2008
This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered
(including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible
transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for
discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan.
Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan.
The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date,
all of which are accordingly subject to change. J.P. Morgan’s opinions and estimates constitute J.P. Morgan’s judgment and should be regarded as
indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or
which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company
or any other entity. J.P. Morgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax
or accounting effects of consummating a transaction. Unless expressly contemplated hereby, the information in this presentation does not take into
account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and
other effects.
Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all
persons, without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the
transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such
tax treatment and tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company
by J.P. Morgan.
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C A P I T A L M A R K E T S U P D A T E
benefit investors.
IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters
included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing
or recommendation by anyone not affiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S.
tax-related penalties.
J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan
arranging, financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities Inc., J.P. Morgan plc,
J.P. Morgan Securities Ltd. and the appropriately licensed subsidiaries of JPMorgan Chase & Co. in Asia-Pacific, and lending, derivatives and other
commercial banking activities are performed by JPMorgan Chase Bank, N.A. J.P. Morgan deal team members may be employees of any of the foregoing
entities.
This presentation does not constitute a commitment by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange
credit or to provide any other services.
J.P. Morgan was ranked No. 1 in most business areas in 2008—the
first bank in the world to achieve this—ever
Market
Market capitalization
capitalization of
of bulge
bulge bracket J.P.
J.P. Morgan
Morgan received
received the
the most
most awards Recognition
bracket awards Recognition from
from the
the top
top
investment banks (US$bn) in 2008 financial publications
investment banks (US$bn) in 2008 financial publications
Market cap. (US$bn)
October 31, 2007 J.P.Morgan 13
December 31, 2008 BNP Paribas 6
158 HSBC 4
118 Barclays 2 International
Financing Review
International
Financing Review
Citi 2
214 Credit Suisse 2 No. 1 No. 1 No. 1
“Never before in the long history of IFR awards has one bank been so dominant, in what is our equivalent of a ‘Titanic at the Oscars’
Bank of the Year moment, J.P. Morgan has won a significant proportion of our awards this year”
2008
“J.P. Morgan has the chance to build a lead over its rivals that might prove unassailable. The bank has manoeuvred itself into this
position not just because of the bullets it dodged, but also because of the business it built over the last decade”
“More than a survivor: Thanks to its belief in old-fashioned banking virtues, J.P. Morgan is in a position to become the pre-
eminent financial institution of the first half of the 21st century. It dodged most of the bullets of the financial crisis by a
relentless focus on careful banking and has also built a global investment banking deal machine that is the envy of its rivals. J.P.
Morgan is IFR’s Bank of the Year.”
1
J.P. Morgan has now led 12 of Europe’s 14 largest
mining IPOs ever
Primary
Primary mining
mining listings
listings on
on the
the London
London Stock
Stock Exchange
Exchange ($mm)
($mm)
3,042
2,505
1,770
1,589
1,425
1,369
873
653 644 594
454 450 440 418
C A P I T A L M A R K E T S U P D A T E
ENRC NWR Fresnillo Billiton Xstrata Kazakhmys Vedanta Gem Anglo Hochschild KGHM Ferrexpo Nikanor Talvivaara
Diamonds American P olska
M iedz
Led by
JPM/
JPMC:
2007 2008 2008 1997 2002 2005 2003 2007 1999 2006 1997 2007 2006 2007
Source: Dealogic
2
J.P. Morgan—consistently the top bookrunner for EMEA Metals
and Mining capital raisings
Placing
Initial Public Offering Placing and re-admission Placing
to AIM
Sole Bookrunner, Placing Sole Bookrunner, Joint
andequity—linked
Joint Bookrunner Joint Bookrunner Agent & Corporate Broker Lead Manager &
& Joint Broker Corporate Broker
Initial Public offering Placing Initial Public Offering Placing of shares &
Financial Adviser, Sole warrants
Sponsor, Global Sole Financial Adviser,
UKequity
Sponsor, Global
C A P I T A L M A R K E T S U P D A T E
3
… as we have been for as long as we can remember
& Broker
Joint Bookrunner Sole Bookrunner
equity—linkedunderwriting
2003
2003
July 2005 June 2005 May 2005 March 2005
US$40m US$3bn US$34m US$202m
Placing
Initial Public Offering Global Coordinator, Follow-on
Sole Bookrunner Sole Bookrunner, Sponsor &
& Lead Manager Co-Manager Lead Manager Joint Bookrunner
10
10 years
years January 2005 November 2004 June 2004 June 2004
US$114m US$120m US$205m US$205m
equityand
UKequity
Secondary Placing of
Bought Deal Accelerated Bookbuilding AngloGold Ashanti shares
C A P I T A L M A R K E T S U P D A T E
Follow-on Offering
Joint Bookrunner & Joint Joint Bookrunner Joint Bookrunner
Lead Manager Joint Bookrunner
UK
15
15 years
years May 2004
US$270m
December 2003
US$875m
November 2003
US$224m
November 2003
US$1,060m
4
A large number of corporates are raising new equity as insurance
against an unpredictable macro environment
Review of EMEA equity issuance market Equity offerings by type (€bn)
Review of EMEA equity issuance market Equity offerings by type (€bn)
divest some of their holdings which could bring IPOs back to the
forefront in the second half of the year Equity offerings by sector
Equity offerings by sector
Corporates are increasingly starting to look at M&A driven by 2008 Oil&Gas: 2% Electronics: 1% 2009 YTD Oil & Gas: 1%
Electronics: 1% Other: 1%
Real Estate: 2% Other: 5%
Machinery: 1%
cheap valuations and will look at raising equity Construction: 2%
Transportation: 2%
Mining: 3% Construction: 5%
Drivers of equity issuance volumes will likely continue to be: Energy: 4% Real Estate: 5%
Telecom & Media: 6% Energy: 6%
Recapitalizations are expected to continue, with more
Consumer &
Metal: 2%
corporate issuers Healthcare: 12%
Transportation: 2%
Possible sell downs of non-core stakes to raise cash Financials: 62% Financials: 65%
Mining: 7%
Source: Dealogic, J.P. Morgan Source: Dealogic, IFR and Bloomberg as of April 14, 2009
5
Emerging signs of stabilisation in equity markets have
started to show, although too early to call a recovery
Market
Market performance
performance last
last 12
12 months
months 2008
2008 overview
overview
Rebased to 100 FTSE 100 Volume (bn) At the start of 2008, 2009 had been forecast as a year of recovery for the global
120 6.0 economy, however now consensus is for a global contraction of c.1.5%
UK and US Equity markets ended 2008 30—40% down. The FTSE 100 was down
100
4.0 31.3%—the worst year on record and characterised by:
80 Knock on impact of US sub prime to all sectors globally
2.0 Bankruptcy of Lehman Brothers
60
Significant GDP downgrades
40 0.0 Forced deleveraging by corporates and hedge funds
01-May-08 01-Aug-08 01-Nov-08 01-Feb-09 01-May-09 Unprecedented market volatility and trading volumes
May-06
Jun-06
Aug-06
Nov-06
Jan-07
Feb-07
Apr-07
Jun-07
Oct-07
Dec-07
Jan-08
Feb-08
Mar-08
Jun-08
Aug-08
Nov-08
Dec-08
Jan-09
Feb-09
Apr-09
Apr-06
Jul-06
Oct-06
Dec-06
Mar-07
May-07
Jul-07
Aug-07
Nov-07
Apr-08
May-08
Oct-08
Mar-09
Jul-08
Sep-07
Sep-06
Sep-08
6
Project development is financed through number of different
alternatives
7
Financing alternatives are dictated by mine lifecycle
Indicative
Indicative portfolio
portfolio lifecycle
lifecycle
Mezzanine
Value
Seed Development projects
Capital Public Equity Operating assets
100%
90%
75 Expansion
% Extend
reserve base
50%
Bonds/Project Loans
25%
C A P I T A L M A R K E T S U P D A T E
A producing mine will be well positioned to access the global financing markets
8
C A P I T A L M A R K E T S U P D A T E
The financing spectrum available to a mining company
9
Peter Hambro Mining merger with Aricom and cash-box placing created
regional mining industry leader and strengthened balance sheet
5 & 6 February 2009 Transaction
Transaction highlights
highlights
No. 1 bank
PHM has announced agreement of terms for the recommended merger of PHM
and Aricom to create a mining industry leader in the Far East of Russia with EMEA
operations in both gold and iron ore equities
Merger gives PHM access to Aricom cash to support near term debt obligations Russian
PHM’s production growth profile and cash flows support iron ore asset equities
Financial Advisor & Sole Bookrunner development when the commodity cycle recovers Metals and
Combined market capitalisation of £789m / $1,147m, implying current mining
equities
Key theoretical rank #54 in the FTSE 250
Key transaction
transaction statistics
statistics The Company has simultaneously announced its immediate intention to move
Metals and
mining
the enlarged group to the Main Board of the LSE research
Exchange ratio range of 15.77x—17.14x announced on 5 February prior to final
agreement at 16.0x announced on 6 February
Implies a price of 30.9p per Aricom share based on PHM previous night’s close
and 24.9p on undisturbed PHM price (8 January)
Irrevocable undertakings received from Aricom Directors for 9.4%
Cash box placing completed on 5 February
Upsized from £55m target to raise £72m by issuing 16m shares at £4.50,
representing 19.7% of the current ordinary share capital of PHM (pre-merger)
Priority given to existing institutional shareholders
Equity placing proceeds used to repurchase $87m of notional Gold Equivalent
Exchangeable Bonds (“GEEx”)
Reduces the exposure to short term obligations
GEEx purchased at 95% of notional plus accrued interest
Following the merger, the enlarged group has a pro forma net cash balance
C A P I T A L M A R K E T S U P D A T E
Marketing highlights
Marketing highlights
Transaction highlights JPMorgan Cazenove’s ability to offer and combine full
range of investment banking services
M&A advisor to PHM
Cash box placing structure and AIM listing allowed equity issuance >10% of
share capital without need for additional documentation
Transaction was pre-marketed to ensure existing shareholders were
comfortable with proposed transaction structure
Upsized transaction 2.3x oversubscribed following positive reaction to fully
covered book prior to launch, which allowed books to close at 09:30
Acted as sole agent in the repurchase of the GEEx for PHM
Risk management products
10
Gem Diamonds successfully raised $107m through a Firm Placing to
weather a challenging diamond industry environment
J.P. Morgan Cazenove acted as Sole Bookrunner, Financial Adviser and Sponsor No. 1 bank
Transaction
£75m (c.$107m) 1 April 2009 Transaction highlights
highlights EMEA
equities
Gem Diamonds prepared for a fully pre-emptive equity offer Russian
equities
Use of proceeds was balance sheet repair: Metals and
Repay debt and fund working capital mining
Sole Sponsor, Financial Adviser and Bookrunner equities
Concentration and stability of register enabled dialogue with >85% of Metals and
Transaction
Transaction terms
terms register over 2 day pre-marketing period
mining
research
Successful marketing of deal structure and use of proceeds complemented management action plan
Very strong support from existing shareholders
Several smaller holders took opportunity to significantly increase exposure
Preferential (and minimum pro-rata) allocation to existing shareholders in the Firm Placing
Capital raise combined with clear cost cutting and downside protection plan
11
May 2008
received by investors
Issuer: New World Resources NV
Cazenove research met 178 investors in one on ones and groups
Issuer’s industry: Mining & Metals
Management met 439 investors in 3 teams in London, Europe and US
Gross proceeds: £1,100m/€1,407m/$2,178m
83m shares Strong early demand with little price sensitivity from investors drove
69.5m secondary shares (£921m/€1,178m/$1,824m) the decision to accelerate the bookbuild
13.5m primary shares (£179m/€229m/$ 354m) Priced at very top of £10.75—13.25 price range and was multiple times
Greenshoe: c.15%; £165m/€211m/$327m oversubscribed
12.5m secondary shares (exercised on 9 May 2008) New World Resources made a strong debut on the London Stock
Proceeds post-shoe: £1,265m/€1,618m/$2,505m Exchange
95.5m shares Closed at 1425p pence on the first day of trading, up 7.6% with 34
Market cap: £3,495m/€4,470m/$6,920m million shares being traded
C A P I T A L M A R K E T S U P D A T E
12
August 2008
Sole Placing Agent Plan to develop to a 70 Mtpa iron ore producer and exporter supplying
the global steel industry
Transaction summary Staged development plan to ramp up production and utilise cash
Transaction summary
flow at each stage
Date of 1st close: 9 July 2008
Date of 2nd close: 6 August 2008 Management team with experience in Rio Tinto, BHP Billiton, Vale,
our research department. For further information, please speak to your usual JPMorgan Cazenove contact.
Transaction demonstrates JPMorgan Cazenove’s ability to develop long Use of proceeds for development of Brazilian assets, resource drilling,
term relationships by providing solutions for early stage companies acquisition of assets, acquisition and development of infrastructure
13
Polo Resources placing of £43m of new shares
intended as a recommendation or an offer or solicitation for the purchase or sale of any security. No representation or warranty is made with respect to the accuracy
or completeness of the information in this document, and no obligation is undertaken to update it. This document is not investment research nor is it the product of
Confidential - not for onward distribution to any person. The securities described in this document have been sold. This document is for information only and is not
Date:
Polo has 14 coal, 18 uranium and one iron ore licence in Mongolia—close to
Chinese border and rail link
our research department. For further information, please speak to your usual JPMorgan Cazenove contact.
Issuer:
production and to make strategic acquisitions in the global coal sector
Stock
Stock performance
performance
Polo Resources 122% FTSE AIM All share (11)%
Caledon 57% GCM 36%
Issuer’s industry:
15
Suspended from AIM¹
C A P I T A L M A R K E T S U P D A T E
12
6
“We are very pleased to announce that we have raised £43.4m. The funds will also
Listing
enable use to invest in our Mongolian exploration assets to bring these into 3
production on an accelerated development programme”
Stephens Dattels, Executive Chairman Sep-07 Oct-07 Nov-07 Dec-07 Feb-08 Mar-08
Note: Rebased to Polo Resources
¹ Reverse takeover-listing Rules suspension
JPMorgan Cazenove successfully raised £43.4m for Polo (equal to 43% of the market cap.)
Offer structure
in difficult market conditions
14
The £228m IPO of Ferrexpo is the first IPO of a Ukrainian
company on the London Stock Exchange
Transaction summary £228m ($450m) June 2007
Transaction summary
Deal
Deal highlights
highlights
Ferrexpo’s Poltava mine is one of the world's largest producing
iron ore resources
15
The €302.5m IPO of Talvivaara has given the London Stock
Exchange its first pure play nickel miner
intended as a recommendation or an offer or solicitation for the purchase or sale of any security. No representation or warranty is made with respect to the accuracy
or completeness of the information in this document, and no obligation is undertaken to update it. This document is not investment research nor is it the product of
Confidential - not for onward distribution to any person. The securities described in this document have been sold. This document is for information only and is not
Deal highlights
Deal highlights
Deal upsized from €275m to €302.5m due to strong demand during the bookbuild process by
tier 1 investors
our research department. For further information, please speak to your usual JPMorgan Cazenove contact.
Access to public equity markets key to successfully developing the Talvivaara mining project
Pre-IPO support from strategic investors (Norilsk Nickel, Outokumpu, and Metso Minerals) also
important
Demand built steadily throughout the bookbuilding period with sensitivity towards the higher
C A P I T A L M A R K E T S U P D A T E
Talvivaara made a strong debut on the London Stock Exchange, closing at 269 pence on
the first day of trading, up 7.6% with 16.8 million shares being traded
JPMorgan Cazenove traded 13.0 million shares, representing an impressive 77% of the
secondary market trading
Following a €33 million pre-IPO convertible bond issued through JPMorgan in October 2006 and continued
support on debt financing, Talvivaara’s IPO further demonstrated JPMorgan Cazenove’s ability to secure
funding for attractive development stories and deliver a full product spectrum
Confidential - not for onward distribution to any person. The securities described in this document have been sold. This document is for information only and is not intended as a
recommendation or an offer or solicitation for the purchase or sale of any security. No representation or warranty is made with respect to the accuracy or completeness of the
information in this document, and no obligation is undertaken to update it. This document is not investment research nor is it the product of our research department. For further
information, please speak to your usual JPMorgan Cazenove contact.
16
The successful $594 million IPO of Hochschild Mining plc is the
first major listing and capital raising for a precious metals
intended as a recommendation or an offer or solicitation for the purchase or sale of any security. No representation or warranty is made with respect to the accuracy
or completeness of the information in this document, and no obligation is undertaken to update it. This document is not investment research nor is it the product of
Confidential - not for onward distribution to any person. The securities described in this document have been sold. This document is for information only and is not
The
The largest
largest mining
mining IPO
IPO in
in 2006
2006
This transaction represents the 1st sizeable Latin American business which
has selected London at its primary listing location
the UK, the US, Canada and Continental Europe gaining notable credit for
its low cash cost profile, proven track record of production growth and
reserve replacement, long dated experience in underground Latin
American mining having been in operation for over 100 years and
significant growth opportunities
17
The successful $1.37 billion IPO of Kazakhmys is the first
full UK listing of a major business from the CIS
Transaction
Transaction summary
summary £761m (US$1,370m) October 2005
First LSE main board listing of a major business from the CIS
First LSE main board listing of a major business from the CIS
Confidential - not for onward distribution to any person. The securities described in this document have been sold. This document is for information only and is not intended as a
recommendation or an offer or solicitation for the purchase or sale of any security. No representation or warranty is made with respect to the accuracy or completeness of the
information in this document, and no obligation is undertaken to update it. This document is not investment research nor is it the product of our research department. For further
information, please speak to your usual JPMorgan Cazenove contact.
18