Pala Investments An investment company focused on value creation in - PowerPoint PPT Presentation

Pala Investments An investment company focused on value creation in the mining space

Who we are Pala is an investment company focused exclusively on the mining sector, backed by a team of accomplished professionals and a track record of success. Mining sector expertise Track record of success   Pala has a team of accomplished mining industry professionals drawn from Pala was founded in 2006 and, since inception, has invested in 87 companies in 25 countries across six continents. around the world.   The team includes specialists and technical experts with skills in finance, Pala works in partnership to unlock value by: law, consulting, mine engineering, mine planning, metallurgy and geology.  Providing long-term capital for development, expansion and  optimization. Pala uses this diversity of skills to help its partners create value throughout the mining life cycle, from project development and operational turnaround  Providing capability in strategic and corporate development. through to operational management and M&A.  Identifying M&A opportunities and assisting with transactions.  Pala also invests in products, services and technology in the mining sector in  Helping its partners augment their board and management team with both developed and emerging markets. high quality professionals, sourcing skills from its global network.  Deep relationships in the mining, investment and advisory world allow Pala  Planning and executing exits for the benefit of all stakeholders. to assist its partners in developing business connections, raising finance, delivering transactions and strengthening management. Mineral sands product storage – Sierra Rutile, portfolio investment With its experienced team of mining professionals and a strong track record of successful investments, Pala is an 1 ideal partner for mining companies looking to maximize shareholder value.

What we invest in Pala invests in development and production stage mining companies, as well as products and services that serve the mining sector, globally. Mining companies Mining products, services and technology   We consider investments in mining companies where a value catalyst is In addition to primary mining investments, Pala also invests in products, projected within the short to medium term. services and technology for the mining sector. Producing assets – particularly those with expansion or optimization   As investors in products, services and technology, we look for opportunities opportunities. that offer the potential for:  Development stage companies – where cash flow generation is  Organic growth, including geographic expansion and entry into new expected within a modest period of time. markets.  Turnaround situations – Pala partners with troubled, under-  Development of new or disruptive products and technologies. appreciated or over-looked businesses looking to realize their potential.  Growth through M&A.  Pala invests in all commodities and all geographies where value-creation opportunities exist. Specialist underground mine services – Dumas, portfolio investment Pala is focused on opportunities where it can work with its partners to realize value accretion within two years 2 from initial investment.

How we invest Pala is flexible in its approach, investing in equity, debt structures, convertibles, and product streams, globally. Equity Debt structures and product streams   Pala mainly invests in equity, and generally looks for control positions, either Pala invests in a variety of debt structures, including mezzanine instruments, convertibles and debt & warrant packages. alone or with like-minded co-investors.   In equity situations, Pala's partners maximize their leverage to Pala's Such structures are attractive to companies with high-risk, high-reward strengths. projects where conventional equity or debt markets are difficult to access.  Pala’s partners can make use of Pala’s team of professionals on a  range of value-creative projects. Pala is able to be flexible and innovative with the terms of its debt investments, allowing growth projects to be developed and  Pala’s partners can take comfort in Pala’s long -term, fundamentals- optimizations to be implemented, even when economic conditions are based approach to equity investing. unfavorable.  To fully align interests with management teams, Pala looks to incentivize  Pala also invests in royalties and product streams. with rewards strongly levered to performance, including shareholder returns.  Pala provides financing packages linked to future product streams  Pala can deploy equity capital in a wide range of structures, including: from development projects.  Block sales & capital raises.  Pala is also able to acquire existing product streams from producing  Buyouts and tender offers. operations, allowing companies to monetize future cash flows.  Restructurings.  Such transactions provide alternative financing routes to dilutive equity issuances or difficult-to-service debt.  Asset disposals and JVs.  Streaming deals can be highly value-accretive for companies,  Warrants and options. particularly in markets when share prices are weak. Liquid portfolio  In addition to strategic equity, debt, and product streams investments, Pala also has a portfolio of liquid positions.  This liquid portfolio comprises investments in commodities, currencies, equities, fixed income, and derivative structures.  The portfolio allows Pala to hedge its strategic investments, as well as actively trade, according to macro trends affecting the mining world. Pala can invest in a range of structures, in both public and private companies, and across both developed and 3 emerging markets.

Track Record A strong track record of forming partnerships with management teams, boards and shareholders to create long-term value 4

Case study – Executing turnaround Our long-term investment horizon enables us to look through near-term challenges faced by companies, and instead focus on fundamental value. This philosophy has been a key component of Sierra Rutile’s successful turnaround. History Value creation through partnership with Pala  Pala acquired a 30% stake in Sierra Rutile (“SRL”), the Sierra Leonean  Team strengthening – Working with the CEO, Pala augmented SRL’s mineral sands producer in September 2010, subsequently increasing its board and management with industry leaders: holding to 55%.  Charles Entrekin, Director – Former President of Titanium Metals  When Pala first invested, SRL had suffered a series of setbacks: Corp.   Richard Lister, Director – Former CEO of Zemex Corp. Its share price had been languishing near all-time lows for an extended period.  Mike Brown, Director – Former COO of De Beers South Africa.  The company was involved in a dispute with the Government of Sierra  Derek Folmer, Chief Marketing Officer – Former GM of rutile and Leone regarding an outstanding government loan. zircon sales at Rio Tinto.  Its assets had been chronically neglected of investment and  Rebuilding of government relations – Pala re-engaged with the maintenance, and the company was loss-making. government, resolving a dispute and rebuilding SRL’s relationship .  A return to profitability – Pala developed and executed SRL’s turnaround Turnaround of dredge mining operations – Sierra Rutile plan, which was focused on operational improvement, and targeted re- investment in key assets.  Delivery of growth – Pala has driven the evaluation and execution of a series of projects, including the commissioning of Lanti Dry Mining, a new brownfield operation. Now, SRL is constructing its second expansion project, the high-grade Gangama deposit.  A doubling of production – from 63,000tpa in 2010 to 126,000tpa in 2015.  Optimized product marketing – Pala used its commercial expertise to renegotiate legacy sales contracts.  CSR – Pala has enhanced SRL’s contribution to the community, including the implementation of environmental, infrastructure, educational and healthcare projects. During its partnership with Pala, Sierra Rutile has been transformed from a loss-making company to a business 5 that has generated EBITDA in excess of US$100 million p.a.