Strategies for successful financings with commercial lenders

Ted KavanaghDirector, Mining and Metals Americas

February 2009

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Important Notice

The information in this document (this “Document”) is for information purposes only. This Document will form part of a verbal briefing by members of the Standard Bank Group (as defined below) and cannot be relied on or used in isolation therefrom. This Document does not constitute an offer of any kind or a solicitation of an offer and does not imply that information contained herein is correct as of any time subsequent to the date of issue. You are to rely on your own independent appraisal of and investigations into all matters and things contemplated by this Document.Whilst every care has been taken in preparing this Document, no representation, warranty or undertaking (express or implied) is given as to the accuracy, completeness or reasonableness of the information or statements contained herein and no responsibility or liability whatsoever is accepted by Standard Bank Plc, Standard New York Securities, Inc., ZAO Standard Bank or their respective subsidiaries, holding companies or affiliates from time to time (together, the “Standard Bank Group”) for any direct or consequential loss resulting from the use of this Document.All opinions and estimates contained in this Document may be changed after publication at any time without notice. This document has been sent to you for your information only and may not be reproduced or redistributed to any other person. By accepting this document, you agree to be bound by the foregoing limitations.Standard Bank Plc is authorized and regulated in the United Kingdom by the Financial Services Authority (“FSA”) and entered in the FSA’s register (register number 124823). Value Added Tax identification number 625861525. ZAO Standard Bank is authorized and regulated in the Russian Federation by the Central Bank of the Russian Federation (“CBR”) and entered into CBR’s register (register number 3431) and Unified State Register (register number 1027744007246). Standard New York Securities, Inc. is a member of the NASD and SIPC and is not a bank.

Standard Bank Plc, Cannon Bridge House, 25 Dowgate Hill, London EC4R 2SBValue Added Tax identification number 625861525

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Agenda

A little bit about Standard Bank

How the current environment impacts new financings debt availability deal structure project finance

Care and maintenance of your existing financing relationships

Financial health in the international banking industry

What can my bank do for me?

Strategies for a successful credit application

Conclusion

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Standard Bank

Largest bank in SA and Africa Focused on high growth economies outside SA Strongly capitalized Strategic alliance with ICBC Strong liquidity A- rating Low volatility of trading revenues Total assets US$178 billion (June 2008) Present in 37 countries around the world – Africa; Argentina; Brazil

Result: Strongly performing share price relative to peers Ability to tap the markets in market stress Positive press and analyst reports

Aiming to be the “go to” emerging markets bank

5

20 year track record of annual earnings growth >20% and ROE >20%

0

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 HY08

%

ROE track record

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008

Ra

nd

bill

ion

s

Firsthalf Second Half

Earnings Growth

$929m

CAGR (HY2002-HY2008) 20%

Diversified Earnings

36

52

84

Personal & Business Banking

Corporate & Investment BankingCentral and other

Investment management & Life Insurance

Asset Growth

0

200

400

600

800

1000

1200

1400

2002 2003 2004 2005 2006 2007 HY08

Ra

nd b

illio

ns

Closing USD/ZAR = 7.82Average USD/ZAR =7.65(30 June 2008)

ICBC new capital creates short

term drag

Long track record of profitability and shareholders returns...

Source: Standard Bank Annual Financial Report

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How the current environment impacts new financings…

7

Monthly average copper, nickel, gold prices

Source: LME, Kitco

$0

$2,000

$4,000

$6,000

$8,000

$10,000

2004

2005

2006

2007

2008

2009

$0

$200

$400

$600

$800

$1,000

Cu

Ni ÷ 10

Au

8

12-month volatility -- monthly average for copper, nickel, gold

Source: LME, Kitco

0%

100%

200%

300%

400%

2004

2005

2006

2007

2008

2009

Copper

Nickel

Gold

9Canadian project closures…suspensions…slow-downs

SeptemberCampbell Res. – Copper Rand

OctoberUrsa Major – Shakespeare First Nickel – Lockerby

FNX – Levack North American Palladium – Lac des Iles

Breakwater – Langlois, Myra Falls Sherritt – Ft Saskatchewan

Liberty – Redstone, McWatters

NovemberThompson Crk – Endako Merit Mining – Greenwood

Xstrata – Craig, Thayer Lindsley Teck – Trail smelter

Imperial – Mt Polley Western Cdn Coal – Willow Creek

DecemberVale – Copper Cliff Acadian – Scotia

First Metals – Fabie De Beers – Snap Lake

JanuaryHudBay – Chisel North Thompson Creek – Endako

Not to mention projects NOT shut down but limping along

10

Evolution in interest rates – last 36 months

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

3-mo LIBORFed Funds Target RateB rated 10 yr notes

BB rated 10 yr notesBBB rated 10 yr notes

Source: Bloomberg

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Impact on debt availability

Near evaporation in availability of new money through December 2008 on any terms

Increase in margin

Invocation of market disruption clauses – LIBOR is a fiction

MAC clauses?

Heightened scrutiny on usual credit parameters (tenor, coverage ratios, reserve tail) – no more “covenant lite”

Too few new deals to speak of “generic” structural impacts

Banks returning to their homelands, and shrinkage of acceptable geography? (DRC, Argentina)

Availability of equity as a component of overall financing

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What can happen in 6 months?

High River Gold

Start-up problems at gold operations in Burkina Faso and Russia

Multiple facilities and lenders

Dec 2008 -- equity infusion by Severstal

Orezone

$450m Essakane gold project development in Mali

$40m facility from SB as bridge to PF

Falling gold price reduces debt capacity

Dec 2008 -- IAMGOLD acquisition

Equinox

Dec 2006 -- $580m debt facilities for development of $715m Lumwana Cu project in the DRC

January 2008 – 75% construction complete

July 2008 – fire at Lumwana substation and transformer delays Q3 start-up

October 2008 -- $80m supplemental debt facility from SB and SC

Dec 2008 – production of first copper concentrate

Talvivaara

June 2007 – Green light for €450m ($600m) nickel project in Finland

Open pit mining and bio-heapleach recovery

$320m PF facility arranged

Hedging associated with debt facility covers 30% of ’09-’11 production (worth $250m at mid-December)

Sep 2008 – €30 bridge as CPs were met

Oct 2008 – first metal recovery

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Care and maintenance of your existing financing arrangements

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Critical elements of relationship

Be proactive!

Communication

Know your credit agreement

covenants

amendments – the third rail

Pricing

Ancillary business

15Financial health of the international banking industry…

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Bank mergers and reorgs in the last 2 years

Deal Type Date Target Bank Acquiror / Funder

Acquisition Jan-07 HypoVereinsbank UniCredit SpaAcquisition Apr-07 ABN Amro Holding NV Barclays PLCAcquisition Aug-08 Dresdner Bank AG Commerzbank AGAcquisition Oct-08 Wachovia Corp Wells Fargo & CoAcquisition Oct-08 Fortis (International) BNP Paribas

Bailout Oct-08 RBS British GovtBailout Oct-08 UBS Swiss Gov'tBailout Oct-08 Credit Suisse Swiss Gov'tBailout Oct-08 ING Dutch Gov'tBailout Oct-08 Credit Agricole French Gov'tBailout Oct-08 BNP Paribas French Gov'tBailout Oct-08 Societe Generale French Gov'tBailout Nov-08 Citigroup US Gov'tBailout Jan-09 Commerzbank AG German Gov'tSource: Bloomberg, Wikipedia

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Evolving market cap/ranking of selected mining/metals banks

Source: Bloomberg

Market caps ($B) @ start of 2008 and March 2009

Citi

HSBC

ScotiaBarclays

BNP

Standard

JPM

CS

ICBC

-50

0

50

100

150

200

250

300

350

400

450

0 1 2 3 4 5 6 7 8 9 10 11

1

15

165

4321 22

49 57

3

4

19

12

26 41 73

5

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What’s up with the banks?

No one is feeling particularly “healthy”

Laser-like concentration on year-end balance sheet (upside for 2009?)

Re-emphasis on “core” businesses and “core” geographies

Aversion to underwriting as opposed to “take and hold” or club deals

Retreat/absorption by investment banks which had been occasional lenders

19What can my bank do for me…

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…and how should this impact my choice of service provider?

Familiarity with, and access to, various financing options

Working capital and pre-export financing Metal loans and swaps Strategic partners; off-take agreements; sale of royalty

Access to ECAs – EDC, US Ex-Im, ECIC, KfW, Sinosure

Metal trading and hedging

Access to capital markets

Broad advisory capability

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Strategies for a successful credit application

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What is the proper approach

Be realistic Metal prices Production rates, recovery, etc. Hedging User-friendly models Down-size or staged start-up

Be conservative Reserves versus resources Technology

Be cautious Management; directors; reporting Pursue multiple avenues Seek name-brand advisors Access equity when available

Be patient

23Conclusions

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Conclusions

Banks have suffered across the board and in the sector, along with their corporate clients

The party is over with respect to rates and terms – overall relationship profitability is key

Focus on robust projects with solid management/operators

Environment will favour capability and commitment on both sides of the table