Silver Mine Project Investment Opportunity in Scandinavia KPMG Corporate Finance ( KPMG ) has been retained by Sotkamo Silver as exclusive Financial and Strategic adviser in connection with the Project
REASONS TO INVEST IN SOTKAMO SILVER LOW TECHNICAL AND GEOLOGICAL RISK PROVEN MANAGEMENT TEAM JORC RESERVES AND ADITIONAL EXPLORATION POTENTIAL FORECASTED OPERATING CASH FLOWS ARE STRONG WE DELIVER EXPERIENCED MANAGEMENT 1 1
SENIOR MANAGEMENT HAVE EXTENSIVE MINING EXPERIENCE IN THE NORDIC REGION Timo Lindborg President & CEO! Doctor of Technology, MSc ( Civil Engineering) and BSc (Geology). Professor at Oulu University! 35 years experience with mining projects and Nordic companies! Former Chief Executive Officer of Endomines AB, Endomines Oy and Kalvinit Oy! Extensive experience in silver and gold mining projects! Born 1955 pic Ilkka Tuokko Managing Director Sotkamo Silver Oy! MSc in Geology and mineralogy from Oulu University! More than 30 years experience in mining projects, precious metals and international mining companies! Competent Person status, according to Australian JORC and Swedish SveMin! Former Group Geology & Mining Manager of Mondo Minerals B.V.! Born 1950 2
BOARD OF DIRECTORS HAVE EXTENSIVE MINING EXPERIENCE IN THE NORDIC REGION Mauri Visuri Chairman of the Board (since 2011)! MSc in Economics from the University Of Vaasa! Bachelor of Science in Machinery Engineering from Vaasa Polytechnic! Extensive experience in mining and process industry! Mr. Visuri is also Managing Director of Teknoventure Oy! Born 1957 Joanna Kuntonen-van t Riet Board member (since 2012)! MSc in Environmental Sciences from the University of Helsinki! Over 13 years experience in environmental and safety management in the mining industry! Presently Environmental and Safety Manager at Northland Resources! Born 1974 Teuvo Jurvansuu Board member (since 2010)! 35 years experience in the mining industry! Worked in various mines in Finland during that period including Vihanti, Keretti, Enonkoski and Pyhäsalmi mines! In 2001 he entered the position of Managing Director of Pyhäsalmi Mine Oy and at the same time, Inmet Finland Oy (retired in 2009)! Born 1948 Jarmo Vesanto Board member (since March 2013)! MSc (Geology and Mineralogy)! Member of the Australian Institute of Mining and Metallurgy! More than 30 years experience in mining and exploration including 10 years in Australia and Canada with Outokumpu Oyj! Currently General Manager - Finland at Altona Mining Ltd! Born 1954 3
OVERVIEW OF SOTKAMO SILVER! Headquarter is in Stockholm, Sweden. The Company also has an operations office in Oulu and a field office in Sotkamo, Finland! The primary listing is on the NGM Equity stock exchange in Stockholm with secondary listing on the Nasdaq OMX Helsinki! Current market capitalization is about " 24 million! The Company had " 4.1 million of net cash at the end of Q1 2013 4
REPUTABLE KEY SHAREHOLDERS WITH EXTENSIVE EXPERIENCE IN MINING SECTOR INVESTMENTS Top five shareholders % ownership Market value (EUR m) Teknoventure Oy 14.2 3.5 Finnish Industry Investments Ltd 14.2 3.5 Timo Lindborg (through a company) 10.2 2.5 Jouko Jylänki 8.9 2.2 Ilmarinen Mutual Pension Insurance Company 8.5 2.1 Total top five shareholders 56.0 13.9 Other shareholders 44.0 10.9 Total 100% 24.8 5
ATTRACTIVE LOCATION OF THE SILVER MINE Port of Oulu Finland Sotkamo SOTKAMO Silver Mine Helsinki Boliden zinc plant, Kokkola Main road Road! The Silver Mine is located close to the town of Sotkamo in the Kainuu region of eastern Finland.! Adjacent roads, railways and a nearby sea port provide efficient transportation to both domestic and international customers! Electricity connection to the local grid is currently being constructed Supply of process water from a neighbouring lake Railway 6
SILVER MINE AREA ALL NECESSARY MINING LICENSES AND ENVIRONMENTAL PERMITS RECEIVED 7
SILVER MINE OVERVIEW! Extensive exploration has been carried out and Sotkamo Silver acquired the Silver Mine rights in 2007 and the land area in 2012.! Total amount of drilling is 53,1 km.! The BFS was completed on the Project in March 2012 by Wardell Armstrong International, with a supplementary mine plan review performed by Outotec.! Current JORC classified mineral resources are 5 million tonnes, including 3 million tonnes of ore reserves at 86.11 g/t Ag amounting to 8.2M oz of silver. 8
MINERAL RESOURCES Mineral Resource Estimate for the Silver Mine (Taivaljärvi) JORC Classification Volume (m 3 ) Tonnes (kt) Density (t/m 3 ) Ag eq (g/t) Ag (g/t) Pb (g/t) Zn (g/t) Au (g/t) Measured 490,889 1,374 2.8 133.24 96.06 0.36 0.70 0.30 Indicated 767,303 2,148 2.8 122.68 87.12 0.34 0.73 0.25 Measured + Indicated 1,258,192 3,523 2.8 126.80 90.65 0.35 0.72 0.27 Inferred 529,035 1,481 2.8 128.70 95.93 0.26 0.70 0.25 9
ORE RESERVES AND MINE ECONOMICS KEY PROJECT SUMMARY Ore reserves Ore tonnage Ag Grade Ag Proven 1.19 Mt 90.18 g/t 3 442 141 oz Probable 1.78 Mt 83.40 g/t 4 786 353 oz Proven and probable ore reserves 2.97 Mt 86.11 g/t 8 228 494 oz MINE ECONOMICS Production of payable silver Operations commencement date Q4 2014 0.8 million oz Ag per annum and 7.4 million oz Ag over LOM Average operating cash costs " 10.5 / oz Ag over LOM (US$ 13.7) Required capital expenditure (including infrastructure) Required net financing (including contingency, working capital and guarantees) " 30.7 million " 40 million KPMG Corporate Finance ( KPMG ) has been retained by Sotkamo Silver as exclusive Financial and Strategic adviser in connection with the Project. 10
RAMP-UP PHASE WILL BENEFIT SIGNIFICANTLY FROM THE EXISTING WORK Mining plan! The mining plan allows for initial shallow open-pit mining with subsequent underground mining to depths of approximately 450 metres! The projected mine life is 9 to 10 years based on current estimated mineable ore reserves of approximately 3.0Mt Open pit Planned extension of the decline (green) Existing ventilation shaft Existing Mine Decline (brown) Backfill with waste rock Year Colour 2014 Green, Brown 2015 Red 2016 Yellow 2017 Blue 2018 Black 2019 2021 Grey 11
KEY INVESTMENT HIGHLIGHTS Short timeframe to production Completed Bankable Feasibility Study (BFS) Production Low capital expenditure! Operations are expected to commence in Q4 2014 and negotiations with potential off-takers are in advanced stages! All necessary mining licenses and environmental permits received! Extensive exploration and technical mine planning completed, including a BFS prepared by Wardell Armstrong in May 2012! Review of the final mining plan completed by Outotec in May 2012! Average silver production of 0.8 million oz Ag per annum.! Silver : 7,386,148 oz; Gold : 23,166 oz (LOM)! Zinc : 17,468 t; Lead : 7,564 t (LOM)! Capital expenditure of approximately " 30.7m required, which includes construction of a processing plant and infrastructure! Contract negotiations are near complete with all suppliers 12
LOW RISK AND SIGNIFICANT GROWTH POTENTIAL Low risk mining and processing Significant growth potential Mining friendly jurisdiction Management team with proven track records Environment! Deposit mineralogy is simple, well understood and easy to process, with standard grinding and flotation with recovery above 86%.! Geophysical surveys suggest substantial extension to potential mine life and resource mineralization.! Exploration mineral resource estimate in the inferred category (NI 43-101 compliant) is 13 Mt of ore for 26 Moz silver at 65g/t (cut-off grade 30 g/t Ag).! Substantial pipeline of promising exploration projects in the surrounding Silver Mine region.! Finland is a AAA-rated country and was ranked as the most favourable mining jurisdiction (Fraser Institute Survey of Mining Companies 2012-2013).! The surrounding region has a well-established mining community with readily available subcontractors and qualified personnel.! The management team has wide experience of running mines in Finland. Both CEO Timo Lindborg and Managing Director Ilkka Tuokko are experienced mining professionals with a proven track record of exploration and production.! Equator Principles Assessment received with no significant issues noted. 13
RAMP-UP BENEFITS SIGNIFICANTLY FROM THE EXISTING WORK! The mining plan allows for initial shallow open-pit mining with subsequent underground mining to depths of approximately 450 metres.! Annual production is planned at 350,000 tonnes of ore. Total saleable production is estimated to comprise of approximately 2,000 tonnes of Ag-Au-Pb concentrate, 4,800 tonnes of Zn-Ag concentrate and 9,000 tonnes of pyrite-ag concentrate. Existing underground access! The existing mine decline of 2.6 km and ramp access (25 m 2 ) to the ore, as well as the vertical ventilation shaft extending 350 meters from the surface, are both already in place and ready for operational use. 14
SOTKAMO SILVER HAS SUBSTANTIAL GROWTH POTENTIAL Additional potential of the existing Silver Mine deposit! Whilst the known and defined deposit extends to 550 metres, geophysical surveys show a continuity of the known mineralisation, which extends down to 1,000 metres depth. Exploration Potential 13 Mill.t, Ag 60 g/t; including Ore Reserve 3 Mill.t, Ag 86 g/t Exploration Potential 15 Mill.t, Ag 60 g/t Drill Intersection R-129: 13.04 m, Ag 74 g/t Drill Intersections R-110: 27.25 m, Ag 92 g/t R-106: 23.40 m, Ag 148 g/t Drill Intersections R-100: 13.44 m, Ag 68 g/t R-102: 7.35 m, Ag 66 g/t 15
EXPLORATION POTENTIAL Exploration Potential 13 Mill.t, Ag 60 g/t; including Ore Reserve 3 Mill.t, Ag 86 g/t Exploration Potential 15 Mill.t, Ag 60 g/t Drill Intersection R-129: 13.04 m, Ag 74 g/t Drill Intersections R-110: 27.25 m, Ag 92 g/t R-106: 23.40 m, Ag 148 g/t Drill Intersections R-100: 13.44 m, Ag 68 g/t R-102: 7.35 m, Ag 66 g/t 16
FURTHER EXPLORATION POTENTIAL! Exploration projects ongoing in the surrounding Silver Mine region, with claims made on plots covering over 3,000 hectares in the Tipasjärvi greenstone belt! The map illustrates locations of the applied claims (previous Mining Act) and ore exploration permit applications! Additional prospects include Hopeavuori (Vammala Migmatite Zone) in Southern Finland. Management believe there is significant potential in these zones 17
PRIMARY CONTACT REGARDING THIS INVESTMENT OPPORTUNITY KPMG Corporate Finance contacts Rama Ayman Mikko Harju Tommi Valento Partner, Global Head Senior Manager, Senior Manager, Metals & Mining Corporate Finance Corporate Finance Head of Debt Advisory +44 20 7311 5092 +358 20 760 3288 +358 20 760 3246 Mob. +44 7826 918 994 Mob. +358 50 339 5910 Mob. +358 40 720 8951 rama.ayman@kpmg.co.uk mikko.harju@kpmg.fi tommi.valento@kpmg.fi 18