Australia Latin America:

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1 Mining Activity & Investment 1 Latin America possesses outstanding mining credentials 2 in Latin America Australia Latin America: The Business Outlook Advantages Abundant reserves Diverse geology World leading deposits Largest share of exploration budget Key markets have low to moderate risk profile Challenges Australia is more Africa focused and its knowledge base is relatively modest Perception of Canadian dominance Low level of personal connections Disconnect between mining and local capital markets Developing capital markets Some markets come with relative higher risk Address given by: Jose Blanco Senior Partner, Blanco Partners & Chairman, Australia Latin America Business Council Mining Investment & Finance 2012 Grace Hotel, Sydney September, 2012 Deepening engagement with China Growing Australian footprint Infrastructure challenges vary water, energy, transport Positions of some indigenous communities / resource nationalism Global nonferrous exploration budgets by region, Top destinations for nonferrous exploration, $4.5bn Estimated Global Nonferrous Exploration Budget Totals Source: Metal Economics Group, 2012 Corporate Exploration Strategies Source: Metal Economics Group, 2012 Corporate Exploration Strategies Location of significant Gold and Base Metals drill results announced Latin America possesses world class mining projects 6 Cerrejon Coal Mine, Colombia Yanacocha Gold Mine, Peru Carajas Iron Ore Mine, Brazil Chuquicamata Copper Mine, Chile Source: Metal Economics Group, 2012 Industry Monitor, Exploration Activity Service Salar de Uyuni Salt Mine, Bolivia

2 M&A activity slows (a) in and (b) from Latin America in Aspects of Latin America that you need to keep in mind 8 Not a single, homogeneous region be conscious of the differences!! What is the prevailing and trending political regime? What is the operating regulatory environment? What are the cost structures? What is the legal regime? Degree of increased uncertainty about mining policy and policy stability in some markets Certain markets have responded to strong mineral prices and corporate profits with degrees of increased resource nationalism Australian investors place lower valuation on Australian owned assets in Latin America than elsewhere ASX v TSX investor perceptions Shortage of high level executives with required dual knowledge of both Australian and Latin American project components it is a case of both what you know and who you know FACT: Deal doing and project financing have become progressively harder There is not a widespread following amongst Latin American investors for resource company equities beyond the major national icons Source: Ernst & Young Mergers, Acquisitions and capital raisings in minerals and metals report, 2011 Trends 2012 Outlook Sovereign ratings reflect much improved economic positions 9 Sustained economic improvement reflects improved fundamentals 10 Country S&P Fitch Moody s Chile A+ A+ Aa3 Mexico BBB BBB Baa1 Chile CHILE A+ A+ A+ A+ A+ A A A A A BBB+ BBB+ BBB+ Brazil BBB BBB Baa2 Peru BBB BBB Baa3 Colombia BBB BBB Baa3 Bolivia BB B+ Baa3 Investment grade = greater finance options Mexico MEXICO BBB BBB BBB BBB BBB BBB BBB BBB BBB BBB BBB BBB Venezuela B+ B+ B2 Argentina B B B3 Ecuador B B Caa2 COLOMBIA Colombia Peru PERU BB+ BB+ BB+ BB+ BB BB BB BB BB BB BB BB BB BB Brazil BRASIL B+ Source: S&P, Fitch, Moody s. All ratings are as at August, 2012 Source: Francis Stenning, Bolsa de Lima Latin American GDP growth forecasts (%) 11 Able to withstand global shock, but impact would be considerable 12 LatAm Countries: International reserves (%of GDP) LatAm Countries: Government gross debt (%of GDP) August 2012 Forecast May 2012 Forecast Lower forecasts due more to local factors than external ones Turbulence in EU markets and lower global growth are affecting all Latin American countries to varying degrees Solid growth during 2008/09 recession reflects improved economic conditions and break with the past Good levels of international reserves and low levels of external debt provide scope to deal with sudden halt in capital inflows Source: BBVA Research Source: BBVA Research

3 Latin America s global connectivity growing fast 13 Mineral exports comprise large slice of Latin America s trade flows to Asia 14 Trade Flows Latin America to Asia Commodities, 2012 FACT: Growing Chinese/Asian investment in Latin American resources sector 48% Trade between Latin America and other regions was USD 1.4 trillion¹ in 2010 (6% of world trade) Latin America trade forecast to grow to USD 3 trillion by 2020 (7.6% CAGR) Latin America includes some of the fastest growing cross regional trade corridors (e.g. China to Brazil, 37% CAGR Latin America to Asia, 20% CAGR) 1 Intra regional using exports only Source: International Trade Centre and HSBC, figures considering merchandise trade and continental Latin America Source: BBVA Research and COMTRADE Importance of mining varies greatly in the region with Chile and Peru leading by a large margin 16 Or last year available 2010 Source: PriceWaterhouse Coopers Statistics Canada, BCRP, Banco de Chile Or last year available 2010 Source: PriceWaterhouse Coopers Statistics Canada, BCRP, Banco de Chile Correlation between mining importance and policy friendliness 17 Mining importance is reflected in accessibility of geological data 18 * Chubut Region Only * Chubut Region Only

4 Legal regime has major impact on investment attractiveness 19 Socioeconomic issues impact upon investment climate 20 ** Chubut Region Only ** Chubut Region Only * Includes local purchasing, processing requirements or supplying social infrastructure Politics matter to investment 21 Corruption Perceptions Index * Chubut Region Only Source: Transparency International 22 Chile Uruguay Botswana Puerto Rico Rwanda Costa Rica 4.8 Global rankings by commodity 23 Substantial mining sector investment pipeline over next decade 24 Commodity Brazil Chile Mexico Peru Copper 1 2 Silver Iron Ore 3 Lead 4 Zinc 3 Gold 5 Estimated Mining Investment in Latin America (Selected Countries) Country Investment Term (USD billion*) Chile 100ǂ 2020 Brazil Peru Colombia FACT: Region is also in Top 5 producers for molybdenum, bauxite, rhenium, and nitrates. Mexico Argentina Source: * CESCO estimates include all mining industries, excluding energy. Do not include exploration or refinery ǂ SONAMI upgrade, April 2012

5 Outbound capital flows junior IPOs (2011) 25 Prominence of TSX for mining companies active in Latin America 26 But, the tide is turning and will accelerate towards ASX.... and Global focus Latin America more than holds its own Unless indicated otherwise, all numbers as at 31 December, 2011 Source: Ernst & Young Mergers, Acquisitions and capital raisings in minerals and metals report, 2011 Trends 2012 Outlook Source: TSX and TSXV Latin American stock markets are evolving 27 Latin American stock markets look beyond the glamour 28 Integration of the stock markets of Chile, Colombia and Peru launched November, 2010, with Mexico to join in next phase Allows investors in each country to buy specific listed stocks from any of the other countries If not TSX, ASX or AIM, where? Gives investors greater choice and diversification brings new issuers to market increases competition 17 Canadian companies have dual listings TSX/MILA raised $220m in 2009/10 Challenges include: tax issues settlement remains bilateral volume is small # Issuers : 604 Market Cap*: US$ 600bn # Issuers : 476 Market Cap*: US$ 408bn Brazil s BOVESPA requires all company financials translated into Reais and into Portuguese by an auditor recognised by the Brazilian regulator # Issuers : 373 Market Cap*: US$ 1,228bn Peru s BVL (and therefore MILA) only requires translation into Spanish of internationally recognised financials Data as at 31 August, 2012 * Data as at 31 December, 2011 Snapshot Bolsa de Valores de Lima 29 Consider the alternative destinations and select the one best for you 30 Market Capitalization by Industry (%) Listed Companies by Industry (%) 8% 1% Mining 5% 3% AFP 2% 12% Financial 7% Financial 11% Misc. Others Agrarian Public Services Industry 15% 10% 23% 54% Industry Juniors Agrarian 5% Mining Insurances Public Services 14% A.F.P. 8% Insurances 21% Others Mining as a % of equity trades on BVL 41 in total: 100% 21 Peruvian 80% 49% 50% 47% 6 Foreign 50% 51% 14 Junior 60% 40% 51% 50% 53% 50% 49% 20% 0% Use Caution: Mining sentiment not as supportive as required. Degree of State control over mining activities. Argentina* (except San Juan, Santa Cruz, Salta and others) Bolivia Costa Rica Venezuela Emerging/Watch: Improving policy settings for mining. Good potential for mining development. Watch: Emerging: Dominican Republic Colombia El Salvador Ecuador Panama Uruguay Paraguay Consolidated: Mining is recognised as a major driver for economic growth. Favourable policy settings. Pipeline of major projects. Brazil Chile Mexico Peru Source: Francis Stenning, Bolsa de Valores de Lima Mining Others

6 Mining sector snapshot Argentina Mining sector snapshot Brazil Recent history of mining development dates from 1990s Bajo de la Alumbrera (MIM, now Xstrata Copper) Cerro Vanguardia (AngloGold Ashanti) Federal constitution, but Provinces own natural resources and set the rules clear division between pro and anti mining Chubut and Mendoza provinces have prohibition on use of cyanide in mining process Vastly underexplored. Seen as having vast potential in: Brazil produces 21 minerals altogether, but iron ore accounts for 82.6% of all metal exports (+300 Mtpa), with Vale contributing approx. 80% of production Gold Copper Silver Lithium Uranium Iron ore production centred in Iron Quadrangle in Minas Gerais and Carajas in Para states, with Vale owning substantial number of smaller scale projects/prospects that are not of interest but should be exploited Policies of Federal Government on foreign exchange and other aspects of doing business seen as detrimental to foreign investment Growing number of Aussie iron ore juniors, including: Pro Mining Provinces: San Juan Santa Cruz Salta Catamarca Jujuy % of Mineral Exports (2011 USD) Centaurus Metals South America Ferrous Metals Cabral Resources Cleveland Mining Allow for custo Brasil high level of bureaucracy, operating costs, complex regulatory regime, myriad of taxes 2030 Plan for the mining industry push for downstream processing Mining sector snapshot Chile Mining sector snapshot Colombia Mineral Coal Gold Nickel Emeralds World ranking production 9th 2 9th Latin America Ranking Exports Characteristics 6th 2nd 4th 2n 96% thermal, 4% metallurgic Mainly alluvial extraction Cerro Matoso, world s 2nd largest producer 57% of world production Features Consistently ranks as best performing economy in Latin America, preferred gateway for Australian companies into South America and well credentialed location for regional headquarters 49% of total surface area yet to be fully explored Government committed to supporting expansion of mining sector 11 minerals have been classified as of strategic importance (including: copper, uranium, iron ore, platinum) 313 strategic mineral areas defined and to be awarded by auction in 2013 Outstanding geology, particularly copper and lithium, but diversifying beyond these into other minerals Very stable and open operating regime, with firm commitment by government to support expansion of junior mining sector Low level of connection between mining and capital market, with only two listed mining companies Relatively few multinational miners present, so ample scope for juniors and mid sized players Codelco enjoys national icon/asset status increasingly engages in joint ventures to secure growth capital Some community opposition to mining arising from use and availability of water Australia Chile double taxation treaty negotiated, awaiting ratification by Chilean congress Ample scope for further expansion of mining activity, but has greater maturity than other regional markets Mining sector snapshot Ecuador No large scale mining industry, but proven large deposits of copper, gold and silver Government state that it intends to support expansion of mining sector and planning to reform applicable regulations, including: Set a ceiling on mining royalties (minimum set at 5%) Delay windfall tax until miners recover their investment BUT caution is advised as policy is not stable or sufficiently clear Relatively few multinational miners present, so ample scope for juniors and mid sized players Extensive opportunities if Government delivers on promises Major projects under negotiation include: USD 1.3bn Fruta del Norte gold project (Kinross Gold Corp) Mining sector snapshot Mexico Mineral Global Rank Production (Ton) Silver 1 Bismuth 3 4,410, Lead 5 192,062 Molybdenum 5 10,849 Zinc 7 570,004 Gold 10 79,375 Copper ,136 Over 287 foreign companies are actively exploring in Mexico very few are Australian Of all exploration conducted, approx. 50% is by juniors USD 1.4bn El Mirador copper project (Chinese owned, Ecuacorriente) Only 13.8% of total surface area has been granted for mining concessions ample scope for expansion Rio Blanco gold silver project of International Minerals Government is supportive of mining development no mining royalties applied Quimsacocha gold copper silver project of IAMGold Gold production increased by 250% since 2003 Grupo Mexico and Grupo Peñoles are main local players, but sector features many players of varying scale

7 Mining sector snapshot Peru 37 Go there! You will not be alone... Aussies thrive in this environment 38 Ranking World Latin America Gold 6 th 1 st Silver 2 nd 2 nd Copper 2 nd 2 nd Lead 4 th 1 st Tin 3 rd 1 st Zinc 2 nd 1 st Features Outstanding geology 14% of total surface area classified for mining, but 12.95% still undeveloped Strong government support for mining, but rising community opposition in remote areas Most connected of all capital markets in the region Latin America must be on your radar! Pack your bags and remember Thank you 40 Checklist of essential items Have the required team: Requisite technical skills Cross cultural knowledge and experience Language fluency Connections at the right levels Willingness to listen and adapt Jose Blanco Senior Partner Manage the risk profile Select the right advisors legal, tax, accounting, etc. Consider the value of strong local partner(s) Understand and engage local stakeholders from the outset Neighbouring communities Provincial and national governments Build relationships for the future from the outset Multiple banking sector touch points Local capital market and investor base Undertake thorough due diligence program Level 1, 2 Barrack Street Sydney NSW 2000 I Australia Direct Tel: jab@blancopartners.com Humility The region has outstanding executive talent Respect will get you further than simple marketing Make the commitment to the long term and to a win win Find or Acquire the right deposit Explore/discover Acquire/merge..... be alert, not alarmed!