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PAKISTAN’S FIRST INTEGRATED IRON ORE MINING,PROCESSING AND STEEL MILLS COMPLEX AT CHINIOT

SPECIAL ECONOMIC ZONE

FROM IRON ORE TO STEELTHE VISION OF CHIEF MINISTER PUNJAB

Pakistan is blessed with a complex and highly prospective geology which has already demonstrated the potential for hosting rich mineral deposits of copper, gold, iron, coal and numerous other commodities. The development and exploitation of this mineral wealth is an important component of our national and provincial strategies to drive rapid and high economic growth and to reduce our reliance on imported commodities. The Punjab Government’s vision for growth and self-sufficiency encompasses a proactive and outward looking drive to attract foreign investment and to stimulate opportunities for public-private partnerships. The Punjab Mineral Company (PMC) has been entrusted with the exploration, development and exploitation of economic mineralization within the Province of Punjab. This is being successfully achieved through the judicious application of modern technology and global best practice. The past three years have seen a range of international consultants - appointed through a competitive bidding process – assisting PMC to complete a comprehensive development programme as per international standards on the flagship Chiniot Iron Ore Project. Now, with the completion of the updated mineral resource statement and our mine and steel plant Feasibility Study we have the foundation for dynamic growth in the province’s steel production strategy. The studies to date indicate the potential for the development of an iron ore mine which in turn may herald a new age of metallic resource mining and the downstream development

of an indigenous steel mill. Along with the provincial energy development plan and the dawn of our CPEC infrastructure enhancement, the steel production strategy will prove to be a game changer for the province and the country at large vis-à-vis employment, revenues, secondary and tertiary sector stimulation and GDP growth.Not content with the significant progress made to date, PMC has developed and is now implementing a second phase of development and exploration to further enhance the geological understanding of the province’s natural resources and to assist with the restructuring of the province’s ability to manage and exploit such resources.In parallel with these initiatives, PMC has appointed a consortium of international Transaction Advisors to advance the economic and commercial aspects of the Chiniot Project and to select concessionaires/investor(s) for both the mining and processing of the iron ore and the establishment of steel mills in Punjab.In summary, the Government of Punjab is moving steadily towards the vision of increased prosperity for the people of the province and firmly placing the province on the international mining map. Even though the challenge is great, I strongly believe in our ability to accomplish what has not been achieved earlier and to continue to move steadily towards a brighter future for our people.

Muhammad Shehbaz Sharif Chief Minister Punjab

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• GDP of US$ 284 Billion (Rs. 29,813 Billion) with real GDP growth of 4.7%• CPI inflation declined to 2.9% during July – April 2016; policy rate reduced to 5.75% & fall in unemployment rate

from 6.2% to 5.9%• Industrial sector recorded remarkable growth at 6.8% including Mining and Quarrying sub-sector growth at

6.8%• Total investment recorded growth of 5.78% and reached US$ 42.88 Billion (Rs. 4,502 Billion)• Pakistan Stock Exchange market capitalization is US$ 70.81 Billion (Rs. 7,435.68 Billion)• Investment agreements between Pakistan and China worth US$46 Billion (Rs. 4,830.41 Billion)• Comprehensive plan launched to create investment friendly environment• Expansionary Monetary Policy along with infrastructure development drive are positive signals for promoting

investor confidence• Consistent policy trends, with liberalization, de-regulation, privatization and facilitation

PAKISTAN ECONOMIC OVERVIEW

Pakistan at a GlancePopulation 188.9 millionGDP USD 284.0 billionGDP growth 4.7%Inflation 2.90%




Iron ore is the basis for steel production and at present Pakistan imports almost all of its iron ore needs. In parallel, demand for finished steel exceeds supply and a range of products including ingots, long product, flat product, and tubular product have to be imported. The import of semi-finished and finished products has increased by around 20% since 2005 and more specifically imports of hot-rolled coils (HRC) from China amounted to between 150,000 T. and 175,000 T. per month since January 2015; which is more than three times the average in calendar year 2014

DO WE NEED IRON ORE?

IMPORTS

According to world steel data, Pakistan is currently one of the less developed countries in regard of steel consumption and therefore there is an opportunity for growth.

Local steel producers are present but with limited capacity and production focusing on long product, mainly rebar. The main local steel producers are AS-steel, Amreli Steels Limited and Agha Steel Industries.

The manufacturing and mining sector in Pakistan grew during the period July-March 2014-15. The production of crude steel in Pakistan has more than tripled since 2005 to around 2.9 MT per year. Since 2008 the scrap content in crude steel production in Pakistan has increased drastically, while the OBC as part of integrated steel mill has decreased. The export of semi-finished product and finished steel product in Pakistan is currently very low, reaching approximately 54,000 ton in 2014. In contrast, the import of semi-finished and finished products increased 20 % since 2005

STEEL PRODUCTION IN PAKISTAN



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The steel industry continues to face a challenging economic environment due to a prolonged economic slow down in China, volatility in financial markets, sluggish growth in global trade, and the low prices of oil and other commodities. Although the automobile and construction sectors continue to support demand, the steel industry is reeling from in adequate investment, and continued weakness in the manufacturing sector and foreign steel imports into the United States. The recent rally in iron ore and Chinese domestic steel prices triggered a knock-on effect around the world as producers raised export offers. In the second quarter of 2016 the World Steel Association documented World crude steel production at 410.4 Mt, a growth rate of 2.8% on the previous quarter.

WHY DO WE NOT BUY IRON ORE OR STEEL FROM SOMEWHERE ELSE?

GLOBAL MARKET

Pakistan and some of its neighboring countries currently have low, but steadily rising steel demand. Growth potential remains a realistic prospect as the current few steel producers in the area will be unlikely to meet an increase in demand. There are no substantial and realistic capacity expansion plans and the area faces a growing steel trade deficit.

Pakistan is surrounded by countries that can be defined as major steel producers: China (604 MT p.a), India (61 MT), Iran (12 MT), Saudi Arabia (8 MT), Kazakhstan (4 MT) and UAE (3 MT). Four of these countries are also net importers: India (5 MT), Iran (5 MT), Saudi Arabia (3 MT) and UAE (3 MT).

China has a dominating influence on the market and can change the balance in the worldwide steel industry. The effects, unfortunately, as we are experiencing at present are unpredictable.

REGIONAL MARKET

The total estimated demand for iron and steel products only for Pakistan, for 2016, is estimated at 4.3 MT per year. The steel producing companies in Pakistan have a current output of 480,000 T. steel products.

Despite reducing its prices by 29% (excluding 17% general sales tax) since January 2015, the local capability has failed to compete with rampant import of Chinese steel that has fulfilled a significant proportion of the market share. However, the imposition of 15% import duty helped reduce Chinese imports in 2015. To protect itself, the local industry is currently demanding for import duties of at least 40%.

LOCAL MARKET


DO WE HAVE MINERALS IN PUNJAB?

THE MINERAL WEALTH

OF PUNJAB

The Punjab’s natural resources provide the foundation for its industrial sector. Over 35 minerals including: coal, limestone, gypsum, and rock salt, are mined by several thousand entrepreneurs. Over 50 industrial leases have been issued to large corporations and multinational for industrial production of cement, soda ash, caustic soda, phosphates, silica, ceramics and marble. Indeed, the Punjab’s Salt Range represents the World’s largest rock salt deposits.

In addition to industrial minerals, the Punjab has prospective areas for base and precious metals and a number of major exploration and development studies have identified numerous anomalies, mineral occurrences and development targets.

Cement Raw Material

Iron Ore

Steel Mills

12 Ce

ment Factories Installed

Ceramic Raw Material

Industrial Products

Glas

s Industry

Rock Salt Raw Material

Chemical Industry

Glass Raw Material



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There are two primary sources of iron ore in the Punjab: Kalabagh and Chiniot. Further sources exist in the Punjab but are considered to be sub-economic at present. Further iron ore resources exist in neighboring provinces, most notably Balochistan.

The Kalabagh deposit located about 120 km north west of Chiniot, comprises a number of iron occurrences, which have been explored and exploited since historical times. Recent investigations have defined a provisional resource of 125 MT of mineable iron ore on both sides of the Chichali pass. The total deposit of Chichali has been estimated at over 400 Mt.

At Chiniot, several phases of historical exploration identified anomalous mineralization. More recently, PMC sponsored exploration and development programme has defined a CIM compliant, combined inferred and indicated resource of some 149.8 MT iron ore at an average grade of 30.79% TFe (Total Iron). The deposit is open along strike and at depth and contains possible base and precious metal credits.

PMC has worked in conjunction with the Geological Survey of Pakistan (GSP) to survey over 18,000 km2 in the Punjab (total area 206,000 km2 ). Magnetic and

gravity geophysical methods identified over 32 anomalies, five of which have been proven to coincide with some level of mineralization.

Chiniot has delivered a resource that can serve as foundation for an integrated iron ore mine, processing plant and steel mill.The Chiniot Property is located on the southern edge of Chiniot town and 35 km north of Faisalabad in the northern part of Punjab Province. The PMC Exploration license covers approximately 58.5 km2 and was issued on May 26, 2014.

The deposit was discovered after a regional aeromagnetic anomaly was observed near Chiniot in 1962. The GSP conducted ground geophysics and exploratory drilling and confirmed the presence of iron ore in 1985. Further drilling was completed during 1996-1999.

The PMC sponsored exploration from 2014 to 2016 included further ground geophysics and additional diamond drill holes. This work culminated in Mineral Resource, modelled under CIM definition standards. A further Mineral Resource was completed to meet Chinese standards.

THE IRON ORE OF PUNJAB

DEVELOPMENT STRATEGY TO DATE AT CHINIOT

MCC+ QP




PHASE I–EXPLORATION (2014 – 2016)

• Consultant: GEOS (Germany)• Contractor: MCC (China)• Report sign off: BAW (Canada)• International standard: NI 43-101 reporting, Canada• +62,000 meters drilling through 71 boreholes completed with 95% core recovery • +10,000 core samples analysed at SGS Labs (Switzerland) and ACME Labs (Canada)• Approximately 150 MT of iron resource estimated with advanced 3-D modelling (on NI 43-101 Canadian

Standards) • Approximately 200 MT of iron resource estimated on Chinese Standards with geological sections



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Figure 1 - Cross Section of the Chiniot project showing areas of focus for Phase II development (investigation, extension and infill)

PHASE II–EXPLORATION (2016 – 2018)

TRANSACTION ADVISORY

• Transaction Advisory Team: DMT (Germany), MME (Germany), Endeavour Financial (UK) Nespak (Pakistan)

• Phase I defined 150 Mt iron ore sufficient for 33 years operations of steel mill • 1 MT per year capacity steel mill planned for HRC production• Sub-level stoping method of mining, conventional processing and steel making on FINEX®

technology • 1,000 acres site identified for industrial development• Environmental baseline assessment and social risk mitigation strategy under development• Base Business Case finalized after extensive market survey regarding demand and supply, product,

pricing and logistics• Strategic Option Analysis report finalized regarding best option for quantum of equity contribution by

public sector, leveraging, concession package incentive structure based on detailed interactive financial model

• Consultant: Fugro (Germany)• Contractor: Final selection under process out of three pre qualified

international contractors • Phase IIa will focus on

infill and extension drilling at Chiniot

• Phase IIb will focus on the exploration of adjoining areas within the Chiniot mineralised corridor

• Phase IIc will focus on (i) the ore deposit at Kalabagh and (ii) numerous regional exploration targets

• Fugro already activated for selection of appropriate contractors as well as literature review

• Contractor appointment and mobilisation expected in Q1 2017




HOW MUCH IRON ORE EXISTS?

IRON ORE RESOURCE AT CHINIOT

Figure 2 - An elevation view of the Chiniot iron ore deposit. Looking to the NW, the lower horizontal surface denotes the top of the Proterozoic basement. The yellow lines illustrate the resource defining drill holes. The red, high grade zone, averages TFe> 52% whilst the blue medium grade Orebody averages TFe> 20%. A second discrete medium grade zone sits behind and below the first.

Cu

Fe-Cu-Au

Cu (Fe)

Chiniot Hill

Wad Sayyidan

Rajoa

• Polymetallic mineralization, similar to that observed at Chiniot

• Increased metallic minerals prospectivity in a corridor zone of �>20 km length and up to 2 km in width

• To be assessed in future exploration; Phase IIB



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The Chiniot iron and associated metallic minerals are hosted by the steeply west dipping HachiGroup, the lower most unit of the Pre-cambrian basement, which includes andesite, dacite, rhyolite, basalt and other volcaniclasic rocks which have all undergone low grade metamorphism. Its unit is exposed in Chiniot Hill and includes in varying proportions quartzites, slates, phyllites, tuffs and lava flows

At Chiniot, two distinct iron mineralization zones have been identified: the magnetite-pyrite zone (MT), which is overlain by a weathered hematite zone (HT). The iron mineralization occurs as massive layers (10m to 100m estimated true width) of hematite and magnetite, interbedded with more disseminated layers. In general, upper high grade hematite ore (+52% Fe) is associated with higher apatite content and the deeper low grade magnetite with zones of lower magnetite and higher pyrite content. The iron mineralization occurs as massive layers (10m to 100m estimated true width) of hematite and magnetite, interbedded with more disseminated layers.

Metallurgical test work showed that commercial quality (+62% TFe) concentrates can be produced by simple beneficiation technology, including: wet low-intensity magnetic separation, wet high-intensity magnetic separation and froth flotation (for hematite).

Copper-gold mineralisation intersected to data is mostly low grade ( 100-1000 ppm Cu ) with occasional 1-2m intervals up to 4% Cu, 3 g/t Au, associated with chalcopyrite in mm-cm scale veins and Copper appears to post-date iron mineralisation, but further research is required to determine which geological model best fits the available data, and where further copper-gold exploration should be focused within Chiniot district and surrounding Punjab region.

A total (indicated and inferred) resource of 149.8 MT of ore with an average grade of 30.79% TFe, using a 20% TFe cut-off for magnetite and a 25% TFe cut-off for hematite, has been identified to date. The mineralized system at Chiniot remains open at depth and in both directions along strike, with potential for further increases in resources.

A Chinese compliant resource of 190.2 MT @ 30.48% TFe was calculated using a 20% TFe Cut-off.

It is probable that the Chiniot deposit belongs to the Iron Oxide Copper-Gold (IOCG) family of ore deposits. These can contain highly valuable concentrations of copper, gold and uranium in association with the iron oxide ore. Their tremendous size, relatively simple metallurgy and relatively high grade of IOCG deposits can produce extremely profitable mines. The largest examples of IOCG deposits include Olympic Dam in Australia and Sossego in Brazil.




JV COMPANY

MINING & PROCESSING SPV STEEL MILLS SPV

PRIVATE PARTNER GOVERNMENT OF PUNJAB (GoPb)

SHAREHOLDER PARTNERSHIP

AGREEMENT

BOARD OF DIRECTORS

SPV Based Financing Agreement

•Proposed Capital Structure: Equity 30% and Debt 70%•GoPb equity participation as per investor’s appetite•GoPb representation on Board commensurate with equity participation•Potential for Partnership between Foreign and Local Investors••

Private sector led management and operationsExcellent opportunity to relocate power and steel plants

PUNJAB STEEL MILLS

CAPTIVE POWER PLANT(200 - 300 MW) PD KHAN

STEEL CONSUMERS

CHINIOT IRON ORE MINING & PROCESSING

PLANT

IRON ORE FROM REST OF

PAKISTAN

SALT RANGE COAL MINES

DOMESTIC COAL FROM KALABAGH, KPK

AND BALOCHISTAN

DOLOMITE LIMESTONE

MINES

IMPORTED COAL

INDONESIA SOUTH AFRICA

INTERNATIONAL DOMESTIC

ON

GR

ID D

ISTR

IBU

TIO

N

THR

OU

GH

WH

EELI

NG

ON-GRID SUPPLY TARIFF: 8.5 cent/Kwh

PROPOSED PROJECT OWNERSHIP MODEL

PROPOSED PROJECT BUSINESS MODEL



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The design of the Chiniot Mine foresees mine access from the surface by two declines via the east portal (man and material incline) and the west portal (production incline). In addition, the sinking of a vertical shaft will be required for ventilation and alternative access.

The mine development will comprise eight main extraction levels and three conveyor haulage levels. These will be connected by an internal ramp system. Orebody access will comprise horizontal and inclined road ways driven perpendicular to the main levels allowing entry to all sublevels. Additionally, ore passes connecting main and haulage levels will be developed at regular intervals to guarantee efficient ore transport between extraction and haulage levels.

The mining method, sub-level stoping with back filling is a combination of cut and fill mining and sub-level stoping. Mining will commence concurrently at two levels, enabling the simultaneous extraction of hematite and magnetite ore. Mining stopes will be developed along strike of the Orebody reaching a length of up to 160 m; stope width and height will vary between 20 m x 20 m for hematite, and 30 m x 30 m for magnetite. While all developments and infrastructure are planned to be located on the eastern margin, at the footwall contact, ore extraction will start at the western stope boundaries retreating eastwards.

Remote-controlled load-haul diggers will be deployed for mucking and hauling of the blasted material. The broken ore will be hauled through the footwall drifts to ore passes connecting several main extraction levels with one of three haulage levels which accommodate belt conveyors transporting the material via the production incline to the surface.

HOW DO WE MINE THE IRON ORE?

MINING

Figure 3 - Sub-level stoping with backfill




Ore beneficiation of 4.6 MTPA (million tones per annum) ROM (Run of Mine) will produce 1.6 MTPA iron ore concentrate with 63.4% TFe (25% Hematite and 75% Magnetite) as an average. The nature of the iron ore permits concentration by conventional processing methods including: crushing, milling, magnetic separation, and flotation.

Waste material will be pumped to the tailings dam facility ahead of being mixed with concrete and being used as backfill underground. The ore concentrate will be pumped via overland pipe to the steel mill, where it will be filtered and then metallurgically processed.

WHAT ARE THE NEXT STEPS?

Conventional steel production takes place in integrated steel mills that often include facilities for coking and sintering. In the basic process, the input materials enter a blast furnace (BF) to be converted into molten pig iron. The pig iron is then loaded into an oxygen furnace to produce cast iron.

Alternative processes to FINEX® are direct reduction iron (DRI) and smelting reduction iron (SRI). Ferrous scrap can also be processed in an electric arc furnace (EAF) to obtain steel.

In Chiniot, the innovative and new FINEX® process will be applied. Iron ore concentrate from Chiniot Mine will be converted and coal coming from other sources will be charged in the smelting reduction system (FINEX®) to produce molten steel.

For the production of flat products, liquid steel is generally cast in form of slabs in continuous slab casting machines. These slabs are inspected, scarfed and then reheated in a slab reheating furnace to the rolling temperatures before being rolled to hot rolled coils in a semi continuous or continuous hot strip mill. The development of thin slab casting and rolling (TSCR) is a step forward to reduce the number of process steps in the production of hot rolled coils (HRC).

FINEX® Technology is a next-generation eco-friendly iron making process allowing the direct use of cheap iron ore fines and non-coking coal as feedstock. One (or two) ladle furnaces are aimed at shorter treatment times and better buffer control during caster sequence.

An added economic and environmental benefit of FINEX® is that the export gas (a mixture of the not recycled off-gas, excess gas and the tail gas off the Pressure Swing Adoption plant) can substitute natural gas, oil, coke and coal for numerous applications.

PROCESSING



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VALUE CHAIN




Figure 4 - The FINEX® process

A Compact Endless Cast & Rolling Mill an advanced process technology that allows mass production of highly valuable hot-rolled products through the direct linking of casting and rolling processes, this new technology is an essential factor to minimize energy consumption in rolling, improve product consistency, and maximize yield.



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Production will be dedicated to the Pakistan market and steel grades are focused on higher value products. The output of the Chiniot plant will be around 1 MT of steel per year. The steel plant will produce products with added value that are not produced in the local market. This reduces the impact on the local market and reduces imports. Particular attention will be given to Hot Rolled Coil (HRC) and to heavy steel structures. The production mix envisage for the Punjab Steel project consists of five groups of steel:

Group 1 and 2

Group 3

Group 4

Group 5

Mild non-alloy steels for direct cold-forming

Unalloyed structural high-strength steel

Low alloyed high-strength steel

High tensile steel

These steel grades are characterised by outstanding formability. They may be used for deep-drawing and forming by bending. Automotive is an example.

Characterised by a guaranteed value such as tensile strength, fracture elongation and notch impact energy. Used for building ships, bridges etc.

Mainly used in riveted, bolted, or welded construction of bridges and buildings

Mainly used for manufacturing boilers, pressure vessels and pipes transporting fluids

AND WHAT DO WE PRODUCE?

During 31 years of ore production, 25.3 MT of Hematite and 95.9 MT of Magnetite will be mined, resulting in a concentrate tonnage of 45.8 MT with an average iron content of 63%. The production schedule is based on the following assumptions and parameters:

• Annual concentrate production of 1.6 MT with an average iron ore content of 63%.• Stepwise production increase, full production from year +4 onwards.• Two years of pre-production to allow

for orebody access.• Mine plan is to maximize LOM while

minimizing losses and dilution.• The waste and ore production levels

must be balanced to ensure optimum utilization of mining equipment through the life of mine.

• Hematite and magnetite ores are processed in different lines. Blending between the two layers is not possible.

• High grade hematite containing ~60 % TFe is extracted separately and requires minor processing.

• Out of 1.6 MT concentrate about 1.02 MT of molten iron and finally around 1 MT of HRC will be produced.

HOW MUCH IRON ORE (CONCENTRATE) CAN WE PRODUCE?

Figure 5 - Graph showing mine iron ore production over time




Chiniot is the closest municipality to the project area and has a population of over 300,000 which is increasing due to urban migration. The area can readily be accessed from the rest of the country via two highways and one publicly operated railway line, which connect Chiniot with cities like Lahore, Faisalabad, Jhang and Sargodha. Numerous private transport operators are active in the area providing for local and country wide road transport. The area is served by the airport at Faisalabad located 35 km to the southeast that offers daily domestic flights and some international connections. International flights are also available from the international airport at Lahore (117km east of Faisalabad). The nearest port is at Karachi on the Arabian Sea, about 1200 km by road to the southwest.

Both a 132 KV power grid line and natural gas pipe line pass close to the envisioned project area. In addition to the existing power generation capacity, the LNG based power plants with cumulative capacity of 3600 MW along with coal based power plant in Sahiwal with 1320 MW capacity will provide sufficient electricity in the near future. Underground water supply is abundant as the Chiniot area is provided through a series of large diameter water boreholes. Irrigation water for cultivation is obtained from a network of irrigation canals and/or from water boreholes. Communication services such as telephone/fax, cell phones and internet are available in urban areas of Pakistan.

Overview: China-Pakistan Economic Corridor is a framework of regional connectivity. CPEC will not only benefit China and Pakistan but will have positive impacts on Iran, Afghanistan, India, Central Asian Republic, and the region. The enhancement of geographical linkages having improved road, rail and air transportation system with frequent and free exchanges of growth and people to people contact, enhancing understanding through academic, cultural and regional knowledge and culture, activity of higher volume of flow of trade and businesses, producing and moving energy to have more optimal businesses and enhancement of co-operation by win-win model will result in well connected, integrated region of shared destiny, harmony and development. A Special Economic Zone (SEZ) is proposed in Chiniot for Pakistan’s first integrated iron ore mining, processing and steel mills complex as resource based industries are generally located near the mineral resources. Moreover, the proposed Special Economic Zone (SEZ) in Chiniot is located near the CPEC (China Pakistan Economic Corridor) route as well.

DO WE HAVE THE PRECONDITIONS FOR THE PROJECT?

PROPOSED SPECIAL ECONOMIC ZONE (SEZ) IN CHINIOT ALONG WITHCPEC - CHINA PAKISTAN ECONOMIC CORRIDOR ROUTE

Chiniot



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The ESIA gathered baseline information about bio-physical and socio-economic environments, provides identification of impacts and mitigation measures to minimize the environmental impacts.

It should be noted that PMC is working closely with the Transaction Advisor’s environmental team to develop a comprehensive CSR strategy.

HOW SAFE IS THE ENVIRONMENT?

Figure 6 - Project map showing the mine portals, plant, product pipeline and steel works.




The Project is an opportunity to create a domestic, high quality steel industry in Punjab with large growth potential of steel production and associated new down stream steel industries. The vertical integration of mine and steel mill will drive up the value chain by producing higher value products domestically and which add to the overall growth of Pakistan GDP.

The major benefit of the proposed project will be to the local population. Small and medium companies with an interest in entering in the industry value chain to provide goods and services for the steel making industry are present in the area. Contractors will be interested in new opportunities and challenges of the sector. The mining and the steel making sectors represent an opportunity for local suppliers to develop and expand the product and service offerings.

All resources, human or otherwise, that can be employed or sourced in the Punjab province represent an opportunity. The local context primarily concerns itself with the development of skills (workforce) and competitive provision of goods and services (supplier development) to generate additional value from sector activity. Through targeted interventions, local content development can be utilized to generate wealth and increased incomes for the broader population, an outcome critical for developing countries.

The development of an Iron Ore Mine and Integrated Steel Complex at Chiniot needs to adhere to the following key points:

WHAT IS THE BENEFIT?

• Avoid negative impact on local steel producers

• Access to competitively priced consumables

• Improve downstream secondary industry via added

value products, with particular attention to HRC and

to heavy steel structure

• Complementary development of infrastructure (road,

rail, power)

• Reduce reliance on imported products

• Increased use of indigenous natural resources

• Acts as a lever for economic and social Uplift



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Educational needs are met by numerous private and public academic institutions up to college level in Chiniot and to university level in nearby cities. Personnel for the operation can be found locally, but most hired labor will require training. Highly skilled mining professionals will most probably have to be sourced from other cities of Pakistan or from the international market.

An estimated 2,500 people will be directly employed by this project during the operation stage and will most preferably be acquired from the surrounding villages. Additionally, around 2,500 people will benefit from indirect employment. The majority of the jobs will be in semi-skilled sectors and will thus require development of a robust professional sector to equip the labor market to meet growing demand in the future. The company will provide apprentice training in the fields of electricians, plumbers, carpenters, masons, workshop attendants, fitters and welders. Medical facilities that will be built to service the mine and plant may also be available for the benefit of local residents.

HOW MANY JOBS WILL BE CREATED?




The combined mine, processing plant and steel mills project will require an overall investment which would rank the project as a major project in Pakistan. It is expected that the project will make significant contributions to the Punjab economy through generation of tax and royalty income and the creation of a considerable number of direct and indirect jobs.

As the only producer of high-quality HRC, and with access to the latest technologies and good corporate governance, the Integrated Steel Mills Complex will be the first in modern Pakistan and in Punjab, and will be the largest private sector steel company in Pakistan in terms of domestic production.

Exploration work on the Chiniot iron ore deposit continues and an increased resource would allow for an expansion of the mine, processing plant and steel mills increasing profitability through efficiency gains. Based on geological and geophysical information, the mineralized system at Chiniot remains open at depth and in both directions along strike. Therefore, exploration and resource estimation updates in Phase II will be required in order to increase the resource; enhance our understanding of the deposit type (IOCG); and explore nearby anomalous occurrences and targets.

The number of risks such as the local skills and industrial experience gap and the infrastructure integration and capacity strategy can be successfully mitigated through diligent planning and structuring of the Project by stakeholders.

WHERE ARE THE RISKS?

The Government will ensure that existing Policies, Legal & Regulatory Framework will be correctly implemented to the new combined mine, processing plant and steel mills.

In order to improve project economics and increase attractiveness of the project to investors, the Government of Punjab has drafted a list of concessions that it intends to offer as part of the project development. The table below summarizes the main items included in the concessions offered by GoPb.

HOW CAN THE GOVERNMENT SUPPORT THIS PROJECT?

CONCESSION

Duration of Lease Land AcquisitionExternal Infrastructure

Utilities

Income Tax Exemption

COMMENT

30 years initially; extendable to 50 yearsGovernment to acquire and provide the land required for the ProjectGovernment to provide rail, road, power and water infrastructure that is not already included within the overall CAPEX.Connection to the grid or power plant; supply of water and licence to discharge treated waste water.Income tax holiday for 10 years with possibility of extension.

A Special Economic Zone (SEZ) in Punjab can significantly benefit the development of integrated steel mills. A further option available to the GoPb is to recommend that the Chiniot mine, processing plant and steel mills plant project be awarded status as an integral part of the CPEC programme.



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The table below outlines in general terms the Base Business Case and compares it to the Enhanced Case (SEZ scenario) and a CPEC Case.

HOW DO THE OPTIONS COMPARE?

ITEM SPECIFICATION BASE ENHANCED CPEC BUSINESS CASE CASE CASE

TAXES Tax Holiday NO 10 Years 20 Years

INFRASTRUCTURE Provision of internal infrastructure NO YES YESProvision of external infrastructure NO YES YESLand acquisition by GoPb NO YES YES

RESULTS BASED ON LATEST CASH FLOW Investor IRR after tax and financing (%) <15% 16-18% >20%NPV after tax and financing (MUSD) 250-300 400-500 >600Payback Period 9.0 years 6.5 years 5.0 yearsGoP/GoPb LoM total tax revenue (MUSD; royalties, tax, etc.) 2,100 1,700 1,000GoP/GoPb avg. annual tax revenue over LoM (MUSD)Includes: royalties, tax, etc. 68 56 32

ASSUMPTIONS FOR THE CALCULATION FOR MINE/PP/SMELTER/MILL Discount Rate 10% 10% 10%Initial Capex Requirement (MUSD) 1,200 1,100 1,10070% Loan @8% Interest (MUSD) 840 770 77030% Equity Requirement (MUSD) 360 330 330Captive Power Plant @ 380 MUSD and 330 MW NO NO NO

ADDITIONAL FACTORS (NOT INCLUDED) Provision of Equity in Mine and PP NO YES NOGoPb as operator of mine and processing plant NO NO NOImport Duty Concession NO YES YES

Our Partners




Figure 7 - Mineral Map of the Punjab showing the locations of Chiniot and Kalabagh

Chiniot

Kalabagh



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Figure 8 - Pakistan overview map showing the location of the two primary iron ore projects in the Punjab.

The figure also shows national infrastructure.

Chiniot

Kalabagh



DATA AND REPORTS AVAILABLE ON REQUEST FOR INVESTOR'S DUE DILIGENCE

PROJECT TEAM

PROFILES OF DMT CONSORTIUM DELEGATION VISITING PAKISTAN

1 Topography Survey Report2 Geophysical Surveys Report of Chiniot-

Rajoa Area3 Geophysical Surveys of Adjoining Areas4 Borehole Geophysical Logging5 Down-hole Deviation Measurements6 71 Boreholes Completion Reports7 Contour Map & 3D Model of Bedrock

Topography of Chiniot-Rajoa8 Hydro-geological Study Report9 Geo-technical Study Report10 Metallurgical Test Work Reports11 Petrography and ore microscopy

12 X-ray analysis by use of diffractometer (XRD Reports)

13 Chinese Resource Report (English Version)

14 Chinese Resource Report (Chinese Version)

15 Core Cutting Report16 Core Recovery & RQD Report17 Geological Core Logging Report18 Sample List Report for 71 Boreholes19 QA/QC Report for SGS samples of

Chiniot-Rajoa Area

20 QA/QC Report for Adjoining Areas Samples

21 Permanent tags marking of the 9657 core boxes for 71 boreholes

22 Monument work for 71 boreholes23 Pulp samples ( Approx. 33300 samples)24 NI 43 101 Ore Resources Report 25- Need Analysis Report26- Base Business Case Report27. Strategic Option Analysis Report28. Project Feasibility Report with interactive

Financial Model



Contractor: Wuhan Surveying & Geotechnical Research Institute, a subsidiary of Metallurgical Corporation of China (MCC)

Dr. Liu Shuxiang (Project Manager )

Michael LoosTeam LeaderDMT Consulting GmbH (Germany)

Nikolaos ChristouSenior Mining EngineerDMT Consulting GmbH(Germany)

Marion ThomasSocial and Environmental ExpertDMT Consulting GmbH(Germany)

George PyperFinancial ExpertEndeavour Financial Ltd.(Cayman Island)

Paul MainwaringTransaction Advisory ExpertEndeavour Financial Ltd.(Cayman Island)

Flavio CozziMetallurgical ExpertMines & Metal EngineeringGmbH (Germany)

Dr. Ernst-Bernhard TeiglerGeologistDMT Consulting GmbH(Germany)

Dr. Hanspeter TomschiHydrogeological andEnvironmental Expert DMT Consulting GmbH(Germany)

Dr. Uta Alisch(MD, Team Leader)FUGRO CONSULT GMBH (GERMANY)

Mr. Ralph Braumann(In-country Project Manager)FUGRO CONSULT GMBH (GERMANY)

Mr. Axel Oppermann(BDM)FUGRO CONSULT GMBH (GERMANY)

Florian BeierSenior Mining EngineerDMT Consulting GmbH(Germany)

Andrew CraigIndividual ConsultantRocklore Exploration Services Ltd.

Mr. ZhaoShugang(Geological Modeler)

Mr. Yong Xu (Senior Geologist)

BAW Mining Inc., Canada

Dr. Weiliang Wang (Qualified Person according to NI 43-101)

Mr. Feng Wei(Geologist)

Resident Consultant: GEO-RC (Consortium of G.E.O.S. IngenieurgesellschaftmbH, Germany and Geo-Research GeoConsult (JV), Pakistan)

Dr. Jürgen Hartsch(Team Leader )

Mr. Moazzam Abbas(Geologist)

Mr. Tariq M. Butt(Team Coordinator)

Mr. Matthias Helbig(Geological Modeler)

Clemens MiethFinancial Analyst & Financial Modelling ExpertEndeavour Financial Ltd.(Cayman Island)

new mining / processing steel production...

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