 4.3
Cash (est.)
5%
Gold Production Summary AIFRS Derivative Adjustment 0.0 0.0 0.0 0.0
EBITDA (15.5) (22.1) (24.6) 29.3
200 800 Depn & Amort 0.2 0.0 0.0 3.2
EBIT (15.8) (22.2) (24.6) 26.1
700 Interest 0.0 0.0 0.0 4.8
150 Operating Profit (15.8) (22.2) (24.6) 21.3
600 Tax expense 0.0 0.0 0.0 0.0
(A$/oz)
(koz)

100 500 NPAT (15.8) (22.2) (24.6) 21.3
400
Normalised NPAT (15.7) (22.2) (24.6) 21.3
50
300
Cash Flow (A$m) 2010A 2011F 2012F 2013F
0 200
2013F 2014F 2015F 2016F 2017F 2018F Adjusted Net Profit (15.7) (22.2) (24.6) 21.3
Total Cash Costs (A$/oz)
+ Depn/Amort 0.2 0.0 0.0 3.2
Reserves & Resources +/- Other 0.0 0.0 0.0 0.0
Operating Cashflow (15.5) (27.2) (32.0) 27.8
Reserves Mt Au g/t Au koz - Capex (+asset sales) 1.1 0.9 0.4 153.1
0.0 0.0 0 - Working Capital Increase (0.3) (5.1) 0.0 0.0
Total 0.0 0.0 0 Free Cashflow (16.3) (23.0) (32.4) (125.4)
- Dividends (ords & pref) 0.0 0.0 0.0 0.0
Resources Mt Au g/t Au koz + Equity raised 20.6 44.1 95.0 0.0
Batie West (Konkera) 42.4 1.6 2,224 + Debt drawdown (repaid) 0.0 0.0 0.0 112.9
Total 42.4 0.0 2,224 Net Change in Cash 4.3 21.1 62.6 (12.4)
Directors Net Cash/(LT Debt) 7.4 28.5 91.1 (34.2)
Name Position Balance Sheet (A$m) 2010A 2011F 2012F 2013F

Peter Mansell Non-Executive Chairman
Paul Kitto Managing Director Cash/Bullion 7.4 28.5 91.1 78.7
Evan Cranston Executive Director Total Assets 14.4 38.6 114.0 248.2
Charles Soh Non-Executive Director Total Debt 0.0 0.0 0.0 112.9
Total Liabilities 2.3 2.0 2.0 115.0
Substantial Shareholders Shares (m) % Shareholders Funds 12.1 36.6 111.9 133.2
Blackrock 15.3 7.4
Dundee Corporation 13.3 6.5 Ratios
CBA 10.2 5.0 Net Debt/Equity (%) na na na 25.7
Kingslane Pty Ltd 9.1 4.4 Interest Cover (x) na na na 5.5
Peter Williams 6.8 3.3 Return on Equity (%) na na na 16.0
Laurent Coulbaly 6.9 3.3
Francois Ouedraogo 6.7 3.3
Disclosure: Patersons acted as lead manager to the Australian component of the placement of 21.5m AMX shares at A$1.95/
sh to raise A$41.925m in September 2010. Patersons received a fee for this service.
Aquila Resources Limited AQA ($8.15)

Recommendation: BUY
Coking coal leverage Analyst: Alex Passmore, Gary Watson
OUR VIEW
AQA’s share price has declined by circa 15% to $8.15/sh since December 2010 as severe weather impacted production at
Isaac Plains, and as investor appetite was damaged firstly by natural disasters in Japan and more recently by the strength
in the Australian dollar (AUD). The company is one of the purest valuation leverage plays to coking coal and iron ore with a
stable of potentially long life assets. We believe AQA’s deep development pipeline will be funded by a serious of divestments
including the Avontuur Manganese Project in South Africa and the Washpool Coking Coal Project in the Bowen Basin,
Australia. The Company is still locked in dispute with JV partner Vale over the port and rail plans for the Eagle Downs coal
project and is also in disagreement over the valuation and sale of AQA’s share (24.5%) of the Belvedere project to Vale
is in arbitration. With a bullish outlook for coking coal, and a series of development announcements due over the coming
2Q’s we are upgrading our recommendation on AQA to BUY with a valuation of $10.79/sh (26% trading disc).

• Isaac Plains production not the main game. Production
was down by more than 50% to 164kt of product (453kt in Year End June 30 2010A 2011F 2012F 2013F
Dec Q) at the Isaac Plains coal operation as the operation
was impacted by Cyclone Yasi related flooding in the March Reported NPAT ($m) (33.1) (38.6) 19.5 (56.1)
Q. Sales are forecast to ramp up to 2.8Mtpa in the June Q as Recurrent NPAT ($m) (33.1) (38.6) 19.5 (56.1)
Recurrent EPS (cents) (10.0) (10.1) 5.1 (14.7)
an expansion (Dragline overburden removal) is completed.
EPS Growth (%) na na na na
PER (x) (81.5) (80.9) 159.6 (55.6)
• Concept Study Due in the June Q for Talwood. The
Talwood Coking Coal Project (246.5Mt mineral resource)
EBITDA ($m) (43.5) (35.6) 138.0 184.1
is a potential underground coking coal mine. The project is
EV/EBITDA (x) (55.8) (69.5) 23.0 29.8
located immediately adjacent to BHPB Mitsubishi Alliance
Capex ($m) 52.1 79.7 1,257.0 2,217.6
Goonyella Riverside Hard Coking Coal mine in the Bowen Free Cashflow (68.2) (79.8)(1,299.0)(2,298.8)
Basin. The Leichardt seam, which is the primary mining target FCFPS (cents) (20.6) (20.8) (339.4) (600.6)
within the concept study is at a depth of about 50m at its PFCF (x) (39.5) (39.1) (2.4) (1.4)
shallowest and dips at a 1:10 gradient throughout much of
the tenement. Our forecasts factor in production of 50.1Mt DPS (cents) 0.0 0.0 0.0 0.0
of ROM coal production for 28.05Mt of coal sales based on a Yield (%) 0.0 0.0 0.0 0.0
55% yield. Annual production is expected to be 6Mtpa (ROM) Franking (%) 100.0 100.0 100.0 100.0
commencing in late 2014 with export through Hay Point or
Dalrymple Bay. Pre-production capex is estimated at A$450m.
Our NPV for the Project is A$321.7m.
Company Statistics & Performance
• PFS for Washpool coking coal due in the Sept Q. AQA has
secured 1.6Mtpa shipping capacity from WICET with exports Shares on issue (m) 322.3 3mth ADT ($m) 4.40
due to commence from the terminal in 2014. The development Market Cap. ($m) 2626.5 Debt est ($m) 0.0
schedule contemplates a construction commencement in mid- 52 week range $6.60 - $10.23 Cash est ($m) 233.3
2012 with production commencing in early 2013. The current
JORC resource is 185.5Mt with a reserve of 108.3Mt yielding
~36% coking coal. The company is planning for 7Mtpa ROM 15.00 3000
production with annual hard coking coal sales of 2.6Mtpa. Capex
for the project has been estimated at $396m with operating cash
costs of $106/t FOB. Current reserves provide Washpool with a 12.00
2500
15 year mine life. Our NPV for the project is $366m.
Share Price (A$)
• Asset sales. The Avontuur Manganese Project (74% AQA) 2000

Volume '000
recently saw an almost doubling of its resource at Avontuur 9.00

Manganese to 108.9Mt at 38.6% Mn. We value this project at
1500
A$500m and believe the company is aiming to sell it prior to
end of 2011. Additionally AQA has indicated that the Washpool 6.00
Coking Coal Project (valuation $366m) may be divested in 1000
2011.
• Belvedere remains in Limbo. AQA’s JV partner Vale has

taken the company to court in an effort to put aside the
3.00
500
deemed valuation of its 24.5% stake in Belvedere. We believe
AQA’s valuation is in the order of A$350-450m (in line with 0.00 0
industry multiples) while Vale’s valuation for the same is circa 12 Months
$92m the price at which AMCI sold its similar stake in the
project for in May 2010. AQA advises it is looking to resolve
the legal dispute and valuation issue by end 2011.
Aquila Resources Limited $8.15 Year End June 30

Isaac Plains (50% AQA, 50% Vale) 379.1 1.01 US$/A$ 0.89 0.99 1.05 1.00
Eagle Downs (50% AQA, 50% Vale) 500.9 1.34 Hard Coking Coal 151 249 303 211
Washpool Hard Coking Coal 366.1 0.98 Semi-soft Coking Coal 111 183 228 153
Talwood Coking Coal 321.7 0.86 PCI 111 195 232 157
Belvedere (24.5% AQA, 75.5% Vale) 400.0 1.07 Export Thermal Coal 77 106 123 98
West Pilbara Iron (API: AQA 50%, AMCI 50%) 687.0 1.84 Domestic Thermal Coal 45 46 48 49
Hardy Iron Ore Project 312.0 0.83 Hamersley Lump 140 225 225 227
Thabazimbi Iron Ore Project 208.7 0.56 Hamersley Fines 119 187 187 187
Avontuur Manganese Project 500.0 1.34 *All comm prices in US$/t
Exploration & Other Projects 110.0 0.29
Equity Investments 29.3 0.08 Production Summary 2010A 2011F 2012F 2013F
Corporate (40.1) (0.11)
Unpaid Capital 29.3 0.08 Attributable Saleable Coal Production
Forwards 0.0 0.00
Cash 233.3 0.62 Isaac Plains (kt) 1239 1021 1463 1463
Debt (0.0) (0.00) Cash costs (US$/t) 83.76 105.71 85.43 78.14
NPV 4037.3 10.79 Price Received (US$/t) 97.55 162.38 190.29 133.19
Price Target 4037.3 10.79
Eagle Downs (kt) 0 0 0 160
Valuation Summary of Assets Cash costs (US$/t) 0.00 0.00 0.00 99.04
Price Received (US$/t) 135.65 219.13 265.87 184.69
Isaac Plains (50% AQA, 50% Vale)
Washpool (kt) 0 0 0 648
Cash costs (US$/t) 0.00 0.00 0.00 119.54
Eagle Downs (50% AQA, 50% Vale)
Washpool Hard Coking Coal
Talwood Coking Coal Price Received (US$/t) 0.00 0.00 0.00 200.57
Belvedere (24.5% AQA, 75.5% Vale)
West Pilbara Iron (API: AQA 50%, AMCI 50%) West Pilbara Iron (kt) 0 0 0 500
Hardy Iron Ore Project Cash costs (US$/t) 0.00 0.00 0.00 31.54
Thabazimbi Iron Ore Project Price Received (US$/t)
Avontuur Manganese Project

Coal Production Summary
Sales Revenue 129.8 155.9 264.5 406.9
1,600 200.00
Other Income 12.8 13.8 61.5 71.2
Operating Costs 113.5 108.9 118.7 223.4
1,200 150.00 Exploration Exp. 60.2 84.7 61.1 62.3
(US$/t)
800 100.00 EBITDA (43.5) (35.6) 138.0 184.1

(kt)
Depn & Amort 5.1 5.3 7.6 28.2

400 50.00 EBIT (48.6) (40.9) 130.4 155.9
Interest 1.0 6.2 102.5 244.5
0 0.00 MRRT 0.0 0.0 0.0 19.5
Operating Profit (49.6) (47.1) 27.9 (88.6)
2010A
2011F
2012F
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
Tax expense (16.5) (8.6) 8.4 (32.4)

Isaac Plains (kt) Cash costs (US$/t) Price Received (US$/t)
Abnormals & Minorities 0.0 0.0 0.0 0.0
NPAT (33.1) (38.6) 19.5 (56.1)
Resources & Reserves (Mt) Normalised NPAT (35.2) (33.0) 19.5 (75.6)
Coal Reserves Mt Cash Flow (A$m) 2010A 2011F 2012F 2013F

Isaac Plains (SSCC, ThC) 50.4
Eagle Downs (HCC) 254.0 Adjusted Net Profit (33.1) (38.6) 19.5 (75.6)
Washpool (CC, 100% AQA) 108.2 + Interest/Tax/Expl Exp 44.7 82.4 172.0 293.9
Coal Resources - Interest/Tax/Expl Inc 67.0 90.0 241.1 347.0
Isaac Plains (SSCC, ThC) 128.5 + Depn/Amort 5.1 5.3 7.6 28.2
Eagle Downs (HCC) 959.0 +/- Other (Associates) 0.0 0.0 0.0 0.0
Belvedere (HCC, 24.5% AQA) 3900.0 Operating Cashflow (50.3) (40.9) (42.0) (100.6)
Washpool (CC, 100% AQA) 185.0 - Capex (+asset sales) 52.1 79.7 1257.0 2217.6
Talwood Coking Coal (100%) 246.5 - Working Capital Increase (34.2) (40.8) 0.0 0.0
Free Cashflow (68.2) (79.8)(1299.0)(2318.3)
Iron Ore Reserves %Fe - Dividends (ords & pref) 0.0 0.0 0.0 0.0
West Pilbara Iron Ore (50%) 445.4 57.1 + Equity raised 285.0 22.1 0.0 0.0
Iron Ore Resources + Debt drawdown (repaid) (7.0) (12.8) 3350.0 0.0
West Pilbara Iron Ore (50%) 927.0 57.0 Net Change in Cash 209.9 354.5 2651.0 (2318.3)
Meletese Iron Ore Project 47.6 62.9 Cash at End Period 283.4 637.9 3288.9 970.6
Net Cash/(Debt) 270.6 637.9 (61.1) (2379.4)
Directors
Name Position
Toni Poli Chairman & MD Cash/Bullion 281.2 637.9 3288.9 970.6
Charles Bass Non-Executive Director Total Assets 448.4 892.1 4888.5 4830.3
Derek Cowlan Non-Executive Director Total Debt 12.8 (6.2) 3343.8 3343.8
Gordon Galt Non-Executive Director Total Liabilities 43.3 503.5 4480.3 4497.8
Dai Zhihao Non-Executive Director Shareholders Funds 405.1 388.6 408.2 332.5
Substantial Shareholders Shares (m) % Ratios
Tony Poli 82.1 25.5 Net Debt/Equity (%) na na 15.0 715.5
Baosteel Group 48.3 15.0 Interest Cover (x) na na 1.3 0.6
Charles Bass 39.0 12.1 Return on Equity (%) na na 4.8 na
Merril Lynch Inv Mgmt 35.5 11.0
The Vanguard Group 18.2 5.6
WA Resources Pty Ltd (AMCI) 14.0 4.3
Seamans Capital Mgmt 10.0 3.1
Atlas Iron Limited AGO ($3.57)

Recommendation: BUY
Expanding Pilbara producer Analyst: Alex Passmore, Tim McCormack
OUR VIEW
Operational efficiencies in the March Q saw FOB cash operating costs down on last Q, falling within the company’s long
term target band of A$40-43/t. With increasing efficiency AGO is on target to export a record 1.5Mt this Q. A strong cash
position of A$293m at the end of the March Q was supported by increases in quarterly benchmark prices and a number of
favourably priced spot cargos. An agreement with Global Advanced Metals will allow capacity from the Wodgina operation to
be ramped up to 7Mtpa in the near term and bring overall capacity to 9Mtpa when combined with the Pardoo operation. The
Turner River Hub is in Definitive Feasibility Study phase with results expected at the end of FY2011, we see development
of this strategically positioned hub as a key catalyst for AGO meeting its longer term export targets. With the acquisition of
Giralia now complete, AGO’s resource base of Direct Shipping Ore (DSO) has been increased allowing it to exploit synergies
with existing infrastructure and port entitlements. AGO remains the lowest capex cost producer of iron ore in the Pilbara
and we rate the stock as BUY with a price target of $4.36/sh.

• Strong Balance Sheet. Cash generation continue to
improve with production ramp up. At the end of the March Year End June 30 2010A 2011F 2012F 2013F
Q AGO had $293m cash on hand including $53m in cash
acquired through the GIA takeover. With the June Q on Reported NPAT ($m) (40.8) 138.6 315.1 354.5
Recurrent NPAT ($m) (41.2) 145.7 315.1 379.8
track to export a record 1.5Mt and an increase in quarterly
Recurrent EPS (cents) (5.0) 17.4 37.6 45.3
benchmark prices we expect to see strong ongoing financial EPS Growth (%) na na 116.2 20.5
outcomes. Cash costs have continued to reduce in line with PER (x) na 20.5 9.5 7.9
AGO’s long term guidance to around $40-43/t.
EBITDA ($m) (24.4) 210.4 453.2 556.9
• Expanding capacity at Wodgina. AGO has signed an
agreement to increase capacity from the Wodgina operation
EV/EBITDA (x) (114.3) 12.4 5.4 4.2
Capex ($m) 31.8 47.1 34.1 92.3
by 75% to 7Mtpa. The agreement comes through negotiations Free Cashflow (92.0) 234.1 163.1 173.8
with Global Advanced Metals (GAM) whereby crushing and FCFPS (cents) (11.2) 27.9 19.5 20.7
screening infrastructure can be utilised in the short term in PFCF (x) (32.0) 12.8 18.4 17.2
return for AGO contributing $35m towards GAM’s exclusive
use alternate processing facility by Q1 2012. The agreement DPS (cents) 0.0 0.0 0.0 0.0
will take the company’s total capacity to 9Mtpa with the aim Yield (%) 0.0 0.0 0.0 0.0
to grow total production to 12Mtpa by December 2012. Franking (%) 0.0 0.0 0.0 0.0
• DFS on the Turner River Hub (TRH) due end of

FY2011. Development of a central processing facility near
the Wodgina operation will lift AGO’s production profile to Company Statistics & Performance
12Mtpa by 2012. The facility will combine ore from the Shares on issue (m) 823.8 3mth ADT ($m) 26.1
Wodgina, Adydos and Mt Webber mines to create a DSO Market Cap. ($m) 2941.0 Debt est ($m) 0.0
product that will be transported 95kms to the Utah Point 52 week range $1.78 - $4.04 Cash est ($m) 293.0
port facility via privately owned off-highway haulage.
The TRH provides AGO advantages through economies
of scale as well as providing blending options through
the production phase. Location of the TRH is strategically 5.00 25000
relevant to assets recently acquired through the Giralia
(GIR) takeover. Capex guidance is approximately $200m
for the development of the project. 4.00 20000
•
Share Price (A$)
Giralia Takeover complete. The off-market takeover of

Volume '000
GIR was completed recently following the issue of 273m

ordinary shares pursuant to the compulsory acquisition. 3.00 15000
With a market cap of $2.9bn AGO is a leading independent
mid-tier iron ore company combing a strong resource
position with strategic infrastructure and port position. 2.00 10000
Subsequent to the takeover AGO’s increased size and
scale will provide greater access to capital to support
project development and the vision of transforming AGO 1.00 5000
into a 22Mtpa producer by 2015.
• Solid management team. The management team lead

by David Flanagan has demonstrated through a number of 0.00 0
clever acquisitions that growth is a primary focus for the 12 Months
company. We believe the stable, well credentialed board
is pivotal to the company delivering on the forecast ramp
up to become a 12Mtpa producer by 2013.
Atlas Iron Limited $3.57 Year End June 30

Pardoo 150 0.18 A$:US$ 0.89 0.99 1.05 1.00

Wodgina 1,158 1.41 Iron Ore Fines (US$/t) 76.44 119.53 119.53 119.53
Abydos 322 0.39 Iron Ore Lump (US$/t) 89.72 143.82 143.82 145.22
Mt Webber 1,097 1.33
Exploration 540 0.66
Listed Investments 49 0.06 Production Summary 2010A 2011F 2012F 2013F
Forwards 0 0.00
Corporate (60) (0.07) Pardoo - Fines 1,259 1,741 1,800 1,800
Unpaid Capital 39 0.05 Turner River Hub:
Cash 293 0.36 Wodgina - Fines 2,827 4,600 5,200
Debt 0 0.00 Abydos 2,000 3,000
NPV 3,588 4.36 Mt Webber 2,000 3,000
Price Target (100% NPV) 3,588 4.36
Group Production (kt) 1,259 4,568 10,400 13,000
Sensitivities to Iron Ore Price -10% 0% +10% Group Sales (kt) 1,259 4,984 10,524 13,018
NPV 3.65 4.36 5.06 Cost Summary (A$/t):

Pardoo Cash Costs 56.48 59.64 58.00 59.17
Wodgina Cash Costs 0.00 43.18 46.35 47.43
Valuation Summary of Operating Assets Project C Cash Costs 0.00 0.00 58.98 60.12
Weighted Ave Cash Costs 56.48 48.93 51.77 53.34
Exploration Ave Price Received (FOB) 67.35 99.82 100.44 105.38
Mt Webber
16%
33%
Listed Investments
1% Sales Revenue 84.8 497.5 856.2 1,055.7
Abydos
Pardoo Other Income 7.0 12.0 17.9 0.0
10%
5% Operating Costs 74.4 237.4 372.0 449.0
Exploration Exp. 24.2 21.3 16.3 16.6
Wodgina Corporate/Admin 17.5 40.5 32.6 33.2
35% EBITDA (24.4) 210.4 453.2 556.9
Depn & Amort 16.9 14.2 3.1 14.4
Iron Ore Production Summary EBIT (41.3) 196.2 450.1 542.5
Interest 0.0 3.9 0.0 0.0
16,000 120 Abnormals 0.4 (7.1) 0.0 0.0
Operating Profit (40.8) 185.1 450.1 542.5
Tax expense 0.0 46.5 135.0 162.8
12,000 90 Minorities 0.0 0.0 0.0 0.0
NPAT (40.8) 138.6 315.1 379.8
(A$/t)
(kt)
8,000 60
Normalised NPAT (28.6) 138.6 315.1 379.8
4,000 30
Cash Flow (A$m) 2010A 2011F 2012F 2013F
0 0 Adjusted Net Profit (40.8) 138.6 315.1 379.8

2010A 2011F 2012F 2013F 2014F 2015F + Interest/Tax/Expl Exp 24.2 67.8 151.3 179.4
Ave Price Received (FOB) Weighted Ave Cash Costs - Interest/Tax/Expl Inc 70.5 69.2 77.2 86.3
Group Sales (kt) + Depn/Amort 16.9 14.2 3.1 14.4
- Deferred Waste 39.5 47.8 195.0 270.0
Reserves & Resources (attributable) Operating Cashflow (109.8) 103.5 197.3 217.2
- Capex (+asset sales) 31.8 47.1 34.1 92.3
Reserves Mt % Fe% Al+Si % Phos - Working Capital Increase (41.5) (169.5) 0.0 0.0
Pilbara 53,691 57.7 7.8 0.8 Free Cashflow (100.1) 225.9 163.1 125.0
Resources Mt % Fe% Al+Si % Phos + Equity raised 127.9 2.7 0.0 0.0
North Pilbara 444 56.4 9.2 0.1 + Debt drawdown (repaid) (14.3) (7.7) 0.0 0.0
Southeast Pilbara 158 56.7 10.2 0.1 Net Change in Cash 30.6 223.1 163.1 125.0
West Pilbara 38 53.6 12.3 0.0 Cash at End Period 154.9 378.0 541.1 666.1
Midwest 12 60.1 9.2 0.1 Net Cash/(Debt) 154.9 378.0 541.1 666.1
Directors Balance Sheet (A$m) 2010A 2011F 2012F 2013F

Name Position Cash/Bullion 154.9 378.0 541.1 666.1
Geoff Clifford Non Executive Chairman Total Assets 388.6 522.9 838.0 1217.7
David Flanagan Managing Director Total Debt 0.0 0.0 0.0 0.0
David Hannon Non Executive Director Total Liabilities 29.6 22.6 22.6 22.6
Tai Sook Yee Non Executive Director Shareholders Funds 359.0 500.3 815.3 1195.1
David Smith Non Executive Director
Ratios
Substantial Shareholders Shares (m) % Debt/Equity (%) na na na na
IMC Group 66.7 8.1 Interest Cover (x) na na na na
Blackrock 41.2 5.0 Return on Equity (%) na 27.7 38.6 31.8
Schroder 41.2 5.0
Bandanna Energy Limited BND ($2.09)

Recommendation: BUY
Transactions looming Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
There has been a steady amount of news flow over the last couple of months including the South Galilee Coal Project (SGCP)
pre-feasibility study, the completed Strategic Review Process and nonbinding indicative bids on any or all of Bandanna’s assets.
The SGCP pre-feasibility study highlighted that how the mine is bigger than we initially expected and it could support an average
production rate of 15Mtpa of raw coal. We believe the SGCP would have attracted some attention from potential suitors as there
have been a number of recent transactions in the Galilee Basin. Adding to the attractiveness is the fact that BND has 4Mtpa
WICET stage 1 allocation and is participating in further expansion. We value BND’s 50% of the SGCP at $645m, or $1.09/t for
in situ resources, which is marginally lower than our estimate of the recent and upcoming transactions in the Galilee of about
$1.50/t. We value the other assets, with 800Mt JORC, at over $400m implying that anyone looking at the SGCP may just look at
the company as a whole with a market cap of only $860m. It is an interesting time for BND and it remains attractive at current
price levels. We retain our BUY recommendation with a price target of $2.50/sh.

• Bigger than expected. We have always attributed
significant value to South Galilee Coal Project. In terms Year End June 30 2010A 2011F 2012F 2013F
of volumes, the PFS increased the total resource by 22% Reported NPAT ($m) (13.5) (5.5) (7.9) (11.3)
to 1,179Mt, increased the indicated resource by 244% to Recurrent NPAT ($m) (13.5) (5.5) (7.9) (11.3)
206.3Mt and provided a measured resource of 166.6Mt. Recurrent EPS (cents) (3.6) (1.3) (1.8) (2.6)
• The PFS also highlighted how the mine plan supports an
average production rate of 15Mtpa of raw coal. Production
PER (x) (58.4) (167.1) (116.1) (80.8)
is estimated to be ramped up in three stages starting EBITDA ($m) (3.8) (5.3) (7.3) (7.2)
at 5Mtpa in Q2 2015, 10Mtpa by Q1 2017 & 15Mtpa EV/EBITDA (x) (200.5) (159.9) (119.0) (144.0)
by Q1 2019. This is higher than our initial estimates of Capex ($m) 3.7 15.8 5.3 150.5
Free Cashflow (6.8) (36.2) (19.1) (167.8)
10Mtpa and we have increased our production and capital
FCFPS (cents) (1.8) (8.3) (4.4) (38.4)
expenditure assumptions. PFCF (x) (115.2) (25.2) (47.9) (5.4)
• Wet weather has limited exploration and the development

of BND’s other projects. BND has earmarked $7m to be spent
DPS (cents)
Yield (%)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
over the current quarter on expenditure and development Franking (%) 100.0 100.0 100.0 100.0
of the Arcturus, Dingo West & Springsure Creek projects.
• There is a very short term corporate catalyst with BND

in the middle of a bid process. An asset transaction or a
bid for the whole company could arise from the completed Shares on issue (m) 426.5 3mth ADT ($m) 2.00
Strategic Review Process. Non-binding indicative bids on Market Cap. ($m) 891.4 Debt est ($m) 0.0
anything from one asset to the company as a whole were 52 week range $0.51 - $2.25 Cash est ($m) 63.4
submitted to UBS on May 4. It was reported that several bids
have been received and these were expected to be from a
mix of domestic and international companies. At the time 3.00 4000
of writing BND is reviewing the non-binding indicative bids
with UBS, and the market is waiting for a shortlist of parties
to progress to a second stage of the transaction process. 2.50
3200
• At the end of the process BND will know the fair market
Share Price (A$)
2.00
value for some or all of their assets and no matter the
Volume '000
2400
outcome the company is in a strong cash position, with
$63m in the bank to progress their current portfolio of 1.50
assets. We believe that the larger than expected South
Galilee project and with a 4Mtpa WICET stage 1 allocation 1600
would have attracted considerable attention. Our value of 1.00
the larger project is not materially different from previous
assumptions as higher coal prices have been offset by the 0.50
800
higher capex and higher Australian Dollar.
• Recent transactions that can be used as a proxy in the

Galilee Basin include the Linc Energy, Adani deal and the
0.00 0
12 Months
Hancock Coal sale to GVK Power & Infrastructure. Our
rough estimate of the Alpha and Kevin’s Corner transaction
is approximately $1.50/t for total in situ resources.
Bandanna Energy Limited $2.09 Year End June 30

Dingo West 129.3 0.30 US$/A$ 1.05 1.00 0.96 0.93

Arcturus 195.0 0.45 Hard Coking Coal 303 211 176 155
Springsure Creek 48.6 0.11 Semi-soft Coking Coal 228 153 123 103
South Galilee (50%) 641.5 1.47 PCI 233 158 128 108
Resources 69.8 0.16 Export Thermal Coal 123 98 88 83
FX Hedging 0.0 0.00 Domestic Thermal Coal (A$/t) 49 50 51 53
Corporate (59.5) (0.14)
Unpaid Capital 4.2 0.01 Production Summary 2012F 2013F 2014F 2015F
Cash 63.4 0.15
Debt 0.0 0.00 Attributable Saleable Coal Production
NPV 1092.4 2.50
Price Target 2.50 Dingo West (kt) 600 750
FOB costs (US$/t) 65.83 64.42
Price Received (US$/t) 100.20 89.20
Arcturus (kt) 1,960 4,000
FOB costs (US$/t) 60.59 59.81
Price Received (US$/t) 73.67 70.54
Dingo West
Springsure Creek (kt)
Arcturus FOB costs (US$/t)
Price Received (US$/t)
Springsure Creek
South Galilee (50%) (kt) 744
Cash costs (US$/t) 55.34
South Galilee (50%)
Price Received (US$/t) 83.06
All Mines (Kt) 2,560 5,494

Cash costs (US$/t) 61.82 59.83
Coal Production Summary Price Received (US$/t) 79.89 74.78
12,000 90.00 Profit & Loss (A$m) 2012F 2013F 2014F 2015F
10,000 80.00
Sales Revenue 0.0 0.0 213.0 441.8
70.00 Other Income 2.8 3.1 3.4 4.5
8,000
(US$/t)
60.00
(kt)
6,000
50.00 Corporate/Admin 10.1 10.3 10.5 10.8
4,000 EBITDA (7.3) (7.2) 41.1 82.0
40.00
Depn & Amort 0.2 0.2 16.5 34.6
2,000 30.00 EBIT (7.5) (7.4) 24.6 47.5
Interest 0.4 3.9 17.3 23.6
0 20.00 Operating Profit (7.9) (11.3) 7.3 23.9
2012F
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
Tax expense 0.0 0.0 0.0 7.0

Abnormals + Minorities 0.0 0.0 0.0 0.0
All Mines (Kt) Cash costs (US$/t) Price Received (US$/t) NPAT (7.9) (11.3) 7.3 16.9
Resources 100% Basis (Mt) Normalised NPAT (7.9) (11.3) 5.1 16.7
Mine Meas+Ind. Inf. Total Cash Flow (A$m) 2012F 2013F 2014F 2015F
Dingo West
Resources 0.0 91.0 91 Adjusted Net Profit (7.9) (11.3) 7.3 16.9
Reserves - Prov - Prob - Total 0.0 0.0 0 + Interest/Tax/Expl Exp 0.4 3.9 17.3 30.5
Arcturus 102.6 103.7 206 - Interest/Tax/Expl Inc 6.4 10.1 23.6 37.0
+ Depn/Amort 0.2 0.2 16.5 34.6
Springsure Creek 72.2 252.0 324 +/- Other (Associates) 0.0 0.0 0.0 0.0
South Galilee 372.9 806.1 1179 Operating Cashflow (13.7) (17.3) 17.4 45.1
Arcadia 0.0 273.0 273 - Capex (+asset sales) 5.3 150.5 108.3 110.5
- Working Capital Increase 0.0 0.0 0.0 0.0
Total Resources 2074 Free Cashflow (19.1) (167.8) (90.9) (65.4)
Directors + Equity raised 10.0 0.0 0.0 0.0
+ Debt drawdown (repaid) 15.0 163.1 108.3 98.3
Name Position Net Change in Cash 5.9 (4.7) 17.4 32.9
Jeremy Barlow Chairman Cash at End Period 69.4 64.7 82.1 114.9
Ray Shaw Managing Director Net Cash/(Debt) 44.4 (123.4) (214.3) (279.7)
David Graham Director
Robert Johansen Director
Balance Sheet (A$m) 2012F 2013F 2014F 2015F
Park Soon Il Director
Cash 69.4 64.7 82.1 114.9
Significant Shareholders Shares (m) % Total Assets 132.5 284.2 468.4 657.3
DJ Mining 87.8 20.6 Total Debt 25.0 188.1 296.4 394.6
Resolve Geo 87.8 20.6 Total Liabilities 27.8 190.8 367.7 539.7
Samtam 37.5 8.8 Shareholders Funds 104.7 93.4 100.7 117.6
Norman Zillman 29.0 6.8
Bruce Wood 36.5 8.6 Ratios
J Barlow Consultants 19.6 4.6 Net Debt/Equity (%) na 132.1 212.8 237.8
Matthew Consulting 19.5 4.6 Interest Cover (x) na na 1.4 2.0
Locmaria 19.8 4.6 Return on Equity (%) na na 7.2 14.4
Brockman Resources Limited BRM ($4.10)

Recommendation: BUY
WNI could prove a distraction Analyst: Alex Passmore, Gary Watson
OUR VIEW
After viewing the Marillana deposit as a stranded asset there is now light at the end of the tunnel with negotiations for an
infrastructure deal with FMG progressing well. While FMG will likely strike a deal to blend Marillana’s higher grade, lower
phosphorous product with its Nyidinghu ore, the real prize will be access to BRM’s 18.5Mtpa port allocation at Port Hedland.
BRM’s share price fortunes however have been dictated by an unsolicited scrip-based take over offer Wah Nam International
Holdings (WNI) which has recently gone unconditional. WNI has 43% of BRM, the offer closes on 16 May (unless extended)
and we believe the new major shareholder could prove a major distraction to BRM’s development plans. A key risk for our
investment thesis on BRM. Our valuation for BRM is based on an NPV for the Marillana project which incorporates 40Mtpa of
beneficiable ore mined for 17Mtpa of product. We have used the DFS upper estimate for capital cost of A$1.9bn. Our estimates
assumed this is funded via a $2.18bn capital raise on a 60/40 debt to equity basis in the coming 12 months (dilution of NPV
for equity raise at an assumed $4.00/sh). We maintain our BUY recommendation with a price target of $6.31/sh. BRM remains
cheap on valuation although WNI actions present a risk to a mid 2013 start up for the project.

• Doing a deal with FMG. Currently the Marillana project is
situated close to existing rail infrastructure. The major hurdle for Year End June 30 2010A 2011F 2012F 2013F
the development of the operation is seeking an agreement with
FMG to provide critical haulage, port handling and ship loading Reported NPAT ($m) (8.4) (30.4) (61.9) (101.6)
facilities at commercial rates. BRM is currently negotiating with Recurrent NPAT ($m) (8.4) (30.4) (61.9) (101.6)
FMG to provide an end-to-end rail, port, shipping and marketing Recurrent EPS (cents) (5.7) (20.2) (15.9) (26.2)
solution for the stranded Marillana deposit. FMG recently EPS Growth (%) na na na na
announced a maiden resource at the nearby Nyidinghu deposit PER (x) (71.5) (20.3) (25.7) (15.7)
of 1.03bt @ 58% Fe and 0.15% P. Marillana’s higher grade
EBITDA ($m) (8.4) (30.4) (2.2) 17.8
Fe and lower P (beneficiated) ore provides the opportunity for
EV/EBITDA (x) (61.5) (15.1) (392.9) 90.1
blending with FMG’s Nyidinghu ore.
Capex ($m) 0.2 0.2 256.7 626.8
• Port allocation has value. BRM’s 18.5Mtpa port allocation
provides an additional incentive for a deal as FMG still requires
Free Cashflow
FCFPS (cents)
(18.5) (27.6) (318.6) (728.4)
(12.6) (18.4) (82.0) (187.5)
a further 35Mtpa of port allocation at Port Headland to meet PFCF (x) (32.5) (22.3) (5.0) (2.2)
their target of shipping 155Mtpa by 2013.
DPS (cents) 0.0 0.0 0.0 0.0
• Marillana granted environmental approval. The granting of
the final environmental approval for the Marillana project paves
Yield (%)
Franking (%)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
the way for commencement of construction pending a positive
BFS. The BFS is due for completion in the September Q, with
construction scheduled for commencement in early 2012.
• Project funding approaching. With circa $70m in the bank
we expect an interim capital raise of circa $100m in the next Shares on issue (m) 144.8 3mth ADT ($m) 2.85
few months to fund working capital and the BFS prior to Market Cap. ($m) 593.7 Debt est ($m) 0.0
raising the remainder of the estimated $1.9b in a debt and 52 week range $2.61 - $6.15 Cash est ($m) 69.9
equity raise in Q3/Q4 CY2011.
• Wah Nam (WNI) Offer. BRM is currently under a takeover

bid from Wah Nam International holdings limited (WNI). The 7.00 5000
offer was announced on 11 November 2010 and has been
extended several times. The latest extension is due expire 6.00
on 15 June 2011. The bid is an all scrip deal offering 30 WNI 4000
shares for 1 BRM share. The board is opposed to the bid and
5.00
Share Price (A$)
has advised shareholders to reject the offer.

Volume '000
• WNI gains control. WNI has declared its unconditional on the

9th of May and extended the offer period to 15 June 2011. WNI
4.00
3000
has a 51.99% interest in BRM (control) as at 16 May 2011. We

believe WNI is likely to push for its input into BRM’s development 3.00
2000
plans, which creates a risk to the timing of BRM’s scheduled
ramp up of the Marillana Project. We believe the incumbent 2.00
management team are the best positioned to oversee the
1000
construction and development of Marillana via a deal with FMG 1.00
and continue to watch developments closely.
• Catalysts. 1) A rail/port solution deal is struck with FMG

2) Positive BFS in Q3 CY2011 3) Successful project capital
0.00 0
raising. 12 Months
• Risks. WNI gain control from current 43% which creates

BRM management instability.
Brockman Resources Limited $4.10 Year End June 30

Marillana 1013 2.61 A$:US$ 0.99 1.05 1.00 0.96

Exploration 125 0.32
Corporate (75) (0.19) Iron Ore Lump (US$/t) 143.8 143.8 145.2 140.8
Unpaid Capital 1317 3.39 Iron Ore Fines (US$/t) 119.5 119.5 119.5 114.6
Cash (est) 70 0.18
Debt 0 0.00 Iron Ore Lump (A$/t) 145.1 136.6 145.2 146.7
Total @ 10% Discount Rate 2,450 6.31 Iron Ore Fines (A$/t) 120.6 113.6 119.5 119.4
Price Target 6.31

Production Summary 2011F 2012F 2013F 2014F
Sensitivities -10% 0% +10% DSO Production (mt)

Marillana Fines 0.0 0.0 0.0 0.4
Iron Ore Price 5.68 6.31 6.88 Marillana Lump 0.0 0.0 0.0 0.0
A$:US$ 6.95 6.31 5.74 Total 0.0 0.0 0.0 0.4
Cost Summary (A$/t)

Valuation Summary of Operating Assets Marillana Cash Cost (A$/t) na na na 41.83
Marillana Total Cost (A$/t) na na na 46.73
Iron Ore Price Received (A$/t) na na na 99.56
Marillana Profit & Loss (A$m) 2011F 2012F 2013F 2014F

89%
Exploration
Other Income 4.6 28.9 53.7 25.5
11% Operating Costs 0.5 0.0 0.0 17.6
Exploration Exp. 21.5 18.9 19.2 19.6
EBITDA (30.5) (2.2) 17.8 13.6
Depn & Amort 0.0 0.0 0.0 2.1
Production Summary EBIT (30.5) (2.2) 17.8 11.5
Interest 0.0 59.7 119.4 119.4
30.0 50.00 MRRT 0.0 0.0 0.0 0.0
Abnormals 0.0 0.0 0.0 0.0
25.0 Operating Profit (30.5) (61.9) (101.6) (107.8)
40.00
Tax expense 0.0 0.0 0.0 0.0
20.0 Minorities 0.0 0.0 0.0 0.0
30.00 NPAT (30.5) (61.9) (101.6) (107.8)
(A$/t)
(mt)
15.0
20.00 Normalised NPAT (30.4) (61.9) (101.6) (107.8)
10.0
10.00
5.0
Cash Flow (A$m) 2011F 2012F 2013F 2014F
0.0 0.00
2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F Adjusted Net Profit (30.4) (61.9) (101.6) (107.8)
Production (mt) Cash Costs (A$/t)
+ Depn/Amort 0.0 0.0 0.0 2.1
Reserves & Resources +/- Other 0.0 0.0 0.0 0.0
Operating Cashflow (32.0) (61.9) (101.6) (105.8)
Reserves Iron Ore Mt % Fe% Al+Si % LOI - Capex (+asset sales) 0.2 256.7 626.8 1120.1
Marillana 1,001 42.40 - Working Capital Increase (4.6) 0.0 0.0 0.0
CID 49 55.50 9.00 9.70 Free Cashflow (27.6) (318.6) (728.4)(1225.9)
Resources Iron Ore Mt % Fe% Al+Si % LOI + Equity raised 103.6 880.0 0.0 0.0
Marillana (DSO) 102 55.60 9.00 9.70 + Debt drawdown (repaid) 0.2 1300.1 0.0 0.0
Marillana (Beneficiation) 1,528 42.60 34.29 3.53 Net Change in Cash 75.9 1861.5 (728.4)(1225.9)
Total 1,629.9 62.15 9.00 3.50 Cash at End Period 159.7 2021.2 1292.8 67.0
Net Cash/(LT Debt) 159.5 720.9 (7.4) (1233.3)
Directors
Name Position
Barry Cusack Chairman Cash 159.7 2021.2 1292.8 67.0
Ross Norgard Deputy Chairman Total Assets 163.1 2281.3 2179.7 2071.9
Wayne Richards Managing Director Total Debt 4.2 1304.3 1304.3 1304.3
Colin Paterson Executive Director Total Liabilities 8.2 1308.3 1308.3 1308.3
Ross Ashton Non-Executive Director Shareholders Funds 154.9 973.0 871.4 763.6
David Nixon Non-Executive Director
Ratios
Substantial Shareholders Shares (m) % Net Debt/Equity (%) na na 0.9 161.5
Wah Nam 61.9 42.8 Interest Cover (x) nm (0.0) 0.1 0.1
Ross Norgard 13.5 9.3 Return on Equity (%) na na na na
Total 52.1
Cape Lambert Resources Limited CFE ($0.505)

Recommendation: BUY
Trading discount set to close Analyst: Alex Passmore
OUR VIEW
CFE’s strategy is to acquire and invest in undervalued and distressed mineral assets and companies and to add value to
those assets through a practical approach to management, exploration and evaluation to enable the assets to be monetised
at a multiple. As assets are monetised, CFE intends to follow a policy of distributing surplus cash to shareholders. Patersons’
sum of parts valuation estimate for CFE is $1.05/sh or $609m. However as with the majority of listed investment companies
(LICs) a trading discount for liquidity is expected. We have set our price target at 75% of our NAV in anticipation of this
discount. Large valuations in the group’s projects are for the Marampa Iron Project (unlisted $350m), the Sappes Gold
Project (unlisted $50m), Pinnacle Group Assets (unlisted $45.3m) and CFE’s residual stake in AKI (listed $42m). The coming
2 Qs should see the monetising of several of CFE’s assets with the expected sale of Leichardt Copper Project, Sappes Gold
Project and a listing (on AIM) of the Marampa Iron Ore project. These assets are well advanced, offer potential buyers
production opportunities accordingly we believe the sale process should progress to CFE’s timeline. CFE is trading well
below its some of the parts valuation and these sales are likely to close the discount. BUY PT $0.77/sh.

• Investments not available to the broader audience.
CFE invests at the project level, the equity level or via Year End June 30 2010A 2011F 2012F 2013F
debt. CFE is able to leverage off its in-house technical
strength and receive a greater return in many cases Reported NPAT ($m) 72.3 (40.5) 17.5 (9.3)
Recurrent NPAT ($m) 72.3 (38.3) 17.5 (9.3)
that are available in listed entities. Given the incubation
Recurrent EPS (cents) 11.4 (6.6) 3.0 (1.6)
period of the assets in which it invests CFE’s due diligence EPS Growth (%) na na na na
process is thorough. While CFE cannot necessarily exit its PER (x) 4.2 na 15.9 na
investments easily it achieves transitioning assets from
unlisted to liquid (i.e. listed). EBITDA ($m) 78.1 (0.1) 17.5 11.6
EV/EBITDA (x) 2.2 4,916.9 1.6 78.7
• Monetizing assets the key to the business model.
One of the keys to CFE’s model is its ability to bring
Capex ($m)
Free Cashflow
0.0
67.9
0.0 411.1 480.4
2.2 (416.6) (511.2)
relatively illiquid assets to the market in a form where they FCFPS (cents) 10.7 0.4 (71.8) (88.2)
may appeal to investors (i.e. after significant de-risking). PFCF (x) 4.5 125.2 (0.7) (0.5)
As evidenced by the recent African Iron Ltd (AKI) spin-
off the valuations of the subsidiary companies are still DPS (cents) 7.0 0.0 0.2 0.0
attractive and CFE is building a loyal following although Yield (%) 14.6 0.0 0.4 0.0
remains exposed to further upside in valuation via the Franking (%) 0.0 0.0 0.0 0.0
residual interest retained in the spun out entity.
• Playing the cycles. CFE’s strategy remains contingent on

playing the cycles effectively. The company successfully
sold the Cape Lambert Iron project to MCC for $400m
in May 2008, which subsequently funded dividends (late Shares on issue (m) 579.8 3mth ADT ($m) 70.03
2008) and the acquisition of CopperCo (CUO) in May 2009. Market Cap. ($m) 316.0 Debt est ($m) 0.0
Since this time CFE has acquired DMC in August 2010 and
spun off AKI (Mayoko iron ore assets) in January 2011.
• Upcoming assets sales: 0.80 25
– Sappes gold project – aiming for July 2011. The

Sappes Gold Project is located in north-eastern Greece. 20
Development plans centre on a shallow underground 0.60
gold mine on the high-grade Viper orebody (Mineral
Share Price (A$)
Volume '000
Resource ~1Mt at 21.4g/t Au) and a small open pit

15
on the near-surface St Demetrios orebody (Mineral
Resource ~0.8Mt at 3.4g/t Au). Development capital 0.40
of circa A$120m is required for a planned production
of 100koz pa over 5 years (in dore and flotation 10
concentrate) for a cash operating cost of A$430/oz
allowing for high margins at current gold prices. 0.20
5
– Marampa iron ore – Sept Q. Marampa is a
brownfields hematite iron ore project 90km north
of Freetown, Sierra Leone, West Africa. As per the
company’s March Q scoping study an open pit mining 0.00 0
and beneficiation operation producing 5Mtpa of high 12 Months
grade hematite concentrate can be built for a pre-
production capital cost of US$665m. CFE is aiming for
an IPO of this asset prior to the September Q.
Cape Lambert Resources Limited $0.505 Year End June 30

Marampa Iron Ore Project 350 0.60 A$:US$ 0.89 0.99 1.05 1.00
Listed Investments 56 0.10 Fe Lump (US$t) 140 225 225 227
Unlisted Investments 128 0.22 Fe Fines(US$t) 119 187 187 187
Exploration 0 0.00
Corporate (15) (0.03)
Unpaid Capital 4 0.01 Production Summary 2010A 2011F 2012F 2013F
Cash 73 0.13
Debt 0 0.00 Marampa Iron Ore Project
Total @ 8% Discount Rate 595.3 1.03 Iron Ore Production 0.0 0.0 0.0 210.0
Price Target (0.75x NAV) 446.5 0.77
Cash Costs (A$/t FOB) na na na 61.65
Total Costs (A$t) na na na 70.59
Valuation Summary of Operating Assets Realised Price (A$t) na na na 115.79
Listed Investments Profit & Loss (A$m) 2010A 2011F 2012F 2013F
13%
Other Income 171.2 14.4 25.7 8.1
Marampa Iron
Ore Project
64%
EBITDA 78.1 (0.1) 17.5 11.6
Unlisted Investments Depn & Amort 0.4 36.7 0.0 1.9
23% EBIT 77.7 (36.7) 17.5 9.7
Interest 1.1 0.0 0.0 19.0
Operating Profit 76.6 (36.8) 17.5 (9.3)
Marampa Production Summary Tax expense 0.9 0.0 0.0 0.0
Minorities 3.4 5.9 0.0 0.0
12,000 140.00 Abnormals and FX adjustments 0.0 2.2 0.0 0.0
120.00
NPAT 72.3 (40.5) 17.5 (9.3)
10,000
100.00 Normalised NPAT 72.3 (38.3) 17.5 (9.3)
8,000
80.00
(US$/t)
(kt)
6,000
60.00 Cash Flow (A$m) 2010A 2011F 2012F 2013F
4,000
40.00 Adjusted Net Profit 72.3 (38.3) 17.5 (9.3)
2,000 + Interest/Tax/Expl Exp 2.1 0.0 0.0 19.0
20.00
0 0.00 + Depn/Amort 0.4 36.7 0.0 1.9
2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F +/- Other 0.0 0.0 0.0 0.0
Realised Price (US$/lb) Cash Cost (US$/lb) Operating Cashflow 59.9 (29.8) (5.5) (30.8)
Iron Ore Production - Capex (+asset sales) 0.0 0.0 411.1 480.4
- Other investing cashflow 44.3 (40.6) 0.0 0.0
Reserves & Resources - Working Capital Increase (52.3) 8.7 0.0 0.0
Free Cashflow 67.9 2.2 (416.6) (511.2)
Reserves (Mt) Cu (%)Ag (g/t) Cu (kt) - Dividends (ords & pref) 0.0 43.8 0.6 0.6
+ Equity raised 8.7 268.1 0.0 0.0
Iron ore resources (Mt) Fe (%) + Debt drawdown (repaid) (14.9) 305.8 0.0 376.3
Marampa 197.0 28.5 Net Change in Cash 61.7 532.3 (417.2) (135.5)
Gold Resources Mt g/t Au Moz Net Cash/(LT Debt) 135.7 668.0 250.8 (637.2)
Sappes Gold Project 1.8 13.4 0.8
Copper Resources Mt % Cu kt Cu Balance Sheet (A$m) 2010A 2011F 2012F 2013F

Leichardt Copper 8.386 0.9 75.471
Cash/Bullion 135.7 668.0 250.8 115.4
Total Assets 451.4 909.5 926.4 1292.9
Directors Total Debt 0.0 0.0 0.0 751.3
Name Position Shareholders Funds 353.4 198.1 215.1 205.2
Tony Sage Executive Chairman
Brian Maher Non Executive Director Ratios
Timothy Turner Non Executive Director Net Debt/Equity (%) na na na 310.5
Ross Levin Non Executive Director Interest Cover (x) 67.7 (3447.0) na 0.5
Return on Equity (%) 20.4 na 8.1 na
Substantial Shareholders Shares (m) %
African Minerals Mimited 118.2 18.9
JP Morgan Nominees 41.0 6.6
HSBC Nominees 38.2 6.1
National Nominees 29.7 4.8
Tony Sage 28.8 4.6
Cerro Resources NL CJO ($0.28)

Recommendation: BUY
Watch for drilling results at Namiquipa Analyst: Gary Watson
OUR VIEW
CJO is one of the few companies listed on the ASX with exposure to the increasing silver price. The high margin Cerro
del Gallo gold mine (66% CJO) is expected to be in operation by the end of CY2012. The silver credits at Cerro del Gallo
provide a significant cash cost saving of almost US$200/oz bringing LOM cash cost to circa US$510/oz (using US$1000/oz
Au and US$17.50 Long term prices). Furthermore the solid margins gained at Cerro del Gallo will provide a funding source
for the development of the Namiquipa silver project. Namiquipa is our favoured project and believe the upcoming drilling
results at the historic Princessa and La Venturosa shaft mines will confirm extensions and parallel lodes of high grade
silver. We highly rate the management team and the board, who have accumulated a great deal of experience operating in
Mexico with Bolnisi Gold NL before its merger with Coeur D’Alene Mines in 2007. CJO is aggressively searching for further
precious metal projects in Mexico while it looks to divest its Australian assets. We upgrade CJO to a BUY rating (previously
Speculative BUY) with a price target of $0.47/sh.

• Preliminary assessment for CIL plant is positive.
The result of a preliminary assessment for Cerro del Gallo
Year End June 30 2011F 2012F 2013F 2014F
has indicated economic viability for the CIL plant, which Reported NPAT ($m) (1.7) (0.9) 39.8 57.9
will operate in conjunction with the heap leach, raising Recurrent NPAT ($m) (1.7) (0.9) 39.8 57.9
throughput to 5.5Mtpa from year 5 of the project. The Recurrent EPS (cents) (0.2) (0.1) 4.9 7.2
addition of the CIL plant will increase the mine life from EPS Growth (%) na na na 45.4
PER (x) (104.9) (225.8) 5.2 3.5
8 years (as a heap leach only operation) to 15 years.
EBITDA ($m) (1.7) (0.9) 44.8 64.3
• Low cash costs bolstered by significant silver
credits. Cash costs implied by the feasibility study shows
EV/EBITDA (x)
Capex ($m)
(93.4) (197.1)
0.0 26.4
3.7
30.4
1.6
0.0
Cerro del Gallo will be producing on the low end of the cost Free Cashflow (4.1) (29.0) 12.8 62.8
curve. Our estimates have the Stage 1 4.5Mtpa heap leach FCFPS (cents) (0.6) (3.6) 1.6 7.8
PFCF (x) (44.4) (7.1) 16.0 3.3
producing at cash costs of US$444/oz (US$635 excl. Ag
credits). We have estimated the cash costs for the Stage DPS (cents) 0.0 0.0 0.0 0.0
2 CIL plant at US$575/oz (US$687/oz excl. Ag credits). Yield (%) 0.0 0.0 0.0 0.0
Franking (%) 100.0 100.0 100.0 100.0
• Reserve announced and in-pit resources increased.
The results of the preliminary assessment of Cerro del
Gallo included a maiden mining reserve of 0.7Moz Au and Company Statistics & Performance
15.3Moz Ag for the heap leach stage of the mine. In-pit
gold resources increased by 12% to 1.66Moz and silver Shares on Issue (m) 718.3 3mth ADT ($m) 0.75
increased 16% to 35.37Moz. Market Cap. ($m) 2.0 Debt ($m) 0.0
52 Week Range $0.62 - $2.44 Cash ($m) 20.9
• One of the few silver plays on the ASX. The silver price
has appreciated significantly in recent months threatening
to break the US$50/oz mark. We reiterate the lack of 3.00 10000
investment avenues for exposure to silver on the ASX.
Through CJO we gain exposure to near term gold-silver
production at Cerro del Gallo, but more importantly we also 2.50
8000
gain leverage through our favoured project in Namiquipa.
Share Price (A$)
2.00
Volume '000
• Exploration commenced at Namiquipa. A 10,000m

diamond drill program has commenced to test strike
6000
and parallel Ag targets of the Princessa and Venturosa 1.50

shafts as well as wider area targets of the northern and 4000
southern extensions. Historical mining of the Princessa 1.00
and Venturosa shafts has averaged grades of 450g/t
Ag from 1948-1955 and 270g/t Ag from 1990-2002, 2000
accordingly we believe the drilling is likely to yield high 0.50
grade results.
0.00 0
• Catalysts. 1) Drilling results at Namiquipa 2) Acquisition
of further projects in Mexico 3) Corporate activity with 12 Months
respect to the Queensland projects.
Cerro Resources NL $0.28 Year End June 30

Cerro del Gallo 230.2 0.29 A$:US$ 0.99 1.05 1.00 0.96
Exploration (includes Namiquipa) 30.0 0.04 Gold (US$/oz) 1445 1494 1525 1575
Forwards 0.0 0.00
Cash 20.9 0.03 Target Price Sensitivity -10% 0% +10% % Chg
Debt 0.0 0.00
NPV (@ 8% discount rate) 315.7 0.39 FX (A$:US$) 0.47 0.47 0.47 1
Price Target (1.2x NPV) 0.47 Gold Price 0.38 0.47 0.56 20
Silver Price 0.45 0.47 0.49 4
NPV Sensitivity Operating costs 0.51 0.47 0.43 (8)
NPV (nom) @ 5% disc. 0.47 Production Summary 2011F 2012F 2013F 2014F
NPV (nom) @ 0% disc. 0.67
Production (koz)
Hedging koz 1-Year 3-years % Reserve Cerro del Gallo 0 0 33 44
Total 0 0 33 44
Committed Production 0 0 0 0
Cost Summary
Valuation Summary of Operating Assets Cash Costs (A$/oz) na na 129 148
Total Costs (A$/oz) na na 280 300
Profit & Loss (A$m) 2011F 2012F 2013F 2014F
Sales Revenue 0.0 0.0 66.4 91.2

Cerro del Gallo Other Income 0.4 1.2 1.0 3.1
88% Operating Costs 0.0 0.0 20.3 27.5
Exploration Corporate/Admin 1.7 1.8 1.9 1.9
(includes Namiquipa) EBITDA (1.7) (0.9) 44.8 64.3
12% Depn & Amort 0.0 0.0 5.0 6.4
EBIT (1.7) (0.9) 39.8 57.9
Interest 0.0 0.0 0.0 0.0
Gold Production Summary Tax expense 0.0 0.0 0.0 0.0
100 500 Abnormals
NPAT (1.7) (0.9) 39.8 57.9
75 400 Normalised NPAT (1.7) (0.9) 39.8 57.9

(A$/oz)
Cash Flow (A$m) 2011F 2012F 2013F 2014F

(koz)
50 300
25 200 - Interest/Tax/Expl Inc 2.8 2.0 2.1 2.1
+ Depn/Amort 0.0 0.0 5.0 6.4
+/- Other 0.0 0.0 0.0 0.0
0 100
2013F 2014F 2015F 2016F 2017F 2018F 2019F Operating Cashflow (4.1) (2.6) 43.1 62.7
Total Cash Costs (A$/oz) - Working Capital Increase 0.0 0.0 0.0 0.0
Free Cashflow (4.1) (29.0) 12.8 62.7
Reserves & Resources - Dividends (ords & pref) 0.0 0.0 0.0 0.0
+ Equity raised 20.5 35.0 0.0 0.0
Reserves Mt Au g/t Ag g/t Au koz Au koz (eq) + Debt drawdown (repaid) 0.0 0.0 0.0 0.0
Cerro del Gallo 32.2 0.7 14.8 712 1,087 Net Change in Cash 15.9 6.0 12.8 62.7
Total 32.2 0.7 14.8 712 1,087 Cash at End Period 20.2 26.1 38.9 101.6
Net Cash/(LT Debt) 20.2 26.1 38.9 101.6
Resources Mt Au g/t Ag g/t Au koz Au koz (eq)
Cerro del Gallo 77.2 0.7 14.2 1,663 2,528 Balance Sheet (A$m) 2011F 2012F 2013F 2014F
Total 77.2 0.7 14.2 1,663 2,528
Cash/Bullion 20.2 26.1 38.9 101.6
Total Assets 62.8 96.9 136.7 194.6
Norm Seckold Non-Executive Chairman
James Crombie Executive Vice-Chairman Ratios
Anthony McDonald Managing Director Net Debt/Equity (%) na na na na
Craig J McPherson CFO and Alt. Director Interest Cover (x) na na na na
Richard Keevers Non-Executive Director Return on Equity (%) na na 31.0 31.0
Robert Bell Non-Executive Director
John Cook Non-Executive Director
Nick Tintor Non-Executive Director
Substantial Shareholders Shares %

Norman Seckold 62.5 8.7
OCJ investments 32.1 4.5
Disclosure: Patersons acted as a lead manager to the placement of 89.3m CJO shares at $0.20/sh to raise A$17.9m in February
2011. It received fees for this service.
Chalice Gold Mines Limited CHN ($0.39)

Recommendation: SPECULATIVE BUY
Site Visit Confirms Our Positive View on Zara Analyst: Simon Tonkin
OUR VIEW
We recently visited CHN’s Zara Gold Project in Eritrea and we came away impressed with the near-mine and regional upside
potential which could ultimately expand the scope of the project. The site is located 160km northwest from Asmara (the
capital of Eritrea) amongst mountainous terrain. The next key event for CHN is an agreement with ENAMCO which will
outline the terms for its participation in the Zara Gold project. This agreement will pave the way for a mine development
licence and move the project towards production. Meanwhile, CHN has commenced an aggressive exploration campaign
whereby it is targeting several IP targets over the Konate-Koka corridor. Further success here could add mine life to the
already robust Koka project. In addition, drilling is expected to commence on the Mogoraib North Exploration Licence (10km
North of the Bisha mine) in the third Q of this year. Based on Koka’s reserves and grade we believe the stock remains
undervalued trading at $108/oz compared to the peer average of $375/oz. We are placing a SPEC BUY on CHN due to
negative investor sentiment towards risk in Northern Africa and until the agreement with ENAMCO is realised. Our price
target decreases to $0.72/sh based on applying a 0.8x discount to our NAV (from $0.91).

• Remains Cheap on an EV/Reserve Basis. CHN remains
attractive on an EV/reserve basis trading at $108/oz (90%) Year End June 30 2010A 2011F 2012F 2013F
compared to the peer average at $375/oz. We believe the higher
grade and lower cost Koka deposit is an attractive development Reported NPAT ($m) (3.8) (3.0) (3.2) (5.0)
proposition with exploration upside. The Koka deposit is located Recurrent NPAT ($m) (3.8) (3.0) (3.2) (5.0)
Recurrent EPS (cents) (1.8) (1.3) (0.9) (1.4)
in the Arabian-Nubian shield which hosts Centamin’s 14.5Moz
Sukari deposit, Nevsun’s Bisha Au and base metals mine and PER (x) (21.8) (29.4) (42.2) (27.0)
Equinox’s Jabal Sayid Cu deposit. The region is highly under-
explored attracting the attention of the likes of Newmont, EBITDA ($m) (3.8) (2.9) 2.6 0.8
AngloGold Ashanti and Barrick among others. EV/EBITDA (x) (19.7) (29.8) 58.0 262.3
Capex ($m) 0.9 14.6 92.3 49.7
• Next Key Step is Agreement with ENAMCO. CHN is
continuing negotiations with the government owned Eritrean
Free Cashflow (13.2) (17.3) (96.1) (55.4)
FCFPS (cents) (6.2) (7.8) (27.5) (15.9)
National Mining Corporation (“ENAMCO”) whereby ENAMCO PFCF (x) (6.2) (5.0) (1.4) (2.5)
can acquire a 30% paid participating interest, at fair value,
in the Zara Project in addition to a 10% carried interest. DPS (cents) 0.0 0.0 0.0 0.0
We understand discussions between CHN and ENAMCO are Yield (%) 0.0 0.0 0.0 0.0
continuing with the possibility of an agreement within the next Franking (%) 100.0 100.0 100.0 100.0
2 months. The conclusion of the agreement would be a major
catalyst for the stock and pave the way for CHN acquiring its
mine development permits.
• Outstanding Exploration Upside. While the focus for
CHN is the development of the Koka gold deposit there will Shares on issue (m) 211.5 3mth ADT ($m) 0.18
be strong newsflow from its exciting exploration program. Market Cap. ($m) 82.5 Debt est ($m) 5.0
A new program is underway and will target results from the 52 week range $0.39 - $0.75 Cash est ($m) 5.2
recently completed IP survey conducted over the Koka-Konate
corridor. At this stage, the most promising near-mine target
is Koka Deeps which lies under the proposed open pit for the 1.00 4000
project. Other targets: 1) between Koka and Konate 2) Zara
North 3) Hurum.
• Two Significant Licences Granted. CHN has been

granted two significant exploration licences which are highly
0.75 3000
Share Price (A$)
prospective for gold and Bisha-style mineralisation. The most

Volume '000
significant is the Mogoraib North EL which lies 10km north of

Nevsun’s (NSU-T) Bisha mine. The second granted tenement
0.50 2000
is Hurum which adjoins Zara South and straddles the same
major regional structure that hosts CHN’s 840koz Koka gold
deposit.
• M&A Potential. Given the recent heightened activity in the

junior gold space we believe CHN is a takeover target for
0.25 1000
aggressive mid-cap companies with aspirations of gaining a

foothold in Eritrea.
0.00 0
• Catalysts. 1) Ongoing Drill Results 2) H1/2011 – ENAMCO
Agreement/Mine Permits 3) Q2/2011 – Results of IP and VTEM 12 Months
Surveys 4) Q2/3 2011 – Financing 5) H2/2011 – Construction
6) H2/2012 – Pre-strip 7) 2H/2013 – Production.
Chalice Gold Mines Limited $0.39 Year End June 30

Koka Gold Project 140.3 0.40 A$:US$ 0.89 0.99 1.05 1.00
Koka Gold 30% Sale to ENAMCO 24.8 0.07 Silver (US$/lb) 17.28 29.77 42.63 42.53
Unpaid Capital 81.4 0.23 Gold (A$/oz) 1222 1368 1409 1507
Corporate (3.1) (0.01)
Cash (est.) 5.2 0.01
Debt (5.0) (0.01) FX (A$:US$) 0.80 0.72 0.66 (9)
NPV 316.5 0.91 Gold Price 0.65 0.72 0.82 13
(@ 8% discount rate) Gold Grade 0.65 0.72 0.82 13
Price Target (0.8x DCF) 0.72 Operating Costs 0.75 0.72 0.70 (4)
Recovery 0.65 0.72 0.82 13
NPV Sensitivity
NPV (nom) @ 0% disc. 1.54 Production (koz)
Koka Gold Project
Hedging koz % Reserve
Total
Committed Production 0 0
Cost Summary
Valuation Summary of Operating Assets Cash Costs (US$/oz) na na na na
Total Costs (US$/oz) na na na na
Price Received (US$/oz) na na na na

Koka Gold Project Exploration
65% 33% Sales Revenue 0.6 0.1 0.0 0.0
Other Income 0.3 0.3 3.6 1.8
EBITDA (3.8) (2.9) 2.6 0.8
Cash (est.) Depn & Amort 0.0 0.0 0.0 0.0
2% EBIT (3.8) (2.9) 2.6 0.8
Interest 0.0 0.1 5.8 5.8
Gold Production Summary Abnormals (pre-tax) 0 0 0 0
Operating Profit (3.8) (3.0) (3.2) (5.0)
Tax expense 0.0 0.0 0.0 0.0
150 1800 Abnormals (post-tax) 0.0 0.0 0.0 0.0
1500
NPAT (3.8) (3.0) (3.2) (5.0)
100 1200 Normalised NPAT (3.8) (3.0) (3.2) (5.0)

(US$/oz)
(koz)
900 Cash Flow (A$m) 2010A 2011F 2012F 2013F

50 600
Adjusted Net Profit (3.8) (3.0) (3.2) (5.0)
300 + Interest/Tax/Expl Exp 0.9 0.8 6.0 6.0
0 0 + Depn/Amort 0.0 0.0 0.0 0.0
2011F 2012F 2013F 2014F 2015F 2016F 2017F +/- Other 0.0 0.0 0.0 0.0
Total Cash Costs (US$/oz) Price Received (US$/oz) Operating Cashflow (12.0) (8.3) (3.9) (5.7)
- Working Capital Increase 0.4 (3.1) 0.0 0.0
Reserves & Resources Free Cashflow (13.2) (19.9) (96.2) (55.4)
Reserves Mt Au g/t Ag g/t Au koz + Equity raised 20.9 13.9 80.0 0.0
Koka Gold Project 4.6 5.1 760 + Debt drawdown (repaid) 0.0 5.0 70.0 0.0
Total 4.6 5.1 760 Net Change in Cash (1.9) (0.9) 53.8 (55.4)
Resources Mt Au g/t Ag g/t Au koz (eq) Net Cash/(LT Debt) 7.7 1.7 (14.4) (69.9)
Koka Gold Project 5.0 5.3 840
Total 5.0 5.3 0.0 840 Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Directors Cash/Bullion 7.7 6.7 60.6 5.1

Total Assets 19.1 38.2 184.9 179.9
Name Position Total Debt 0.0 5.0 75.0 75.0
Mr Tim Goyder Executive Chairman Total Liabilities 0.2 5.2 75.2 75.2
Dr Doug Jones Managing Director Shareholders Funds 18.9 32.9 109.7 104.7
Mr Mike Griffiths Executive Director
Mr Anthony Kiernan Non-Executive Director Ratios
Mr Stephen Quin Non-Executive Director Net Debt/Equity (%) na na 13.1 66.7
Interest Cover (x) na na 0.4 0.1
Substantial Shareholders % Return on Equity (%) na na na na
Franklin Resources 14.8
Tim Goyder 11.9
Lujeta Pty Ltd 6.8
Coalspur Mines Limited CPL ($1.70)

Recommendation: BUY
Strong Position Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
The fundamentals of Coalspur are as robust as ever, 920Mt of Measured and Indicated resources of coal, 3km from a rail line
with spare capacity going to a coal port with spare capacity. Coal production could be up to 8Mtpa of coal comparable to standard
Newcastle coals. Coalspur owns 100% of Vista and the Vista South projects and has yet to dilute its ownership or offtake because
it has been well funded at the equity level. This was reinforced by the successful completion of the first C$44.4m tranche of a
C$55.5m two tranche capital raising. The most recent Quarterly Report contained no reasons to deviate from these assumptions
and with the capital raising the company is in a strong position to complete future milestones such as the Bankable Feasibility
Study on Vista. The study is contracted to be completed by the end of 2011. In the meantime the company has received its
mining permit and process plant approval for sales up to 4.2Mtpa, which is a very significant milestone. Its cash level also puts
the company in a good position to negotiate with potential offtake or JV partners. We have reduced our valuation marginally
to $2.01/sh due to a stronger AUD and the stock has been heavily sold during the last month, oversold in our view. We have
upgraded our recommendation to a BUY with a price target of $2.00/sh.

• Mining permit and plant approvals granted. Coalspur has
achieved an important milestone with the granting of these Year End June 30 2010A 2011F 2012F 2013F
approvals and is extremely well placed to move quickly to
becoming a coal producer as soon as the BFS is complete. Reported NPAT ($m) (8.7) (12.0) (0.0) (4.6)
Recurrent NPAT ($m) (8.7) (12.0) (0.0) (4.6)
• Well funded. The company has completed the first tranche
of a C$55.5m two tranche capital raising. The completed
Recurrent EPS (cents)
EPS Growth (%)
(1.9)
na
(1.7)
na
(0.0)
na
(0.7)
na
tranche was a public offering of 24m shares at C$1.85 totalling PER (x) (90.0) (97.5)(31,646.1)(256.1)
C$44.4m through three Canadian brokers. The second
tranche will be C$11.1m placement to existing shareholder EBITDA ($m) (8.7) (12.0) 0.0 (0.4)
Highland Park by issue of 6m shares at the same price as EV/EBITDA (x) (87.8) (92.5)63,428.4 (2,963.8)
Capex ($m) 0.4 0.4 0.4 182.1
the first tranche.
Free Cashflow (11.1) (15.0) (8.5) (195.0)
• BFS due by end 2011. We think that the raising is positive
in terms of strengthening the balance sheet ahead of the Vista
FCFPS (cents)
PFCF (x)
(2.4) (2.2) (1.2) (28.3)
(70.3) (78.3) (137.9) (6.0)
Bankable Feasibility Study. The BFS was recently started and
is being conducted by Snowdens and is due for completion by DPS (cents) 0.0 0.0 0.0 0.0
Yield (%) 0.0 0.0 0.0 0.0
the end of 2011. There will be some expense related with the
Franking (%) 100.0 100.0 100.0 100.0
BFS, which will focus on the potential to increase the annual
production capacity beyond the 9Mtpa saleable outlined in the
PFS earlier this year, mine engineering, transport logistics, coal
quality, resource modelling, Capex, Opex, price forecasting, and Company Statistics & Performance
permitting.
• Development capital will be needed. The capital raising
also allows the company to be in a stronger position as it
Market Cap. ($m)
52 week range
886.1
$0.60 - $2.30
Debt est ($m)
Cash est ($m)
0.0
64.2
negotiates with potential offtake or JV partners over the
coming 12 months. Once the BFS is completed we expect
that CPL will likely need to raise a much larger amount to 3.00 9000
cover the capital cost of the first phase of the Vista project.
• More drill results expected. Further drilling has begun on

Vista to confirm coal quality, upgrade existing resource and 2.50 7500
investigate the structural potential of the Vista coal sequence
to support underground longwall mining. The Silkstone seam in
Share Price (A$)
2.00 6000
Vista may extend over a 16km strike length and interpretation of
Volume '000
geological data indicates this seam has surface mining potential

and it will be suitable for export. The upcoming drill results from 1.50 4500
Vista and Vista South expected during the June Q could be an
additional catalyst in the coming 6 months.
1.00 3000
• Vista South shaping up. The Vista South Coal Project has
completed drilling and, though geologically less attractive
than Vista, the results confirmed significant coal intercepts 0.50 1500
outside the existing resource model. The McPherson Seam
was intersected and was up to 10m thick and cumulative
thickness was 23m in certain areas. Results confirm potential 0.00 0
to consolidate the two exploration target areas within Vista 12 Months
South into a continuous 11km strike length zone and expand
the coal resource. Further resource modeling is expected
during the June 2011 Q.
Coalspur Mines Limited $1.70 Year End June 30

Vista 951.1 1.38 US$/A$ 0.9912 1.0525 1.0000 0.9600

Vista South 300.0 0.43 Hard Coking Coal 248.75 302.50 211.25 176.25
Coal Resources 50.0 0.07 Semi-soft Coking Coal 182.50 227.50 152.50 122.50
FX Hedging 0.0 0.00 PCI 195.00 232.50 157.50 127.50
Corporate (17.8) (0.03) Export Thermal Coal 106.00 122.50 97.50 87.50
Unpaid Capital 38.1 0.06 Domestic Thermal Coal (A$/t) 45.39 48.72 49.87 50.88
Cash 64.2 0.09
Debt 0.0 0.00
NPV 1385.5 2.01 Production Summary 2011F 2012F 2013F 2014F
Price Target 2.00
Attributable Saleable Coal Production
Vista (kt) 1,350
FOB costs (US$/t) 58.08
Vista South (kt)

Vista FOB costs (US$/t)
Price Received (US$/t)
Vista South All Mines (Kt) 1,350
Cash costs (US$/t) 58.08
Profit & Loss (A$m) 2011F 2012F 2013F 2014F

Sales Revenue 0.0 0.0 0.0 115.8
8,000 100.00 Other Income 1.0 3.1 2.7 2.9
7,000 90.00 Operating Costs 0.0 0.0 0.0 81.7
6,000
80.00 Corporate/Admin 3.0 3.0 3.1 3.2
5,000 EBITDA (12.0) 0.0 (0.4) 33.9
(US$/t)
70.00
Depn & Amort 0.0 0.0 0.0 20.0
(kt)
4,000
60.00 EBIT (12.0) (0.0) (0.5) 13.9
3,000
Interest 0.0 0.0 4.1 20.1
50.00
2,000 Operating Profit (12.0) (0.0) (4.6) (6.2)
1,000 40.00 Tax expense 0.0 0.0 0.0 0.0
Abnormals + Minorities 0.0 0.0 0.0 0.0
0 30.00 NPAT (12.0) (0.0) (4.6) (6.2)
2012F
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
Normalised NPAT (12.0) (0.0) (4.6) (6.2)

All Mines (Kt) Cash Costs (US$/t) Price Received (US$/t)
Resources 100% Basis (Mt) (All Thermal) Cash Flow (A$m) 2011F 2012F 2013F 2014F
Mine Meas. Indi. Total Adjusted Net Profit (12.0) (0.0) (4.6) (6.2)
Vista - Interest/Tax/Expl Inc 11.6 8.1 12.4 28.6
Resources - Meas - Indi - Total 588.9 331.6 920.5 + Depn/Amort 0.0 0.0 0.0 20.0
Reserves - Prov - Prob - Total 0.0 0.0 0.0 +/- Other (Associates) 0.0 0.0 0.0 0.0
Operating Cashflow (13.6) (8.1) (12.8) 5.4
Vista South - Capex (+asset sales) 83.9 0.4 182.1 237.6
Resources - Meas - Indi - Total 51.5 41.9 93.4 - Working Capital Increase 1.0 0.0 0.0 0.0
Reserves - Prov - Prob - Total 0.0 0.0 0.0 Free Cashflow (98.5) (8.5) (195.0) (232.2)
Total Measured & Indicated Resources 1013.9 + Equity raised 141.5 0.0 0.0 0.0
+ Debt drawdown (repaid) 0.0 1.0 197.1 237.6
Directors Net Change in Cash 43.0 (7.5) 2.2 5.4
Name Position Net Cash/(Debt) 64.2 55.7 (139.2) (371.4)
Ian Middlemas Non-Executive Chairman
Eugene Wusaty Managing Director & CEO
Mark Pearce Non-Exec Director & Company Secretary Balance Sheet (A$m) 2011F 2012F 2013F 2014F
Colin Steyn Non-Exec Director
Denis Turcotte Non-Exec Director Cash 64.2 56.7 58.9 64.3
Mark Pearce Non-Exec Director Total Assets 164.7 165.5 357.8 626.9
Total Debt 0.0 1.0 198.1 435.7
Significant Shareholders Shares (m) % Total Liabilities 0.5 1.4 198.3 473.6
Colin Steyn 106.8 20.5 Shareholders Funds 164.1 164.1 159.5 153.3
Gavin Argyle 46.3 8.9
Deans Knight Capital 31.9 6.1 Ratios
Anastosios Arima 19.2 3.7 Net Debt/Equity (%) na na 87.3 242.3
Arredo Pty Ltd 9.3 1.8 Interest Cover (x) na na na 0.7
Ian Middlemas 9.3 1.8 Return on Equity (%) na na na na
Eugene Wusaty 2.6 0.5
Disclosure: Patersons acted as lead manager to the placement that raised $8m at 0.32/sh for Coalspur Mines Limited in
November 2009. It received a fee for this service.
Cockatoo Coal Limited COK ($0.48)

Recommendation: BUY
Repairing the Nest Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
The widely reported wet season in Queensland has effectively robbed Cockatoo of half a year of sales and imposed a
significant restoration bill. This will mean that it is unlikely Cockatoo will report a profitable financial year for FY11 and the
cash position was looking in a weak position. Despite these short term disruptions Cockatoo remains one of our preferred
mid-cap coal stocks. The management has shown foresight and acted decisively by securing a short term financing package
that will be sufficient to carry the company through these extraordinary circumstances while minimising initial cash outlay
and potential dilution. It looks as though the market has priced the adverse developments but not the full potential and as
such the company continues to look cheap on an EV/t comparison for a producer. It has a very strong production growth
profile over the coming 4 years. The company has been allocated 3Mtpa of WICET stage 1 and it is actively participating
in further expansion of the project. Cockatoo remains on track to be a major producer. Accordingly we are retaining our
BUY recommendation with a price target of $0.75/sh.

• Not a tonne of ROM coal was produced during the March Q.
However, once access to the site was gained 19.5Kt of PCI
was processed and sold from remaining ROM stocks. With Reported NPAT ($m) 3.5 (27.8) 11.0 4.5
the return to full capacity not likely until late in the June Q, Recurrent NPAT ($m) 3.5 (22.9) 11.0 4.5
we expect that full year production will total only 215kt. Recurrent EPS (cents) 0.6 (2.2) 1.1 0.4
EPS Growth (%) na na na (58.7)
• Moving overburden. 409kt of overburden above the waterline,
which is falling as dewatering continues, was able to be removed.
PER (x)
PEG
81.3 (20.8)
na na
43.5
na
105.4
na
Much of this material was utilised in levee bank construction.
Overburden was also removed from the area adjacent to the EBITDA ($m) 4.3 (22.4) 14.2 13.8
north east wall and production of raw coal from this area EV/EBITDA (x) 59.7 (20.9) 33.1 40.0
will begin this quarter. We do not believe that the main pit Capex ($m) 3.2 9.1 2.8 78.4
at Baralaba will be fully restored when there is cheaper coal Free Cashflow (4.0) (36.5) (0.7) (82.5)
accessible to the north but it is cost effective for some areas to FCFPS (cents) (0.6) (3.5) (0.1) (8.0)
be salvaged. PFCF (x) (72.1) (13.1) (662.3) (5.8)
DPS (cents) 0.0 0.0 0.0 0.0

• Momentarily in the red. The reduced production and costs
incurred to restore the main pit at Baralaba and other recovery Yield (%) 0.0 0.0 0.0 0.0
costs after the flood such as levee bank construction will mean Franking (%) 100.0 100.0 100.0 100.0
that it is unlikely that Cockatoo will report a profitable financial
year for FY11 – we expect a loss of $28m. This is an extraordinary
event, and these issues will be behind the company as we move Company Statistics & Performance
into the new financial year. We believe there remains significant
value to be unlocked as the company returns to full capacity Shares on issue (m) 1016.1 3mth ADT ($m) 2.36
and resumes drilling activities on their Bowen and Surat basin Market Cap. ($m) 497.9 Debt est ($m) 1.4
tenements.
• Cash has fallen. $9m was not going to be enough though

earnings from sales in the coming quarters and the potential 0.70 7200
purchase by Mitsui of a share in COK’s Surat assets means the
tight cash balance was going to be a short term issue. 0.60 6000
• $50m bank guarantee from Macquarie. This subsequent
facility is viewed as a positive resolution to the decline in the 0.50
Share Price (A$)
company’s cash position. Part of facility fee will be paid through 4800
Volume '000
20.83m options with a strike price of 64c and an expiry at the

0.40
same date as the maturity date (31-Dec-13). Any proceeds
from the exercise of the options will go towards repayment of 3600
the debt. We estimate the cost of the options is about $2.5m, 0.30
which equates to a fee of 5% or roughly the same as an equity 2400
raising but with only a 2% dilution to shareholders as opposed to 0.20
10% if new shares had been issued. The options exercise price
is 30% out-of-the-money and does represent a hurdle before 1200
0.10
they become profitable.
• Infrastructure. Discussions continue to ensure adequate

port and rail requirements to support the development of the
0.00 0
12 Months
projects in both QLD and NSW and with the current sale process
of Bandanna Energy’s assets there will emerge a fair market
proxy for assets with attached port allocations.
Cockatoo Coal Limited $0.48 Year End June 30

Valuation A$m A$/sh Commodity Assump. 2010A 2011F 2012F 2013F
Baralaba/Wonbindi Project 276.1 0.27 US$/A$ 0.8939 0.9912 1.0525 1.0000

Collingwood/Taroom 218.5 0.21 Hard Coking Coal (US$/t) 151.00 248.75 302.50 211.25
Woori Project 151.3 0.15 Semi-soft Coking Coal (US$/t)111.25 182.50 227.50 152.50
Hume Project 27.6 0.03 PCI Coal (US$/t) 202.40 232.50 232.50 157.50
Other Surat Projects 99.3 0.10 Thermal Coal (US$/t) 110.00 122.92 122.50 97.50
Cougar Energy Shares 0.4 0.00 Domestic Thermal Coal 44.85 45.39 48.72 49.87
Corporate (20.0) (0.02)
Unpaid Capital 1.0 0.00 Production Summary 2010A 2011F 2012F 2013F
Ambre+ATEC Investments 5.5 0.01
Cash 10.6 0.01 Attributable Saleable Coal Production
Debt (1.4) (0.00) Baralaba/Wonbindi (kt) 353 177 326 450
NPV 768.8 0.74 FOB costs (US$/t) 128.71 267.43 129.49 96.98
Price Target 0.75 Price Received (US$/t) 152.54 176.71 182.58 130.45
Valuation Summary of Coal Assets Taroom/Collingwood (kt) 0 0 0 0

FOB costs (US$/t) 0.00 0.00 93.85 81.13
Baralaba/Wonbindi Project
Collingwood/Taroom
Woori (kt) 0 0 0 0
FOB costs (US$/t) 0.00 0.00 60.36 56.16
Woori Project Price Received (US$/t) 0.00 0.00 122.32 97.49
Hume Project
Surat (kt) 0 0 0 0
Other Surat Projects FOB costs (US$/t) 0.0 0.0 0.0 0.0
Coal Production Summary All Mines (kt) 353 177 326 450
12,000 320 FOB costs (US$/t) 128.7 267.4 129.5 97.0
10,000 270
8,000 220 Profit & Loss (A$m) 2010A 2011F 2012F 2013F
(US$/t)
6,000 170 Sales Revenue 62.4 33.3 56.6 58.7

(kt)
Other Income 1.5 3.7 1.8 2.9

4,000 120
2,000 70 Exploration Exp. 0.0 0.0 0.0 0.0
0 20 EBITDA 4.3 (22.4) 14.2 13.8
2010A
2011F
2012F
2013F
2014F
2015F
2016F
2017F
2018F
Depn & Amort 0.1 0.5 1.3 1.8

EBIT 4.2 (22.9) 12.9 12.0
All Mines (kt) FOB costs (US$/t) Price Received (US$/t) Interest 0.7 0.1 1.9 5.2
Operating Profit 3.5 (22.9) 11.0 6.8
Resources & Reserves (Mt) Tax expense 0.0 0.0 0.0 2.3
Abnormals & Minorities 0.0 (4.9) 0.0 0.0
Wonbindi (PCI/Thermal) Total NPAT 3.5 (27.8) 11.0 4.5
Resources - Meas+Ind. - Inf. - Tot. 44.7 19.4 64.1 Normalised NPAT 2.5 (16.1) 7.7 4.8
Reserves - Prov -Prob - Tot 0.0 25.8 25.8
Baralaba (PCI/Thermal)
Cash Flow (A$m) 2010A 2011F 2012F 2013F
Resources 17.6 76.8 94.4
Reserves 0.0 7.7 7.7 Adjusted Net Profit 3.5 (27.8) 11.0 4.5
Woori (Thermal) + Interest/Tax/Expl Exp 0.7 0.0 1.9 7.5
Resources 84.3 0.0 84.3 - Interest/Tax/Expl Inc 6.7 10.0 12.1 17.9
Reserves 0.0 40.6 40.6 + Depn/Amort 0.1 0.5 1.3 1.8
+/- Other (Associates) 7.3 10.0 0.0 0.0
Surat Projects (Thermal Resources) 209.1 407.0 616.1 Operating Cashflow 5.0 (27.4) 2.1 (4.1)
Kingaroy (Thermal Resources) 163.8 115.0 278.8 - Capex (+asset sales) 12.9 131.1 2.8 78.4
Hume (Coking & Thermal) 34.5 0.0 34.5 - Working Capital Increase 5.3 0.0 0.0 0.0
Group Total 554.0 618.2 1172.2 Free Cashflow (13.2) (158.5) (0.7) (82.5)
+ Debt drawdown (repaid) (7.5) (8.8) 57.8 58.4
Norman Seckold Executive Chairman Net Change in Cash 22.1 (21.6) 57.1 (24.1)
Mark Lochtenberg Managing Director Cash at End Period 32.2 10.6 67.7 43.5
Peter Nightingale CFO and Company Secretary Net Cash/(Debt) 27.2 9.2 8.5 (74.0)
SM Woo Non-Exec Independent Director
Paul Chappell Non-Exec Independent Director
Gillis Broinowski Non-Exec Independent Director
Lindsay Flint, Robert Yeates Non-Exec Independent Director Cash 32.2 10.6 67.7 43.5
Hak Hee Lee, Scott Thompson Non-Executive Director Total Assets 136.0 262.1 327.5 390.7
Joo-Ok chang Non-Executive Director Total Debt 5.0 1.4 59.2 117.5
Posco Aust 134.7 13.3
SK Australia Pty Ltd 55.4 5.5 Ratios
Kepco/Kewepo 49.9 4.9 Net Debt/Equity (%) na na na 29.0
UBS 48.7 4.8 Interest Cover (x) 5.8 (454.6) 6.7 2.3
Harum Energy Aust. 41.7 4.1 Return on Equity (%) 3.1 na 4.4 1.8
Kores 41.4 4.1
Disclosure: Patersons acted as joint lead manager to a placement for COK in September 2009 that raised a maximum of $35m in
two tranches, the first tranche ($17.6m) at $0.33/sh and the second tranche (up to $17.4m) at $0.36/sh. It also acted as co-lead
manager for an entitlement and placement at prices between $0.40 and $0.51/sh that raised $153.3m. Patersons received fees for
these services.
Dragon Mining Limited DRA ($1.28)

Recommendation: BUY
Year of the Dragon Analyst: Gary Watson
OUR VIEW
Despite DRA’s status as a gold producer, it’s share price has historically lagged its peers due to the lack of reserves at
its Scandinavian gold projects. We see a turning point for DRA, where its focus on near mine and regional exploration
should expand its global resource well above the current 1.1Moz, and grow the reserve base (currently at 3 years) out
beyond 5 years. The most exciting exploration upside exists in Finland at the Kuusamo project with a 383koz resource
and several high grade intersections (including 50.8m @ 75.9g/t) indicating a large upside potential. The Svartliden mine
will simultaneously undergo a cutback and commence development of a decline in Q3 FY2011 to maintain gold production
while transitioning from open pit to underground mining. The Vammala production centre is ramping up with Jokisivu due
to begin full production in Q3 CY2011. We expect DRA to produce 60koz for FY2011 at group cash cost of ~US$850/oz
(includes Svartliden stripping) moving back to ~US$750/oz in FY2012. DRA is currently trading at 3.0x FY2011 EBITDA
and 1.9x FY2012 EBITDA and with $33m in the bank DRA looks cheap. Price target is$2.18/sh. BUY

• Cutback at Svartliden provides breathing room
for underground development. A successful drilling
Year End December 31 2010A 2011F 2012F 2013F
campaign in late CY2010 extended the Svartliden resource Reported NPAT ($m) 24.7 21.6 35.4 36.4
to allow cutbacks on the east side of the pit extending Recurrent NPAT ($m) 26.4 21.6 35.4 36.4
production into 2012. The additional mill feed provided Recurrent EPS (cents) 35.5 29.1 47.6 48.9
by the cutback and the low grade stockpiles will ensure EPS Growth (%) 1,842.5 (18.1) 63.9 2.6
an uninterrupted transition from open pit to underground PER (x) 3.6 4.4 2.7 2.6
mining with first U/G ore due by Q1 CY2012. Our EBITDA ($m) 39.7 31.3 49.8 66.3
production estimate at Svartliden for CY2011 is 32koz @ EV/EBITDA (x) 1.8 2.0 0.9 0.0
cash cost ~$US880/oz. Cash costs will be unusually high Capex ($m) 5.5 22.9 26.9 6.7
for CY2011 as the cutback stripping is expensed rather Free Cashflow 23.5 10.4 18.4 42.5
than capitalized, however we see cost returning to ~$680/ FCFPS (cents) 31.5 14.0 24.8 57.1
PFCF (x) 4.1 9.2 5.2 2.2
oz in FY2012.
DPS (cents) 0.0 0.0 0.0 0.0
• Jokisivu underground begins production in 3Q.
The Jokisivu mine produced its first development ore
Yield (%)
Franking (%)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
in April and first production ore is scheduled for 3Q
CY2011. Jokisivu currently has a mine life of 5 years and
is expected to produce 15kozpa LOM. Jokisivu feeds the Company Statistics & Performance
Vammala production centre which is estimated to produce
30koz for CY2011 at cash cost of $750/oz. Shares on Issue (m) 74.4 3mth ADT ($m) 0.24
Market Cap. ($m) 95.2 Debt ($m) 0.0
• Exploration at Kuusamo continues to hit high grade
intersections. Highlights of the recent drilling at the
52 Week Range $0.75 - $1.90 Cash ($m) 28.2
Juomasuo deposit (Kuusamo project) include 34.9m

@ 9.3g/t and 14.5m @ 4.8g/t. Results of the re-assay 200 3000
program produced higher than historic results including
one hole returning 50.8m @ 75.9g/t. Circa $4m has been 175 2500
budgeted for exploration drilling throughout CY2011
at Kuusamo. The Juomasuo deposit is the largest of 5
Share Price (A$)
deposits identified in the Kuusamo project area and has 150 2000
Volume '000
a current resource of 259koz Au and 2,100t Co.

125 1500
• Svartliden resource update in May. Several drilling
programmes have been conducted at Svartliden to test the
depth extensions of the ore body to increase the planned 100 1000
underground resource. Multiple high grade intersections
were recorded outside of the current resource including
75 500
4m @ 12.8g/t and 2m @ 32g/t. A resource update is for
the Svartliden project is due in May. The current resource
stands at 158koz (including reserves of 103koz). 50 0
12 Months
• Catalysts. 1) Svartliden resource update 2) Continued
exploration success at Kuusamo.
Dragon Mining Limited $1.28 Year End December 31

Svartliden Gold 44 0.60 A$:US$ 0.93 1.06 1.03 0.98

Vammala 75 1.01 Gold Price (US$/oz) 1227 1445 1494 1525
Forwards (1) (0.01) Gold Price (A$/oz) 1321 1369 1454 1556
Exploration 20 0.27
Unpaid Capital 0 0.00 Production Summary 2010A 2011F 2012F 2013F
Cash 28 0.38
Equity Investment 1 0.01 Production (koz)
Debt 0 0.00 Svartliden Gold 40 32 34 34
Price Target 162 2.18 Vammala 31 29 38 56
(NAV) Kaapelinkulma 0 0 0 0
Total Production 72 60 72 90
Valuation Summary of Operating Assets Cost Summary

Weighted Ave Cash Costs (A$/oz) 663 850 758 771
Weighted Ave Total Costs (A$/oz) 823 1010 918 931
Realised price (A$/oz) 1321 1370 1454 1556
Vammala
63%
Sales Revenue 92.0 86.5 106.6 136.6

Other Income 0.7 1.5 1.9 3.4
Svartliden Gold Operating Costs 47.5 51.1 54.2 69.0
37%
EBITDA 39.7 31.3 49.8 66.3
Depn & Amort 9.4 9.7 11.4 14.3
Gold Production Summary EBIT 30.3 21.6 38.4 52.0
Interest 1.1 0.0 0.0 0.0
120 1800 Operating Profit 29.2 21.6 38.4 52.0
Tax expense 2.8 0.0 2.9 15.6
1600
100 Abnormal Losses / Minorities 1.7 0.0 0.0 0.0
1400
NPAT 24.7 21.6 35.4 36.4
80 1200
(A$/oz)
(koz)
1000 Normalised NPAT 25.9 21.6 35.4 36.4

60
800
40 600
400 Cash Flow (A$m) 2010A 2011F 2012F 2013F
20
200
Adjusted Net Profit 24.7 21.6 35.4 36.4
0 0 + Interest/Tax/Expl Exp 4.1 1.5 3.4 16.1
2010A 2011F 2012F 2013F 2014F
Realised price (A$/oz) Weighted Ave Cash Costs (A$/oz) + Depn/Amort 9.4 9.7 11.4 14.3
Total Production +/- Other 0.0 0.0 0.0 0.0
Reserves & Resources - Capex (+asset sales) 5.5 22.9 26.9 6.7
Resources Mt Au g/t Au koz - Other Investing 0.0 0.0 0.0 0.0
Svartliden 1.3 3.7 158 Free Cashflow 21.8 10.4 18.4 42.5
Vammala 3.2 5.7 583 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Kuusamo 2.2 5.4 384 + Equity raised (5.5) 0.0 0.0 0.0
Total 6.7 5.0 1124.9 + Debt drawdown (repaid) (5.2) 0.0 0.0 0.0
Net Change in Cash 19.1 10.4 18.4 42.5
Reserves Mt Au g/t Au koz Cash at End Period 23.5 33.9 52.3 94.8
Svartliden 1.0 3.2 103 Net Cash/(Debt) 23.5 33.9 52.3 94.8
Vammala 0.9 4.5 128
Total 1.89 3.84 231.0

Total Assets 87.5 123.2 164.2 209.0
Peter Cordin Executive Chairman Total Liabilities 16.4 30.5 36.0 44.5
Michael Naylor Finance Director Shareholders Funds 71.0 92.7 128.1 164.5
Peter Gunzburg Non Executive Director
Tapani Jarvinen Non Executive Director Ratios
Markku Makela Non Executive Director Net Debt/Equity (%) na na na na
Christian Russenburger Non Executive Director Interest Cover (x) 27.2 na na na
Return on Equity (%) 34.8 23.3 27.7 22.1
Eurogold 14 19
Nicholas Mathys 11 15
Equinox Minerals Limited EQN ($7.91)

Recommendation: SELL
Barrick’s is a better offer Analyst: Alex Passmore, Rhys Bradley
OUR VIEW
Barrick Gold Corporation (S&P,TSX: ABX) has trumped Minmetals’ C$6.3bn bid for Equinox (EQN), raising the offer price
to C$7.3bn (C$8.15/sh). The offer is good news for shareholders representing a significant premium to the pre-offer share
price, and ending chances of the expensive Lundin acquisition. We believe the offer values EQN’s assets generously and
shareholders should accept the offer. However, the offer may come as a surprise to shareholders given a 16% interest in EQN
was shopped around by First Quantum in November 2010 at ~$6.00 a share with no takers. This would have represented a
saving of ~C$300m to ABX. Per the terms of the ABX offer the Lundin bid has been dropped. The EQN Board is supportive
of the ABX offer, and has recommended shareholders accept. Whether ABX shareholders will be pleased about the deal
remains to be seen, however the ~14% cooling of ABX’s share price suggests investors are not fully supportive of the move
to diversify to base metals and increase debt. C$8.15/sh represents a 42% premium to the pre-Minmetals share price on
1 April. The deal will provide Barrick with exposure to copper via EQN’s Lumwana copper project. We maintain our SELL
recommendation and do not believe it is likely that a superior offer will emerge.

• The price is right. The offer represents a 42% premium to
the pre-MMR share price and a 16% premium to the MMR Year End Dec 31 2010A 2011F 2012F 2013F
offer. We maintain our SELL recommendation at or above the Reported NPAT (A$m) 289.6 249.2 633.8 949.6
C$8.15 offer price, representing a 39% premium to our DCF Recurrent NPAT (A$m) 329.9 343.3 633.8 949.6
valuation. The conditions required EQN to terminate the offer Recurrent EPS (cents) 41.0 38.4 70.6 105.7
with Lundin which should come as a relief to shareholders. EPS Growth (%) 71.1 6.6 78.7 42.9
The Board has recognized the value, announcing they will PER (x) 18.1 19.3 10.5 7.0
support the offer and terminated the Lundin bid.
EBITDA (A$m) 599.8 779.3 1,223.3 1,704.9
EV/EBITDA (x) 11.2 9.4 5.9 4.3
• Barrick aligning with peers. Barrick shareholders may
be questioning why First Quantum’s 16% stake was not
Capex (A$m) 127.2 276.1 241.1 206.0
Free Cashflow 38.2 20.6 507.3 912.0
acquired at $6.00/sh in November 2010 which would have FCFPS (cents) 4.7 2.3 56.5 101.5
represented a saving of approximately $300m. Shareholders PFCF (x) 166.0 342.0 13.9 7.8
may also be questioning the move to diversify their interests
to base metals via the Lumwana copper project, with DPS (cents) 0.0 0.0 0.0 0.0
Yield (%) 0.0 0.0 0.0 0.0
concerns ABX may forfeit a percentage of the gold company
Franking (%) 0.0 0.0 0.0 0.0
premium. Barrick maintain that they are a gold company,
that the deal will align them with the peer average (ABX:
82% Au, 18% Cu and peer average 81% Au, 19% Cu) and
should not affect their trading multiple.
• Looking back. Barrick has received Australian Foreign
Investment clearance for its acquisition of EQN, however Market Cap. ($m) 6974.4 Debt est ($m) 396.1
it is worth a look at how the deal has played out. Equinox
had reportedly been watching Lundin for some time, and
was forced to pull together an offer after the friendly
9.00 60000
takeover was announced by Inmet. Although the EQN offer
appeared on all fronts to be superior for shareholders,
Mr Lundin was adamant it was not. Those who had been 7.50 50000
eyeing off Equinox’s Lumwana were forced to move
before the Lundin deal went ahead. Minmetals made the
Share Price (A$)
6.00 40000
first move announcing their intention to make a C$7.00/
Volume '000
sh cash offer. Barrick then stepped up the stakes with a

higher C$8.15/sh cash offer. 4.50 30000
• EV/copper resource. Based on an EV per tonne of

copper resource equivalent, EQN looks expensive. On PSL 3.00 20000
calculations EQN has an EV per tonne of copper equivalent
of $2,199 compared to the copper peer average of $494/t. 1.50 10000
The relatively high valuation on an EV basis would suggest
Barrick is paying a fair price for EQN.
0.00 0
• Key dates. The Barrick offer for EQN closes at 5pm
Toronto time on 1 June 2011. As the offer is C$8.15/sh
12 Months
the offer remains sensitive to FX fluctuations between

AUD and CAD.
Equinox Minerals Limited $7.91 Year End December 31

Valuation (US$) US$m US$/sh Commodity Assumptions 2010A 2011F 2012F 2013F
Lumwana Copper 5552 6.18 US$/A$ 0.93 1.06 1.03 0.98
Lumwana Uranium 200 0.22 Gold (US$/oz) 1227.24 1445.41 1494.16 1525.28
Jabal Sayid 1377 1.53 Silver (US$/oz) 20.13 39.91 42.60 42.45
Base Metals Exploration 150 0.17 Copper (US$/lb) 3.44 4.33 4.26 4.10
Uranium Exploration 8 0.01 Uranium (US$/lb) 44.99 52.24 60.00 68.13
Hedging (34) (0.04) Production Summary 2010A 2011F 2012F 2013F
Listed Investments 2 0.00 Lumwana Copper (100%)
Cash 171 0.19 Copper in Concentrate (kt) 146.7 145.7 155.5 164.2
Debt (396) (0.44) Copper Cash Costs (US$/lb) 1.37 1.43 1.21 1.12
Unpaid Capital 27 0.03 Copper Total Costs (US$/lb) 1.73 1.85 1.55 1.43
Total (8% Discount Rate) 6817 7.59 Realised Copper Price (US$/lb) 3.24 4.21 4.26 4.10
Valuation (A$) A$m A$/sh Cash Margin (US$/lb) 1.87 2.78 3.05 2.97
Jabil Sayid Copper (100%)
Exchange Rate (US$/A$) 1.06 1.06 Copper in Concentrate (kt) 35.9 64.0
Total (8% Discount Rate) 6431 7.16 Copper Cash Costs (US$/lb) 1.09 0.73
Price Target 7.99 Copper Total Costs (US$/lb) 1.41 1.06
Price Target Sensitivities (A$) -10% 0% +10% Realised Copper Price (US$/lb) 4.26 4.10
Cash Margin (US$/lb) 3.17 3.36
Copper Price 7.99 7.99 7.99 Lumwana Uranium (100%)
CAD$/A$ 8.88 7.99 7.26 Uranium Oxide (t) 837
Valuation Summary of Operating Assets Copper in Concentrate (kt) 5.8
Uranium Cash Costs (US$/lb) 6.82
Realised Uranium Price (US$/lb) 68.18
Cash Margin (US$/lb) 61.36
Lumwana Copper Profit & Loss (US$m) 2010A 2011F 2012F 2013F
97%
Lumwana Uranium Sales Revenue 1046.8 1352.5 1802.7 2272.5
3% Other Income (incl.hedging) (34.7) (23.8) 13.3 47.9
Operating Costs 454.4 494.0 526.0 615.9
Exploration Expense 6.0 10.6 12.4 12.6
Lumwana Copper Production Summary (EQN 100% Share) EBITDA 530.0 787.9 1256.9 1670.8
Depn & Amortisation 75.7 90.6 117.8 165.0
250 5.00 EBIT 454.3 697.3 1139.1 1505.7
Interest Expense 37.6 30.6 21.2 15.9
200 4.00 Abnormals Pre-Tax (10.2) (64.6) 0.0 0.0
(US$/lb)
150 3.00 Tax Expense 137.4 339.0 466.7 559.2

(kt)
Minorities 0.0 0.0 0.0 0.0

100 2.00
NPAT 269.1 263.1 651.2 930.6
50 1.00 Normalised NPAT 306.5 362.4 651.2 930.6
0 0.00
2010A 2011F 2012F 2013F 2014F 2015F
Reported NPAT 269.1 263.1 651.2 930.6
Realised Copper Price (US$/lb) Copper Cash Costs (US$/lb)
+/-Exploration Adjustment (66.0) (0.0) 0.0 0.0
Copper in Concentrate (kt) +/-Interest Adjustment 0.2 0.0 0.0 0.0
Lumwana Reserves & Resources +Depreciation/Amortisation 75.7 90.6 117.8 165.0
+/-Tax Adjustment 101.2 26.0 0.0 0.0
Sulphide Reserves & Resources (Mt) Cu(%) Cu(kt) +/-Other Operating Cash Flows 0.0 0.0 0.0 0.0
Malundwe: Operating Cash Flow 379.8 379.7 769.1 1095.6
Proved Reserve 43 1.09 468 -Capex (Net of Asset Sales) 118.1 291.5 247.8 201.9
Probable Reserve 78 0.79 619 -Other Investing Cash Flows (161.8) 153.1 0.0 0.0
Malundwe Reserves 121 0.90 1086 -Working Capital Increase 33.9 79.1 0.0 0.0
Inferred Resource 4 0.77 32 Free Cash Flow 389.6 (144.0) 521.3 893.7
-Dividends 0.0 0.0 0.0 0.0
Chimiwungo: +New Equity 0.0 0.0 0.0 0.0
Proved Reserve 82 0.70 571 +Debt Drawdown/(Repayment)(179.2) (28.3) (106.8) (31.0)
Probable Reserve 119 0.57 677 Net Change in Cash 210.3 (172.3) 414.5 862.7
Chimiwungo Reserves 200 0.62 1247 Cash at End Period 319.5 147.1 561.6 1424.3
Inferred Resource 413 0.60 2478 Net Cash/(LT Debt) (20.0) (164.0) 357.3 1251.1
Total Reserves 299 0.73 2186
Total Resources 417 0.60 2503 Balance Sheet (US$m) 2010A 2011F 2012F 2013F
Oxide Reserves & Resources (Mt) Cu(%) Cu(kt) Cash/Bullion 319.5 147.1 561.6 1424.3
Proved Reserve 5 0.85 44 Total Assets 3239.0 3402.5 3946.9 4846.5
Probable Reserve 4 0.52 23 Total Debt 339.4 311.1 204.3 173.3
Total Reserves 10 0.70 67 Total Liabilities 1207.5 1104.4 997.5 966.6
Inferred Resource 4 0.42 15 Shareholders Funds 2031.5 2298.1 2949.3 3879.9
Uranium Reserves & Resources (Mt) U3O8(%) U3O8(mlb)
Malundwe: Ratios
Probable Reserve 3 0.12 9 Debt/Equity (%) 16.7 13.5 6.9 4.5
Inferred Resource 1 0.09 2 Interest Cover (x) 1208.4 2276.0 5380.9 9449.7
Chimiwungo: Return on Equity (%) 13.2 11.4 22.1 24.0
Inferred Resource 1 0.07 2
Directors Position
Jabil Sayid (Mt) Cu(%) Cu(kt)
Jabil Sayid Total 38 2.2 837 Peter Tomsett Non-Executive Chairman
Craig Williams Chief Executive Officer
Substantial Shareholders Shares (m) (%) Dave Mosher Non-Executive Director
Brian Penny Non-Executive Director
Dundee Corporation 44.3 5.0 David McAusland Non-Executive Director
Minmetals Resources Limited 37.0 4.2
Jim Pantelidis Non-Executive Director
Concord Capital Ltd 29.6 3.4
ZCCM Investment Holdings Plc 20.1 2.3 Tony Reeves Non-Executive Director
Extract Resources Limited EXT ($7.49)

Recommendation: BUY
Tier 1 Asset: Buying Opportunity Knocks Analyst: Simon Tonkin
OUR VIEW
Extract is looking to develop the world class 392mlb Husab uranium project in Namibia. Recent comments by the Namibian
Government regarding nationalisation of mining and exploration tenure have impacted the stock. However, EXT do not expect
to be adversely impacted by the proposed changes and a media release by the Minister of Mines suggests that mining licences
in application will be dealt with under existing procedures on their own merit without prejudice. There could be some impact if
EXT wishes to involve a partner as the mining licence conditions might require the holder to approach the Namibian Government
first in investment opportunities. The Chinese have withdrawn their bid for Kalahari, EXT’s largest shareholder, the original
bid was 290p and the Chinese wished to reduce that bid to 270p following the events at Fukushima. The UK takeover panel
denied the revised bid due to the Chinese not reserving the right to bid lower and lost an appeal. The Chinese will have to
wait three months before they can re-bid. We believe the negative effects of the move to nationalise mining and exploration
tenure and the failed bid from the Chinese presents an opportunity for investors to gain exposure to a tier 1 asset. As such
we believe that the stock will eventually be taken out (most likely following the grant of its mining licence. Key players who
may be interested in EXT are the Chinese, RIO and ARMZ. We are upgrading to Buy our target price is $8.70/sh.

• Buying Opportunity Knocks. We believe the recent
plans to nationalize mining and exploration tenure and the Year End June 30 2010A 2011F 2012F 2013F
failed bid by the Chinese presents a buying opportunity for
Reported NPAT ($m) (35.6) (46.3) (31.6) (26.0)
investors to gain exposure to a tier 1 asset. EXT owns the fifth Recurrent NPAT ($m) (35.6) (46.3) (31.6) (26.0)
largest uranium resource in the world and it is the highest Recurrent EPS (cents) (14.5) (18.3) (12.5) (7.6)
grade alaskite resource in Namibia. We believe ultimately EPS Growth (%) na na na na
one of the majors will buy or joint venture the asset, most PER (x) na na na na
likely following the grant of the mining licence.
EBITDA ($m) (51.8) (46.3) (27.2) (18.0)
• DFS Capex and Operating Costs Higher than Expected.
In April, Extract released the results of the DFS Study for
EV/EBITDA (x)
Capex ($m)
(34.0) (39.1) (57.1) (159.8)
44.5 0.2 388.6 631.2
the Husab uranium project in Namibia. The capital costs at Free Cashflow (48.3) (50.3) (422.7) (659.7)
FCFPS (cents) (19.8) (19.9) (167.5) (193.6)
US$1.7b were around 11% higher than our estimate. Total PFCF (x) na na na na
operating costs were US$32/lb, well above our estimate of
$25/lb. Therefore the higher costs have an overall negative DPS (cents) 0.0 0.0 0.0 0.0
impact on our valuation for the company. Our base case Yield (%) 0.0 0.0 0.0 0.0
scenario 1.0x NAV dropped to $5.30/sh (from $8.30/sh). Franking (%) 0.0 0.0 0.0 0.0
We have examined a second scenario whereby EXT does a
JV with RIO for synergistic benefit.
• Husab Would be More Attractive Using Rio’s Rossing
Mine/In Chinese Hands. In our Rio JV scenario, we Shares on issue (m) 252.4 3mth ADT ($m) 10.32
estimate capital cost savings in the $600-800m range. Market Cap. ($m) 1890.5 Debt est ($m) 0.0
This results in a 1.0x NAV of $8.13/sh. Therefore this is 52 week range $6.04 - $10.73 Cash est ($m) 86.5
an attractive path for Extract to pursue. In addition, if the
Chinese were to make good on their bid for Kalahari this
could also be attractive for EXT shareholders. 11.00 6000
• Mine Optimisation and Resource Extension (MORE)

Program. EXT plans to significantly expand the value of 10.00 5000
its project through 1) converting more ore to reserves 2)
Steepening the pit slopes 3) Exploration and 4) Processing
Share Price (A$)
9.00 4000
enhancements. However, we believe that the mining of
Volume '000
zone 4-5 and Middle Dome could be problematic due to the

endemic Welwitschia plant. 8.00 3000
• Significant Hurdles Remain. We have identified a number

of hurdles that EXT needs to overcome to move the Husab 7.00 2000
Uranium Project to development these include: 1) Namibian
BEE 2) Mining Licence 3) Water Availability 4) Capital and
op. cost increases 5) Shareholder Disagreements. 6.00 1000
• Catalysts. 1) Q2/2011 Resource Update with a Reserve

update expected to follow in H2/2011 2) Outcome of Chinese
5.00 0
12 Months
and Kalahari Appeal on UK Takeover panels decision 3)
Grant of Mining Licence and decision to Proceed on Husab
4) Financing 5) mid-2011 Long-Lead time items.
Extract Resources Limited $7.49 Year End June 30

Base Case NPV A$m A$/sh Commodity Assumptions 2010A 2011F 2012F 2013F
Husab 948.7 2.78 A$:US$ 0.89 0.99 1.05 1.00

Exploration 189.7 0.56 Uranium (US$/lb) 61.89 60.00 62.50 66.40
Corporate (146.7) (0.43)
Forwards 0.0 0.00
Unpaid Capital 715.4 2.10 Sensitivities -10% 0% +10%
Cash 86.5 0.25
Debt 0.0 0.00 U Price 3.70 5.30 6.80
NAV 1793.7 5.27 Rossing Sth Grade 5.20 5.30 5.40
(@ 10% disc) Rossing Sth Opex 6.10 5.30 4.50
Average of Base Case and RIO JV Valuations

RIO JV NPV 8.13
Rossing South (mlbs) 0.00 0.00 0.00 0.00
Average NPV 6.70
1.3x Multiple 8.71 Total Production (mlbs) 0.00 0.00 0.00 0.00
Price Target 8.70 Cash Cost (US$/lb) na na na na

Total Cash Cost (US$/lb) na na na na
Valuation Summary of Operating Assets Price Received - ($US/lb) na na na na

Exploration
15% Sales Revenue 0.0 0.0 0.0 0.0
Rossing South Other Income 3.1 3.0 0.9 13.8
78%
Exploration Exp. 44.5 39.2 13.8 14.1
Cash Corporate/Admin 9.6 10.2 14.3 17.7
7% EBITDA (51.8) (46.3) (27.2) (18.0)
Depn & Amort 0.0 0.0 0.0 0.0
EBIT (51.8) (46.3) (27.2) (18.0)
Interest 0.0 0.0 4.4 8.0
Uranium Production Summary Operating Profit (51.8) (46.3) (31.6) (26.0)
Abnormals (pre-tax) 0.0 0.0 0.0 0.0
20.00 90 Tax expense (16.2) 0.0 0.0 0.0
Minorities 0.0 0.0 0.0 0.0
NPAT (35.6) (46.3) (31.6) (26.0)
15.00
60
Cash Flow (A$m) 2010A 2011F 2012F 2013F
10.00
Adjusted Net Profit (35.6) (46.3) (31.6) (26.0)
30
5.00 + Interest/Tax/Expl Exp 28.3 39.2 18.3 22.2
+ Depn/Amort 0.0 0.0 0.0 0.0
0.00 0 +/- Other (0.1) 0.0 0.0 0.0
2014F 2015F 2016F 2017F Operating Cashflow (35.7) (50.4) (34.1) (28.5)
Cash Cost (US$/lb) Price Received ($US/lb) - Capex (+asset sales) 0.2 0.2 388.6 631.2
Total Production (mlbs) - Working Capital Increase 12.5 (0.4) 0.0 0.0
Free Cashflow (48.3) (50.3) (422.7) (659.7)
Reserves & Resources - Dividends 0.0 0.0 0.0 0.0
+ Equity Raised 89.4 60.9 679.3 0.0
M & I Resources Mt ppm U3O8 (t) (mlbs) + Debt Drawdown (Repaid) 0.0 0.0 233.1 338.7
Zone 1 + 2 241.0 480 115,680 257.0 Net Change in Cash 41.1 10.7 489.7 (321.0)
Total 241.0 480 115,680 257.0
Net Cash/(LT Debt) 70.1 80.8 337.4 (322.3)
Inferred Resources Mt ppm U3O8 (t) (mlbs)
Zone 1 + 2 + 3 + 4 125.5 400 50,200 110
Total 125.5 400 165,880 367
Cash/Bullion 70.1 80.8 570.5 249.6
Directors Total Assets 164.7 218.9 1113.2 1439.4
Total Debt 0.0 0.0 233.1 571.9
Name Position Total Liabilities 11.5 50.9 261.9 614.1
Stephen Galloway Non-Executive Chairman Shareholders Funds 153.2 168.0 851.3 825.3
Jonathan Leslie Managing Director
Neil MacLachlan Non-Executive Director Ratios
Inge Zaamwani-Kamwi Non-Executive Director Net Debt/Equity (%) na na na 39.1
John Main Non-Executive Director Interest Cover (x) na na na na
Ron Chamberlain Non-Executive Director Return on Equity (%) na na na na
Alastair Clayton Non-Executive Director
Substantial Shareholders No. Shares %

Kalahari Uranium 107.3 42.8
Rio Tinto Group 35.7 14.7
ITOCHU 25.1 10.3
Top 20 211.9 87.1
Fortescue Metals Group Limited FMG ($6.27)

Recommendation: BUY
Setting up to break records Analyst: Alex Passmore
OUR VIEW
FMG has traded sideways since our last Resources Review in early December 2010 and we are now upgrading our
recommendation with the coming 2 Qs likely to be strong periods. The company reported lower production in the March Q,
due to a record northern wet season. From here the company seasonally does very well (June and Sept Qs) with production
records likely to be broken as the 55Mtpa rate is achieved in the June Q. FMG’s expansion plans to which will see production
of 155Mtpa iron ore by the end of FY14 are progressing with the company’s Solomon and Chichester expansion projects
requiring US$8.4bn in capital likely funded internally. FMG’s capital intensity is US$84/t well below the average for projects
in the Pilbara (US$107/t). The company has more growth options than most in the Pilbara with production likely to rise by
four fold in the coming five years. This will more than offset a softer iron ore price if the anticipated declines occur. With
the AUD reducing margins across the sector and commodity prices softening FMG shows future production growth and has
a track record of delivering expansions. Upgrade to BUY.

• Increase in forecast production. Christmas Creek
processing facility is in the commissioning stage and the
Chichester Hub should be running at 55Mtpa during the Reported NPAT (A$m) 642.4 1,033.1 1,817.6 2,123.0
June Q 2011. FMG has outlined a shipping target circa Recurrent NPAT (A$m) 642.4 1,836.3 1,817.6 2,179.5
12Mt for the June Q 2011 (up from 9-10Mtpa). Recurrent EPS (cents) 20.6 58.9 58.3 69.9
EPS Growth (%) 12.6 216.9 5.1 13.9
• Unit costs set to drop with Christmas Creek ramp
up. Unit costs of production for the March Q rose as a
PER (x) 30.4 10.6 10.8 9.0
result of the lower production rates, commissioning of EBITDA (A$m) 1,252.8 2,706.7 3,300.3 3,963.5
EV/EBITDA (x) 16.0 7.4 6.1 5.1
the Christmas Creek processing facility and a ramp up Capex (A$m) 664.4 1,106.8 191.6 3,995.9
in contractor mining. The reported cash cost remained Free Cashflow 621.6 436.4 1,756.7 (1,578.6)
lower than our estimate of US$50/t for the Q but still FCFPS (cents) 19.9 14.0 56.3 (50.6)
had a notable spike from the previous Q of US$38/t to PFCF (x) 31.5 44.8 11.1 (12.4)
US$45/t. We see this increase in costs as a one off event
DPS (cents) 0.0 6.1 5.7 6.0
and expect with the end of the wet season and ramping up
Yield (%) 0.0 1.0 0.9 1.0
of production costs will return to the US$32-37/t range. Franking (%) 100 100 100 100
• Earnings outlook. Excluding one of refinancing costs

FMG should report a tripling of net earnings in FY11
(US$1,800m) on our forecasts FY12 looks comparable Company Statistics & Performance
as we assume the AUD remains high putting pressure
Shares on issue (m) 3,118.7 3mth ADT ($m) 70.03
on margins. Forecast earnings in FY13 and FY14 periods
Market Cap. ($m) 19,553.9 Debt est ($m) 3,320
(US$2,100m and US$3,300m NPAT respectively reflect 52 week range $3.44 - $7.27 Cash est ($m) 2,013
additional production as Solomon and an expansion of
the Chichester Hub to 95Mtpa come online.
9.00 60000
• Increased resource portfolio and growth options.
FMG’s resource inventory now stands at over 10bt
following the release of the 1.03bt Nyidinghu resource and 50000
7.50
the 625Mt resource upgrades within the Western Hub.
•
Share Price (A$)
Unparallel growth options. FMG can grow production 40000

Volume '000
by three to four times (and possibly beyond this). This 6.00

is currently not factored in by the market and remains a 30000
key attraction to the stock.
4.50
• Capital intensity remains low. The cost to ‘install’ an
additional tonne of annual production capacity for FMG
20000
operations is $84/t versus an average of $107/t for the 3.00

Pilbara. 10000
• Positive catalysts. 1) Production turnaround in the June

Q 2011 to re-establish medium cash costs 2) Successful 1.50 0
ramping up to 55Mtpa by FY12 and 3) Further clarity on 12 Months
growth projects in terms of funding and development
strategies.
Fortescue Metals Group Limited $6.27 Year End June 30

Cloudbreak & C.Creek (net of LN) 13221 4.24 A$:US$ 0.89 0.99 1.05 1.00
Solomon Project 6515 2.09 Iron Ore Fines (US$/t CFR) 83.71 150.50 160.09 125.19
Corporate (241) (0.08) Iron Ore Lump (US$/t CFR) 82.01 141.51 163.10 147.74
Exploration/Resources outside Reserves 2122 0.68 Production Summary 2010A 2011F 2012F 2013F
Cash (est) 2013 0.65
Debt (excl Leucadia note) (3320) (1.07) Chichester Hub
Total @ 10% Discount Rate 20349 6.52 CC & CB - Lumps 0 1100 5500 6000
Price Target (4 x FY14f EBITDA) 7.59 CC & CB - Fines 0 0 0 0
CC & CB - Rocket fines 38418 38045 49500 54000
Chichester Production 38418 39145 55000 60000
Valuation Summary of Operating Assets Chichester Sales 39152 39358 54639 59872
Cost Summary (US$/t)
Exploration/Resources Chichester Unit Cash Costs 33.09 56.81 62.54 59.40
outside Reserves
Cloudbreak &
10%
C.Creek (net of LN) Solomon Hub
60% Solomon Fines Production 0 0 0 10000
Solomon Sales 0 0 0 10000
Cost Summary (US$/t) na na na na
FMG TOTAL SALES 39152 39358 54639 69872

Solomon Project
30% Price and Forex
Ave Price Received 82.24 113.08 126.99 117.55
(FOB, moisture 7%)
Forex Received (US$/A$) 0.89 0.99 1.05 1.00
Iron Ore Production Summary
Profit & Loss (US$m) 2010A 2011F 2012F 2013F
100000 140
Sales Revenue 3220.1 4450.5 6938.6 8213.2
120
80000 Other Income 84.1 588.6 60.9 0.0
100 Operating Costs 1366.8 1934.3 3417.3 4138.7
Net Forex loss / (gain) (99.5) 20.6 0.0 0.0
(A$/t)
60000
(kt)
80
Net Shipping Costs 612.3 282.7 0.0 0.0
40000 60 Exploration Exp. 0.0 6.0 0.0 0.0
40 Corporate/Admin 24.7 105.6 108.7 110.9
20000 Other expenses 280.0 7.1 0.0 0.0
20
EBITDA 1119.9 2682.8 3473.5 3963.5
0 0 Depn & Amort 153.2 175.1 234.9 300.5
2010A 2011F 2012F 2013F 2014F 2015F 2016F EBIT 966.7 2507.6 3238.6 3663.1
Chichester Production Interest 394.2 395.6 505.7 549.5
Chichester Unit Cash Costs MRRT 0.0 0.0 0.0 56.5
Ave Price Received (FOB, moisture 7%) Operating Profit 572.5 2112.0 2732.9 3113.6
Tax expense (1.8) 292.0 819.9 934.1
Reserves & Resources Minorities 0.0 0.0 0.0 0.0
Sign Items post-tax Gain / (loss) 0.0 77.2 0.0 0.0
Reserves Mt % Fe % Si NPAT 574.3 1101.2 1913.0 2179.5
Christmas Creek and Cloudbreak 1625 58.9 4.16
Normalised NPAT 574.3 1024.0 1913.0 2179.5
Resources Mt % Fe % Si
Cloudbreak/Christmas Creek 2463 58.20 4.46 Cash Flow (US$m) 2010A 2011F 2012F 2013F
Solomon 2860 56.30 7.20
Glacier Valley - Magnetite 1230 33.1029% DTR Adjusted Net Profit 574.3 1024.0 1913.0 2179.5
North star - magnetite 1230 32.0030% DTR + Interest/Tax/Expl Exp 392.4 693.6 1325.6 1540.1
+ Depn/Amort 153.2 175.1 234.9 300.5
Directors +/- Leucadia Revaluation 280.0 7.1 0.0 0.0
+/- Other 0.0 0.0 0.0 0.0
Name Position Operating Cashflow 848.1 1021.2 2086.6 2417.4
Herb Elliot Chairman - Capex (+asset sales) 594.0 1097.0 201.7 3995.9
Andrew Forrest CEO - Working Capital Increase (301.5) 364.9 0.0 0.0
Russell Scrimshaw Executive Director Free Cashflow 555.6 (440.7) 1884.9 (1578.6)
Geoff Brayshaw Non-Executive Director - Dividends (ords & pref) 0.0 93.4 186.8 186.8
Graeme Rowley Non-Executive Director + Equity raised 2.2 0.0 0.0 0.0
Ian Burston Non-Executive Director + Debt drawdown (repaid) (5.7) 1652.7 0.0 0.0
Ian Cumming Non-Executive Director Net Change in Cash 580.6 1118.6 1698.1 (1765.3)
Ken Ambrecht Non-Executive Director Cash at End Period 1235.5 2354.2 4052.3 2286.9
Li Xiaowei Non-Executive Director Net Cash/(Debt) (2182.6) (2716.6) (1018.5) (2783.9)
Mark Barnaba Non-Executive Director
Owen Hegarty Non-Executive Director Balance Sheet (US$m) 2010A 2011F 2012F 2013F
Substantial Shareholders: Shares (m) % Cash/Bullion 1235.5 2354.2 4052.3 2286.9

The Metal Group Pty Ltd 972.8 31.2 Total Assets 5303.6 7610.7 9335.6 11325.7
Hunan Valin Iron and Steel Co 500.0 16.0 Total Debt (incl LN) 3418.1 5070.8 5070.8 5070.8
Leucadia National Corporation 247.0 7.9 Total Liabilities 3826.9 5126.2 5124.8 5122.2
Magnitogorsk Iron and Steel Works 150.4 4.8 Shareholders Funds 1476.7 2484.5 4210.7 6203.5
Ratios
Net Debt/Equity (%) 147.8 109.3 24.2 44.9
Interest Cover (x) 2.5 6.3 6.4 6.7
Return on Equity (%) 38.9 44.3 45.4 35.1
Gindalbie Metals Limited GBG ($0.95)

Recommendation: HOLD
Watch for funding solution Analyst: Alex Passmore, Rhys Bradley
OUR VIEW
GBG recently reported its maiden hematite shipment under an ore sales agreement with Sinosteel Midwest Corporation
(SMC). Initial mining rates at the Karara Iron Project have ramped up as expected with circa 276Kt of hematite mined and
processed. A review of the Karara Project construction and operating costs is expected to be completed by mid year. GBG is
yet to provide clarity on a course of action to account for the forecast 30% ($250m on PSL calculations) increase in project
capex reported in the March Q but we believe the company may consider debt, forward sales, a rights issue or a combination
of these. It was encouraging to see GBG recently secure funding towards working capital requirements and bank guarantees
to provide security for rail upgrade agreements. Mr Tim Netscher, ex-Newmont has now replaced Garret Dixon as CEO & MD.
Scoping studies commenced during the Q to consider the viability of a ~$500m upgrade to increase production from 10Mtpa
to 16Mtpa. GBG also reported a substantial cash balance of $241m as at 31 March. Pending an announcement of updated
cost estimates and a funding arrangement for Karara, we retain our HOLD rating with a price target of $0.99/sh.

• Taking advantage of current high spot prices. GBG
will supply 480Kt of high grade lump/fines hematite over Year End June 30 2010A 2011F 2012F 2013F
the next 8 months from the Karara Project to form joint
cargos with SMC. GBG will be utilising SMC’s rail network Reported NPAT ($m) (2.5) (3.7) (20.0) 46.8
Recurrent NPAT ($m) (2.5) (3.7) (20.0) 46.8
and port facilities until its own infrastructure is complete at
Recurrent EPS (cents) (0.3) (0.3) (1.7) 4.0
the end of 2011. This short term arrangement offers GBG EPS Growth (%) na na na na
exposure to buoyant iron ore prices until infrastructure is PER (x) nm nm nm 24.0
at a point where it can export in its own right.
EBITDA ($m) (1.2) 5.9 71.7 202.1
• Karara capital costs increase by 30%. Following the
announcement of capex increases of circa 30% to $2.63bn, EV/EBITDA (x) (482.4) 223.0 28.5 11.3
Capex ($m) 154.3 432.7 696.4 296.8
GBG is reviewing construction costs estimates, with Free Cashflow (196.2) (449.2) (729.6) (253.3)
results due by mid year. We have included 30% increased FCFPS (cents) (22.8) (38.1) (61.8) (21.5)
construction cost estimates into our valuation. Development PFCF (x) (4.2) (2.5) (1.5) (4.4)
spend reached A$885.1m, with A$484.5 drawn down on
the US$1.2bn loan facility. On our calculations, $350m DPS (cents) 0.0 0.0 0.0 0.0
funding is required by GBG. Of cash held, we estimate Yield (%) 0.0 0.0 0.0 0.0
$100m is free cash and could be put towards capex, hence Franking (%) 0.0 0.0 0.0 0.0
an additional $250m is required. We anticipate the funding
will come from either (or a combination of) debt, bonds,
forward iron ore sales or a rights issue.
• Funding toward working capital secured. GBG recently
announced completion of formal signing of a US$336m facility Shares on issue (m) 934.7 3mth ADT ($m) 6.75
with China Development Bank towards funding working Market Cap. ($m) 888.0 Debt est ($m) 244.8
capital requirements of A$430m, and US$300m of bank 52 week range $0.89 - $1.47 Cash est ($m) 240.6
guarantees to provide security for rail upgrade agreements.
GBG have reported cash reserves of A$241m at end of Q.
1.50 21000
• Karara expanding to 16Mtpa. Scoping studies have
been approved for commencement on stage two of
the Karara Project, promising to boost throughput 1.25
18000
from 10Mtpa to 16Mtpa. It is proposed the increase in
throughput will come via the addition of another module 15000
Share Price (A$)
to the plant in 2015. We forecast the expansion will come 1.00

Volume '000
at a $500m cost, and have included both the expansion

12000
cost and increased production into our valuation.
0.75
• Management changes happen smoothly. Tim Netscher
replaced Garret Dixon as CEO & MD at the end of April.
9000
Mr Netscher comes from Newmont (NEM) where he was 0.50

Senior Vice President Asia Pacific Region. Mr Netscher 6000
provides a wealth of knowledge and experience in
constructing and operating major resource projects. David 0.25 3000
Richardson has been appointed CFO, replacing David
Southam who resigned in late 2010. 0.00 0
• Catalysts. 1) Updated cost estimates for the Karara
Project. 2) Clarification of funding arrangements for the
12 Months
~$250m in capex increases. 3) Karara stage two scoping

study results.
Gindalbie Metals Limited $0.95 Year End June 30

Karara Hematite 173 0.15 A$:US$ 0.89 0.99 1.05 1.00

Karara Magnetite 602 0.51 Iron Ore Fines (US$/t FOB) 76.44 119.53 119.53 119.53
Bayuquan Pellet Plant 266 0.23 Iron Ore Lump (US$/t FOB) 89.72 143.82 143.82 145.22
Exploration 151 0.13 Magnetite Pellets (US$/t) 88.66 158.94 177.80 180.97
Corporate (20) (0.02) Magnetite Conc [bmk] (US$/t) 81.22 127.00 127.00 127.00
Unpaid Capital / new equity 4 0.00
Cash 241 0.20
Debt (245) (0.21) Production Summary 2010A 2011F 2012F 2013F
Total @ 10% Discount Rate 1171 0.99
Price Target 0.99 GBG Share of Production (kt)
Mungada Hematite 0 63 875 1000
Karara Magnetite 0 0 74 1255
Valuation Summary of Operating Assets Bayuquan Pellet Plant 0 0 0 198
Bayuquan Pellet Plant Cost Summary (A$/t)

22% Mungada Hematite Cash Costs na 42.61 43.68 45.39
Karara Magnetite Cash Costs na na 47.07 47.85
Conc Price Received 99.94 140.94 132.73 139.70
Exploration
Karara Magnetite 13%
Sales Revenue 0.00 7.35 116.07 342.64

Other Income 8.1 11.8 11.1 9.3
Karara Hematite Operating Costs 1.1 2.7 41.7 135.7
15% Exploration Exp. 0.1 0.8 1.6 1.7
Iron Ore Production Summary (GBG share) EBITDA (1.2) 5.9 71.7 202.1
Depn & Amort 0.9 0.5 1.2 11.1
EBIT (2.2) 5.4 70.5 191.0
8000 160
Interest 0.7 5.7 31.8 53.9
7000 140 Operating Profit (2.8) (0.4) 38.7 137.1
6000 120 Tax expense (0.3) 0.1 11.6 41.1
5000 100
Minorities 0.0 3.3 47.1 49.1
Abnormals 0.0 0.0 0.0 0.0
(A$/t)
(kt)
4000 80
NPAT (2.5) (3.7) (20.0) 46.8
3000 60
2000 40 Normalised NPAT (2.5) (4.0) (20.0) 46.8
1000 20
0 0 Cash Flow (A$m) 2010A 2011F 2012F 2013F
2010A 2011F 2012F 2013F 2014F 2015F
Conc Price Received Karara Magnetite Cash Costs Adjusted Net Profit (2.5) (3.7) (20.0) 46.8
Karara Magnetite + Interest/Tax/Expl Exp (0.2) 6.6 45.0 96.7
+/- Other 0.0 0.0 0.0 0.0
Karara Magnetite Mt % Fe Operating Cashflow (10.1) (10.0) (33.5) 43.0
Reserves 977 36.5 - Capex (+asset sales) 154.3 432.7 696.4 296.8
Resources 2518 34.1 - Working Capital Increase 31.9 6.4 0.0 0.0
Free Cashflow (196.2) (449.2) (729.8) (253.9)
Mungada Hematite Mt % Fe - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Reserves 10.9 61.7 + Equity raised 289.0 75.3 0.0 0.0
Resources 27.1 61.5 + Debt drawdown (repaid) 0.0 408.7 565.7 131.4
Directors Net Cash/(LT Debt) 219.9 (188.4) (918.2) (1172.1)
Name Position
George Jones Non-Executive Chairman Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Tim Netscher Managing Director
Michael O’Neil Non-Executive Director Cash/Bullion 219.9 234.8 70.6 78.8
Yu Wanyuan Non-Executive Director Total Assets 517.0 978.5 1551.0 1859.9
Chen Ping Non-Executive Director Total Debt 0.0 423.2 988.8 1250.9
Wang Heng Non-Executive Director Total Liabilities 54.0 443.8 1036.3 1298.4
Shao An Lin Non-Executive Director Shareholders Funds 463.0 534.6 514.7 561.5
Substantial Shareholders Shares (m) (%) Ratios

Ansteel 255.7 27.4 Net Debt/Equity (%) na 35.2 178.4 208.7
JP Morgan 46.7 5.1 Interest Cover (x) (3.3) 0.9 2.2 3.5
Top 20 471.1 50.4 Return on Equity (%) na na na 8.3
Gloucester Coal Limited GCL ($9.90)

Another Vend Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
Gloucester has maintained a strong sales performance with a significant portion of sales being coking coal (40%). These
sales were maintained by running down stocks as ROM and saleable coal production was sharply lower for the third quarter
of FY11. The main reason cited for the disappointing production numbers was delays in receiving approvals for extension
work at Duralie and Stratford. We expect that subsequently GCL’s coking coal share will increase as it has exercised the
option, purchased from Noble, to increase its share in Middlemount mine to 47.5%. The $400m raised to make the purchase
was seen as a positive as it increased coking coal production and diluted Noble’s shareholding to 65%. GCL is in a trading
halt at the time of writing pending the announcement of “two potential acquisitions and a capital raising involving retail and
institutional investors” which we expect to be related to the purchase of another Noble asset - Donaldson. Without knowing
the particulars, we assume that GLC will raise in the vicinity of $500-600m to buy Donaldson from Noble, which would likely
further dilute Noble by about 20%. This has always been an issue with GCL and it has now come to pass. Accordingly we
maintain our HOLD recommendation with a price target of $9.65/sh until further details are released.

• RoM fell 26% YoY. A disappointing quarterly production
result for the third quarter of FY11, with RoM coal Year End June 30 2010A 2011F 2012F 2013F
production down by 26% to only 589kt compared to Reported NPAT ($m) 32.7 59.2 147.5 105.2
798kt in the previous corresponding period. For the three Recurrent NPAT ($m) 32.7 59.2 147.5 105.2
quarters to date, RoM production was down by a lower Recurrent EPS (cents) 39.1 41.3 103.0 73.4
9% to 2,103kt compared to 2,307kt last year. This is the EPS Growth (%) (60.1) 5.8 149.2 (28.7)
lowest level in over 2 years. PER (x) 25.3 23.9 9.6 13.5
• Saleable Production down but sales maintained.

Production of Saleable coal was also down – by 32% in the
EBITDA ($m)
EV/EBITDA (x)
53.6
15.6
100.9
14.9
238.8
6.0
183.2
7.5
March Q at 342kt compared to 502kt in 2011. For the three Capex ($m) 40.4 8.7 29.1 2.1
quarters to date Saleable production was down 13% to Free Cashflow (37.3) 53.0 118.5 118.1
1,231kt compared to 1,427kt last year. However, sales were FCFPS (cents) (44.6) 37.0 82.8 82.5
kept up from stockpiles, with GCL able to sell 496kt, which PFCF (x) (22.2) 26.7 12.0 12.0
is only 6% below the 529kt of March 2010. For the year to
date, sales are in fact up by 5.7% to 1,525kt compared to DPS (cents) 0.0 6.0 36.0 36.0
1,443kt last year. The proportion of coking sales was 40% Yield (%) 0.0 0.6 3.6 3.6
in the quarter, above the rate for the preceding quarters. Franking (%) 100.0 100.0 100.0 100.0
• Planned production increase on track. GCL has stated

that production for the Full Year will be 1.9Mtpa (which we Company Statistics & Performance
interpret as sales of 2.1Mtpa) and reiterated that it still
expects future coal output to rise to 3.5Mtpa by 2014, Shares on issue (m) 140.4 3mth ADT ($m) 3.31
although the pending announcement of any transactions Market Cap. ($m) 1390.4 Debt est ($m) 103.5
will substantially change these assumptions. Of the current 52 week range $9.65 - $13.60 Cash est ($m) 17.6
output estimate, up to 2Mtpa will be coking coal.
• Middlemount stake to 47.52%. GCL has exercised its

options, acquired from Noble, to buy a larger stake in the
14.50 1800
Middlemount coal mine. This, plus the increase in coking

coal prices, has seen the asset owned by GCL increase in 13.50 1500
value to $514m from $413m previously.
Share Price (A$)
• Another Noble Vend. An announcement is due shortly but 12.50 1200

Volume '000
the newswires are speculating that GCL is finalising a deal to

takeover Noble’s Donaldson Coal and two tenements held by
the related Ellemby Resources Ltd worth an estimated $600 11.50 900
million. Donaldson Coal operates in the Hunter Valley and is
100% owned by Noble. Interests associated with Brendan 10.50 600
McPherson own 20% of Ellemby. McPherson is a director of
Donaldson, a former senior executive of Noble Group and
was appointed chief executive of Gloucester in February. 9.50 300
• Noble dilution. Using a 5 day VWAP prior to the trading

halt of $10.04/sh GCL will need to issue between 59.8m 8.50 0
and 66.4m shares (using up to a 10% discount on the 12 Months
VWAP) to raise $600m. This implies a post capital raising
share value of $9.62-$9.94/sh and it will dilute Noble’s
shareholding to 45% assuming they do not participate.
Gloucester Coal Limited $9.90 Year End June 30

Stratford/Duralie 725.4 5.07 US$/A$ 0.8939 0.9912 1.0525 1.0000

Middlemount 469.4 3.28 Hard Coking Coal 151.00 248.75 302.50 211.25
Resources 314.4 2.20 Semi-soft Coking Coal 111.25 182.50 227.50 152.50
Corporate (45.1) (0.31) PCI 106.25 180.00 232.50 157.50
Unpaid Capital 0.0 0.00 Export Thermal Coal 77.00 106.00 122.50 97.50
FX Hedging 0.0 0.00 Domestic Thermal Coal 45.28 46.40 47.52 48.63
Cash 17.6 0.12
Debt (103.5) (0.72)
NPV 1378.1 9.63 Production Summary 2010A 2011F 2012F 2013F
Price Target 9.65
Attributable Coal Sales
Stratford/Duralie (Kt) 1,787 2,131 2,702 2,597
FOB costs (US$/t) 74.84 103.38 100.34 92.64
Middlemount (Kt) 24 704 1,557

Stratford/Duralie FOB costs (US$/t) 75.26 93.43 84.70
Price Received (US$/t) 203.79 214.63 159.85
Middlemount All Mines (Kt) 1,787 2,154 3,406 4,154
Cash costs (US$/t) 74.84 103.07 98.91 89.67

Sales Revenue 229.3 296.1 565.8 559.3
5,000 200.00 Other Income 0.2 7.8 2.4 5.9
4,500 180.00 Operating Costs 152.2 193.8 320.1 372.5
4,000 160.00 Exploration Exp. 0.0 0.0 0.0 0.0
3,500 140.00 Corporate/Admin 23.7 9.2 9.3 9.5
3,000 120.00 EBITDA 53.6 100.9 238.8 183.2
(US$/t)
Depn & Amort 11.3 10.6 18.0 23.0

(kt)
2,500 100.00
EBIT 42.3 90.4 220.7 160.2
2,000 80.00
Interest 0.7 5.8 10.0 10.0
1,500 60.00
1,000 40.00 Tax expense 8.8 25.4 63.2 45.1
500 20.00 Abnormals & Minorities 0.0 0.0 0.0 0.0
0 0.00 NPAT 32.7 59.2 147.5 105.2
2010A
2011F
2012F
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
Normalised NPAT 29.1 59.2 147.5 105.2

All Mines (Kt) Cash Costs (US$/t) Price Recieved (US$/t)
Resources & Reserves (Mt) (100% Basis) Cash Flow (A$m) 2010A 2011F 2012F 2013F
Duralie Total Adjusted Net Profit 32.7 59.2 147.5 105.2

Resources - Meas - Ind - Tot 10.6 22.5 33.1 + Interest/Tax/Expl Exp 9.5 31.2 73.2 55.1
Reserves - Prov -Prob - Tot 11.5 13.3 24.8 - Interest/Tax/Expl Inc 56.1 39.3 81.5 63.5
Duralie Underground Resources 0.9 40.0 40.9 + Depn/Amort 11.3 10.6 18.0 23.0
+/- Other (Associates) 5.5 0.0 0.0 0.0
Stratford Operating Cashflow 3.0 61.6 157.2 119.6
Resources 2.7 47.2 49.9 - Capex (+asset sales) 40.4 505.0 29.1 2.1
Reserves 1.8 48.2 50.0 - Working Capital Increase 0.0 0.0 10.0 0.0
Grant & Chainey Resources 0 56.9 56.9 Free Cashflow (37.4) (443.4) 118.2 117.6
Middlemount + Equity raised 0.0 430.8 0.0 0.0
Resources 89.3 31.5 120.8 + Debt drawdown (repaid) 34.6 68.8 0.0 0.0
Reserves 69.0 27.0 96.0 Net Change in Cash (38.0) (10.3) 67.6 67.0
Total Resources 301.6 Net Cash/(Debt) (6.9) (86.0) (18.4) 48.7
Directors and Management

Name Position
James MacKenzie Chairman Cash 27.8 17.6 85.2 152.2
Brendan McPherson CEO Total Assets 264.9 833.7 984.8 1038.1
Tim Crossley Deputy CEO Total Debt 34.7 103.5 103.5 103.5
Craig Boyd Acting CFO Total Liabilities 83.7 170.9 225.1 223.8
William Randall Non-Executive Director Shareholders Funds 181.2 662.7 759.7 814.3
David Brownell Non-Executive Director
Ricardo Lieman Non-Executive Director Ratios
Greg Fletcher Non-Executive Director Net Debt/Equity (%) 3.8 13.0 2.4 na
Interest Cover (x) 58.1 15.5 22.1 16.0
Substantial Shareholders Shares (m) % Return on Equity (%) 18.1 8.9 19.4 12.9
Noble Group 91.8 65.3
Westpac 6.9 4.9
Water Island Capital 2.5 1.8
Macquarie Investments 1.4 1.0
Grange Resources Limited GRR ($0.67)

Recommendation: BUY
Moving to a new growth phase Analyst: Alex Passmore
OUR VIEW
GRR recently announced the results of a pre-feasibility study into the Southdown magnetite project near Albany, WA which
showed for an annual throughput of 10Mtpa iron ore concentrate the capital cost of development will be A$2,570m. Funding
for this and valuations on this growth project are set to drive the fortunes of GRR in the medium term. On our estimates
the project only shows mundane returns ($300mpa EBITDA on PSL Fe, AUD assumptions) which equates to a return of 12%
on capital invested. Due to lower production in the March Q (plant shutdown) we have adjusted our underlying CY2011
EBIT forecast down by $40m. However this has been offset by an upwards revision of $70m (i.e. net $30m up) following
a one off US$70m provisional pricing gain to be reported in the June HY (PSL EBIT forecast for GRR is $82m). With the
AUD appreciating by 10% to US$1.07 GRR’s margins are significantly impacted which remains a key risk to our investment
thesis. We continue to rate GRR a BUY (PT$0.98/sh) as its comes into its next growth phase, the stock has had the tainted
image of being ‘ex-growth’ which is set to be removed as Southdown progresses.

• March Q weak although turnaround expected. GRR
reported weak production for the March Q from Savage River
Year End December 31 2010F 2011F 2012F 2013F
operations (SR). Ore production was lower as remediation Reported NPAT ($m) 77.2 55.5 75.2 75.1
of the east wall continued. Longer haul distances and truck Recurrent NPAT ($m) 29.1 55.5 80.1 95.0
rebuilds impacted the amount of ore delivered to stockpiles. A Recurrent EPS (cents) 2.5 4.8 4.5 5.3
total of 248k BCMs of ore were delivered to the ROM. On our EPS Growth (%) 183 90 (6) 19
estimates deliveries to the SR concentrator on a normalised PER (x) 26.7 14.1 15.0 12.6
basis need are required to be maintained at 370k BCMs to
maintain a production rate of 2Mtpa conc. EBITDA ($m) 121.4 122.6 227.4 264.9
EV/EBITDA (x) 5.2 5.2 2.8 2.4
Capex ($m) 5.7 31.5 299.8 825.0
• Savage River well positioned following shutdown. A
major shutdown of the SR concentrator and the Port Latta
Free Cashflow 37.6 148.8 (132.1) (637.9)
FCFPS (cents) 3.2 12.8 (7.4) (35.6)
pellet plants was completed during the March Q. With the PFCF (x) 20.7 5.3 (9.1) (1.9)
replacement of a ball mill and a major welding repair to
an AG mill the concentrator ran for two of three months DPS (cents) 0.0 0.0 0.0 0.0
of the Q. Pellet production at Port Latta was lower in line Yield (%) 0.0 0.0 0.0 0.0
with lower production at the SR concentrator. Franking (%) 0.0 0.0 0.0 0.0
• Earnings impact. We have revised our revenue forecasts

down by 13% to $296m (CY2011) on the back of the lower Company Statistics & Performance
production reported this Q. Our forecast for GRR’s EBIT
has moved from $87m to $46m (down 47%). Shares on issue (m) 1168.4 3mth ADT ($m) 1.34
• Currency also impacting earnings. The higher AUD
is also impacted GRR significantly, as its currency
exposure is entirely unhedged. A 10% move in our dollar

assumption impacts our FY13f EBITDA by circa 40%. 1.25 15000
• Provisional price benefit. GRR has announced a one-

off provisional pricing adjustment of US$70m as it moves 1.00 12000
to Platts IODEX based price for its Pellets. This index is
published daily.
Share Price (A$)
Volume '000
• GRR not immune from rising cost pressures. The

Southdown PFS which had been due for release in early 2011
0.75 9000
was released on 9 May 2010. Capital costs at $2.57bn were

above initial estimates of US$2bn in addition the company 0.50 6000
has not been immune to rising production cost pressures
in the sector with unit operating costs now forecast to be
US$60/t concentrate (up from US$47/t initial est). 0.25 3000
• Funding. We have assumed the Southdown project is funded

via a mix of debt and equity. For a 70% share in the project 0.00 0
GRR will need A$1,800m which we assume will be sourced
40% equity / 60% debt. This implies that GRR needs to raise 12 Months
$420m in equity, will use $300m from Savage River cash flow
and will raise the remainder as debt financing A$1,080m.
Grange Resources Limited $0.67 Year End December 31

Savage River 829 0.46 A$:US$ 0.93 1.06 1.03 0.98

Southdown 350 0.20 Iron Ore Fines (US$/t FOB) 105.16 119.53 119.53 119.53
Exploration 30 0.02 Iron Ore Lump (US$/t FOB) 125.79 143.82 143.82 148.01
Corporate (20) (0.01) Magnetite Pellets (US$/t FOB) 123.67 168.99 175.18 184.57
Unpaid Capital 420 0.23 Magnetite Conc (US$/t FOB) 111.74 127.00 127.00 127.00
Equity Investment 1 0.00
Cash 197 0.11
Debt (47) (0.03) Production Summary 2010A 2011F 2012F 2013F
Price Target 0.98 Production (kt)
Savage River 2347 1694 2358 2544
Southdown (conc) 0 0 0 0
Valuation Summary of Operating Assets Total Production 2347 1694 2358 2544
Cost Summary (A$/t)

Southdown Savage River (incl pre-strip) 71.10 103.64 95.45 93.51
29% Southdown 0.00 0.00 0.00 0.00
Weighted Ave Cash Costs 71.10 103.64 95.45 93.51
Ave Price Received (FOB) 132.64 205.49 175.63 193.49
Savage River Profit & Loss (A$m) 2010A 2011F 2012F 2013F
Exploration
69% 2% Sales Revenue 311.32 348.03 414.20 492.19
Other Income (SR Stock Movements)(10.4) 0.9 44.2 16.6
Operating Costs 170.4 220.5 225.1 237.9
Savage River Iron Ore Production Summary Corporate/Admin 7.4 4.0 4.1 4.2
EBITDA 121.4 122.6 227.4 264.9
3000 220
Depn & Amort 37.3 40.0 55.7 60.0
200
EBIT 84.1 82.6 171.7 204.8
2500 180 MRRT 0.0 0.0 4.9 20.0
160 Interest 9.6 3.3 59.4 77.6
2000 140 Operating Profit 74.5 79.3 107.4 107.3
(A$/t)
120 Tax expense 45.5 23.8 32.2 32.2

(kt)
1500
100 Minorities 0.0 0.0 0.0 0.0
1000 80 Abnormals 48.2 0.0 0.0 0.0
60 NPAT 77.2 55.5 75.2 75.1
500 40
20 Normalised NPAT 79.3 55.5 75.2 75.1
0 0
2010A 2011F 2012F 2013F 2014F 2015F 2016F 2017F
Ave Price Received (FOB) Weighted Ave Cash Costs
Cash Flow (A$m) 2010A 2011F 2012F 2013F
Savage River
Reserves & Resources + Interest/Tax/Expl Exp 56.8 28.9 93.5 111.7
Savage River Magnetite Mt % DTR + Depn/Amort 37.3 40.0 55.7 60.0
Reserves 149 49.2 +/- Other 0.0 0.0 0.0 0.0
Resources 316 50.7 Operating Cashflow 154.8 95.3 130.6 134.9
Southdown Magnetite (100%) Mt % DTR - Working Capital Increase 63.6 (85.0) 0.0 0.0
Reserves 388 35.5 Free Cashflow 85.5 148.8 (169.2) (690.1)
Resources 654 36.5 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
+ Equity raised 0.0 420.0 0.0 0.0
+ Debt drawdown (repaid) (44.9) (12.5) 968.0 (7.0)
Directors Net Change in Cash (4.0) 556.3 798.8 (697.1)
Name Position Net Cash/(LT Debt) 44.9 613.7 444.5 (245.6)
Xi Zhiqiang Chairman
Neil Chatfield Deputy Chairman
Russell Clark Managing Director Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Hong Lin Zhao Non-Executive Director
Clement Cheung Ko Non-Executive Director Cash/Bullion 91.9 648.2 1447.0 749.9
Mr Peter Stephens Non-Executive Director Total Assets 799.9 1381.7 2466.3 2583.6
John Hoon Non-Executive Director Total Debt 47.0 34.5 1002.5 995.5
Substantial Shareholders Shares (m) (%) Shareholders Funds 563.1 1038.6 1113.7 1188.8
Shagang 551.0 47.2
RGL 143.6 12.5 Ratios
Pacific Minerals 161.3 13.8 Net Debt/Equity (%) (8.0) (59.1) (39.9) 20.7
Acorn 50.0 4.3 Interest Cover (x) 8.8 25.2 2.9 2.6
Stemcor 32.0 2.7 Return on Equity (%) 13.7 5.3 6.7 6.3
Disclosure: Patersons acted as underwriter for GRR’s 1:1 non renounceable pro-rata rights issue in August 2009 which raised
$124m. It received a fee for this service.
Independence Group NL IGO ($6.20)

Recommendation: BUY
Bolting on earnings with JML Analyst: Alex Passmore, Rhys Bradley
OUR VIEW
Following a strong run from mid-2010 with a buoyant gold price and news of Tropicana development, IGO announced a
$532m deal to takeover JML on a 1:8 scrip basis in early February. This put significant downwards pressure on the stock
as the market held the view it was over paying. The deal has since closed and we see the assets as a good fit for IGO
adding $61mpa NPAT to the group in the coming years (implying 8.7x P/E acquisition multiple). IGO will acquire a highly
prospective pipeline of exploration projects and JML will gain improved access to funding. We also believe the management
teams of the companies are complimentary with IGO historically being exploration focused while JML management have
a strong project development track record. FY12 looks like a strong year for IGO as the impact of the JML acquisition is
seen in the company’s operating profit (on our estimates EPS almost triples). Funding for IGO’s share of Tropicana and
Stockman will be met internally with the company able to maintain a dividend on our forecasts ($560m in operating cash
flow versus $330m in capital expenditure commitments). We rate IGO a BUY with a target price of $8.13/sh.

• Becoming a diversified miner. IGO which has historically
focused on nickel and gold has completed its takeover of Jabiru Year End June 30 2010A 2011F 2012F 2013F
Metals Ltd (JML). This sees the company emerge as a diversified Reported NPAT ($m) 27.1 34.3 94.3 111.8
player with interests in nickel (Long), gold (30% of Tropicana), Recurrent NPAT ($m) 27.7 33.2 94.3 111.8
copper, zinc and lead (Jaguar and Stockman). Recurrent EPS (cents) 24.2 16.5 46.8 55.5
EPS Growth (%) 13.8 (31.9) 184.1 18.5
• Reaction to the merger with JML. IGO announced the off-
market takeover of JML on 9 February 2011 (1:8 basis). Initially
PER (x) 25.6 37.6 13.2 11.2
the market responded poorly to the deal believing IGO paid a EBITDA ($m) 58.2 71.6 163.4 191.5
premium at the implied value of $532m for JML. However we EV/EBITDA (x) 9.7 13.9 6.6 5.6
believe the takeover is a good fit, providing IGO with a pipeline Capex ($m) 31.1 60.8 120.0 111.0
of exploration and development opportunities and affording the Free Cashflow 21.9 (32.8) (8.6) 20.9
ex-JML projects (Stockman capex requirement is estimated at FCFPS (cents) 19.1 (16.3) (4.3) 10.4
$190m) with funding to take them into production. IGO has PFCF (x) 32.5 (38.1) (144.5) 59.8
compulsorily acquired JML as of 12 May 2011.
DPS (cents) 1.0 12.0 9.0 11.0
Yield (%) 0.2 1.9 1.5 1.8
• Valuation updated for the integration. Our updated IGO
valuation includes JML’s Jaguar/Bentley and Stockman projects, Franking (%) 100 100 100 100
and the target price has been adjusted accordingly. Our DCF
valuation is $7.39/sh with a price target of $8.13/sh.
• Nickel production marginally lower. The March Q saw
production fall 16% short of forecasts, which was attributed the Shares on issue (m) 201.5 3mth ADT ($m) 5.67
Moran development where airway ventilation works and drilling Market Cap. ($m) 1249.3 Debt est ($m) 0.0
for extensions were completed. Consequently cash costs moved 52 week range $4.01 - $8.13 Cash est ($m) 252.4
higher (actual A$5.52/lb versus forecast A$4.37/lb). Mine life
remains a key area to watch with exploration at Moran North
highlights including an intercept of 5m at 12.2% Ni. 9.00 3000
• Tropicana construction commences. While the feasibility

study for the Boston Shaker open pit development as a start 8.00 2500
to Tropicana is pending with release in the September Q, site
mobilization have works commenced indicating the project is
Share Price (A$)
moving ahead. We are expecting a 33 month build period and 7.00 2000
Volume '000
$730m in pre-production capital. Once complete the project will

be operating at 6Mtpa throughput at a head grade of 2.5g/t Au 6.00 1500
for 450kozpa Our forecasts call for A$615/oz unit cash costs.
• Jaguar. Full year forecast copper production is expected to

be consistent with guidance for the FY of 9-10kt with full year
5.00 1000
forecast zinc production down from 20kt to 15-17kt. The decline

at Bentley is continuing with forecast ore mining scheduled for 4.00 500
Q1 FY12.
• Catalysts. 1) Bentley mining in Q1 FY12. 2) Reserve/resource

upgrades at Jaguar and extension of mine life. 3) Boston Shaker
3.00 0
12 Months
and Havana Deeps feasibility and pre-feasibility study results.
4) Successful integration of the two companies and delivery of
cost savings through synergies.
Independence Group NL $6.20 Year End June 30

Victor/Long 217 1.08 A$:US$ 0.89 0.99 1.05 1.00

Tropicana 420 2.08 Gold (US$/oz) 1,093 1,356 1,483 1,507
Jaguar/Bentley 322 1.60 Copper (US$/lb) 3.04 4.00 4.31 4.20
Stockman 111 0.55 Nickel (US$/lb) 8.75 11.12 11.75 11.43
Forward Sales (8) (0.04) Zinc (US$/lb) 0.94 1.03 1.11 1.11
Exploration 201 1.00 Production Summary 2010A 2011F 2012F 2013F
Cash (est post raise) 252 1.25 Victor/Long
Debt est 0 0.00 Nickel Production (t)
DCF @ 8% Discount Rate 1490 7.39 Nickel in Concentrate 8,615 8,849 9,766 11,116
Price Target 10% Premium to NPV 1,639 8.13 Copper in Concentrate 643 640 720 840
Per Pound of Payable Nickel
Sensitivity Price Target +10% 0% -10% Net Nickel Cash Cost (A$/lb) 4.00 4.19 4.43 4.16
Nickel Total Cost (A$/lb) 5.58 6.13 6.32 6.02
Nickel Price 8.41 8.13 7.88 Net Nickel Cash Cost (US$/lb) 3.57 4.16 4.66 4.16
Gold Price 9.01 8.13 7.26 Nickel Price Received (US$/lb) 8.29 10.53 11.40 11.22
A$ : $US 6.64 8.13 9.98 Tropicana
Gold Production (koz)
Valuation Summary of Assets Tropicana Gold Production (IGO)
Victor/Long Gold Cash Costs (A$/oz)
14% Gold Cash Costs (US$/oz)
Gold Price Received (US$/oz)
Cash (est post raise)
17% Tropicana
28%
Jaguar/Bentley
Zn in Concentrate (kt) 26.8 19.2 18.1 18.1
Cu in Concentrate (kt) 9.2 9.0 9.7 8.2
Exploration Silver in Cu Concentrate (moz) 0.6 0.8 0.7 0.7
13% **(Net of copper and silver credits)
Stockman
Jaguar/Bentley
Stockman
7% 21% Zn in Concentrate (kt) 0.0 0.0 0.0 7.5
Cu in Concentrate (kt) 0.0 0.0 0.0 10.0
Nickel Production Summary Silver in Cu Concentrate (moz) 0.0 0.0 0.0 0.0
12,500 12.50
**(Net of copper and silver credits)
10,000 10.00
Nickel in conc (t)
Sales Revenue 111.1 161.1 293.0 330.5

7,500 7.50
Other Income 5.6 11.4 12.1 9.8
(US$/lb)
Operating Costs 45.5 71.9 121.5 128.2

5,000 5.00
2,500 2.50
EBITDA 58.2 71.6 163.4 191.5
Depn & Amort 18.8 21.6 26.4 29.6
0 0.00
2010A 2011F 2012F 2013F 2014F 2015F EBIT 39.4 50.0 137.0 161.9
Nickel in Concentrate Net Nickel Cash Cost (US$/lb) Interest 0.0 0.0 2.3 2.2
Nickel Price Received (US$/lb) Operating Profit 39.4 50.0 134.8 159.7
Tax expense 11.7 16.8 40.4 47.9
Reserves & Resources as June 10 Abnormal Losses / Minorities 0.6 (1.1) 0.0 0.0
NPAT 27.1 34.3 94.3 111.8
(Ni, Zn & Cu)/Moz Normalised NPAT 27.8 33.2 94.3 111.8
Reserves Mt % kt (Au &Ag)
Long Ni 1.32 4.1 53.9 Cash Flow (A$m) 2010A 2011F 2012F 2013F
Tropicana (100%) Au 45.00 2.3 3.33
IGO (30%) 13.50 2.30 1.00 Adjusted Net Profit 27.7 33.2 94.3 111.8
Jaguar/Bentley Zn 3.23 7.9 255.6 + Interest/Tax/Expl Exp 18.9 26.7 56.7 64.4
Cu 3.2349 1.8 58.2 - Interest/Tax/Expl Inc 28.1 37.1 65.5 72.9
Ag 3.2349 0.99 0.10 + Depn/Amort 18.8 21.6 26.4 29.6
Resources +/- Other 0.0 0.0 0.0 0.0
Long Ni 1.70 5.4 91.9 Operating Cashflow 37.4 44.4 111.9 132.9
Tropicana (100%) Au 75.3 2.07 5.01 - Capex (+asset sales) 31.1 60.8 120.0 111.0
IGO (30%) 22.59 2.07 1.50 - Working Capital Increase (15.6) 16.3 0.0 0.0
Jaguar/Bentley Zn 4.68 7.2 337.0 Free Cashflow 21.9 (32.7) (8.1) 21.9
Cu 4.68 2.1 98.3 - Dividends (ords) 5.7 14.6 18.1 22.1
Ag 4.68 0.98 0.15 + Equity raised 0.5 158.6 0.0 0.0
Stockman Zn 12.50 4.4 550.0 + Debt drawdown (repaid) 0.0 0.0 (15.0) (40.0)
Net Cash/(LT Debt) 144.0 255.3 174.1 173.9
Name Position
Rodney Marston Non Executive Director Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Christopher Bonwick Managing Director
Kelly Ross Executive Director Cash/Bullion 144.0 255.3 214.1 173.9
John Christie Non Executive Director Total Assets 273.5 450.7 580.1 633.6
Oscar Aamodt Non Executive Chairman Total Debt 0.0 0.0 40.0 0.0
Peter Bilbe Non Executive Director Total Liabilities 58.8 58.6 111.8 75.6
JP Morgan 40.0 20 Ratios
National Nominees 30.2 15 Net Debt/Equity (%) na na na na
HSBC 26.7 13 Interest Cover (x) na na 59.9 74.4
Citicorp 14.4 7 Return on Equity (%) 12.6 8.8 20.1 20.0
Lynas Corporation Limited LYC ($2.10)

Recommendation: BUY
Imminent product and record prices Analyst: Andrew Harrington
OUR VIEW
Lynas is only months away from becoming the first new Rare Earth Oxide (REO) supplier outside China and with prices at
record levels it is an attractive company in this space. The company has received its operating licence for the Mt Weld Rare
Earth Concentration plant and will begin feeding ore into the concentrator in the third week of May. The resulting concentrate
will be shipped to Malaysia in September to produce the finished Rare Earth Oxide product for sale. We expect REO prices that
are made up of the prices of 15 individual elements to eventually decline but the current market fundamentals for the majority
of the 15 elements are very supportive. Our short term price assumptions are $80/kg, half of current spot prices of $163/kg,
and our long term prices are $40/kg, a quarter of current spot prices. The company is fully funded for it to achieve forthcoming
milestones with $220m in cash plus further funds raised through a combination of issuing equity and debt. Our valuation has
risen and we re-iterate our BUY recommendation with a price target of $2.95/sh.

• LYC has received its operating licence for the Mt Weld Rare
Earth Concentration plant and will begin feeding ore into the
concentrator in the third week of May. LYC has announced that Year End June 30 2010A 2011F 2012F 2013F
rare earth concentrate will be produced 10 days later. This
Reported NPAT ($m) (43.0) (24.8) 257.6 567.9
is an important milestone for LYC and more milestones are
Recurrent NPAT ($m) (17.6) (24.8) 257.6 567.9
coming in a short period of time. Concentrate will be shipped Recurrent EPS (cents) (1.0) (1.4) 14.4 31.8
to Malaysia and first feed into the LYC Advance Materials EPS Growth (%) na na na 120.5
Plant (LAMP) will begin in September. Shortly thereafter it PER (x) (205.2) (151.1) 14.6 6.6
will produce finished Rare Earth Oxide product for sale.
EBITDA ($m) (16.5) (24.8) 267.8 601.7
• LYC has all of its approvals for both the concentrator and LAMP
but is now only waiting for an independent panel of international
EV/EBITDA (x) (195.0) (142.2) 12.8 5.1
Capex ($m) 36.0 218.3 152.8 256.2
experts to conduct a one-month audit of the Malaysian LAMP Free Cashflow (38.8) (254.3) 110.5 330.0
which is in response to local community apprehension around FCFPS (cents) (2.3) (14.2) 6.2 18.5
the minor radioactivity of thorium in the main waste product – PFCF (x) (93.1) (14.8) 34.0 11.4
phosphogypsum – which LYC is aiming to store and sell for road
base or building material. DPS (cents) 0.0 0.0 0.0 0.0
• Phase1 capacity is 11ktpa and LYC has recently executed

a financing and supply agreement with Sojitz to accelerate
the ramp-up to 22ktpa of REO. Ramp-up is now expected to
be achieved by the end of Calendar 2012 (early 2013 in our Company Statistics & Performance
modelling). The deal sees LYC supplying 8.5ktpa (40% of total
production) for 10 years to Japan in exchange for Sojitz buying Shares on issue (m) 1702.6 3mth ADT ($m) 79.46
$25m in new LYC shares and providing $225m in finance. This Market Cap. ($m) 3575.5 Debt est ($m) 0.0
supply constitutes 30% of Japanese total demand for REO and 52 week range $0.47 - $2.60 Cash est ($m) 220.8
shows the urgent imperative to source supplies outside of China,
which has continued to cut exports.
3.00 80000
• The company is fully funded for the ramp up. It has raised $100m
in new equity, $225m in debt and will have earnings from the
second half of 2011. With cash of $205m at the end of March 2.50
and $75m of capex in the current quarter we estimate that LYC
will have $221m at the end of FY11 without drawing down on 60000
Share Price (A$)
its new financing package. 2.00

Volume '000
• A REO supply response is coming with Mt Weld and Mountain

Pass in the USA bringing substantial new volumes to the market. 1.50 40000
The Chinese quota system (controlling 95% of supply), and the
development of new applications (and substitutes) for REO mean
that a supply demand balance is very difficult to determine but 1.00
one cannot expect ongoing record prices and super margins. 20000
Our long term REO price has risen to $40/kg.
0.50
• The transaction with Forge that has caused much consternation
to shareholders because of its related-party nature, with
Executive Chairman Nick Curtis being a large shareholder in 0.00 0
Forge, has been cancelled at the cost of $0.6m to LYC. We saw 12 Months
it as immaterial except in terms of the division of loyalties for
Nick Curtis at such a crucial time for the development of LYC.
Lynas Corporation Limited $2.10 Year End June 30

Mt Weld 5044 2.82 A$:US$ 0.89 0.99 1.05 1.00

Crown Polymetallic 25 0.01 Mt Weld suite of REO (US$/t) 12976 79131 80908 41318
Kangankunde- Malawi 56 0.03 Mt Weld suite of REO (US$/kg) 12.98 79.13 80.91 41.32
Exploration remainder of Mt Weld 0 0.00 Lanthanum (US$/kg) 6.62 69.26 69.88 26.51
Exploration Crown poly-metallic 5 0.00 Cerium (US$/kg) 5.39 69.55 67.06 13.25
Forwards 0 0.00 Neodymium (US$/kg) 24.84 104.36 110.76 82.46
Corporate (194) (0.11) Praseodymium (US$/kg) 24.64 100.66 107.43 82.46
Unpaid Capital 69 0.04 Samarium (US$/kg) 4.09 50.93 50.79 13.99
Cash 221 0.12 Dyprosium (US$/kg) 155.48 358.07 371.31 338.68
Debt 0 0.00 Europium (US$/kg) 503.75 501.46 733.24 1531.41
DCF @ 10% Discount Rate 5,226 2.93 Terbium (US$/kg) 449.25 707.84 995.77 1767.01
Price Target 5,226 2.95
Sensitivities -10% 0% +10% Production Summary 2010A 2011F 2012F 2013F
Rare Earth Prices 2.57 2.93 3.28 Lanthanum 1,468 4,672

Neodymium Price 2.79 2.93 3.06 Cerium 2,691 8,563
A$ : US$ 3.32 2.93 2.60 Neodymium 1,065 3,389
Praseodymium 306 975
Valuation Summary of Operating Assets Samarium 131 416
Dyprosium 7 23
Europium 26 81
Terbium 4 12
Total REO Production (t) 5,758 18,320
Cash Cost (US$/kg) 18.53 9.73
Mt Weld Crown Polymetallic
99% 1%
Sales Revenue 0.0 0.0 357.3 760.9

Other Income 9.1 13.0 15.5 30.5
REO Production Summary Corporate/Admin 9.2 37.6 28.4 28.9
EBITDA (16.5) (24.8) 267.8 601.7
25,000 100.00 Depn & Amort 1.2 0.0 5.8 18.3
EBIT (17.6) (24.8) 262.1 583.4
20,000 80.00 Interest 0.0 0.0 4.5 15.5
Tax expense 0.0 0.0 0.0 0.0
(US$/kg)
15,000 60.00
Minorities 0.0 0.0 0.0 0.0
(t)
NPAT (17.6) (24.8) 257.6 567.9

10,000 40.00
Significant item gains / (losses)(25.4) 0.0 0.0 0.0
Normalised NPAT (43.0) (24.8) 257.6 567.9
5,000 20.00
0 0.00
2010A 2011F 2012F 2013F 2014F
Cash Flow (A$m) 2010A 2011F 2012F 2013F
Mt Weld suite of REO (US$/kg) Cash Cost (US$/kg)
Total REO Production (t)
+/- Other 0.0 (11.0) 0.0 0.0
Reserves MtGrade (%)REO (kt) Operating Cashflow (42.2) (35.9) 263.3 586.1
Mt Weld 2.08 15.5 322 - Capex (+asset sales) 36.0 218.3 152.8 256.2
Resources MtGrade (%)REO (kt) - Working Capital Increase (39.3) 0.0 0.0 0.0
Mt Weld - CLD 9.9 10.7 1,057 Free Cashflow (38.8) (254.3) 110.5 330.0
Mt Weld - Duncan 7.6 4.8 366 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Kangankunde- Malawi 2.5 4.2 107 + Equity raised 431.5 101.5 0.0 0.0
Crown Tantalum & Niobium Deposit 37.7 1.2 437 + Debt drawdown (repaid) 0.0 0.0 152.8 32.9
Total 57.7 3.4 1,968 Net Change in Cash 388.5 (184.4) 263.3 362.9
Directors Net Cash/(Debt) 405.2 220.8 331.3 661.2
Name Position
Nick Curtis Executive Chairman Balance Sheet (A$m) 2010A 2011F 2012F 2013F
David Davidson Non Executive Director
Jacob Klein Non Executive Director Cash 405.2 220.8 484.1 847.0
Liam Forde Non Executive Director Total Assets 640.7 676.8 1130.6 1830.4
Total Debt 0.0 0.0 152.8 185.8
Substantial Shareholders Shares (m) % Total Liabilities 21.5 20.2 216.5 348.4
Morgan Stanley 172.9 10.2 Shareholders Funds 619.1 656.6 914.2 1482.0
JP Morgan Chase 76.5 4.5
JP Morgan Asset Mgmt 24.0 1.4 Ratios
Carmignac Gestion 22.0 1.3 Net Debt/Equity (%) na na na na
Van Eck Associates 17.6 1.0 Interest Cover (x) na na 58.1 37.6
General Electric 16.9 1.0 Return on Equity (%) na na 28.2 38.3
Nick Curtis 16.0 0.9 Gearing (%) (9.2) (189.5) (50.7) (56.8)
Fidelity International 9.7 0.6
Fidelity Management 9.6 0.6
Capital Research Global 55.0 3.2
MacArthur Coal Limited MCC ($11.50)

Recommendation: BUY
Strength on future sales Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
All of the large cap coal producers have their blemishes but looking forward MCC looks like the standout in terms of valuation
and relative to its peers. Granted it reported a very poor result for the third quarter of FY11 where ROM coal production fell
45% and sales fell by 56%. These results were to be expected as the company has been under force majeure conditions
since December due to the QLD floods. The force majeure has been lifted and the impacts of the flooding will only linger for
the next few months, including rollover commitments. Then we should see a return to higher production volumes combined
with higher prices. However those prices and returns will be reduced by the strength of the Aussie dollar, which has knocked
80c per share off our previous valuation. The semi-hard coking coal from Middlemount will contribute less to future growth
after GCL increased its holding to 47.5%. However, development of MCC’s large portfolio of exploration and operating assets
will support growth. The share price has reacted positively to the recent profit guidance and increase in coal resources at
West Rolleston and Vermont East/Willunga tenements. We are maintaining our BUY recommendation despite the fact that
our revised Aussie dollar assumptions have taken some of the shine off our price target which is currently $14.15/sh.

• RoM fell 45% YoY. RoM coal production fell by 45% to
725kt compared to 1,328kt in the previous corresponding Year End June 30 2010A 2011F 2012F 2013F
period. For the three quarters to date, RoM production
was down a less substantial 25% to 3,367kt compared to Reported NPAT ($m) 124.7 212.0 448.2 406.0
Recurrent NPAT ($m) 120.7 212.0 448.2 406.0
4,468kt last year. This is the lowest quarter since 2003.
Recurrent EPS (cents) 41.3 70.2 148.4 134.4
EPS Growth (%) (31.9) 70.1 111.4 (9.4)
• Saleable Production and Sales crashed. Production
of Saleable coal was also down – 56% in the March Q PER (x) 27.9 16.4 7.8 8.6
2011 at 523kt compared to 1,180kt in 2010. For the three EBITDA ($m) 226.8 334.9 688.7 636.4
quarters to date Saleable production was down 26% to EV/EBITDA (x) 13.7 9.1 4.0 4.1
2,790kt compared to 3,766kt last year. Worse still, without Capex ($m) 79.2 75.9 64.5 55.7
substantial stockpiles, sales fell to 476kt, which is 61% below Free Cashflow 98.1 113.3 406.0 381.6
the 1,226kt of March 2010. For the year to date, sales are FCFPS (cents) 33.5 37.5 134.4 126.3
down by 27% to 2,899kt compared to 4,001kt last year. PFCF (x) 34.3 30.7 8.6 9.1
The proportion of PCI sales was only 75% in the quarter.
DPS (cents) 25.0 35.0 74.0 67.0
• Smoother sailing going forward. MCC had previously
revised downward its production guidance for FY11 to
Yield (%)
Franking (%)
2.2
100.0
3.0
100.0
6.4
100.0
5.8
100.0
4.2Mt but has now revised it to 3.8-4.2Mt. We have
assumed in our modelling that FY11 production will be
down by 24% to 3.8Mt. The company has lifted force
majeure and the next six months should see a return to Company Statistics & Performance
higher production volumes combined with much higher
realised prices from PCI contracts (once rollover tonnages Shares on issue (m) 302.1 3mth ADT ($m) 19.26
are concluded by June). FY12 production will be back over
5Mt not including the production from Middlemount.
• Earnings and Balance Sheet look strong. Guidance for

FY11 NPAT is $185m to $205m, below our most recent 14.00 5000
estimate of $220m before any abnormals. This represents
a 48-64% increase on last year. We highlight also that 12.00
MCC has over $500m in cash at bank. 4000
• Increased coal reserves. In addition to the coal 10.00

Share Price (A$)
resources and reserves increase relating to the Codrilla and

Volume '000
Middlemount projects, in February and March respectively, 8.00

3000
MCC has announced a significant upgrades at two other
projects - West Rolleston and Vermont East/Willunga. This
has increased total coal resources by 622Mt from 1,635.9Mt 6.00
2000
to 2,257.9Mt this financial year. MCC holds a 90% joint
venture interest in the West Rolleston thermal coal deposit 4.00
and an 85% joint venture interest in the Vermont East/ 1000
Willunga low volatility PCI deposit providing a net coal 2.00
resource increase of 543.1Mt attributable to the Company.
• The prospect of a takeover. Appears to have diminished

although we still see it as a possibility. The company’s commitment
0.00
12 Months
0
of $25m per annum on exploration and development of the

existing portfolio of coal tenement will build the asset base and
increase the value of the company prior to any bid.
MacArthur Coal Limited $11.50 Year End June 30

Coppabella 706.3 2.34 US$/A$ 0.8939 0.9912 1.0525 1.0000

Moorvale 871.1 2.88 Hard Coking Coal (US$/t) 151.00 248.75 302.50 211.25
Middlemount 463.2 1.53 Semi-soft Coking Coal (US$/t)111.25 182.50 227.50 152.50
Codrilla 618.4 2.05 PCI Coal (US$/t) 111.25 195.00 232.50 157.50
Monto 89.1 0.29 Thermal Coal (US$/t) 77.00 106.00 122.50 97.50
Resources 1191.4 3.94 Coke price (US$t) 302.00 497.50 605.00 422.50
Corporate (100.2) (0.33)
FX Forwards 1.1 0.00
Cash 524.2 1.74 Production Summary 2010A 2011F 2012F 2013F
Debt (88.6) (0.29)
Attributable Saleable Coal Production
NPV 4276.0 14.15
Price Target 14.15 Coppabella (kt) 2,699 1,943 2,620 2,620
FOB costs (US$/t) 82.3 90.4 99.3 91.5
Valuation Summary of Coal Assets Price Received (US$/t) 118.3 175.8 212.4 157.4
Moorvale (kt) 2,334 1,897 2,600 2,600

FOB costs (US$/t) 65.3 82.7 81.9 75.1
Coppabella Price Received (US$/t) 111.4 161.8 194.4 145.4
Moorvale Two Operating Mines (kt) 5,033 3,840 5,220 5,220

FOB costs (US$/t) 74.4 86.6 90.6 83.3
Middlemount Price Received (US$/t) 115.1 168.9 203.4 151.4
Codrilla
Monto Profit & Loss (A$m) 2010A 2011F 2012F 2013F
Sales Revenue 667.5 691.3 1220.6 1304.1

Other Income 25.0 22.5 31.9 42.8
Coal Sales Summary (Mt) Operating Costs 423.8 338.9 543.5 689.8
11 Corporate/Admin 41.9 40.0 20.3 20.7
10 EBITDA 226.8 334.9 688.7 636.4
9 Depn & Amort 31.3 24.3 38.3 47.3
8 EBIT 195.6 310.6 650.5 589.1
7
Interest 12.2 7.7 10.1 9.1
Equity Accounted (10.9) 0.0 0.0 0.0
6
5
Tax expense 47.8 90.9 192.1 174.0
4 Abnormals & Minorities 0.0 0.0 0.0 0.0
3 NPAT 124.7 212.0 448.2 406.0
2
1 Normalised NPAT 120.7 212.0 448.2 406.0
0
2009a 2010a 2011e 2012e 2013e 2014e
Coppabella Moorvale Middlemount Codrilla Monto Cash Flow (A$m) 2010A 2011F 2012F 2013F
Resources 100% Basis (Mt) Adjusted Net Profit 124.7 212.0 448.2 406.0
Meas. Indic. Total - Interest/Tax/Expl Inc 108.6 114.6 218.4 199.6
Coppabella 59.7 121.6 181.3 + Depn/Amort 31.3 24.3 38.3 47.3
Moorvale/Moorvale West 167.0 68.6 235.6 +/- Other (Associates) 70.0 (31.1) 0.0 0.0
Olive Downs 56.4 53.3 109.7 Operating Cashflow 177.3 189.2 470.3 436.8
Monto 22.4 50.0 72.4 - Capex (+asset sales) 130.2 370.9 64.5 55.7
Vermon East/Wilunga 170.0 123.6 293.6 - Working Capital Increase 0.0 0.0 0.0 0.0
Codrilla 42.8 12.7 55.5 Free Cashflow 47.1 (181.7) 405.8 381.1
West Rolleston 47.2 105.9 153.1 - Dividends (ords & pref) 53.4 130.6 126.9 223.5
Middlemount 89.3 31.5 120.8 + Equity raised 62.0 499.5 0.0 0.0
+ Debt drawdown (repaid) 24.5 (10.8) 29.5 (24.3)
Total Resources 1222.0 Net Change in Cash 80.2 176.4 308.4 133.2
Directors Net Cash/(Debt) 248.4 435.6 714.5 872.0
Name Position
Keith De Lacy Non-Executive Chairman Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Roger Marshall Non-Executive Deputy Chairman
Nicole Hollows Managing Director & Chief Executive Officer Cash 348.2 524.2 832.6 965.9
Martin Kriewaldt Non-Executive Director Total Assets 1567.1 1994.8 2621.4 2799.6
Peter Forbes Non-Executive Director Total Debt 99.4 88.6 118.2 93.8
Terry O’Reilly Non-Executive Director Total Liabilities 438.5 259.7 661.7 636.2
Chen Zeng Non-Executive Director Shareholders Funds 1128.6 1735.0 1959.7 2163.4
Significant Shareholders Shares (m) % Ratios

CITIC Australia Coal 71.7 23.7 Net Debt/Equity (%) na na na na
ArcelorMittal 42.2 14.0 Interest Cover (x) 16.1 40.2 64.3 64.9
POSCO 21.2 7.0 Return on Equity (%) 10.7 12.2 22.9 18.8
Fidelity 15.2 5.0
UBS 13.2 4.4
Mantra Resources Limited MRU ($6.84)

Quality Project: Accept ARMZ Offer Analyst: Simon Tonkin, Rhys Bradley
OUR VIEW
MRU is a uranium exploration and development company with a portfolio of assets in Southern Africa. The company’s
key focus is the Mkuju River Project in Tanzania where it discovered multiple thick zones of sandstone hosted uranium
mineralisation at the 101.4mlb Nyota deposit. In December 2010, MRU and ARMZ Uranium Holding Co. (ARMZ) entered
into a Scheme Implementation Agreement (i.e. friendly deal) under which ARMZ will acquire all of the issued share capital
in MRU by way of a Scheme of Arrangement with minimal conditions. Following the events of Fukushima, Japan and the
impact on the uranium market ARMZ revised downward by 12.5% its all-cash consideration to $6.87/sh with a $0.15/sh
special dividend (from $8/sh). This values the Company at approximately A$1.02 billion. The Scheme Booklet has been
dispatched to shareholders and the next key date is 20 May 2011 whereby a Scheme Meeting will be held to vote on the
deal. The proposed implementation date is Thursday 9 June 2011. We believe the deal is attractive for MRU shareholders
considering the current environment for uranium. We have a $6.60/sh target price on MRU based on our revised multiple
from 1.5 to 1.2x NAV. Our recommendation is for MRU shareholders to accept the offer.

• ARMZ Deal Attractive. The ARMZ deal represents a
premium to shareholders of 16.9% to our target price and
represents $10.06/lb of resource. It is unsurprising to us Reported NPAT (A$m) (31.3) (39.7) (26.0) 15.5
that the Russian’s have taken an interest in Mantra given Recurrent NPAT (A$m) (31.3) (39.7) (26.0) 15.5
its quality assets in a jurisdiction that Russia has worked in Recurrent EPS (cents) (22.7) (29.0) (12.3) 7.4
before (Tanzania). We attended a lunch in Toronto in August EPS Growth (%) na na na na
2010 where the head of Rosatom indicated that Russia was PER (x) (30.2) (23.6) (55.4) 92.8
keen to become more involved in uranium mining. Rosatom EBITDA (A$m) (31.3) (39.7) (24.4) 33.8
is involved in approximately 17% of uranium enrichment EV/EBITDA (x) (30.2) (23.6) (62.6) 43.3
compared to only 4% of uranium mining under Rosatom’s Capex (A$m) 1.1 55.0 210.9 25.8
subsidiary ARMZ. Rosatom is keen to bring these figures Free Cashflow (14.5) (82.7) (239.3) (2.1)
closer together and has already taken a 51% holding in FCFPS (cents) (10.5) (60.3) (113.7) (1.0)
PFCF (x) (65.3) (11.3) (6.0) (690.7)
Uranium One (UUU-T) and has made its offer for Mantra.
DPS (cents) 0.0 0.0 0.0 0.0
• Quality Asset; Near-Term Production. The Nyota deposit
at 101.4mlb is a quality asset for the following reasons:
Yield (%)
Franking (%)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1) The shallow ore is free dig; therefore cash costs should
remain in the lowest quartile of uranium producers. 2) Capital
costs are reasonably low at US$298m with over half of that Company Statistics & Performance
cost related to infrastructure for the project. 3) Grades at
422ppm are high enough to sustain a low-cost operation. Shares on issue (m) 142.9 3mth ADT ($m) 5.35
• Operations Team Already in Place. The feature that really
stood out with MRU is that over the past 12 months MRU
has assembled an outstanding operations team to ensure

that the project was optimised for a smooth ramp up to 8.00 5000
production. The approach was to optimise the project before
it reaches production to prevent ramp-up issues and improve
the overall efficiency of the project. From a Russian point of 7.00 4000
view many of these people would need to stay on-board to
Share Price (A$)
reach MRU’s original production estimate of 2013.

Volume '000
6.00 3000
• Plenty of Exploration Upside. MRU has commenced its
near mine exploration drill program with first results in
November. This could ultimately expand the Nyota resource 5.00 2000
by 100mlb.
• Timetable of Scheme of Arrangement (Proposed):

– 20 May 2011: Scheme Meeting;
4.00 1000
– 25 May 2011: Second Court Hearing for approval of

the Scheme; 3.00 0
– 30 May 2011: Proposed Effective Date of the Scheme 12 Months
and last day of trading on the ASX and TSX;
– 6 June 2011 Record Date for Entitlements;
– 9 June 2011 Implementation Date.
Mantra Resources Limited $6.84 Year End June 30

A$m A$/sh Commodity Assumptions 2011F 2012F 2013F 2014F
Mkuju River 639.1 3.04 A$:US$ 0.99 1.05 1.00 0.96

Exploration 213.0 1.01 Uranium (US$/lb) 60.00 62.50 66.40 68.81
Corporate (51.4) (0.24)
Forwards 0.0 0.00
Unpaid Capital 306.8 1.46 Sensitivities -10% 0% +10% % Chg
Cash 51.8 0.25
Debt 0.0 0.00 FX (A$:US$) 8.70 8.40 8.20 (2)
NPV 1159.3 5.51 U Price 7.10 8.40 9.70 15
(@ 10% disc) Grade 7.10 8.40 9.70 15
Price Target 6.60 Operating Costs 8.80 8.40 8.00 (5)
(1.2x NAV)

Mkuju River (Attributable) 0.00 0.00 1.64 3.29
Total Production (mlbs) 0.00 0.00 1.64 3.29

Exploration
Mkuju River 18% C1 Cash Cost (US$/lb) na na 24.74 23.00
56% Cash Cost (US$/lb) na na 28.10 26.44
Total Cash Cost (US$/lb) na na 36.21 34.33
Price Received - ($US/lb) na na 67.31 68.81
Unpaid Capital Profit & Loss (US$m) 2011F 2012F 2013F 2014F
26%
Sales Revenue 0.0 0.0 99.2 203.9
Uranium Production Summary Other Income 2.4 6.3 2.6 2.1
5.00 30 Exploration Exp. 36.9 27.8 11.7 12.0
EBITDA (39.4) (25.7) 33.8 92.2
4.00 28
Depn & Amort 0.0 0.0 13.3 26.0
EBIT (39.4) (25.7) 20.6 66.2
3.00 26 Interest 0.0 1.7 3.1 0.7
2.00 24 Abnormals (pre-tax) 0.0 0.0 0.0 0.0
Tax expense 0.0 0.0 0.0 0.0
1.00 22
Minorities 0.0 0.0 2.0 6.3
NPAT (39.4) (27.3) 15.5 59.2
0.00 20
2012F 2013F 2014F 2015F 2016F 2017F
Cash Flow (US$m) 2011F 2012F 2013F 2014F
Total Production (mlbs) Cash Cost (US$/lb)
Reserves & Resources + Interest/Tax/Expl Exp 36.9 29.5 14.8 12.7
M & I Resources Mt ppm (mlb) U3O8 (t) + Depn/Amort 0.0 0.0 13.3 26.0
Mkuju River (200ppm cut) 67.7 439 65.5 29,720 +/- Other (0.2) 0.0 0.0 0.0
Operating Cashflow (39.6) (29.8) 23.7 80.1
Total 67.7 439 65.5 29,720 - Capex (+asset sales) 54.6 222.0 25.8 22.3
- Working Capital Increase (12.2) 0.0 0.0 0.0
Inferred Resources Mt ppm (mlb) U3O8 (t) Free Cashflow (82.0) (251.8) (2.1) 57.8
Mkuju River (200ppm cut) 41.2 395 35.9 16,274 - Dividends 0.0 0.0 0.0 0.0
+ Equity Raised 302.7 0.0 0.0 0.0
Total 41.2 395 35.9 16,274 + Debt Drawdown (Repaid) 0.0 91.9 (64.2) (4.2)
Net Change in Cash 205.6 (159.9) (66.3) 53.6
Total 108.9 422 101.4 45,994 Cash at End Period 284.3 124.4 58.1 111.8
Net Cash/(LT Debt) 284.3 32.5 30.4 88.2

Directors
Name Position Balance Sheet (US$m) 2011F 2012F 2013F 2014F

Ian Middlemas Non-Executive Chairman
Peter Breese CEO Cash/Bullion 284.3 124.4 58.1 111.8
Ted Mayers Non-Executive Director Total Assets 363.8 428.4 379.7 619.1
Rob Behets Executive Director Total Debt 0.0 91.9 27.8 23.6
Colin Steyn Non-Executive Director Total Liabilities 22.6 114.5 50.4 230.5
William Smart Alternative for Colin Steyn Shareholders Funds 341.2 313.8 329.3 388.6
Substantial Shareholders No. Shares % Ratios

Highland Park SA 16.1 12.4 Net Debt/Equity (%) na na na na
Deans Knight 11.5 8.8 Interest Cover (x) na na 6.7 92.6
Anglo Pacific Group 8.3 6.4 Return on Equity (%) na na 4.7 15.2
Haywood Securities 8.1 6.2
Top 20 115.9 89.0
Meridian Minerals Limited MII ($0.135)

Turning lead into gold Analyst: Gary Watson
OUR VIEW
MII recently entered into a non-binding Heads of Agreement (HOA) to sell the Lennard Shelf lead-zinc project for $78m
to its major shareholder NWME. Considering ~$27m was spent on acquisition and development of the project, MII will be
realising significant value from the investment. After the transaction MII will hold approximately $68m in cash (after tax)
and is on the hunt for its next project. The non-binding HOA to acquire a 75% stake in Russian gold company Omchak has
been extended to 11 July 2011 while MII does its due diligence. Our view is neutral on the Russian gold project, pending
the outcome of MII’s due diligence and an upcoming $10m drilling programme. While the Russian HOA is non-binding MII
continues to assess other ventures and has indicated a preference for gold and copper projects in or near production. We
see MII as a cash box, however, we do attribute significant upside value to management, who have a proven track record
of locating and developing quality assets. We rate MII as a Speculative BUY with a price target of $0.15/sh.

• MII enters non-binding heads of agreement to sell
Lennard Shelf to NWME. MII’s major shareholder NWME Year End June 30 2010A 2011F 2012F 2013F
(41.3%) has entered into a non-binding Heads of Agreement
Reported NPAT ($m) (9.2) (7.4) (5.9) 7.5
(HOA) to purchase the Lennard Shelf project for A$78m.
Recurrent NPAT ($m) (9.0) (7.4) (5.9) 7.5
Following the transaction MII will hold approximately $68m Recurrent EPS (cents) (1.9) (1.6) (1.2) 1.6
cash (net of tax). Provided the deal goes through, MII is EPS Growth (%) na na na na
cash backed at $0.14/sh. PER (x) (7.1) (8.7) (11.0) 8.6
• Aliya gold project. The HOA to purchase of 75% of the

non-alluvial mining assets of Russian based gold company
EBITDA ($m)
EV/EBITDA (x)
(8.8)
(6.9)
(7.4)
(9.7)
(5.9)
(24.7)
23.6
7.6
Omchak has been extended to 11 July 2011. Omchak is Capex ($m) 2.4 17.4 66.5 51.7
a subsidiary of UK listed Petropavlovsk PLC and owns the Free Cashflow (10.1) (26.2) (73.0) (33.3)
Aliya gold project in Eastern Russia. Aliya is currently at the FCFPS (cents) (2.1) (5.5) (15.2) (6.9)
Australian equivalent of Pre-Feasibility stage. Construction PFCF (x) (6.4) (2.5) (0.9) (1.9)
at Aliya is scheduled to commence in Q1 CY2012. The
DPS (cents) 0.0 0.0 0.0 0.0
acquisition is contingent on successful due diligence being Yield (%) 0.0 0.0 0.0 0.0
completed prior to the expiry of the HOA. Franking (%) 0.0 0.0 0.0 0.0
• Uncertain until more drilling is done. The purchase price

is US$40m ($A36.8m) giving the project an EV/resource oz
range of A$45-A$70 using the current exploration target Company Statistics & Performance
of 700oz-1,100oz. We are conscious of the fact that this
valuation ignores the risk of converting an exploration Shares on Issue (m) 478.9 3mth ADT ($m) 0.03
target to a resource and we will view the transaction with
52 Week Range $0.05 - $0.16 Cash est ($m) 10.2
uncertainty until more drilling is done.
• Exploration at Aliya. The Aliya gold project has an

exploration target of 700oz-1,100oz formulated using a 0.18 6
database consisting of 414 drill holes. The previous drilling
has identified the ore body as a series of steeply dipping, high 0.15 5
grade, narrow veins within alteration zones of up to 2m in
width. MII’s due diligence has confirmed the average grade
Share Price (A$)
is 10.5g/t. Petropavlovsk will be spending a further US$10m 0.12 4

Volume '000
on resource definition and extension drilling in CY2011 with

MII’s share of the program likely be paid through cash flows
once the project is operating. 0.09 3
• Thomson exploration drilling commences. MII has

commenced drilling at its Thomson copper-gold project in
0.06 2
NSW. The programme consists of drilling 6 individual holes
into targets identified from geophysical surveys of the 0.03 1
area. Further drilling is dependent on success of the initial
program. The Thomson project area lies under thick cover
and is relatively under explored. 0.00 0
12 Months
• Copper and gold preferred. MII is aggressively searching
for other projects and have indicated a preference for copper
and gold assets in or near production.
Meridian Minerals Limited $0.135 Year End June 30

Kapok 58 0.12 A$:US$ 0.89 0.99 1.05 1.00

Options 0 0.00 Copper (US$/lb) 3.04 4.00 4.31 4.20
Corporate (11) (0.02) Lead (US$/lb) 0.95 0.98 1.02 1.04
Unpaid Capital (assumed equity raise) 0 0.00 Zinc (US$/lb) 0.94 0.98 1.02 1.04
Debt 0 0.00 Silver (US$/oz) 17.28 29.77 42.63 42.53
Exploration 15 0.03 Gold (US$/oz) 1,093 1,356 1,483 1,507
Equity Investments 0 0.00
Cash 10 0.02
NPV 72 0.15 Production Summary 2010A 2011F 2012F 2013F
NPV @ 8% Discount Rate 72 0.15
Kapok
Sensitivities -10% 0% +10% Zn in Concentrate (kt) 13.61
Pb in Concentrate (kt) 23.71
A$ : US$ 0.15 0.15 0.15 Silver in Cu Concentrate (moz) 0.18
Zinc Price (US$/lb) 0.15 0.15 0.15 Zn + Pb Cash Cost (A$/lb) 0.80
Lead Price (US$/lb) 0.15 0.15 0.15 Zn + Pb Cash Cost (US$/lb) 0.79
Zn + Pb Total Cost (A$/lb) 0.95
**(Net of silver credits)**

Other Income 0.1 0.3 3.3 2.4
Kapok Operating Costs 2.0 0.0 0.0 60.2
79% Exploration Exploration Exp. 5.6 6.0 2.5 1.7
21%
EBITDA (8.8) (7.4) (1.2) 21.7
Depn & Amort 0.1 0.0 0.0 11.4
EBIT (8.9) (7.4) (1.2) 10.3
Interest 0.0 0.1 2.0 4.0
Operating Profit (9.0) (7.6) (3.2) 6.3
Zinc Lead Production Summary Tax expense 0.0 0.0 0.0 2.6
Minorities 0.0 0.0 0.0 0.0
50.00 1.50 Abnormals (0.2) 0.0 0.0 0.0
NPAT (9.2) (7.6) (3.2) 3.7
40.00 1.25
1.00 Normalised NPAT (6.3) (5.3) (2.2) 4.4

(US$/lb)
30.00
(kt)
0.75
20.00 Cash Flow (A$m) 2010A 2011F 2012F 2013F
0.50
Adjusted Net Profit (9.2) (7.6) (3.2) 3.7
10.00
0.25 + Interest/Tax/Expl Exp 5.6 6.1 4.5 8.3
0.00 0.00 + Depn/Amort 0.1 0.0 0.0 11.4
2012F 2013F 2014F 2015F 2016F 2017F
+/- Other 0.0 0.0 0.0 0.0
Zn Production (kt) Pb Production (kt)
Zn + Pb cash cost (US$/lb) Zinc Price (US$/lb) Operating Cashflow (10.5) (9.1) (3.8) 14.7
Lead (US$/lb) - Capex (+asset sales) 2.4 17.4 66.5 51.7
- Other investing cashflow (4.8) 0.0 0.0 0.0
Reserves & Resources - Working Capital Increase (2.8) (0.4) 0.0 0.0
Free Cashflow (5.3) (26.0) (70.3) (37.1)
Resources (Mt) (% g/t) (kt,koz) - Dividends (ords & pref) 0.0 0.0 0.0 0.0
Lennard Shelf 17.23 + Equity raised 12.2 113.1 0.0 0.0
Lead 4.0 689 + Debt drawdown (repaid) 0.0 0.0 60.0 (5.0)
Zinc 5.5 948 Net Change in Cash 6.9 87.1 (10.3) (42.1)
Total Zn + Pb 1,637 Cash at End Period 7.4 94.5 84.2 42.1
Net Cash/(LT Debt) 3.5 94.5 24.2 (12.9)
Silver (koz) 10.5 5,817

Directors
Cash 7.4 94.5 84.2 42.1
Name Position Total Assets 15.5 121.7 181.2 197.0
Raymond Miller Non-Executive Chairman Total Debt 3.9 0.0 62.7 57.5
Jeremy Read Managing Director Total Liabilities 4.8 1.9 63.6 75.0
Paul Niardone Non Executive Director Shareholders Funds 10.7 119.8 117.6 122.0
Michael Howard Non Executive Director
Sharou Zhao Executive Director Ratios
Sushil Bhatter Non Executive Director Net Debt/Equity (%) na na na 10.5
Interest Cover (x) na na na 0.6
Substantial Shareholders Shares (m) % Return on Equity (%) na na na 3.6
Northwest Nonferrous Australia Mining Pty Ltd 198 41.3
BZ Minerals 82 17.2
R.A. Healey 25 5.3
Lennard Shelf P/L 25 5.3
Minara Resources Limited MRE ($0.805)

Recommendation: BUY
Set for a steady 2012 Analyst: Alex Passmore, Rhys Bradley
OUR VIEW
MRE is set to demonstrate a turn around in earnings despite currency headwinds. The company reported lower than forecast
production results for the March Q 2011 despite this full year production guidance remains between 33-37kt nickel. While
production consistency has been an issue for MRE’s flagship Murrin Murrin Nickel Project following a major shutdown
and maintenance programme we anticipate a significant boost to output (through debottlenecking) and reliability. MRE
achieved ramp-up to full production in January. MRE’s increased production rates will cash in on higher nickel prices which
have risen >20% since June to ~US$11.00/lb. With nickel metal forwards (LME) trading in contango the price appears
likely to be strong throughout 2012. On current metrics MRE looks attractive trading at 3.2x our FY11 and FY12 EBITDA
forecasts. Furthermore, MRE’s strong cash position of ~$200m provides a basis for their intentions to grow organically or
via acquisition. Glencore has maintained its 71% ownership, which we believe will remain static for the medium term. We
retain our BUY recommendation with a price target of $0.93/sh based on an FY11 and FY12 EV/EBITDA multiple of 5.5x.

• Short term downgrade, long term upgrade. Production
reached a >36ktpa Ni run rate in January following the triennial Year End December 31 2010A 2011F 2012F 2013F
shutdown in the Dec Q. Mar Q production was 7.5kt which was
less than forecast due to severe weather and the resultant Reported NPAT ($m) 58.4 122.1 109.6 81.4
flooding. Flooding damaged the process water supply reducing Recurrent NPAT ($m) 57.3 122.1 109.6 81.4
production to 7.5kt Ni (PSL production estimates were 9kt Ni). Recurrent EPS (cents) 4.9 10.4 9.4 7.0
CY2011 production guidance remains between 33–37kt Ni. Given EPS Growth (%) 18.2 112.9 (10.2) (25.8)
the recent issues maintaining sustained production we believe PER (x) 15.8 7.4 8.3 11.1
MRE will produce approximately 34.5kt for CY2011.
EBITDA ($m) 132.6 197.8 181.1 139.3
EV/EBITDA (x) 5.1 3.2 3.3 4.2
• Nickel prices flat in AUD terms. The continued strength of
the Australian dollar (relative to the USD) has eroded gains Capex ($m) 32.6 21.4 18.7 19.1
made by the Ni price. Since mid-2010 the US$ Ni price has Free Cashflow 93.4 122.1 110.2 80.0
FCFPS (cents) 8.0 10.4 9.4 6.8
gained 21% against the A$/US$ gain of 28%.
PFCF (x) 9.7 7.4 8.2 11.3
• Higher grades in the pipeline. $10m capex is being
expended to access the Murrin Murrin East ore body which DPS (cents) 9.5 7.0 7.0 5.0
Yield (%) 12.3 9.0 9.0 6.5
should be in production by 2Q CY2011. The higher grades
Franking (%) 100 100 100 100
from Murrin Murrin East are expected to raise the overall grade
profile for the plant from 1.1% Ni to 1.3% for 5-8 years.
• Sulphur prices locked in. Sulphur prices which represent

15-20% of costs are ~80% protected, and have been
delivering savings to the company. Shares on issue (m) 1169.7 3mth ADT ($m) 1.14
• Glencore offtake arrangement. MRE’s marketing fee for
nickel sales has been renegotiated from 4% down to 3.5% of
the LME daily cash settlement price. At consensus forecast Ni

prices of US$22,180/t and 18ktpa the reduction equates to a
1.50 20000
US$2m saving pa. The arrangement has a term of 5 years with
an option for and additional 5 years.
17500
1.25
• Near mine exploration drilling. MRE commenced a near mine
exploration program at Murrin Murrin to identify higher grade 15000
Share Price (A$)
zones of the current resource. The drilling program is additional 1.00

Volume '000
to normal mine development drilling and is the first near mine 12500
exploration to be undertaken in 10 years.
0.75 10000
• Growth Opportunities are on the radar. MRE is actively
looking to acquire a second mine to leverage off their strong 7500
cash position and technical success in developing High- 0.50
Pressure Acid Leach (HPAL) nickel production with laterite 5000
ores. The Mount Lucky manganese tenements were purchased
from Crescent Gold (CRE:ASX) in August ‘10 signalling the 0.25
2500
company’s intention to acquire assets complimentary to Murrin
Murrin. The addition of the manganese ore improves the nickel
0.00 0
processing of the nickel laterites in the HPAL plant.
12 Months
• Catalysts. 1) Ramp-up to 36ktpa production rate. 2) Delivery
of higher grades via Murrin Murrin East. 3) Exploration results
from Murrin Murrin. 4) Identification of growth opportunities.
Minara Resources Limited $0.805 Year End December 31

Murrin Murrin 767.8 0.66 A$:US$ 0.93 1.06 1.03 0.98

Corporate (92.0) (0.08) Nickel (US$/lb) 9.83 11.92 11.60 11.21
Exploration 143.6 0.12 Cobalt (US/lb) 17.42 15.11 15.41 15.72
Cash 199.0 0.17
Debt 0.0 0.00
Total @ 8% Discount Rate 1,018 0.87 Production Summary 2010A 2011F 2012F 2013F
Price Target 1,088 0.93
(100% NPV) Total MMJV Production
Contained Nickel (t) 28,378 34,671 34,272 32,256
Contained Cobalt (t) 1,976 2,120 2,176 2,048
Sensitivity Analysis
Weighted Ave Cash Cost (US$/lb) 6.78 6.97 7.19 7.24
Patersons Base Case $/sh 0.87 Weighted Ave Total Cost (US$/lb) 7.98 7.51 7.75 7.77
Valuation at flat spot $/sh 2.03
Implied LT nickel price at current SP US$/lb 8.50 Realised Nickel Price (US$/lb) 9.83 11.92 11.60 11.21
Realised Cobalt Price (US$/lb) 17.42 15.11 15.41 15.72
Exchange Rate (US$/A$) 0.93 1.06 1.03 0.98
Sales Revenue 464.4 557.0 554.9 530.9

Other Income 3.7 11.3 14.7 15.6
Murrin Murrin Operating Costs 323.6 342.9 360.5 378.7
84% Exploration Exp. 0.1 15.3 15.6 15.9
16% EBITDA 134.9 197.9 181.1 139.3
Depn & Amort 48.3 23.4 24.5 23.0
EBIT 86.6 174.5 156.6 116.2
RSPT 0.0 0.0 0.0 0.0
Interest 1.3 0.0 0.0 0.0
Nickel Production Summary Tax expense 26.5 52.3 47.0 34.9
Minorities/abnormals -1.0 0.0 0.0 0.0
50,000 15 NPAT 59.9 122.1 109.6 81.4
40,000 12 Normalised NPAT 61.1 122.1 109.6 81.4
30,000 9
Cash Flow (A$m) 2010A 2011F 2012F 2013F
(US$/lb)
(t)
20,000 6
10,000 3 - Interest/Tax/Expl Inc 25.3 72.7 67.7 56.0
+ Depn/Amort 48.3 23.4 24.5 23.0
0 0 +/- Other 1.0 0.0 0.0 0.0
2010A 2011F 2012F 2013F 2014F 2015F
Contained Nickel (t) Weighted Ave Cash Cost (US$/lb) - Capex (+asset sales) 32.6 21.4 18.7 19.1
Realised Nickel Price (US$/lb)
- Working Capital / Other (18.6) (1.2) 0.0 0.0
Free Cashflow 97.7 120.2 110.2 80.0
+ Equity raised 0.0 0.0 0.0 0.0
Reserves Mt Ni % Ni kt + Debt drawdown (repaid) (7.6) 0.0 0.0 0.0
Murrin Murrin 144 1.09 1,570 Net Change in Cash (21.0) 50.0 40.0 9.9
Resources Mt Ni % Ni kt Net Cash/(LT Debt) 226.0 276.2 316.2 326.1
Murrin Murrin 342 0.99 3,386

Directors
Cash 226.1 276.2 316.2 326.1
Name Position Total Assets 1,007.4 1,017.7 1,056.7 1,063.0
Malcolm Macpherson Non-Executive Interim Chairman Total Debt 0.1 0.0 0.0 0.0
Peter Johnston Chief Executive Total Liabilities 188.5 150.5 150.1 145.2
Ivan Glasenberg Non Executive Director Shareholders Funds 815.3 867.3 906.7 917.9
John Morrison Non Executive Director
Willy Strothotte Non Executive Director Ratios
Net Debt/Equity (%) na na na na
Substantial shareholders Shares (m) % Interest Cover (x) 68.5 na na na
Glencore International AG 824.8 70.52 Return on Equity (%) 7.3 14.1 12.1 8.9
Barclays Group 34.5 2.95
Top 20 391.5 84.84
Mincor Resources NL MCR ($1.145)

Tough Work Continues Analyst: Simon Tonkin, Tim McCormack
OUR VIEW
Mincor (MCR) reported a poor March Q from its Kambalda Operations. Total nickel production was 1,978t for the quarter,
34% lower than PSL forecast of 2,983t. Cash costs came in higher at A$8.64/lb (PSL est. A$7/lb). Lower production was a
result of the partial closure of the Otter Juan mine due to a seismic event in March and ongoing performance issues with
Miitel. A combination of factors have hit MCR that have resulted in potential for the stock to move lower, these include: 1)
several seismic events that have impacted production 2) Lack of Staff at Miitel and Mariners which have required MCR to
increase wages by 15% 3) Lower grade material at Mariners prior to higher grade material at end of year. The biggest problem
appears to be attracting talented miners to work at MCR’s mines and it appears that MCR may have lost several key hires,
therefore it could take several quarters to be back to the full staff complement. Based on our analysis and adjustments to
costs and mining profile our price target decreases to $0.89/sh based on a 1.0x NAV. We retain our SELL rating.

• Poor March Q. Production was 34% lower than our
expectations. The forced closure of the lower levels of
the Otter Juan mine was a considerable factor however Reported NPAT ($m) 28.1 (8.7) 16.9 12.5
low equipment availability and under-supply of contract Recurrent NPAT ($m) 27.6 (0.9) 16.9 12.5
personnel continue to severely impact production at the Recurrent EPS (cents) 13.7 (0.5) 8.4 6.2
Miitel mine. MCR recognised the need to address this in EPS Growth (%) 2,171.2 na na (25.7)
PER (x) 8.3 (246.0) 13.6 18.3
December Q stating an expected 15% increase in cash
costs should address the labour shortfall and improve EBITDA ($m) 79.9 30.1 64.3 38.3
productivity. This quarter saw a 20% increase in cash EV/EBITDA (x) 1.3 4.6 1.8 3.0
costs with none of the expected increase in production Capex ($m) 28.0 44.4 21.8 21.5
realised. There is some hope of better production in the Free Cashflow 65.0 (13.6) 33.1 9.6
September and December Qs at Mariners: with potential FCFPS (cents) 32.4 (6.8) 16.5 4.8
PFCF (x) 3.5 (16.9) 6.9 24.0
for the terrace level to start in late June Q and the N10
orebody late CY2011. DPS (cents) 9.0 4.0 6.0 6.0
Yield (%) 7.9 3.5 5.2 5.2
• Seismic Incident at Otter Juan. Due to a seismic event
on 22 March, production from Otter Juan was down 36%
Franking (%) 100.0 100.0 100.0 100.0
for the March Q. The event prompted the closure of six

sub-levels and going forward the production at Otter Juan Company Statistics & Performance
is likely to be reduced by half and bring the closure of the
mine forward by one year, to early 2012. Shares on issue (m) 200.6 3mth ADT ($m) 1.77
• Decreasing 1.0x NAV to $0.89/sh (from $1.26). We
have made several changes to our production outlook for
2011/12 with lower production from Otter Juan and its
closure in early 2012. Costs were also further adjusted 2.50 4000
following the 15% increase. This results in our 1.0x NAV
decreases to $0.89/sh (from $1.26).
3200
2.00
• Continuing The Search for Growth Options. MCR has
Share Price (A$)
circa $96m in the bank and is continuing its search for

Volume '000
growth options. Drilling results have confirmed high grade 2400

extensions to the Mariners Ore System and significant 1.50
along strike extension at the South Miitel mine. Desk and
field studies have also identified a number of regional 1600
targets to be explored in 2011. In addition, MCR continues
drilling at its Tottenham Copper Project in NSW where 1.00
drilling has identified a number of potential VMS systems 800
that coincide with electro-magnetic anomalies.
• Catalysts. Ongoing Exploration Results from Kambalda

and Tottenham; July: Production Results; Further M&A
0.50
12 Months
0
activity.
Mincor Resources NL $1.145 Year End June 30

Miitel 17 0.09 A$:US$ 0.89 0.99 1.05 1.00

Wannaway 0 0.00 Copper (US$/lb) 3.04 4.00 4.31 4.20
Redross 0 0.00 Lead (US$/lb) 0.95 1.10 1.20 1.18
Mariners 11 0.05 Zinc (US$/lb) 0.94 1.03 1.11 1.11
Carnilya Hill 10 0.05 Nickel (US$/lb) 8.75 11.12 11.75 11.43
Otter-Juan 8 0.04 Nickel (A$/lb) 9.78 11.22 11.16 11.43
McMahon/Ken 23 0.12 Cobalt (US$/lb) 12.92 15.52 15.26 15.57
Durkin 0 0.00
Bluebush line 10 0.05 Production Summary 2010A 2011F 2012F 2013F
Forward Sales 2 0.01
Corporate (20) (0.10) South Kambalda Operations 3,615 5,003 8,560 8,025
Exploration 20 0.10 Miitel 0 2,650 4,268 4,057
Unpaid Capital 1 0.01 Wannaway 0 0 0 0
Cash 98 0.48 Redross 0 0 0 0
Debt 0 0.00 Mariners 3,615 2,354 4,292 3,968
NPV @ 8% Discount Rate 180 0.89 North Dordie 0 0 0 0
Price Target 216 0.89 North Kambalda Operations 7,182 4,376 5,177 2,139
Carnilya Hill 2,593 1,397 1,682 0
Sensitivity Price Target +10% 0% -10% Otter-Juan 4,262 2,897 1,998 0
McMahon/Ken 327 83 1,497 2,139
Nickel Price 1.11 0.89 0.66 Durkin 0 0 0 0
A$ : $US 0.66 0.89 1.17 Nickel in Concentrate (t) 10,833 9,380 13,737 10,164
Copper in Concentrate (t) 838 684 837 670
Valuation Summary of Operating Assets Cobalt in Concentrate (t) 169 133 160 128
Per Pound of Payable Metal
Net Nickel Cash Cost (A$/lb) 5.66 7.82 7.17 7.68
Miitel 19% Net Nickel Cash Cost (US$/lb) 5.06 7.75 7.55 7.68
Mariners 12% Nickel Price Received (US$/lb) 9.36 11.05 11.96 11.07
Carnilya Hill 11% Spot Nickel Price (US$/lb) 8.75 11.12 11.75 11.43
Otter-Juan 9%
McMahon/Ken 27%
Exploration 22% Sales Revenue 180.2 153.0 227.2 171.0
Other Income 3.8 6.5 6.1 6.9
Operating Costs 87.1 107.7 145.0 115.1
Nickel Production Summary
EBITDA 79.9 30.1 64.3 38.3
20,000 20.00 Depn & Amort 40.2 32.0 40.2 20.4
EBIT 39.7 (2.0) 24.1 17.9
Interest 0.3 0.0 0.0 0.0
15,000 15.00
Operating Profit 39.4 (2.0) 24.1 17.9
Tax expense 11.8 (1.0) 7.2 5.4
(US$/lb)
10,000 10.00 Abnormals 0.5 (7.8) 0.0 0.0

(t)
NPAT 27.0 6.8 16.9 12.5

Normalised NPAT 28.1 (8.7) 16.9 12.5
5,000 5.00
Cash Flow (A$m) 2010A 2011F 2012F 2013F
0 0.00
2010A 2011F 2012F Adjusted Net Profit 28.1 (8.7) 16.9 12.5
Nickel in Concentrate (t) Net Nickel Cash Cost (US$/lb) + Interest/Tax/Expl Exp 21.8 10.3 21.1 19.5
Nickel Price Received (US$/lb) Nickel (US$/lb) - Interest/Tax/Expl Inc 27.7 31.7 23.2 21.4
+ Depn/Amort 40.2 32.0 40.2 20.4
+/- Other (17.5) 0.6 0.0 0.0
Reserves & Resources as of June 30 2010
Reserves Mt Ni % Ni kt - Capex (+asset sales) 28.0 44.4 21.8 21.5
Miitel 0.613 2.7 16.6 - Working Capital Increase (48.6) (20.4) 0.0 0.0
Wannaway 0.039 2.9 1.1 Free Cashflow 65.5 (21.4) 33.1 9.6
Redross 0.033 3.5 1.2 - Dividends (ords & pref) 14.0 14.0 8.0 12.0
Mariners 0.524 3.1 16.2 + Equity raised 1.0 0.0 0.0 0.0
Carnilya Hill 0.083 3.3 2.7 + Debt drawdown (repaid) (1.5) 0.0 0.0 0.0
Otter-Juan 0.212 3.2 6.8 Net Change in Cash 51.0 (35.4) 25.1 (2.5)
McMahon 0.242 2.3 5.6 Cash at End Period 126.8 91.4 116.5 114.0
Total 1.746 2.87 50.2 Net Cash/(LT Debt) 126.8 107.3 116.5 114.0
Resources Mt Ni % Ni kt Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Mariners 0.704 4.0 28.2
Redross 0.236 3.2 7.6 Cash/Bullion 126.8 91.4 116.5 114.0
Burnett 0.250 3.7 9.3 Total Assets 260.5 255.2 277.4 267.8
Miitel 0.699 3.8 26.6 Total Debt 0.9 0.0 0.0 0.0
Wannaway 0.139 3.0 4.2 Total Liabilities 55.4 77.3 90.7 80.6
Carnilya Hill JV 0.147 4.0 5.9 Shareholders Funds 205.1 177.8 186.7 187.2
Otter-Juan 0.485 3.2 15.5
McMahon/Ken 0.328 3.7 12.1 Ratios
Durkin 0.378 5.1 19.3 Net Debt/Equity (%) na na na na
Gellatly 0.029 3.4 1.0 Interest Cover (x) 124.1 na na na
Stockwell 0.557 3.1 17.3 Return on Equity (%) 13.2 3.8 9.0 6.7
Cameron 0.096 3.3 3.2
Total 4.048 3.72 150.7 Directors
Substantial Shareholders Shares (m) % Name Position

David Humann Non Executive Chairman
JP Morgan Nominees 25.28 12.60 David Moore Managing Director
Top 20 Shareholders 101.35 50.52 Jack Gardener Non Executive Director
Ian Burston Non Executive Director
Mirabela Nickel Limited MBN ($2.07)

Recommendation: BUY
MBN Preferred Pick in Nickel Space Analyst: Simon Tonkin, Rhys Bradley
OUR VIEW
MBN is our preferred pick in the nickel space due to: 1) its offshore exposure and attractive operating environment where
the Brazilian currency has been weak against the US$ 2) Growth plans to move production >20ktpa Ni and 3) Installation
of a desliming circuit to improve recoveries and efficiency. MBN’s March quarterly production from its Santa Rita Project
in Brazil came in at 2,825t Ni which was 14% lower than our 3,302t estimate. The reason for the lower March Q was the
impact of the SAG motor failures in January 2011. Costs came in at US$6.97/lb (in line with our US$7.06/lb). Recoveries
remained at 55% as we had anticipated and this is expected to improve to 65% once the desliming circuit is installed.
Despite the lower production the focus for MBN is opening up the pit to give greater production flexibility and completion of
the plant expansion and desliming circuit in Q3/CY2011. We have incorporated the new 43-101 technical report production
and cost profile, the revised private offering for $US375m and our higher nickel forecasts. The net impact is an increase
to our target price to $3.38/sh (previously $2.72/sh) retain our Buy rating.

• Lower March Quarter; Focus on Opening Up the Pit.
MBN recorded lower production for the March Q with the main
impact from the SAG mill motor failures in January 2011. Reported NPAT ($m) (47.5) 25.8 203.3 205.9
MBN is also very much focused on the open-pit pre-strip Recurrent NPAT ($m) (28.8) 25.8 203.3 205.9
which will open-up the pit and provide significant production Recurrent EPS (cents) (5.8) 5.2 41.0 41.5
flexibility in the later half of 2011. The completion of the pre- EPS Growth (%) na na 689.4 1.2
PER (x) (35.7) 39.8 5.0 5.0
strip program for the whole mine is on track to be completed
by the end of Q2/2011. The new Brazil mining team appears EBITDA ($m) 36.9 104.4 345.5 349.0
to be doing an excellent job with a strip ratio in the March Q EV/EBITDA (x) 32.2 11.4 2.7 2.0
of 8.3:1 and this is expected to drop dramatically. In addition, Capex ($m) 102.2 30.5 16.7 18.4
It was encouraging to see that the recoveries remained Free Cashflow (101.4) (0.3) 240.2 239.4
strong at 55% and indicates the plant, when operating, FCFPS (cents) (20.5) (0.1) 48.4 48.3
PFCF (x) (10.1) nm 4.3 4.3
was efficient. The focus will be on the Q3/2011 when the
desliming circuit is incorporated and expected to increase DPS (cents) 0.0 0.0 0.0 0.0
recoveries towards 65%. Yield (%) 0.0 0.0 0.0 0.0
Franking (%) 100.0 100.0 100.0 100.0
• Expansion to 7.2Mtpa On-Target. MBN’s expansion of
its processing plant is progressing well and is on schedule
to be completed by the 2H/2011. All major components Company Statistics & Performance
have been ordered for the desliming circuit and crusher
upgrade due to be completed in Q3/2011. This is the Shares on issue (m) 491.6 3mth ADT ($m) 3.35
main value driver for MBN and will take production toward Market Cap. ($m) 1017.5 Debt est ($m) 262.5
25ktpa. We would also expect costs to fall significantly as 52 week range $1.58 - $2.46 Cash est ($m) 56.0
MBN’s grade and recoveries improve.
• Further Exploration Underway in 2H/2011. On the

quarterly conference call MBN indicated that they are
3.00 12000
expecting strong 2q sales from stockpiling accumulated as 10000

a result of Votorantim smelter works, additionally a delivery 2.50
to Norilsk shipped in April. By end of Q2 stocks are expected
Share Price (A$)
to be minimal. Further exploration is expected for the 2H 8000

Volume '000
of year, with MBN saying they will provide details on the

Q2 conference call. 2.00 6000
• Target Price Increases Due to Higher Nickel prices.

We have incorporated the updated technical report, 4000
US$375m private offering and our higher nickel price 1.50
deck and the impact is positive to our NAV with a $0.67/ 2000
sh increase. We note that MBN has minimal exposure to
A$ with its Santa Rita projects costs in US$ and Brazilian
Real which has weakened against the US$. 1.00 0
12 Months
• Catalysts. 2H/2011 Completion of Expansion to 7.2Mtpa
and installation of the desliming circuit.
Mirabela Nickel Limited $2.07 Year End December 31

Santa Rita 1957.4 3.95 A$:US$ 0.93 1.06 1.03 0.98

Exploration 195.7 0.39 Nickel (US$/lb) 9.83 11.92 11.60 11.21
Nickel Forwards (72.7) (0.15) Copper (US$/lb) 3.44 4.33 4.26 4.10
Copper Forwards (10.8) (0.02) Cobalt (US$/lb) 17.42 15.11 15.41 15.72
Corporate (75.1) (0.15) Platinum (US$/oz) 1,576 1,542 1,597 1,677
Cash 56.0 0.11
Debt (262.5) (0.53)
Unpaid capital 0.0 0.00 Production Summary 2010A 2011F 2012F 2013F
Total NAV (8% Discount Rate) 1,788 3.61
Price Target 1,788 3.61 Concentrate (kt)
Santa Rita 109.4 122.5 190.9 194.8
Valuation (A$) A$m A$/sh Contained Nickel (kt)
Santa Rita 10.4 15.9 24.8 25.3
Total NAV 8% Discount 1,675 3.38
Price Target 1,675 3.38 Weighted Ave Cash Cost (US$/lb) 6.32 6.78 3.63 3.56
Price Target (Spot Prices and Rates) 5.93 Weighted Ave Total Cost (US$/lb) 8.19 8.20 4.82 4.73
Realised Nickel Price (US$/lb) 9.66 10.17 10.76 10.36
Exchange Rate (US$/A$) 1.07
Sensitivity Price Target (A$) +10% 0% -10% Profit & Loss (US$m) 2010A 2011F 2012F 2013F
Nickel Price 4.03 3.38 2.73 Sales Revenue 211.1 337.6 550.4 541.9
A$ : $US 2.83 3.38 3.59 Other Income 1.0 6.9 16.2 28.3
Operating Costs 166.0 228.9 209.8 209.5
Valuation Summary of Operating Assets Exploration Exp. 0.0 1.8 1.9 1.9
EBITDA 36.9 104.4 345.5 349.0
Depn & Amort 37.2 43.9 57.8 58.2
EBIT (0.3) 60.6 287.7 290.8
Interest 22.1 26.6 33.5 33.5
Santa Rita Exploration Provisions 18.7 0.0 0.0 0.0
91% 9% Operating Profit (41.2) 33.9 254.2 257.3
Tax expense 6.3 8.2 50.8 51.5
Minorities 0.0 0.0 0.0 0.0
NPAT (47.5) 25.8 203.3 205.9
Normalised NPAT (32.9) 27.1 203.3 205.9
Nickel Production Summary

30.0 15.00
Adjusted Net Profit (47.5) 25.8 203.3 205.9
25.0 12.50
20.0 10.00
+ Depn/Amort 37.2 43.9 57.8 58.2
(US$/lb)
15.0 7.50 +/- Other 0.0 0.0 0.0 0.0

(kt)
Operating Cashflow (8.3) 71.4 263.0 266.0

10.0 5.00 - Capex (+asset sales) 102.2 30.5 16.7 18.4
5.0 2.50 Free Cashflow (114.6) 5.7 246.3 247.6
0.0 0.00
+ Equity raised 235.4 0.0 0.0 0.0
2010A 2011F 2012F 2013F 2014F 2015F
+ Debt drawdown (repaid) (72.1) 132.5 0.0 0.0
Santa Rita Realised Nickel Price (US$/lb) Net Change in Cash 32.9 132.1 240.2 241.3
Weighted Ave Cash Cost (US$/lb) Cash at End Period 102.1 234.3 474.4 715.8
Net Cash/(LT Debt) (160.4) (160.7) 79.4 320.8
Reserves & Resources
Santa Rita - Reserves Mt Ni % Cu % Ni kt Balance Sheet (US$m) 2010A 2011F 2012F 2013F
Proven & Probable 84.0 0.61 0.14 508
Total 84.0 0.61 0.14 508 Cash 102.1 234.3 474.4 715.8
Total Assets 1120.3 1251.8 1472.2 1677.4
Santa Rita - Resources Mt Ni % Cu % Ni kt Total Debt 262.5 395.0 395.0 395.0
Proven & Probable (Pit) 121.0 0.6 0.16 726 Total Liabilities 501.0 606.8 623.8 623.1
Inferred (Underground) 87.5 0.79 0.23 691 Shareholders Funds 619.3 645.1 848.4 1054.3
Inferred 19.8 0.6 0.16 119
Low Grade Resource 53.0 0.3 0.07 159 Ratios
Total (excl. low grade) 228.3 0.60 0.10 1,536 Net Debt/Equity (%) 25.90 24.92 na na
Interest Cover (x) na 2.3 8.6 8.7
Directors Return on Equity (%) na 4.0 24.0 19.5
Name Position
Craig Burton Non-Executive Chairman Substantial Shareholders Shares (m) %
Ian Purdy CEO & MD
Colin Steyn Non-Executive Director Canadian Control Account 172.5 35.1
Bill Clough Non-Executive Director JP Morgan Nominees Australia Ltd 64.1 13.1
Nick Sheard Non-Executive Director National Nominees Ltd 57.2 11.6
Joe Hamilton Non-Executive Director HSBC Custody Nominees (Australia) Ltd 32.7 6.7
Geoff Handley Non-Executive Director
Ian McCubbing Non-Executive Director
Mount Gibson Iron Limited MGX ($1.975)

Recommendation: BUY
Cheap on earnings Analyst: Alex Passmore, Tim McCormack
OUR VIEW
MGX has enjoyed a steady run up in share price during FY2011 on the back of strengthening iron ore prices. However, with
the Chairman’s resignation in November, a surging Australian dollar and a broader cooling of the market we believe full value
in the stock is yet to be realised. Shaky market sentiment was accentuated by extreme rainfall during the March Q which
caused widespread flooding and constricted ore sales by 41% on the previous Q. Despite the lacklustre performance MGX still
maintained a strong cash position of A$388m and fully repaid its $35m debt facility. With Koolan Island making the transition
to owner operator we expect to see cost and productivity advantages realised in the 2H FY2012 and beyond. Development
at Extension Hill remains on schedule with capital works substantially complete and pre-strip mining well underway. MGX is
currently recruiting two new non-executive directors to restore appropriate independence to the board which is a pivotal step
in addressing market concerns over corporate governance. Set to recover from a torrid March Q, we view favourably the cash
position, earnings outlook and realignment of the board. We upgrade our recommendation from SELL to BUY (PT $2.68).

• Market to focus on the company’s cash generation. MGX
reported a cash position of $388m and fully repaid its $35m Year End June 30 2010A 2011F 2012F 2013F
senior debt facility in the March Q. MGX looks attractive on current Reported NPAT ($m) 132.4 334.1 638.9 490.1
metrics trading at 2.6x FY2011 EV/EBITDA and reducing this Recurrent NPAT ($m) 129.5 319.9 638.9 524.4
to <1x beyond FY2012. Debt free with an exceptional forward Recurrent EPS (cents) 11.9 29.4 58.7 48.2
earnings forecast we believe MGX will step up its hunt for a new EPS Growth (%) 103.4 146.3 99.7 (17.9)
asset in FY2012 to bulk up its relatively small resource base. PER (x) 16.5 6.7 3.4 4.1
• Clarity on board governance. MGX’s recent decision to appoint

two new independent non-executive directors is significant in
EBITDA ($m)
EV/EBITDA (x)
481.6
3.6
672.1 1,098.1
2.6 1.6
915.4
1.9
restoring independence and positive market sentiment following Capex ($m) 284.5 160.0 12.3 12.5
the resignation of the chairman last November. We believe this Free Cashflow 124.3 221.8 656.1 803.2
new clarity on governance will be fundamental in retaining key FCFPS (cents) 11.5 20.4 60.3 73.9
PFCF (x) 17.2 9.7 3.3 2.7
board members and subsequent managers which is a critical to
MGX’s company stability and market perception. DPS (cents) 0.0 0.0 0.0 0.0
Yield (%) 0.0 0.0 0.0 0.0
• Rainfall and unreliability a short term drawback.
Higher than average rainfall at both of MGX’s operations was
Franking (%) 0.0 0.0 0.0 0.0
accentuated by machinery and plant unreliability. Koolan Island’s

throughput and lump yield was down due to replacement of
the secondary crusher and Tallering Peak’s ore production Company Statistics & Performance
suffered similarly through inability of blast hole contractors
to meet drilling schedules due to poor equipment and labour Market Cap. ($m) 2138.1 Debt est ($m) 0.0
availability. The March Q saw overall ore mining down 55% on 52 week range $1.29 - $2.34 Cash est ($m) 388.3
our forecasted figures with processing and shipping down 45%
and 27% respectively. With the onset of the dry season and
MGX addressing some of the fundamental availability issues we 3.00 40000
expect to see a marked improvement in June Q production.
• Extension Hill ramping to 1.3Mtpa in FY2012. Capital works

have progressed in line with our expectations, however, MGX
2.50
32000
highlighted that completion dates for train unloading facilities
Share Price (A$)
at the Geraldton Port have been pushed back to December 2.00

Volume '000
2011. Aiming to mitigate the delay by utilising existing port 24000

infrastructure we maintain our export target of 1.3Mt for FY2012.
1.50
Contracts for 80% of these ore sales remain open to the market
following the sales agreement termination with Shougang in 16000
April. MGX remains in negotiations with a number of parties 1.00
interested in purchasing Extension Hill hematite.
• Short term pain, long term gain at Koolan Island. The

mining and maintenance contract with BGC will not be renewed
0.50
8000
at the end of FY2011. With MGX going owner operator we expect

to see an adverse effect on production in the short term due to 0.00 0
labour and machinery change out before cost and productivity 12 Months
advantage are realised in the longer term. The operation is
targeting a production ramp up to 4Mtpa by FY2014.
Mount Gibson Iron Limited $1.975 Year End June 30

Tallering Peak 346 0.32 A$:US$ 0.89 0.99 1.05 1.00

Extension Hill 892 0.82 Iron Ore Fines (US$/t) 76.44 119.53 119.53 119.53
Koolan Island 1,233 1.14 Iron Ore Lump (US$/t) 89.72 143.82 143.82 145.22
Exploration 69 0.06
Forwards 12 0.01
Corporate (36) (0.03) Production Summary 2010A 2011F 2012F 2013F
Unpaid Capital/Equity Raise 0 0.00
Cash 388 0.36 Tallering Peak - Lump 1,834 1,588 1,537 1,537
Debt 0 0.00 Tallering Peak - Fines 1,537 1,214 1,213 1,213
NPV 2,904 2.68 Extension Hill - Lump 0 0 1,225 2,000
Price Target 2,904 2.68 Extension Hill - Fines 0 0 1,225 2,000
Koolan Island - Lump 1,236 1,182 1,410 1,410
Koolan Island - Fines 2,237 1,597 1,990 1,990
Sensitivities to Iron Ore Price -10% 0% +10% Group Production (kt) 6,844 5,581 8,600 10,150
NPV 2.30 2.68 3.06 Group Sales (kt) 6,487 5,672 7,781 10,100
Cost Summary (A$/t):

Valuation Summary of Operating Assets Tallering Peak Cash Costs 53.28 53.39 55.20 51.13
Ext Hill Cash Costs 0.00 0.00 40.33 41.11
Extension Hill Koolan Island Cash Costs 41.23 43.36 44.92 29.37
36% Weighted Ave Cash Costs 47.08 48.53 47.70 39.95
Ave Price Received (FOB) 82.16 140.93 165.53 123.09
Koolan Island Profit & Loss (A$m) 2010A 2011F 2012F 2013F
50%
Sales Revenue 532.9 799.3 1,288.0 1,243.2
Other Income 49.1 18.5 30.3 0.0
Tallering Peak
14%
Operating Costs 79.6 125.4 199.8 307.0
Iron Ore Production Summary EBITDA 481.6 672.1 1098.1 915.4
Depn & Amort 278.0 201.6 185.3 166.2
12,000 200 EBIT 203.7 470.5 912.7 749.1
Interest 18.2 9.2 0.0 0.0
160 Abnormals 2.9 14.1 0.0 0.0
9,000 Operating Profit 188.3 475.3 912.7 749.1
120 Tax expense 55.9 141.3 273.8 224.7
(A$/t)
Minorities 0.0 0.0 0.0 0.0

(kt)
6,000
80
NPAT 132.4 334.1 638.9 524.4
3,000 Normalised NPAT 131.8 334.1 638.9 524.4

40
0 0
2010A 2011F 2012F 2013F 2014F 2015F Cash Flow (A$m) 2010A 2011F 2012F 2013F
Weighted Ave Cash Costs Ave Price Received (FOB)
Group Sales (kt)
- Deferred Waste 134.8 133.3 128.5 71.7
Reserves Mt % Fe% Al+Si % Phos Operating Cashflow 275.8 381.9 668.3 591.0
Tallering Peak 8.39 61.20 8.32 0.03 - Capex (+asset sales) 284.5 160.0 12.3 12.5
Extension Hill 14.80 59.40 7.66 0.06 - Working Capital Increase (155.6) (27.0) 0.0 0.0
Koolan Island 33.30 63.40 8.41 0.01 Free Cashflow 146.9 248.9 656.1 578.5
Resources Mt % Fe% Al+Si % Phos + Equity raised 18.6 0.0 0.0 0.0
Tallering Peak 11.20 61.10 8.77 0.04 + Debt drawdown (repaid) (40.3) (64.7) 0.0 0.0
Extension Hill 23.10 58.40 9.33 0.06 Net Change in Cash 125.2 184.2 656.1 578.5
Koolan Island 74.30 62.60 9.61 0.01 Cash at End Period 347.4 531.6 1187.6 1766.1
Net Cash/(Debt) 282.7 531.6 1187.6 1766.1
Directors
Name Position
Craig Readhead Chairman Cash/Bullion 347.4 531.6 1187.6 1766.1
Luke Tonkin Managing Director Total Assets 1296.0 1438.6 2024.4 2548.8
Ian Macliver Non Executive Director Total Debt 64.7 0.0 0.0 0.0
Alan Jones Non Executive Director Total Liabilities 369.1 177.6 124.5 124.5
Lee Seng Hui Non Executive Director Shareholders Funds 926.9 1261.0 1899.9 2424.3
Robert Wilcocks (Alternate Director)
Alan Rule (Alternate Director) Ratios
Cao Zhong (APAC nom) Non Executive Director Debt/Equity (%) na na na na
Chen Zhouping (Shougang nom) Non Executive Director Interest Cover (x) 11.2 na na na
Return on Equity (%) 14.3 26.5 33.6 21.6
APAC Resources Ltd* 279.9 25.9
Shougang Concord* 154.2 14.2
New Hope Corporation Limited NHC ($4.85)

Remaining range bound Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
We continue to view NHC as a good low cost operator in the coal sector. It has been able to capitalise on escalating coal prices
while others have not and production has been almost uninterrupted by the rain. Flooding did damage the Acland rail to QBH
export terminal and therefore impacted sales. The line has now been restored although the disruption will have an impact on
profitability in the next reporting period. The break has allowed ROM stocks, which were run down during the last reporting
period, to be rebuilt. The company had a large cash inflow of $460m from the settlement of its 16.7% share of Arrow Energy
and has acquired a majority share of NEC for about $180m. Our valuation has fallen marginally to $4.90/sh as the company’s
asset base is relatively unchanged and higher coal prices have been offset by the appreciating Australian dollar and a higher cost
base for the Acland mine. All told not much has changed during 2011 for NHC, it has a good mining operation in Acland, large
cash reserves but not much on the horizon in the way of catalysts to break the share price out of the trading range it has been
stuck in for almost three quarters. Though we view NHC as one of the best operators in the sector, we think it is fairly valued.
Accordingly we are maintaining our HOLD recommendation with a price target of $4.90/sh.

• Relatively unaffected production. Heavy rain and flooding
in late 2010 and early 2011 impacted production only slightly, Year End July 31 2010A 2011F 2012F 2013F
with raw coal production falling by 3.1% to 5.3Mt compared
to the corresponding period last year. This was well down Reported NPAT ($m) 184.0 488.5 277.0 277.2
Recurrent NPAT ($m) 171.3 162.2 277.0 277.2
on the prior record setting half but these three halves have
Recurrent EPS (cents) 20.6 19.5 33.4 33.4
averaged ROM production of over 5.6Mt per half. Yields EPS Growth (%) (32.6) (5.3) 70.8 0.0
improved a little on prior periods resulting in a smaller decline PER (x) 23.5 24.8 14.5 14.5
in saleable coal production. Sales volumes remained over
3Mt for the second consecutive half. Since the interim report EBITDA ($m) 282.7 263.6 433.3 440.6
the mine has focused on rebuilding ROM inventories. EV/EBITDA (x) 9.2 9.3 5.5 5.1
Capex ($m) 83.0 13.0 154.7 2.1
• The strong sales performance, but only in the first
half. Over 1HFY11 NHC took full advantage of the rising
Free Cashflow
FCFPS (cents)
(557.8)
(67.2)
167.3
20.1
147.6
17.8
307.3
37.0
thermal coal prices but this will not continue into the PFCF (x) (7.2) 24.1 27.3 13.1
second half as sales were severely impacted by the flood
damaged rail system. The better prices achieved over DPS (cents) 23.5 29.4 16.6 16.7
the first half have been offset by the strong dollar and Yield (%) 4.8 6.1 3.4 3.4
returns have been eroded by higher costs. We estimate Franking (%) 100.0 100.0 100.0 100.0
that FOB costs for the half exceeded $60/t for the first
time .We still consider the company a low-cost producer
of thermal coal in South East Queensland and think that Company Statistics & Performance
costs will reduce from current levels however we have
increased our long term cost assumptions. Shares on issue (m) 830.2 3mth ADT ($m) 2.17
• Significant flood damage was done to Acland rail
infrastructure with initial restart estimated late March. NHC
informed the market in early April that the first train of Acland
coal was delivered to the QBH export terminal on schedule
6.00 1200
and services are now operating at contractual capacity.
• The Arrow Energy transaction generated a non-recurring

NPAT of $326.3m and the settlement increased cash balances 5.50
1000
by $460m. This placed NHC in an even stronger financial

position to advance expansion and development projects
Share Price (A$)
800
Volume '000
with cash and cash equivalents approaching $1.9b as at 31 5.00

January 2011. A portion of these funds would have been used
to acquire a majority stake in Northern Energy Corp. 600
• The Northern Energy take-over process is drawing to a

close with NHC accumulating approximately 99m shares for
4.50
400
a 80.81% stake in the company. New members have been
appointed to the board and all activities are being reviewed. 4.00
200
The final bid price of $1.85/sh was likely higher than the initial
$1.50/sh bid by NHC. We have used a weighted average
price from January to early March of $1.85/sh to calculate 3.50 0
an indicative spend of $183m.The purchase will be positive
12 Months
for NHC but in the short term, the expansion of New Acland
is likely to have a bigger impact on valuation when further
details are made available.
New Hope Corporation Limited $4.85 Year End July 31

New Acland 1854.0 2.23 US$/A$ 0.8939 0.9912 1.0525 1.0000

Northern Energy Shares 159.9 0.19 Hard Coking Coal 151.00 248.75 302.50 211.25
West Moreton Land Holding 290.0 0.35 Semi-soft Coking Coal 111.25 182.50 227.50 152.50
Planet Gas + Westside Shares 18.2 0.02 PCI 118.75 195.00 232.50 157.50
Dart Energy Shares 44.1 0.05 Export Thermal Coal 77.00 106.00 122.50 97.50
Resources 207.2 0.25 Domestic Thermal Coal (A$/t) 42.12 45.39 48.72 49.87
FX Hedging 2.6 0.00
Corporate (83.9) (0.10)
Unpaid Capital 0.0 0.00 Production Summary 2010A 2011F 2012F 2013F
Cash & Equiv. 1577.5 1.90
Debt 0.0 0.00 Attributable Saleable Coal Production
NPV 4069.7 4.90
Price Target 4.90 New Acland & W.Moreton (kt)*5,921 5,301 6,532 8,000
FOB costs (US$/t) 49.40 60.54 54.41 51.39
Valuation Summary of Assets Price Received (US$/t) 76.91 88.22 111.48 96.09
* Includes coal produced from Jeebropilly and New Oakleigh mines
All Mines (Kt) 5,921 5,301 6,532 8,000

New Acland FOB costs (US$/t) 49.40 60.54 54.41 51.39
Northern Energy Shares
West Moreton Land Holding
Planet Gas + Westside Shares
Sales Revenue 516.4 513.2 705.9 782.8
Dart Energy Shares Other Income 228.7 88.2 79.3 83.6
Operating Costs 327.2 323.8 337.7 411.1
Corporate/Admin 121.7 14.0 14.2 14.6
Coal Production Summary EBITDA 282.7 263.6 433.3 440.6
Depn & Amort 38.0 31.9 37.5 44.7
9,000 120.00 EBIT 244.8 231.7 395.8 395.9
110.00
Interest 0.0 0.0 0.0 0.0
8,000
7,000 100.00
Tax expense 60.8 209.4 118.7 118.8
90.00
6,000 Abnormals & Minorities 0.0 466.2 0.0 0.0
(US$/t)
80.00 NPAT 184.0 488.5 277.0 277.2

5,000
(kt)
70.00
4,000
60.00 Normalised NPAT 171.3 162.2 277.0 277.2
3,000 Normalised NPAT excl Intrst.100.1 100.5 221.5 218.6
50.00
2,000 40.00
1,000 30.00
0 20.00 Cash Flow (A$m) 2010A 2011F 2012F 2013F
2010A 2011F 2012F 2013F 2014F
All Mines (Kt) FOB Costs (US$/t) Price Recieved (US$/t) Adjusted Net Profit 184.0 162.2 277.0 277.2
Resources & Reserves (Mt) + Depn/Amort 38.0 31.9 37.5 44.7
+/- Other (Associates) (696.4) 0.0 0.0 0.0
Total Operating Cashflow (474.8) 182.1 302.4 309.4
New Acland - Capex (+asset sales) 83.0 13.0 154.7 2.1
Resources - Meas - Ind - Tot 322.0 546.0 868.0 - Working Capital Increase 0.0 0.0 0.0 0.0
Reserves - Prov -Prob - Tot 221.0 295.0 516.0 Free Cashflow (557.8) 169.1 147.6 307.3
New Oakliegh + Equity raised 14.1 5.3 0.0 0.0
Resources 11.5 5.0 16.5 + Debt drawdown (repaid) 0.0 0.0 0.0 0.0
Reserves 0.5 0.0 0.5 Net Change in Cash (1290.1) 160.5 58.0 144.6
Lenton Net Cash/(Debt) 1417.0 1577.5 1635.5 1780.1
Resources 0.0 37.0 37.0
Reserves 0.0 0.0 0.0
Bee Creek
Resources 0.0 9.0 9.0 Cash 1416.5 1577.5 1635.5 1780.1
Total Assets 2652.5 2744.0 2915.5 2998.0
Rob Millner Chairman
Rob Neale Managing Director Ratios
David Williamson Director Net Debt/Equity (%) na na na na
Peter Robinson Director Interest Cover (x) na na na na
David Fairfull Director Return on Equity (%) 7.9 18.9 10.2 9.7
Bill Grant Director

Washington H Soul Pattinson 495.7 59.7
Mitsubishi Materials Corp 92.0 11.1
Perpetual Ltd 57.2 6.9
Taiheiyo Kouhatsu 7.7 0.9
Noble Mineral Resources Limited NMG ($0.625)

Wait for commissioning in September Analyst: Alex Passmore, Byron Benvie
OUR VIEW
Noble Resources (NMG) continues to progress plant refurbishment at the Bibiani Gold Mine (Ghana) with commissioning
expected to be completed during Q3 CY2011. Commercial production will follow in December 2011 and will ramp up to
3Mtpa/150kozpa. We believe this timing is optimistic and with risk of delays in the ramp up schedule we are moving to a
neutral view on NMG until confidence in the December target is increased. Recent drilling activity has been focused on the
Bibiani open pit and smaller satellite deposits, which will form the initial mainstay of plant feed, a strategy we are favourable
on with the Bibiani cutback pushed out until drilling of the west wall can confirm ore body morphology and grade. The USD
gold price has given NMG a boost and the company has moved its reporting currency to USD which reduces translation
losses to AUD. With increasing risks to the investment thesis and NMG concurrently having appreciated from $0.25/sh
since August 2010 we are downgrading our rating from Buy to HOLD with a price target of A$0.60/sh.

• Plant commissioning to be completed during Q3
CY2011. Production beginning in December 2011,
ramping up to 150kozpa Au during 2012. Expectations Reported NPAT (A$m) (11.5) 23.9 68.9 73.7
were for commencement of commissioning in July, Recurrent NPAT (A$m) (14.3) 23.9 68.9 73.7
and production before December with risks of further Recurrent EPS (cents) (2.7) 4.6 13.2 14.1
pushback. We have assumed a total capital spend of EPS Growth (%) na na 174.2 2.6
PER (x) (22.8) 13.7 4.7 4.4
US$50m for the plant and mine to commissioning and
a subsequent US$25m for Bibiani cutback and mine EBITDA (A$m) (12.1) 37.7 119.3 125.3
expansion in CY2012. EV/EBITDA (x) (29.9) 10.0 3.1 2.8
Capex (A$m) 35.4 30.1 15.0 7.9
• Owner operator strategy will result in higher capex/
lower opex. NMG is has allocated US$25-30m for the
Free Cashflow
FCFPS (cents)
(47.8)
(9.2)
(5.6)
(1.1)
71.0
13.6
83.0
15.9
PFCF (x) (6.8) (58.8) 4.6 3.9
acquisition of 12 trucks and two excavators with delivery
expected between May and October 2011. Significant DPS (cents) 0.0 0.0 0.0 0.0
extension of mining life is required for the benefits of Yield (%) 0.0 0.0 0.0 0.0
this strategy to be realised and we see risks in sufficient Franking (%) 100.0 100.0 100.0 100.0
extension of the current 10 year plan. However this
equipment will be financed by the exercise of NMG’s short
dated options (NMGO which will see the issue of 74m Company Statistics & Performance
shares at 30cps).
• Resource update pending. Announcement of increases
to the Bibiani resource were expected by end March 2011, 52 week range $0.23 - $0.74 Cash est ($m) 22.1
and are yet to be released. An onsite assay laboratory due
on site in 14 weeks time should reduce turnaround to 5
days and speed up the resource estimation process. 1.00 12000
• Five drill rigs on site by June 2011. Current drilling

focus is planning for the Bibiani open cut mine, with drilling 0.80
10000
into the base of the planned cut back having commenced.

Share Price (A$)
From January 2012 drilling will resume at satellite pits and 8000
Volume '000
will continue to extend the main pit. Exploration drilling 0.60

at the Cape Three Points is also expected to commence 6000
by mid-May 2011.
0.40
• New additions to management and board. Mr Peter

Johnston has been appointed to the position of Chief
4000
Operating Officer for NMG in February and is a metallurgist 0.20

2000
with extensive project management experience. NMG has
also appointed a new Non-Executive Director, Duncan
Coutts, in April 2011. Mr Coutts is a mining engineer with 0.00 0
20 years minerals industry experience. 12 Months
Noble Mineral Resources Limited $0.625 Year End June 30

Valuation US$m A$/sh Commodity Assumptions 2010A 2011F 2012F 2013F
Bibiani 256.8 0.49 A$:US$ 0.89 0.97 1.00 0.92

Cape Three Points, Brotet 23.0 0.04 Gold (US$/oz) 1093 1353 1444 1310
Exploration 50.9 0.10 Silver (US$/lb) 17.28 28.27 37.92 21.04
Unpaid capital 54.1 0.10 Gold (A$/oz) 1222 1393 1451 1432
Corporate (37.1) (0.07)
Cash 22.1 0.04
Debt (34.2) (0.07) FX (A$:US$) 0.60 0.60 0.59 (1)
NAV 335.7 0.64 Gold Price 0.48 0.60 0.71 20
(@ 8% discount rate)
NPV in AUD 0.60 EV:Reserve (A$/oz) 581
Price Target 0.60 EV:Resource (A$/oz) 177
NPV Sensitivity Production Summary 2010A 2011F 2012F 2013F
NPV (nom) @ 5% disc. 0.66 Production (koz) - 90% share

NPV (nom) @ 0% disc. 0.80 Bibiani 0 0 55 139
Hedging koz 1-Yr 3-Yrs % Reserve Total 0 0 55 139
Committed Production na na na na Cost Summary

Cash Costs (US$/oz) na na 626 577
Valuation Summary of Operating Assets Total Costs (US$/oz) na na 745 696
Price Received (US$/oz) na na 1,432 1,200
Sales Revenue 0.0 0.0 80.0 181.7

Exploration
Bibiani Other Income 0.2 2.8 1.7 3.1
16%
77% Operating Costs 0.0 1.0 34.7 80.1
EBITDA (2.1) (11.9) 37.5 93.3
Cash Depn & Amort 0.0 1.5 6.6 16.5
7% EBIT (2.1) (13.5) 31.0 76.9
Interest 0.5 0.7 3.1 3.7
Abnormals (pre-tax) 0 2.83 0 0
Gold Production Summary Operating Profit (2.6) (11.3) 27.9 73.2
Tax expense 0.0 0.0 4.4 22.0
Abnormals (post-tax) 0.0 0.0 0.0 0.0
200 1600
NPAT (2.6) (11.3) 23.5 51.2
1400
150
1200
Normalised NPAT (1.8) (16.5) 18.8 51.2
1000 Cash Flow (US$m) 2010A 2011F 2012F 2013F

(A$/oz)
(koz)
100
800
50
600 + Interest/Tax/Expl Exp 1.1 2.8 8.8 28.8
400 - Interest/Tax/Expl Inc 0.7 3.6 9.9 28.8
+ Depn/Amort 0.0 1.5 6.6 16.5
0 200 +/- Other 0.0 0.0 0.0 0.0
2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F
Total Cash Costs (US$/oz) Price Received (US$/oz) - Capex (+asset sales) 0.0 34.7 31.3 15.0
Free Cashflow (2.5) (47.0) (7.0) 52.7
+ Equity raised/Options Exercised 39.1 28.3 22.0 0.0
Reserves Mt Au g/t Au koz + Debt drawdown (repaid) (3.1) 34.2 18.7 (12.5)
Bibiani 8.4 2.2 605 Net Change in Cash 27.1 (16.0) 33.7 40.2
Resources Mt Au g/t Au koz Net Cash/(LT Debt) 30.9 (19.2) (4.3) 48.5
Bibiani 33.0 1.9 1,983
Aheman 0.7 0.7 17 Balance Sheet (US$m) 2010A 2011F 2012F 2013F

Total Assets 38.0 84.0 159.5 218.6
Tunku Naquiyuddin Non-Executive Chairman Total Liabilities 0.6 34.9 69.6 77.4
Wayne Norris Managing Director Shareholders Funds 37.4 49.2 89.9 141.2
Brian Thomas Non-Executive Director
Duncan Coutts Non-Executive Director Ratios
Net Debt/Equity (%) na 39.1 4.7 na
Substantial Shareholders m % Interest Cover (x) na na 10.0 20.7
Global Gold Holdings 44.7 11.9 Return on Equity (%) na na 26.1 36.3
Wayne Norris 43.1 11.5
Wei An Developments 30.0 8.0
Bank of America Corporation 20.5 5.5
Disclosure: Patersons acted as joint lead manager to the company for a $30m share placement in November 2010, and as Lead
Manager/Underwriter in April 2010 for a placement and SPP which raised a total of $40.2m at $0.30/sh. It received a fee for these
services.
Northern Star Resources Limited NST ($0.37)

Recommendation: BUY
Heading in the right direction Analyst: Gary Watson
OUR VIEW
The acquisition of the Paulsens gold project in mid 2010 has proved to be a big win for NST, managing a payback period of
7 months and now operating unhedged and debt free. A small capital expenditure on the 705 exploration drive has proved
to be a savvy investment too, already providing a resource upgrade and likely to deliver at least another 200koz. Paulsens
is producing at cash costs of circa $510/oz and has been consistently exceeding guidance of 70kozpa due to positive
reconciliation of the ore grade. Management are very shrewd operators and have proven themselves by turning Paulsens,
which was viewed as a marginal asset, into a highly profitable mine. The acquisition of the 961km2 Ashburton tenements
appears to be another good move by NST, picking up a further 668koz resource and exploration targets within trucking
distance of the Paulsens plant. Our estimates see NST trading on very attractive multiples of 2.0x FY2011 EV/EBITDA and
1.7x FY2012 EBITDA. With NST’s prolific cash generation they are well positioned to initiate their growth strategy in the
near term. We rate NST a BUY with a price target of $0.61/sh.

• Strong, low cost production at Paulsens. Since acquiring
Paulsens gold mine in July 2010 NST has produced >70koz
Year End June 30 2011F 2012F 2013F 2014F
of gold at cash costs of ~A$510/oz. The nuggety nature of Reported NPAT ($m) 21.5 33.1 39.0 45.8
the ore body has resulted in positive reconciliation of the gold Recurrent NPAT ($m) 21.5 33.1 39.0 45.8
content of the ore, earning greater than expected ounces. We Recurrent EPS (cents) 6.1 9.4 11.0 12.9
are conservatively forecasting 70kozpa production at cash EPS Growth (%) 2,447.8 53.8 17.8 17.5
PER (x) 6.1 4.0 3.4 2.9
cost of A$560/oz with a mine life of 4 years, however there
is good probability of NST producing higher than forecast EBITDA ($m) 49.7 59.5 67.9 77.7
ounces and extending the mine life with additional mill feed EV/EBITDA (x) 2.6 2.1 1.9 1.6
from the Ashburton project. Capex ($m) 44.6 8.1 5.4 2.5
Free Cashflow 10.7 37.7 45.9 55.5
FCFPS (cents) 3.0 10.7 13.0 15.7
• Quick payback to remain debt free and unhedged.
NST acquired the Paulsens gold mine in July 2010 for PFCF (x) 12.2 3.5 2.9 2.4
$40m consisting of $23m in cash payments in addition to DPS (cents) 0.0 0.0 0.0 0.0
$17m in royalty payments. NST achieved a payback period Yield (%) 0.0 0.0 0.0 0.0
of only 7 months and is now debt free and unhedged with Franking (%) 100.0 100.0 100.0 100.0
~$10m cash in the bank.
• Top notch management. We rate highly rate NST’s

management and thus far they have proved themselves
as efficient operators. Prior to becoming NST’s Managing Shares on Issue (m) 353.5 3mth ADT ($m) 0.38
Director, Bill Beament, spent 3.5 years overseeing the Market Cap. ($m) 130.8 Debt ($m) 0.0
mining contractor at Paulsens, while he was Operations 52 Week Range $0.05 - $0.44 Cash ($m) 3.8
Manager at Barminco.
• Ashburton project. NST purchased the Ashburton mining

tenements from Sipa Resources in February in exchange
0.50 9
0.45 8
for replacing its environmental bonds at $445k, plus
royalty based payments on the first 250koz produced. 0.40 7
The tenements contain a 668koz resource and multiple
Share Price (A$)
0.35
walk up drill targets all within trucking distance of the 6
Volume '000
Paulsens plant. 0.30

5
0.25
• Exploration hitting the marks. Over the last 9 months
NST has developed the 705 drill drive to expand the shallow 0.20
4
dipping Voyager 1 and Voyager 2 lodes. To date, drilling from 0.15

3
the 705 level has added ~22koz to the resource inventory,
2
however significant drilling has been completed outside of 0.10
the current resource with encouraging results. NST is mining 0.05 1
in excess of 1,000oz per vertical metre, and we estimate
a 100koz resource upgrade to the Voyager 1 lode and a 0.00 0
maiden resource of 100koz for the Voyager 2 lode. A 64.5koz 12 Months
resource has been delineated at Paulsens for an open pit to
extract the near surface low grade ore.
Northern Star Resources Limited $0.37 Year End June 30

Paulsens Gold Mine 141.5 0.40 A$:US$ 0.89 0.99 1.05 1.00
Unpaid capital 5.1 0.01 Silver (US$/oz) 17.28 29.77 42.63 42.53
Forwards 0.0 0.00
Cash (est.) 3.8 0.01 Target Price Sensitivity -10% 0% +10% % Chg
Debt (0.0) (0.00)
NPV 171.5 0.49 FX (A$:US$) 0.58 0.58 0.58 0
(@ 8% discount rate) Gold Price 0.58 0.58 0.58 0
Price Target 0.58 Gold Grade 0.58 0.58 0.58 0
Operating Costs 0.58 0.58 0.58 0
Recovery 0.00 0.58 0.00 (100)
NPV Sensitivity
EV:Reserve (A$/oz) 185
Valuation Summary of Operating Assets Production (koz)

Paulsens Gold Mine 7 84 70 70
Total 7 84 70 70
Cost Summary
Exploration
14%
Cash Costs (A$/oz) 501 560 573
Total Costs (A$/oz) 706 736 749
Paulsens Gold Mine Price Received (A$/oz) 1,289 1,369 1,410 1,508
86%
Sales Revenue 8.5 104.3 98.4 105.2

Other Income 0.0 0.3 1.5 3.5
Gold Production Summary Exploration Exp. 0.2 0.7 0.5 0.0
100 1800 EBITDA 2.3 49.7 59.5 67.9
Depn & Amort 1.2 20.8 12.3 12.3
1600 EBIT 1.1 28.9 47.3 55.7
80
1400 Interest 0.0 0.3 0.0 0.0
Abnormals (pre-tax) 0.0 0.0 0.0 0.0
1200
(US$/oz)
60 Operating Profit 1.1 28.6 47.3 55.7

(koz)
1000 Tax expense 0.5 7.1 14.2 16.7

40 Abnormals (post-tax) 0.0 0.0 0.0 0.0
800
NPAT 0.6 21.5 33.1 39.0
600
20
400 Normalised NPAT 0.6 21.5 33.1 39.0
0 200
2011F 2012F 2013F 2014F Cash Flow (A$m) 2010A 2011F 2012F 2013F
Total Cash Costs (A$/oz) Price Received (A$/oz)
Resources + Interest/Tax/Expl Exp 0.7 8.1 14.7 16.7
Mt Au g/t Au koz + Depn/Amort 1.2 20.8 12.3 12.3
Paulsens Gold Mine 1,268 5.5 226 +/- Other 0.0 0.0 0.0 0.0
Ashburton Gold Project 7,145 2.9 668 Operating Cashflow 1.0 42.3 45.4 51.2
- Capex (+asset sales) (0.0) 44.6 8.1 5.4
Total 8,413.0 0.8 894 - Working Capital Increase (0.2) (10.3) 0.0 0.0
Free Cashflow 1.2 8.1 37.2 45.9
+ Debt drawdown (repaid) (0.1) 0.0 0.0 0.0
Name Position Net Change in Cash 3.6 12.4 37.2 45.9
Chris Rowe Non-Executive Chairman Cash at End Period 3.8 16.1 53.4 99.2
Bill Beament Managing Director Net Cash/(LT Debt) 3.8 16.1 53.4 99.2
Michael Fotios Non-Executive Director
Peter Farris Non-Executive Director
Substantial Shareholders %
Investmet 19.1 Cash/Bullion 3.8 16.1 53.4 99.2
Total Assets 5.8 44.6 77.7 116.7
Total Debt 0.0 0.0 0.0 0.0
Ratios
Interest Cover (x) 419.1 88.9 na na
Return on Equity (%) 12.1 69.6 51.7 37.8
Olympus Pacific Minerals Inc OYM ($0.37)

The Next Mid-Tier Gold miner in SE Asia Analyst: Simon Tonkin
OUR VIEW
Olympus Pacific Minerals Inc (OYM-A, OYM-T) is a dual listed gold company focussed on south-east Asia with two operating
gold mines in Vietnam, a development asset in Malaysia and a significant exploration project in the Philippines. We recently
visited OYM’s Bong Mieu and Phuoc Son mines in Vietnam and the Bau development asset in Malaysia. While the Vietnamese
gold mines are relatively small (50kozpa) they are high grade (especially Phuoc Son) and as such have relatively low
cash costs (US$640/oz including royalties). OYM is targeting to increase production to at least 100koz in the near term.
The Bau project in Malaysia is large with 2.45Moz in resource and a number of large structures which appear attractive
for expanding the resource. The challenge at Bau is the metallurgy; however, we are confident that OYM has the team in
place to overcome this issue. OYM is cheap on a EV/oz basis and therefore has the potential to significantly increase its
gold production through moving the Bau gold project towards production. We retain our Spec Buy rating and price target
moves up to $0.99/sh due to our commodity price increase.

• Targeting Gold Production >150,000ozpa in Vietnam.
OYM is targeting to become the next mid-tier gold producer
in South East Asia. Production from its Vietnam assets is Reported NPAT (A$m) (1.5) (1.4) 18.7 35.9
expected to reach 150kozpa Au within 4 years. OYM is Recurrent NPAT (A$m) (3.0) (1.4) 18.7 35.9
currently commissioning its new processing plant at its 85% Recurrent EPS (cents) (0.8) (0.4) 5.1 9.8
owned Phuoc Son mine in Vietnam. The new plant will mean EPS Growth (%) na na na 82.9
PER (x) (45.2) (97.1) 7.3 3.8
that ore from Phuoc Son will no longer need to be trucked to
OYM’s second mine at Bong Mieu. Both mines have excellent EBITDA (A$m) 10.5 9.6 39.4 68.4
exploration potential to extend the mine life. EV/EBITDA (x) 15.2 18.7 4.4 2.5
Capex (A$m) 42.2 13.5 4.6 13.4
• 2.45Moz Resource in Malaysia. We visited OYM’s Bau
development Asset in Malaysia. This appears to have
Free Cashflow
FCFPS (cents)
8.2
2.2
6.0
1.6
38.9
10.6
60.2
16.4
some significant exploration upside with a number of large PFCF (x) 16.6 22.7 3.5 2.3
and relatively unexplored structures. The best targets to
DPS (cents) 0.0 0.0 0.0 0.0
significantly expand the resource are in the Taiton, Juala, Yield (%) 0.0 0.0 0.0 0.0
Krian and Bekajang areas. The mineralisation is variably Franking (%) 100.0 100.0 100.0 100.0
refractory (gold locally associated with arsenopyrite) and
some will require a pressure leach or similar solution
to recover the gold. This would result in a higher cost Company Statistics & Performance
operation around US$700/oz, however, we believe it
will be mined as long as gold prices remain buoyant. At Shares on issue (m) 366.3 3mth ADT ($m) 0.05
current gold prices this would provide sufficient margin Market Cap. ($m) 135.5 Debt est ($m) 50.3
to bring the project into production. 52 week range $0.30 - $0.64 Cash est ($m) 35.6
• Cheap on an EV/oz Basis. Based on our analysis OYM is

trading at $53 per attributable oz of resource compared to 0.80 3000
the peer average of $178/oz. This indicates that the stock is
cheap compared to its peers and can improve value through
2500
moving these ounces towards production. However, that said
OYM’s operations tend to be in the third quartile of costs. 0.60
Share Price (A$)
Volume '000
2000
• Strong Mine Building Team. While the track record of the
mine building team was an issue during construction of Bong
0.40
Mieu mine in 2006, our recent visit to Phuoc Son revealed a 1500
quality plant design and construction. The engineering and
metallurgical teams appear to be very strong and we believe 1000
will be a valuable asset in building further mines in Malaysia 0.20
and the Philippines. Despite that commissioning has been
delayed by the heavy rain in Vietnam. 500
• Catalysts. May 2011 Commissioning of Phuoc Son;

Q2/2011 Updated Resource Vietnam; Q2/2011 Bau
0.00 0
12 Months
Metallurgical test results; End 2011 Updated Resource Bau;
2013 Feasibility Study Bau; Ongoing Drill Results; Further
developments at Capcapo.
Olympus Pacific Minerals Inc $0.37 Year End December 31

Bong Mieu 68.5 0.19 A$:US$ 0.93 1.06 1.03 0.98

Phuoc Son 148.4 0.40 Gold (USD/oz) 1,093 1,356 1,483 1,507
Exploration (Bau/Capcapo) 207.6 0.57
Corporate (25.3) (0.07)
Cash 35.6 0.02 Production Summary 2010A 2011F 2012F 2013F
Debt (50.3) (0.06)
Forwards (1.0) (0.00) Gold produced (oz) (attributable)
Unpaid capital 0.2 0.00 Bong Mieu 5,615 14,377 17,612 33,428
Total NAV (8% Discount Rate) 384 1.05 Phuoc Son 22,265 25,700 41,838 52,596
Price Target 384 1.05
Weighted Ave Cash Cost (US$/lb) 373 426 413 449
Valuation (A$) A$m A$/sh Weighted Ave Total Cost (US$/lb) 495 562 551 584
Realised Gold Price (US$/oz)1,291 1,307 1,436 1,490
Total NAV 8% Discount 362 0.99
Price Target 362 0.99
Exchange Rate (US$/A$) 1.06
Sales Revenue 36.7 52.4 85.4 128.2
Sensitivity Price Target (US$) +10% 0% -10% Other Income 1.4 0.8 0.6 2.3
Gold Price 1.15 0.99 0.94 Exploration Exp. 0.0 14.0 7.4 8.0
A$ : $US 0.90 0.99 1.10 Corporate/Admin 10.3 8.5 8.7 8.9
EBITDA 9.8 10.1 40.5 67.0
Valuation Summary of Operating Assets Depn & Amort 9.0 6.5 9.8 13.9
EBIT 0.8 3.6 30.6 53.1
Exploration (Bau/Capcapo) Interest 1.3 3.5 3.2 2.9
Provisions (1.4) 0.0 0.0 0.0
49%
Tax expense 2.3 1.5 8.2 15.1
Minorities 0.0 0.0 0.0 0.0
NPAT (1.4) (1.5) 19.2 35.1
Normalised NPAT (1.8) 0.0 19.2 35.1

Phuoc Son
35% Bong Mieu
16% Cash Flow (US$m) 2010A 2011F 2012F 2013F

Gold Production Summary + Interest/Tax/Expl Exp 15.0 19.0 18.9 26.0
80,000 1,800 + Depn/Amort 9.0 6.5 9.8 13.9
+/- Other 0.0 0.0 0.0 0.0
1,500 Operating Cashflow 19.1 20.6 44.7 72.2
60,000 - Capex (+asset sales) 39.2 14.3 4.7 13.1
1,200 - Working Capital Increase (27.8) 0.0 0.0 0.0
(US$/lb)
Free Cashflow 7.6 6.3 40.0 59.0

(oz)
40,000 900
600 + Equity raised 15.8 0.0 0.0 0.0
20,000 + Debt drawdown (repaid) 22.2 24.4 (6.2) (1.5)
300 Net Change in Cash (1.6) 2.7 18.9 41.4
0 0 Net Cash/(LT Debt) (18.1) (38.8) (13.7) 29.2
2010A 2011F 2012F 2013F 2014F 2015F
Bong Mieu Realised Gold Price (US$/oz)
Weighted Ave Cash Cost (US$/lb) Balance Sheet (US$m) 2010A 2011F 2012F 2013F
Reserves & Resources Total Attrib. Cash 4.1 6.8 25.8 67.2
Total Assets 123.2 136.7 160.6 212.7
Reserves Kt g/t Au oz Total Debt 22.2 45.7 39.5 38.0
Bong Mieu 251 2.59 20,863 16,691 Total Liabilities 44.9 59.9 64.6 81.5
Phuoc Son 831 6.26 167,249 142,161 Shareholders Funds 78.3 76.8 96.0 131.2
Total 1,082 0.61 188,112 158,852
Ratios
Resources (M&I) Kt g/t Au oz Au oz Net Debt/Equity (%) 23.15 50.54 14.30 na
Bong Mieu 3,222 1.76 182,293 145,835 Interest Cover (x) na 1.0 9.6 18.4
Phuoc Son 621 9.41 187,858 159,679 Return on Equity (%) na na 20.0 26.8
Bau 10,963 1.6 563,950 423,244
Tungsten Credits 96,236 76,989
Total 14,806 2.16 1,030,337 805,747 Directors
Resources Inferred Kt g/t Au oz Au oz Name Position

Bong Mieu 4,729 1.4 212,872 170,297 David Seton Chairman &CEO
Phuoc Son 2,481 6.01 479,453 407,535 Les Robinson Non-Executive Director
Bau 35,808 1.64 1,888,057 1,416,987 Jon Morda Non-Executive Director
Total 43,019 2.16 2,580,382 1,994,819 John Seton CFO
Douglas Willock Non-Executive Director
Total 57,824 3,610,719 2,800,567
Dragon Capital Group Limited 65.4 17.9
Orocobre Limited ORE ($2.44)

Recommendation: BUY
Strong position in Lithium Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
Orocobre has hit some political turbulence on a regional level in Argentina however it has achieved a major milestone
with the completion of the Definitive Feasibility Study (DFS) for the Salar de Olaroz lithium project. Salar de Olaroz, in the
northern province of Jujuy is ORE’s flagship project. The completion of the DFS was the trigger to commence a 90 day period
within which Toyota Tsusho has to exercise its option to acquire 25% of the project. Toyota Tsusho has been intimately
involved with the DFS process and it should be comfortable with the estimated value of $275-450m depending on different
levels of discounts rates and gearing. The share price has reacted more to the Provincial Government of Jujuy declaring
lithium a strategic resource and that projects will be assessed by a new Committee. We see this as more a political process
for a domestic audience ahead of the local elections than a serious attempt to block any projects that have been recently
approved by the government. We see the market pricing ORE more as an exploration play rather than a company with an
advanced project, 3 other attractive projects in the pipeline, and a strong strategic partner. Accordingly we maintain our

• The completed Definitive Feasibility Study (DFS) for the Salar
de Olaroz lithium project was published highlighting a range Year End June 30 2011F 2012F 2013F 2014F
of NPVs from $275-450m depending on different levels of
discounts rates and gearing. The main changes in the DFS Reported NPAT ($m) (2.7) (3.5) (11.0) (9.2)
compared to our assumptions were lower operating costs Recurrent NPAT ($m) (2.7) (3.5) (11.0) (9.2)
Recurrent EPS (cents) (2.6) (3.4) (10.6) (8.9)
(-14%), higher production rates (9%) for Lithium carbonate, EPS Growth (%) na na na na
a much longer mine life (to 40 years), and a much faster PER (x) (93.0) (72.7) (23.0) (27.5)
accelerated depreciation (now 3 years). These have more
than offset the much higher capex (90%) at $220m and EBITDA ($m) (2.7) (2.1) 5.3 50.5
higher long term AUD (13%). The outcome from this new EV/EBITDA (x) (79.1) (151.7) 87.6 8.5
level of detail has seen our NPV for 100% of Olaroz rise from Free Cashflow (18.6) (142.4) (102.5) 30.2
$220m to $305m, or $2.92/sh. FCFPS (cents) (17.8) (136.8) (98.5) 29.0
PFCF (x) (13.7) (1.8) (2.5) 8.4
• Upon the completion of the DFS, Toyota Tsusho has 90
days to exercise its option to acquire 25% of Olaroz based DPS (cents) 0.0 0.0 0.0 0.0
on the NPV and also secure Japanese bank funding for Yield (%) 0.0 0.0 0.0 0.0
Franking (%) 0.0 0.0 0.0 0.0
at least 60% of the project capex ($130m). Toyota has
been deeply involved in the completion of the DFS and
should be in a position to make a decision within the 90
days but credit approval from the banks may take up to Company Statistics & Performance
another 6 months.
• ORE has $40m in cash and will receive around $75-100m
for 25% of Olaroz, while its eventual equity share of the
capex will only be $66m ($220m x 40% x 75%) so the
company looks fully funded to first production of Lithium
Carbonate in late FY13. 5.00 1400
• There is concern about the additional Jujuy province

approval, but this appears to us as more a political process 1200
for a domestic audience ahead of the local elections than 4.00
a serious attempt to block the projects that have been 1000
Share Price (A$)
recently approved by the current government itself.

Volume '000
3.00
• This means that the Salar de Olaroz project will have to
submit to this new process. This does not stop any of the
800
current work being conducted by ORE at the site. The 2.00

600
pilot plant will continue to produce Lithium Carbonate to
optimise the process and for testing by customers. 400
• The value placed on the Salar de Olaroz project implies that

is cheaper to buy the stock than to buy the mine, a common
1.00
200
occurrence in resource companies. In the case of ORE there
are few strategic or management shareholders that would 0.00 0
able to block a serious bid. Once Toyota is on the register 12 Months
this dynamic may change for any third party looking at the
company but it will be the foundation stone for the first big
new Lithium-from-brines producer in many years.
Orocobre Limited $2.44 Year End June 30

Salar de Olaroz (100%) 304 2.92 US$/A$ 0.99 1.05 1.00 0.96
South American Salars (85%) 50 0.48 Lithium Carbonate (US$/t) 6,000 6,177 6,301 6,428
Cauchari 20 0.19 Potash (KCl) (US$/t) 700 587 599 611
Exploration 20 0.19 Boric Acid (US$/t) 500 506 516 527
Corporate (26) (0.25) Sodium Sulphate (US$/t) 120 122 124 126
Elementos Holding 6 0.06
Debt 0 0.00 Production Summary 2011F 2012F 2013F 2014F
Cash 38 0.37
NAV (at 10%) 414 3.97 Salar Olaroz (100%)
Price Target 3.95 Lithium Carbonate (t) 2,000 12,500
Potash (KCl) (t)
Price Target Sensitivities -10% 0% +10% Boric Acid (t)
Sodium Sulphate (t)
Lithium Carbonate Price (US$/t) 3.44 3.97 4.51
Potash Price (US$/t) 3.93 3.97 4.02 Cash Costs (US$/t) 1,674 1,700
Exchange Rate (US$/A$) 4.27 3.97 3.73
Valuation Summary of Operating Assets Profit & Loss (A$m) 2011F 2012F 2013F 2014F
Sales Revenue 0.0 0.0 11.6 75.8

Other Income 1.3 2.0 1.2 1.2
Salar de Olaroz (100%) Corporate/Admin 4.0 4.1 4.1 4.2
EBITDA (2.7) (2.1) 5.3 50.5
South American Salars (85%) Depn & Amort 0.0 0.0 8.0 50.0
EBIT (2.7) (2.1) (2.7) 0.5
Cauchari Interest 0.0 1.4 8.3 9.7
Operating Profit (2.7) (3.5) (11.0) (9.2)
Tax expense 0.0 0.0 0.0 0.0
Minorities 0.0 0.0 0.0 0.0
Abnormals 0.0 0.0 0.0 0.0
Lithium Production Summary NPAT (2.7) (3.5) (11.0) (9.2)
18,000 7,000 Normalised NPAT (2.7) (3.5) (11.0) (9.2)
15,000 6,000
12,000
5,000 Cash Flow (A$m) 2011F 2012F 2013F 2014F
(US$/t)
4,000
(kt)
9,000 Adjusted Net Profit (2.7) (3.5) (11.0) (9.2)

3,000 + Interest/Tax/Expl Exp 0.0 1.4 8.3 9.7
6,000
2,000 - Interest/Tax/Expl Inc 15.4 9.5 16.6 18.1
3,000
+ Depn/Amort 0.0 0.0 8.0 50.0
1,000
+/- Other 0.0 0.0 0.0 0.0
0 0 Operating Cashflow (18.1) (11.6) (11.3) 32.3
2011F 2012F 2013F 2014F 2015F - Capex (+asset sales) 0.5 130.8 91.2 2.1
Lithium Carbonate (t) Cash Costs (US$/t) - Working Capital Increase 0.0 0.0 0.0 0.0
Potash (KCl) (t) Lithium Carbonate (US$/t) Free Cashflow (18.6) (142.4) (102.5) 30.2
Boric Acid (t)
+ Equity raised 37.0 0.0 0.0 0.0
Reserves & Resources (100% of Project) + Debt drawdown (repaid) 0.0 130.8 90.7 (20.6)
Net Change in Cash 13.0 (11.6) (11.8) 9.6
Volume LithiumPotassiumBoron Cash at End Period 38.1 26.5 14.7 24.3
Salar Olaroz (cubic km) mg/L mg/L mg/L Net Cash/(LT Debt) 38.1 (59.6) (206.9) (176.6)
1.75 690 5,730 1,050
Contained Metal (kt) 1,209 10,041 1,840
Product Equivalent LiCO3 KCl H3BO3 Balance Sheet (A$m) 2011F 2012F 2013F 2014F
(kt) 6,433 19,179 10,527
Cash 38.1 26.5 14.7 24.3
Directors Total Assets 63.1 190.5 270.2 240.3
Total Debt 0.0 86.1 221.5 200.9
Name Position Total Liabilities 1.1 131.9 222.6 202.0
James Calaway Non-Executive Chairman Shareholders Funds 62.0 58.5 47.5 38.3
Richard Seville Managing Director
John Gibson Non-Executive Director Ratios
Federico Nicholson Non-Executive Director Net Debt/Equity (%) na 1.0 4.4 4.6
Fernando Oris De Roa Non-Executive Director Interest Cover (x) na (1.4) (0.3) 0.0
Courtney Pratt Non-Executive Director Return on Equity (%) na na na na
Neil Stuart Non-Executive Director
Substantial Shareholders Shares (m) (%)

Lithium Investors LLC 8.2 8.0
Richard Seville 4.8 4.7
Fairground 4.4 4.3
Eye Investment Fund 4.0 3.9
CIBC GAM 3.7 3.6
Disclosure: Patersons acted as joint lead manager for a share placement that raised A$15m at A$3.21/sh. In conjunction Cormark
Securities Dundee Securities acted as lead Syndicators for C$20m bought deal at C$3.20/sh in February 2011. Patersons acted as
joint lead manager for a share placement that raised A$6.25m at A$1.10/sh in December 2009. It received a fee for this service.
OZ Minerals Limited OZL ($1.43)

Further growth needed Analyst: Alex Passmore, Gary Watson
OUR VIEW
We see the recent acquisition of Carrapateena as a positive for OZL, with production starting in 2018 and replacing some
of the production gap at a time when Prominent Hill is tailing off. The Prominent Hill underground development is underway
at Ankata, where the expected 1.2Mtpa production is set to ramp up from early 2012. We see a short term increase in
production but longer term however; the concern remains that post 2018 when the Malu pit ends there will be a significant
feed shortfall for the 10Mtpa mill. We see OZL’s success in filling the expected production gap as critical to their growth going
forward and the company is aggressively pursuing reserve expansion through its significant $20m near mine exploration
spending and $50m regional exploration programme. OZL is also looking for another project, either domestic or international,
and is well placed for an acquisition given its strong cash position of A$700m (post the Carrapteena deal). Lower expected
gold grades and a strong Australian dollar has driven OZL’s cash cost from US$0.44/lb in the Dec Q CY2010, to US$0.70/
lb for the remainder of CY2011. We expect the impact of the higher cost will be largely mitigated by the rising Cu and Au
prices. We retain our HOLD recommendation with a price target of $1.49/sh.

• Carrapateena acquisition offers minor growth catalyst.
With current reserves at Prominent Hill providing a mine life Year End December 31 2010A 2011F 2012F 2013F
of approximately 9 years, we see Carrapateena as a much
needed growth catalyst for OZL. Carrapateena will have a Reported NPAT ($m) 544.4 372.5 407.1 442.2
long development timeline and production is expected to Recurrent NPAT ($m) 354.0 372.5 407.1 442.2
commence in 2018. The production will be coming online in Recurrent EPS (cents) 11.3 11.8 12.9 14.1
2018 as PH winds down, offering positive timing synergies, EPS Growth (%) 1,031.1 5.2 9.3 8.6
PER (x) 12.5 11.9 10.9 10.0
but the production rate will be lower leaving a gap once PH
goes underground only. OZL purchased Carrapateena for EBITDA ($m) 765.0 701.5 749.6 799.7
US$250m plus a further $50m payment once production EV/EBITDA (x) 4.0 5.1 4.4 3.7
begins. The deposit has an initial resource of 203Mt at 1.31% Capex ($m) 79.9 381.4 87.6 36.7
Cu, 0.56g/t Au, 270ppm U and 6g/t Ag. OZL plans to put Free Cashflow 359.3 129.5 465.8 550.8
forward a 10,000m drilling programme to over the next year FCFPS (cents) 11.4 4.1 14.8 17.5
to increase the resource with notable results from previous PFCF (x) 12.3 34.1 9.5 8.0
drilling in the area including 905m at 2.15% Cu & 0.66g/t
Au, and 905m at 2.17% Cu, 0.89g/t Au. DPS (cents) 19.0 6.0 6.0 5.0
Yield (%) 13.5 4.3 4.3 3.6
• Rise in costs. Cash costs have risen from $0.44/lb in
the Dec Q to US$0.70/lb in the March Q, due to lower
Franking (%) 0.0 0.0 0.0 0.0
gold production of 49,911oz (54,128oz Dec Q) resulting

from lower grades and the rise in the Australian dollar.
Management has indicated it expects higher gold grades to Company Statistics & Performance
return for Q3 and Q4 CY2011. Cost guidance for the rest
of CY2011 is ~$US$0.70/lb factoring in the high AUD. Shares on issue (m) 3121.3 3mth ADT ($m) 31.93
• Strong cash position despite acquisition and capital
return. OZL announced on 16 March that its intended
A$390m (12cps) capital return to shareholders due on 15

April, was ruled by the ATO as a non-taxable distribution. 2.00 75000
Despite this being subject to shareholder vote at the AGM on
18 May, we see no reason why this should not go ahead. The
distribution represents an 11% return based on the current 1.80
share price. Post capital return and Carrapateena acquisition 60000
OZL will hold ~$700m in cash. 1.60
Share Price (A$)
•
Volume '000
Class action loss. Despite recent class action suits having 45000
gone against OZL to the tune of $55.1m and the resulting 1.40
negative impact on the company’s net profit for FY2011,
we don’t expect any ongoing negative impacts from the 1.20
company’s decision to settle. Under the class actions OZL 30000
was accused of classifying much of its current liabilities
1.00
as non-current by around $300m and failing to disclose
the full extent of its refinancing obligations. 15000
0.80
• Regional Exploration. With the Government releasing
land from the Woomera exclusion zone near to OZL existing
exploration tenements, it is likely that OZL will pick up 0.60 0
some of these prospective properties. The $50m regional 12 Months
exploration budget may see some exploration success,
however, the Gawler Craton has ~100m thick cover rocks,
significantly increasing the risk of exploration in the area.
OZ Minerals Limited $1.43 Year End December 31

Prominent Hill 2879 0.92 A$:US$ 0.93 1.06 1.03 0.98

Carrapateena 250 0.08 Copper (US$/lb) 3.44 4.33 4.26 4.10
Exploration 730 0.23 Lead (US$/lb) 0.78 0.79 0.80 0.82
Equity Investments 232 0.07 Zinc (US$/lb) 0.98 1.09 1.11 1.10
Cash 861 0.27 Nickel (US$/lb) 9.83 11.92 11.60 11.21
Debt 0 0.00 Gold (US$/oz) 1356 1483 1507 1548
Corporate (255) (0.08) Silver (US$/oz) 20.13 39.91 42.60 42.45
Total @ 8% Real 4951 1.49
DCF Valuation Sensitivity A$/sh
Prominent Hill
Patersons NPV 1.49 Copper (kt) 112 114 118 118
NPV at flat spot Cu and AUDUSD $1.55/sh Gold (koz) 196 188 195 195
Implied Cu price at current stock price US$3.30/lb Copper Cash Cost (US/lb net) 0.61 0.69 0.67 0.67
Valuation Summary of Operating Assets Carrapateena

Copper (kt) 0.00 0.00 0.00 0.00
Carrapateena Gold (koz) 0.00 0.00 0.00 0.00
6% Copper Cash Cost (US/lb net) na na na na
Prominent Hill Profit & Loss (A$m) 2010A 2011F 2012F 2013F
70%
Exploration Sales Revenue 1148.9 1141.1 1195.2 1221.0
18% Other Income 36.3 9.1 9.3 61.1
Operating Costs 341.8 385.9 401.8 429.1
Exploration Exp. 31.4 22.9 13.0 13.2
Equity Investments EBITDA 765.0 701.5 749.6 799.7
6% Depn & Amort 152.6 169.4 168.0 168.0
EBIT 612.4 532.1 581.6 631.7
Prominent Hill Copper Production Summary Interest 37.1 (0.0) (0.0) (0.0)
150 5.0 Tax expense 221.3 159.6 174.5 189.5
Minorities 0.0 0.0 0.0 0.0
120 4.0 Abnormals 190.4 0.0 0.0 0.0
NPAT 544.4 372.5 407.1 442.2
90 3.0
(US$/lb)
Normalised NPAT 411.2 364.5 398.4 432.7

(kt)
60 2.0
Cash Flow (A$m) 2010A 2011F 2012F 2013F
30 1.0 Adjusted Net Profit 411.2 364.5 398.4 432.7
0 0.0 - Interest/Tax/Expl Inc 224.5 205.4 200.4 216.0
2010A 2011F 2012F 2013F
+ Depn/Amort 152.6 169.4 168.0 168.0
Copper Cash Cost (US/lb net) Copper (US$/lb)
+/- Other 0.0 0.0 0.0 0.0
Copper (kt)
- Capex 79.9 381.4 87.6 36.7
Reserves & Resources - Other investing cashflow 114.9 0.0 0.0 0.0
Prominent Hill Ore Reserves (Mt) (g/t, %) (kt, Moz) Free Cashflow 131.0 129.5 465.8 550.8
Cu 74.5 1.21 905 - Dividends (ords & pref) 93.6 615.3 194.3 226.7
Au 0.67 1595 + Equity raised/ZFX acquisiton 123.9 0.0 0.0 0.0
Ag 3.08 7375 + Debt drawdown (repaid) (121.0) 0.0 0.0 0.0
Net Change in Cash 40.3 (485.8) 271.5 324.1
Prominent Hill Mineral Resources (Mt)(g/t, %, ppm)(kt, Moz) Cash at End Period 1334.2 848.4 1119.9 1444.1
Copper-Gold Zone Cu 200.3 1.23 2473 Net Cash/(LT Debt) 1334.2 848.4 1119.9 1444.1
Au 200.3 0.50 3.1
Ag 200.3 3.00 19.3 Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Gold only Zone Cu 85.2 0.08 1.5
Au 85.2 1.50 4.1 Cash/Bullion 1334.2 848.4 1119.9 1444.1
Ag 85.2 1.00 2.7 Total Assets 3386.9 3728.9 3944.4 4220.6
Total Debt 0.0 0.0 0.0 0.0
Carrapateena Resource Cu 203.0 1.31 2659 Total Liabilities 95.9 267.7 279.1 284.5
Au 203.0 0.56 3.66 Shareholders Funds 3291.0 3461.2 3665.3 3936.1
Ag 203.0 6.00 39.16
U 203.0 227 46.08 Ratios
Directors Interest Cover (x) 16.5 na na na
Return on Equity (%) 12.5 10.5 10.9 11.0
Name Position
Neil Hamilton Non-Executive Chairman Substantial Shareholders
Terry Burgess Managing Director
Micheal Eager Non Executive Director Shares (m) % issued cap
Brian Jamieson Non Executive Director Blackrock Inv Mgmt 336.6 10.8
Dean Pritchard Non Executive Director Bank of America 215.0 6.9
Paul Dowd Non Executive Director Ausbill Dexia 189.5 6.1
Charles Lenegan Non Executive Director M&G 170.0 5.4
Paladin Energy Limited PDN ($3.34)

Starting to Meet Expectations; LH Stage 3 Analyst: Simon Tonkin, Rhys Bradley
OUR VIEW
Overall, PDN is starting to meet production expectations; however, investors should remain cautious with the implementation
of Langer Heinrich Stage III and Namibian BEE policies being considered. We believe there could be some production
disruption while Stage III is implemented, however, once up and running there are some new components that have the
potential to improve production and lower costs. One of the biggest catalysts for PDN is access to additional water for LH
Stage IV we estimate if PDN had access to water their 1.0x NAV could improve from $3.00 to $3.20. On 15 April, PDN
released its March quarterly activities report; uranium production was 6% lower than our estimates at 1.40mlb (PSL est:
1.48). As a result PDN revised its production guidance down to 6mlb which is at the lower end of last quarter’s 6-6.3mlb
range (PSL est: 5.9mlb). The reason for the lower production was heavy rainfall (10 times the average in March) and a fuel
shortage at Kayelekera. Revenues from sales (1.4mlb sold) was US$92.5m (PSL est: US$81.8m) at an averaged realised
price of US$66.28/lb. We retain our HOLD rating and our price target is $3.52/sh based on a 1.2x NAV.

• PDN Starting to Meet Expectations. March quarterly
production came in at 1.40mlb, 6% below of estimate Year End June 30 2010A 2011F 2012F 2013F
of PSL est: 1.48mlb this was a result of factors largely
Reported NPAT (A$m) (39.5) (3.9) 164.2 212.8
outside PDN’s control. This was made up of 606klb (PSL Recurrent NPAT (A$m) (12.8) (5.2) 177.4 223.4
est. 585klb) from Kayelekera and 795.8klb (PSL: 899klb) Recurrent EPS (cents) (1.8) (0.7) 22.8 27.0
from Langer Heinrich. At Langer Heinrich the installation of EPS Growth (%) na na na 12.6
a pilot splash flash heat exchange in stage II has improved PER (x) (187.9) (497.3) 14.7 12.4
extraction rates to 94.8% (from 88%).
EBITDA ($m) 20.2 87.2 343.7 404.8
• Watch-out LH Stage III Front-End Commissioning
in April. While the March Q met our expectations PDN
EV/EBITDA (x)
Capex ($m)
129.2
190.6
31.6
103.3
7.9
33.8
6.2
33.2
reports that it expects to commission the front end (crusher, Free Cashflow (259.5) (48.2) 200.2 254.9
scrubbing unit) of LH Stage III in April. However, the NIMC-IX FCFPS (cents) (36.1) (6.2) 25.7 30.8
columns are behind schedule and won’t be commissioned PFCF (x) (9.2) (54.0) 13.0 10.8
until late in the June quarter. This is in-line with comments
DPS (cents) 0.0 0.0 0.0 0.0
in our site visit note we released in February. Therefore Yield (%) 0.0 0.0 0.0 0.0
we believe there is potential for production disruptions as Franking (%) 0.0 0.0 0.0 0.0
the Stage III circuit is included over the next two quarters.
However, once at nameplate it has the potential to operate
more efficiently than Stage I and III.
• Newmont 6.7% holding in PDN an Overhang. Recently
Newmont (NEM-US) released a substantial holding notice Shares on issue (m) 778.7 3mth ADT ($m) 33
in PDN of 6.7%. The reason relates to NEM’s takeover of
TSX-listed Fronteer Gold who late last year did a deal with
PDN to sell its uranium assets for $260m in shares. There
are restrictions on selling the stock until 2 June 2011 and
6.00 40000
we believe the stock is an overhang for the PDN stock.
The world’s largest gold producer is unlikely to want to
retain its stake in an emerging uranium producer. 5.50
32000
• FY2011 Guidance Downgraded to 6mlb. In the March
Share Price (A$)
quarterly PDN downgraded its FY2011 production to the 5.00

Volume '000
lower end of PDN’s 6-6.3mlb range. 24000
• Langer Heinrich Stage IV. PDN is targeting increasing

production at Langer Heinrich to 8.7mlbpa. We expect
4.50
16000
capital costs to be in the $75-100m range and will require
4.00
additional water. Currently PDN uses 1.5GLpa and in order
to increase production to Stage IV it will require 5-6GLpa.
The water could come from the Areva desalination plant 3.50
8000
or a new plant by Namwater. We estimate that LH Stage
4 could add $0.29/sh to our valuation.
3.00 0
• Catalysts. April-May 2011: LH Stage III Front-End
Commissioning; Late June Q: LH Stage III Back End; Dec
12 Months
Q: LH Stage 4 Feasibility; Update on Water Availability

Ongoing.
Paladin Energy Limited $3.34 Year End June 30

Valuation US$m US$/sh Commodity Assumptions 2010A 2011F 2012F 2013F
Langer Heinrich 2015.1 2.29 A$:US$ 0.89 0.99 1.05 1.00

Kayelekera 477.9 0.46 Uranium (US$/lb) 61.75 60.00 62.50 66.40
Canadian Assets 233.9 0.27
Exploration (inc. Mt Isa) 634.4 0.72 Sensitivities -10% 0% +10% % Chg
Listed investments 72.1 0.08
Corporate (73.8) (0.08) FX (A$:US$) 3.52 3.52 3.53 0
Forwards (8.1) (0.01) U Price 3.10 3.52 3.94 12
Unpaid Capital 2.7 0.00 Langer Heinrich Grade 3.27 3.52 3.78 7
Cash (est.) 181.3 0.21 Kayelekera Grade 3.48 3.52 3.57 1
Debt (inc. Con Note) 720.9 (0.82) Langer Heinrich Opex 3.69 3.52 3.35 (5)
NAV (@ 10% disc rate) 3,536 3.11 Kayelekera Opex 3.55 3.52 3.49 (1)
Price Target (1.2x NAV) 3.74
Valuation (A$) A$m A$/sh
Langer Heinrich U3O8 (mlbs) 3.4 4.1 9.0 9.0
Total NAV 10% Discount 3335 2.94 Kayelekera U3O8 (mlbs) 1.0 2.2 3.1 3.1
Price Target 3335 3.52 Total Production (mlbs) 4.3 6.2 12.1 12.1
Exchange Rate (US$/A$) 1.06 Reported Cash Costs (US$/lb) 26.06 26.56 26.16 26.68
Total Cash Costs (US$/lb) 33.07 34.94 35.63 36.28
Valuation Summary of Operating Assets Price Received - ($US/lb) 54.20 54.91 62.07 66.29

Kayelekera Sales Revenue 202.0 305.3 723.6 772.8
Langer Heinrich 15% Other Income 10.8 (11.1) 5.1 5.9
65% Operating Costs 156.0 180.4 341.7 351.2
Exploration Exp. 17.1 16.4 14.2 14.5
EBITDA 18.0 86.1 360.5 400.5
Exploration Depn & Amort 15.0 44.9 82.6 82.6
(inc. Mt Isa) EBIT 3.0 41.2 278.0 318.0
20% Interest 20.2 30.6 12.5 0.0
Uranium Production Summary Abnormals (pre-tax) 8.1 18.4 0.0 0.0
Tax expense 10.0 (5.2) 93.5 112.0
14.0 100
Minorities 0.0 1.6 0.0 0.0
NPAT (35.3) (4.1) 172.0 206.0
12.0 NPAT (Adj) (27.1) (16.7) 185.8 222.6
80
10.0
60
(mlbspa)
(US$/lb)
8.0
6.0 40 + Interest/Tax/Expl Exp 69.0 36.1 120.2 126.5
4.0 - Interest/Tax/Expl Inc 61.1 46.0 129.3 132.7
2.0
20 + Depn/Amort 15.0 44.9 82.6 82.6
+/- Other 0.0 0.0 0.0 0.0
0.0 0 Operating Cashflow (11.0) 18.3 259.3 298.9
2010A 2011F 2012F 2013F - Capex (+asset sales) 170.4 102.4 35.5 33.2
Total Production (mlbs) Price Received ($US/lb) - Working Capital Increase 27.5 42.4 0.0 0.0
Free Cashflow (208.9) (126.5) 223.8 265.7
Reserves & Resources - Dividends 0.0 0.0 0.0 0.0
- Other 1.8 0.0 0.0 0.0
Measured & Indicated Resources Mt % U3O8 U3O8 (t) + Equity Raised 364.1 1.5 0.0 0.0
Langer Heinrich 124.3 0.05 67,758 + Debt Drawdown (Repaid) 129.2 (25.9) (44.5) (371.8)
Kayelekera 22.2 0.08 17,760 Net Change in Cash 282.6 (150.9) 179.3 (106.1)
Manyingee 7.9 0.10 7,900 Cash at End Period 348.8 197.9 377.2 271.1
Angela & Pamela 11.4 0.11 12,540 Net Cash/(LT Debt) (245.9) (511.1) (287.3) 40.3
Valhalla 34.7 0.08 28,778
Total 200.5 0.053 134,736 Balance Sheet (US$m) 2010A 2011F 2012F 2013F
Inferred Resources Mt % U3O8 U3O8 (t)
Cash 348.8 197.9 377.2 271.1
Langer Heinrich 18.5 0.06 11,100
Total Assets 1957.6 2056.8 2198.1 1673.1
Kayelekera 3.9 0.06 2,153
Total Debt 730.1 844.4 800.0 41.2
Manyingee 4.2 0.07 2,940
Oobagooma 7.1 0.12 8,520
Valhalla 9.1 0.06 5,851
Total 42.8 0.071 30,564
Ratios
Net Debt/Equity (%) 25.7 54.3 25.5 na
Directors
Interest Cover (x) 0.2 1.3 22.3 na
Name Position Return on Equity (%) na na 15.3 15.3
John Borshoff Managing Director/CEO
Rick Crabb Non-Executive Chairman Substantial Shareholders No. Shares %
Sean Llewelyn Non-Executive Director
HSBC Custody Nominees (Aust) Ltd 172.40 24.00
Donald Shumka Non-Executive Director
Ian Noble Non-Executive Director
Top 20 587.24 81.74
Peter Donkin Non-Executive Director
Philip Bailey Non-Executive Director
Gillian Swaby Company Secretary
Panoramic Resources Limited PAN ($2.08)

Higher Costs Beginning to Bite Analyst: Simon Tonkin, Tim McCormack
OUR VIEW
Overall, we believe PAN is an attractive nickel story with excellent leverage to nickel prices and exploration upside; however
we believe the stock is fairly priced based on current production expectations. PAN’s diversification into gold at the established
Gidgee project (plant infrastructure) will take some time to prove up with the first milestone the delineation of a 500,000oz
gold reserve estimate. In addition, PAN has a number of exploration properties (East Kimberley, Norrland (Sweden), Tushtena
(Alaska) and Drake (Scandinavia)) which could yield significant discoveries however, further exploration work is needed. PAN
also has investments in Ampella (AMX) and Magma Metals (MMW). For the March Q, PAN reported consolidated production of
4,166t Ni (up 3% previous quarter and below our estimate of 4,500t) at cash costs of US$5.95/lb (10% lower than previous
quarter and above our estimate of US$5.30/lb). However, PAN has revised its FY2011 production guidance downward by
5-10% to 17-17.2kt of nickel. PAN’s costs have been gradually rising and we have incorporated these into our financial
model, with the impact on our NAV $0.30 to $1.92/sh (previously $2.36/sh). We retain our HOLD rating.

• Slightly Better Quarter. PAN recorded 3% better
production in the March Q compared to the December Q. Year End June 30 2010A 2011F 2012F 2013F
During the March Q Savannah was impacted by heavy
Reported NPAT ($m) 56.9 41.2 55.6 48.7
rains, however, PAN was able to access higher grade mining Recurrent NPAT ($m) 56.5 36.4 55.6 48.7
areas recording a grade of 1.43% Ni (PSL est. 1.35% Ni) Recurrent EPS (cents) 26.9 17.4 26.5 23.2
with throughput down by 17% vs. PSL est. The heavy rains EPS Growth (%) 47.0 (35.6) 52.5 (12.3)
impacted concentrate shipments with 4,500t of nickel valued PER (x) 7.7 12.0 7.9 9.0
at $7m remaining on site. Production from Lanfranchi was
10% lower than expectations mainly due to lower availability EBITDA ($m) 132.0 100.5 126.7 116.9
of the underground equipment fleet due to major component EV/EBITDA (x) 2.3 3.3 2.1 1.9
failures on trucks and loaders. Capex ($m) 33.0 24.6 25.0 25.5
Free Cashflow 105.2 13.5 74.2 66.7
FCFPS (cents) 50.2 6.4 35.3 31.8
• FY2011 Guidance Revised Downward by 5%. In
its March quarterly, PAN revised its FY2011 production PFCF (x) 4.1 32.5 5.9 6.5
guidance down by 5% to 17-17.2kt from 18-19kt in the DPS (cents) 16.5 9.0 8.0 7.0
previous quarter. We had 17.4kt however, inputting this Yield (%) 7.9 4.3 3.8 3.4
quarters production figures we have revised our estimate Franking (%) 100.0 100.0 100.0 100.0
down to 17kt Ni.
• Higher Costs Beginning to Bite. We have taken this

opportunity to review our PAN model and costs have been Company Statistics & Performance
gradually rising over the past year. We have incorporated
these higher costs into our model which results in a $0.30/ Shares on issue (m) 209.7 3mth ADT ($m) 2.43
sh impact to our NAV now $1.92/sh (previously $2.36/sh). 52 week range $1.72 - $2.96 Cash est ($m) 97.5
• Completed Gidgee Acquisition; Targeting 500,000oz

Reserve. PAN has $96m in cash following the $15.5m
acquisition of the Gidgee Gold Project in Western Australia. 3.25 5000
PAN plans to recommission the existing Gidgee gold
processing plant with an initial reserve target of 3-5Mt
at 5g/t Au for 500koz Au. This is targeted as the next leg 4000
of growth for PAN. 2.75
Share Price (A$)
•
Volume '000
Record Exploration Expenditures in FY11. PAN is 3000

spending $12m in FY11 on various global and domestic
exploration projects including Savannah and Lanfranchi to 2.25
provide an option on potential new discoveries. PAN has
2000
had some success and plans to drill the following targets:
1) Helmut South: several more high-grade hits down plunge
2) Helmut South Extension: Narrow high grade sulphides 1.75
returned 3) Cruickshank: PAN released an updated resource 1000
estimate 4) East Kimberley JV: Drill testing of targets
expected in June Q 5) Drake (Scandinavia): Ten high quality
Zn-Cu targets ready for testing. 1.25 0
12 Months
• Catalysts. 1) Ongoing Exploration Results 2) July 2011
- June Q Report 3) Continued Strategic Investments/
Acquisitions.
Panoramic Resources Limited $2.08 Year End June 30

Savannah Project 97 0.46 A$:US$ 0.89 0.99 1.05 1.00

Copernicus-Salk 0 0.00 Nickel (US$/lb) 8.75 11.12 11.75 11.43
Lanfranchi 165 0.78 Copper (US$/lb) 3.04 4.00 4.31 4.20
Forwards (4) (0.02) Cobalt (US$/lb) 12.92 15.52 15.26 15.57
Puts & Calls 1 0.00 Zinc (US$/lb) 0.94 1.03 1.11 1.11
Corporate (39) (0.18) Lead (US$/lb) 0.95 1.10 1.20 1.18
Cash 98 0.47
Investments/TD 7 0.03 Production Summary 2010A 2011F 2012F 2013F
Debt (2) (0.01)
Exploration 79 0.37 Nickel (t)
Unpaid capital 2 0.01 Savannah 7,273 6,936 7,605 7,459
NPV 403 1.92 Copernicus 0 0 0 0
Price Target 403 1.92 Lanfranchi 10,005 10,024 10,708 10,708
Total Nickel Production (t) 17,278 16,960 18,313 18,167
Sensitivities +10% 0% -10%
Cobalt (t)
Nickel Price 2.53 1.92 1.27 Savannah 386 364 363 363
A$ : $US 1.27 1.92 2.74 Copernicus 0 0 0 0
Lanfranchi 0 0 0 0
Copper (t)
Exploration Savannah 4,019 3,705 4,070 4,070
23% Copernicus 0 0 0 0
Lanfranchi 684 823 775 775
Lanfranchi
48%
Cash Cost per lb payable (A$/lb) 5.34 6.06 5.91 6.06
Cash Cost per lb payable (US$/lb) 4.77 6.01 6.22 6.06
Total Cost per lb payable (US$/lb) 6.50 7.81 8.08 7.85
Savannah Project Spot Nickel price (US$/lb) 8.75 11.12 11.75 11.43
29% Realised Nickel Price (US$/lb) 9.07 10.34 11.74 11.03
Nickel Production Summary Profit & Loss (A$m) 2010A 2011F 2012F 2013F
20,000 12.00
Sales Revenue 284.1 282.9 325.9 321.1
10.00 Other Income 4.5 11.2 6.4 9.0
16,000
Operating Costs 139.1 175.4 188.5 195.8
8.00 Exploration Exp. 7.1 8.2 6.9 7.0
12,000
(US$/lb)

6.00
(t)
8,000
EBITDA 132.0 100.5 126.7 116.9
4.00 Depn & Amort 52.7 44.7 47.3 47.3
4,000
EBIT 79.4 55.9 79.4 69.6
2.00 Impairments/MTM adjustment (0.4) (4.8) 0.0 0.0
0 0.00
Interest 0.8 0.1 0.0 0.0
2010A 2011F 2012F 2013F 2014F 2015F Operating Profit 79.0 60.5 79.4 69.6
Total Nickel Production (t) Cash Cost per lb payable (US$/lb) Tax expense 22.1 19.3 23.8 20.9
Realised Nickel Price (US$/lb) Spot Nickel price (US$/lb) NPAT 56.9 41.2 55.6 48.7
Reserves & Resources Normalised NPAT 56.5 37.6 55.6 48.7

Reserves Kt Metal Grade (%) Metal (kt) Cash Flow (A$m) 2010A 2011F 2012F 2013F
Savannah 6,220 Ni 1.20 74.6
Cu 0.62 38.6 Adjusted Net Profit 56.9 41.2 55.6 48.7
Co 0.06 3.7 + Interest/Tax/Expl Exp 30.0 27.6 30.7 27.9
Lanfranchi 376 Ni 4.60 17.3 - Interest/Tax/Expl Inc 23.9 32.0 34.4 31.7
Deacon 2,443 Ni 2.52 61.6
+ Depn/Amort 52.7 44.7 47.3 47.3
Total 9,039 Ni 1.59 144.1
+/- Other 0.0 0.0 0.0 0.0
Resources Kt Metal Grade (%) Metal (kt) Operating Cashflow 115.6 81.5 99.2 92.2
Savannah 6,049 Ni 1.53 92.5 - Capex (+asset sales) 38.7 30.2 25.0 25.5
Cu 0.81 49.0 - Working Capital Increase (22.6) 43.4 0.0 0.0
Co 0.08 4.8 Free Cashflow 99.5 7.9 74.2 66.7
Copernicus JV 812 Ni 1.23 10.0 - Dividends (ords & pref) 24.6 21.6 18.6 14.5
Cu 0.82 6.7 + Equity raised 0.6 0.0 0.0 0.0
Co 0.04 0.3 + Debt drawdown (repaid) (5.4) (13.6) 0.0 0.0
Lanfranchi 5,327 Ni 1.31 69.7 Net Change in Cash 70.1 (27.3) 55.5 52.3
Deacon 2,301 Ni 2.42 55.7 Cash at End Period 137.5 110.1 165.7 217.9
Total 14,489 Ni 1.76 255.0 Net Cash/(LT Debt) 132.8 110.1 165.7 217.9
Directors Balance Sheet (A$m) 2010A 2011F 2012F 2013F

Name Position Cash 137.4 110.1 165.7 217.9
Christopher de Guingand Non-Executive Chairman Total Assets 416.8 371.8 417.3 450.4
Peter Harold Managing Director Total Debt 4.7 2.1 0.0 0.0
Chris Langdon Non Executive Director Total Liabilities 125.7 105.9 112.4 111.3
John Rowe Non Executive Director
Brian Phillips Non Executive Director
Chris Williams Chief Operating Officer
Trevor Eton Chief Financial Officer Ratios
Substantial Shareholders Shares (m) % Interest Cover (x) 104.1 397.5 na na
M&G 40.0 19.5 Return on Equity (%) 19.5 15.5 18.2 14.4
AMP 12.1 5.9
Eley Griffiths 11.6 5.7
Regis Resources Limited RRL ($2.40)

Recommendation: BUY
Upgrading expectations for Garden Well

Analyst(s): Alex Passmore, Byron Benvie, Rhys Bradley
OUR VIEW
RRL reported 22,005oz of Au production for the March Q 2011, down marginally from 23,851oz in the December Q although
an impressive result given the high rainfall experienced by all operators is the eastern goldfields during the period. The
company’s second major project, Garden Well, will be given the go ahead following completion of the DFS during the June Q
and the recent announcement of their intent to award the mining contract to MACA, who currently provide mining services
at the Moolart Well project. The combination of these two major projects will see production increase significantly over the
next few years, with forecasts to produce >100koz in 2013 as Moolart ramps up and Garden Well comes online. Despite
RRL being a domestic gold producer and hence exposed to the current strong AUD the company has the ability to grow
revenues and earnings via organic growth at a time when many in the sector are struggling to do so. RRL has a proven
ability of delivering on targets, We are upgrading our recommendation to BUY from HOLD with a price target of $3.13/sh
and see confirmation of Garden Well metrics and a successful ramp up in production as key elements to watch.

• Solid March Q production. The Moolart Well operations
delivered 22koz for the Q, at a low cash cost of $545/
oz (excl royalties, $599 incl royalties) compared to the Reported NPAT ($m) (18.1) 32.5 48.0 112.0
Australian gold sector (AQG’s Australian ops: A$508/ Recurrent NPAT ($m) (18.1) 32.5 48.0 112.0
oz, SBM’s ops: A$800/oz). The Moolart Well gold plant Recurrent EPS (cents) (4.2) 7.0 10.3 24.1
is performing well above expectations at 2.32Mtpa EPS Growth (%) na na 47.6 133.1
annualised rate achieved for the Q, with a 2.5Mtpa rate PER (x) (57.7) 34.3 23.2 10.0
being reached at the end of the Q.
EBITDA ($m) (16.4) 50.9 80.2 190.8
• A second major project. The large Garden Well project
(2.12moz Au resource and 1.6moz Au reserve) is progressing
EV/EBITDA (x)
Capex ($m)
(64.0)
56.0
22.0
40.6
14.7
98.0
5.7
17.5
rapidly with the company having commenced purchasing long Free Cashflow (86.5) 2.7 (42.5) 107.7
FCFPS (cents) (19.9) 0.6 (9.1) 23.1
lead time items of ~$14m for the development, indicating PFCF (x) (12.1) 418.7 (26.3) 10.4
this project is likely to be given the go ahead. The Garden
Well DFS is also on track for completion in June 2011 Q. DPS (cents) 0.0 0.0 0.0 0.0
Capex for the project has been revised down to $110m from Yield (%) 0.0 0.0 0.0 0.0
$165m with project construction commencing in September Franking (%) 100.0 100.0 100.0 100.0
2011 Q. RRS plans to process 4Mtpa for 180koz from the
forecast production start in Sept 2012 Q at an operating cost
of $572/oz (excl royalties). Company Statistics & Performance
• Significant resource and reserve base. Between
Moolart Well, Garden Well and Erlistoun, RRL currently
Shares on Issue (m) 435.2 3mth ADT ($m) 2.85
has total Au resources of 164.1Mt at 1.1 g/t for 5.8moz 52 Week Range $0.82 - $2.59 Cash ($m) 12.4
Au, of which 42% (50.5Mt at 1.52g/t for 2.47moz Au) are
reserves. Drilling last quarter and through 2011 is focused
on Garden Well targeting the conversion of inferred 3.00 10500
to indicated resources, as well as further defining the
extent of mineralisation both along strike and at depth.
9000
Encouraging results from RC and diamond drilling outside 2.50
the current Garden Well resource have included highlights
such as 20m at 3.73g/t Au, and 29.48m at 2.72g/t Au. 7500
Share Price (A$)
2.00
Volume '000
• Re-optimisation studies at Moolart Well. RC drilling

of 3,983m was completed during the quarter to test
6000
1.50
for extensions to and infill of the known mineralisation
at Moolart Well, with assay results pending. Pit 4500
re-optimisation work has commenced on existing reserves 1.00
at Lancaster, Lancaster North, Stirling, Stirling North and 3000
on the Blenheim prospect (no reserve to date) with studies
expected to be completed from June Q onwards. 0.50 1500
• Catalysts. 1) Completion of Garden Well DFS study and

approval, 2) Conversion of resources to reserves, 3) 0.00 0
Results of pit re-optimisation studies (June Q onwards). 12 Months
• Risks. 1) further AUD appreciation, 2) Garden Well DFS

results.
Regis Resources Limited $2.40 Year End June 30

Moolart Well 395.9 0.85 A$:US$ 1.06 1.03 0.98 0.94

Garden Well 482.8 1.04 Gold (US$/oz) 1445 1494 1525 1575
Exploration 185.0 0.40 Silver (US$/lb) 29.77 42.63 42.53 42.38
Unpaid capital 41.3 0.09 Gold (A$/oz) 1369 1454 1556 1675
Corporate (28.9) (0.06)
Forwards (9.3) (0.02) Target Price Sensitivity -10% 0% +10% % Chg
Cash 12.4 0.03
Debt (39.8) (0.09) FX (A$:US$) 3.64 3.13 2.71 (13)
Price Target (1.4x NPV) 3.13 Gold Grade 2.96 3.13 3.29 5
Operating costs 3.17 3.13 3.07 (2)
NPV Sensitivity
EV:Reserve (A$/oz) 432
Hedging koz 1-Year 3-years % Reserve
Production (koz)
Committed Production 150 48 150 20 Moolart Well 81 106 106 105
Garden Well 0 0 100 185
Valuation Summary of Operating Assets Total 81 106 206 290
Cost Summary
Cash Costs (A$/oz) 555 566 586 607
Exploration Total Costs (A$/oz) 766 818 839 860
31%
Moolart Well Profit & Loss (A$m) 2011F 2012F 2013F 2014F
67%
Sales Revenue 106.6 149.0 309.9 486.0
Other Income 0.9 2.1 5.3 11.6
Cash Operating Costs 48.5 60.1 112.4 179.5
2% Exploration Exp. 1.9 3.4 4.6 5.8
EBITDA 50.9 80.2 190.8 304.6
Gold Production Summary Depn & Amort 15.9 26.9 32.2 36.5
EBIT 35.1 53.3 158.6 268.1
350 800 Interest 2.5 5.3 9.9 7.5
300 700 Tax expense 0.0 0.0 36.7 78.2
250 FX Adjustment 0.0 0.0 0.0 0.0
600
Abnormals
(A$/oz)
200
(koz)
500 NPAT 32.5 48.0 112.0 182.4

150
400 Normalised NPAT 22.8 33.6 104.1 182.4
100
50 300
0 200 Cash Flow (A$m) 2011F 2012F 2013F 2014F

2011F 2012F 2013F 2014F 2015F 2016F
Total Cash Costs (A$/oz)
+/- Other 0.0 0.0 0.0 0.0
Reserves Mt Au g/t Au koz Operating Cashflow 20.6 40.7 116.6 200.4
Moolart Well 12.5 1.5 607 - Capex (+asset sales) 40.6 98.0 17.5 2.1
Erlistoun 2.7 2.4 205 - Working Capital Increase (12.3) 0.0 0.0 0.0
Garden Well 35.3 1.5 1,660 Free Cashflow (7.7) (57.3) 99.1 198.3
Total 50.5 1.5 2,472 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
+ Equity raised 8.2 0.0 0.0 0.0
Resources Mt Au g/t Au koz + Debt drawdown (repaid) 16.3 98.0 17.5 (48.9)
Moolart Well 91.8 0.8 2,214 Net Change in Cash 16.8 40.7 116.6 149.3
Erlistoun 5.3 1.9 324 Cash at End Period 26.3 67.0 183.7 333.0
Regional 18.0 2.0 1,129 Net Cash/(LT Debt) (4.3) (61.5) 37.5 235.8
Garden Well 49.0 1.4 2,143
Total 164.1 1.1 5,809
Directors
Cash/Bullion 26.3 67.0 183.7 333.0
Nick Giorgetta Non-Executive Chairman Total Debt 30.6 128.6 146.1 97.2
Mark Clark Managing Director Total Liabilities 73.5 171.5 189.0 140.1
Morgan Hart Executive Director Shareholders Funds 112.8 146.4 250.5 432.9
Mark Okeby Non-Executive Director
Ross Kestel Non-Executive Director Ratios
Net Debt/Equity (%) 3.8 42.0 na na
Substantial Shareholders Shares % Interest Cover (x) 13.9 10.0 16.0 35.8
Newmont Capital Pty Ltd 70.4 16.3 Return on Equity (%) 28.9 32.8 44.7 42.1
Citicorp Nominees Pty Ltd 34.1 7.9
J P Morgan Nominees Australia Ltd 24.6 5.7
South American Ferro Metals Limited SFZ ($0.30)

Recommendation: BUY
Fine tuning the plant Analyst: Gary Watson
OUR VIEW
While some of the heat has come out of the market, SFZ’s share price has fallen further in comparison to well below its
listing price of $0.36/sh, primarily due to the lack of news flow from the company. A lacklustre March Quarterly report did
little to shed light on SFZ’s progress or the company’s upcoming catalysts. We anticipate positive news flow to recommence
shortly with the upcoming announcements of sales agreements and the commencement of the Ponte Verde resource drilling
programme during the June Q. The commissioning of the plant at Ponte Verde has been slower than expected with problems
arising from higher than normal phosphorous content in the beneficiated product. The issue appears to have been resolved
with SFZ beginning to stockpile saleable lump and fines products while the sales agreements are under negotiation. Once
Ponte Verde is in full production we expect to see cash margins of ~$35/t, generating free cash of circa US$35m annually.
Currently SFZ is trading at 10.0x FY12 EBITDA and 4.7x FY13 EBITDA (fully diluted). With a 40% discount to our NPV of
$1.03/sh, we rate this company a BUY with a price target of $0.62/sh.

• Fine tuning the plant. SFZ began commissioning of the
Ponte Verde plant in early February and reached a production
rate of ~460ktpa in March while operating on a single shift. Reported NPAT ($m) (1.3) (6.7) 9.7 17.1
A second shift will be introduced at the plant in the coming Recurrent NPAT ($m) (1.3) (1.1) 9.7 17.1
months to reach targeted production of 720ktpa. Some Recurrent EPS (cents) (0.5) (0.4) 2.2 3.0
teething problems have been encountered in the early stages EPS Growth (%) na na na 33.9
of commissioning the plant which has delayed sales. Issues PER (x) (57.1) (68.7) 12.9 9.6
with lower than expected production and high phosphorous
levels have been addressed, bringing the lump and sinter EBITDA ($m) (1.3) (0.5) 12.5 26.5
EV/EBITDA (x) (54.9) (155.8) 9.7 5.0
products within specification.
Capex ($m) 0.1 3.8 6.2 42.2
Free Cashflow (3.0) (10.6) 0.0 (29.0)
• Upcoming drilling. The Ponte Verde project requires further
drilling to infill proven mineralised areas for JORC-compliant
FCFPS (cents) (1.1) (4.0) 0.0 (5.1)
PFCF (x) (25.5) (7.2) 3,734.0 (5.7)
resources. There is also scope to expand the exploration
target base as the ore body is open at depth and deeper DPS (cents) 0.0 0.0 0.0 0.0
drilling is required below 150m. Vale’s adjoining 1.5Bt deposit Yield (%) 0.0 0.0 0.0 0.0
extends down to 300m and we believe the Ponte Verde Franking (%) 0.0 0.0 0.0 0.0
deposit is likely to be expanded at depth also. A 6,000m-
8,000m diamond drilling programme is due to commence
in the coming months and the drilling contractor is due to Company Statistics & Performance
be appointed at the time of printing this document.
• Concentrator due for Dec Q delivery. SFZ is in the process
of adding a concentrator to the Ponte Verde plant to recover
Market Cap. ($m)
52 week range
45.6
$0.14 - $0.44
Debt est ($m)
Cash est ($m)
0.0
8.0
high grade fines material. The concentrator should be on
site in the Dec Q 2011. Fines will be stockpiled until the
completion of the concentrator at which time it is expected 0.50 4000
that the concentrate will be sold to local pellet plants (VALE).
The addition of the pellet plant should provide additional
sales of ~400ktpa at with at a cash cost of ~US$20/t. 0.40 3200
•
Share Price (A$)
Appointment of new CEO. SFZ recently appointed Philip

Volume '000
Hopkins to the CEO position. Mr Hopkins has 30 years

0.30 2400
experience as a mining engineer, including several senior
positions at BHP within their Iron Ore and Stainless Steel
divisions. We do note he has not held a CEO/MD position
previously. 0.20 1600
• Future M&A Potential. Given the fact that Vale

requires access to the Ponte Verde site to fully realise 0.10 800
their neighbouring 1.5Bt resource, there is a significant
possibility that Vale will attempt to acquire the Ponte
Verde project rather than cohabitate with SFZ. 0.00 0
12 Months
• Catalysts. 1) Drilling results at Ponte Verde 2)Successful
ramp up 3) Finalisation of sales contracts 4) Corporate
activity.
South American Ferro Metals Limited $0.30 Year End June 30

Ponte Verde (Stage 1) 220 0.39 A$:US$ 0.89 0.99 1.05 1.00
Ponte Verde (Stage 2) 327 0.58
Exploration 10 0.02 Iron Ore Lump (US$/t) 89.7 143.8 143.8 145.2
Corporate (30) (0.05) Iron Ore Fines (US$/t) 76.4 119.5 119.5 119.5
Cash (est) 8 0.01 Iron Ore Lump (A$/t) 100.4 145.1 136.6 145.2
Debt 0 0.00 Iron Ore Fines (A$/t) 85.5 120.6 113.6 119.5
Price Target 0.63 Production Summary 2010A 2011F 2012F 2013F
Production (Mt)
Sensitivities -10% 0% +10% Lump Production 0.00 0.07 0.33 0.36
Fines Production 0.00 0.18 0.82 0.91
Iron Ore Price 0.54 0.63 0.72 Total 0.0 0.3 1.1 1.3
Cost Summary (US$/t)

Valuation Summary of Operating Assets Cash Cost (US$/t) 0.00 36.18 25.59 15.57
Total Cost (US$/t) 0.00 37.97 26.84 15.91
Ponte Verde (Stage 1) Iron Ore Price Received (US$/t) 0.00 32.16 38.17 44.43
40%
Sales Revenue 0.0 5.2 24.8 40.5

Exploration
Other Income 0.1 0.5 0.0 0.7
2% Ponte Verde (Stage 2) Operating Costs 0.0 2.7 12.3 14.8
58% Exploration Exp. 0.0 0.0 0.0 0.0
EBITDA (1.3) (0.5) 12.5 26.5
Depn & Amort 0.0 0.2 0.6 0.3
EBIT (1.3) (0.7) 11.9 26.1
Production Summary Interest 0.0 0.4 0.0 0.3
Abnormals 0.0 (5.6) 0.0 0.0
5.0 100 Operating Profit (1.3) (6.7) 11.9 25.9
Tax expense 0.0 0.0 2.2 8.8
4.0 80 Minorities 0.0 0.0 0.0 0.0
NPAT (1.3) (6.7) 9.7 17.1
3.0 60
(A$/t)
Normalised NPAT (0.9) (6.7) 9.7 17.1

(mt)
2.0 40
1.0 20
0.0 0 + Interest/Tax/Expl Exp 0.0 0.4 2.2 9.1
2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F - Interest/Tax/Expl Inc 0.0 0.6 6.3 13.2
Iron Ore Price Received (US$/t) Cash Costs (US$/t) + Depn/Amort 0.0 0.2 0.6 0.3
Production (mt) +/- Other 0.0 0.0 0.0 0.0
Reserves & Resources - Capex (+asset sales) 0.1 3.8 6.2 42.2
Resources Iron Ore Mt % Fe% Al+Si % LOI Free Cashflow (3.0) (10.6) 0.0 (29.0)
Ponte Verde (Non-JORC) 149 39.18 38.06 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
+ Equity raised 1.8 13.9 0.0 57.0
Total 149.1 39.18 38.06 0.00 + Debt drawdown (repaid) 0.0 0.0 0.0 40.0
Net Change in Cash (1.2) 3.3 0.0 68.0
Directors Net Cash/(LT Debt) 1.3 4.6 4.7 32.6
Name Position
Terry Willsteed Chairman Balance Sheet (US$m) 2010A 2011F 2012F 2013F
Phillip Hopkins CEO
Stephen Fabian Non-Executive Director Cash/Bullion 1.3 4.6 4.7 72.6
Philip Re Non-Executive Director Total Assets 3.6 11.1 20.8 134.8
Stephen Turner Non-Executive Director Total Debt 0.1 0.1 0.1 40.1
Paul Lloyd Non-Executive Director Total Liabilities 0.1 0.4 0.4 40.4
Topix Management Ltd 16.2 10.3 Ratios
Grafton Resource Investment 13.3 8.5 Net Debt/Equity (%) na na na na
Massif Limited 11.2 7.1 Interest Cover (x) na (1.7) na 97.0
Disclosure: Patersons was lead manager to a placement of 41.7m SFZ shares at $0.36/sh to raise $15m in October 2010. It received
fees for this service. This analyst declares a beneficial interest in SFZ securities.
St Barbara Limited SBM ($1.985)

Recommendation: BUY
Question marks over CAH deal Analyst: Alex Passmore
OUR VIEW
SBM is on the cusp of a record year in terms of production and costs. In FY11 the company has demonstrated production
stability, while in FY12 earnings are set to jump ($64m to $129m NPAT PSL est) as production from the company’s flagship
Leonora Operation move into overdrive with an impressive 6000oz pvm to be extracted at the Gwalia underground. Further
out the company requires bolt-on acquisitions or exploration success with rapid development to produce more than 240kozpa
as Southern Cross Operations (Marvel Loch) are set to close in 2012 with ore reserves fully depleted. SBM’s management
is cognisant of this and has increased its exploration efforts and is actively looking at projects where value can be added.
Our $2.92/sh valuation for the stock is based on 1x NAV. SBM has retraced to $2.08/sh and represents good comparative
value at these levels particularly with looking toward the impending jump in production and cash flow. While major additions
to project value and SBM’s production profile are difficult to identify (meaning that SBM is not in the ‘strategic’ category)
we believe the market will applaud the upcoming strong FY12 Upgrade to BUY from Hold.

• CAH deal looks marginally dilutive. On our estimates
SBM is trading on an EV of $2250/oz of normalised annual
production (in FY12 SBM is set to produce 350ozpa which Reported NPAT ($m) (40.2) 64.5 129.1 89.4
equates to an even cheaper EV of $1,500/oz) while Recurrent NPAT ($m) (40.2) 54.8 129.1 89.4
CAH, at the offer price, is trading on an EV of $2,900/oz Recurrent EPS (cents) (2.2) 7.5 39.5 27.4
normalised annual production (120koz). Hence the deal EPS Growth (%) na na 429.6 (30.7)
PER (x) (91.0) 26.6 5.0 7.2
looks dilutive for SBM shareholders.
EBITDA ($m) 39.0 125.8 276.2 190.1
• Lower forecasting risk with steady recent production
and costs. Mined ore supply at both Marvel Loch and
EV/EBITDA (x)
Capex ($m)
14.4
85.9
4.5
101.1
2.0
32.6
2.9
24.9
Leonora is the constraint on both operations. However Free Cashflow (1.2) (29.6) 242.8 164.4
SBM has maintained gold production in excess of 60kozpa FCFPS (cents) (0.1) (4.0) 74.4 50.4
PFCF (x) (3,074.4) (49.3) 2.7 3.9
(61.5koz for the March Q) for four consecutive Qs. This
indicates the reliability and stability of the operation has DPS (cents) 0.0 0.0 0.0 0.0
improved markedly from its previous history via more Yield (%) 0.0 0.0 0.0 0.0
stable milling operations. Franking (%) 0.0 0.0 0.0 0.0
• Guidance for FY11. SBM has downgraded its FY11

guidance marginally from 265-295koz to 255koz-270koz. Company Statistics & Performance
Leonora will contribute 130-135koz at A$680-720/oz cash
costs, while Marvel Loch (Southern Cross) will contribute Shares on issue (m) 325.6 3mth ADT ($m) 3.75
115-125koz at A$850-900/oz cash costs. Market Cap. ($m) 646.3 Debt est ($m) 12.5
• Production set to jump by 45%. FY12 production will
be a peak at 360koz on our estimates (SBM guidance 330-
370kozpa) as an improved gold grade at Gwalia deeps and 3.50 15000
the King of the Hills underground ore sources impact.
3.00
• Ounces per vertical metre steps up to 6000+. The
Gwalia underground mine progresses at the rate of 40m 2.50
12000
Share Price (A$)
vertically per annum. The upper areas SBM has been mining
Volume '000
over the past 2 years have been running at 3000oz pvm with 2.00
9000
a lift in grade and a wider ore body dimension the Au ounces
within each vertical metre of depth is set to double which 1.50
will have a marked increase in positive cash flow impact. 6000
• Marvel Loch mine life is short. This operation is set to

close at the end of FY12 as mineable reserves are depleted.
1.00
3000
Current ore reserves are 5.4Mt at 2.8g/t Au for 500koz 0.50
although Marvel Loch and Nevoria Pit (2.3Mt at 3.0g/t
Au) are the main commercial propositions. As this mine is 0.00 0
wound down group production will fall by c.100koz however 12 Months
on our forecasts FY12 will be a peak production year where
high grades at Gwalia come into the profile.
St Barbara Limited $1.985 Year End June 30

Southern Cross 6 0.02 A$:US$ 0.89 0.99 1.05 1.00

Leonora (Gwalia) 778 2.38 Gold Price (US$/oz) 1093 1356 1483 1507
Listed Investments 5 0.02 Gold Price (A$/oz) 1222 1368 1409 1507
Forwards 55 0.17
Corporate (31) (0.10) Production Summary 2010A 2011F 2012F 2013F
Exploration (resources @ 40/oz) 71 0.22
Cash 82 0.25 Production (kt)
Debt (inc CN) (12) (0.04) Southern Cross/Marvel Loch 122 116 103 0
Price Target (NAV) 954 2.92 Leonora 109 134 256 242
Sensitivity
Cost Summary
Patersons base case valuation $2.92 Weighted Ave Gold Cash Cost 917 860 742 610
Valuation at spot gold, A$ $3.25/sh (A$/oz)
Implied spot A$ gold price at current SP A$1200/oz Weighted Ave Gold Total Cost 1161 1112 996 865
(A$/oz)
Hedging koz 1-Year 3-years % Reserves Gold Price Realised 1220 1450 1584 1508
(post Hedging, A$/oz)
Bought Puts (A$1,425/oz) 250.0 19 40 10
Sold Calls (A$1,615/oz) 250.0 19 40 10
Sales Revenue 296.8 369.0 569.1 364.5
Other Income 7.7 5.4 0.0 0.0
Operating Costs 219.4 223.7 266.5 147.5
(resources @ 40/oz) Unrealised loss/(gain) on hedging 19.5 0.0 0.0 0.0
Leonora (Gwalia)
91%
8% EBITDA 39.0 125.8 276.2 190.1
Depn & Amort 71.9 58.5 91.0 61.7
Southern Cross EBIT (32.9) 67.4 185.1 128.4
1% Interest 7.3 2.6 0.8 0.8
RSPT 0.0 0.0 0.0 0.0
Tax expense 0.0 10.0 55.3 38.3
Abnormal Losses / Minorities 0.0 (9.7) 0.0 0.0
Gold Production Summary NPAT (40.2) 64.5 129.1 89.4
420 2500 Normalised NPAT (40.2) 64.5 129.1 89.4

360
2000
300 Cash Flow (A$m) 2010A 2011F 2012F 2013F
240 1500
(A$/oz)
Adjusted Net Profit (40.2) 64.5 129.1 89.4

(koz)
180 1000
120 + Depn/Amort 71.9 58.5 91.0 61.7
500
60 +/- Other 0.0 0.0 0.0 0.0
0 0 - Capex (+asset sales) 85.9 101.1 32.6 24.9
2010A 2011F 2012F 2013F 2014F 2015F
- Working Capital Increase (53.2) 46.0 0.0 0.0
Total Production Weighted Ave Gold Cash Cost (A$/oz) - Other Investing (2.7) (2.7) 0.0 0.0
Gold Price Realised (post Hedging, A$/oz) Free Cashflow (1.2) (10.2) 242.8 164.4
Reserves & Resources + Equity raised 124.0 0.0 0.0 0.0
+ Debt drawdown (repaid) (75.5) (1.5) 0.0 0.0
Reserves (A$1075/oz to 2010, $850/oz thereafter) Net Change in Cash 50.0 (9.0) 242.8 164.4
Mt Au g/t Au koz Cash at End Period 104.0 95.0 337.9 502.3
Southern Cross 5.5 2.8 500 Net Cash/(Debt) 90.0 82.6 325.4 489.8
Leonora 10.2 7.3 2406
Total 15.69 5.7 2906
Resources Mt Au g/t Au koz
Southern Cross 19.9 3.5 2257 Cash/Bullion 102.2 95.0 337.9 502.3
Leonora (Tarmoola = 2.1Moz) 27.7 6.1 5394 Total Assets 479.2 549.6 697.2 824.9
Total 47.6 5.0 7651 Total Debt 13.9 12.5 12.5 12.5
Directors Shareholders Funds 349.5 414.0 543.0 632.4
Name Position Ratios

Colin Wise Chairman Net Debt/Equity (%) na na na na
Tim Lehany Managing Director & CEO Interest Cover (x) (4.5) na na 169.9
Douglas Bailey Non-Executive Director Return on Equity (%) na 15.6 23.8 14.1
Phil Lockyer Non-Executive Director
Robert Rae Non-Executive Director

M&G Investments 50.00 15.36
Hunter Hall 13.36 4.10
Tanami Gold NL TAM ($0.83)

Recommendation: BUY
Australia’s Next Mid-Tier Gold Miner Analyst: Simon Tonkin
OUR VIEW
Tanami Gold NL (TAM:ASX) is an Australian based gold producer and explorer. TAM’s production focus has been on its
Western Tanami Operation located in north-east Western Australia where it expects to produce 40koz Au in FY2011. In mid-
2012, we expect the production focus to shift to TAM’s recently acquired Central Tanami Project, located in the Northern
Territory, which is currently under feasibility study. The Central Tanami Project contains approximately 75% of TAM’s 2Moz
resource and has much larger widths and a larger processing facility which we believe will make a significant contribution
to TAM’s push to increase production to >150,000koz of gold by 2013. In addition, to its production targets one of the
most exciting upside for TAM is targeting deeper Callie style targets which have the potential for higher grades and large
size. TAM has significant exposure to the TAM region through its 25% stake in ABM Resources. The next big catalyst for
TAM is its reserve update expected in May this will be followed by a feasibility for the Central Tanami Project at the end of
CY2011. We are retain our BUY rating and our price target increases to $1.81 due to our higher gold price.

• Targeting 150,000ozpa by 2013. TAM is targeting a
substantial uplift in gold production over the next 12-18 Year End June 30 2010A 2011F 2012F 2013F
months. The major contributor will be the Central Tanami Reported NPAT ($m) (8.3) 8.4 23.5 80.6
Project which has a significant resource of 1.5Moz and Recurrent NPAT ($m) (8.3) 8.4 23.5 80.6
large scale processing facility. In addition, TAM recently Recurrent EPS (cents) (0.2) 3.2 7.2 24.9
completed its Stage 1 upgrade to the Western Tanami EPS Growth (%) na na 125.0 243.5
treatment facility and is looking at options to further PER (x) (351.7) 25.8 11.5 3.3
increase capacity to 500ktpa (from 350ktpa) during 2012.
In the March Q production from the Western Tanami EBITDA ($m) 1.8 26.4 48.4 126.3
operations was adversely affected by the record rainy EV/EBITDA (x) 1,692.0 8.5 5.5 1.5
season. March Q production was 4,000oz Au we expect Capex ($m) 0.0 8.7 73.3 22.1
this to improve to 15koz in the June Q. Free Cashflow 5.6 45.0 (41.6) 75.1
FCFPS (cents) 0.2 17.2 (12.8) 23.2
• Stock undervalued. Based on our all of our valuation
metrics, TAM is attractive. Our 1.0x NAV of $1.81 is based
PFCF (x) 527.1 4.8 (6.5) 3.6
on our sum of the parts valuation. On a P/CF (13)/(14) DPS (cents) 0.0 0.0 0.0 0.0
basis we determine a value between $1.27-$1.70/sh and Yield (%) 0.0 0.0 0.0 0.0
on an EV/oz basis TAM is trading at $116/oz compared Franking (%) 100.0 100.0 100.0 100.0
to the peer average of $178/oz.
• Situated in a well-endowed gold region. TAM’s Central

Tanami Project is analogous in geological setting and located
100km north-west of Newmont’s 2.5Moz Callie mine which Shares on issue (m) 261.0 3mth ADT ($m) 0.43
produces 400kozpa. NEM recently discovered a parallel Market Cap. ($m) 216.6 Debt est ($m) 15.8
orebody and expects to add up to 75% to reserves over 52 week range $0.54 - $1.56 Cash est ($m) 6.1
the next decade. In addition, NEM has identified three Callie
lookalike targets. The majority of drilling on TAM’s tenements
has been shallow and has not tested the deeper Callie-style
targets. TAM has budgeted $A15m for exploration this year 1.75 3500
which will include exploration of deeper targets.
1.50 3000
• Leverage to gold price. Given that TAM is unhedged it is
highly leverage to the gold price. For example a 10% increase
Share Price (A$)
1.25 2500
in the gold price has a 17% increase to our 1.0x NAV. TAM’s
Volume '000
production opportunities are likely to be in the third quartile

of the cash cost curve, however, based on the current spot 1.00 2000
price of gold TAM has a significant margin from our cash
cost projections ($700/oz). If we place the spot price into 0.75 1500
our model this increases our valuation to $3.15/sh.
• Significant exposure to Tanami Region. TAM has

direct and indirect control of over 35,000km2 of ground
0.50 1000
in the Tanami region through 100% ownership in the 0.25 500

Western and Central Tanami tenements and a 25% fully
diluted interest in ABM resources (ABU).
0.00 0
• Catalysts. Ongoing exploration results; May reserve

statement; end-CY2011 CTP Feasibility; mid-2012 CTP
12 Months
Production.
Tanami Gold NL $0.83 Year End June 30

Western Tanami 152.0 0.47 A$:US$ 0.89 0.99 1.05 1.00

Central Tanami 282.0 0.87 Gold (US$/oz) 1093 1356 1483 1507
Unpaid Capital 47.5 0.15 Silver (US$/lb) 17.28 29.77 42.63 42.53
ABM Resources 25.9 0.08 Gold (A$/oz) 1222 1368 1409 1507
Exploration 90.2 0.28
Corporate 0.0 0.00
Cash 6.1 0.02
Debt (15.8) (0.05) FX (A$:US$) 2.20 1.81 1.50 (17)
Gold Grade 1.65 1.81 2.01 11
Valuation Summary of Operating Assets Operating Costs 1.93 1.81 1.70 (6)
Recovery 1.74 1.81 1.88 4
ABM Resources
6%
Central Tanami Cash
60% 1% Production (koz)
Western Tanami 48 41 75 97
Central Tanami 0 0 7 71
Total TAM Share of Production 43 37 75 158
Western Tanami
33% Cost Summary
Cash Costs (US$/oz) 697 944 829 761
Total Costs (US$/oz) 727 1039 982 909
Gold Production Summary Price Received (US$/oz) 1,197 1,369 1,484 1,508
200 1800
1500
150 Sales Revenue 57.1 65.1 106.5 238.7
1200 Other Income 0.3 3.0 2.4 2.4
(US$/oz)
(koz)
Operating Costs 41.0 38.5 60.5 114.8

100 900 Exploration Exp. 10.7 0.8 0.0 0.0
600
EBITDA 1.8 26.4 48.4 126.3
50
300 Depn & Amort 4.2 10.5 8.2 16.5
EBIT (2.4) 15.9 40.2 109.8
0 0 Interest 5.9 2.0 2.4 2.4
2012F 2013F 2014F 2015F 2016F 2017F 2018F Abnormals (pre-tax) 0 0 0 0
Total TAM Share of Production Operating Profit (8.3) 13.9 37.9 107.4
Price Received (US$/oz) Cash Costs (US$/oz) Tax expense 0.0 5.5 14.4 26.8
Abnormals (post-tax) 0.0 0.0 0.0 0.0
Reserves & Resources NPAT (8.3) 8.4 23.5 80.6
Reserves Mt Au g/t Au koz Normalised NPAT 0.4 9.2 23.5 80.6

Total 0.0 0.0 0
Resources M&I Mt Au g/t Au koz (eq) Cash Flow (A$m) 2010A 2011F 2012F 2013F
Coyote (Western Tanami) 551.0 13.5 238
Sandpiper (Western Tanami) 493.0 4.0 64 Adjusted Net Profit 0.4 1.8 23.5 80.6
Kookaburra (Western Tanami) 594.0 2.6 51 + Interest/Tax/Expl Exp 0.0 2.8 16.8 29.2
Stockpiles (Western Tanami) 100.0 2.4 8 - Interest/Tax/Expl Inc 0.0 6.0 16.8 29.2
MLS153 (Central Tanami) 3,258.0 2.0 209 + Depn/Amort 4.2 10.5 8.2 16.5
MLS167 (Central Tanami) 5,324.0 3.2 550 +/- Other 0.0 0.0 0.0 0.0
MLS168 (Central Tanami) 1,168.0 2.0 77 Operating Cashflow 4.6 9.0 31.7 97.2
MLS180 (Central Tanami) 1,417.0 2.9 134 - Capex (+asset sales) 0.0 8.7 73.3 22.1
MLSA172 (Central Tanami) 1,272.0 2.6 106 - Working Capital Increase (0.9) (44.6) 0.0 0.0
Stockpiles (Central Tanami) 1,400.0 0.7 32 Free Cashflow 5.6 45.0 (41.6) 75.1
Total 15,577.0 2.9 1,468 - Dividends (ords & pref) 0.0 0.0 0.0 0.0
+ Equity raised 0.0 0.0 45.0 0.0
Resources Inferred Mt Au g/t Au koz (eq) + Debt drawdown (repaid) 0.0 (39.4) 14.7 0.0
Western Tanami 1,380.0 4.4 194 Net Change in Cash 5.6 1.1 23.1 75.1
Central Tanami 4,319.0 2.7 368 Cash at End Period 6.7 7.9 31.0 106.1
Total 5,699.0 3.1 562 Net Cash/(LT Debt) (48.5) (7.9) 0.5 75.6
Total 21,276.0 3.0 2,030

Mr Denis Waddell Non-Executive Chairman Total Debt 55.2 15.8 30.5 30.5
Mr Graeme Sloan Managing Director Total Liabilities 68.4 49.5 66.7 66.7
Mr Alan Senior Non-Executive Director Shareholders Funds 20.6 30.4 101.4 182.0
Mr Lee Seng Hui Non-Executive Director
Ratios
Substantial Shareholders % Net Debt/Equity (%) 235.7 26.1 na na
Allied Properties Resources Limited 23.5 Interest Cover (x) na 8.1 17.0 46.3
Sun Hung Kai Investment Services Limited 10.6 Return on Equity (%) na 27.6 23.2 44.3
Troy Resources NL TRY ($3.68)

Recommendation: BUY
Troy on target for turnaround Analyst: Alex Passmore, Rhys Bradley
OUR VIEW
Troy Resources (TRY) is an unhedged, low cost gold and silver producer focused on South America. The coming months will
see TRY’s flagship Casposo Project in Argentina ramp up to full production. The operation will produce a total of 320koz Au and
11.6Moz Ag on our base case estimates. While production fluctuates y-on-y it will average 80kozpa Au with significant silver
credits (15-30kozpa Au equivalent). On a by-product basis this results in negative operating costs from FY14 onwards. Casposo
commissioning has been prolonged as seen in the March Q production result, however we highlight the coming June Q as a key
turnaround event. Problems experienced in the tailings filtration system leading to throughput constraints have been resolved.
The next key value driver is an upgrading of Casposo reserves to facilitate a 10-yr life. In addition we continue to watch the
Sandstone Nickel JV with Western Areas ($4m over 4 years for 70%) which has recently shown positive results. TRY also stands
to benefit from recent currency fluctuations with costs incurred in Brazilian Real and Argentina Peso’s. Following a tumultuous
year the Board appears to be operating well. We rate TRY a BUY with a $4.66/sh price target.

• Casposo turnaround imminent. Recent high cash costs
have resulted from issues associated with the tailings filtration
process. These have now been rectified and production is Reported NPAT ($m) (5.4) 18.0 77.6 53.0
set to increase, which will see a corresponding drop in cash Recurrent NPAT ($m) (5.4) 18.0 77.6 53.0
costs. PSL’s FY12 forecast calls for production of 100koz Au. Recurrent EPS (cents) (5.8) 19.5 84.5 57.7
Stockpiles at the mine de-risk the mining operation (146kt EPS Growth (%) na na 332.4 (31.7)
stockpile of ore at 7.1g/t Au and 97.7g/t Ag). Throughput PER (x) (63.0) 18.8 4.4 6.4
of 1100tpa is forecast for the coming Q, with significant
silver credits of 171g/t (Reserve grades) providing negative EBITDA ($m) 7.7 46.3 154.8 108.4
EV/EBITDA (x) 31.2 5.2 1.6 2.2
production costs for much of the mine life at PSL’s forecast
Capex ($m) 43.3 41.5 16.2 18.0
silver prices. Free Cashflow (46.5) (2.1) 99.3 63.8
FCFPS (cents) (50.6) (2.3) 108.1 69.5
• Andorinhas (Brazil) on target. FY11 production
remains on target for >40koz, with YTD production of
PFCF (x) (7.3) (159.0) 3.4 5.3
34koz, and production for the June Q expected to be DPS (cents) 4.0 8.0 8.0 8.0
>10koz at cash costs YTD of $606/oz. Furthermore, the Yield (%) 1.1 2.2 2.2 2.2
sale of iron ore should deliver an additional $3m in initial Franking (%) 100.0 100.0 100.0 100.0
payment by the end of CY2011, and US$3mpa in royalties.
Exploration is continuing in the area with opportunities at
depth and regionally with geological mapping required to Company Statistics & Performance
better identify drill targets.
• Exploration upside. Further drilling at Julieta, located to
the north east of Casposo, will target deeper vein systems 52 week range $2.40 - $4.10 Cash est ($m) 15.4
down dip aiming to intersect higher grades. At Castano Nuevo
(Argentina) deeper underground drilling is anticipated in the
June Q to identify higher grade deposits. TRY will aim expand 5.00 2400
Casposo’s life out to 10 years with further exploration of the
ore body along strike to the south-east and at depth. 4.50 2000
• WSA Sandstone JV. The Sandstone mill has now been 4.00
Share Price (A$)
placed on care and maintenance. The WSA JV has provided 1600

Volume '000
some encouraging results to date including 26.2m at

3.50
0.4% Ni, and will continue to provide TRY with exposure
to nickel exploration. 1200
3.00
• Positive FY12 Outlook. Ramping up to production of

130koz of Au (equiv.) for FY12. We forecast that cash flow 2.50
800
from production will cover company overheads and further

exploration. We also anticipate the company will look to 2.00 400
resume paying dividends over the coming year(s).
1.50 0
• Catalysts. 1) Achieving budget production at Casposo for
June of ~1,100tpd. 2) Expanding Casposo mine life to 10 12 Months
+ years. 3) Drilling results from exploration (Julieta and
Castano Nuevo).
Troy Resources NL $3.68 Year End June 30

Sandstone 0.0 0.00 A$:US$ 0.89 0.99 1.05 1.00

Andorinhas 66.2 0.72 Gold (US$/oz) 1093 1356 1483 1507
Casposo 319.6 3.48 Silver (US$/oz) 17.28 29.77 42.63 42.53
Listed Investments 3.8 0.04 Gold (A$/oz) 1222 1368 1409 1507
Exploration 26.5 0.29 Silver (A$/oz) 19.33 30.03 40.50 42.53
Unpaid Capital 10.6 0.12
Corporate (14.1) (0.15) Sensitivity -10% +0%+10%Delta 10%
Cash (est.) 15.4 0.17
Debt 0.0 0.00 A$:US$ 5.28 4.66 4.15 (11%)
NPV (@ 8% Discount Rate) 428 4.66 Gold Price 4.21 4.66 5.11 10%
Price Target 4.66 Silver Price 4.42 4.66 4.90 5%
Operating Costs 4.81 4.66 4.52 (3%)
Hedging koz Strike Grade 4.19 4.66 5.14 10%
Bought Puts 5.0 A$900/oz Production Summary 2010A 2011F 2012F 2013F
Valuation Summary of Operating Assets Gold production (koz)

Sandstone 30 5 0 0
Andorinhas 32 46 45 45
Casposo 0 16 85 41
Casposo
83% Silver Production (koz)
Andorinhas Casposo 0 266 1,244 1,281
17%
Cost summary
Wtd Ave Cash Costs (US$/oz) 808 481 126 137
Wtd Ave Cash Costs (A$/oz) 904 485 120 137
Wtd Ave Total Costs (A$/oz) 1,117 844 410 470
Gold Production Summary Realised price (A$/oz) 1,215 1,365 1,410 1,508
150 1200
125 1000
Sales Revenue 73.3 106.6 233.9 185.1
100 800 Other Income 1.5 0.7 2.6 5.9
75 600 Exploration Exp. 7.3 5.7 6.6 6.7
50 400 Corporate/Admin 8.5 9.7 9.2 9.3
EBITDA 7.7 46.3 154.8 108.4
25 200 Depn & Amort 13.3 19.5 37.8 28.9
EBIT (5.5) 26.8 117.0 79.5
0 0
2010A 2011F 2012F 2013F Interest 0.1 2.1 0.6 0.0
Wtd Ave Cash Costs (A$/oz) Wtd Ave Total Costs (A$/oz) Operating Profit (5.6) 24.6 116.4 79.5
Total Production (koz) Tax expense (0.2) 6.7 38.8 26.5
Abnormals 0.0 0.0 0.0 0.0
Reserves & Resources (as at 30 June 2010) Minorities 0.0 0.0 0.0 0.0
NPAT (5.4) 18.0 77.6 53.0
Reserves (Gold/Silver) Mt Au(g/t) Ag(g/t) Au koz
Andorinhas (Brazil) 1.0 7.00 224 Normalised NPAT (3.9) 17.2 81.5 55.7
Casposo (Argentina) 2.0 5.22 171 829
Sandstone (Australia) 0.7 1.70 36 Cash Flow (A$m) 2010A 2011F 2012F 2013F
Total 3.0 5.81 171 1,053
Resources (Gold/Silver) Mt Au(g/t) Ag(g/t) Au koz Adjusted Net Profit (3.7) 16.4 77.6 53.0
Andorinhas (Brazil) 2.3 5.1 369 + Interest/Tax/Expl Exp 7.2 14.2 45.9 33.2
Casposo (Argentina) 2.6 5.22 189 1,139 - Interest/Tax/Expl Inc 7.1 14.2 45.9 33.2
Sandstone (Australia) 15.5 1.49 739 + Depn/Amort 13.3 19.5 37.8 28.9
Total 4.9 5.16 189 1,508 +/- Other 0.0 0.0 0.0 0.0
Reserve (Iron Ore) Mt Fe% kt - Capex (+asset sales) 43.3 41.5 16.4 18.0
Andorinhas (Brazil) 2.8 64% 1.79 - Working Capital Increase 11.2 (1.5) 0.0 0.0
Total 2.8 1.79 Free Cashflow (44.9) (4.0) 99.3 63.8
Resources (Iron Ore) Mt Fe% kt - Dividends (ords & pref) 4.4 5.2 7.0 7.0
Andorinhas (Brazil) 6.5 51% 3.30 + Equity raised 26.0 0.0 0.0 0.0
Total 6.5 3.30 + Debt drawdown (repaid) 0.0 20.7 (20.7) 0.0
Net Change in Cash (24.2) 14.3 71.6 56.7
Net Cash/(LT Debt) 13.4 7.1 99.3 156.2
Name Position
David Dix Non-Executive Chairman
Paul Benson CEO & MD Balance Sheet (A$m) 2010A 2011F 2012F 2013F
Ken Nilsson Executive Director
Fred Grimwade Non-Executive Director Cash/Bullion 13.4 27.7 99.3 156.2
Robin Parish Non-Executive Director Total Assets 153.7 189.9 239.9 279.8
John Jones Non-Executive Director Total Debt 0.0 20.7 0.0 0.0
Fred Grimwade Non-Executive Director Total Liabilities 28.1 53.5 32.7 26.5
Warrigal Pty Ltd 6.0 8.5
John Jones & Ass. 3.5 5.0 Ratios
Robin Parish 3.8 5.4 Net Debt/Equity (%) na na na na
Fidelity 3.5 5.0 Interest Cover (x) na 12.5 212.3 na
Top 20 34.3 Return on Equity (%) na 13.1 37.5 20.9
Western Areas NL WSA ($6.25)

Recommendation: BUY
Consistent Performer Analyst: Alex Passmore, Tim McCormack
OUR VIEW
Since the Cosmic Boy concentrator upgrade at the beginning of FY2011, consistent improvements in production and
recovery rates have been realised, with the March Q no exception. WSA’s improved throughput has the company on track
to produce ~25,000t of nickel in concentrate for FY2011. Record nickel in concentrate sales for the March Q of 6,813t which
coincided with strong average LME nickel prices of US$26,903/t or US12.20/lb (PSL long term est: US$8/lb). Consistently
low production costs, record sales and a 27% improvement in nickel prices have seen the share price run up 67% since
the beginning of FY2011. Cash and nickel sales receivables totalled A$208.8m at the end of the March Q which represents
a net positive movement of 33% from the December Q. WSA continues an aggressive drilling campaign aimed at proving
up resource extensions and extending mine life to both the Flying Fox and Spotted Quoll underground operations. With
strong production performance, open offtake arrangements, and full control of the Forrestania greenstone belt, we believe
WSA should trade on a premium to NAV, accordingly ascribe a 1.4x multiple to derive a price target of $7.42/sh. BUY

• Strong March Q. WSA reported a strong March Q with a
record 6,813t nickel concentrate sales from its Forrestania Year End June 30 2010A 2011F 2012F 2013F
Project. Record sales offered WSA full exposure to the strong Reported NPAT ($m) 13.8 131.4 169.8 389.4
LME nickel price which averaged US$26,903/t for the period. Recurrent NPAT ($m) 13.8 131.4 169.8 389.4
Cash and nickel sales receivables totalled A$208.3m which Recurrent EPS (cents) 7.7 73.1 94.5 216.7
represents a 33% net improvement from previous Q. Xstrata EPS Growth (%) na 853.7 29.2 129.4
was added as an offtake partner joining BHP, Jinchuan and PER (x) 81.5 8.5 6.6 2.9
MRE. We see this as a major positive with the market demand
for WSA nickel concentrate high. EBITDA ($m) 82.8 296.2 341.2 659.6
EV/EBITDA (x) 15.2 3.8 3.0 1.0
• Low cash costs. WSA maintained a low average cash cost
for nickel in concentrate of US$2.23/lb for the Q. A slight
Capex ($m)
Free Cashflow
94.9
(56.4)
60.0
140.4
108.0
126.1
52.5
413.7
increase in cash costs compared with the December Q was FCFPS (cents) (31.4) 78.1 70.1 230.2
driven by increased operating costs at the Spotted Quoll PFCF (x) (19.9) 8.0 8.9 2.7
mine. The YTD average cash cost of US$1.98/lb nickel 21%
below WSA’s long term guidance of US$2.50/lb nickel. WSA DPS (cents) 6.0 7.0 9.0 0.0
remains one of the lowest cost nickel miners in Australia. Yield (%) 1.0 1.1 1.4 0.0
Franking (%) 100 100 100 0
• Consistent performance. Production figures were down
slightly on last Q with 131,024t at 5.6% nickel being
mined. This was due to the majority of ore being mined Company Statistics & Performance
from development drives at the Flying Fox operation.
Mill throughput remained consistent with past Qs with Ni Shares on issue (m) 179.7 3mth ADT ($m) 6.17
recoveries increasing from 90% to 92% and achieving 6,226t Market Cap. ($m) 1123.3 Debt est ($m) 334.0
of nickel in concentrate. Consistent production and increased 52 week range $3.71 - $7.41 Cash est ($m) 163.8
recovery reflect the success of the plant upgrade in June
2010. Future modifications will see capacity increase from
0.55Mtpa to 1Mtpa in line with production ramp up.
10.00 3000
• Extending mine life. Recent drilling has indicated continuity
of mineralisation down dip of the Stage 1 underground
2500
development at Spotted Quoll. This drilling should add 8.00
40-50kt nickel to the Spotted Quoll resource. A major drilling
program at the Flying Fox underground operation is targeting
Share Price (A$)
2000
extensions to know sulphide mineralisation and aiming to
Volume '000
6.00
extend the mine life beyond ten years.
1500
• New underground development progressing. The
Spotted Quoll underground has made solid progress with 4.00
significant infrastructure already in place. Development 1000
mining began in April 2011 with the contract being awarded
to Barminco. Commencement of underground ore mining will 2.00
target 10,000tpa nickel and should largely coincide with the 500
closure of the Spotted Quoll open pit operation.
• Key JV arrangements. WSA remains active in its regional

exploration via a number of strategic joint ventures. With
0.00
12 Months
0
a 70% interest in the Sandstone and Lake King JV’s and

an 80% interest in the Kawana JV WSA maintains good
exposure to potential new nickel discoveries.
Western Areas NL $6.25 Year End June 30

Flying Fox 616 3.43 A$:US$ 0.89 0.99 1.05 1.00

Diggers South 76 0.42 Copper (US$/lb) 3.04 4.00 4.31 4.20
New Morning/ Daybreak 20 0.11 Lead (US$/lb) 0.95 1.10 1.20 1.18
Cosmic Boy 14 0.08 Zinc (US$/lb) 0.94 1.03 1.11 1.11
Spotted Quoll 328 1.83 Nickel (US$/lb) 8.75 11.12 11.75 11.43
Investments 11 0.06 Tin (US$/lb) 7.33 12.27 14.71 12.67
Unpaid capital 0 0.00 Palladium (US$/oz) 369 568 595 350
Forwards 0 0.00 Iron Ore Fines (US$/t) 76.44 119.53 107.08 70.60
Exploration 115 0.64 Production Summary 2010A 2011F 2012F 2013F
Cash 164 0.91
Debt (incl CN) (334) (1.86) Nickel Production (t)
Total @ 8% Discount Rate 952 5.30 Flying Fox 9,746 15,588 16,368 15,717
Price Target (1.4 x NAV) 1333 7.42 Spotted Quoll 732 12,639 10,920 10,981
Diggers South 0 0 0 5,429
Valuation sensitivity New Morning/ Daybreak 0 0 0 0
Cosmic Boy 0 0 0 2,025
Patersons base case NAV $5.30 Total Ni in Concentrate (t) 10,478 28,226 27,288 34,152
Valuation at flat spot NI and AUDUSD $5.46
Implied Ni price at current SP US$12.80/lb Cash Cost (US$/lb) per lb prod. 3.53 2.97 3.08 0.00
Total Cost (US$/lb) per lb prod. 5.42 4.63 4.91 0.00
Realised Price Received (US$/lb) 8.87 11.12 11.76 0.00
New Morning/Daybreak Cosmic Boy
1%
Spotted Quoll
Diggers South
28% Sales Revenue 162.7 495.5 477.1 861.3
6%
Other Income 30.7 (6.7) 11.5 14.4
Operating Costs 84.6 172.6 124.9 193.3
10% EBITDA 82.8 296.2 341.2 659.6
Depn & Amort 34.7 73.6 74.4 87.2
Flying Fox EBIT 48.1 222.6 266.8 572.4
53% Interest 25.7 32.3 24.3 16.1
Nickel Production Summary Tax expense 8.6 58.9 72.8 166.9
Minorities/Abnormals 0.0 0.0 0.0 0.0
30,000 17 NPAT 13.8 131.4 169.8 389.4
25,000 14
Normalised NPAT 15.7 133.2 169.8 389.4
20,000 11
(US$/lb)
Cash Flow (A$m) 2010A 2011F 2012F 2013F

(t)
15,000 8
10,000 5 + Interest/Tax/Expl Exp 46.3 107.1 115.1 201.2
5,000 2
+ Depn/Amort 34.7 73.6 74.4 87.2
0 -1 +/- Other 0.0 0.0 0.0 0.0
2009A 2010F 2011F 2012F Operating Cashflow 44.1 205.0 234.0 466.2
Total Ni in Concentrate (t) Cash Cost (US$/lb) per lb prod. - Capex (+asset sales) 94.9 60.0 108.0 52.5
Realised Price Received (US$/lb) - Working Capital Increase 5.6 4.6 0.0 0.0
Free Cashflow (56.4) 140.4 126.1 413.7
+ Equity raised 0.0 0.0 0.0 0.0
Reserves kt Ni % Ni kt + Debt drawdown (repaid) 20.6 0.0 0.0 (209.0)
Flying Fox 1,062 5.5 58.7 Net Change in Cash (21.2) 127.8 113.5 177.7
Spotted Quoll 1,980 4.2 82.7 Cash at End Period 70.4 198.2 311.7 489.4
Diggers 2,109 1.5 30.8 Net Cash/(LT Debt) (138.6) (10.8) 102.7 489.4
Total 5,150.7 3.34 172.2
Resources kt Ni % Ni kt
Flying Fox 1,891 4.6 86.4 Cash 70.4 198.2 311.7 489.4
Spotted Quoll 1,806 6.0 108.1 Total Assets 384.0 561.9 719.0 949.9
New Morning/Daybreak 2,144 1.4 30.7 Total Debt 209.0 209.0 209.0 0.0
Cosmic Boy 376 2.4 9.0 Total Liabilities 306.5 365.5 365.5 233.9
Diggers South 7,800 1.0 80.3 Shareholders Funds 77.5 196.3 353.6 716.0
Diggers Rocks 2,229 0.9 19.3
Beautiful Sunday 480 1.4 6.7 Ratios
Total 16,726 2.04 340.4 Net Debt/Equity (%) 178.8 5.5 na na
Interest Cover (x) 1.9 6.9 11.0 35.6
Directors Return on Equity (%) 17.8 66.9 48.0 54.4
Name Position Substantial Shareholders Shares (m) %

Terry Streeter Chairman
Julian Hanna Managing Director Jungle Creek Gold Mines 25.8 14.3
Dan Lougher Operations Director Northmead Holdings 10.2 5.7
Robin Dunbar Non Executive Director UBS 10.1 5.6
David Cooper Non Executive Director
Rick Yeates Non Executive Director
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Explorers and Developers
Altona Mining Limited AOH ($0.31)

Attractively Priced Cu Developer Analyst: Byron Benvie, Simon Tonkin
OUR VIEW
In early 2010, Altona Mining Ltd (AOH) was formed through the merger of Vulcan Resources Limited and Universal Resources
Limited. AOH is a copper explorer and developer with a strategy to build production from its two 100% assets: Outokumpu
in Finland and Roseby in Australia. AOH expects to commence production at Outokumpu from early 2012 at the rate of
8ktpa, with annual production building towards 35ktpa Cu and 15koz Au by 2014 when Roseby is expected to come online.
The Outokumpu Project has low capital costs of A$46m, is fully funded, and has good potential to extend the planned 8
year mine life by inclusion of regional satellite deposits. A DFS update has commenced at the Roseby Project which will
evaluate upgrading the processing capacity from 5Mtpa to 8Mtpa, and ongoing drilling is expected to substantially upgrade
the current 900kt Cu and 250koz Au resource base. We see AOH becoming a mid-tier copper producer over the next 3
years and given the significant discount to its peers (A$50/t vs $150/t), we will continue to monitor its progress toward
achieving its production targets which could see a significant re-rating of the stock. We rate AOH as a Speculative BUY.
Investment Highlights Directors & Shareholders

• Outokumpu Project, Finland. The project is located 400km
north-east of Helsinki in Finland, is low risk and low capital
Directors
Kevin Maloney
Position
Chairman
cost (A$46m), and involves the refurbishment of an existing Alistair Cowden Managing Director
processing plant at Luikonlahti and the development of an Jason Brewer Non-Executive Director
underground mine at Kylylahti (Figure 1). AOH recently Fiona Harris Non-Executive Director
completed a $70m capital raising at 31cps, therefore this project Peter Ingram Non-Executive Director
is fully funded and is currently progressing on schedule. Kylylahti Heikki Solin Non-Executive Director
is a sulphide deposit containing an 8.4Mt resource at 1.25% Cu,
0.54% Zn and 0.68g/t Au as well as 0.2% Ni and 0.24% Co, of Shareholders Holding (%)
which 4.3Mt are reserves running at 1.56% Cu. The Luikonlahti National Nominees Ltd 14.89
processing plant has a 550ktpa capacity (with potential to Tulla Resources Group Ltd 4.82
increase to 800ktpa) giving the Outokumpu Project an expected ANZ Nominees Ltd 4.28
Merrill Lynch (Australia) Nominees Pty Ltd 3.18
mine life of 8 years based on current resources. Potential exists
Finnish Industry Investment 2.99
for mine life extension with several smaller deposits in the area
Prufrock Partners Ltd 2.54
bringing the total project resource to 17.8Mt (at 0.87% Cu). Sovereign Gold Nl/C 2.27
Three clean and penalty-free concentrate products: Cu-Au, Dempsey Resources Pty Ltd 2.03
Zn, and a low grade Co-Ni will be generated by flotation with
expected recoveries of 90% (Cu), 70% (Au) and 50% (Zn).
• Roseby Copper Project, Queensland. The project covers
>1,400km2 and is situated 95km NE of Mt Isa in Queensland
(Figure 2). The project contains total resources of 133Mt at an Shares on issue (m) 472.1 3mth ADT ($m) 0.63
average of 0.68% Cu and 0.06g/t Au, for 900kt Cu and 250koz ITM Options (m) 10.3 EV ($m) 79.1
Au (Figure 3). The resource is spread across 11 deposits with four Market Cap. ($m) 147.1 Debt est ($m) 0.0
of these containing >10Mt and two >30Mt. The mineralisation is 52 week range $0.08 - $0.44 Cash est ($m) 68.0
of two dominant types: oxidized sedimentary-hosted containing
mainly native Cu, and IOCG style Cu-Au sulfide. Definition of
many of the resources is limited to shallow depths, giving the
current and ongoing drilling potential to expand resources both 0.50 12000
at depth and along strike - Altona’s target is a 50% resource
0.45
increase to 200Mt by mid 2011. A DFS for the project was
published in 2010 and estimated capital costs of A$217m 10000
0.40
based on open pit mining and a 5Mtpa conventional flotation
concentrator operation. The company has recently announced 0.35
Share Price (A$)
8000
it will update this study to include a larger resource size and
Volume '000
an increased production rate of 8Mtpa. Xstrata has an option 0.30

to earn 51% into the Roseby Project by spending $15m on 0.25 6000
exploration and resource definition drilling, or by spending $10m
and completing a DFS by 30 June 2012. 0.20
4000
• Attractively Priced. AOH is attractively priced relative to its
peers. Based on an EV/resource metric the company is trading
0.15
0.10
at A$50/t Cu compared to the A$150/t Cu average for Australian 2000
listed copper explorers and developers. Producer’s average over 0.05
$1000/t therefore AOH has significant value upside.
0.00 0
• Catalysts. 1) Early 2012 Outokumpu production 2) Ongoing:
Roseby resource expansion 3) Continued strong copper
12 Months
prices.
Figure 1: Map showing layout of the Outokumpu Project, Finland
Figure 2: Map showing location of the Roseby Project showing regional mineral deposits
Ausgold Limited AUC ($1.50)

Targeting a New Gold Province Analyst: Simon Tonkin
OUR VIEW
Ausgold Limited (“AUC”) has utilised some of the latest advances in exploration technology to target areas in Australia that
are highly prospective for gold and copper ore bodies. The company has pegged 12,500km2 within Australia based on work
by the Centre for Exploration Targeting, an internationally renowned group affiliated with the University of Western Australia
and Curtin University. We recently visited AUC’s flagship Katanning Gold Discovery located 300km southeast of Perth and were
impressed with the potential to establish a new gold province. AUC has 15km of strike on its 80% owned JV ground with gold
mineralisation (resources) and anomalism recorded along the entire length. Thus far at the Jinkas deposit AUC has discovered
continuous mineralisation along 900m of strike. We are awaiting drill results (150 holes) from Dingo which is located 3km south
of Jinkas with drilling underway at Jackson (2km north of Jinkas). This has the potential to prove up 8km of strike. In addition,
AUC has secured a number of other highly prospective projects. We believe there is potential for a multi-million ounce gold
discovery which could be the biggest new discovery since Tropicana. We have a Speculative Buy rating on AUC.

• Boddington South: Targeting a New Gold Province.
AUC has secured tenure over the majority of the Katanning Directors Position
greenstone belt. AUC’s tenements contain parallel structures Robert Pett Chairman
and similar geology to Newmont’s 26Moz Boddington gold Benjamin Bell CEO
mine, the largest in Australia. AUC is targeting Boddington- Simon Trevisan Executive Director
style mineralisation which precipitates gold deposits on the Richard Lockwood Non-Executive Director
contact between the granite (acid) and the mafic (alkaline) Christopher Kelsall Non-Executive Director
rocks. AUC has 15km of strike on its 80% owned JV ground
with gold mineralisation (resources) and anomalism recorded Shareholders Holding (%)
along the entire length. In addition AUC has 85km of strike Transcontinental Group 17.7
on its 100% owned ground and recently secured a further CQS Asset Management 14.7
33km from a 60% JV with Dominion Mining. Based on our NEFCO Nominee Pty Ltd 8.7
analysis we believe there is multi-million ounce potential. Mr Denis Rakich 8.4
Tenalga Pty Ltd 7.7
Batterbury Holdings Pty Ltd 6.2
• Resource Estimate in May. Drilling at Boddington South
has initially focused on the Jinkas deposit (the largest in
the area) thus far AUC has established in excess of 900m
of gold mineralisation to a depth of 100m. Based current
drilling we believe this has the potential to yield a resource of
approximately 400koz Au at 3.5g/t Au. A resource estimate
will be completed in May. Drilling has shifted to focus on Shares on issue (m) 93.8 3mth ADT ($m) 0.192
the Dingo and Jackson orebodies which if mineralized could ITM Options (m) 88.7 EV ($m) 270.5
provide 8km of mineralized strike. AUC has planned a Market Cap. ($m) 273.8 Debt est ($m) 0.0
100,000m RC/Diamond program in June and will test the 52 week range $0.12 - $1.75 Cash est ($m) 3.3
orebody to a strike of 1.4km and to 500m depth.
• Favourable Mining Location. The project is located 300km

SE of Perth, Western Australia and within 30km from the
2.00 2500
wheat belt town of Katanning. The proximity to large centres

means that it is an attractive location for miners and with 2000
significant infrastructure already in place. 1.50
Share Price (A$)
Volume '000
• Excellent Management Team to Drive Discovery. The

team is led by Benjamin Bell a geologist and geophysicist
1500
with 15 years in the mineral industry which included a stint 1.00

at Regis Resources. Robert Pett is Chairman with over 27
1000
years’ experience and has been involved in the successful
exploration, development, operation and financing of
more than ten mining projects worldwide. 0.50
500
• Other Projects Have Significant Potential. AUC’s other
projects are highly prospective for further discoveries. The
Yamarna project is the most progressed with a hit of 31m at 0.00 0
0.58% Cu and 0.35% Ni. AUC’s Doolgunna Station project
12 Months
adjacent to Sandfire Resources DeGrussa discovery.
• Catalysts. 1) Ongoing positive drill results Dingo/Jackson

2) May - Katanning Gold Discovery Resource Estimate 3)
Disclosure: Patersons was lead manager in an IPO for AUC
in December 2009 that raised $10m at $0.20/sh. Patersons
April Follow-up Drill Program at Yamarna. received a fee for this service.
Figure 1: Project location Figure 2: Granite-Mafic trend and gold occurances
Figure 3: Project JV and Newmont mine location
Azimuth Resources Limited AZH ($0.285)

Gold in Guyana Analyst: Byron Benvie, Simon Tonkin
OUR VIEW
Azimuth Resources (AZH), formerly Epsilon Energy Limited, is a junior explorer seeking dual listing on the TSX and focussed
on several early and advanced exploration projects in Guyana, South America (see Figure 1). The projects are mainly
prospective for gold but also have potential to host uranium mineralisation, and cover a combined area of 11,330km2. A large
proportion of the licence areas are underlain by geological terrain considered equivalent to that hosting the gold deposits
of West Africa. A recently announced A$1.3m geophysical exploration campaign covering 7,330km2 of this terrain is seen
as a key catalyst for value creation from these properties. AZH’s cornerstone project is West Omai where intensive drilling
is currently underway to define a maiden resource at the Hicks and Smarts Prospects. Our expectation is for a ~600koz
Au combined resource to be defined here by August 2011. This potential resource is the main driver for our preliminary
A$0.41/sh valuation, but we note significant upside potential as further drilling upgrades this resource and mineralised
extensions continue to be identified along strike of the Hicks-Smarts trend. We therefore rate AZH a Speculative BUY.

• Advanced exploration at West Omai. The Hicks and
Smarts Prospects (Figure 2) are both are undergoing a
Directors
Michael Hunt
Position
Non-Executive Chairman
resource drillout, with a maiden resource for both projects Dominic O’Sullivan Managing Director
due by the end of August 2011. These deposits comprise sub- Richard Monti Executive Director
Dean Felton Non-Executive Director
vertically dipping, greenstone-hosted lode style mineralisation
(Figure 3). Drill results from Smarts are continuing to be Shareholders Holding (%)
released and regular positive news flow is expected from National Nom Ltd 14.04
the two drill rigs (a third is expected during May) currently Macquarie Bank Ltd 8.67
on site. Our expectations based on preliminary calculations, Javelin Minerals Inc 8.29
ANZ Nom Ltd 6.20
are for a combined ~600koz Au maiden resource to be
Gundyco PL 5.39
announced in August, with further drilling possibly doubling Goornong Gees Mining Ltd 4.42
this. The discovery of new artisanal workings along strike Riverview Corp 3.37
of the Hicks-Smarts trend, indicate significant potential for Di Capo Pasquale 2.14
further strike extensions to this resource going forward. Greatcity Corp PL 2.13
UBS Wealth Mgnt Aust Nom 1.92
• 80km strike of virgin granite-greenstone terrain is
interpreted as underlying the sand cover at the East Omai
HSBC Custody Nom Aust Ltd
NBCN Inc <Pinetree Resource>
1.77
1.43
Project, based on airborne geophysics. This terrain is highly
prospective for further gold mineralisation. Company Statistics & Performance
• Detailed airborne geophysical surveys have recently
been commissioned over 7,330km2 of the West and East
ITM Options (m) 34.5 EV ($m) 93.6
Omai projects at a cost of A$1.3m. The work is expected Market Cap. ($m) 103.6 Debt est ($m) 0.0
to begin in mid May 2011, providing a focus for future 52 week range $0.05 - $0.34 Cash est ($m) 10.0
exploration activities and assisting in the discovery of new
deposits.
0.40 18000
• Attractive valuation. Preliminary valuation calculations
based on our estimate of a ~600koz resource at the Hicks- 0.35 16000
Smarts prospects indicate a valuation of A$0.41/sh. The
14000
valuation is highly sensitive to the resource size at Hicks- 0.30
Share Price (A$)
Smarts. We see significant upside to the current share 12000

Volume '000
price on the back of drilling and resource announcements, 0.25

despite the stock having seen a better than 500% return 10000
over the last 12 months. 0.20
8000
• Experienced board and Management. The AZH board
and management team have significant experience in
0.15
6000
mining project development, with their Exploration Manager 0.10
4000
having a 27 year background in gold exploration.
0.05 2000
• Catalysts. 1) Drilling and resource definition (Q3 2011)
at the Hicks-Smarts prospect. 2) Geophysical anomaly 0.00 0
definition and positive follow up at East Omai. 3) Drilling 12 Months
along strike of the Hicks Smarts trend showing extension
of mineralised trend.
Figure 1: Location of AZH projects in Guyana
Figure 2: Hicks-Smarts soil sampling results
Figure 3: Cross sections representing mineralized lodes at the Hicks-Smarts prospects
Bannerman Resources Limited BMN ($0.355)

Highly Leveraged to Uranium Price Analyst: Simon Tonkin
OUR VIEW
We continue to believe that Bannerman’s 80% owned Etango project in Namibia is a marginal asset at our long term
uranium price of US$70/lb. In our view, in the post-Fukushima environment BMN will find it more difficult to access funding
to continue development of the project. In the short term BMN will need to extend or refinance its $10m convertible note in
December 2011. Over the longer term, the capital cost of Etango is US$638m before mining fleet (US$64m) which is 9x the
current market capitalisation of BMN. Therefore, BMN will need to secure a deal with a strategic partner who would likely
want control of the project and consequently this would likely be dilutionary for BMN shareholders. While financing is the
largest risk we have identified other risks which include: BEE, access to water and grant of mining licence. The main reason
Etango is less attractive and higher cost than other alaskite-hosted uranium projects already in production/development
is its lower grade which is >30% lower than the operating Rossing mine and 60% lower than EXT. We maintain our SELL
rating and we suspend our target price.

• Op Cost Savings Identified; Etango (BMN 80%)
Remains Marginal. Despite some internal estimates of a Directors Position
US$4/lb op. cost saving (to US$38/lb) for the Etango project David Smith Non-Executive Chairman
Len Jubber Managing Director
it remains marginal at our long term uranium price of US$70/
Geoff Stanley Non-Executive Director
lb. We note that BMN has delineated an impressive resource Ronnie Beevor Non-Executive Director
of 212.7mlb (M+Ind+Inf) however grades are 30% below Clive Jones Non-Executive Director
the operating Rossing mine and 60% lower than EXT. On the James McClements Non-Executive Director
positive side Etango ore has the best leach characteristics David Tucker Non-Executive Director
of the alaskite-hosted ores as well as requiring a lower acid Mason Hills Alternate for James McClements
consumption. Lab test work has suggested that additional
oxidants may not be required potentially providing further Shareholders Holding (%)
operating cost savings. Clive Jones 6.5
Resource Capital Fund 5.9
Peter Batton 4.2
• Etango Needs Strategic Partner. In BMN’s March
quarterly report BMN states one of their aims in 2011 is to Alastair Clayton 2.3
Global Management 1.8
secure a strategic partner. The price tag for the development
of the Etango project is $638m and we believe in the post-
Fukushima environment that BMN alone will find it difficult to
raise the required capital especially when the spot uranium Company Statistics & Performance
price is at US$57.44/lb. Therefore we believe for the project
to proceed a strategic partner would be needed.
ITM Options (m) 4.0 EV ($m) 66.0
• Refinance/Extension of Convertible Note. BMN will need
to refinance/extend its $10m convertible which is due on 16 Market Cap. ($m) 84.6 Debt est ($m) 0.0
Dec 2011. RCF the holder of the note is a large institutional
holder of BMN and would likely be able to refinance the
note. However, this would likely be at a lower price and
could be dilutionary for existing shareholders. BMN reported 1.00 14000
$18.7m in cash at the end of Mar 2011 this followed a $15m
share placement at $0.50/sh in Dec 2010. BMN intends to
12000
spend approximately $5m per quarter so will need to raise 0.80
additional capital by the end of the year.
10000
Share Price (A$)
• Risks Remain. Several risks remain in the development

Volume '000
of the Etango project these include: 1) Financing: In the 0.60

8000
short term, BMN needs to refinance its convertible note
and secondly finance a project with capital costs of 9x BMN
current market capitalisation. 2) Water: BMN needs access 6000
0.40
to water and negotiations are continuing with Namwater. 3)
Mine Licence: The grant of the mining licence has taken 4000
longer for BMN than previous submissions. The original 0.20
submission was in Dec 2009 and will now be updated to 2000
include: larger resource and site layout refinements to be
submitted in June. 0.00 0
• Catalysts. 1) Deal with strategic partner 2) June 2011

Submission of updated ESIA and mining licence 3) 2012
12 Months
DFS completion.
Figure 1: BMN project location and infrastructure
; Right Place 9
Figure 2: Etango pit outline and targets Figure 3: Etango example cross sections
a 7,488,800 mN
a
a a b 7,488,300 mN b
b b
c c
c 7,488,600 mN c
Infill drill to
Indicated status
Bassari Resources Limited BSR ($0.092)
Multi-Million Ounce Gold Potential in W.Africa Analyst: Simon Tonkin
OUR VIEW
Bassari Resources (BSR) is a gold explorer with a strategic tenement position in the well-endowed Birimian gold belt in
eastern Senegal, West Africa. The company’s main focus is development of its 70%-owned Makabingui project. The project
has multi-million ounce potential with a number of prospects to be followed up. The company’s main focus is the Makabingui
project where it has defined a resource of 240,000oz (8% Measured + 65% Indicated + 27% Inferred) at 2.3g/t from three
zones over a strike length of 600m. This is about 20% largest than we had previously anticipated and further drilling will
be needed to improve the confidence in the resource and continue to expand its size. Based on our analysis the company
is trading on an EV/oz resource of $81/oz below the peer average of $178/oz. We note if BSR is able to define 1Moz then
the EV/oz drops to $19.50/oz. Therefore, BSR is a relatively attractive entry point for a gold project with multi-million
ounce potential in West Africa. BSR also has adjacent tenure to the north and south of the Makabingui project where 8
further prospects have been identified.

• 240koz Resource at Makabingui. BSR has released its
maiden resource of 240,000oz Au from its Makabingui project Directors Position
in Senegal. This is approximately 20% larger than we had David Tyrwhitt Non-Executive Chairman
anticipated at a grade of 2.3g/t Au based on 3 discrete Jozsef Patarica Managing Director
zones over a strike length of 600m. We believe there is Clive Wright Non-Executive Director
good potential to continue to expand the resource given that
zones 1 and 2 remain open along strike and zone 3 remains Shareholders Shares (m) Holding (%)
open to the north and south. Initial metallurgical test work Senegal Nominees (SARL Grouped) 24.6 10.51
Mr Lamine Diouf 10.7 4.58
has indicated 99% recoveries from Zone 1 North (oxide and
UBS Nominees 9.4 4.03
sulphide) using cyanide leaching and gravity gold recovery. Reama Pty Ltd 5.7 2.47
• Located in a Multi-Million Ounce Gold Province. BSR aims
to find at least one multi-million ounce gold deposit. There is
good potential considering BSR’s location which is within close
proximity to a number of large deposits which include: Sadiola Company Statistics & Performance
(14Moz) owned by AngloGold Ashanti, Massawa (3.5Moz) owned
by Randgold and Sabodala (3.5Moz) owned by Teranga Gold.
• Early Stage, Attractive Entry into West Africa. Based
on the maiden resource of 240koz this would place BSR on
ITM Options (m)
Market Cap. ($m)
0.0
21.5
EV ($m)
Debt est ($m)
19.5
0.0
an EV/oz resource attributable at $81/oz compared to the 52 week range $0.10 - $0.28 Cash est ($m) 2.0
peer average of $178/oz. We note if BSR is able to define
1Moz then the EV/oz drops to $19.50/oz. Therefore, BSR
is a relatively attractive entry point for a gold project with
multi-million ounce potential in West Africa. In addition recent 0.30 9000
takeout activity has provided higher valuations for West
8000
African gold companies with Redback (RBI-T) taken out in 0.25
late 2010 for $660/oz by Kinross. 7000
•
Share Price (A$)
12 Other Prospects. BSR has identified a number of other

Volume '000
0.20 6000
prospects in their 70% owned northern and southern tenements
mainly from regional drill programs and termite geochemistry. 5000
While the focus is on Makabingui the company will continue to 0.15
progress these targets towards drilling. 4000
• Alluvial Operation (BSR 63%) Underway. BSR has

commenced a small scale alluvial operation called Douta on its
0.10 3000
central permit. First gold was poured in November 2010 with 2000
the operations main benefits being: training for the Senegalese 0.05
and to establish good governmental relationships. The first gold 1000
shipment was 964oz with 728oz produced in the March Q. 0.00 0
• Strong Financial Position. BSR had $2.03m in cash at the end
of the March Q with $688,000 coming from gold sales from its
12 Months
alluvial gold operation. The company expects to spend $1.65m

in the March Q. Therefore BSR may need to raise further funds
to continue its aggressive exploration program. Disclosure: Patersons was joint lead manager and underwriter
for a $7m rights issue at $0.12/sh conducted in December 2010.
• Catalysts. Ongoing Drill Results. Patersons received a fee for this service.
Figure 1: BSR project location in relation to other deposits in Senegal

XVHGRQ
RXQFHJROG
*ROG%HOW
%$66$5,
%$66$5,
HQWFRQWUROLQ
Figure 2: BSR resources (240,000oz)
Breakaway Resources Limited BRW ($0.061)
Targeting Ni and Cu Discoveries Analyst: Simon Tonkin
OUR VIEW
BRW is focussed on two premier regions: 1) the Leinster Nickel project in Western Australia where the company has several
high priority nickel sulphide targets along trend from the world class Cosmos and Perseverance nickel deposits. BRW has
completed 8 of 10 holes from its 3,100m drill program at its Miranda and Wildara projects. BRW has reported sulphide bearing
sulphide intersections with assays awaited. BRW is planning a Downhole TEM survey following completion of the drilling to
assist in targeting further mineralisation. 2) Cloncurry Copper Project in Queensland which has a number of copper, silver
and gold targets in close proximity to the Eloise Copper mine. Mill production is expected to recommence in May 2011 at
the Eloise copper mine whereby BRW owns a 30% NPI (adjusted for previous losses) and could supply additional cash flow
to help fund exploration activities in the region. BRW plans to commence drilling of multiple high grade copper targets on
BRW’s 100% owned exploration ground in the June Q 2011. Further discoveries by BRW could supply additional satellite
feed to the Eloise Copper mine. BRW has $4.5m in cash at the end of March 2011.

• Attractive Nickel Projects in the Leinster District. BRW
has landholding of 750km2 with two projects in the Leinster Directors Position
district: 1) Miranda Project and 2) Wildara Project Group. John Atkins Non-Executive Chairman
Both projects contain interpreted strike extensions of premier David Hutton Managing Director
nickel sulphide ultramafic belts. At the Miranda BRW has Jon Young Non-Executive Director
interpreted a 14km extension to the Mt Goode Ultramafic belt Jeff Gresham Non-Executive Director
which hosts the Cosmos nickel deposits. Multiple targets have
Shareholders Holding (%)
been selected for drill testing at both locations. A 3,100m is
Norilsk Nickel 11.5
underway with 8 of 10 holes completed. BRW reports that FMR Investments 8.0
there have been multiple prospective sulphide - bearing Abbotsleigh Pty Ltd 3.1
ultramafic intersections with assays awaited. Following the
completion of drilling BRW is planning a Downhole TEM
survey to develop further drill targets.
• Cloncurry Copper Project in Queensland Has Several
Impressive Drill Targets. At the Eloise Exploration
Project BRW has a 480km2 landholding in the Cloncurry Shares on issue (m) 291.1 3mth ADT ($m) 0.027
district where multiple high grade copper targets have ITM Options (m) 0.0 EV ($m) 13.3
been identified within a 20km radius of the Eloise copper Market Cap. ($m) 17.8 Debt est ($m) 0.0
mine (BRW 30% NPI). Historical drill intercepts up to 4.7%
copper. Fieldwork and drilling is expected to commence
in the June Q 2011. 0.12 5000
• Altia JV Could Offer Significant Upside. BHPB is earning

70% of the silver – lead – zinc rights on the Altia JV, 0.10
4500
4000
which is contained within BRW’s Eloise Exploration Project
and represents approximately 2% of the project’s total
Share Price (A$)
3500
Volume '000
area. BHPB is testing the Altia deposit which has potential 0.08
to provide additional high grade silver feed to BHPB’s 3000
Cannington mill located 120km away. BHPB is currently 0.06 2500
reviewing the results of its 2010 drilling program at Altia
before determining whether further drilling is warranted. 2000
BRW expects a decision to made by the end of May 2011. 0.04
1500
• Solid Cash Position. BRW had $4.5m in cash at the end

of March following a Share Purchase Plan and subsequent 0.02
1000
500
placement to raise $3.8m. This should provide sufficient
funding for the 2011 exploration program. In addition, 0.00 0
BRW divested its East Kimberley tenements to Panoramic
12 Months
Resources Limited for $0.36m.
• Catalysts. 1) Assay Results from 3,100m program at

Leinster Nickel Projects with 8 of 10 holes completed 2) Disclosure: Patersons was lead manager and part underwriter
end-May BHPB Decision on Continuation of Altia JV 3) 2H/ of an SPP and placement which raised $3.7m at 7.1cps in
November 2010. Patersons received a fee for this service.
CY2011 drilling at the Altia JV 4) June Q Eloise Copper Jon Young, a director of BRW, is a Director, Private Clients at
Drilling. Patersons Securities.
Figure 1: Project location
Figure 2: Project targets
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without
any responsibility or liability on any account whatsoever on the part of this firm or any member or employee thereof.
Cokal Limited CKA ($0.69)
Targets in the Jungle Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
Cokal Limited has emerged from the restructuring of Altera Resources. The company has exploration permits in the Surat/
Clarence-Moreton and Bowen Basins, a joint venture in Tanzania, and they have recently purchased options to acquire shares
in four exploration projects in Kalimantan, Indonesia. The company is targeting metallurgical coal tenements primarily on the
overseas projects. The focus is on developing the Indonesian assets and bring them into production by 2013. Geologists have
been going over the ground in Kalimantan since the start of the year to map out the drilling program. CKA has secured one
drill rigs and would like to increase that number to 5 or 6 with a target to bring a maiden resource to the market by late Q3
or early Q4 this year. The Tanzanian JV has secured a tenement to explore part of the Karoo basin, which may share many
characteristic with the Riversdale and Moatize deposits in Mozambique. A drill rig has been secured and scouting is due to
begin once the dry season begins. The board and senior management are one of the strongest teams in the industry and
though it is very early days, the combination of assets, management, and coking coal strength is very attractive.

• Building a Portfolio of Prospective Coal Opportunities.
Cokal (formerly known as Altera Resources Ltd) is pursuing a Name Position
coking coal strategy focused on Kalimantan and Tanzania as Mr Peter Lynch Executive Chairman
well as in QLD. Late last year a successful purchase of options to Mr Pat Hanna Executive Director
acquire between 50% and 75% of four strategically located coal Mr Jim Middleton Managing Director & CEO
exploration projects in Kalimantan, Indonesia was concluded. Mr Domenic Martino Non Executive Director
CKA has a Farm-in Joint Venture with Dragon Energy Ltd which Mr Duncan Cornish CFO & Company Secretary
holds Exploration Permits for Coal in the Surat/Clarence-Moreton Mr Chris Turvey Exploration & Resource Manager
and Bowen Basins in QLD. The company has entered a number
of Joint Ventures in Tanzania, one of which recently secured Substantial Shareholders Shares (m) %
a tenement to explore part of a Karoo basin, coal bearing Peter Lynch 55.00 17.22
formations found throughout Southern Africa. Domenic & Sandra Martino 36.51 11.08
Patrick Hanna 25.00 7.83
• Coking Coal Targets are a high priority and the Indonesian
exploration projects are the primary targets at the moment. All
the projects are within the highly prospective Murawai coking
coal basin in Central Kalimantan and two of these are adjacent
to BHP Billiton’s coking coal tenements and have several surface
coal outcrops within their boundaries. CKA commissioned an
independent geological report by the international consulting firm Company Statistics & Performance
SRK Consulting on the 4 Kalimantan coal exploration projects.
SRK is of the opinion that all of the coal projects are prospective Shares on Issue (m) 338.1 3mth ADT ($m) 0.39
and worthy of further exploration, including drilling and additional Market Cap. ($m) 241.7 Debt ($m) 0.0
sample analyses. 52 Week Range $0.2 - $0.82 Cash ($m) 21.6
• Busy on the ground since the start of the year geologists

have been mapping the known and new outcrops of coal on
the projects in Kalimantan. The company is looking to expand
the drilling program and hopes to employ additional drill rigs 0.90 3000
as soon as possible.
0.80
• River to Production. CKA is endeavoring to evaluate the quality
of the coal in the next month, release a maiden inferred resource 0.70
2500
by the end of the year and start scoping studies soon after, on
Share Price (A$)
a timeline to bring the projects into production during 2013. 0.60 2000
Volume '000
• Strong Board and Management headed by Peter Lynch,

previously CEO and Director of Waratah Coal Inc, a TSX
0.50
1500
listed company taken over by the Mineralogy Group in 2008. 0.40
All members of the board and management have extensive
experience in building exploration companies and in the design, 0.30 1000
technical and operational aspects of thermal and coking coal
0.20
projects.
500
• Well financed and popular. The market re-rated Cokal after

the non brokered private placement to Passport Capital. This has
0.10
0.00 0
put the company into a well financed position, with $20m in the
bank, to actively pursue their high priority exploration targets. 12 Months
These projects are in the very early stages and but the company
has ambitions to start production very quickly in a small scale.
Figures 1 and 2: Indonesia - Murawai deposit
Figure 3: Tanzania - Karoo Basin extension of Mozambique
Figure 4 and 5: Bowen & Clarence Moreton Basin
Dart Mining NL DTM ($0.06)
Large Moly System To Be Drilled In May Analyst: Simon Tonkin
OUR VIEW
Dart Mining NL (DTM) is a Victorian focussed precious and base metals explorer that has a strategic tenement position. Dart
appears to have discovered a new mineral province within northeast Victoria that has similar rocks (Lachlan fold) to the
large Cadia and Ridgeway copper mines in NSW. At DTM’s flagship property the Unicorn Mo-Cu-Ag project which outcrops
at surface DTM has returned some very encouraging Mo-Cu-Ag drill results. DTM recently appointed Mr Lindsay Ward as
Managing Director he is a qualified geologist with 25 years of industry experience and will drive DTM to fully evaluate the
Unicorn discovery. Drilling is expected to recommence in May to continue to define the extent and grade of the mineralisation
which has a 500m diameter footprint at surface and is a similar size to the giant Climax and Henderson mines in the US. DTM
plans to carry out a series of deep diamond drilled holes 800m in length with the aim to move towards the establishment
of a maiden resource estimate. We would expect a resource estimate to be released by the end of 2011. In addition, DTM
has a number of other Mo and Au porphyry targets within Victoria that have had some encouraging results.

• Unicorn An Unexplored Mo-Ag-Cu Porphyry System. Initial
drilling has identified a very large mineralised intrusive system Directors Position
consisting of multiple mineralised rhyolitic quartz feldspar Christopher Bain Non-Executive Chairman
porphyry pulses. The system shows very broad pervasive John Quayle Managing Director
molybdenum mineralisation above 350ppm with large intervals Bernhard Hochwimmer Executive Director
of significant mineralisation including 106m @ 0.08% Mo, Dean Turnball Executive Director
0.15% Cu and 4.5ppm Ag (DUNDD005). Based on stream and Stephen Poke Non-Executive Director
soil sampling a 500m diameter target area has been defined Richard Udovenya Non-Executive Director
which we calculate could contain up to 350Mt. Grades appear
encouraging with >0.05% Mo a potentially mineable grade. Russel Simpson 5.7
North East Geologica 3.9
• Unicorn Drilling to Recommence in May. Further drilling is
expected to be conducted in May. DTM plans to conduct a series
Hochwimmer Bernhard 3.9
of deep diamond drill holes of up to 800m in length to establish
the size and grade of Mo-Cu-Ag mineralisation. The first hole
will test the interpreted continuation and northern extent of the Company Statistics & Performance
M1 mineralisation and test the M2 mineralised horizon. This will
assist in targeting the resource program which will consist of
a series of 100m spaced holes with angled holes of east-west Shares on issue (m) 119.4 3mth ADT ($m) 0.012
drilling. There will be approximately 2500m of deep drilling. ITM Options (m) 0.0 EV ($m) 5.5
• Excellent Infrastructure. DTM’s projects are located in north-
eastern Victoria close to hydro-power, water, paved highways,
towns and mining supportive communities. Therefore this

would be conducive to a development scenario. 0.20 20000
• Molybdenum (Moly) Market. The major use of Moly is

to strengthen and rust proof steel. Moly use is somewhat
0.18 18000
energy related as it is used in pipelines, drill pipe, tubing in 0.16 16000

nuclear plants and as a catalyst to crack the sulphur out of
Share Price (A$)
0.14 14000
crude oil and its price is correlated strongly with oil price.
Volume '000
The Moly market is fairly small being 488mlbpa (220,000t) 0.12 12000
in 2010 with 47% of supply by-products from copper mines
and 53% from large primary mines and smaller mines. The 0.10 10000
LME began trading of Moly future in February 2010 with the 0.08 8000
current price US$17.50/lb.
0.06 6000
• Other Projects. DTM have highly prospective tenure with a
number of other projects identified other than Unicorn these 0.04 4000
include: 1) Morgan 2) Mountain View 3) Bunroy and Boebuck.
0.02 2000
• Stronger Financial Position. DTM is in a stronger financial
position after a $2m placement and 1 for 3 rights issue at
0.00 0
6.5cps. For every two shares shareholders received a listed 12 Months
option exercisable at 10cps. DTM has a cash position of
approximately $1.63m at the end of March.
Disclosure: Patersons was lead manager and underwriter for
• Catalysts. 1) May - recommencement of Drilling at Unicorn
2) Further positive drill results from the Unicorn project.
a $2m rights issue and placement at $0.065/sh conducted in
November 2010. Patersons received a fee for this service.
Figure 1: DTM project location
Figure 2: Unicorn IP drill targets
Guildford Coal Limited GUF ($1.30)
Fast Mover Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
Since floating mid last year Guildford has moved quickly to secure multiple targets in major Queensland and Mongolian Coal
Basins which the share price has reflected in a positive manner. This portfolio will allow the company to explore coking coal,
thermal coal and PCI targets. The company is in a very strong financial position with over $40m in the bank and it is utilising
those funds by initiating an intensive drilling program in both Mongolia and Australia. The South Gobi Mongolian project has
now secured the third drill rig and is well down the road to being issued a mining lease for the tenement. The first hole on
this Project has been completed and has intersected approximately 8 metres net of coal contained in three coal seams with
the deepest seam estimated at 87m. If key milestones, are met the project is expected to start production late this year or
in early 2012. Drilling has re-started on the Australian assets after being held up by the extraordinary wet season last year.
The company expects 6 rigs (from the current 3) to define the assets in the Galilee, Maryborough and Bowen Basins. The
main negative, in our view, is the management fee of $2.5mpa for 5 years and the success fee of $20m for each 100Mt of
JORC compliant indicated resource defined on the original Queensland assets up to a maximum of $100m.

• A Simple Objective has been pursued by the management
team when it first started. This was to secure prospective
Name
Tony Bellas
Position
Non Executive Chairman
tenements close to infrastructure. They have achieved this Craig Ransley Deputy Chairman
objective with their 3 primary targets in Queensland, the Michael Avery MD and Joint Company Secretary
Hughenden project on the Mt Isa – Townsville rail line, Mike Chester Non-Executive Director
the Kolan project close to rail to Gladstone and the Sierra Hon. Alan Griffiths Non-Executive Director
project on the main rail line west of Rockhampton. Mark Turner Chief Operating Officer
Norah St. George CFO and Joint Company Secretary
Tony Mooney General Manager Stakeholder Relations
• Focus of South Gobi. The project covers large coal
prospects located in the South Gobi desert approximately Cameron Switzer Exploration Manager
60km to the Chinese border and adjacent to two operating
coal mines. There are 3 drill rigs on site to establish a
The Chairman 1 Pty Ltd 200.0 48.4
JORC compliant resource and the mining lease on the Och-Ziff Capital Management 52.1 12.6
South Gobi Project is expected to be issued in Q3 2011. Springsure Mining Pty Ltd 40.0 9.7
UBS AG 30.6 7.4
• Near Term Cash Flow. The South Gobi project does not
have the infrastructure focus but management believes
Credit Suisse AG 29.5 7.1
it will provide positive cash flow in the near future.

Production could begin early next year or possibly late this Company Statistics & Performance
year. The project is expected to require minimal capex
(~$20m) and produce about 2Mtpa ROM. Coal is sold at
the mine gate and the majority of the mining logistics will Shares on Issue (m) 413.5 3mth ADT ($m) 1.42
be handled by a contractor. Negotiations are currently Market Cap. ($m) 537.6 Debt ($m) 0.0
progressing and an agreement with a mining contractor 52 Week Range $0.235 - $1.195 Cash ($m) 48.7
is expected to be finalised shortly.
• Assets on the Galilee Basin. The Hughenden project

is one of the largest coal exploration tenement portfolios
on the Galilee Basin. The drilling program has been 1.40 18000
significantly delayed by the extraordinary wet season and
flooding last year. 3 drill rigs have resumed drilling and 1.20
the company is looking to expand the program with an 15000
additional rig. The project is located near Pentland and
Share Price (A$)
the main rail line to Townsville. The company has already 1.00
Volume '000
12000
started negotiations to secure rail and port capacity.
0.80
• And the Others. Kolan in the Maryborough Basin has
re- started to confirm the coking coal target. Drilling the
9000
0.60
Sierra Project in the Bowen Basin will commence once
the EL is granted later this year. 6000
0.40
• Different Management Structure. The company has
a management agreement with Chairman 1, the major 0.20 3000
shareholder and original owner of the assets in the Galilee,
Maryborough and Bowen Basins. Chairman 1 will receive
$2.5mpa for 5 years to manage Guildford and for each 0.00 0
100Mt of JORC compliant indicated resources defined on 12 Months
the original Queensland assets a fee of $20m will be paid
to Chairman 1 up to a maximum of $100m.
Figure 1: Mongolian Projects
Figure 2: Galilee Basin - Hughenden Projects
MetroCoal Limited MTE ($0.41)

Quiet Achiever Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
MetroCoal is an emerging coal explorer focused on the Surat Basin. It has a number of tenements but its main focus is on the
Columboola, Bundi and Norwood projects around Wandoan and Miles. Current JORC compliant resources total 709Mt (686Mt
Inferred and 23Mt Indicated). Like other projects in the Surat it is dependant on infrastructure development, primarily the
Surat Basin Rail Link and WICET Stage 2, to which is has applied for a 12Mtpa allocation. The company is in a financially strong
position with $14m in the bank on top of the recent sale of 51% of Columboola to Sinocoal for $30m. The JV will develop a 5Mtpa
underground thermal coal mine with initial production most likely in 2016. The company is actively pursuing a partner for the
Bundi project and with a JORC compliant resource already identified management believes it should attract a premium to the
Columboola transaction. Details of any transaction should emerge during the second half this year. Metro has not had the same
run up in value prices seen in other junior coal plays but it has not had experienced the depreciation in value seen recently. The
company has an experienced Board and Management team to move the company forward. Accordingly we retain our Speculative

• MetroCoal (MTE) holds a portfolio of tenements in the Surat
Basin and it has identified prospective thermal coal seams
Name Position
suitable for conventional opencut and underground mining. Mr David Barwick Chairman
It also has identified zones applicable to Underground Coal Mr Andrew Gillies Non Executive Director
Gasification. The company is actively drilling the Columboola Mr John Haley Non Executive Director & Company Secretary
and Bundi projects with 3 rigs on each. Mr Michael Hansel Non Executive Director
Mr Mike O’Brian Chief Executive Officer
• A systematic drilling program on the Columboola Project is
being conducted to establish an initial inferred resource and
Mr Theo Psaros
Mr Neil Mackenzie-Forbes
Chief Operating Officer
Exploration Manager
identify project areas for future infill drilling. Early results have
confirmed the Macalister Seam Package is continuous across Substantial Shareholders Shares (m) %
the tenement. In addition, economic thicknesses of the Bulwer Matallica Minerals Limited 80.0 45.3
and Condamine seams have been identified, implying there the Bank of America Corporation 20.1 11.4
ACD Services Ltd 2.6 1.5
potential for multi- seam underground thermal coal mining.
• The Bundi Project drilling program has just begun and initial
results (first 5 holes of a 70 hole program) indicate the potential
for two working seams. Thicker than anticipated Kogan and Company Statistics & Performance
Macalister Upper Seams were intersected with up to 7m in
thickness.
• MTE is in a strong financial position with $14.2m in the bank as
at the 31 March 2011. The majority of these funds were raised
52 Week Range $0.215 - $0.42 Cash ($m) 4.4
by a successful placement to institutional and sophisticated
investors. MTE entered into a JV agreement with Sinocoal where
Sinocoal acquired a 51% interest in the Columboola Project and 0.45 4000
pre-emptive rights over MTE’s other tenements for an agreed
expenditure commitment of $30m. Sinocoal has waived pre- 0.40 3500
emptive rights over the Bundi Project and MTE has appointed
Caldrex Capital to market a JV proposal. 0.35
3000
Share Price (A$)
• Both the Columboola and Bundi projects are well located to the 0.30
Volume '000
2500
proposed Surat Basin Rail (SBR) link connecting to Gladstone
but as with other explorers in the region they are dependant 0.25
2000
on the successful completion of the rail line. MetroCoal plans to
0.20
seek participation in the SBR project later in 2011 and this will
1500
follow its application for 12Mtpa capacity of the second stage of 0.15
the Wiggins Island Coal Export Terminal development.
1000
0.10
• MTE has an experienced Board and Management team to move
the company from explorer to producer over the next five years. 0.05 500
The team have considerable knowledge and expertise covering
geology, mining, financial management and investment, and 0.00 0
business development. 12 Months
• The main shareholder and original owner of the MTE, Metallica

Minerals, is unlikely to participate in future fund raising by the Disclosure: Patersons acted as lead manager for a two tranche
company and MTE is focusing on JVs at the asset level to develop placement of 35m MTE shares at A$0.30/sh to raise A$10.5m
its projects. in October 2010. It received fees for this service.
Figure 1: Tenement Location Map
Figure 2: Bundi and Norwood Target Areas and EPC Boundary
NuCoal Resources NL NCR ($0.38)
Drilling in the Hunter Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
NuCoal successfully reconstructed and re-listed the company early last year as an emerging coal developer with the acquisition
of the Doyles Creek project in the Lower Hunter Valley. The company has grown its presence in the established Hunter Coalfield
region with the recent acquisition of the Dellworth assets and the expansion of the Doyles Creek resources. The political
environment and the process surrounding the granting of Doyles Creek exploration licence (EL) have been an unwelcome
development to management and shareholders and the share price has been tending downwards since February. The EL issue
is unlikely to disappear immediately as the newly elected NSW government raised the issue while it was in opposition although
an independent probity review did find “the then Minister acted within the powers afforded to him under the legislation.” The
company was given a vote of confidence by the investment community as it successfully completed a $30m capital raising
last quarter. This will allow the company to complete a BFS, upgrade the resources of the Doyles Creek and develop the
Dellworth assets. An extension to the Doyles Creek project is the establishment of a specialised underground coal mining
training facility to help to address the skills shortage currently being experienced in the mining sector.

• Emerging coal developer NuCoal Resources (NCR) acquired
100% of the Doyles Creek project in the Lower Hunter Valley Name Position
in conjunction with a reconstruction and re-listing of the Mr Gordon Galt Chairman
Company in February 2010. Last month NCR also acquired Mr Glen Lewis Managing Director
a 49% stake in Dellworth Pty Ltd a New South Wales based Mr James Beecher Non Executive Director
company that holds two exploration licenses in close proximity Mr Michael Davies Non Executive Director
Mr Mike Chester Non Executive Director
to Doyles Creek.
Mr Andrew Poole Non Executive Director
Mrs Megan Etcell Commercial Manager & Company Secretary
• The Doyles Creek project has recently expanded resources
from an inferred resource of 420.3Mt to 12.9Mt indicated Mr Gary Cambourn Project Manager
Mr Kenny Barry Safety, Training, Environment & Community Mgr
resource and 484.8 inferred resource. The ongoing drilling
program is expected to upgrade further resources to the Substantial Shareholders Shares (m) %
indicated category. We expect new JORC compliant resource Taurus Funds Management 125.3 19.5
statements from the company in the second half of 2011. Pooles Australia 48.5 7.5
The Pre-Feasibility Study on the Doyles Creek project has Sparta Group 42.2 6.6
commenced and is scheduled for completion in June 2012. Jonca Investments 33.1 5.1
Management has indicated that the project would be suitable
for a multi seam longwall mining.
• The newly elected NSW government proposed a review of Company Statistics & Performance
Exploration Licences (EL) and its Strategic Regional Land
Use Policy has highlighted the Doyle Creek Project. NCR
supports the review and an independent probity review on Shares on Issue (m) 646.9 3mth ADT ($m) 0.63
the granting of this EL was conducted last year which found
52 Week Range $0.2 - $0.62 Cash ($m) 3.9
“the then Minister acted within the powers afforded to him
under the legislation.”
• The company will acquire 100% of the Dellworth assets once

they satisfy the requirements of the new change of ownership
0.70 30000
clause added to recently granted exploration licenses set by
the new NSW government. Management is very confident
they will meet all criteria in this formal process and NCR 0.60 25000
has a management agreement in place until the process is
concluded. This will enable NCR to conduct detail analysis of 0.50
Share Price (A$)
historic drill results and design an exploration process which 20000

Volume '000
is expected to begin in the September quarter this year.

0.40
• NCR is progressing discussions for rail and port access. NCR has
applied for PWCS port access in the July 2011 nominations. 0.30
15000
• A successful capital raising of $30m was completed last quarter

which should be adequate fund to complete a Bankable Feasibility 0.20
10000
Study on Doyles Creek and develop the Dellworth assets.

0.10 5000
• An extension to the Doyles Creek project, and a part of the
EL being granted, is the establishment of a specialised coal
centric training facility run in parallel with the proposed mining 0.00 0
operations. The facility will help to address the critical skills 12 Months
shortage currently being experienced in the mining sector
and the wider community.
Figure 1: Doyles Creek Project Timeline
Figure 2: Location Map Figure 3: Doyles Creek Stratigraphic Column
Nyota Minerals Limited NYO ($0.265)

Targeting an Underexplored Gold Province Analyst: Simon Tonkin
OUR VIEW
Nyota Minerals (NYO) is an east African gold company with its main focus on the development of the Tulu Kapi deposit in
Ethiopia which has a JORC compliant inferred resource of 1.2Moz Au at a grade of 1.18g/t Au. NYO recently completed
a positive Preliminary Economic Assessment and is progressing the project to Pre-feasibility Study. The resource has a
significant amount of exploration upside with recent positive drill results from the Northern and South Eastern extensions
and the discovery of a deeper feeder zone late last year. The feeder zone hole returned 15.7m at 37.04g/t Au from 490m
since then a number of other positive intersections have been released. Further work is likely to grow the feeder zone and
a number of trade-off studies will determine if the operation targets the underground or the open-pit or a combination of
the two. In addition, NYO has a significant number of outstanding exploration targets within the greenstone belt in western
Ethiopia derived from soil geochemistry, airborne and ground geophysics, trenching and rock sampling. We recently visited
site and were impressed with the potential for further discoveries in the area which could provide additional feed for a
central processing facility. NYO is well cash up with $32m in the bank. We have a Spec Buy on NYO.

• Tulu Kapi Progresses to Prefeasibility. NYO indicated
that the PEA has shown positive project returns and Directors Position
therefore is progressing to Pre-Feasibility Study. The PEA Melissa Sturgess Chairman
looked at an open pit and then underground scenario with David Pettman Deputy Chairman
a processing facility of 2Mtpa. The process route chosen Richard Chase CEO Elect
was Carbon-In-leach (CIL). Capital costs are estimated Dr Evan Kirby Non-Executive Director
at US$200m however cash costs came in at US$14.50/t Mike Langoulant Finance Director
for open pit and US$35.83/t for underground. There was Martin Churchouse Technical Director
limited information on the split of open pit vs underground
however NYO indicates that higher grade underground feed Shareholders Holding (%)
improves the project economics initial studies on Lodes 3 and International Finance 6.2
4 indicate potential to be developed from underground. On 9 JP Morgan Chase & Co 6.1
December 2010, NYO discovered the Feeder Zone beneath JP Morgan Asset Management 4.8
the currently defined resource returning a peak intersection Investec Asset Management 3.5
of 15.7m at 37.04g/t Au. Therefore, Tulu Kapi is a work in Henderson Global 2.0
progress with a lower grade open pit resource and a higher
grade feeder zone. The trade off will be whether there is
enough high grade material to justify an underground mine
or to stay with open pit or a combination of the two. Company Statistics & Performance
• Outstanding Near-Mine and Regional Targets. NYO
are well cashed up with A$32m to execute an aggressive Shares on issue (m) 477.9 3mth ADT ($m) 0.031
exploration campaign. NYO is targeting three areas for ITM Options (m) 14.0 EV ($m) 98.3
exploration: 1) Tulu Kapi Resource Extensions: NE, SW Market Cap. ($m) 130.4 Debt est ($m) 0.0
and deep high grade FZ (all being drilling). 2) Proximal/ 52 week range $0.20 - $0.48 Cash est ($m) 32.0
Advanced Targets: Within 25km of Tulu Kapi and include:
Soyoma (results expected), Dina (target below Soyoma),
Guji (aim to drill mid-2011), Chago (along trend), Syenite Hill
(along trend from Tulu Kapi). Discoveries at these near mine 0.60 2000
targets could supply satellite feed to the central processing
mill. 3) Regional Targets: these would be stand alone 1800
mining operations. 0.50
1600
• Government Support for Mine Development. Ethiopia

Share Price (A$)
1400
currently has one operating mine Lege Dembi which produces
Volume '000
0.40
approximately 100-120kozpa Au. Given the positive 1200
contribution to the economy, the Ethiopian Government is
keen for Nyota to move to a development scenario. NYO 0.30 1000
has lodged its Mining Licence application with the Ethiopian 800
Government. 0.20
600
• New CEO announced. Recently, NYO has announced that
it has appointed Mr Richard Chase as CEO effective 1 June 400
0.10
2011. He has 19 years experience in the resources sector:
200
8 working for SAMAX Resources (acquired by Ashanti
Goldfields) and the last 8 with Ambrian Capital Plc. 0.00 0
• Catalysts. 1) Ongoing Drill Results Tulu Kapi and regional

2) End-2011 Prefeasibility Results 3) Infill/Regional Drilling
12 Months
Underway.
Figure 2: Tenement locations
Sherwin Iron Limited SHD ($0.13)
Infrastructure and yield the key to success Analyst: Tim McCormack
OUR VIEW
SHD’s strategic tenement holding in the highly prospective Roper River region in the Northern Territory is the primary focus of
development for the company. In just 6 months drilling at the 100% owned Roper River Iron Ore Project, SHD has firmed up
a resource of 106.6Mt at 47% Fe. Latest metallurgical test work on the resource has indicated a saleable product of >60% Fe
at robust recovery yield of 56% can be achieved through the introduction of a SLon magnetic separator into the beneficiation
circuit. Initial drill results of the 2011 drilling program continue to confirm extensions of oolitic hematite mineralisation
consistent with the existing resource. Combined exploration targets for the Hodgson Downs, Sherwin Creek & Mount Scott
Deposits stand at 400-500Mt at 40-48% Fe. We believe developing the Gulf of Carpentaria Infrastructure Service under Joint
Venture with Western Desert Resources to provide a cost effective means of export to market is a key aspect of the project.
Scoping studies and environmental work critical to advancing the bulk loading facility are already underway and SHD remains
confident that a multi-user export facility will be ready by mid 2013. With the recent capital raising of $8.5m, SHD is well
funded in the near term and we believe the company offers an attractive entry point into the iron ore market.

• Significant drilling targets. The aggressive 2011 drilling
program began in April and aims to deliver resource Directors Position
upgrades to the Sherwin Creek/Mount Scott areas, Greg Bittar Managing Director
complete the resource build up at Hodgson Downs and Neil Biddle Technical Director
examine high potential un-tested targets. First drill holes John Berry Project Development
of the 2011 program are intersecting continuous near Paul Lynch Mine Development & Operations
surface oolitic hematite mineralisation identical to the Anthony Peterson Exploration & Resource Development
Hodgson Downs deposit 70km to the south-west. We view Stacey Apostolou Commercial & Company Secretary
homogeneity of mineralisation as an important facet of Eddie Fry Indigenous Relations Consultant
the project as it ultimately determines the effectiveness
of beneficiation. The combined exploration target stands Shareholders Holding (%)
at 400-500Mt at 40-48% Fe. Jerry Ren 59.0
Huaxi Steel 6.0
Directors 2.0
• Major processing breakthrough. SHD’s latest
announcement regarding metallurgical test work Others 33.0
demonstrates that by introducing a SLon Magnetic Separator
into a progressive grinding circuit, first class grades of >60%
Fe can be delivered while maintaining a robust yield of 56%.
We view yield as a key catalyst of the projects economics. Company Statistics & Performance
Indicative capital and operating costs for incorporating
magnetic separation are yet to be disclosed.
• Well funded to progress project. The recent capital raising
of $8.5m at $0.16/sh has SHD well positioned to accelerate
ITM Options (m)
Market Cap. ($m)
164.0
80.0
EV ($m)
Debt est ($m)
69.5
0.0
the drilling and development of its Roper River Iron Ore 52 week range $0.145 - $ 0.265 Cash est ($m) 10.5
Project. Funding will also be used to progress ongoing
feasibility studies including the Gulf of Carpentaria scoping
study and provide general working capital. A further $2.5m
may become available through a share purchase plan to 0.30 2000
eligible shareholders whereby up to $10,000 of shares may
be purchased at $0.16/sh.
0.25
1600
• Gulf Infrastructure Service. Establishing this facility
and associated infrastructure in JV with WDR has become
Share Price (A$)
0.20
Volume '000
a core focus for the company. All scoping and feasibility

1200
studies imply the export of product through the Gulf of
Carpentaria and prudent development is essential to 0.15
coincide with production. Forthcoming feasibility studies
will provide clarity on the capex involved in establishing 800
the facility which will invariably see SHD return to the 0.10
market for additional funding.
400
• Cheap on EV to resource basis. Despite the need to
beneficiate all of SHD’s resource it remains attractive on
0.05
a EV/resource basis. Assuming a recovery yield of 56%

saleable product the stock is trading on an EV/t of A$1.10/t 0.00 0
product. If SHD can deliver on indicative metallurgical testing 12 Months
through to production then SHD remains an excellent value
for money exposure to the iron ore market.
Figure 1: Location of the Roper River Iron Ore Project, Northern Territory
Figure 2: Typical deposit style cross-section
Figure 3: Proposed trans shipping infrastructure - Maria Island Figure 4: Key targets within the tenement holding
Stanmore Coal Limited SMR ($1.20)
On the Path to Production Analyst: Andrew Harrington, Matthew Trivett
OUR VIEW
Stanmore Coal (SMR) is a coal company that has been listed for less than two years and in that time is has progressed
from an early stage exploration company to a development company and it remains firmly on track to be a producing
company. Production is expected in 2015 from two projects, the Mackenzie River in the Bowen Basin and the Range in the
Surat Basin. These projects currently have a combined inferred JORC compliant resource of 318Mt of coking and thermal
coal, which further drilling should expand and upgrade. Both projects are dependant on allocation from the WICET Stage
2 port development. Also, the Range is a thermal coal project dependant on the Surat Basin Rail Link to be completed.
Both infrastructure projects are progressing. We view SMR as being well positioned to secure an initial 7Mt allocation at
WICET with prefeasibility studies, ML applications and EIS either underway or due to begin next quarter. The company
is continuing to explore its other tenements and some encouraging results thave surfaced on the Tennyson and Belview
Projects in the Bowen basin. The share price of SMR has been under pressure since mid April but the market can expect
a good flow of information on resource establishment and expansion over the next 6 months.

• Project Development. There are two projects in
the development stage, the Range in the Surat and
Mackenzie River in the Bowen. SMR aim to have both Name Position
start production by 2015. The Mackenzie River project Mr Neville Sneddon Chairman
is located between the operating Ensham mine and the Mr Nick Jorss Managing Director
Mr Andrew Martin Director
Washpool development belonging to AQA. It is one of the
Mr Stephen Bizzell Director
very few opencut coking coal projects left in Queensland Mr Viv Forbes Director
not in the hands of the majors. Mr Vaughan Wishart Project Development Manager
Mr Mike McKee Operations Manager
• Resources with potential. Drilling has been completed
on the Range project to identify a JORC compliant Inferred Mr Duncan Cornish CFO & Company Secretary
Resource of 219Mt. The high quality export thermal coal
target continues to be drilled to enable detailed analysis St Lucia Resources International Pty Ltd 31.7 25.4
of the coal and upgrade resources. A conceptual mining Bank of America Corporation 7.1 5.7
study has been completed for a 5Mtpa open cut mine Kinetic Investment Partners Limited 6.3 5.0
with potential to expand production significantly. A JORC Stephen Bizzell 5.8 4.7
compliant Inferred Resource of 99Mt has been identified
on Mackenzie River. The second stage has recently
commenced although it has been affected by continuing
wet weather. The drilling program objective is to test a Company Statistics & Performance
70-80Mt target in the north of the tenement and establish
a resource for a 2Mtpa open pit coking coal operation.
• Other Projects. There are five other tenements held by the
company in the Bowen Basin. A scout program is currently
Market Cap. ($m)
52 Week Range
145.8
$0.62 - $1.51
Debt ($m)
Cash ($m)
0.0
24.5
underway on the Tennyson (previously Emerald) project.
The company reported that numerous coal seams have been
intersected and it is confident that the 200-290Mt exploration
target will be easily achieved in the next few months. Drilling
has commenced on the Belview Project with an exploration 1.60 8000
target to be determined in the next 4-5 months. The target
coking coal seams on this project are mined in nearby Cook 1.40 7000
Colliery and Leichhardt Colliery. Drilling on the Kerlong
Project is expected to follow. Kerlong will target coking and 1.20 6000
PCI seams similar to Coppabella and Burton.
Share Price (A$)
Volume '000
1.00 5000
• Infrastructure. All the Bowen Basin projects are located in
close proximity to rail lines which access coal terminals at
either Gladstone or Dalrymple Bay. The Range project is well 0.80 4000
located to the proposed Surat Basin Rail link connecting to
Gladstone. Stanmore has applied for an allocation of capacity 0.60 3000
of the Wiggins Island Export Terminal Stage 2.
0.40 2000
• Expansion fully funded. The successful renounceable
rights issue late last year has the company in a strong 0.20 1000
financial position. This allows the company to fund the drilling
programs already outlined and progress the Mackenzie and 0.00 0
Range projects to further milestones. Scoping and pre-
12 Months
feasibility studies on Range are well progressed in conjunction
with statutory approvals such as the ML and EIS, while a
conceptual mining study is underway on Mackenzie.
Figure 1: Location Map Figure 2: Mackenzie River Geological Plan
Figure 3: The Range Product Flow Sheet
Figure 4: Project Timeline
Stonehenge Metals Limited SHE ($0.12)

Vanadium Key to Unlocking Project Value Analyst: Simon Tonkin
OUR VIEW
We recently visited Stonehenge Metals flagship Daejon Uranium Project in South Korea. The project contains an inferred
resource of 65mlb of uranium grading 320ppm U3O8 and has a significant vanadium by-product credit which is the key to
the project. Initial results from a pre-scoping study have indicated cash costs of $24.50/lb uranium (assuming vanadium
by-product credits) and mid-40’s for uranium extraction. Bench scale uranium recoveries are >90%, however, vanadium
recoveries are 50% and this is where SHE is looking to improve through applying more intensive leach conditions such as: 1)
higher temperatures 2) more acid 3) medium pressure leach or 4) Salt roast. SHE is currently cheap on an EV/lb of uranium
basis trading at A$0.50/lb in the ground (excluding by-products) compared to the peer average of A$1.70/lb. Our analysis
suggests that as SHE continues to progress the project the stock could appreciate towards $0.30/sh. Therefore we rate the
stock as a Speculative Buy with the biggest risks i) metallurgy and ii) community relations to allow a smooth permitting
process. SHE had $3.9m at the end of the March Q and should provide sufficient capital for the near term.

• Large Resource with Upside for +100mlb. SHE has a
significant resource of 65mlb U3O8 which remains open at Directors Position
depth and along strike with excellent potential to expand the Warren Staude Non-Executive Chairman
resource beyond 100mlb. The mineralisation is shale-hosted Richard Henning Managing Director
and also has a significant amount of vanadium (conservatively Simon Fleming Executive Director
assumed to average 3,500ppm V2O5 based on adit sampling) Bevan Tarratt Non-Executive Director
which as a by-product credit improves the economics of the Bob Cleary Non-Executive Director
project. SHE plans to conduct chemical assays which can be Jay Stephenson Company Secretary
higher than spectrometer readings, which has the potential
improve the overall uranium grade beyond 400ppm U3O8. Glenn Whiddon 11.8
Citigroup Global 7.4
• Positive Pre-Scoping Study Results. In early March, SHE
released a positive pre-scoping study results which indicated
Thesis Asset Management 4.2
cash costs of US$24.50/lb (following vanadium by-product
credits) these costs were mid-US$40/lb for the uranium only
extraction process. On this basis considering our long term
uranium price forecast of US$70/lb SHE will need to extract the Company Statistics & Performance
vanadium to improve the project economics. Initial bench scale
metallurgical test work has been encouraging with excellent
leach recoveries of >90% for uranium. Vanadium recoveries at Shares on issue (m) 271.4 3mth ADT ($m) 0.168
50% should improve with more intensive leach conditions. ITM Options (m) 61.9 EV ($m) 34.9
• South Korean Nuclear Friendly Jurisdiction. South Korea
has 21 nuclear reactors which require 9mlb of U3O8 annually. SHE
aims to sell its uranium to KEPCO to provide a domestic source of
supply. In addition, the project is located near infrastructure. 0.30 16000
• Cheap on EV/lb Basis. SHE is currently cheap on an EV/lb

basis trading at A$0.50/lb in the ground (excluding vanadium) 0.25
14000
compared to the peer average of A$1.70/lb. Therefore there 12000

Share Price (A$)
is significant upside to the current share price if SHE can

Volume '000
0.20
successfully progress the project to a development scenario. 10000
• Biggest Risks Metallurgy and Community. The biggest

risks for SHE are: i) Metallurgy – initial results are encouraging;
0.15 8000
ii) Community Relations: SHE are only in the initial stages 6000
of community consultation with the town of Chubu located 0.10
in the adjacent valley. It will be imperative to foster positive 4000
relations to allow a smooth permitting process.
0.05
2000
• Potential Second Project at Gweson: In April, SHE released
assays results from 8 diamond holes with the best intercept: 0.00 0
8m at 245ppm U3O8 and 3,471ppm V2O5. All intercepts were
12 Months
between 73 and 183m depth. The results at Gwesan are
encouraging and suggest a potential second project other
than SHE’s key Daejon project (located 50km NE).
Disclosure: Patersons was co-manager of a $2.8m placement at
$0.056/sh with an attaching 10c option in June 2010. Patersons
• Catalysts: May - Commence Prefeasibility; May/June
Metallurgical test work on 3x20kg samples. received a fee for this service.
Figure 1: SHE project locations
Figure 2: Exploration potential on top of 65mlb resource
Uranex NL UNX ($0.335)
Mantra Resources Look-a-like Plus Coal? Analyst: Simon Tonkin
OUR VIEW
UNX’s main focus is its Mkuju Uranium Project in Southern Tanzania. UNX’s tenure is located adjacent to Mantra Resource’s
(MRU) Mkuju River project (MRP), MRU are currently in the process of being acquired for $1.02b all cash/dividend offer by
Russian-state owned uranium miner ARMZ. UNX stock has come off following the Fukushima disaster in Japan, prior to this
it had performed well due to the ARMZ-MRU takeover and encouraging high grade drill results at its Mkuju Uranium Project.
We believe the Fukushima impact is likely to remain in the short to medium term, however, with further drilling UNX has
a good opportunity to establish a high grade resource at its Likuyu North prospect by the end of 2011. In addition, UNX
has identified through a radiometric survey on its Mkuju Uranium Project extensive uranium anomalies over 64km of strike
within four prospect areas. UNX also holds the Songea Coal project in Southern Tanzania where exploration is continuing
and expects to commence drilling in June 2011. There are two established coalfields adjacent to the Songea Coal project
with resources exceeding 1bt of coal. Finally, UNX is also looking to divest its non-core uranium assets in Australia.

• MRU Mkuju River Project Mark II? UNX’s tenure is
immediately south of MRU. MRU is currently the subject of Directors Position
a takeover for $1.02b which values its current resource of Johann Jacobs Chairman
101.4mlb at A$10.06/lb. UNX’s 2010 drill program has focused Matthew Gauci Managing Director
on drilling the Likuyu North prospect located 30km southwest Stephen Hunt Non-Executive Director
of MRU’s Nyota deposit. The prospect has been defined over a Mark Chalmers Non-Executive Director
strike length of ~600m. In 2010, 16 diamond holes were recently Frank Poullas Non-Executive Director
completed all of which intersected uranium mineralisation. Assay John Nethersole CFO
results were very encouraging and include 10.5m at 1,124ppm
U3O8, including 2m at 2,135ppm U3O8, 13m at 614ppm U3O8 Shareholders Holding (%)
including 4.5m at 1,154ppm U3O8 and 2m at 1,244ppm U3O8. IMX 29.0
Subsequently, UNX has commenced a 6,000m aircore drilling Acorn 14.0
program to extend the high grade mineralized zone over 5km Geiger 10.0
to establish a resource in 2H/CY2011.
• Targeting MRU Style Mineralisation and Large Higher-

Grade ISR Deposits. UNX has initially been targeting shallow
sandstone hosted deposits at Likuyu North (which the drilling Company Statistics & Performance
is targeting) which is the same type of mineralisation as
Mantra and PDN’s Kayelekera mine. These horizons tend to Shares on issue (m) 169.6 3mth ADT ($m) 0.318
be multi-layered and shallow <70m and are free dig meaning ITM Options (m) 4.0 EV ($m) 53.1
lower cost to mine. In addition, UNX will be targeting roll front Market Cap. ($m) 58.2 Debt est ($m) 0.0
style deposits which tend to be large and of an even higher 52 week range $0.12 - $0.82 Cash est ($m) 5.1
grade these have the potential to be mined using ISR (In-Situ
Recovery) extraction techniques. The ISR method of mining
is the lowest cost method of uranium extraction and is used 0.90 4500
at Beverley-Four Mile, Kazakhstan and in the US.
0.80 4000
• Radiometric Survey Identifies 5 Main Anomalies; Drilling
to Recommence in March 2011. Based on radiometric 0.70 3500
surveys UNX appears to have identified five similar targets to
Share Price (A$)
MRU which total 69km of strike. Likuyu North (5km), Likuyu 0.60 3000
Volume '000
South (18km), Matemanga Cluster (10km), Mteramwahi North

(17km) and Mteramwahi South (19km). 0.50 2500
• Coal Project to Be Drilled in June 2011. UNX is aiming

to drill its Songea Coal project in June 2011. The project
0.40 2000
covers an area of 3,500km2 where 11 coal fields have been 0.30 1500
identified. It is located in close proximity (50km) to the
Ketewaka (804Mt) and Ngaka (250Mt) coalfields. 0.20 1000
• Strong Cash Position Following Raising. UNX has $5.1m in

cash and this is expected to grow with the exercise of company
0.10 500
0.00 0
options (would bring in $1.5-5m) and the expected divestiture of
its non-core Australian assets in the June Q which would include 12 Months
the 14mlb Thatcher Soak project in Western Australia.
• Catalysts. June/July: Likuyu North Drill Results; 2H/CY2011:

Resource Update; June 2011 Commencement of Drilling at
Disclosure: Patersons was lead manager and underwriter for
a $5.8m rights issue at $0.14/sh conducted in October 2010.
Songera Coal Project. Patersons received a fee for this service.
Figure 2: Project status
$? Production
Manyoni Feasibility Studies

(29M lbs U308 @ 100ppm)
Thatcher Soak Scoping Studies

(14M lbs U3O8 @ 100ppm cut off)
Mkuju and Songea Advanced Exploration

(8,500m km2, 20,000m drilling underway)
underway)
Alligator Rivers Bremer Bassin Early Stage Exploration

(Target generation) (6000m drillingg)
Database of uranium prospectss Project Generation
Figure 3: Likuyu North drilling
Western Desert Resources WDR ($0.335)

Un-locking potential in the NT Analyst: Tim McCormack
OUR VIEW
The unrelenting Northern Territory wet season has seen a slow start to 2011 field program with excessive rainfall hampering
access to WDR’s flagship Roper Bar Project. In light of this WDR has concentrated on critical pre-feasibility studies relating to
the development of the Gulf Infrastructure Service and environmental studies for the proposed mining leases and transport
corridors. WDR’s resource inventory grew to 312Mt at 40% Fe during the March Q on the back of a positive drilling program
which ceased in mid January due the wet season. WDR is set to embark on a well funded aggressive drilling campaign to
increase resource inventories and importantly grow the 14.5Mt of direct shippable ore (DSO) that is currently in resource.
Pivotal to the longer term success of the project is an effective means of concentrating the lower grade hematite into a
saleable product. Initial metallurgical test work has shown Dense Media Separation can upgrade the resource to a saleable
grade ~58% Fe with further enrichment capable through the introduction of magnetic separation. WDR remains well funded
for 2011 and we should see a steady news flow regarding essential infrastructure, resource upgrade and clarity on metallurgy.
Attractive on EV/resource basis with a DSO resource <50kms from the coast. We rate WDR a SPEC BUY.

• Strong financial position. WDR recently announced a Share
Subscription Agreement with Permat Holdings whereby up Directors Position
to $12m will be raised through a placement of 40m shares Rick Allert Chairman
at $0.30. The placement is viewed as a cornerstone to the Norm Gardner Managing Director
development of the Roper Bar Iron Ore Project. Parallel to Laurence Ackroyd Company Secretary
the placement WDR intends to offer existing shareholders a Graham Bubner Non-Executive Director
one for eight non-renounceable rights issue at $0.30 to raise David Cloke Non-Executive Director
an additional $5.8m. Closing date for the rights issue is May Michael Ashton Non-Executive Director
23rd with funds raised to be concentrated on developing the Phil Lockyer Non-Executive Director
Roper Bar project as well providing working capital for WDR’s
gold, base metals and geothermal projects in the NT. Shareholders Holding (%)
Directors 17.0
• Direct Shipping Ore (DSO) to underpin early cash

flows. The availability of 14.5Mt DSO to WDR is a key benefit
given the potential for early cash flow at an achievable capital
expenditure rate. With a significant capex requirement to Company Statistics & Performance
develop the Gulf Infrastructure Service WDR can spread
capital intensity by operating a low cost DSO operation in Shares on issue (m) 154.7 3mth ADT ($m) 0.233
the formative stages of production. ITM Options (m) 7.2 EV ($m) 54.1
52 week range $0.25-$0.48 Cash est ($m) 1.8
• Gulf Infrastructure Service. The JV between WDR and
SHD to develop the Gulf Infrastructure Services is a regionally
significant step forward in improving the accessibility to 0.50 5000
this emerging province. As it stands WDR and SHD will be
responsible for the development, funding and operation 0.45 4500
of the bulk commodity stockpiling and loading facilities
in the Gulf of Carpentaria. This facility will deliver large 0.40 4000
scale production potential with significant operating cost
Share Price (A$)
0.35 3500
benefits. We see WDR’s close proximity to the coast and
Volume '000
developmental hub as a significant competitive advantage 0.30 3000

over more isolated iron ore players.
0.25 2500
• Attractive on an EV per tonne basis. WDR is trading on an

EV per DSO tonne of A$3.80/t. However based on the current
0.20 2000
total resource and applying a yield of 50% to beneficiate to 0.15 1500

a saleable product WDR is trading on A$0.35/t of product,
0.10 1000
one of the lowest in our suite of iron ore stocks covered. As
WDR demonstrates the viability of the beneficiation project 0.05 500
the potential for a re-rating to the sector average implies
significant upside to WDR’s current equity value. 0.00 0
12 Months
• Metallurgical test work. Current metallurgical test work
has allowed the oolitic hematite to be upgraded to saleable
grade via simple crush-grind-gravity separation circuit. Disclosure: Patersons was lead manager for WDR Resources
Preliminary results have indicated grades ~58% Fe at a Ltd for the placement of 37.5m shares at $0.32/sh in November
2010, which raised $6.45m. Patersons was lead manager and
yield of approximately 50%. WDR is currently investigating
underwriter to the placement of 20.8m shares of a $0.40/sh
the cost benefit of introducing WHIMS or SLon magnetic in November 2009, which raised $8.33m. It received a fee for
separators to further improve product grade and yield. these services.
Figure 1: Key company projects in the Northern Territory
Figure 2: Roper Bar Project and proposed transport corridor
Figure 3: Timeline for the Roper Bar Project
YTC Resources Limited YTC ($0.575)

Imminent copper producer Analyst: Byron Benvie, Simon Tonkin
OUR VIEW
YTC Resources Ltd (YTC) is a gold and base metal exploration and development company focussed on: 1) the Hera Gold Project
and 2) the adjacent Nymagee Copper Joint Venture near the town of Cobar in NSW. YTC acquired these projects from CBH
Resources in September 2009. A DFS study is currently underway focussed on developing an integrated mining and processing
hub to accommodate both of the deposits which are located in close proximity to each other. YTC aims to move to producer
status by 2013. The company is well funded with A$30m in cash on hand to fund its DFS and aggressive exploration programme
at the Nymagee Copper deposit. Recent drilling at the Nymagee Project continues to reveal high grade Cu, as well as Pb-Zn-Ag
mineralisation with a maiden resource expected in August 2011. Based on our estimates we believe that this could approach
150kt Cu and YTC has an existing 560koz Au Eq. resource at Hera. We see a combined value of ~A$137m for these two projects,
which is approximately YTC’s EV. With YTC moving toward achieving producer status and continuing to increase the size of its
resources, their valuation is likely to increase substantially. We therefore rate YTC as a Speculative BUY.

• Hera Gold Project. The project is located 100km south-east of
Cobar and is situated in the Cobar Basin which hosts a series of Directors Position
small to medium-sized sediment hosted base metal deposits, of Wenxiang Gao Chairman
Mr Anthony Wehby Vice Chairman
which four are operating mines (see Figure 1). The central Main
Mr Rimas Kairaitis Director and CEO
Lens extends for approximately 600m along strike represents
Mr Stephen Woodham Non-Executive Director
the bulk of the deposit. The Hera resource presently contains Dr Guoqing Zhang Non-Executive Director
2.18Mt at 0.2% Cu, 2.8% Pb, 3.9% Zn, 4g/t Au and 15.6 g/t Ag Mr Robin Chambers Non-Executive Director
(~560koz Au Eq). An updated resource estimate from a recently Richard Hill Non-Executive Director
completed drilling programme at the Far West Lens is expected Christine Ng Non-Executive Director
by end May 2011. A DFS is underway at Hera to establish an
underground mine which will produce base metals and gold Shareholders Holding (%)
(recoveries >92%). The DFS will also assess the possibility of Yunnan Tin Australia TDK Resources Pty Ltd 15.0
scaling-up the Hera process plant from the 350ktpa to 700ktpa Wonderful Investments Ltd 9.8
to accommodate ores sourced from an integrated Hera-Nymagee Yunnan Tin YTC holdings Pty Ltd 6.0
development. ANZ Nominees Ltd 4.7
Kaymac Nominees Pty Ltd 3.0
• Nymagee Copper Joint Venture (YTC 90%). The property
adjoins immediately north of the Hera Gold Project and includes
J P Morgan Nominees Australia Ltd
Locksley Holdings Pty Ltd
2.5
2.0
the Nymagee Copper Mine which last operated in 1918 and has Smiff Pty Ltd 1.9
seen historical production of 422kt at 5.8% Cu. YTC (operator) B & M Jackson Pty Ltd 1.5
with JV partner CBH Resources (10%), have recently announced
positive results from its ongoing drilling program at Nymagee,
with highlights such as 69m at 1.5% Cu including 19m at 3.0% Company Statistics & Performance
Cu. The mineralisation at Nymagee comprises narrow (true
widths of ~3-5m) steeply dipping Cu-rich and distinct Pb-Zn-Ag Shares on issue (m) 248.2 3mth ADT ($m) 0.77
rich lode structures at depth, and broader widths of shallow ITM Options (m) 7.3 EV ($m) 116.9
Cu-sulfide with open pit potential. Preliminary metallurgical Diluted Market Cap. ($m) 146.9 Debt est ($m) 0.0
testwork on Nymagee ore indicates that +92% recoveries of 52 week range $0.17 - $0.79 Cash est ($m) 30.0
Cu can be achieved. Separate flotation concentrates/circuits will
likely be required for the Cu-rich and Pb-Zn-Ag rich ores.
0.90 4500
• Exploration Upside. We believe further extensions to the
mineralized lenses are likely at the Hera Project. At Nymagee 0.80 4000
the mineralisation remains open at depth and to the north
0.70 3500
and south.
Share Price (A$)
• Mineralisation at Nymagee is similar to CSA mine. The 0.60 3000

Volume '000
Nymagee deposit has many similarities to Glencore’s CSA mine 0.50 2500
(Figure 2). The Nymagee mineralisation appears narrower than
CSA’s but we estimate that YTC could define 150kt contained 0.40 2000
Cu. On this basis we estimate a value of $47m based on our
average EV/t resource for Cu explorers and developers but 0.30 1500
we note this value could increase by as much as 4x once YTC
achieves producer status. We would value the current 560koz 0.20 1000
Au eq. resource at Hera at A$90m (using our average EV/oz
Au resource for Au explorers and developers). This gives a total 0.10 500
A$137m, which is approximately equal to YTC’s EV.
0.00 0
• Catalysts. 1) Maiden resource at Nymagee and Hera DFS in
August 2011. 2) Production expected by January 2013.
12 Months
Figure 1: Regional view showing the location of the Nymagee and Hera projects in the Cobar Basin, as well as surrounding deposits
Figure 2: Comparison of mineralisation at the Nymagee and CSA deposits
ZYL Limited ZYL ($0.23)

Near term, near to port, funded Analyst: Andrew Harrington
OUR VIEW
ZYL is one of our preferred coal exploration companies with a majority stake in Kangwane, an opencut anthracite project in
south Africa. A capital raising of $30m associated with the lodging of a re-compliance prospectus will ensure the company
has sufficient funds for its share of the feasibility study, commercial development and mine construction at the Kangwane
Project. The project has a rail siding with a capacity of 1.2Mt while the railway has spare carrying capacity and access to port
facilities. Some of the coal may be consumed locally as a non-binding MOU with a power company has been signed with a
utility company which is planning on building a modular power station near to Kangwane. The board has extensive operational
experience in African mining including coal. They have appointed SRK Consulting to independently manage the BFS and
Olympic Park to undertake the drilling program at the Kangwane Project which commenced in mid February. We expect that
ZYL will be hitting milestones with new resources, the completion of studies, agreements and permits. The company has
been suspended while it re-complies with the ASX rules to change from a tech company to a resources company. It will be
relisted shortly and we maintain our Speculative Buy recommendation with a price target of $0.40/sh.

• High value product. ZYL’s primary project is Kangwane an
opencut Anthracite operation, adjacent to an existing, profitable Name Position
operating mine. The coal produced, anthracite, has very high Bevan Tarratt Chairman
energy and low moisture and ash. Energy is between 6,000- Dr Eric Lilford Managing Director
6,700kcal/kg. Anthracite also has very high carbon content, Gino D’Anna Executive Director and Company Secretary
burns very cleanly and at a very high temperature. It is priced David Greenwood Non-Executive and Technical Director
in between traditional thermal coal and hard coking coal and is
favoured by the metal refining customers if South Africa. Substantial Shareholders Shares (m) %
Sin-Tang Development 40.9 6.7
• Early 2013 start up. ZYL has plans for Phase 1 production
of 2Mtpa RoM coal and 1.5Mtpa saleable coal. The Capex is
Whiddon Glenn Ross
Clay Fraser John
40.6
35.9
6.7
5.9
expected to total only around $30m. We suspect that following Monti Richard 31.1 5.1
from the MoU for the power station that ZYL will be looking
to a bigger 4Mtpa RoM mine in order to maximise the use of
the available rail infrastructure. Kangwane could also benefit
from the existing power, water, and handling infrastructure
at the adjacent Nkomati mine, which is currently operating Company Statistics & Performance
below capacity.
• Early offtake MoU. A non-binding MoU for off-take with an

International Power Utility has been signed. The company
Shares on Issue (m)
Market Cap. ($m)
332.6
76.5
3mth ADT ($m)
Debt ($m)
0.29
0.0
specialises in the construction and operation of specifically 52 Week Range $0.036 - $0.28 Cash ($m) 6.7
engineered and designed modular power stations whereby the
furnaces and boilers are exclusively designed to accommodate
0.30 20000
the characteristics of high energy coal. The power station will
be built in close proximity, down the rail line from Kangwane.
• 100km from Port. Kangwane has a rail siding, with a

capacity of 1.2Mtpa, in the south-eastern edge of the property
0.25
16000
that is about 100km from the export port of Maputo. It is

Share Price (A$)
0.20
Volume '000
currently in use by the Anthracite mine to south of Kangwane

12000
called Nkomati but only to around 120-300ktpa so there is
plenty of spare capacity. 0.15
• A talented and driven MD. The MD of ZYL is Eric Lilford, who

has more that 20 years of operational experience in African 0.10
8000
mining, including gold, platinum, copper and coal. He was

Mine Overseer for the Rietspruit and Khutula coal mines which 4000
produced over 3Mtpa. He has an impressive track record of 0.05
project feasibility and development work.
• Re-listing expected in May. ZYL has been in a trading halt for

over 2 months at the time of writing due to a number of corporate
0.00
12 Months
0
actions including the lodging of a re-compliance prospectus to

satisfying ASX Listing Rules and requirements. The majority of
these requirements have been satisfied including the successfully Disclosure: Patersons acted as joint lead manager to the
placement of $30m of shares to institutional investors and placement of 150m ZYL shares at $0.20/sh to raise $30m in
consolidation of the existing share registry. It is continuing to April 2011. Patersons was lead manager of the placement of
work with the ASX to satisfy the final conditions and apply for 48.1m ZYL shares at $0.016/sh to raise $0.769m in July 2010.
the re-quotation to the Official List of the ASX. It received fees for these services.
Figure 1: Kangwane Location Map Figure 2: Geological Plan
Figure 3: Depth to Roof Lower Seam Figure 4: Strip Ratio (bcm/t)
Figure 5: Project Timeline
Notes
Notes
Notes
Research
Alex Passmore - Head of Research Phone: (+61 8) 9263 1239 Email: apassmore@psl.com.au
Andrew Quin - Research Strategy Coordinator Phone: (+61 8) 9263 1152 Email: aquin@psl.com.au
Tony Farnham - Economist Phone: (+61 8) 9258 8973 Email: tfarnham@psl.com.au
Metals and Mining

Byron Benvie - Associate Analyst Phone: (+61 8) 9263 1189 Email: bbenvie@psl.com.au
Rhys Bradley - Associate Analyst Phone: (+61 8) 9225 2836 Email: rbradley@psl.com.au
Andrew Harrington - Coal Analyst Phone: (+61 2) 8238 6214 Email: aharrington@psl.com.au
Tim McCormack - Associate Analyst Phone: (+61 8) 9263 1647 Email: tmmcormack@psl.com.au
Simon Tonkin - Senior Resources Analyst Phone: (+61 8) 9225 2816 Email: stonkin@psl.com.au
Matthew Trivett - Research Analyst Phone: (+61 7) 3737 8053 Email: mtrivett@psl.com.au
Gary Watson - Associate Analyst Phone: (+61 8) 9263 1110 Email: gwatson@psl.com.au
Oil and Gas

Scott Simpson - Senior Oil & Gas Analyst Phone: (+61 8) 9263 1679 Email: ssimpson@psl.com.au
Industrials
Jonathan Kriska - REIT Analyst Phone: (+61 2) 8238 6245 Email: jkriska@psl.com.au
Russell Wright - Retail Analyst Phone: (+61 2) 8238 6219 Email: rwright@psl.com.au
Small Cap Industrials

Graeme Carson - Industrial Analyst Phone: (+61 3) 9242 4076 Email: gcarson@psl.com.au
Allan Franklin - Industrial Analyst Phone: (+61 3) 9242 4001 Email: afranklin@psl.com.au
George Galanopoulos - Industrial Analyst Phone: (+61 3) 9242 4172 Email: ggalanopoulos@psl.com.au
David Gibson - Industrial Analyst Phone: (+61 8) 9263 1664 Email: dgibson@psl.com.au
Ben Kakoschke - Industrial Analyst Phone: (+61 3) 9242 4181 Email: bkakoschke@psl.com.au
Quantitative
Mark Barsdell - Quantitative Analyst Phone: (+61 3) 9242 4187 Email: mbarsdell@psl.com.au
Kien Trinh - Quantitative Analyst Phone: (+61 3) 9242 4027 Email: ktrinh@psl.com.au
Institutional Dealing
Phil Schofield Phone: (+61 2) 8238 6223 Email: pschofield@psl.com.au
Michael Brindal Phone: (+61 2) 8238 6274 Email: mbrindal@psl.com.au
Gordon Anderson Phone: (+61 2) 8238 6276 Email: ganderson@psl.com.au
Dan Bahen Phone: (+61 8) 9263 1274 Email: dbahen@psl.com.au
Artie Damaa Phone: (+61 2) 8238 6215 Email: adamaa@psl.com.au
Paul Doherty Phone: (+61 3) 8803 0108 Email: pdoherty@psl.com.au
Trent Foxe Phone: (+61 2) 8238 6265 Email: tfoxe@pls.com.au
Peter Graham Phone: (+61 3) 9242 4129 Email: pgraham@psl.com.au
Chris Kelly Phone: (+61 3) 9242 4078 Email: ckelly@psl.com.au
Jason Lal Phone: (+61 2) 8238 6262 Email: jlal@psl.com.au
Ben McIlvride Phone: (+61 2) 8238 6253 Email: bmcilvride@psl.com.au
Jeremy Nugara Phone: (+61 3) 8803 0166 Email: jnugara@psl.com.au
Trevor Pike Phone: (+61 3) 8803 0110 Email: tpike@psl.com.au
Joe Wang Phone: (+61 8) 9263 1125 Email: jwang@psl.com.au
Rob Willis Phone: (+61 7) 3737 8021 Email: rwillis@psl.com.au
Sandy Wylie Phone: (+61 8) 9263 1232 Email: swylie@psl.com.au
Important Notice: Copyright 2011. The contents contained in this report are owned by Patersons Securities Limited (‘Patersons’) and are protected by the
Copyright Act 1968 and the copyright laws of other countries. The material contained in this report may not be copied, reproduced, republished, posted,
transmitted or distributed in any way without prior written permission from Patersons. Modification of the materials or use of the materials for any other
purpose is a violation of the copyrights and other proprietary rights of Patersons.
Disclaimer: Patersons believes that the information or advice (including any financial product advice) contained in this report has been obtained from
sources that are accurate at the time of issue, but it has not independently checked or verified that information and as such does not warrant its accuracy
or reliability. Except to the extent that liability cannot be excluded, Patersons accepts no liability or responsibility for any direct or indirect loss or damage
caused by any error in or omission from this report. You should make and rely on your own independent inquiries. If not specifically disclosed otherwise,
investors should assume that Patersons is seeking or will seek corporate finance business from the companies disclosed in this report.
Warning: This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is
appropriate to your particular investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek
advice from your adviser, on whether any relevant part of this report is appropriate to your individual financial circumstances and investment objectives.
Disclosure: Patersons, its director and/or employees may earn brokerage, fees, commissions and other benefits as a result of a transaction arising from any
advice mentioned in this report. Patersons as principal, its directors and/or employees and their associates may hold securities in the companies the subject
of this report, as at the date of publication. These interests did not influence Patersons in giving the advice contained in this report. Details of any interests
may be obtained from your adviser. Patersons as principal, its directors and/or employees and their associates may trade in these securities in a manner
which may be contrary to recommendations given by an authorised representative of Patersons to clients. They may sell shares the subject of a general
‘Buy’ recommendation, or buy shares the subject of a general ‘Sell’ recommendation.
Stock recommendations: Investment ratings are a function of Patersons expectation of total return (forecast price appreciation plus dividend yield) within
the next 12 months. The investment ratings are Buy (expected total return of 10% or more), Hold (-10% to +10% total return) and Sell (> 10% negative
total return). In addition we have a Speculative Buy rating covering higher risk stocks that may not be of investment grade due to low market capitalisation,
high debt levels, or significant risks in the business model. Investment ratings are determined at the time of initiation of coverage, or a change in target price.
At other times the expected total return may fall outside of these ranges because of price movements and/or volatility. Such interim deviations from specified
ranges will be permitted but will become subject to review by Research Management. This Document is not to be passed on to any third party without our
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Effective Date: 1 May 2011

Patersons Resources Review May 2011

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Telephone (+61 8) 9263 1111

Explorers and Developers:

OUR TOP PICKS (BUY)

Cockatoo Coal Ltd COK $0.75 Orocobre Ltd ORE $3.95

EQN ▼ SELL BUY Accept Barrick’s offer.

Explorers and Developers

Recovering from floods, will expand production, cheapest coal

Company’s Pilbara operations are set to expand by 3x in the

Nickel growth story in Brazil looking to increase production by

Clearly valued as an explorer when in fact it’s a near term

Significant Australian gold growth story targeting 150,000ozpa

BUY SPECULATIVE BUY

MARKET HAS GAINED SINCE JULY 2010

NAV 1.0x Target Price

PRICE PERFORMANCE % SINCE DECEMBER 2010 RESOURCES REVIEW

1. SRQ/SRL increased by 61% which included a $1.72/sh dividend.

ASX300 Res. (4.4%)

LME Index (3.1%)

AUD Gold (-2.4%)

-75% -50% -25% 0% 25% 50% 75% 100%

Global Economic Outlook

4 Rising stock levels for industrial metals, including copper where

Copper is often considered the “canary indicator” for the metals

5 Impacting on the value of the dollar has been increasing interest

rate differentials. The FOMC has signalled it intends to hold

The pace of Chinese growth and global sovereign debt problems,

Macro economic factors remain the major risk

We continue to watch macro risks closely and remain concerned

Implied mine life (yrs)

Patersons Small Gold Producers Index 0

Resource size (Au Moz)

Bubble size indicates EV ($m). Source: Bloomberg, Company Reports

Bubble size indicates EV ($m). Source: Bloomberg, Company Reports

Figure 8: Average Cu grade vs resource size for Australian copper

5 market from increasingly remote locations, this being primarily

our Nickel Index is up 19%. Equities have outperformed the nickel

come back in line with the nickel price.

companies have outperformed, with the index up 30% over the

BRW MRE 80%

Resource (Contained Ni Eq. Mt)

Bubble size indicates EV. Source: Bloomberg, Company Reports

explorers, thermal coal, and/or stranded deposits on the left of

and exploration ground is now being valued at between A$1-2/t 140

5.00 Source: Bloomberg, UxC

0.00 In Figure 15, we highlight the performance of the PSL uranium

index since uranium price began to move upward in July 2010.

(Figure 14). There will be an extensive review globally of the 440

uranium market in the short to medium term (12-24 months). PEN

Resource (mlb U3O8)

Bubble size indicates EV ($m). Source: Bloomberg, Company Reports

Table 1: Patersons Commodity Price Assumptions (year ending June 30)

Stock Valuation and Recommendations

Investment ratings are a function of Patersons expectation

In valuing our universe of stocks we focus on discounted

Adamus Resources Limited ADU ($0.68)

Multiple growth avenues Analyst: Alex Passmore, Gary Watson

Investment Highlights Investment Summary

• Growth becomes the focus. ADU remains focused on

increasing its 2.1Moz resource inventory with several near

value the residual ounces (2Moz in resources) at A$90/

Adamus Resources Limited $0.68 Year End June 30

Salman 284.1 0.59 A$:US$ 0.89 0.99 1.05 1.00

NPV (nom) @ 5% disc. 0.79 EV:Reserve (A$/oz) 319