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Capital Investment Partners ABN 37 110 468 589; AFSL 292416

MINING BOOKSEPTEMBER 2008

Volume 1 • Issue 2

the

CAPITAL INVESTMENT PARTNERS

THE MINING BOOK | VOLUME 1 | ISSUE 2 | SEPTEMBER 2008

EQUITIES RESEARCH | Capital Investment Partners 1

CONTENTS

About CIP 2

Executive Summary 4

Company Highlights 5

Thermal Coal Background 6

Thermal Coal Industry Overview 9

Iron Ore Background 16

Iron Ore Industry Overview 18

Bauxite Overview 24

Freight Overview 29

Golden West Resources Ltd 30

Sundance Resources Ltd 34

Brockman Resources Ltd 40

Equatorial Coal Ltd 44

Comdek Ltd 48

Bauxite Resources Ltd 52

Tiger Resources Ltd 58

Carnavale Resources Ltd 64

Industrial Minerals Corporation Ltd 66

Corporate Directory 72

EQUITIES RESEARCH | Capital Investment Partners2

ABOUT CAPITAL INVESTMENT PARTNERS

Capital Investment Partners (CIP) was established to provide specifi c corporate advisory services to Australian based companies.

The company was founded and based upon a relatively simple notion that investment bankers should be in the business of providing value-added, customised solutions to clients’ capital markets needs ̶ not in the business of “selling” fi nancial products on a high volume, one-size-fi ts-all basis.

CIP is designed to allocate capital towards business opportunities that they might otherwise not participate in. We believe that there are a great number of opportunities that exist in the Australian market that, given the right guidance, can not only provide an excellent return from an initial investment, but can also deliver long term successful relationships.

SENIOR MANAGEMENT GAVIN ARGYLEManaging Director

Mr. Gavin Argyle has over 15 years experience in investment banking and stock broking in Australia, including initiating, managing and completing share placements and initial public off erings for more than 35 companies. Prior to investment banking, Gavin was a Senior Staff member at Western Mining Corporation Limited. He has served on the board of Australian and US listed and private companies in executive and non-executive positions. He is currently a Non-Executive Director of ASX listed Lindian Resources Limited and Managing Director of Capital Investment Partners Pty Limited. His qualifi cations include a Bachelor of Commerce from the University of Western Australia and an MBA from the Wharton Business School at the University of Pennsylvania.

CARL COWARDGeneral Manager - Corporate Finance

Carl has been with CIP since its inception in mid 2005 and has had hands on experience with the development and progression of over 15 of CIP’s transactions in the mining and industrial sector.

Carl brings international experience to CIP having lived and worked in Europe and the USA. Carl holds a Bachelor of Commerce from Curtin University of Technology and is currently completing his Masters of Applied Finance and Investments at FINSIA.


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RESEARCH TEAM

ANASTASIOS ARIMAAnalyst

Anastasios joined CIP in 2007 as a resources analyst and is part of the corporate due diligence of all of CIP’s mining transactions. Anastasios has a strong understanding of the technical and fi nancial requirements of progressing resource projects from scoping study into production. Anastasios is responsible for the preparation of CIP’s Mining Book. Anastasios has previously worked in the hydrocarbons division at WorleyParsons Limited and at CBH Limited in its GrainPool division. Anastasios was part of the winning WA team in the 2007 UBS Investment Banking Challenge.

Anastasios has completed the requirements for a Bachelor of Commerce (Investment Finance, Corporate Finance & Financial Accounting) from UWA and will shortly complete his Bachelor of Engineering (Off shore Engineering and Naval Architecture) from UWA.

MING SUAnalyst

Ming began as an Intern at Capital Investment Partners in 2006 before joining the fi rm on a full-time basis in 2007. Prior to joining the fi rm, Ming completed an internship with Ernst & Young in their Entrepreneurial Growth Markets division as well as work experience with a number of boutique accounting fi rms.

Ming studied at the University of Western Australia where he graduated with a Bachelor of Commerce (majoring in Quantitative Finance, Corporate Finance and Financial Accounting) and a Bachelors of Arts (majoring in Mathematics and Statistics). During his undergraduate studies, Ming studied abroad at the University of Pennsylvania undertaking studies from the Wharton School and the College of Arts & Sciences. He was also part of the winning WA team in the 2007 UBS Investment Banking Challenge. Ming is currently pursuing his Chartered Financial Analyst designation.

EDDIE KINGAnalyst

Eddie is an Analyst with Capital Investment Partners. Prior to joining the fi rm, Eddie worked as a consulting intern with SRK Consulting on various mining projects. Eddie also completed a number of remote placements while studying at University at world-class mining sites, including BHP Billiton Iron Ore’s Pilbara Operations, Newmont Australia’s Gold Operations in the Northern Territory and WMC Resources’ Leinster Nickel Operations.

Eddie holds a Bachelor of Commerce (Majoring in Corporate and Investment Finance) and a Bachelor of Engineering (Mining Systems, Honours) from the University of Western Australia. In addition to his study, Eddie was elected in 2007 by his peers to the role of President of the UWA Australian Institute of Mining and Metallurgy student chapter. Eddie has continued his involvement with the Institute and now serves as a board member of the Perth Branch.

LEIF ANDREASSEN Analyst

Leif Andreassen graduated Suma Cum Laude from Arizona State University where he received his Bachelor of Science degree from the W.P. Carey School of Business and the Barrett Honors College, majoring in Finance and Computer Information Systems with a certifi cate in International Business. Leif was elected into the Investment Banking Industry Scholars program in the W.P. Carey School where he had the opportunity to interact and build relationships with individuals working in various divisions of Investment Banks throughout the United States.


EXECUTIVE SUMMARYMarkets in both Australia and throughout the world have suff ered signifi cant losses that can be attributed to the US, and now global, credit shortage and appear to relate quite strongly to an apparently receding US economy. The ASX Metals and Mining Index has dropped more than 15% since the last issue of our Mining Book, likely due to both negative economic and commodity price outlooks. The troubles surrounding US banks have spread globally and we believe this has contributed strongly to the views of Australian and global investors.

Although many commodity companies have suff ered due to factors relating to bank fi nancing (particularly those at the feasibility stage) and risk perception and certain commodity prices have fallen, bulk commodity prices have remained strong. Considering the turbulence in the markets, coal and iron ore prices have maintained a stable upwards trend, reaching levels near or at record highs. Australian iron ore prices settled, on average, 85% above prices last year and Newcastle thermal coal spot prices re just over $1 0 per tonne. As we continue our coverage of bauxite 6acompanies, we have added an overview of the bauxite market to this issue of our Mining Book and note that bauxite is currently selling at a record spot price of around $70 per tonne.

Performance of the companies covered in our last issue was above that of the industry average as indicated by the ASX Metals and Mining index, albeit the short time period of coverage. Our stocks are chosen as long-term investments, and as such the performance of one quarter will not accurately refl ect the long-term growth we believe to be present in the chosen companies. We will continue to selectively include companies for current and future issues of the Mining Book that we believe have the potential for signifi cant growth and the ability to outperform market standards.

Figure 1: CIP Outperforms Metals and Mining Index since May 9, 2008

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Metals and Mining CIP Average

SOURCE CIP Research


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Company Initiation Price Return Highlights

Golden West Resources (GWR)

$1.76 13.6%

GWR has secured off take agreements and placements totalling $29M with two Asian companies, Valin (partly owned by Mittal) and Yijian. GWR has upgraded their Inferred Resource by 38% to 119Mt grading 59% Fe. Appointed experienced iron ore executive David Rose (ex-Rio Tinto) as CEO.

Sundance Resources (SDL)

$0.225 -4.4%SDL announced an initial JORC compliant Inferred Resource of 1.2Bt of itabirite grading 38% Fe and low phosphorous. SDL also upgraded its DSO Inferred Resource of hematite to 200Mt grading 60.3% Fe.

Brockman Resources(BRM)

$2.92 -49.0%

BRM has recently upgraded its world-class deposit by 40% to 1.6Bt of iron ore hematite resource, of which +950Mt of DSO and benefi ciated hematite can be produced. BRM has recently completed a A$112.5M capital raising that will take the company to the next stage.

Equatorial Coal(EQX)

$0.26 7.7%

EQX has appointed coal industry veteran Jim Dracopoulos to Managing Director and will drive EQX’s signifi cant move from an explorer to a producer. Production is scheduled to begin in September at MOU #3 and EQX expects to become cash fl ow positive by the end of the calendar year.

Comdek(CDS) $0.145 20.7%

Acquisition of Waterberg coal licenses was approved by the Reserve Bank of South Africa, CDS can now move forward with the projects and look to develop them further. CDS Appointed experienced coal executives Paul Jury as MD and Steve Matthews as an Executive Director, both of whom will look to take CDS to the next stage.

Bauxite Resources (BAU)

$0.50 -47.0%

BAU recently appointed mining executive, Daniel Tenardi as Managing Director. Mr Tenardi has signifi cant experience in bauxite including 15 years with Alcoa. BAU has applied for 13 more exploration permits and has also received signifi cant interest from parties interested in off take.

Tiger Resources (TGS)

$0.52 -34.6%

TGS has upgraded the resource at their fl agship Kipoi project to a Measured and Indicated Resource of 2.86Mt @ 8.1% Cu for a total of 263,000t of copper and 4,000t of cobalt (equity interest). This positions well in TGS’s aspirations to target 1Mt contained Copper and become a 100,000tpa producer of copper metal. A DFS should be out in the September quarter 2008.

Carnavale Resources (CAV)

$0.16

* New to the Mining Book

CAV has a number of projects located in Brazil that are prospective for copper/gold/iron ore and molybdenum/tungsten and is currently focusing on three main projects. CAV currently has 63.9m shares on issue and $10.6M in cash as at 30/06/2008. With a share price of $0.1 as 6at 22/08/2008, CAV is trading below its cash backing of $0.165/share.

Industrial Minerals Corporation(IDM)

$0.25

* New to the Mining Book

IDM has a heavy mineral sands project in the US entering into production in the 2nd quarter of 2009. Once in production, IDM will be the only major chromite foundry sand producer in the US and will be a signifi cant competitor to South African, Chinese and Indian mineral sands suppliers in the US.

Thermal Coal Background


22 August 2008

T2

WHAT IS COAL?Coal is a readily combustible rock containing carbonaceous material (50% by weight and 70% by volume) including inherent moisture, formed from compaction of variously altered plant remains. Diff erences in kinds of plant materials (type), in degree of metamorphism (rank) and in the rage of impurity (grade) are characteristics of coal and are used in classifi cation [Source: Society for Mining, Metallurgy and Exploration].

The quality of each coal deposit is determined by temperature, pressure and by the length of time in formation, known as ‘organic maturity’. Initially, the peat is converted into lignite - these are coal types with low organic maturity. Under the right conditions, the progressive increase in the organic maturity can continue, fi nally forming anthracite.

CLASSIFICATIONS OF COALOf the various approaches to classifying coal, rank is one of the more important.

The rank of the coal is the degree of change undergone by a coal as it matures from peat to anthracite, otherwise known as coalifi cation. Rank has an important bearing on the coal’s physical and chemical properties such as fi xed carbon, volatile matter and calorifi c values.

Low rank coals, such as lignite and sub-bituminous coals are typically characterised by high moisture levels and low carbon content, therefore having low energy content.

Higher rank coals often have black, vitreous lustre and contain more carbon, lower moisture content and therefore higher energy content. Anthracite is the highest ranked coal and correspondingly has higher carbon and energy content with low levels of moisture.

Figure 1: Types of coal and their uses

SOURCE World Coal Institute


Thermal Coal Background22 August 2008

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COAL QUALITYDetermining the coal quality is an integral part of the coal exploration process. Common analyses performed on coal include proximate analysis, calorifi c value, sulphur, ultimate analyses, determination of free swelling index and determination of trace element content. Proximate analysis includes determining moisture, volatile matter, fi xed carbon and ash. It is important to note though, that certain coal quality parameters can be changed to meet user specifi cations by coal cleaning technology and/or by blending with other coals.

MoistureTotal or “as-received” moisture is a combination of surface and inherent moisture and is used for calculating other parameters to the as-received basis. Total or as-received moisture values are critical because coal contracts are often based on as-received calorifi c values, which are obtained by converting dry calorifi c values to as-received calorifi c values using total moisture content. Moisture content also plays an important role in handling and processing coal. As little as 0.5% surface moisture can cause coal to stick in a chute. Higher moisture contents also cause a decreased coke yield in coke ovens.

Volatile MatterIs a measure of thermal decomposition products that form during the heating of a coal sample; examples of volatile matter driven off in the heating process include water, hydrogen, carbon dioxide, carbon monoxide, hydrogen sulphide, chlorine, tar, ammonia and a variety of organic compounds.

Volatile matter measurement assists in distinguishing between coals of medium volatile bituminous and higher rank. Volatile matter values provide useful information in matching specifi c coals to appropriate combustion equipment and are also of importance in selecting processes and conditions for the gasifi cation and liquefaction of coal. The best metallurgical grade coking coals contain between 15% and 31% volatile matter.

AshAsh is the non-combustible residue that is left when coal is burned. Ash is a function of the amount of extraneous detrital particles of shale and clay, amount of secondary material such as calcite and pyrite, and inorganic elements chemically bound in the organic compounds making up the coal.

The amount of ash contained in a coal, as well as the ash’s composition, aff ect the coal’s performance and therefore its’ success in the marketplace. The greater the ash content of a coal bed, the lower is the heating value per unit weight of the coal. Thus, in higher ash coal, more coal is required to produce a given amount of heat and disposal of the ash residue also becomes a problem. The ash content of a coal usually can be lessened by washing the coal in preparation plants. This usually involves grinding the coal to a specifi ed size then suspending it in a liquid with a specifi c between that of coal and ash, so that the coal tends to fl oat.

Fixed CarbonFixed carbon values are essential in classifying coal ranks. Because the amount of fi xed carbon is used to approximate coked produced, the fi xed carbon value is used to estimate coke yield. Additionally, fi xed carbon is essential in calculating combustion equipment effi ciencies.

Calorifi c ValueCalorifi c value is one of the primary rank-defi ning parameters for bituminous, sub-bituminous and lignitic coals. Calorifi c value is usually reported in British thermal units per pound or calories per gram.

Thermal Coal Background


22 August 2008

T2

SulfurSulfur presentes numerous problems in coal utilization. In combustion applications it can cause corrosion in the boiler or the buildup of heavy fouling in the boiler tubes. Large amounts of SO2 are also generated upon combustion and may contribute to atmospheric pollution, unless removed by limestone-based stack scrubbers. The same potential corrosion and pollution problems also apply to coking processes, with the additional concern that unacceptable high levels of sulfur might be passed along through the coke to the iron and steel resulting in an inferior product.

Generally, only coals with low sulfur contents are used for steam electric generation. Variations in maximum allowable sulfur contents in diff erent areas are due primarily to diff erences in local regulations and to the presence of stack scrubbers at some facilities. The practice of blending diff erent coals to achieve required specifi cations allows the use of some high sulfur coals that would not otherwise be suitable for steam-electric generation. Likewise, in coke production, the use of a high sulfur coal results in a decrease in the amount of coke that can be produced from a given amount of coal. Coal that cannot be cleaned to a sulfur content less than 1.5% is not likely to be used, even as a blend, for coke production.

Free Swelling Index The Free Swelling Index (“FSI”) considered useful in evaluating the coking properties of a coal. It is a measure of the volume increase of a coal when it is heated under specifi c conditions and is reported in numbers from 0 to 9, with the higher values considered superior from a coking standpoint. Generally speaking, coals with FSI values of 2 or less probably are not suitable for coke production.

USES OF COALGenerally speaking, there are two main uses of coal worldwide, for electricity generation and for iron and steel production.

Thermal CoalThermal oal, also known as steam coal, is used in power stations to generate electricity. The coal is usually pulverized and then burned in a furnace with a boiler. The furnace heat converts boiler water to steam, which is then used to spin turbines which turn generators and create electricity. Essential to quality thermal coal is low levels of ash and depending on the power plant, acceptable levels of moisture content.

Coking CoalCoking coal is made into coke, which have certain physical properties that cause them to soften, liquefy and then resolidify into hard but porous lumps when heated in the absences of air. Coking coals must also have low sulphur and phosphorous contents

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Thermal Coal Industry Overview22 August 2008

GLOBAL ENERGY DEMAND A key driver of thermal coal is global energy consumption. Global energy demand is set to increase signifi cantly as developing economies increase their energy consumption to move towards industrialisation and increase their levels of urbanisation. During 2007, developing economies from Latin America, Africa and Asia made up 85% of the energy growth. Majority of this growth came from China who increased its 2006 energy use by 8% and contributed 52% to global energy growth. This growth is continuing as the Chinese economy grew at an impressive 10.3% for the second quarter of 2008.

For the fi fth consecutive year, coal has been the fastest growing primary fuel source in the world, with 77% of this growth being driven by China. Of the 256Mt oil equivalent increase in global energy use, 49% was from coal.

Region 2005 2006 2007 Change Per Capita ConsumptionNorth America 2,813 2,794 2,839 45 6.4Latin America 513 533 553 20 1.2Europe & Eurasia 2,963 3,010 2,988 -22 3.5Middle East 534 557 574 17 2.6Africa 321 328 344 16 0.4Asia Pacifi cAustralia 118 124 122 -2 5.7China 1,561 1,730 1,863 134 1.4India 362 379 404 26 0.4Other 1,373 1,389 1,412 24 1.1

Total Asia Pacifi c 3,414 3,621 3,802 181 1.0Global Total 10,558 10,843 11,099 256 1.7

As can be seen from the table above, per capita consumption is widely spread with North America and Australia enjoying values of 6.4 and 5.7, respectively. In contrast, China, India, Latin America and Africa have relatively low values, all below the global per capita consumption value of 1.7, leaving much room for improvement.

Figure 1: Global energy consumption (tonnes oil equivalent per capita)

Table 1: Global energy consumption (Mt Oil Equivalent)

SOURCE CIP Research

SOURCE BP Statistical Review of World Energy 2006, CIP Research

Thermal Coal Industry Overview


22 August 2008

T2

Imports (Mt)Country 2007 2008f 2009f China 44.8 41.0 43.0 Taiwan 60.3 63.0 64.0 India 29.1 33.0 39.0 Japan 124.0 131.0 132.0 South Korea 66.6 75.0 80.4 Malaysia 13.0 14.5 17.6 Other 36.5 38.4 39.7 Asia Total 374.3 395.9 415.7 Europe Total 212.5 213.1 217.0 Other 96.4 95.8 97.9 World Imports 683.2 704.8 730.6

THERMAL COAL OUTLOOKLast month, the Barlow Jonker Spot price reached a high of US$190.95/t, highlighting the phenomenal demand for thermal coal. This time last year, the Barlow Jonker Spot price for thermal coal was US$67.90/t FOB; since then, the commodity has experienced a bull run and has increased by 139% to US$162.50/t FOB, as of the 14th of August. Current JFY08/09 contract prices are US$125/t FOB, representing a current spot price premium of 30% or US$37.0/t FOB. Spot prices have a signifi cant role in setting future contract prices between the major producers and utilities.

The driving factors supporting record coal prices are the strong growth in thermal coal import demand from Asia, export infrastructure constraints, extreme weather conditions in Australia, the South African power crisis and China reducing its’ exports, becoming a net importer in thermal coal. Thus it is unlikely that there will be a major correction in thermal coal prices and CIP remains bullish on the commodity.

Figure 2: Barlow Jonker Spot Price for Thermal Coal

SOURCE Coalfax, CIP Research

SOURCE ABARE

Asia’s insatiable appetite for coalIn 2007, world coal trade was 683.2Mt and is forecasted to increase to 704.8Mt in 2008, a net change of 21.6Mt. Asian imports are forecasted to make up all of this increase, as the rest of the world is forecasted to have zero net change. This trend is likely to continue in the foreseeable future as China, India, Korea and other emerging Asian countries continue to be the long-term market makers. Driving this demand will be the completion of numerous coal-fi red power plants in the region.

Table 2: Asian Imports of Thermal Coal

BJ SpotContract Prices

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30-Aug-07 27-Dec-07 24-Apr-08 21-Aug-08

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Figure 3: Chinese Net Imports (2006-2013)

China’s burning question - how much is enough?China, the world’s largest producer and consumer of thermal coal has been a net exporter of thermal coal thus far in 2008 with 5.3Mt net change, however, this is expected to reverse by the end of the year.

Chinese exports are expected to fall for the remainder of the year as higher export taxes take eff ect. The tax is 10% on thermal coal and will start on the 20th of August. This move was required, as half the nation was rationing electricity and severe power outages due to a lack of coal supplies. In addition, the government is expected to lower its export quota, the details of which are due for release soon.

The current energy crisis was further worsened when the government closed more than 10,000 mines for safety and political reasons. With the country being front and centre on the world stage for the Olympics, the government was particularly sensitive of any high-profi le mine disaster news being released. On conclusion of the Olympics, the government may be more willing to re-open these mines.

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This change to become a net importer has resulted because of the double-digit growth that China has experienced for the past few years and shows no signs of signifi cantly slowing. As the economy and commercial industries grow, further thermal coal, currently responsible for 78% of electricity generation in China, will be needed to meet the rapidly expanding energy needs.

With such rampant demand for electricity, China is experiencing one of its worst ever power crises. Coal stockpiles in the country’s largest power plants were enough for only 12 days of operation.

Essentially, this power crisis is due to utilities not securing enough coal and refusing to pay soaring prices for thermal coal, given that they cannot raise the price of their electricity above state-set tariff s.

Export licenses are allocated to coal exporting companies twice a year in two blocks. Through the Chinese quota system, the government manages its thermal coal exports. The fi rst block of export licences was issued for 29Mt and it is planned that an additional 20Mt be allocated. This decision is expected after the Olympics and, due to the current power crisis, there is speculation that the second block could be signifi cantly reduced.

SOURCE ABARE, CIP Research



22 August 2008

T2New Asian power stations

As mentioned, China contributed 77% to global growth in coal use. This growth is punctuated by the fact that China is activating one new coal power plant every week.

Following China’s lead, India is also experiencing rapid economic and industrial growth. To meet the power demand, India’s top power producer, NTPC Ltd, consumes a quarter of the coal production in India to produce 29,144MW and plans to add another 22,430MW over the next 4 years. In addition, domestic coal often has a high ash content so it is blended with imported coal to increase overall quality. India’s domestic infrastructure is also a hurdle in moving coal from mines to power plants effi ciently; rail transport cost is relatively high and passenger transport often has priority over coal transport. As a result, India’s import demand for coal jumped 21% in 2007 and is forecasted to increase by 13.4% in 2008.

During 2007 and 2008, ten 500MW coal power stations are expected to commence operation or are currently in operation in Korea. As a result, Korean thermal imports increased by 11.7% in 2007 and are forecasted to increase by 12.6% in 2008, for a total of 75Mt. However, state-owned Korean Electric Power Corp plans to add capacity of 1,500MW to 2,300MW by the end of the year, further boosting thermal coal imports.

Japan is expected to import a further 5.6% in 2008 due to lower utilization of nuclear and hydroelectricity power. This takes their total imports to 131Mt, maintaining its status as the largest importing nation of thermal coal. Imports are forecasted to increase in 2009 with the planned addition of 600MW of coal-fi red electricity generation capacity.

India’s power crisisAs a sign of the times, India is now following South Africa’s and China’s lead in experiencing a coal shortage. Six major thermal power stations across the country have recently reported that they have run out of coal. The overall coal shortage situation across the country is at an all-time high with 44 out of the 77 country’s power stations reporting critical stocks. 24 of these utilities are experiencing supercritical stocks of less than 4 days stock of coal. These 77 power stations currently supply 53% of the country’s power needs

NTPC Ltd is also reporting that four of its stations totalling 9,440MW are actually operating on day-to-day coal supplies and could be forced to shutdown some stations if the situation isn’t remedied.

Indonesian concernsThe Indonesian government recently ordered six coal miners to halt exports, because they were charging well below current spot and contract prices. The ban will not be lifted until prices are in-line with the market. The six companies combined export a total of 10Mt per year.

Also, six major thermal coal producers are accused of evading royalty payments and income tax during the period 2001-2005, possibly causing disruptions to production. These companies are PT Kideco Jaya Agung, PT Kaltim Prima Coal, PT Kendilo Coal Indonesia, PT Arutmin Indonesia, PT Berau Coal and PT Adaro Indonesia.

Additionally, Asia’s biggest exporter of thermal coal, PT Bumi Resources, was ordered to halt output at its largest mine because of a lack of permits.

All these issues combined in Indonesia, the world’s largest exporter of thermal coal, could throw off the current supply-demand balance and push prices higher.

Vietnamese stormsRecent storms have severely hampered exports out of Vietnam’s largest coal hub, Cam Pha port. Three cargo-loading facilities at the port have been damaged and the estimated decrease in volume is on the order of 8-12Mt. In 2008 thus far, Vietnam has supplied the world with 14.5Mt of coal, mainly to China. Vietnam is the largest supplier of thermal coal to China and this environmental event has helped thermal coal prices rebound recently with Chinese customers scrambling to meet the shortfall.

Additionally, Vietnam is struggling to meet domestic energy demand and will look to impose the maximum 45% tariff on coal exports. This is in line with the Finance Ministry’s plan to cut thermal coal exports, mainly to China, by more than 32%.



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Australian Export ConstraintsOnce the world’s largest exporter of thermal coal, bad weather and infrastructure constraints have bumped Australia to second place behind Indonesia. January fl oods in Queensland aff ected the prolifi c coal-producing Bowen Basin, severely aff ecting production by major coal producers such as Xstrata Coal, BHP Billiton and Rio Tinto. The eff ects of these fl oods are still being felt today, with the reduced exports causing the current highs in thermal spot prices.

During this year, major Australian coal terminals in New South Wales and Queensland have experienced severe port and rail infrastructure constraints, restricting the thermal coal that Australia can export. As of 22nd of August 2008, twenty-fi ve vessels were waiting to berth at the Newcastle port and at current loading rates, will wait 11 days for their turn. This rate is extraordinary when you consider that general cargo vessels who only have to wait 0.37 days to berth.

Additionally, developments and upgrades of existing rail are causing loadings to be below the total capacity of approximately 26.8Mt. For loadings in June and July, total unused capacity was 3.7Mt and 3.5Mt, respectively. This represents June and July underutilization of 14% and 13%, respectively.

Another issue that could potentially surface is the ability of Australian miners to switch from thermal to metallurgical coal production, given that metallurgical coal prices have tripled and spot prices are substantially above US$330/t FOB.

June July June JulyNew South Wales Newcastle 8.5 7.3 8.2 1.2 0.3Pt Kembla 1.0 0.9 1.0 0.1 -

Queensland Dalrymple Bay 5.0 4.5 4.4 0.5 0.6 Hay Point 3.7 3.7 3.5 - 0.2 Gladstone 6.3 5.0 4.5 1.3 1.7 Abbot Pt 1.8 1.2 1.2 0.5 0.5 Brisbane 0.6 0.5 0.6 0.1 -

Total 26.8 23.1 23.3 3.7 3.5

Coal Terminal Monthly Capacity (Mt)Loadings(Mt) Shortfall (Mt)

Table 3: Australian capacity, loadings and shortfall at major coal terminals

Figure 4: Australian coal Exports (2006-2009)

SOURCE Coalfax, CIP Research

SOURCE ABARE, CIP Research

As a result of these infrastructure issues, thermal exports only increased by 0.5% in 2007. If these constraints can be overcome, thermal exports can be expanded in 2008 and 2009 by 6.9% and 4.2%, respectively. If current expansion programs go as planned, export capacity at Australian ports could reach 155Mtpa by 2012.



22 August 2008South African IssuesThe world’s largest coal terminal, South Africa’s Richards Bay Coal Terminal, has been exporting well below its annual capacity of 76Mt. At the current average monthly rate, annual exports will only be 58.6Mt, a shortfall of 17.4Mt. Coal railed to the terminal was at expected rates, but capacity constraints with the unloading of trains and loading of ships were to blame for the poor performance.

The situation in South Africa could get worse and government intervention will be required to ensure the country has suffi cient thermal coal supplies. Exports could be limited, as utilities are currently struggling to keep coal stockpiles at its current target of 20 days.

Eskom Holdings Ltd, the South African state run power utility, estimates a 100Mt coal gap in the next ten years. Low growth in coal production and surging export prices are posing major problems for the utility. For South Africa to overcome its domestic problems and keep up with export demand, structural changes will need to occur to encourage new coal production.

The US - future swing supplier?With the main exporters of thermal coal experiencing issues, a new supply stream will need to come online or be increased to stabilize the market. A potential white knight for the seaborne thermal coal trade is the US. Exports in 2007 were only 23.9Mt, making up a paltry 2.3% of total production. However, they have enough excess reserves to comfortably increase exports without hurting the domestic market.

Coal producers in the US estimate 14GW of new coal-fi red capacity is under construction, representing an additional annual coal demand of 50Mt. Additionally, there are no supply issues in the country and this is particularly highlighted with utilities buying up a record stockpile of 51-days. Thus, production is not experiencing any major issues. Additionally, the US has an impressive estimated reserve of 243Bt of oil equivalent. Therefore, the biggest hurdle will be expanding export capacity in the US.

Original plans for a new US coal terminal at Maryland have been suspended but expanding US export capacity remains a hot topic. There has been talk about expanding capacity from the US West and Gulf coasts. In order to capitalise on the lost opportunities of struggling exporters, these infrastructure developments will need to be undertaken for the US to expand shipments to Europe and the booming Asian market.

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Iron Ore Background


22 August 2008

I2

IRON ORE PRODUCTSGlobal iron ore production for 2008 is forecast to grow to approximately 1.8Bt, an increase of almost 200Mt from the previous year. The majority of this iron ore is primarily used as raw material in the production of steel, with major consumers of the global iron ore trade most recently being Asian steel mills.

The iron ore used in steel mills is typically added to a blast furnace as either a fi ne product or a lump product. In most cases the blast furnaces perform more effi ciently with higher components of lump material than they do with a fi ne material. Therefore, it is common for fi ne material to be separated from the raw blast furnace feed and agglomerated into either a pellet feed or sinter. The resultant iron ore market can be broken down into the three major traded products;

• Direct shipping ore (DSO) requires only crushing and screening (and minimal benefi ciation is required) before it is shipped to the steel mills as either a fi ne or lump product. Once the ore has reached the mill the lump ore is fed directly into the blast furnace, whereas the fi ne ore is used to create sinter or pellets. As a result lump ore attracts a premium to the fi nes. Furthermore DSO is relatively inexpensive to produce as it requires minimal processing before it can reach the steel mill. Most of Australia’s iron ore production is shipped to Asian steel mills as DSO.

• Pellets allow for ease of shipping and handling. It can also be used to create a superior product which can be used for increasing the iron ore content of the feed in a steel mill. Pellets attract a premium to lump as they have superior characteristics, however, they require signifi cantly more processing with the degree of processing being directly related to whether the pellet feed is hematite or magnetite. Brazilian iron ore is pelletised and then shipped to the European and Asian markets and is considered the best product in the world.

• Concentrate from magnetite operations is also traded globally, albeit on a very small scale. The micro fi nes produced from these operations are almost always sold as a pellet feed as the ability to create sinter from the fi nes is costly and technically diffi cult.

Figure 1: Hematite and Magnetite process

SOURCE CIP Research

IRON ORE BENEFICIATIONAs higher quality DSO deposits are exhausted, production will start to come from processing lower grade ores and using benefi ciation to produce concentrate. Benefi ciation is defi ned as “a variety of processes whereby extracted ore from mining is reduced to particles that can be separated into waste and mineral; this mineral can be used directly or processed further.” This process is more expensive for lower grade ores than DSO products, due to the high energy costs associated with liberation and separation, as well as capital costs.


Iron Ore Background22 August 2008

m . m s e d

Iron ore resources generally occur in iron-rich sedimentary rocks known as banded iron formations or BIFs. They are made up of iron-rich layers of hematite or magnetite alternating with silica rich layers. BIFs can be mined as iron ore, but more importantly, higher-grade iron ore is sourced from these rocks. The resultant iron ore can grade up to 69% compared to BIF’s grade of 30%. There are mainly three types of iron ore deposits that are sourced from BIFs:

• Bedded iron deposits are formed when the BIF layers are eroded by weathering and become enriched in the process. The weathering oxidises the magnetite to hematite and hydrous iron oxides replace the gangue minerals in the BIF.

• Channel iron deposits are formed when iron particles are eroded from BIFs and are deposited in rivers and creeks. They are then cemented by iron oxides precipitated from ground waters. These types of deposits are characterised by rounded pisolitic hematite in a matrix of goethite.

• Detrital iron deposits are similar to channel iron deposits, but have larger iron particles and form either cemented hematite conglomerates or loose gravels of concentrated iron oxide particles.

To benefi ciate each of these deposit types, various physical characteristics of an ore can be exploited to separate the waste from valuable product, these include variations in hardness, density, refl ectance, conductivity and magnetism.

Impurities

Silica (Si) Iron ore typically contains silicates in the form of quartz. Silica is

undesirable as it doesn’t bond with carbon in the smelting process and can remain in the iron ore after refi nement. Silica is removed in the smelting process by the addition of lime and other fl uxes which result in slag containing the silica forming at the surface.

Aluminium (Al)

Alumina (Al2O3) is an unwanted impurity in the steel making process and is generally found in the ore as a clay or shale. Alumina is removed by washing and/or fl uxing.

Phosphorous (P)

Phosphorous is one of the most deleterious elements in the iron ore industry as concentrations of as little as 0.05% can lead to the produced steel being brittle. Phosphorous is not easily removed and ores of higher phosphorous levels are blended with lower phosphorous ores.

Sulphur (S)

High sulphur ores can result in the production of sulphur dioxide gas being produced whilst smelting and can interfere with the steel making process.

Physical Characteristics

Size Delivered ore size plays a role as to whether the product is able to be directly fed into the blast furnace. Size is thus a determinant in the discount/premium of the delivered ore with typical tolerances being +/- 10% of specifi cation.

LOI & Moisture Whilst it is desirable to have low contaminants in the ore delivered a certain level of Loss on Ignition (LOI) is required in the production of steel. An optimum is specifi ed to avoid any unwanted eff ects of added weight in the delivered ore and inherent rapid evaporation and resulting pressurisation from high LOI ores.

DI Decrepitation Index is a measure of the resistance of lump ore to break down into fi nes. The greater the DI in the delivered lump ore the less fi nes produced and the higher the value.

IMPURITIES AND PHYSICAL CHARACTERISTICS

Iron Ore Industry Overview


22 August 2008

I2

IRON ORE PRICESFor the 6th consecutive year, iron ore prices have increased with the JFY 08/09 negotiations yielding contract price increases for Hamersley Fine and Hamersley Lump of 79.9% and 96.5%, respectively. This trend has been driven by the emergence of the Chinese market as a major consumer of the seaborne demand. Rio Tinto and BHP were successful in negotiations with Asian steel mills and the increase is larger than CVRD’s of 65%, closing the freight rate gap between Australia and Brazil. With supply remaining tight for the next 4-5 years it is expected that iron ore prices will remain at historical highs promoting the emergence of new iron ore producers.

Table 1: Global iron ore exports and imports

Figure 1: Hamersley Fine and Lump Iron Ore Contract Prices (USc/dmtu 1% Fe FOB)

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008fExportsAustralia 17.4 156.7 165.9 187.7 209.8 239.3 247.4 269.0 304.0Brazil 160.1 157.7 170.0 184.4 200.9 223.4 246.6 283.0 319.0Canada 26.5 22.0 25.6 27.1 23.1 27.9 27.7 30.0 30.0India 32.9 37.3 46.6 57.3 62.7 89.6 86.4 91.0 88.0South Africa 21.4 23.5 24.3 24.1 24.7 27.4 27.4 31.0 34.0Sweden 16.0 13.6 14.2 15.6 17.3 17.8 18.2 20.0 22.0Other 84.8 84.4 87.2 85.3 134.0 110.4 109.2 113.0 111.0Total 499.0 493.3 533.9 581.6 672.5 735.9 762.9 837.0 909.0ImportsEU 188.2 168.1 175.1 184.5 204.2 180.7 192.3 195.3 198.3Japan 131.7 126.3 129.1 132.1 134.9 132.3 134.4 139.0 140.0China 70.0 92.4 111.4 148.1 208.1 275.3 326.3 378.0 438.0Other 109.2 106.5 118.3 116.9 125.3 147.6 109.9 124.7 132.7Total 499.0 493.3 533.9 581.6 672.5 735.9 762.9 837.0 909.0

SOURCE ABARE

SOURCE CIP Research

IRON ORE MARKETThe strong demand for raw steel making materials continues to drive growth in the consumption of iron ore. BHP, RIO and Vale control over 70% of the seaborne market for iron ore with all companies having invested heavily in increasing iron ore production to meet continued strong demand. In the short term there is the opportunity for the smaller iron ore aspirants to supply the global market imbalance without requiring critical mass before being able to compete on a global scale. The coming years will see the emergence of new global market participants in the trade for iron ore, particularly that of Australia’s Fortescue Metals Group (FMG) and Brazil’s MMX.Global iron ore exports are set to remain relatively tight as market conditions in China drive the demand both now and in the future. With China now reaching critical mass, any slight change in its expected growth pattern can signifi cantly aff ect the supply/demand balance. Furthermore, Russia and India, together with other emerging economies, have the potential to signifi cantly aff ect the growth in demand for global iron ore. These countries have planned full scale infrastructure projects, in particular India, which has committed +US$300B for infrastructure developments that has the potential to drain signifi cantly more iron ore resources from the global market.

0.00

70.00

140.00

210.00

JFY03/04 JFY04/05 JFY05/06 JFY06/07 JFY07/08 JFY08/09

Hamersley Lump Premium Hamersley Fine


Iron Ore Industry Overview22 August 2008

n e n e e e e s

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GLOBAL STEEL PRODUCTIONWorld production and consumption of steel continues to be led by the emerging economies of China, India, Russia and the like. Consumption of steel is expected to remain leveraged to the Asian region as their economy continues to grow. Particularly in China, rapid stages of growth continue to be forecasted although there is the risk for a potential slowdown given the recent recession worries of the US and rising infl ation, the last of which has attracted government intervention in the Chinese economy. The Australian Department of Industry and Resources expects China to account for over 90% of the growth in steel demand until 2012. The economy continues to have strong fundamentals with growth forecasted to remain high (+9%) over the coming years.

Industrialisation has been a driver of the steel consumption super-cycle in China. To support the long term aspirations of the Chinese economy, there has been signifi cant spending in the industrial sector to create new factories and alleviate future capacity constraints. China also boasts the largest urbanisation program ever seen in the world with the equivalent of ~4 new cities being built every year to support the expansion plans and capacity output of the nation.

Figure 2: Global Steel Production

Ste

el P

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ion

(M

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Global steel production reached 1.34Bt during the 2007 period with expected production set to increase by a further 60Mt to 1.40Bt in 2008 (source: ABARE). China and India are the top 2 emerging consumers of iron ore in the global economy. China’s economy has grown from consuming less than 250Mt in 2002 to 489Mt in 2007, representing an average growth rate of 12% p.a. Consumption grew by 14% in 2007 and is set to grow further in 2008 with production estimated to reach 533Mt.

In addition to strong demand from China, the emergence of Russia and India, have the potential to further signifi cantly add to the demand pressures for steel consumption (ABARE). In India, continued strong infrastructure demands have led to steel production growth of 10% to 54Mt in 2007. Estimates for 2008 indicate a further 9% growth to 59Mt. As a result, strong global demand for steel is set to continue with estimates of global steel consumption set to reach 1.6Bt by 2012, representing a cumulative average growth rate (CAGR) of 5.4% p.a. (DOIR and ABARE).

SOURCE ABARE



22 August 2008

I2

AUSTRALIAN PREMIUM IRON ORE PRODUCTIONAustralia iron ore production continues to be heavily consolidated with BHP and RIO holding over 90% of the market. With rising freight rates and increased necessity for spot ore, Australia will continue to see growing developments and be a supplier of choice for Asian steel mills. Both BHP and RIO, together with the emerging FMG, have strong expansion plans set for the coming years. BHP has implemented Stage 3 and 4 of their Rapid Growth Project (RPG) which is set to expand production from 107Mtpa in 2007 to approximately 130Mtpa by 2009. RIO aims to increase production through the Hope Downs Expansion, Brockman 4 operations and Mesa A operations from 163Mtpa in 2007 to approximately 200Mtpa by 2009.

Figure 3: Iron Ore Production from Australian companies

SOURCE Company websites

The Pilbara continues to be host to the major iron ore expansion plans in Australia. Since its discovery in the 1960’s, the Pilbara has undergone intensive growth and now hosts various rail and port facilities including that of RIO, BHP and most recently, FMG. Expansion plans are in motion for production of over 500Mtpa in the region. The continued strong demand for iron ore has instigated the emergence of smaller players in the region which have the potential to develop profi table small scale operations by relying on third party infrastructure for relatively low capital costs. These small scale operations will not signifi cantly aff ect the demand/supply imbalance but will be highly leveraged to the benchmark pricing, therefore their emergence (and even FMG’s to some extent) are not expected to alleviate the current and future demand.

The emergence of the Midwest as a potential supplier of iron ore to the worlds steel mills may potentially add a new 60Mtpa iron ore province in Australia. New entrants have emerged in this region with plans of supplying the imbalance of trade. Due to various issues including infrastructure, quality of ore, processes involved and the expansion plans of the Pilbara, these companies have formed long term relationships with Asian steel mills who themselves are looking to secure resources and move away from the control of the majors. The Midwest still has many issues facing it and will no doubt lag behind the Pilbara as Australia’s secondary iron ore producing region.

Iron Ore

Pro

duction (M

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Iron Ore Industry Overview22 August 2008

f

PILBARA STRONGHOLD LOSING ITS GRIPGiven that iron ore hematite is relatively simple and does not require much value-adding processing, the key barrier to entry in developing a project is gaining access to rail and port facilities.

BHP and RIO control the majority of rail infrastructure in the Pilbara and this infrastructure was originally constructed under State Agreements, which subsidised development costs. In return, BHP and RIO agreed to construct the railways under a ‘third party user pays’ principle for rail access and the provision for haulage services. This agreement also provided for companies to pay for expansions to the railway to haul their ore. In comparison, FMG’s State Agreement includes provision for track access and is branded as multi-user infrastructure.

Due to their relative small size, in order for a junior iron ore company to unlock the in-ground value of its deposits, they must agree to a deal with either BHP, RIO or FMG. Currently, there are three avenues to production:

1. Third party access through BHP and RIO The Department of Treasury and Finance recently released a draft access regime recommending framework for third parties accessing existing rail infrastructure via haulage service. This recommendation was opposed by BHP and RIO, arguing that ineffi ciencies would disrupt current expansion plans and lose the state billions of dollars in revenues. Realistically, a fi nal verdict will not be decided for a few years. The key features of the regime are as follows:

i. The regime will act as a safety net for juniors to seek third party haulage.ii. Juniors will not be able to run their own trains.iii. Only rail haulage is provided for, not loading/unloading and port facilities.iv. Haulage charges will be justifi able under a transparent pricing system - no “free rides” or infl ated costs.

v. Any additional infrastructure or expansions to be built by third parties must adhere to the providers standard

vi. If the haulage capacity is fully utilised, any expansions will be funded by the junior on a user pays basis.

Thus, a junior looking to use BHP and RIO’s rails would have to pay a capital contribution to cover the necessary expansion of rail systems, including loading/unloading facilities, rail haulage equipment and supporting infrastructure. Under this scheme, the large costs could be quite discouraging for some juniors.

2. Third party access through FMG Currently, FMG has excess capacity across its rail network and a major commercial agreement is in the works. Atlas Iron Limited and BC Iron Limited have MoUs with FMG and commercial terms are expected to be fi nalised. These agreements will set the benchmark price for using FMG rail and port. Given his substantial shareholding in FMG and FMG’s excess infrastructure capacity, CIP believes that FMG CEO Andrew Forrest is incentivised to maximise FMG’s current infrastructure and will soon agree to a deal.

3. Mine-gate sales Announced on the 24th of July 2008, an innovative agreement between RIO and Iron Ore Holdings was reached. The deal involved RIO purchasing iron ore from Iron Ore Holding’s mine 90km from Newman and selling the ore to its existing customers. This agreement was a compromise for both RIO and Iron Ore Holdings, allowing RIO to access extra tonnage, whilst not jeopardising current rail effi ciencies and enabling Iron Ore Holdings to develop its resources without huge capital costs.



22 August 2008

IRON ORE COMPANIES PEER COMPARISONA comparison of Australian hematite focused iron ore companies is shown in the chart below. In the analysis, GWR and BRM both have relatively low EV/Resource tonne valuations of approximately $3.40/t and $1.62/t respectively. There is a large disparity between valuations for iron ore explorers and producers with the producers having signifi cantly higher valuations as indicated on their position on the far left of the chart.

Additionally, the graph shows that infrastructure agreements signifi cantly re-rate a company’s EV/Resource tonne valuation. Despite its lower grade compared to PMM, AGO has a similar valuation. CIP believes that this re-rating is a result of the MoU signed with FMG and expectations of a commercial agreement being reached. Similarly, IOH has a relatively high EV/Resource tonne valuation, despite being an explorer. Again, this can be explained by the company’s landmark agreement with RIO for mine-gate sales.

CIP believes that Brockman Resources Limited is well-positioned to achieve a path to production as it is close to BHP, RIO and FMG rail lines and can utilise all three paths mentioned before. Thus, BRM’s location in the Pilbara has the company well-placed for an infrastructure agreement and should attract a substantial re-rating if this can be achieved. Additionally, the market is not currently valuing BRM’s total resource, particularly its benefi ciated resource of an additional 900Mt. Including this resource in the EV/Resource tonne calculation would mean a valuation of $0.26/t, clearly undervaluing the company.

The low multiple for GWR’s Wiluna project may be partially explained by its distance from an exporting terminal. Nonetheless, given the record iron ore prices and the project’s low contaminants, the project looks to be undervalued compared to its peers.

Figure 4 : EV/Resource tonne of ASX-listed Iron Ore Companies

SOURCE CIP ResearchNote: Only Australian high-grade hematite resources were included

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PMM AGO MGX MMX TTY M IS IOH B R M FR S CUL GWR R HI B C I WPG POL

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50 .00%

52.00%

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Bauxite Overview


22 August 2008 BAUXITE EMERGING SEABORNE MARKETBackgroundBauxite ore is required to produce alumina which is then further refi ned to produce aluminium, a key commodity for many products including cars, aircrafts, building construction and packaging. For every 4 tonnes of bauxite, roughly 2 tonnes of alumina can be produced; and roughly every 2 tonnes of alumina can be converted to 1 tonne of aluminium. Bauxite is relatively cheap and abundant with Australia and Guinea having the largest bauxite reserves in the world (23% and 29% respectively). However, massive amounts of energy is required in refi ning bauxite to alumina and even more for aluminium. Operating costs for aluminium are estimated to have increased by a third in the past decade with electricity accounting for 25-30% of total operating costs (ABARE). Over the past decade, countries and regions that have attracted relatively large shares of new aluminium smelting capacity have been those with relatively low electricity prices. Recently, some of these countries have been hit by rising energy costs and power grid constraints, in particular China and South Africa. These two countries depends largely on coal for power generation and with coal rising to record levels recently, this has further impacted on their producing capabilities.

Energy driving seaborne marketThe energy intensive process of refi ning bauxite means it is more feasible for aluminium production in places where energy is cheap. Evidence of this happening can be seen in the oil rich countries of the Persian Gulf which are looking to diversify their sources of revenue. The UAE and Algeria have formed an alliance to build a US$5B smelter that can generate 700,000tpa, Saudi Arabia has plans for a US$3.8B smelter and Oman a US$2.2B smelter. These countries have massive reserves of oil and gas to meet the energy requirements to power a smelter, the required capital to build refi neries with the burgeoning price increase of oil but it lacks bauxite. With Australia the largest producer of bauxite (refer to Figure 1), BAU is well positioned.

According to the USGS, global aluminium production was running at 89% capacity, producing 33.7Mt in 2006. The USGS estimated that in 2007, production was up 12% to 38Mt and capacity increased to 42.7Mt. Data from USGS has also showed that domestic aluminium requirements cannot be met by domestic bauxite resources.

Currently there are no published prices for seaborne bauxite which makes it diffi cult to track consensus; however reports have indicated a price range of US$57-US$75/tonne CIF (cost, insurance and freight) for bauxite shipped to Asia.

Figure 1: 2006 Leading Bauxite Producers by country

Total Production of 175Mt

Figure 2: 2006 Leading AluminiumProducers by country

Total Production of 33.7Mt

SOURCE USGS


Bauxite Overview22 August 2008

REFINING OF BAUXITE

Table 1: The Bayer Process

Table 2: Caustic soda price (US$/dry metric tonne, FOB)

SOURCE British Sulphur Consultants industry price estimates, CRU

Step 1 Digesting Bauxite is crushed and ground before it is mixed with caustic soda solution (sodium hydroxide) in a large pressure tank. The ore is dissolved under steam, pressure and a temperature of +150°C. The aluminium oxide in the bauxite reacts with caustic soda to form sodium aluminate and insoluble impurities called red mud.

Step 2 Settling The contents of the tank are passed through tanks and fi lters where the pressure and temperature is reduced and red mud is discarded.

Step 3 Precipitation The resultant solution is placed into precipitator tanks where seed crystals (alumina hydrate) are added to precipitate alumina as the solution cools.

Step 4 Calcination The alumina is then transferred into calcining kilns and heated to +980°C to remove any water to form pure alumina.

Reactive silica and costsThe two major costs involved in the refi ning of bauxite to alumina are energy costs and caustic soda solution (sodium hydroxide). As the reactive silica levels in the bauxite rises, more caustic soda is required which can signifi cantly add to the cost of producing alumina. In cases where bauxite has very high reactive silica levels (i.e. approx. +5% reactive silica), the Bayer process becomes uneconomical due to high caustic soda costs. In the past 2 years, both contract and spot prices for caustic soda have risen substantially. Contract prices for caustic soda from the US Gulf has risen 50% from US$255/dmt in Q1,2007 to US$410/dmt in Q2, 2008 (Table 2). On the spot market, prices have reached as high as US$683/dmt. The rising cost of caustic soda means it is now even more important for secure sources of low-silica bauxite.

Higher reactive silica requires Bayer-Sinter processAs an alternative to the Bayer process, high silica bauxite may be economically refi ned using the Bayer-Sinter process. This process is commonly used for Chinese bauxite which have high silica levels. The downside to the Bayer-Sinter process is that the operating costs are notably higher than the Bayer process (Figure 3) The Bayer-Sinter process requires higher energy consumption and other operating costs to extract alumina. The additional cost pressures required in the Bayer-Sinter process and high caustic soda prices required to process high silica bauxite means that bauxite with low silica levels can demand a premium price.

2007 2008

Contract Q1 Q2 Q3 Q4 Q1 Q2

West Europe 258 258 280 280 337 337

US Gulf 255 255 337 337 410 410

Saudi Arabia 265 265 270 270 300 300

Spot

West Europe 295-320 280-320 290-325 315-335 325-395 410-550

US Gulf 288-314 353-386 386-430 390-420 405-525 606-683

SOURCE CIP Research

Bauxite Overview


22 August 2008

THE CHINA FACTOR Despite falling demand from United States and Japan, consumption of aluminium from emerging economies have more than off set this with China leading the way with an expected 25% increase in consumption of aluminium in 2008 alone (ABARE). China’s consumption of aluminium now accounts for 22% of world consumption and is expected to become a net importer in 2008 and 2009 as a result of strong domestic demand and insuffi cient aluminium smelting capacity in China. World consumption of aluminium is forecast to increase by 10% in 2008 to 41.0Mt according to ABARE and China alone is expected to contribute 68.9% to aluminium consumption growth from 2008-2013 (refer to table 3). China has less than 3% of the world’s bauxite reserves and their alumina production is becoming increasingly reliant on either imported bauxite or relatively poor quality and small scale local deposits. Over the past 2 years, China’s bauxite imports have increased dramatically and is expected to reach 31Mt this year with supply coming mainly from Indonesia (70%) and India. However, supply from both these countries have been dwindling after the government vowed to crack down on illegal mining. The Indian government has also been trying to retain higher grade bauxite for its own refi neries to feed its growing local consumption of bauxite. This will force China to diversify its source of supplies with reports indicating the country is investing in bauxite mines and alumina refi neries in Australia and Vietnam.

Figure 3: Comparison of Bayer and Bayer-Sinter technology costs within China

Table 3: Top 10 additions to aluminium smelting capacity by country, 2008-2013

SOURCE CRU

SOURCE ABARE

Capacity (kt) % of totalChina 2,790 24.1Russian Federation 1,850 15.9United Arab Emirates 1,400 12.1India 940 8.1South Africa 720 6.2Saudi Arabia 600 5.2Qatar 585 5.0Venezuela 570 4.9Canada 520 4.5Oman 350 3.0

SUMMARY Australia, Brazil and Guinea are all major bauxite producers (Figure 1), however comparatively, they produce very little aluminium (Figure 2). The reason for this is two fold: 1) they export a substantial amount of their bauxite and 2) they refi ne a substantial amount of their bauxite to alumina to export to other countries that do refi ne aluminium (Figure 1). There is now a trend emerging to ship bauxite as local supplies of bauxite for alumina refi ners are dwindling and new alumina and aluminium refi neries are being developed in China and the Persian Gulf which require quality feedstock.

m y . d c n E n s n . s ) r t s e d

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Freight Overview22 August 2008

FREIGHT OVERVIEWAt the beginning of 2007, the world fl eet transport capacity was 1.04Bdwt. In 2006, total world seaborne trade reached 7.4Bdwt. As demand for raw materials such as coal, iron ore and bauxite surge, this places pressure on the world’s existing fl eet. While shipping companies scramble to expand their transport capacity, producers and consumers are scrambling for ships, pushing up freight costs.

This pressure is being felt in the Baltic Dry Index (“BDI”) with the index closing at 7,147 points, as of August 22nd 2008. This is up 17% since the start of February this year and has almost tripled over the past two years. On May 20th 2008, on the back of BHP doubling its normal bookings of Capesize carriers, the index reached a high of 11,771 points with Capesize freight rates at almost US$200,000 per day. Rates have come off recent highs and current Capesize rates are approximately US$130,000 per day.

High freight rates make project logistics more important and favour producers that are closer to consumers. Freight costs were factored in heavily for JFY08/09 iron ore contract price negotiations and further increases will justify Australian producers to seek an even higher freight premium over their Brazilian competitors.

With the majority of bulk commodity demand coming out of China and India, Australian and SE-Asian producers have a geographical advantage over more distant producers. Thus, companies such as BRM, GWR, EQX and BAU are well-located to service the demand in iron ore, thermal coal and bauxite.

Background on the BDIThe Baltic Exchange provides shipping companies and customers a marketplace for brokering shipping contracts. Members own and operate the exchange, arranging the ocean transportation of bulk commodities from producer to end user.

The Exchange maintains prices on various routes around the world for diff erent size ships and uses this information to publish the BDI. The BDI is an average of the daily prices to ship raw materials and is used as a summary of the entire dry bulk shipping market.

The BDI only looks at raw materials such as coal, steel, cement and iron ore and does not include fi nished goods or container ships. The BDI takes into account 26 diff erent routes and factors in all four sizes of dry bulk transport vessels - Capemax (100,000dwt), Panamax (80,000dwt), Supramax (60,000dwt) and Handymax (35,000dwt).

Figure 1: Baltic Dry Index

SOURCE CIP Research, Bloomberg

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G2

Interesting new developments with the appointment of David Rose, a highly regarded experienced mining executive, the completion of a $29M placement and execution of an off take agreement Golden West Resources Ltd (“GWR”) has a 100% interest in the Wiluna West Iron Ore Project located approximately 40km west of Wiluna. The project has upgraded its JORC compliant Inferred resource by 38% to 119Mt @ 58.9% Fe which was completed by international mining consultants Snowden. GWR is targeting a 150Mt resource containing a 100Mt reserve to support a 10Mtpa operation for 10 years, commencing mid 2011. The strategic investment by Cleveland-Cliff s into GWR not only provides the potential to access the required infrastructure but also displays the high quality, economic potential of the Wiluna project. Recently, GWR also struck an off -take agreement and a share placement with a Chinese company partly owned by Arcelor Mittal which will be important in the company’s aspirations to become an iron ore producer.

APPOINTMENT OF DAVID ROSE AS CEORecently, GWR appointed highly regarded and experienced mining executive, David Rose as CEO of GWR eff ective from early October 2008. Mr Rose was previously COO of Rio Tinto’s non-Australian iron ore operations in Guinea, India and Brazil. He also has held operations, project management, and executive management roles in Western Mining, CRA, Pasminco and Argyle Diamond where he was Managing Director.

David Rose’s appointment may alleviate some investors’ corporate governance concerns and create a viable management alternative to Portman Mining’s proposed board representatives.

COMPANY HIGHLIGHTS• GWR has entered off take agreements with two Chinese companies, Valin and Yijian. Valin is ~33% owned by the world’s largest steel company, Arcelor Mittal.

• Valin and Yijian have both subscribed for shares @ $1.85 per share, raising a total of $29M.

• Recent resource upgrade to 119.0Mt @ 58.9% Fe JORC compliant inferred resource with low impurities including 0.06% P, completed by Snowden with greater upside in many of its targets.

• GWR is nearing completion on its scoping study and will soon begin its pre-feasibility study on developing a 10Mtpa FOB operation from the Wiluna West project from either Esperance (~900km) or the proposed Oakajee port (~700km) which is expected to be complete by the end of 2008.

• GWR has an aggressive +70,000m drilling campaign planned over the 2008 year; 2 RC rigs and one diamond drill rig are already operating on site with plans for an additional rig by September 2008.

• Low resource multiple of $1.62/tonne of high grade hematite presents itself as one of the lowest for both an explorer and emerging producer which is partly due to the recent corporate activity uncertainty and credit market concerns.

• 150Mt resource target based on the current resource and considering the signifi cant upside potential in the remaining areas this target should be easily achievable.

EQX.AX $0.18 30 April 2008

INDUSTRY Metals & Mining

ASX Code GWR

Principal Activity Iron Ore Exploration

Country of Operation Australia

Market Capitalisation $252.8M

Cash $48.0M

Diluted Enterprise Value $229.8M

12 month low / high 0.845 / 2.74

Board

Mr Con Markopoulos (Executive Chairman)

Mr David Rose (CEO eff ective early October 2008)

Mr Michael Wilson (Executive Director)

Mr Alan Rudd (Non-Executive Director)

Mr John Lester (Non-Executive Director)

Capital Structure

Shares on Issue 126.4M

Options (various) 23.3M

Shares Fully Diluted 149.7M

Resource

Mineral Iron Ore, Hematite

Inferred Resource* 119.0mt @ 58.9% Fe

8.9% SiO2;2.7% AI2O3; 0.06%P

*Includes iron ore resource from the Joyners JV which GWR is earning an 80% interest in.

GOLDEN WEST RESOURCES LTD

GWR $2.00 22 August 2008


Anastasios Arima+61 8 9421 [email protected]

SOURCE CIP Research

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Golden West Resources Ltd22 August 2008

P

CLEVELAND - CLIFFS STRATEGIC INVESTMENTASX-listed iron ore miner Portman Mining Ltd (controlled by Cleveland-Cliff s) has taken a strategic investment in GWR with a stake of 19.2% to date. Cleveland-Cliff s is a major US based international mining company that provides metallurgical coal and iron ore to international steel makers. Cleveland-Cliff s is the largest supplier of iron ore pellets to the North American market and its investment into GWR is a further indication of the high quality ore and strategic nature of the Wiluna Project. The implications for this investment for the future of the project are:

• Access to the existing rail infrastructure and to the port of Esperance, decreasing the capital and operating expenditure of the Wiluna project signifi cantly.

• Access to the required technical and fi nancial expertise needed for a 10Mtpa operation.

• Potential corporate activity by Portman Mining in the future.

CORPORATE DEVELOPMENTS GWR recently achieved a milestone when it entered into two off take agreements. The fi rst is an agreement to supply Hunan Valin Steel Tube & Wire Co., Ltd, of China (Valin) with up to 4.5Mtpa of direct shipping iron ore for 15 years. Valin is listed on the Shenzhen Stock Exchange and is 33% owned by the largest steel company in the world, Arcelor Mittal. The agreed price has a range of between 110% of the BHP/Rio benchmark price and 80% of the prevailing spot price. Valin has also agreed to subscribe for 14.4M shares at a price of $1.85 per share, raising $26.64M. This would give Valin approximately an 11.4% stake in GWR. GWR has also entered into an agreement with Yijian Investment Co. Ltd (“Yijian”) to supply Yijian with 500,000 wet metric tons of DSO per annum for 15 years on similar terms to the Valin agreement. Yijian has agreed to subscribe for 1.6M shares at $1.85, rasing an additional $2.96M.

The deals come just before the upcoming general meeting to be held on the 29th August, 2008 where Portman Mining is seeking representation on GWR’s board by replacing current directors, Con Markopoulos and Michael Wilson, with its own Managing Director, Richard Mehan and former Rio Tinto executive Paul Piercy. The Valin and Yijian stakes in GWR could also hamper any potential corporate activity by Portman Mining.

PROJECT ECONOMICS Cash Flow PotentialThe potential for the Wiluna West project to generate signifi cant returns in the current iron ore market is great, given that the resource is of a signifi cantly high Fe content and contains very low contaminants.

Figure 1 shows the potential project cash surplus given the past three years iron ore prices (assuming a fi nes:lump ratio of 50:50). Although the relative cost per tonne is high given the project location, the capex of the project is relatively low and with a production potential of 10Mtpa this enables the project to have both positive economics and a relatively short payback.

Figure 1 : Wiluna West resource

SOURCE GWR Announcements, ABARE, Bloomberg Note: Cash fl ow is based upon an Esperance FOB cash cost with a 50:50 Lump:Fines ratio. No discount has been applied for freight or product quality, a 60.1% Fe content has been assumed. Fines prices per dmtu used are; ‘06 - 74.63, ‘07 - 80.42 & ‘08 - 135.51

Golden West Resources Ltd


22 August 2008

G2

WILUNA WEST IRON ORE PROJECT An aggressive development campaign is currently underway. GWR plans to drill over 60,000 metres to further delineate the resource and a further 10,000 metres to defi ne a reserve. GWR will simultaneously be commencing the pre-feasibility study with a target completion date of December 2008. It is the intended that this campaign will establish both a 150Mt resource and confi rm the potential for the 100Mt reserve.

Rail AlternativesGWR has completed an assessment of the various transportation alternatives for the project. This has resulted in two proposed rail options;1. 900km rail to the port of Esperance; requires an extension to the Leonora- Esperance existing rail line of ~300km.

2. 700km rail to the port of Oakajee; requires the construction of the Oakajee rail line.

The fi nal rail option will now be heavily determined by Cleveland-Cliff s participation in the companies strategic objectives.

Cost EstimatesGWR has completed a desktop study of the estimated costs of the project for the two diff erent rail options. The study has concluded that either rail operation will allow for strong operating margins in the current market with the preference being the proposed Oakajee rail line. The estimated operating costs for the two rail alternatives are;

Esperance FOB cash cost - A$38.10 / tonneOakajee FOB cash cost - A$32.10 / tonne

Figure 2 : Wiluna West deposit locations

SOURCE GWR announcements


Golden West Resources Ltd22 August 2008

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Iron Ore ResourceThe Wiluna West Project covers an area of 440km2 and has an approximate strike length of 45km. GWR’s exploration eff orts at the Joyners Find North, Bowerbird, Bowerbird South and C3 deposits have further increased the Inferred Resource to 119.0Mt @ 58.9% Fe with further upgrades expected as results from further drilling at the C4 deposit and the Bowerbird South deposit. The resource is low in contaminants including an average of 8.9% silica and 0.06% Phosphorus. The company has continued to encounter signifi cant intercepts at Wiluna West including:

• 180 metres @ 58.3% Fe from surface• 90 metres @ 60.1% Fe from 14 metres• 64 metres @ 63% Fe from 28 metres

GWR’s deposits consist of direct shipping hematite ore and contains low levels of phosphorous, alumina and silica, with no other signifi cant contaminants. The resource is of a low phosphorous content and a relatively comparable iron ore quality to many of the West Australian Mid-Cap iron ore projects. In particular, GWR’s resource is of similar Fe quality but has a lower phosphorous content than many of the exploration projects in WA.

GWR has also entered an agreement to acquire two mining leases adjacent to the company’s existing Joyners Find tenements (subject to shareholder approval), which could signifi cantly boost the amount of mineable resource at Wiluna West.

Figure 3: Wiluna West deposit locations

SOURCE GWR announcements


Iron ore company confi rms massive resource in emerging iron ore province and is progressing a feasibility studySundance Resources Ltd (“Sundance”) is an iron ore explorer aspiring to become a 35Mtpa producer by 2012. The company’s main asset is the Mbalam project located within Exploration Permit No. 92 in the Republic of Cameroon in West Africa. Recent drilling completed by Sundance has confi rmed JORC compliant DSO-quality hematite mineralisation of 200Mt @ 60.3% Fe for the Mbarga and Mbarga South deposits and itabirite hematite mineralisation of 1.2Bt @ 38% Fe at Mbarga.

COMPANY HIGHLIGHTS• Sundance has an itabirite resource target of 2-2.5Bt and a production target of 35Mtpa DSO/itabirite which will create a world class project;

• Drilling has confrirmed the potential of a large scale, low cost open pit operation at Mbalam

• Based on Worley Parson’s updated cash study report, the Mbalam Project has potential to generate a signifi cant operating margin of US$1B per year.

• The Board and management team have a wealth of expertise in infrastructure, project development and iron ore experience.

• Cameroon government has recognised the Mbalam project as one of national interest and has provided strong support for its development.

• The majority of recent drilling results have high grade hematite (+60%) with relatively low impurities for the supergene hematite DSO material.

• Pre-feasibility studies commenced on the Mbalam project during 2007 with signifi cant progress made in key survey, engineering and environmental work programs. Negotiations have begun to prepare for the development phase of the Mbalam project with an MoU having been submitted to the Cameroon Government outlining the key mining, infrastructure development and fi scal terms proposed for the project.

• New surface mapping has identifi ed a new supergene hematite prospect and drilling and SDL’s 90% owned subsidiary CamIron was recently granted EP143 which cover 877km2 immediately east of EP92. Reconnaissance investigation into this area will commence in the June 2008 quarter.

• The Mbarga and Mbarga South deposits are near surface and have a very low stripping ratio of approx 0.2:1.

• Estimated capital cost of US$3.3B including port and rail (~490km) costs.

EQX.AX $0.18 30 April 2008


ASX Code SDL


Country of Operation Cameroon


Cash (30/6/2008) $47.0M


12 month low / high 0.160 / 0.865

Board

Mr George Jones (Non-Executive Chairman)

Mr Don Lewis (Managing Director)

Mr Alec Pismiris (Executive Director)

Mr Ken Talbot (Non-Executive Director)

Mr Geoff Wedlock (Non-Executive Director

Dr John Saunders (Non-Executive Director)

Mr Craig Oliver (Non-Executive Director)

Capital Structure

Shares Currently on Issue 1,881.0M


Shares Fully Diluted 1,973.0M

Resource

Mineral Iron Ore, HematiteSupergene 200Mt @ 60.3% Fe (7.6% SiO2; 2.7% Al2O3; 0.06% PItabirite 1.2Bt @ 38% Fe (44% SiO2; 0.6% Al2O3; 0.04% P)

SUNDANCE RESOURCES LTD

SDL $0.225 22 August 2008


Figure 1: Location of proposed rail

Ming Su+61 8 9421 [email protected]

SOURCE CIP ResearchSOURCE Company Announcements


Sundance Resources Ltd22 August 2008

UPDATED STUDY REPORTA study report completed by Worley Parsons in December 2007 updated original cost forecasts contained in the 2006 Scoping Study of the Mbalam Project completed by Promet Engineers. The study shows that the Mbalam project has the potential to deliver a DSO cash operating margin of US$1B per year based on an average FOB Price of US$52.30/t (Refer to Table 1). Notably, these fi gures do not take account of itabirite concentrate and have yet to factor in the most recent 80% price increase for iron ore. As can be seen in Figure 2, the economics of the project signifi cantly increases when the average FOB price is revised upwards.

In light of recent JORC resource estimates, SDL’s current target is for DSO production for the fi rst 7-8 years and the development of itabirite benefi ciation once these reserves are depleted.

Scenario

Throughput 35Mtpa DSOOperating margin per tonne US$31.62Operating margin per year ~US$1.1B

Key Assumptions

Average FOB Price (Lump + Fines DSO) US$52.30/tEstimated Cash Operating Cost US$20.68/tGrade +60% FeFines 70%Lump 30%Mine life 20 yearsRailway length 490kmBerth capacity 250,000DWT

Table 1: 35Mtpa DSO Study Report (December 2007)

Figure 2: Operating Margin per year based on diff erent average FOB prices per tonne

SOURCE Company announcements

SOURCE Company Announcements

Sundance Resources Ltd


22 August 2008

BOARD AND MANAGEMENT TEAMSundance has an experienced Board and management team with highly successful backgrounds in infrastructure, project development and the iron ore industry.

• Chairman George Jones was instrumental in the growth of Portman Mining, taking it from a start-up iron ore producer in the early 1990’s to a 8mtpa producer of hematite with a MCAP of >$600M before it was taken over by Cleveland Cliff s in 2005. George Jones is also chairman of iron ore producer hopeful, Gindalbie Metals which recently received the fi rst A$50M subscription payment from its joint partner, Ansteel; demonstrating the extensive contacts George Jones has with Chinese steel mills.

• Managing Director Don Lewis was previously MD of Multiplex Engineering Pty Ltd and responsible for major minerals and infrastructure projects including the Moma Mineral Sands Project ($320M) and the Perth Seawater Desalination Project ($300M).

• Non-Exec. Director Geoff Wedlock has had more than 35 years experience in the mining sector including 32 years with BHP where for a period he was CEO of BHP Iron Ore. Prior to joining Sundance, Geoff Wedlock was Managing Director of iron ore company Grange Resources.

• Non-Exec. Director Ken Talbot is a prominent Australian businessman with nearly four decades of corporate, fi nancial and mining expertise, including 20 years as a CEO/Managing Director. He founded the highly successful coal mining company, Macarthur Coal Ltd, which is today worth $2.8B. Ken Talbot’s investment company, Talbot Group, is Sundance’s largest shareholder and has an asset base of more than $550M.

• Non-Exec. Director John Saunders has wide experience in the private and public sectors, including high-level investment, business development and advisory roles in Australia, the US, Europe and China. Highlights include negotiating an engineering and construction contract with a Chinese consortium for a 750 MW hydro power project in Nepal and development of a 500,000tpa hot plate rolling mill in Vietnam with equipment supplied by a Chinese consortium. John Saunders is also Chairman of Yilgarn Infrastructure which is focusing on developing infrastructure for emerging iron ore mines in the Mid West Region of Western Australia.

MBALAM IRON ORE PROJECT (90%)This project Is based on Exploration Permit No.92 (937km²) and Exploration Permit No. 143 (877km²) which cover the Mbalam iron ore province in Cameroon. The permit areas are located ~300km eastsoutheast of the capital city of Yaoundé and are part of a larger iron ore province extending from Cameroon into neighbouring Gabon and Congo. Its deposits are typical supergene hematite enrichments from an Archean banded iron formation similar to large iron ore deposits mined in Liberia and the nearby CMEC funded project at Belinga, Gabon.

SDL has 5 priority targets at Mbalam: • Mbarga• Mbarga South• Metzimevin• Meridional• Njweng Previous exploration conducted by the UNDP and the Canadian International Development Agency between 1976 and 1984 showed that extensive iron mineralisation existed. UNDP concluded a non-JORC resource estimate of +800Mt for Mbalam including ~184Mt @ +60% Fe at Mbarga (from surface mapping and trenching) and 35Mt @ + 60% Fe at Metzimevin (estimated from a six-hole diamond drill program with intersections including 64.9m @ 65.7% Fe and 36.9m @ 64.6% Fe with low contaminants).



f

Figures 3&4: Map of the Mbalam permit areas and Sundance’s 5 priority targetsand location of the Mbalam Project

SOURCE Company website

MBARGA PROSPECTSupergene DSODrilling conducted by the Company has produced a JORC compliant Inferred Resource of 200Mt near-surface supergene mineralisation at Mbarga and Mbarga South deposits with the average grade being 60.3% Fe, 7.6% SiO2, 0.06% P and 2.7% Al2O3. Drilling at Mbarga averaged 50m in depth and around 40m at Mbarga South. SDL is currently completing infi ll drilling to convert the resource into indicated/measured status in the September 2008 quarter.

There is still upside with latest drilling identifying potential for signifi cant extensions of high Fe grade material below the supergene zone. The initial target for this additional material is between 40-60Mt of hematite grading 55-60% Fe.

Table 2: Supergene DSO drilling intercepts

Drillholes Type Intersection (m) From (m) Fe% SiO2% Al2O3% P% LOI%MBR0003R RCDD 41 0 63.25 2.48 2.91 0.09 2.93MBR0004 RC 32 6 63.62 2.58 2.67 0.06 3.18MB0016C RC 46* 0 63.50 1.66 3.89 0.04 2.62MB0017C RC 64 0 63.50 1.61 3.82 0.04 2.53MB0021C RC 35* 18 63.08 3.85 2.78 0.04 1.64*Denotes the hole ended in mineralisation


Sundance Resources Ltd


22 August 2008

Itabirite style materialThe itabirite style material generally underlies the higher grade supergene hematite. The Mbarga deposit alone has an initial Inferred JORC Resource of 1.2Bt of itabirite style mineralisation @ 38% Fe. The exploration target for itabirite hematite at Mbarga is 1.6-1.8Bt @ 38-39% Fe with the overall target for the Mbalam project being 2.0-2.5Bt. This mineralisation appears similar to the itabirite hematite mineralisation in a number of major iron ore projects in the Minas Gerais area of Brazil including the Minas Rio iron ore project being developed by Brazilian listed MMX Mineraceo e Metalicos.

The latest metallurgical test work has confi rmed the potential of benefi ciating Mbarga itabirite with results producing 40% Fe produced a +66% Fe concentrate with very low P and Al2O3 content and a 44% weight recovery. Notably, this benefi ciation process has been used by other companies to technical and commercial viability.

Figure 5: Drill intercepts at Mbarga


OTHER PROSPECTSRecent mapping also identifi ed a high grade hematite outcrop at surface at a new prospect approx 2.5km south of Mbarga. The prospect has a strike of over 1km with one reconnaissance drill hole at this mineralisation indicating supergene hematite enrichment from surface extending to ~70m deep. Assay results from this prospect are pending but could be potentially signifi cant.

Mbarga, Mbarga South and Metzimevin will be the main exploration targets in the near term to target near surface DSO quality material and also the potential of the itabirite style material. Sundance has 6 drill rigs operating on site and the focus will be on delineating a mineral resource inventory capable of sustaining a long-term 35Mtpa hematite export operation. Sundance has only just begun to tap into the potential of its Mbalam project with the current resource being based on drilling on ~9km²; there is still signifi cant upside with other prospects known to host iron mineralisation.



Co mm ence ra mp-up of operat ions

Construct ion

RISKSThe capex estimated to begin iron ore production at Mbalam is US$3.3B (Refer to table 3). Successfully arranging the fi nance required for this project is a major risk. The company has already commenced discussions to develop strategic partnerships with a range of iron ore and steel industry groups with respect to product off -take, development and fi nancing of the mine and export infrastructure. A range of prospective rail route options from the mine to the proposed port site have been identifi ed from satellite terrain modeling with a preferred route having been selected already. Bathymetric/seismic refraction studies are underway to confi rm conditions at the proposed export jetty site south of Kribi (Refer to Figure 1).

Sundance’s potential to deliver +US$1B per year as discussed in Figure 2 are purely conceptual in nature and are dependant on results from exploration to deliver a suffi cient resource and Sundance securing fi nancing to reach the production stage.

US$MMine and process plant 375Rail 1,423Port 529Indirects 442Contingency 508Total Estimated Capex 3,277

Table 3: Estimated capital cost for the Mbalam Project

Figure 6: Indicative Development Timetable




Advanced Iron Ore Explorer overcoming barriers to entry in the Pilbara with its recently upgraded 1.6Bt hematite resource...Brockman Resources Ltd (“Brockman”) has a 1.6Bt resource (including 347Mt of Indicated resource) from their fl agship project, the 100% owned Marillana Iron Ore Project (“Marillana”). After benefi ciation, this resource has the potential to produce >950Mt @ 57.4-60.0% Fe fi nal product. Brockman is concentrating on Marillana, recently having completed an oversubscribed raising of $112.5M to accelerate its development to be ready for production in 2009. Marillana is surrounded by world-class deposits owned by major iron ore players including BHP, RIO and FMG. Marillana is in close proximity to existing infrastructure, with BHP’s railway cutting through the lease, RIO’s Yandicoogina mine 20km south and FMG’s Cloudbreak mine approximately 35km north east.

COMPANY HIGHLIGHTS• Brockman has a resource of 1.6Bt with a potential shipping inventory of

950Mt of DSO and benefi ciated hematite ore grading 57.4-60.0% Fe.• Recent 40% upgrade in Marillana’s resource confi rms world-class deposit and demonstrates the potential to support a production profi le of 15-25mtpa commencing in 2012.

• Brockman is targeting an initial 2Mtpa operation for Stage 1 of the Marillana Project beginning in late 2009 with a DFS expected to be completed in the March quarter 2009.

• Brockman is investigating a 15Mtpa operation for Marillana (Stage 2) with a feasibility study expected to begin in September 2008.

• Several Australian and international institutions have joined Brockman’s register following the recent placement of 45M shares at $2.50 per share raising $112.5M which will accelerate development of Marillana.

• Brockman has completed a Scoping Study on Marillana producing a potential NPV of between A$876M and A$1,006M; this study did not incorporate the company’s signifi cant 1.6Bt resource upgrade.

• Marillana is ideally located, nearby to BHP, RIO and FMG rail lines - especially signifi cant given the latest developments of the National Competition Council recommending third party access be granted.

• Brockman is part of a Pilbara alliance, dubbed the North West Iron Ore Alliance, 4 companies working together to cooperate on infrastructure development and access - this alliance has recently been successful in securing berth reservations at Port Hedland that will have annual capacity of 50Mt by 2012.

• Brockman has now signed Confi dentiality Agreements with seven interested industry participants from China, relating to a possible off -take agreement with Brockman and a position on the share register.

EXPERIENCED MANAGEMENTOn the 1st of August 2007, Brockman appointed iron ore mining executive, Mr Wayne Richards as Managing Director of the company. Wayne fulfi lled senior executive roles within BHP Billiton Iron Ore and was responsible for developing ‘Business Integration Plans’ and commissioning multi-billion dollar expansions for mine, port and rail activities.

Wayne’s appointment brings not only an understanding of the iron ore industry and the challenges associated with infrastructure in the Pilbara, but an extensive network of contacts vital to the success of Brockman’s overall strategy.

EQX.AX $0.18 30 April 2008


ASX Code BRM




Cash $112.0M


12 month low / high $0.42 / $3.00

Board

Mr Ross Norgard (Chairman)

Mr Wayne Richards (Managing Director)

Mr Colin Paterson (Executive Director)

Mr Ross Ashton (Non-Executive Director)

Capital Structure

Shares Currently on Issue 132.7M



Resource

Mineral Iron Ore, Hematite

Indicated & Inferred Resource 1.6Bt @ 40.0-62.0% Fe

DSO & Benefi ciatedResource 950Mt @ 57.4-60.0% Fe

BROCKMAN RESOURCES LTD

BRM $1.49 22 August 2008


SOURCE CIP Researech

Eddie King+61 8 9421 [email protected]

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Brockman Resources Ltd22 August 2008

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MARILLANA IRON ORE PROJECT

Brockman’s fl agship project, Marillana (E47/1408), is located in the Pilbara region 100km northwest of Newman. The project covers 96km2 bordering the Hamersley Range and contains a 16km strike. There are extensive areas of supergene iron ore mineralisation within the Brockman Iron Formation that caps the range. Iron ore mineralisation comprises unconsolidated to moderately cemented material with grades ranging from 55-63% Fe. This material is ’free digging’ due to its unconsolidated nature and does not require blasting.

As shown in Figure 1, the tenement is split into 3 areas: • North West Sector• Rockhole Bore• Abalone

SOURCE Brockman Announcements and Google Earth

Signifi cant Hematite ResourceBrockman has a signifi cant mineral resource estimate of 1.6Bt of hematite (CID and detrital) mineralisation. This is split into:• High grade DSO of 55.4Mt @ 57.5% Fe at North West Sector and Rockhole Bore;• Lower grade benefi ciation feed of 1.52Bt @ 43.6% Fe across all three areas.Importantly, this resource includes a JORC-compliant Indicated Mineral Resource for the North-West Sector of 347Mt of CID and detrital mineralisation. Post-benefi ciation, the fi nal product is estimated to be >950Mt @ 57.4-60.0% Fe. The mineralisation extends over 16km of strike length and further ore mineralisation extension drilling is progressing in CY2008 to fi nalise the extent of mineralisation at Rockhole Bore and Abalone.

Following the mining process, benefi ciation test work has confi rmed that simple gravity screening was successful in upgrading the detrital mineralisation and pisolites to a saleable product of +57% Fe with an average weight recovery of over 59%, which have signifi cantly added to the resource base. These materials were considered waste and the upgrade has enhanced project economics by reducing the previous 4:1 stripping ratio down to a favourable 1.5:1 stripping ratio.

Marillana Iron Ore Project

Yandi(BHP) 1.1Bt

15km

Yandicoogina(RIO) 2.1Bt

10km

Marillana (BHP) 1.1Bt

10km

Cloudbreak(FMG) 434mt

35kmNorth West Sector

Rockhole Bore

Abalone16km Strike

BHP RAIL

BHP RAIL

Figure 1: The Marillana Project area, the extent of its strike, nearby mine sites and the BHP rail infrastructure cutting through the lease

Brockman Resources Ltd


22 August 2008

InfrastructureAs shown in Figure 1, there are multiple infrastructure opportunities present for Brockman with existing rail lines being within or close proximity of the project. Securing third-party infrastructure agreements with either BHP, RIO or FMG is essential for the Marillana Iron Ore Project and recent developments are highly favourable for Brockman. Discussions via the North West Iron Ore Alliance with the Port Hedland Port Authority have been successful with the Alliance being allocated a berth reservation with an annual capacity of 50Mt as early as 2012. The berth will be tailored to multiple users and is enough to cater for Brockman’s emerging production.

Positive Scoping StudyBrockman has completed a scoping study based on a 10Mtpa Iron Ore Project at Marillana commencing in 2011. The potential NPV’s range from A$876M to A$1,006M and IRR’s of 47-54% for three development scenarios, with capitals costs ranging from A$542M to A$755M and total operating costs between A$28.94-36.72/tonne. All scenarios have a 2-3 year capital payback and the results are summarised below in table 1. The Scoping Study assumed +/-30% accuracy on the capital and operating costs, discount rate of 12% and mine life of 11 years. Three principal options were developed for Marillana:• Option 1: The utilisation of the BHP Billiton rail system, accompanied by the full funding of an unloader at Port Hedland

• Option 2a: The utilisation of FMG rail system, with the full capital cost of a rail spur from Marillana to Cloud Break

• Option 2b: The utilisation of the FMG rail system, with the rail spur from Marillana to Cloud Break being captured as an operating cost

The capital cost estimates include a 10Mtpa processing plant (with 10,000tph train loader and conveyors), minesite infrastructure (camps, airstip and power), mine pre-strip and ore transport infrastructure, including rail loops and spur lines, haul roads and unloader at Port Hedland.

The study assumes mining CID only and does not fully incorporate Brockman’s 1.6 Bt resource announced in August 2008. Thus, there is signifi cant upside in the NPV of the project once this has been taken into account.

Table 1: Economics associated with the three principle optionsOption Capex (A$m) Opex (A$/t) NPV (A$m) IRR (%) Payback

Period (years)

1 714 29.20 1,006 47 32a 755 28.90 986 44 32b 542 36.70 876 54 2

SOURCE Brockman Announcements


Brockman Resources Ltd22 August 2008

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INDICATIVE TIMETABLEFollowing the signifi cant resource upgrade, Brockman is positioning itself to be a future iron ore producer behind it’s world-class resource, moving to a BFS next fi nancial year. Early mining is forecast to begin in FY2009/10, eventually moving to a 15-25Mtpa mining operation in FY2011/12.

Figure 2: Brockman’s implementation plan

SOURCE Brockman Announcements

SOURCE Brockman announcements

IRON ORE REGIONAL PROSPECTSBrockman has several other iron ore projects which are yet to be signifi cantly explored. These regional projects are in the Hamersley Iron Province covering more than 400km2, with Brockman owning 100% of each.

Surface sampling at Duck Creek has been completed and results from 286 samples are expected later this month. Work has also begun at Mt Stuart and West Hamersley with 5 surface samples being collected from each tenement.

Detailed aeromagnetic surveys have been completed across all Brockman tenements and results are expected soon.

Figure 3: Brockman’s tenements in the Hamersley Iron Ore Province

PFS (update)

Resource and reserve drilling

Construction of 10-15Mtpa Processing Facility

Early mining at Marillana (2Mtpa)

15-25Mtpa Production

FY 2008/09 FY 2011/12 FY 2010/11 FY 2009/10

BFS


Name-change symbolising Indonesian explorer’s monumental move to become a coal producer this September with more mines to come!Equatorial Coal Limited (“EQX” or “Equatorial”) - formerly EQiTX Limited - has fi nalised its move into the Indonesian coal sector by the recent change of activities, approved by shareholders. EQX has entered 3 separate MOUs which allows it to participate in profi ts from the mining of coal on a number of Indonesian properties. The company is currently conducting due diligence on these properties, where its aiming to prove up signifi cant quantities of mineable coal. All properties are found in the prolifi c South and East Kalimantan region, where a signifi cant thermal and metallurgical coal industry resides. Equatorial is committed to becoming a producer with 1mtpa coal production forecasted to begin in September 2008 with its third MOU, Alam Duta.

COMPANY HIGHLIGHTS• Appointment of coal industry veteran Jim Dracopoulos to Managing

Director, who previously managed Straits Resources’ Sebuku coal mine as well as Straits’ coal marketing business.

• EQX expects to be cash fl ow positive at their Alam Duta project by end of CY 2008 with commencement of 1mtpa production in September.

• Equatorial has a strong partnership with PT Mega Coal Indomine (“Mega Coal”) who have been very supportive. Mega Coal is focused on working with responsible and respected parties and has a outstanding relationship with local key players in Kalimantan.

• Three binding MOUs signed for the exploration and development of coal in East and South Kalimantan.

• Low acquisition cost per tonne for all 3 MOUs ranging between US$0.92/t and US$1.67/t.

• Indonesia has a signifi cant regional thermal and metallurgical coal industry and is the largest thermal coal exporting country in the world.

• EQX’s MOUs lie within close proximity of excellent infrastructure including existing ports.

• Excellent logistics of the project will allow supply to easily enter the SE Asian coal market, with local producers already exporting to Japan and South Korea.

• Sustained demand for both metallurgical and thermal coal from SE Asia has sustained high Indonesian coal prices.

IMMINENT PRODUCTIONEquatorial will be moving into production through MOU 3 where they have a 51% interest in net profi ts generated from the PT. Alam Duta Kalimantan licence (Kuasa Pertambangan or “KP” is a licence issued by the Department of Mines for exploration and exploitation of mineral resources, which must be wholly owned through 100% Indonesian national shareholding).

The mine is adjacent to existing coal operations and is well-developed with agreements in place to use roads, barge-loading facilities and ports. Equatorial appointed PT. GSB Resources (“GSB”) as the mining contractor responsible for topsoil removal, mining of coal, transport of coal, maintenance of haul roads and all other activities associated with coal mining. GSB has been on-site for the past two months with construction nearing completion on the camp, workshop and offi ce complexes. Production is planned to be 1Mtpa over +4 years.

EQX.AX $0.18 30 April 2008


ASX Code EQX

Principal Activity Coal Exploration

Country of Operation Indonesia


Cash $9.0M


12 month low / high 0.15 / 0.43

Board

Mr Geoff Gander (Executive Chairman)

Mr Jim Dracopoulos (Managing Director)

Mr Hilton Nathanson (Non-Executive Director)

Mr Sol Majteles (Non-Executive Director)

Capital Structure




EQUATORIAL COAL LTD

EQX $0.28 22 August 2008


SOURCE CIP Research



Equatorial Coal Ltd22 August 2008

INDONESIAN COAL INDUSTRYKeeping the lights on in AsiaAmid higher energy demands from China and India, Indonesian exports of thermal coal are expected to continue to grow dramatically. Coupled with existing demand from Korea, Japan, Taiwan and Hong Kong, CIP believes that Indonesia has the proven track record and is in a prime position to service the power-hungry Asian region for the foreseeable future. This trend is evident in Figure 1. CIP believes that coal produced from Equatorial’s projects will be sold to a market with increasing demand for Indonesian thermal coal with potential for sustained thermal coal prices of above US$70/t.

Indonesian AdvantagesThe positive freight diff erential of US$25/t arising from the proximity of Indonesia to China, India, Korea and Taiwan as compared to Australia which increases appeal of Indonesian coal. Exports from the country in 2006 were 178Mt and are expected to grow dramatically to over 200Mt as transportation capacity is not constrained with river systems providing easy access to inland deposits and coastal deposits. Although Indonesian coal is generally of lower quality than Australian export thermal coal, it is also very low in deleterious elements, particularly ash and sulfur.

SOURCE CIP Research

Figure 1: Indonesian coal exports by regional distribution (Mt)

Figure 2: Indonesia’s Competitive Advantage

SOURCE CIP Research

Equatorial Coal Ltd


22 August 2008

Acquisition ConsiderationEquatorial is currently undertaking due diligence on the permits and has commenced drilling. Upon successful completion of due diligence, the issue of exploitation permits, identifi cation of suffi cient quantities of coal and commencement of production, Equatorial’s maximum consideration payable to Mega Coal will be US$9.8M and 30M performance shares, equating to a total acquisition cost of US$0.92/t of coal.

Surrounding Coal OperationsThe East Kalimantan region is a prolifi c coal mining region in Indonesia with major Indonesian companies producing ~100Mt of coal in 2006 from the province. The majority of coal exports from the region comprised of thermal coal sales to the Japanese, South Korean and T aiwanese power markets. This export market utilises six coal terminals ranging in size from the 32Mtpa capacity Tanjung Bara Coal Terminal owned by Kaltim Prima Coal (subsidiary of Bumi Resources) to small 8,000dwt barge loading ports.

EAST KALIMANTAN EXPLORATION PERMITS (MOU 1)On the 29th of October 2007, Equatorial successfully signed a binding Term Sheet for the rights to 70% of the net profi ts generated from the production of coal from six Indonesian coal KPs covering almost 18,000 Ha located in the Regency of Penajam Paser Utara, East Kalimantan.

Figure 3: Indonesian coal permits, East Kalimantan

Table 1: Other major coal contractors in East Kalimantan (2006)

SOURCE Equatorial

SOURCE 2007 Coal Manual (Tex Report), CIP Research

Contractor Production (000’s tonnes) Product Export Port

Berau Coal 10 593 Thermal Muara Pantai

Indominco Mandiri 10 302 Thermal, Coking Bontang Coal Terminal

Kaltim Prima Coal 35 301 Thermal, Coking Tanjung Bara Coal Terminal

Kideco Jaya Agung 18 912 Thermal Tanah Merah Coal Terminal

Trubaindo Coal Mining 5 738 Thermal Balikpapan Coal Terminal

Other 18 761

Total 99 607


Equatorial Coal Ltd22 August 2008

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SOUTH KALIMANTAN EXPLORATION PERMITS (MOU 2)On the 24th of December 2007, Equatorial signed another binding Term Sheet with Mega Coal that entitled Equatorial to take a 51% interest in the net profi ts from various licenses in South Kalimantan. The license areas are smaller in South Kalimantan than in East Kalimantan however the coal seams in the area are typically signifi cantly thicker and more consistent. The project area lies in close proximity to suitable barge port areas and to the open sea. Logistically, these permits are well-situated to allow easy trans-shipment operations with a very short haul by barge. Mega Coal has free carried interests on the permits and will receive consideration once key milestones are met.

COAL PRODUCING ASSET ALAM DUTA (MOU 3)On the 6th of May 2008, Equatorial signed an additional binding terms sheet with Mega Coal entitling Equatorial to a 51% interest in the net profi ts from a KP nearby Kintap, South Kalimantan. The 100Ha KP is adjacent to the permits in MOU 2 and is well developed and ready to move to production in September.

Acquisition ConsiderationEquatorial has paid Mega Coal US$2.5M for its 51% interest, but this is fully refundable in the event that the operation fails to achieve certain pre-agreed profi t hurdles over the fi rst 12 months of production. In addition, Equatorial will pay Krypton Resources Pte Ltd an introductory fee of 1.5M EQX shares for introducing the opportunity. The total acquisition cost is US$1.38/t of mineable coal identifi ed.


Emerging explorer led by experienced coal executives in an emerging province amidst the power crisis in South Africa...Comdek Limited (“Comdek”) has a JORC Inferred Resource of 739Mt thermal and coking coal across its three properties in the Waterberg Coal Field in the Limpopo Province, South Africa. To complement these assets, Comdek is in the process of fi nalizing the acquisition of Energy Investments Limited (“EIL”) and Tiger Coal Pty Ltd (“Tiger Coal”). Both companies have applied for two coal projects each in Tasmania. All Comdek projects were previously owned by BHP or RIO. Importantly, all project areas have high potential for increased resources and are well-located to infrastructure.

COMPANY HIGHLIGHTS• Comdek appointed experienced coal executives Paul Jury to Managing

Director and Steve Matthews as an Executive Director, both were instrumental in growing ASX-listed Resource Pacifi c Holdings Limited from a $54M company to their eventual takeover by Xstrata at a value of approximately $1.1B.

• 12 additional boreholes showed extensions to Koert Louw Zyn Pan’s mineralisation and increased the Waterberg JORC Inferred Resources by 78% to 739Mt.

• Comdek completed a $12M rasing on August 15 through the placement of 66.7M shares, the majority of which have already been approved by shareholders. The funds will enable CDS to continue exploration and development of their coal tenements.

• Comdek has been granted an Eskom Generation Division Vendor Number to supply the utility company’s new power stations. Eskom approached Comdek to apply for preferred supplier status of coal as part of their long-term strategy to identify future coal supply.

• Comdek is an emerging explorer in an emerging province; the Waterberg Coalfi elds. It has an estimated 40% of the known remaining coal reserves in South Africa, yet there is only one operating colliery in the area, Grootgeluk.

• Grootgeluk is 30km from Comdek and has an adjacent railway to Richards Bay Coal Terminal (“RBCT”), South Africa’s largest.

• Comdek properties are strategically located to power stations with Grootgeluk in close proximity to two coal-fi red power stations, Matimba and Medupi (currently under construction and expected completion early-2011)

EQX.AX $0.18 30 April 2008


ASX Code CDS

Principal Activity Coal Exploration

Country of Operation South Africa, Australia


Cash $1.4M


12 month low / high $0.016 / $0.42

Board

Mr Michael Hunt (Chairman)

Mr Paul Jury (Managing Director)

Mr Scott Douglas (Executive director)

Mr Steve Matthews (Executive Director)

Capital Structure




Resource

Mineral Coal, Thermal and Coking

Inferred Resource 739Mt

COMDEK LTD

CDS $0.175 22 August 2008


Figure 1: Direct Railway to Richards Bay Coal Terminal

SOURCE Comdek announcements SOURCE CIP Research


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Comdek Ltd22 August 2008

WATERBERG COALFIELDSCDS, via its’ acquisition of Isicebi Carbon Mining Pty Ltd (“Isicebi”), has the right to earn a 70% interest in three coal projects located in the Waterberg Coalfi elds: Lisbon, Zoetfontein and Koert Louw Zyn Pan. This interest is achieved by spending up to A$5 million over 3 years towards producing a Bankable Feasibility Study. These properties total 3,160 Ha and are currently owned by a Black Economic Empowerment (“BEE”) group, Lukale Mining Ltd (“Lukale”) and were acquired from BHP Billiton and BP Coal due to pro-BEE changes in the Minerals Petroleum Resources Development Act.

Current JORC ResourceAcross the three properties, CDS has reported an Inferred Resource estimate of 739Mt, a 78% increase over its initial estimate. Zoetfontein and Lisbon are considered to be mainly coking coal type properties whilst Koert Louw Zyn Pan is majority thermal. The RBSA approved the transaction on the 16th of June 2007 and now Comdek will aggressively target +1Bt coal resource across these three properties. The Company is commencing a 98 exploration hole program and has also commenced the mining approval process. It intends to establish a bankable feasibility in a short term horizon (1-1.5years) with a clear intent to commence mining operations in 2-3 years if possible.

Property Type Tonnage (Mt)Zoetfontein Coking 75.4

Lisbon Coking 17.1

Koert Louw Zyn Pan Thermal and Coking 646.3

Total 738.8

Table 1: JORC Inferred Resource Estimates for Waterberg Tenements

Figure 2: Geological formation for the Waterberg Coalfi elds

SOURCE Comdek announcements

Geological FormationA thin layer of overburden is present (~16m) and the open pit stripping ratio is estimated to be 1:1. The mineralization extends to 110m in depth, but the resource calculation is based on a depth of only ~75m, thus, there is high potential for the resource to be increased. Additionally, the resource has a similar geological sequence to the Grootegeluk (811Mt Reserve), providing further optimism. Koert Louw Zyn Pan’s formation exhibits all 11 zones shown in fi gure 2, whilst Zoetfontein and Lisbon are shallower with zones 1-4 at the surface.


Comdek Ltd


22 August 2008

Figure 3: Locality of existing power stations and railway infrastructure

Table 2: Eskom Power Capacity and Demand for the Period 2008 - 2014

Nearby Rail Approximately 40km South East of Comdek’s properties is a rail line servicing RBCT, that is currently undergoing expansion plans to increase export capacity to 91Mtpa (Expected completion in early 2009). The expansion gives higher preference to pro-BEE companies and Comdek will look to tender an application. Current spot prices out of RBCT are well above historical prices.

The Witbank power region is also connected via rail and the coalfi elds in this area are maturing with approximately 10-20 year mine life remaining. Total Witbank capacity is 40-50Mtpa and power stations will need new sources of coal.

Power CrisisComdek is also looking to capitalise on the current power crisis in South Africa. Eskom, one of the world’s largest utility companies, generates 95% of electricity in SA and is currently consuming more coal than planned. Eskom is currently operating at dangerously low inventory levels and is forecasting shortfalls over the long-term.

Additionally, approximately 10 power stations will be needed over the next 20 years and substantial coal sources, such as those from Comdek’s properties, will be needed to supply these needs. Medupi power station, which is expected to be completed early 2011, will need more than 16Mtpa and is directly connected to Koert Louw Zyn Pan via road and is a possible destination for the 646.3 Mt resource.


Year Forecast Demand (MW)

Ideal Operating Capacity (MW)

Shortfall (MW)

2008 38,287 44,030 4,682

2009 40,158 46,182 4,919

2010 41,671 47,922 4,767

2011 43,238 49,724 6,338

2012 44,655 51,365 7,026

2013 46,430 53,395 6,633

2014 48,624 55,918 6,794



Comdek Ltd22 August 2008

TASMANIAN COAL AQUISITIONSIdeally located, all projects are close to rail infrastructure with multiple port infrastructure options. Export coal price expectations are signifi cantly higher than historic levels and these deposits may now present a very economic scenario.

EIL AcquisitionsOn the 7th of February 2008, Comdek signed an agreement to acquire EIL for a consideration of 36M shares. EIL has applied for two coal projects located in Tasmania - Woodbury and Bonnie’s Tier (Latrobe). These properties were previously owned by BHP and pre-JORC historical drilling indicates between 12 to 22 million tonnes of black bituminous thermal coal. Comdek believes that there is potential for signifi cant upgrades to this resource and is targeting an initial resource of 100-160 million tonnes of thermal coal. This transaction remains subject to and conditional upon the granting of the exploration licences to EIL.

Tiger Coal AcquisitionsOn the 27th of May 2008, Comdek signed an option to acquire Tiger Coal for a consideration of 75M shares. Tiger Coal has applied for the Jericho East and Jericho West Coal Projects. These properties were previously owned by Rio Tinto and pre-JORC historical tonnage is estimated to be 60 to 80Mt of black bituminous coal. Comdek believes that there is potential for signifi cant coal discoveries and has set an initial exploration target of 240-300Mt of thermal coal. Jericho East and Jericho West cover an area of 22,000Ha and 22,300Ha, respectively, and are considered highly prospective.

Figure 4: Coal projects in Tasmania

SOURCE Comdek Announcements


Pure WA bauxite play with massive landholdings secures highly respected mining executive Daniel Tenardi as Managing DirectorBauxite Resources Ltd (“BAU”) is an exploration play focusing on three highly prospective areas for bauxite: the North and South Darling Range and the Kimberley in Western Australia. To date, BAU applied for 44 tenement licenses across these areas with 3 licenses granted already. BAU is in the process of interpreting substantial historical work completed by several companies including CSR/Pacminex, Project Mining Corporation, Bridge Oil, Vam Ltd and Alcoa. Once review of the historical data has been completed, BAU plans to gain the necessary approvals to commence drilling in the December quarter 2008 to defi ne an initial economic bauxite resource suffi cient to support a 2mtpa direct shipping bauxite project in the shorter term.BAU listed on the ASX on 22 October 2007 at $0.20 after closing it’s $7.5M IPO early and oversubscribed.

COMPANY HIGHLIGHTS• Key appointment of Daniel Tenardi as Managing Director. Mr Tenardi has extensive experience in the bauxite industry including 15 years with Alcoa.

• BAU has a two-stage Business Plan with Stage 1 targeting an initial bauxite resource target of 30Mt and a 2Mtpa DSO operation, and Stage 2 targeting a resource that will support development of an Alumina Refi nery.

• Preliminary scoping study confi rms positive economics of a 2Mtpa DSO operation which will deliver early cashfl ows.

• The project areas lie in a province known for its gibbsite ore, low reactive silica and the Darling Ranges supplies 17% of the world’s alumina.

• 44 applications for tenements highly prospective for near surface bauxite has been applied for covering a massive 9,400km2 with a further 3 secured so far in the North Darling Range.

• Projects lie in areas with proven bauxite mineralisation adjacent to world class bauxite mines and refi neries and is close to existing refi neries, road, railway and ports.

• Over $2M (circa $40M in today’s dollars) was spent during the 1960s and 1970s by several companies who reported existence of bauxite mineralisation in certain areas of BAU’s applied tenements.

• BAU is in discussions for potential Direct Investment/JV/off take opportunities.

• The Board and management team come from successful backgrounds with experience in infrastructure and bulk commodities including key former Gindalbie Metals Ltd management who were instrumental in defi ning Gindalbie’s iron ore project.

• Substantial investments have been made in the bauxite/alumina industry recently including BHP’s US$2.8B planned expansion of the Worsley aluminium refi nery in Western Australia and follows Rio Tinto’s US$38B cash acquisition of aluminium producer Alcan last year.

• Demand for aluminium from emerging economies particularly China and India continues to grow while supply of aluminium is being curbed by power constraints in China and South Africa.

• Hatch consulting has been appointed to explore the possible benefi ciation techniques available and capital required for Darling Range bauxite.

EQX.AX $0.18 30 April 2008


ASX Code BAU

Principal Activity Bauxite Exploration



Cash $7.6M


12 month low / high 0.20 / 0.55

Board

Mr Luke Atkins (Executive Chairman)

Mr Daniel Tenardi (Managing Director - eff ective 8/9/2008)

Mr Neil Lithgow (Non-Executive Director)

Mr David McSweeney (Non-Executive Director)

Mr Robert Nash (Non-Executive Director)

Capital Structure




BAUXITE RESOURCES LTD

BAU $0.265 22 August 2008



SOURCE CIP Research

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Bauxite Resources Ltd22 August 2008

MANAGING DIRECTOR APPOINTMENTThe recent appointment of Mr Daniel Tenardi as Managing Director of BAU further endorses this bauxite player’s credentials. Mr Tenardi has extensive experience with Darling Range bauxite mining having spent 15 years with Alcoa. He has held management and director positions with Rio Tinto in their iron ore mining interests in the Pilbara and most recently developed close working relationships with Chinese interests as Chief Operating Offi cer for CITIC on its Sino Iron Project.Executive Chairman Luke Atkins believes Mr Tenardi’s enthusiasm for BAU’s bauxite project, his wealth of knowledge and hands on bauxite understanding and his most recent experience dealing with Chinese partners will prove invaluable to BAU’s goal of a DSO operation.

DARLING RANGE PROJECTSBAU is currently focusing on its Darling Range projects with the North Darling Range Project being the most advanced currently with 3 tenements covering 447km2 being granted in this project area already.


Figure 1: The Darling Range Projects detailing the granted and pending tenements.

Bauxite Resources Ltd


22 August 2008

Figure 2: The Kimberley Project detailing pending tenements


North Darling Range Project (16 ELs covering approx. 2,892 km2)Signifi cant work was conducted by CSR/Pacminex, Project Mining Corporation and Vam Ltd in the late 1960’s and 70’s in parts of the North Darling Range project. Over $2M was spent on drilling programs (9,820 holes for 52,600m), resource estimations and metallurgical testwork to investigate the potential to support an alumina refi nery. They identifi ed areas containing bauxite mineralisation and derived a non-JORC resource, however since BAU has yet to verify all the historical data and conduct its own drilling programmes, it is premature for the company to report these numbers. Initial review of the data has identifi ed certain areas to have the potential to yield +30Mt of bauxite. Data from the Geological Survey of Western Australia also indicated other signifi cant areas of bauxite laterites preserved on plateaus and forming outcropping ridges. Historical drilling has largely identifi ed bauxite mineralisation commonly in 2-3m thicknesses at surface to a maximum depth of 12m.

Over the longer term, BAU plans to prove up a suffi cient resource in this project area as part of Stage 2 of its business plan to develop an Alumina Refi nery.

South Darling Range Project (22 ELs covering approx. 4,088 km2)The South Darling Range project includes large areas of privately owned land and is adjacent to Alcoa’s minerals lease area and their Huntly Mine (the world’s largest bauxite mine). Historical reports from Project Mining Corporation, Bridge Oil Pty Ltd and Alcoa have identifi ed areas containing bauxite mineralisation as well as BHP’s Mount Saddleback bauxite mine which supplies the Worsley refi nery. During 1969-1973, Vam Ltd conducted exploration work including drilling (2,368 holes for 6,891m) over parts of BAU’s applied tenements and completed a resource estimation which had average grades of 34% of available alumina. The project also covers additional areas reported by the Geological Survey of Western Australia as containing bauxite laterites.

BAU plans to prove up an initial resource of +30Mt of bauxite in this project area to commence a +2Mtpa DSO operation in the short term.

KIMBERLEY PROJECT Kimberley Bauxite Project (6 ELs covering approx. 1,814km2)The Kimberley project covers areas in the vicinity of the Mitchell Plateau (one of the largest known bauxite reserves in the world) and is adjacent to tenements held by United Minerals Corporation Ltd (“UMC”) and in the area of those held by Alcoa.

The area has attracted great interest recently with UMC commencing exploration for bauxite in the area and entering a JV agreement with a Fortune 500 company, Norsk Hydro to explore the possibility of bauxite mining and alumina refi ning in the region.


Bauxite Resources Ltd22 August 2008

PEER COMPARISONThere are few ASX-listed companies which off er exposure to the bauxite market and BAU is the only junior ASX-listed bauxite explorer in the Darling Ranges of Western Australia.

Transol recently acquired 3 bauxite exploration licenses in Cambodia covering 866km2. The licenses lie adjacent to BHP/Mitsubishi project areas.

UMC operates an iron ore project in the Pilbara and a bauxite project in the Kimberley region covering 6,830km2 in the Kimberley region. It appears however that at the moment, there is greater focus on their iron ore project and with a MCAP of A$320M, CIP believes BAU off ers better leverage to the bauxite market.

Figure 3: The Darling Range Projects detailing the granted and pending tenements.

SOURCE Company

RISKSBAU continues to identify priority areas in order to commence drilling and prove up an economic bauxite resource. Several of BAU’s tenements were previously held by Alcoa and Worsley Alumina and overlap areas of State Agreements which may aff ect the company’s application to explore for bauxite; however the company intends to negotiate terms with the relevant parties to secure bauxite exploration and mining rights to these areas.

With current plans to start a bauxite DSO operation to deliver early cashfl ows rather than invest in a capital intensive alumina refi nery plant, being able to secure customers for its product is a risk for BAU. However we believe growing demand for bauxite and aluminium will mitigate this risk with the company having already received strong interest particularly from Asia.

There are several existing ports and refi neries well within rail and trucking distance of BAU’s tenements, however gaining access to these ports and selling bauxite to asian refi neries will be an issue that needs to be further explored.

The company currently has $7.6m in cash and while this is likely to be enough for the initial near surface exploration required to defi ne a JORC resource, the company will need more capital or possibly seek a JV partner in order to proceed through to the next stage.

Bauxite Resources Ltd


22 August 2008

CONCLUSIONThe BAU story is already shaping up to be reminiscent of a young aspiring iron ore play which has grown to become multi-billion dollar iron ore company, Fortescue Metals Group (“FMG”). BAU is walking a similar path that FMG once did when it began pegging large known iron ore tenements in the Pilbara under the nose of the iron ore majors and just before the iron ore boom. Compared to the iron ore market, the bauxite market is still in its infancy and BAU provides excellent leverage for investors wanting to invest in the bauxite industry.

With the advent of recent and planned major infrastructure projects in the Kimberley and Darling Range areas including BHP’s $2.8B Worsley refi nery expansion off ers new and exciting exploration opportunities. Coupled with substantial investments in aluminum refi neries in the bauxite poor Persian Gulf and the growing demand for aluminium from emerging economies (namely China and India), these are all indicators that the bauxite boom has begun. This all bodes well for BAU’s strategy to identify suffi cient bauxite resources close to existing infrastructure and ship bauxite ore direct to overseas markets.

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Existing JORC resource of 439,000t (approx. $2.5B worth) of contained copper and we expect the company to double the resource by the December 2008 quarter. Tiger Resources Limited (“TGS”) is an emerging copper producer and mineral exploration company with over 1800km2 of tenements in the highly prospective copper belt in the Kantanga Province of the Democratic Republic of Congo (DRC). They are earning a 60%-70% interest in a number of proven and high potential exploration projects including Kipoi, Lupoto, Kolwezi and Sakania. The company is listed on the ASX, the Toronto Stock Exchange and the Frankfurt Stock Exchange. Drilling at the company’s fl agship project Kipoi has returned world class copper-cobalt intercepts. The Kipoi Central deposit has a high grade (+6%) core which the company is targeting for early production of 32,000tpa of black copper by putting the material through a Heavy Media Separation (“HMS”) plant and Furnace by early 2010. A DFS is expected to be completed in the September 2008 quarter.

COMPANY HIGHLIGHTS• TGS recently announced a resource upgrade to the high grade component at Kipoi Central to a Measured and Indicated status of 2.86Mt @ 8.1% cu which will allow early mining to produce 32,000tpa of contained copper by early 2010.

• A large initial Inferred Resource of 439,000t of contained copper @ 3.3% and 20,000t of contained cobalt for the Kipoi Central deposit alone. Additionally, mineralisation remains open along strike and down dip.

• Excellent drilling results continue at Kipoi with best results to date including:

• 133.5m @ 6.4% Cu • 88.0m @ 7.9% Cu and 0.3% Co • 122.0m @ 7.3% Cu • 109.0m @ 5.0% Cu & 1.0% Co • 118.6m @ 7.0% Cu • 118.6m @ 7.0% Cu • 102.5m @ 7.3% Cu • 109.0m @ 7.6% Cu• TGS’s experienced Board and management team have a wealth of experience and have an excellent track record of both successful exploration programs and taking projects to production in Africa.

• The Company has over A$25M in cash which should be suffi cient to support its aggressive exploration and completion of its feasibility study.

• Open pit mining and initial capex of US$50-70M is achievable to enable initial production. CIP believes a capex payback of 1 year is achievable based on our cashfl ow calculations and 3-6 month production ramp up.

• TGS plans on proving +1Mt of copper metal by end of 2008 to support future production of 100,000tpa of copper metal and 1,600t of cobalt.

• There is excellent existing infrastructure with good access to power, roads, rail and water.

• The DRC Government is in the process of reviewing mining projects which could result in certain mining deals being renegotiated. CIP believes this is a reason why TGS is trading at a discount. Following a media release made by TGS on 22/2/2008, it appears the contractual terms of the Kipoi Project will not be signifi cantly aff ected. Notably, TGS’s JV partner is a DRC state controlled company.

• TGS has other signifi cant properties through the Aurum JV including a grassroots discovery at Pumpi (over 500m of mineralisation) which is adjacent to the world-class Tenke Fungurume deposit.

EQX.AX $0.18 30 April 2008


ASX Code TGS

Principal Activity Copper/Cobalt Exploration

Country of Operation DRC


Cash $25.3M


12 month low / high 0.255 / 0.94

Board

Mr Reg Gillard (Chairman)

Mr David Young (Managing Director)

Mr Patrick Flint (Director)

Mr Bradley Marwood (Director)

Mr Rhett Brans (Non-Exec. Director)

Capital Structure




Resource

Mineral Copper/Cobalt

Inferred Resource - 13.4Mt @ 3.3% Cucontaining 439,000t of copper and 20,000t of cobalt; includes Measured and Indicated Resource of 2.86Mt @ 8.1% Cu containing 232,000t of copper and 4,000t of cobalt.

TIGER RESOURCES LTD

TGS $0.34 22 August 2008


Resource


SOURCE CIP Research

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Tiger Resources Ltd22 August 2008

PEER GROUP COMPARISON* - GRADE IS KINGTGS’s resource has world class copper grades which are far superior to most other companies with the exception of Anvil Mining which also operates in the DRC. Its high grade resource is a reason why we believe it has a very strong potential to develop into a world class mine.

TGS has an EV/resource multiple of approximately A$453 per tonne of contained copper* as can be seen in the graph below. However, with the inclusion of TGS’s attributable cobalt credits, TGS becomes signifi cantly cheaper with a EV/resource multiple of A$323 per tonne of contained copper equivalent*^. This multiple is even more attractive in light of TGS’s expected JORC resource upgrades later in 2008. CIP believes it is only a matter of time before TGS will increase its resource and in eff ect decrease its EV/resource.

The current cobalt price is +US$60,000/t, which values TGS’s attributable cobalt credits at an in-ground value of ~US$700M. At current prices, TGS’s attributable in-ground copper and cobalt resource is a staggering +US$2.5B*^.

There are a number of companies which appear to be ‘cheaper’ than TGS; however TGS has a considerably higher grade copper resource, a larger scale project, and lower capex and opex costs than most of these companies’ projects.

Good mineralisation recently identifi ed immediately west of the Kipoi Central deposit, signifi cant sulphide mineralisation identifi ed at depth and high grade mineralisation still open along strike and down dip, CIP believes that TGS’s current share price does not refl ect its scope for signifi cant upside. This is particularly pronounced with the addition of TGS’s signifi cant cobalt credits and its other grassroots properties which are highly prospective for copper.

Figure 1: Average Copper grade resource and EV/Resource tonne of ASX Listed Copper Companies

NOTES: *Figures for TGS in this comparison are based on TGS earning a 60% interest in the Kipoi project and refl ects the initial JORC resource. The EV calculated for Tiger in this comparison has been revised upwards to include a total consideration of US$35.72M (being US$9.7M+US$12M+US$2.75M+US$6.77M+US$4.5M and equal to A$39.69M) which TGS will be required to pay to acquire Orgaman Group’s 15% share in the Tiger Congo sprl and to earn a 60% interest in the Kipoi Project. The payment also assumes the current JORC resource will be upgraded to the probable reserves category.

^A copper price of US$7,500/t and a cobalt price of US$60,000/t has been assumed.

A conversion rate of 1USD=0.90AUD has been assumed where applicable.

Information used to compile this comparison has been sourced from the companies’ website.


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Anvil Mining TigerResources

Redbank Mines Cudeco CitadelResource

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Matrix Metals ExcoResources

Hillgrove Copper Strike Equinox UniversalResources

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Tiger Resources Ltd


22 August 2008

KIPOI PROJECT ECONOMICSCIP has prepared the following forecasted fi nancial economics for Stage 1 production at the Kipoi Central deposit. Based on our assumptions, the Kipoi Project will begin to deliver signifi cant cashfl ow following a 3-6 month production ramp up to a 32,000tpa producer of contained copper starting from late 2009. With an estimated initial capex of US$50-70M, the project has a highly attractive capital cost payback of ~1 year. TGS’s attributable cash surplus for the project assuming it earns a 60% interest is forecasted to be US$20M for the FY 09/10, rising to US$46M for FY 10/11. These fi gures are only for Stage 1; production is planned to increase to 100,000tpa of contained copper and 1,600tpa of cobalt credits by Stage 4.

Figure 2: CIP Forecast Kipoi Project Operating Surplus for Stage 1

FY 09/10 FY 10/11 FY 11/12

Copper Production (t) 15,000 32,000 32,000Forecast Copper Price (US$/t) 7,100 6,800 6,400Realised Copper Price (US$/t) 6,390 6,120 5,760Extraction Costs (US$/t) 2,500 2,500 2,500Transportation Costs (US$/t) 500 500 500Production Royalties @ 5% (US$/t) 320 306 288Margin (US$/t) 3,071 2,814 2,472

Copper Cash Surplus (US$000’s) 46,058 90,048 79,104Depreciation Expense (US$000’s) (10,000) (10,000) (10,000)Interest Expenses (US$000’s) (5,000) (5,000) (5,000)Taxes @ 20% (US$000’s) 3,000 3,000 3,000NPAT (US$000’s) 34,058 78,048 67,104

TGS Attributable Cash Surplus (US$000’s) 27,635 54,029 47,462TGS Attributable NPAT (US$000’s) 20,435 46,829 40,262

COPPER PRICEThe copper price in the past few years has been very strong with an increase of over 90% to US$7,500/t. CIP believes that copper will continue to enjoy steady growth at least in the near term as global demand for the metal continues. This will work to TGS’s favour since its resource is completely unhedged.


SOURCE London Metal Exchange

Copper Price (US$/t)

DATE

Figure 3 : Copper Price Chart



k % .

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KIPOI PROJECTThe Kipoi Project covers 55km2 containing a 12km strike of copper-cobalt mineralised roan sediments, located 85km north west of Lubumbashi in the Katanga Province of the DRC. World-class copper and cobalt mineralisation has been intersected at all 5 known Prospects: Kileba, Judeira, Kaminafi twe, Kipoi North and Kipoi Central. The project area also has excellent existing infrastructure including rail, high voltage power lines and sealed roads.

Kipoi CentralThe best results to date have been obtained from Kipoi Central which has delineated signifi cant copper and cobalt oxide mineralisation over a strike of 550m and vertical depths of more than 150m with mineralisation remaining open along strike and at depth. An initial Inferred Resource of 439,000t contained copper for Kipoi Central could potentially be increased by drilling to west of main zone at Kipoi Central where zones of +1.0% Cu of up to 80m have been intersected recently.

Initial drill testing of copper sulphide has been very encouraging with results indicating high grade chalcopyrite mineralisation extending beneath the +6% copper oxide mineralisation. This high grade chalcopyrite mineralisation has now been identifi ed over a minimum strike of 175m with an average thickness of 110m. This sulphide mineralisation remains open down dip and to the south along strike:

• 111.0m @ 6.7% Cu • 103.6m @ 3.1% Cu • 105.0m @ 2.6% Cu

Kipoi NorthRecent resource drilling results for the Kipoi North deposit, situated less than 1km to the north of the Kipoi Central deposit confi rmed continuity of high grade copper mineralisation to over 650m and depths of 200m from surface. This prospect will have a resource statement out in the September 2008 with some of the latest results including:

• 66.5m @ 2.9% Cu • 31.7m at 3.7% Cu

KilebaInitial drilling at the Kileba deposit have been very encouraging with copper mineralisation extending over a strike of 550m from near surface to a depth of 200m. A resource estimate is expected to be available in the December quarter 2008 with signifi cant results to date including:

• 66.5m @ 2.9% Cu • 31.7m at 3.7% Cu • 48.5m at 2.7% Cu

Figure 4: Map of the Katanga province and the location of TGS’s projects


Tiger Resources Ltd


22 August 2008

KIPOI PROJECT ACQUISITION TERMS

Figure 5: Potential Mining Operation at Kipoi Central


TGS has two agreements in place to eff ectively earn a 60% interest in the Kipoi Project.

The Kipoi Project is currently owned by the SEK sprl joint venture. The JV is between Congo Minerals sprl (60%) and Gecamines (40%), a DRC state controlled company. Tiger Congo sprl has entered an agreement with the owners of Congo Minerals sprl to earn their 60% interest in the Kipoi Project. TGS currently owns 85% of Tiger Congo sprl and has an agreement to acquire the remaining 15% owned by Orgaman Group.

The terms for TGS to acquire Orgaman Group’s 15% interest in Tiger Congo sprl are as follows:

• Pay Orgaman Group US$6,769,178 payable in TGS shares based on the weighted average price of TGS shares for the fi ve business days following the satisfaction of the condition below;

• Pay Orgaman Group a total of US$4.5M in six equal annual instalments commencing from commercial scale production at the Kipoi Project;

• Subject to TGS being satisfi ed with the outcomes of the DRC Government contract review process.

Tiger Congo sprl currently has acquired 13% of Congo Minerals sprl. Tiger Congo sprl will be required to complete a feasibility study (BFS) for the Kipoi Project by no later than 31 January 2009, and deliver on the following commitments to Congo Minerals sprl to wholly acquire Congo Minerals sprl and eff ectively earn a 60% interest in the Kipoi Project.

• Pay US$9.7M within 6 months of completion of the BFS to earn a further 37% interest in Congo Minerals sprl;

• Pay an additional US$12M within 16 months of the BFS to earn a further 50% interest in Congo Minerals sprl.

Tiger Congo sprl will also be required to pay Congo Minerals sprl US$2.75M for each 50,000t of probable copper reserves in excess of 350,000t.



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Figure 6: The corporate structure is outlined below assuming TGS successfully acquires Orgman Group’s 15% share in Tiger Congo sprl.


ADDITIONAL PROPERTIESTGS has entered the Aurum JV with Somika, an international trading company with a copper processing plant in Lubumbashi. TGS has the right to earn an interest of up to 70% interest in 7 permits covering a total area of 1640km2 which are all within close proximity of world class copper deposits in the Katanga province.

The main focus will be on the Pumpi prospect in the Kolwezi project area and the Sase prospect in the Lupoto project area where earlier aircore drilling reported intersects of 67m @ 2.83% Cu; both have potential to host signifi cant resources. Recent RC drilling results confi rm discovery of major copper/cobalt greenfi elds at Pumpi, adjacent to the huge Tenke Fungurume concession. Signifi cant results from fi rst pass RC drilling include:

• 35.0m @ 0.53% Co• 28.0m @ 1.6% Cu & 0.57% Co• 81.0m @ 1.4% Cu & 0.36% Co

The company also recently secured interest in additional exploration tenements which lie on structures hosting known major copper mineralisation located within approximately 50km of Lubumbashi, DRC.

Freeport-McMoran is developing its $650 million Tenke Fungurume copper project in the DRC which is on strike to TGS’s Kolwezi project. The project is poised to produceabout 115,000t of Cu and 8,000t of Co and mixed hydroxide a year.


Company with surplus cash eyeing new opportunities in the resources sector...Carnavale Resources Limited (“CAV”) has a number of projects located in Brazil that are prospective for copper/gold/iron ore and molybdenum/tungsten. The company is currently focusing on three projects: the Parmegiana Iron Ore project, the Frei Martinho Molybdenum Project and the Morro do Cobre copper/gold project in Brazil. CAV currently has 63.9m shares on issue and $10.6M in cash as at 30/06/2008. With a share price of $0.16, CAV is trading below its cash backing of $0.165/share.

BOARD TEAM• Non-Executive Chairman Adam Sierakowski is a partner of the legal fi rm Price Sierakowski and also a co-founder of Perth based corporate advisor, Trident Capital. He has 13 years’ experience in legal practice including time spent advising on fundraising activities, corporate reconstructions, mergers and acquisitions for private and listed public entities. Mr Sierakowski has held a number of board positions with ASX listed companies and is currently a director of Sterling Biofuels International Ltd.

• Executive Director Ron Gajewski was trained as an accountant and has many years’ experience as a director and corporate advisor of public listed companies in both Canada and Australia. He is currently chairman of Burey Gold Ltd.

• Director Klaus Eckhof is a senior exploration geologist with global contacts and has been instrumental in sourcing and developing successful projects in Australia, Africa, Russia, South America and the Philippines. He was formerly President and CEO of TSX-listed company, Moto Goldmines Ltd, which within 4 years from his appointment discovered nearly 20Moz of gold and completed a BFS in the Democratic Republic of Congo.

• Executive Director Hans Biener graduated from Ludwig Maximilian University with a degree in Economics in 1964 and has been a consultant to numerous foreign companies for feasibility studies in relation to mineral projects.

• Non-Executive Director Peter Christie graduated from Curtin University with a Bachelor of Business in 1983 and is a qualifi ed accountant and tax agent. He has 17 years of public accounting experience and has developed extensive hospitality and property development interests.

PARMEGIANA IRON ORE PROJECT (100%)This project covers 5750km2 and is located on the north-western portion of Mato Grosso State, approx. 750km from the state capital of Cuiaba. Outcropping banded iron formations/itabirites extend for more than 38km on three welldistinct plateaus. A 2,000 metre diamond drilling program commenced in the 2008 March quarter and 4 holes were completed. Best assay results to date include 57.75m @ 28.62% Fe, 45.4m @ 29.17% Fe and 16.8m @ 34.74% Fe. 63 open pits have been completed so far and results from these are expected in September 2008. This is the fi rst drilling program on a tenement covering 5000km2 and we believe that exploration to date has only uncovered a small portion of the potential resource. Furthermore, we believe that the tenement holding is a strategic investment and once a suitable, higher grade deposit is discovered, the company will receive a rerating.

EQX.AX $0.18 30 April 2008


ASX Code CAV

Principal Activity Exploration

Country of Operation Brazil


Cash (30/6/2008) $10.6M

Diluted Enterprise Value $(0.4)M

12 month low / high 0.14 / 1.90

Board

Mr Adam Sierakowski (Non-Executive Chairman)

Mr Klaus Eckhof (Director)

Mr Ron Gajewski (Executive Director)

Mr Peter Christie (Non-Executive Director)

Capital Structure


Options 53.7M


CARNAVALE RESOURCES LTD

CAV $0.16 22 August 2008


SOURCE CIP Research


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Carnavale Resources Ltd22 August 2008

M

FREI MARTINHO MOLYBDENUM PROJECT (100%)The project is located in the Paraiba State of Brazil and is located approximately 120 km from the port city of Natal. A 2000m reconnaissance drilling program completed in February 2008 returned assay results with best intersections including 2.67m @ 0.226% Mo and 62.4m @ 0.019% Mo. Further assay results of drilling completed in the last quarter will be received in September 2008 and cover a further 8 holes. Drill assays to date have averaged .02% Mo. A follow-up drill program is planned for September.

MORRO DO COBRE CU-AU PROJECT (80%)This project covers 90km2 and lies within the Alto Jauru Greenstone Belt. This belt also hosts BP Mineracao’s Cabacal Au-Cu Deposit (1.1Mt @ 11.6g/t Au) which lies approx. 50km from the Morro do Cobre project. Carnavale has performed 85 Auger samples and will follow up the samples with Auger drilling in the upcoming quarter as they continue their exploration program.

Figure 1: Location of Carnavale’s Projects.



Mineral sands explorer looking to begin production in the fi rst half of 2008...Industrial Minerals Corporation (“IDM” or the “Company”) has completed 85% of their plant design and engineering and, with the proposed A$45M funding package (currently in the fi nal stages of arrangement), should be able to commence full production at their Oregon Heavy Minerals Project in the 2nd quarter of 2009. The company has JORC-Compliant Proved Ore Reserves of over 8.68M tons of high quality heavy mineral sands, consisting of chromite, garnet, zircon and a high-iron/ilmenite/chromite specialty product. Once production commences they will become the sole domestic producer of chromite foundry sands in the USA and CIP believes the Company will receive a market re-rating as the production date nears and fi nancing is fully secured.

COMPANY HIGHLIGHTS• Upgrade of JORC-Compliant Proved Reserves from 1.38M tons to 8.68M tons with additional Indicated Resources of 3.7M tons.

• Down payment of US$2.7M placed on long lead equipment to facilitate wet plant commissioning.

• Plant design and engineering for the processing site is approximately 85% complete and nearly 80,000 feet of foundation pilings have been delivered.

• The Company has fi led the application for an operating permit with the Oregon Department of Geology and Mineral Industries and expects all aspects to be approved during the construction phase.

• MOUs for 75% of the anticipated chromite production have been obtained for foreign distribution. It is anticipated that the remaining production will be sold domestically.

• The only major chromite mine in the United States, providing a key alternative to South African chromite suppliers.

2009 PRODUCTIONIDM has scheduled full production to commence in the 2nd quarter of 2009, with wet plant commissioning in the 1st quarter of the same year. Production is dependant on the fi nalisation of a A$45M convertible equity funding package, which the Company anticipates will be closed in the current quarter. When the IDM plant comes online, IDM will be the only major chromite producer in the United States and will also be able to provide an alternative source of garnet to US consumers of similar quality to that received from India and China. The capital expenditure of US$41M combined with a 2009 production start means that the company will be cash fl ow positive in approximately one year.

EQX.AX $0.18 30 April 2008


ASX Code IDM

Principal Activity Mineral Sands Exploration

Country of Operation USA

Market Capitalisation $41.5 M

Cash $5.5M


12 month low / high $0.21 / $0.50

Board

Mr Jeremy Shervington (Chairman)

Mr Michael J. B. Brickell (Deputy Chairman)

Mr Philip J. Garratt (CEO)

Ms Cheryl L. Wilson (Executive Director)

Mr Daniel F. Smith (COO)

Mr Alec Pismiris (Co-Secretary)

Capital Structure


Performance Shares 30.0M



Resource

Proved Reserves 8.68M tons @ 21.5% HM, 7.5%

Indicated Resources 3.67M Tons @ 9.1% Chromite

INDUSTRIAL MINERALS CORP. LTD

IDM $0.25 22 August 2008

INDUSTRY Materials

SOURCE CIP Researech

Leif Andreassen+61 8 9421 [email protected]

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Industrial Minerals Corporation Ltd22 August 2008

%

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Figure 1: Visual of Production Process

Table 1: Project Reserves and Resources and Mineral Content

SOURCE CIP Research, IDM independent Geologist Report

SOURCE IDM Announcements

OREGON HEAVY MINERAL SANDS PROJECT DETAILS Increased Resource with Further Upgrade PotentialIDM was able to upgrade its mineral inventory to 8.9M tons of Proved Reserve and 3.7M tons of Indicated Resource after the completion of step-out drilling and edge defi nition. Further exploration activities are planned and are estimated to be completed next quarter.

Resource Type Ore Tons (short) HM Grade Chromite Garnet Zircon (%) Grade (%) Grade (%) Grade (%)

Proved reserve 8,682,738 21.5 7.5 1.6 0.4Indicated resource 3,674,780 - 9.1 - -Total 12,357,518 - - - -

Strategic Location for Both Foreign and Domestic SalesThe Project is located on the West Coast of Oregon in the Coos Bay region, close to both domestic markets and ports from which product can be exported to Asian and other foreign markets. The Coos Bay area was host to heavy minerals production in World War Two and was explored by the US Bureau of Mines, resulting in the establishment of a heavy minerals sand resource.

Raw Ore Stockpile

Gravity Separations

Wet Mill Concentrate

Mineral SeparationsDryMill

WetMill

Chromite ProductGarnet Product

Industrial Minerals Corporation Ltd


22 August 2008Figure 2: Oregon Heavy Mineral Sands Project Location

SOURCE CIP Research

CHROMITEChromite sands are important inputs to the production of steel castings, and demand for steel castings is closely tied to economic growth. Prices for chromite foundry sands have continued to surge as supply is constrained by world wide shortages. One of the key problems is the fact that there are only a few producers of chromite foundry sands, and of the total production by these countries, only 20% is traded. IDM’s plant will be capable of producing 71,000 tons of chromite per annum, making them the largest domestic producer of chromite and allowing them to take advantage of soaring prices. The product to be produced by IDM has been independently tested and is of a quality on par with and greater than supplies coming from South Africa, who produces more than 50% of total supply.

GARNETGarnet is a mineral that is used as an abrasive in water jet cutting, the process of cutting metals and other materials using a high pressure stream of water. IDM has estimated that they will be producing 27,000 tons per annum of “good” quality garnet. In 2005, IDM had their garnet tested by a large water jet manufacturer, and it was found that, given a 100 is the reference for benchmark garnet, IDM’s garnet scored a 95.8% and 90.9% in aluminium and steel cutting, respectively. Although IDM garnet is slightly less eff ective than the industry benchmark, it is of equal or higher quality than products being imported from India and China and should therefore be sought after by US buyers.

OTHER MINERAL PRODUCTSZircon Zircon is another mineral used in metal casting and is an alternative to chromite. IDM zircon will be produced in smaller quantities with only 8,500 tons being produced annually. Because of the low volume, it is intended that IDM zircon will be sold on the domestic spot market. Zircon prices have risen signifi cantly in recent years and are expected to stay high, although not at their peak.

High-Iron-IlmeniteIDM has been conducting customer evaluation surveys and associated test work to assess the viability of a new foundry product (product used in metal casting), a High Iron/ Ilmenite product. Initial tests have shown that the IDM product has a strong potential for use in anti-veining applications and could replace or augment oxide products currently available.


Industrial Minerals Corporation Ltd22 August 2008

f

Table 2: Forecasted Financials

Assumptions: Chromite US$450, Garnet US$250, Zircon US$400, Iron/Ilmenite/chromite US$50

SOURCE CIP Research, IDM

MARKET POTENTIALIDM is positioned well to become a signifi cant producer of chromite foundry sands and take advantage of the fact that they will be the only domestic producer. Their project location allows easy access to export terminals and they will be able to take advantage of the strong demand in the Asian markets. IDM garnet is of high enough quality to compete with products being imported from India and China, and domestic consumers will appreciate the local supply option.

IDM will be producing a variety of mineral sands, giving them good diversifi cation for individual commodity fl uctuations. Their upcoming production will allow them to take advantage of current high prices for minerals such as chromite and zircon. Once these factors have been realized by the market, CIP believes IDM will undergo a signifi cant market rerating and their true value will be refl ected.

ProductionThroughput (short tons) 450,000 700,000 1,200,000 1,200,000Net Revenues(US$ millions) 36.3 35.8 57.3 57.3EBITDA(US$ millions) 22.9 17.7 30.9 30.9

CIP FORECAST

2010 2011 2012 2013

The Mining Book


22 August 2008

NOTES


The Mining Book 22 August 2008

NOTES

Bauxite Overview


22 August 2008

SENIOR MANAGEMENTGAVIN ARGYLE Managing Director [email protected] COWARD Manager ‒ Corporate Finance [email protected]

RESEARCH TEAMANASTASIOS ARIMA Analyst [email protected] SU Analyst [email protected] KING Analyst [email protected] ANDREASSEN Analyst [email protected]

REGISTERED OFFICELevel 34, Exchange Plaza2 The Esplanade

Perth, Western Australia 6000

CONTACT DETAILSTelephone: +61 8 9421 2111Facsimile: +61 8 9421 2100

Website: www.cipartners.com.auEmail: [email protected]

CORPORATE DIRECTORY

DISCLAIMERThis document does not constitute personal advice or a securities recommendation. One must act entirely on the basis of their own and not on representations or information provided by Capital Investment Partners (CIP) or any of its respective directors, offi cers, employees or advisers. If one should require advice, one should consult an investment adviser; CIP believes that the information and general fi nancial advice contained in this document is accurate as at the time and date of issue (“Information”). CIP and its directors, offi cers, employees or advisers from time to time may hold shares in the security/securities mentioned in this Research document and therefore may benefi t from any increase in the price of those securities. CIP and its directors, offi cers, employees or advisers may earn brokerage, fees, commissions, other benefi ts or advantages as a result of a transaction arising from any advice mentioned in publications to clients. To the fullest extent permitted by law, each of CIP and its directors, offi cers, employees and advisers excludes and disclaims all liability for any direct or indirect expenses, losses, damages or costs that may be incurred by one as a result of the Information being inaccurate or incomplete in any way for any reason (including responsibility to any person by reason of negligence). Except for any liability that cannot be excluded by law, CIP does not accept any responsibility in relation to the Information or the general fi nancial advice; CIP, its Directors and their Associates from time to time may hold shares in companies mentioned in this document. Parties related to CIP hold 50% of Equatorial Resources Pte Ltd which is the vendor group for Equatorial Coal Ltd fi rst MOU. In accordance with Section 949A of the Corporations Act 2001 CIP advise this document contains general fi nancial advice only. CIP has not taken into account the investment objectives, fi nancial situation and particular needs of any person. CIP advise that you should not act on any recommendation without fi rst consulting your own investment adviser in order to ascertain whether the recommendation (if any) is appropriate, having regard to your investment objectives, fi nancial situation and particular needs. CIP believe that the general fi nancial advice herein is accurate however no warranty of accuracy or reliability is given in relation to any information or general fi nancial advice contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by CIP. The contents of this mining book are not to be reproduced or copied without the permission of CIP.

www.cipartners.com.au

Capital Investment Partners ABN 37 110 468 589; AFSL 292416

MINING BOOKSEPTEMBER 2008

Volume 1 • Issue 2

the

CAPITAL INVESTMENT PARTNERS

THE MINING BOOK | VOLUME 1 | ISSUE 2 | SEPTEMBER 2008

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