Asia Mining Club – Hong Kong Entering a New Era for Resources in Asia 27 May 2010 Owen Hegarty Executive Vice Chairman G-Resources, Executive Vice Chairman CST Mining Group, Chairman Tigers Realm Minerals, Director Fortescue Metals, Director Range River Gold, Director of the AUSIMM, Member SAMPEG
Introduction Minerals demand remains on an upward trajectory Minerals supply remains under pressure but Asia has great endowment Hong Kong capital market and the HKEx Asia’s circle of growth and prosperity Growing world-class businesses: G-Resources, CST Minerals Group & Tigers Realm Minerals 2
China remains the major driver of commodities demand with India and others to follow ► World to continue in a long period GDP real growth rate 2009 by country of economic expansion ► China still the main game ► Traditional markets of US, Japan, Europe still important ► But emerging markets including India and Indonesia are the future China’s GQ – Growth Quadrella GDP 2009 and 2050 Forecasts Car Ownership Projections 1. Accelerating consumption Car Ownership 900 from growing middle class (millions) 2. A metal intensive stage of 600 economic development 300 3. Largest urban migration in world history 0 4. Massive infrastructure 2006 2018 2030 2042 development India China Airports Highways Ports Railways Water Subways Source: IMF;Goldman Sachs; CIA World Fact Book; Macquarie research; ICSG; The Balloch Group; Beijing Traffic Management Bureau 3
Supply- still under pressure Supply will be running to catch up FMG - a great example More of them required Exploration needs to be encouraged Asia is uniquely positioned Geopolitically Technically Financially Some structural challenges Physical infrastructure Regulatory infrastructure Sovereign risk issues 4
Copper - Red gold, powering the world Asia consumes 51% of world copper production but attracts just 4% of global exploration spend Exploration Consumption Smelting Mining 51% 15% 41% 4% Asia World Copper Supply / Demand Forecast 27,000 ► Whilst copper demand grows 25,000 rapidly, supply growth remains Copper (Kt) 23,000 modest at best and can’t match 21,000 Asia and the worlds’ needs 19,000 17,000 ► The world needs one new 15,000 Escondida each year to keep 13,000 up with demand growth Refined Production (Kt) Consumption demand (Kt) Source: ICSG; Brook Hunt; Citi 5
Asia – inherent prospectivity ► Although exploration expenditures have grown, the amount of metal found continues to decline ► Inherent endowment for Au & Cu-Au resources in the SE Asia-SW Pacific modern plate margins is among the greatest in the world ► Asia remains substantially underexplored compared to many other regions ► Opportunities are provided by the combination of endowment and relative immaturity of exploration Global discovery rates - in this example gold - are Asia’s mineral belts are among Moz falling even as and exploration expenditures rise the world’s most prospective Expenditures (2009 US$B) (E) Source: MinEx Consulting 6
Hong Kong Capital Markets and the HKEx Hong Kong Stock Exchange - Carefully working towards a world competitive Stock Exchange for mining and exploration companies ► HKEx now recognised as world IPO capital with US$22.7bn raised via 71 IPOs in the past 12 months ► HKEx is growing at a faster pace than its developed peers ► Hang Seng 5 year growth 97.8% ► Tokyo Stock Exchange (1st section) declined 42.7% in 5 years ► ASX 5 year growth 17.3% ► Major companies like Rusal attracted by unparalleled access to capital ► However only 51 mining companies on the HKEx versus 682 on the ASX ► In November 2009 the HKEx sought responses to a questionnaire on listing rules on eligibility for mining and exploration companies ► Consequent changes to listing rules to take effect on 3 June 2010 ► Significant number of changes to encourage mining and oil and gas companies with regulations similar to ASX and TSX such as requirements for Competent Person's Reports ► However early stage exploration companies are still excluded ► The door has been left ajar with the HKEx saying they may be listed "once the market is more mature” Source: Morgan Stanley 7
Asia’s circle of growth and prosperity Prospectivity, people Demand and technology Hong Kong Supply Capital 8
G-Resources Overview ► G-Resources: Is an Asia/Pacific gold company based and listed in Hong Kong Tianshan Mineral Belt Owns the Martabe gold and silver project in North Sumatra Is looking to grow an Asia Pacific focused world class gold company by: Hong Kong Headquarters Building Martabe to time, budget and quality Organic growth from increases in Martabe Reserves and Resources and through SE Asian Mineral Belt discovery on the large Martabe licence area Martabe Acquisition and development of other quality Jakarta office projects or producing assets in Asia, Australasia and the Pacific Region Leveraging off management’s regional gold and base metals experience and knowledge Martabe production commencing 2011 will be Melbourne office 250koz/a gold and 2.5Moz/a silver Asia hosts some of the world’s great gold deposits Is targeting 1 million ounces per annum gold in the Tianshan and SE Asian mineral belts production within 5 years 9
G-Resources Corporate Overview ► Hong Kong based and listed G-Resources Group Limited ► Market capitalisation 1 of US$810m / HK$6,300m ► 14.1 billion shares on issue ► 13 billion shares issued in July 2009 at HK35c Other Potential Martabe Project Gold Projects raising US$587m to: Purchase Martabe for US$220m G-Resources (HK1051) Share Price Complete the project development 0.8 HK$ Provide funds for exploration and business 0.7 development 0.6 ► Cash at end 2009 of US$350 million 0.5 ► Top 20 shareholders include major international 0.4 resource funds and Hong Kong and Mainland China 0.3 institutions and tycoons 0.2 ► Management have shares and options up to 10% of capital Notes: 1. Share price as of 23 May 2010 of HK$ 0.45 and TSO of 14.1Bn 10
Martabe Overview ► The Martabe Project is a world class gold and silver project located in North Sumatra Province, Indonesia Discovered some 10 years ago 7.4 million ounces of gold equivalent 1 resources 6 known deposits within a 5 x 6km area with Purnama the largest so far Part of a large-scale mineralised district which has the potential to host further gold and gold-copper deposits ► Fully permitted under a sixth generation Contract of Work ► Excellent location ► Significant value accretion in train Uluala Hulu 80koz Au Ramba Joring / East 1.2Moz Au, 5.2Moz Ag Purnama- Pit 1 Barani 4.5Moz Au, 58.5Moz Ag 660koz Au Martabe Camp Notes: 1. Gold equivalent calculated as 70g/t Ag being equal to 1g/t Au 11
Strong Gold Price Outlook Gold Historical & Forward Price Why Gold? ► Gold is: a commodity, a currency, a store of value, a hedge US$ / oz against inflation and geopolitical and financial uncertainty 1,300 1,271 1,164 1,196 1,226 ► Supply fundamentals: 1,200 Mine production provides majority of gold supply 1,100 Declining mine production expected to continue as easy-to- 1,000 900 mine and easy-to-process ore is depleted 10-15+ years from discovery to project completion 800 ► Demand fundamentals: 700 Investment demand the primary driver in 2010 due to 600 500 inflationary fears and risk aversion Growing national reserve demand 400 Jewelry demand increasingly bolstered by consumers in 300 Jan-04 Jun-04 Nov-04 Apr-05 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12 China where demand increased 6% in H1 2009 Spot Forward Source: Bloomberg as of 4 May 2010 Source: GFMS; World Gold Council 2Q 2009 Update Demand: China and India underweight gold Supply: Declining mine production and discovery rates 4,500 1,000 Gold - Percentage of Total Foreign Reserves Gold - Tonnes 900 4,000 United States 8,134 800 Gold Price US$/oz 3,500 Germany 3,408 700 3,000 France 2,435 600 2,500 Switzerland 1,040 Tonnes 500 2,000 United Kingdom 400 310 1,500 300 Australia 80 1,000 200 India 358 500 100 Japan 765 0 0 China 1,054 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e 0 20 40 60 80 Total Mine Production Official Sector Sales % Scrap Gold Avg Gold Price US$ Source: GFMS Source: World Gold Council 3Q 2009 12
CST - Mining Group ► Listed on Hong Kong Stock Exchange (HK0985) ► Current Market capitalisation of ~ US$200M Mining Group ► Targeting copper production of 250,000t/a in the medium term ► Active acquisition of quality strategic resource projects Investments and Cash Copper Growth (including 9% in Chariot Resources including Macobre Copper Strategy G-Resources) Project, Peru Lady Annie Copper Project, Australia ► Presently raising US$1bn in equity Macobre Copper ► Experienced Board and management in resources Project, Peru (70%) and corporate finance Lady Annie Project, Australia (100%) 13
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