Mandalay Resources Corporation March 2014 Investor Presentation

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Information about Mandalay Resources Corporation March 2014 Investor Presentation
Investor Relations

Published on March 14, 2014

Author: GregDiTomaso

Source: slideshare.net

Description

Mandalay Resources Corporation March 2014 Presentation

DELIVERING VALUE AND GROWTH MAR 2014

This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans and exploration plans and the growth and strategy of Mandalay. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, that exploration results at Cerro Bayo, Costerfield, and La Quebrada may not meet management’s expectations, that Cerro Bayo and Costerfield capital, production and operating cost results may not meet current plans, that reclamation costs associated with Mandalay’s Furioso property may exceed current estimates, and changes in commodity prices and general market and economic conditions. The factors identified above are not intended to represent a complete list of the factors that could affect Mandalay. Although Mandalay has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward- looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Quality Control and Assurance Quality control and assurance programs are implemented in line with the standards of National Instrument 43-101. The exploration program at Costerfield is supervised by Chris Gregory (Member, Australian Institute of Geoscientists accredited Chartered Professional (Mining)), General Manager of Australasian Business Development for Mandalay and a Qualified Person as defined under National Instrument 43-101. Mr. Gregory regularly visits Costerfield, supervises the collection and interpretation of scientific and technical information contained in this presentation. The exploration programs on the Cerro Bayo and La Quebrada projects are supervised by Ronald Luethe (Member: American Institute of Professional Geologists and an Idaho Registered Professional Geologist), General Manager of Mandalay Chile Ltda. and a Qualified Person as defined under National Instrument 43-101. Mr. Luethe visits the Cerro Bayo and La Quebrada projects often, supervises the collection and interpretation of scientific and technical information contained in this presentation. Dr. Mark Sander (Member: AusIMM), President of Mandalay, has visited the Costerfield, Cerro Bayo, and La Quebrada projects several times during 2010, 2011, 2012 and 2013 and has supervised the preparation of this presentation. He has also visited the Challacollo project in 2013 and 2014. Forward-looking Statements 2

Vision 3 To create exceptional shareholder value through the acquisition of undervalued assets that can rapidly become cash generative, self fund exploration, establish and maintain high operating margins and return cash to shareholders within a planned period of time. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement.

Locations and Tradeflows 4

**The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA is presented because the Company believes it is a useful indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net income or cash flow as determined in accordance with IFRS. ***Annual cash dividend paid quarterly, based on 6% of the Company’s trailing quarter’s gross revenue and the future cash requirements of the Company. 5 Strategy: Rapid Value Generation and Returns Focus and ResultsEntry Strategy:  Acquire high-quality assets at a low cost relative to ultimate value  Apply management’s extensive operational and exploration expertise to turn around, grow and/or develop the assets  Focus on cash returns to shareholders and prudent use of leverage Operationally, Mandalay is focused on:  High-margin projects where the Company can achieve rapid production ramp-ups from restarts, turn around situations or late-stage development  Early cash flow to fund exploration, growth and operational improvements  Building critical mass through acquisition Capital strategy: Reduce dilution and return cash to shareholders  Announced dividend policy, currently paying annualized dividend of 6% of gross revenue***  NCIB: Repurchasing up to 5% of the Company from operational cash flow over 1 year Dividend Declarations ($CAD MM) and Return on Invested Capital $10.9 $2.3

Mandalay Q4 2013 Financial Performance 6 Mandalay Q4 2013 Operational Performance Q4, 2013 2013YE Q4, 2012 2012YE Saleable Silver oz produced 878,542 3,145,537 895,222 2,911,595 Saleable Gold oz produced 12,117 50,240 10,927 35,125 Saleable Antimony t produced 805 3,275 785 2,481 *Cash position of USD$33.5 prior to purchase of Challacollo mining project in February 2014. Q4, 2013 2013YE Q4, 2012 2012YE Net Cash/All-in Cost/oz Ag at Cerro Bayo, USD 6.74 / 11.51 6.84 / 12.07 5.17 / 10.71 5.67 / 10.70 Net Cash/All-in Cost/oz Au Eq. at Costerfield, USD 850 / 1,085 819 / 1,062 943 / 1,153 1,112 / 1,304 EBITDA, USD million 13.9 67.7 28.8 79.9 Net Income, USD million 4.4 29.4 22.4 41.7 Cash and cash equiv. at end of period, USD million* 33.5 33.5 17.3 17.3

Discovery-fuelled Organic Growth 7 Significant M&I Resource Growth (1,2,3,4) P&P Reserve Growth (1,2,3,4) 1 Source: Cerro Bayo - Roscoe Postle Associates, Feb. 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 2 Source: Costerfield - SRK Consulting (Australia), Feb 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 3 Source: Challacollo – Roscoe Postle Associates, Dec. 20, 2013, in a report filed Feb. 7, 2014 4 Source: La Quebrada – Independent Technical Report filed 16-Aug-2012 Total Reserves: 31-December-2013 Ag (cont. oz) Au (cont. oz) Sb (cont. t) Mandalay Proven Reserves 4,705,000 61,000 3,000 Mandalay Probable Reserves 13,197,000 240,000 12,000 Mandalay P&P Reserves 17,902,000 301,000 15,000

Production Growth 2014E 8 Costerfield Budget and Production (2014E) Cerro Bayo Budget and Production (2014E) Challacollo Budget (2014E)

(1) Exercise price: C$0.255 - C$0.83; Expiry date: Dec 7, 2014 - Mar 18, 2018 (2) Exercise price: C$0.31 - C$0.465; Expiry date: Nov 30, 2014 (3) Assuming USD$ 1 = CAD$ 1.1140 (4) As of November 5, 2013, the directors and executive officers of the Corporation, as a group, beneficially owned, or controlled or directed, directly or indirectly, approximately 173,783,259 Common Shares, representing approximately 53.76% of the outstanding Common Shares Capital Structure and Ownership 9 Major Shareholders(4) Holders % Shares (Million) West Face Capital 40.3% 136.9 Plinian + Management 10.5% 35.8 Sprott Asset Management 9.9% 33.5 Silver Standard 3.5% 12.0 Arcourt (Byrne) 3.4% 11.7 Baker Steel 3.3% 11.1 Capital Structure as at March 12, 2014 Millions (Except Share Price Information) Share price (Mar. 12, 2014 - close) (CAD$) 0.96/shr Shares Outstanding 340.1 Options(1) 15.8 Warrants(2) 15.9 Fully Diluted Shares Outstanding 371.8 Market Capitalization (CAD$) 326.5 Cash and Cash Equivalents (CAD$) (as of Dec. 31, 2013)(3) 37.3 Total Debt (CAD$) (as of Dec. 31, 2013)(3) 0 Total Enterprise Value (CAD$) 289.2

10 Management Track Record: Execution, Value Creation Company History and Milestones 2009 Q4 2010 2011 2012 2013 2014 Financial/ Corporate • Acquired Costerfield gold-antimony mine for Mandalay stock • Listed on TSX main board from TSX-V • Raised $23 million for purchase and restart of Cerro Bayo silver-gold mine • Announced Normal Course Issuer Bid (“NCIB”) to buy back 5% of Company’s shares • Completed Substantial Issuer Bid; reduced FD share count by 8% • Completed and Renewed NCIB • Paid $3.2 million in dividends • Extended credit facility by $10 million • NCIB renewed • Paying $10.9 million in dividends (2013 est.) • Completed Challacollo acquisition Operational • Began Production at Costerfield (Dec 2009) • Began production at Cerro Bayo (Sept 2010) • Began milling & shipping at Cerro Bayo (Jan 2011) • Increased production at both projects • Doubled silver reserves, boosted gold reserves 85% • Reached design production at both operations • Extended Costerfield mine life to 4 years • Began ramp up at Cerro Bayo to 1,400 tpd • Cerro Bayo ramp up expected completion: Q1 2014 • Feasibility at Challacollo Mandalay: 256% (total return) Peers: 137% Silver: 49% Gold: 43% TSX Composite: 30% TSX Mining: -11% *Peer group includes: Coeur Mining, Endeavour Silver, First Majestic Mines, Fortuna Silver, and Primero Mining Share prices as at March 12, 2014 Q4 2009 - New Management Team (Mills, Sander & Swarup)

Cerro Bayo Silver-Gold Mine 11 Land package 23,096 hectares Ownership 100% 2013 silver production 3,145,537 oz 2013 gold production 21,482 oz 2014E silver production 3.0 – 3.2 Moz 2014E gold production 23,000 – 27,000 oz Current throughput / Goal approx. 1,200 tpd / 1,400 tpd (end Q1 2014) P&P Reserves 2.5 Mt @ 224 g/t Ag; 2.2 g/t Au Plant recoveries (FY 2013) Ag: 90.9%, Au: 87.8% 2013A Cash costs/oz Ag net Au credits / 2014E $6.84 / $6 – $8 2014 Planned Exploration Budget $3 – 4 million

Cerro Bayo Operating Performance 12

13 Cerro Bayo District: Target-rich Land Package NI43-101 Reserve-Resource veins  2013 Infill and Step-Out Drilling 2012 New infill from 2011 Blue Sky successes 2013 Scheduled Blue Sky drill targets 2013- Field work to prep for 2014 drilling Lucia Chatito Sb Anomaly Roadside Brillantes Cerro Viento Aquila Sinter Hill Laguna Verde High level, Madre- Aquila-Meseta Cerro Bayo Guanaco Esperanza Sb Anomaly MarcelaRoadside Cerro Viento Brillantes Coigues

LAGUNA VERDE Emerging Extensions and New Veins Under Laguna Verde Veins with Reserves Surface Trace Veins with Reserves Underground Trace Target Extensions Under Laguna Verde Reported Drill Intercepts 14

Cerro Bayo M&I Resource Growth Net of Depletion 15 1 Source: Cerro Bayo - Roscoe Postle Associates, Feb. 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb.13, 2014 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 2010 2011 2012 2013 OZSAg END OF YEAR MEASURED PLUS INDICATED RESOURCES Cerro Bayo M+I Resource Additions vs Depletion (Ag Ozs) CUMULATIVE DEPLETION Dagny Fabiola Delia NW Delia SE Marcela Sur Yasna Coyita Dalila Bianca Trinidad Raul 2.4 X Net Add Cerro Bayo Resources (1) Resource (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Measured Resources 411,000 423 5,596,000 3.6 48,000 Indicated Resources 1,633,000 308 16,172,000 3.2 167,000 M&I Resources 2,044,000 331 21,768,000 3.3 214,000 Inferred Resources 433,000 400 5,580,000 3.3 46,000 Cerro Bayo Reserves (1) Ore (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Proven Reserves 516,000 283 4,705,000 2.5 41,000 Probable Reserves 1,967,000 209 13,197,000 2.1 134,000 P&P Reserves 2,483,000 224 17,901,000 2.2 174,000

Costerfield Gold-Antimony Mine: Overview 16 2014 Planned Exploration Budget $4 – 5 million Land package 1,293 hectares Ownership 100% 2013 gold production 28,758 oz 2013 antimony production 3,275 t 2014E gold production 37,000 – 43,000 oz 2014E antimony production 3,000 – 3,300 t Current throughput / 2014E 400 tpd / 400 tpd P&P Reserves 420,000 tonnes @ 9.2 g/t Au; 3.6% Sb Plant recoveries (FY 2013) Au: 89.98%, Sb: 95.37% 2013A Cash cost/oz Au Eq. (US$) / 2014E $819/ $675 – $775

Costerfield Operating Performance 17

Cuffley Mine Plan 18  Subparallel and adjacent to N-lode  Same mining technique as N-lode • Long hole stoping 10 m lifts • CRF backfill Cuffley Lode N-lode W-lode E-lode

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 2009 2010 2011 2012 2013 OZAuEq. END OF YEAR MEASURED PLUS INDICATED RESOURCES Costerfield M+I Resource Additions vs Depletion (AuEq Ozs) CUMULATIVE DEPLETION Augusta Brunswick Cuffley 19 Costerfield M&I Resource Growth Net of Depletion Costerfield Resources (1) Categories Resource (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Measured 191,000 4.3% 8,000 8.4 51,000 Indicated 605,000 3.7% 22,000 9.6 187,000 M&I 796,000 4.1% 32,000 9.3 238,000 Inferred 569,000 3.8% 22,000 7.4 135,000 Costerfield Reserves (1) Categories Ore (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Proven 71,000 4.4% 3,000 8.3 20,000 Probable 350,000 3.4% 12,000 9.4 106,000 P&P 420,000 3.6% 15,000 9.2 126,000 Source: Costerfield - SRK Consulting (Australia), Feb. 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 3.8 X Net Add

20 Costerfield – Long Section

Challacollo Silver-Gold Project: Overview 21 Land package 4,000 hectares Ownership 100% Location 130 km SE of Iquique, Chile Mineralization Epithermal, oxidized Ag-Au Elevation approx. 1,500 metres ASL Resource Indicated: 1 mt @ 242 g/t Ag; Inferred: 4 mt @193 g/t Ag

22 Plan funded from cash flow • 12 mo Feasibility Study: $7 – $8 million  Environmental, community, cultural baselines for permitting  Drill 8,000 m for infilling existing Inferred Resource and extensions  Resource update  Metallurgical testing– crushing, grinding, agitation leach  Mine design, plant design  Capital and operating costing  Financial case and conversion to reserves • Permitting  Submission of EIA Q1, 2015  Receipt of permits – goal EOY 2015 • Build  12 months build (est.) in 2016 • Production  First production – Goal: Q1 2017 Challacollo Development Plan

23 Lolon Vein Lolon Vein satellite image Source: NI 43-101 Technical Report on the Challacollo Silver-Gold Project, Region 1, Chile. Effective date January 30, 2014. Filed on SEDAR February 7, 2014.

24 Peer Comparison: Production, Cost, Financials * Financial data 9M 2013 Source: Company reports and Bloomberg Market capitalization as at March 12, 2014 Ag Eq oz converted at 55/1 Au/Ag. Metal prices: Ag price of $28.92 and Au price of $1,578 P+P Reserves Market Comparables Ag (oz) Au (oz) Other Reserve Grade Ag Eq (g/t) (Au + Ag) Market Capitalization FD (CAD$MM) EPS Last 12M Dividend Paid/Share Mandalay Resources 18,250,000 214,000 7,200t Sb 361 353.2 $0.09 $0.03429 Coeur Mining 261,528,000 2,286,000 - 51 1,084.7 ($1.02) $0 Endeavour Silver 23,057,200 222,300 - 253 635.0 ($0.45) $0 First Majestic Mines 90,800,000 0 - 161 1,516.2 $0.18 $0 Fortuna Silver* 42,700,000 266,100 - 216 635.7 $0.06 $0 Primero Mining 39,377,000 660,000 - 513 1,087.5 $0.00 $0 2013A Production 2013A Financials Ag (oz) Au (oz) Other Ag Eq (oz) (Au + Ag) Revenue (US$MM) EBITDA (US$MM) EBITDA Margin (%) Mandalay Resources 3,145,537 50,240 3,275 t Sb 5,886,848 166.9 67.7 40.6 Coeur Mining 17,012,000 262,217 - 31,319,691 746.0 192.8 25.8 Endeavour Silver 6,813,069 75,578 - 10,936,931 276.8 100.0 36.1 First Majestic Mines 10,641,465 10,040 16,000 t Pb+Zn 11,189,291 251.3 70.1 27.9 Fortuna Silver* 4,631,264 21,242 19,000 t Pb+Zn 5,790,319 101.0 29.4 29.1 Primero Mining 6,050,000 111,983 - 12,160,276 200.3 87.3 43.6

25 Mandalay Compares Favourably to its Peers * Financial data 9M 2013 for Fortuna Silver Market capitalization as at March 12, 2014 Ag Eq oz converted at 55/1 Au/Ag Metal prices: Ag price of $28.92 and Au price of $1,578  Second highest grade reserves (Ag Eq oz)  Second highest EBITDA margin  Lowest fully loaded cost (Ag Eq oz)  Second lowest market cap per estimated annual production of Ag Eq oz  Second lowest market cap per P+P reserves oz  Highest dividend paid per share

26 Investment Proposition  Execution-focused management with track record of acquisition, operational and exploration success, growth and value generation  High-quality, cash flowing asset portfolio with major exploration upside and full project pipeline  Strong balance sheet, self-funding Challacollo development, zero net debt  Rapid increase in production and margins through low-capex organic growth and operational efficiencies  Returning cash to shareholders and reducing dilution – share buyback program in place  Company dividend policy based on 6% trailing revenues  Continued growth through further acquisitions

DELIVERING VALUE AND GROWTH MAR 2014 For more information, please contact: Greg DiTomaso Tel: 647.260.1566 Email: g.ditomaso@mandalayresources.com Company Website: www.mandalayresources.com Twitter: @MandalayAuAg

28 Management and Board of Directors Senior Management Board of Directors Brad Mills, CEO and Executive Director Former CEO Lonmin plc, over 30 years of experience in Copper, Gold, PGMs Mark Sander, President 28 years of experience in exploration, strategy and operating improvements Sanjay Swarup, CFO and Executive Director Former Lonmin plc, over 20 years of industry experience Belinda Labatte, Corporate Secretary Over 10 years of experience in capital markets and investment banking Braam Jonker, Chairman Peter R. Jones, Independent Director Tony Griffin, Independent Director Robert Doyle, Independent Director Dominic Duffy, COO Mining Engineer with extensive technical and operational management experience

Numbers may differ slightly from Source documents due to rounding 29 Mandalay Reserves Cerro Bayo Reserves (1) Ore (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Proven Reserves 516,000 283 4,705,000 2.5 41,000 Probable Reserves 1,967,000 209 13,197,000 2.1 134,000 P&P Reserves 2,483,000 224 17,901,000 2.2 174,000 Costerfield Reserves (2) Ore (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Proven Reserves 71,000 4.4 3,000 8.3 20,000 Probable Reserves 350,000 3.4 12,000 9.4 106,000 P&P Reserves 420,000 3.6 15,000 9.2 126,000 TOTAL RESERVES: 31-December-2013 Ag (cont. oz) Au (cont. oz) Sb (cont. t) Mandalay Proven Reserves 4,705,000 61,000 3,000 Mandalay Probable Reserves 13,197,000 240,000 12,000 Mandalay P&P Reserves 17,902,000 301,000 15,000 1 Source: Roscoe Postle Associates, Feb. 2014 documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 2 Source: SRK Consulting (Australia), Feb 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014

30 Mandalay Resources Cerro Bayo Resources (1) Resource (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Measured Resources 411,000 423 5,596,000 3.6 48,000 Indicated Resources 1,633,000 308 16,172,000 3.2 167,000 M&I Resources 2,044,000 331 21,768,000 3.3 214,000 Inferred Resources 433,000 400 5,580,000 3.3 46,000 Costerfield Resources (2) Resource (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Measured Resources 191,000 4.3% 8,000 8.4 51,000 Indicated Resources 605,000 3.7% 22,000 9.6 187,000 M&I Resources 796,000 4.1% 32,000 9.3 238,000 Inferred Resources 569,000 3.8% 22 ,000 7.4 135,000 TOTAL RESOURCES Ag (cont. oz) Au (cont. oz) Sb (cont. t) Cu (cont. lb) Measured Resources 5,596,000 99,000 8,000 0 Indicated Resources 35,372,000 367,000 22,000 459,000,000 M&I Resources 40,968,000 465,000 32,000 459,000,000 Inferred Resources 30,280,000 221,000 22,000 13,000,000 1 Source: Cerro Bayo - Roscoe Postle Associates, Feb. 2014 documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 2 Source: Costerfield - SRK Consulting (Australia), Feb 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 La Quebrada Resources (4) Resource (t) Cu Grade (%) Cu (cont. lb) Ag Grade (g/t) Ag (cont. oz) Measured Resources 0 0 0 0 0 Indicated Resources 34,800,000 0.6% 459,000,000 10 11,200,000 M&I Resources 34,800,000 0.6% 459,000,000 10 11,200,000 Inferred Resources 1,000,000 0.6% 13,000,000 11 400,000 Challacollo Resources (3) Resource (t) Au Grade (g/t) Ag Grade (g/t) Au (cont. oz) Ag (cont. oz) Measured Resources - - - - - Indicated Resources 1,030,000 0.4 242 13,000 8,000,000 M&I Resources 1,030,000 0.4 242 13,000 8,000,000 Inferred Resources 3,900,000 0.3 193 40,000 24,300,000 3 Source: Challacollo – Roscoe Postle Associates, Dec. 20, 2013, in a report filed February 7, 2014. 4 Source: La Quebrada – Independent Technical Report filed 16-Aug-2012.

Significant Resource Increase Net of Depletion in 2013 Measured and Indicated • Contained Sb increased by 52% • Contained Au increased by 31% • Contained Ag increased by 18% Inferred • Contained Ag increased by 811% • Contained Au increased by 26% • Contained Sb increased by 13% Source of Additions • Infilling Cuffley and N-lode • Acquiring Challacollo • Expanding Marcela etc. Source of Additions • Acquiring Challacollo • Fabiola and Yasna extensions 31

32 Safety, Health, Environment and Community Safety & Health Environment & Community Employees ACTIONS • Spending on S&H (including safety training) tripled in last two years • Focus on line management safety leadership, systems and behaviours • Improved S&H safety processes & compliance • Implementation of DuPont safety system in 2013 at both operations • Extensive training and equipping of mine rescue team at Cerro Bayo • Spent over 200% more in 2012 on environment & community projects as compared to 2011 • Commitment to local purchases & payrolls • Development of new water & mine waste solutions at Costerfield • Closure works completion at Furioso Mine Site • Supplying various workshops for local community at Cerro Bayo • University scholarships for local school leavers at Cerro Bayo • Employee selection process improved • Focus on local hires including management positions • Increased hours of training in 2012 by +80% as compared to 2011 • High level executive coaching for leadership team RESULTS • Consolidated lost time injury frequency rate approximately halved • Improved return to work performance • Maintained high levels of attendance at mine sites • More prosperous local communities • Reduced impacted land area • Zero incidences of unpermitted discharge at both operations • 3 year collective contract signed with Cerro Bayo union in 2012 • Increased presence of local hires among workforce and supervisors • Reduced employee turnover at mine sites • More productive employees, leading to lower unit costs

Metal Price Update 33 *Source: Bloomberg, accessed February 21, 2014

Antimony Facts 34  140,000 t/y global market • Sold either as metal ingots or various grades of antimony oxides and trioxides • Primary use as fire retardant in fabrics and plastics (trioxides) • Relatively minor uses in electronics, with possible new uses in development, e.g. in batteries • Ingredient of lead alloys as hardener (antimony metal) • Consumption growth in line with global GDP growth  Market dominated and prices set by China • Declining Chinese mine production as reserves depleted and environmental controls strengthened, closing marginal mines • Chinese beginning to invest in mines outside China • Two dominant Chinese smelters, only one of which recovers Au

Gold Equivalent Ounces Calculation 35 ***Au Eq. oz produced is calculated by multiplying the saleable quantities of Au, Ag, and Sb in the period by the respective average market prices of the commodities in the period, adding the three amounts to get a “total contained value based on market price”, and then dividing that total contained value by the average market price of Au in the period. Average Au price in the period is the average of the monthly LME PM fix, average Sb price is the average of the monthly high and low Rotterdam warehouse prices, and average Ag price is the average of the monthly London Broker’s silver spot price, all reported in www.metalbulletin.com. The monthly commodity prices are calculated as the average of the daily prices, with holiday and weekend day prices carried forward from the last business day. Au Eg. oz for each of the low range and high range guidance is calculated by multiplying (i) total Au oz by an assumed US$1,600/oz Au price, (ii) total Ag oz by an assumed US$32.00/oz Ag price and (iii) total Sb tonnes times an assumed US$12,000/t Sb price, then, in each case, dividing by the assumed US$1,600/oz Au price. Silver Equivalent Ounces Calculation Ag Eq oz converted at 54/1 Au/Ag at metal prices: Ag price of $28.92 and Au price of $1,578.00

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