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COMMODITY OUTLOOK

Jean-François (J-F) Bertincourt

Director, Natural Resources & Resource Services

16 July, 2013

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Contents

OUTLOOK

Copper

Gold

Oil & Gas

Tungsten

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Copper Supply & Demand Fundamentals

The copper market remains supply constrained

Copper intensity of use

Source:: Turquoise Hill. * estimate of potential loss from concentrate supply only

Source: World Bank, Brook Hunt, CRU, IISI, Global Insight,

BHP Billiton analysis

Forecast production of

mines operating in 2012

excluding brownfield

expansions (mt)

1.4 mt production loss

between 2013-16 due to

closures

1.8 mt annual production*

lost due to declining

grades between 2013-16

Source: Wood Mackenzie, Rio Tinto

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Are we discovering enough copper?

Source: MinEx Consulting © Feb 2012. Production data from USGS.

Moderate shortfall, lacking large discoveries

Mining and discovery rates for copper Discovery Year Top 10 Mines

1979 Escondida

1988 Grasberg

1910 Chuquicamata

1996 Antamina

1910 El Teniente

1979 Collahuasi

1996 Los Pelambres

1876 Los Bronces

1935 Norilsk

1870s Morenci

As a rule of thumb – to be sustainable we

need to find at least 2x as much as we mine

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“Quality” of the potential new supply?

Source: Wood Mackenzie, Rio Tinto

Lower quality, greater depth, declining grades translate in higher costs

Riskier Regions Greater Depth

High Disruptions Declining grades

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How supply is fitting demand?

Source: CRU Group, LCC Research

“Possible” and “Probable” projects likely to be postponed

0

200

400

600

800

1000

1200

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Inventories in 000 tonnes (RHS)

Cash Settlement Price US$/lb (LHS)

Global Copper Mine Production Potential (‘000t contained copper in concentrates and SXEW cathode)

Consumption

Scrap + Secondary Refined Production

LME Copper Price and Inventories

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Operating costs trend

Operating costs trending up

Source: Company announcements, LCC Research

Copper Cash Operating Costs 2012

Selected C1 Costs

0.20

0.60

1.00

1.40

1.80

2.20

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Dec-12

Mar-13

US

$/lb

Codelco Freeport OZ Minerals PanAust

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Capital Intensity

An unprecedented investment challenge for a minor capacity gain

Source: Wood Mackenzie, Codelco, LCC Research

Year Project / Mine Capacity Capex Capital Intensity

2013 Ministro Hales 183,000 tpa Cu US$3.1 billion $16,940/t

2016 - 2017 Radomiro Tomic sulphides Phase II 343,000 tpa Cu US$5.0 billion $14,577/t

2017 El Teniente new mine level 434,000 tpa Cu US$3.5 billion $8,065/t

2018 Chuquicamata underground 366,000 tpa Cu US$4.2 billion $11,475/t

2021 Andina Phase II 343,000 tpa Cu US$6.8 billion $19,825/t

Total 1,700,000 tpa Cu US$22.6 billion $13,294/t

If the projects are not developed, Codelco output could drop to 800,000 tpa.

US$23 billion to increase production from a stagnant production of 1.8 mtpa copper

over the period 2009-2012 to 2.1 mtpa in 2021, i.e. an increase of only 300,000 tpa.

Period Projects Capital Intensity

2011 US$/tpa

1985 - 2011 Greenfield and brownfield copper projects $7,700/t

2012 - 2015 Greenfield copper projects in construction $14,970/t

2016 - 2020 Greenfield unapproved copper projects $18,600/t

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How much gold does the world need/want?

Physical and investment demand difficult to predict

Physical Demand By Region in Q1 2013

World Gold Demand vs. Supply

Sources of Demand

Purchasing behaviour Percent of Indian and Chinese consumers who

have purchased gold in the last six months

Source: World Gold Council

73%

6%

12%

9% Consumer Demand

EFT Demand

Central Bank Demand

Technology Demand

World Gold Demand vs Supply

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Are we finding enough?

Source: MinEx Consulting © Feb 2012. Production data from USGS, World Gold Council

Mining and Discovery Rates for Gold

Possibly lacking gold discoveries

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Gold Price vs. Costs

Costs followed prices, grades and labour are the key drivers

Source: Company reports, Bloomberg, Barclays research

Source: GFMS

Source: Bloomberg, Mining Associates. Note data indexed to 14th January 2000; index made up of eight major

gold producers total return indexes by market capitalisation; major gold producers are AngloGold Ashanti, Barrick,

Harmony, Kinross, Goldcorp, Goldfields, Newmont and Newcrest.

Gold and Major Gold Equities Performance

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Performance of Australian Gold Producers

Source: Goldnerds, LCC Research Casualties appearing at the high end of the cost curve

ASX Listed Gold Producers Cost Curve (as at 31 March 2013)

0

200

400

600

800

1000

1200

1400

1600

1800

2000

-

100

200

300

400

500

600

700

800

900

1,000

Medusa M

ining

Prim

ero Mining

Kingsrose M

ining

Teranga G

old

Rand M

ining

Tribune R

esources

Regis R

esources

Citigold…

Northern S

tar…

Polym

etals Mining

New

crest Mining

Silver Lake…

Troy R

esources

Perseus M

ining

Millennium

…

Evolution M

ining

Resolute M

ining

Alacer G

old

OceanaG

old

Kingsgate

Besra G

old

AngloG

old Ashanti

St B

arbara

Austral G

old

Saracen M

ineral…

Lachlan Star

Endeavour M

ining

Red 5

Ram

elius…

Mintails

Unity M

ining

Norton G

old Fields

Tanam

i Gold

Vantage G

oldfields

Gold O

ne…

Dragon M

ining

Norsem

an Gold

Focus M

inerals

Navigator…

Minera G

old

Reed R

esources

BC

D R

esources

Apex M

inerals

Cu

rren

t P

rod

uct

ion

(K

oz/

year

) (A

$/oz)

Current Production koz/year

Cash Cost A$/oz

Current Gold Price in A$

2nd Quartile: cost

under A$ 967/oz

3rd Quartile: cost

under A$ 1202/oz

1st Quartile: cost

under A$ 704/oz

Producers with gold

projects soley based

in Australia

Wiluna mine

for sale

Comet Vale project

for sale (terminated

by CTT) Laverton mine

closed

WA mines

for sale

Coyote mine

closed

Write down of operations

in Papua New Guinea

Bronzewin

g mine

closed

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A$/US$ Exchange Rate The Saviour?

Source: Capital IQ, LCC Research

Price correction seen before, A$/US$ FX to assist Australian mines

Historical Gold Price

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Future Global Demand and Supply for Energy

Oil and gas remain key component of the energy mix

Source: Exxon Mobil

Energy Mix continues to evolve Quadrillion BTUs

Residential/commercial fuel demand by sector Quadrillion BTUs

Residential/commercial demand by fuel Quadrillion BTUs

Liquid supply by type Millions of oil equivalent barrels per day

Global natural gas supply Billions of of cubic feet per day

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Outlook for Crude Oil and Natural Gas

Crude Oil: US$85-95/bbl; Natural Gas: US$3.70-4.00/mmbtu

Source: Capital IQ, LCC Research

Overall supply and demand figures show general weakness

Global demand has been growing, albeit slowly

Producers from Canada and US provide substantial supplies

Geopolitical factors impacting oil prices

Consensus indicates an oil price between US$85 and US$95 for

the balance of the year

Structural shift to natural gas-fired power generation

Switch from gas to cheaper coal when price above US$4.00/mbtu

Prices above US$3.70 are seen as incentive for new natural gas

well drilling

Natural gas prices more volatile than oil prices

Crude Oil Natural Gas

Crude Oil and Natural Gas Spot Price 2006-2013

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Tungsten Fundamentals

Source: ITIA, Roskill Prices appear to be moving according to market fundamentals

Global Supply vs Demand Forecast Tungsten Demand 1989 to 2016*

Tungsten APT (EU)

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Outlook

Copper prices supported by strong long-term fundamentals: decreasing grades and

increasing depth, significant country and infrastructure risks, higher operating costs and

capital costs

For gold: supply adjusting quickly, high production costs, strong demand from India and

China, positive investment demand. Production costs are supporting of prices above the

current level

Oil prices stable and natural gas prices more volatile

Tungsten represents an opportunity among the minor metals

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Contact us

Important Information

Information that has been prepared in this presentation has been done so by

Lincoln Crowne & Company (‘LCC’) in good faith based on information sourced

from a variety of information points including public data, company published

information and third party data sources such as Capital IQ, Bloomberg, IRESS,

Merger Market, MDS News, Thomson Reuters and various other news and

information outlets.

Whilst it is believed that the information is accurate at the date of publication, no

responsibility will be accepted in any way from any party seeking to rely upon

this information for any business or investment decision. The information has

been provided by way of background research only, and given its content is

subject to continual change in fluctuating markets.

In any engagement LCC acts as an independent contractor and not in any other

capacity, including as an agent or a fiduciary. LCC does not provide any tax

advice. Any tax statement herein regarding any US federal tax is not intended or

written to be used, and cannot be used, by any taxpayer for the purpose of

avoiding any penalties. Any such statement herein was written to support the

marketing or promotion of the transaction(s) or matter(s) to which the statement

relates. Each taxpayer should seek advice based on the taxpayer’s particular

circumstances from an independent tax advisor.

Lincoln Crowne & Company holds a series of registered trademarks in the

United States of America and Australia to protect its intellectual property. Those

trademarks are “Lincoln Crowne & Company”: Reg. No. 4,107,955 with the

United States Patent & Trademark Office and the following with the Australian

Government as certified by the Registrar of Trade Marks : “Lincoln Crowne”

(Trade Mark No. 1423960); “Lincoln Crowne & Company” (Trade Mark No.

1423961); “LCC” (Trade Mark No. 142116) and “lincolncrowne” (Trade Mark No.

1424175).

AUSTRALIAN OFFICE

Level 18, Aurora Place

88 Phillip Street

Sydney NSW 2000

Australia

Correspondence

GPO Box 4154

Sydney NSW 2001

T: +612 9262 2121

F: +612 8088 1239

AFSL 278054

ACN 105 807 645

HONG KONG OFFICE

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One International

Finance Centre

1 Harbour View Street

Central Hong Kong

HONG KONG

T: +852 3960 6532

F: +852 3669 8008

PROJECT TEAM

Nicholas Assef

naa@lcc.asia

T: +61 2 8288 8688

J-François Bertincourt

jfb@lcc.asia

T: +61 2 8288 8611