KPMG ASPAC MINING INVESTMENT EXPO

Investing in Energy and Natural Resources Owen Hegarty Chairman EMR Capital Sydney, 16 November 2011

Agenda

World commodity demand and supply outlook

Regional opportunities

Gold

Copper

Coal

Key success factors for investments

EMR Capital

China remains the major driver of commodities demand with India and others to follow

3

World to continue in a long period of economic expansion

China still the main game

Traditional markets of US, Japan, Europe still important

But emerging markets are the future

BRIC MIST N11 CIVETS

World average real GDP growth during 2010-11

China’s GQ – Growth Quintella

4

Accelerating household income growth

A metal intensive stage of economic development

Largest urban migration in world history

Massive infrastructure development

Social imperative

$0

$20,000

$40,000

$60,000

$80,000

China USA India Brazil Russia UK Japan

2009 2050

US$b GDP 2009 and 2050 Forecasts Car Ownership Projections

2006 2018 2030 2042

India China

600

300

900

0

Car Ownership (millions)

Source: IMF;Goldman Sachs; CIA World Fact Book; Macquarie research; ICSG; The Balloch Group; Beijing Traffic Management Bureau

Supply is still under pressure

5

Supply will be running to catch up

FMG – a great example

More of them required

Exploration needs to be encouraged

Asia uniquely positioned

Geopolitically

Technically

Financially

Some structural challenges

Physical infrastructure

Regulatory infrastructure

Sovereign risk issues

Some current supply uncertainties

Concept Reality

Port Herb Elliott Port

Rail Fortescue Railway

Mine Cloudbreak Minesite

In the midst of great mineral provinces

6

SE Asia-SW Pacific and Australia host a number of the worlds great Au, Cu-Au, Coal and Iron Ore provinces

Relatively modern volcanic arc environments host major Cu-Au mineral provinces in Indonesia-Philippines-PNG

Lesser provinces occur in mainland SE Asia

World class mines and projects

7

The SW Pacific provinces are equally well endowed with epithermal (gold) and porphyry (copper-gold) deposits

Sunda-Banda Arc section contains ~ 100 Moz gold equivalent* in resource and past production from epithermal and porphyry deposits

Epithermal deposit

Porphyry deposit

A matter of scale

8

The SW Pacific Modern Arcs are comparable in scale to the Andean Arc

Given similarity in tectonic setting a similar level of total endowment can be expected

Andean margin significantly more heavily explored than SW Pacific-SE Asia

SE Asia and SW Pacific under-explored

9

Despite multiple world class belts and giant deposits there has been comparatively low levels of exploration in SE Asia-SW Pacific

Australia & Americas subjected to decades of sustained post-war exploration

SE Asia-SW Pacific exploration commenced in 1960s at low level and has been subject to only sporadic effort since

Asia and Australia’s virtuous circle of economic growth and prosperity

10

Prospectivity

People

Technology

Capital

Supply

Demand

Investment opportunities

11

Gold Copper

Thermal coal and coking coal

Gold demand outlook strong

12

Gold a commodity, a currency, a store of value, a safe haven, a hedge against inflation, geopolitical and financial uncertainty

Demand fundamentals

Investment demand the primary driver in 2010/2011

Growing national reserve demand

Demand for gold jewellery is rising with rising living standards universally but especially in Asia

Central Bank gold sales / purchases

Source: Standard Chartered Research

China and India Underweight Gold

0 20 40 60 80

China

Japan

India

Australia

United Kingdom

Switzerland

France

Germany

United States

Gold % of Total Foreign Reserves Gold Tonnes

8,134 3,408 2,435 1,040

310 80

558 765

1,054

Source: World Gold Council as end of 2010

China’s gold demand overtakes developed world

13

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

China Developed WorldSource: GFMX, WGC, KITCO

Tonnes

Gold supply outlook subdued

14

Supply fundamentals

Mine production provides majority of gold supply

Declining mine production expected to continue as easy-to-mine and easy-to-process ore is depleted

10-15+ years from discovery to project completion

Gold discovery in decline

50% of world base and precious metal exploration expenditure is for gold

Yet discoveries are declining

Supply will be flat through 2020

0

500

1000

1500

2000

2500

3000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Global Mine Production (2002 - 2010)

Source: USGS , Mineral commodity

Gold (Tonnes) Iron Ore (Mt)

Gold Price

15

Source: Bloomberg as of 15 November 2011

0

200

400

600

800

1000

1200

1400

1600

1800

2000

15-Nov-02 15-Nov-03 15-Nov-04 15-Nov-05 15-Nov-06 15-Nov-07 15-Nov-08 15-Nov-09 15-Nov-10 15-Nov-11

Gold Historical Price

Strong demand + subdued supply = buoyant prices

USD per troy ounce

Coal outlook

16

Future coal generation growth exceeds growth in gas, oil, nuclear, hydro, biomass, geo and solar

Export demand for thermal and metallurgical coal will grow rapidly over the next ten years

Coal The world’s fastest growing fuel for the past decade

Source: International Energy Agency, World Energy Outlook 2011

World primary energy demand by fuel & scenario, 2009 & 2035 (Mtoe)

Thermal Coal

17

Demand Supply

Source: Peabody analysis

Expected increase between 2010 and 2015

Metallurgical Coal

18

Demand is forecast to rise 550 mt/a by 2020

Global steel production expected to rise nearly 60% by 2020

Bulk of market share growth is in China and India

Trends show a structural shortage of premium coking coal

Source: Peabody analysis

Expected global steel production and met coal demand

Copper – Chinese and Asian demand & supply

19

Regional Opportunity

Asia consumes 51% of global copper production

But attracts less than 5% of exploration spend

Excellent prospectivity

Source: ICSG; Brook Hunt; Citi

Consumption Smelting Mining Exploration

51% 41%

59% 49%

85%

15%

96%

4%

Asia World

Red Gold

Copper – noblest of metals

Wide diversity of uses

Powering the info-tech and communications revolutions

Electrifying China and the developing world

Strong demand outstripping supply

0

10000

20000

30000

Refined productionConsumption demand

Key success factors for investing in resources

20

Macro factors Where is it?

Management Who is it?

Micro factors What is it?

Key success factors for investing in resources

21

Macro factors Where is it?

Inherent mineral prospectivity

Geological endowment

History

Mines and operators

Country hardware

Geography

Infrastructure

Labour force

Sovereign risk evaluation

Security

Stability

Economic outlook

Country software

Legislative regime

Fiscal conditions

Community support

Key success factors for investing in resources

22

Micro factors What is it?

Minerals

World Market

Industry Structure

Outlook

Geology / deposit

Grade, tonnes, recovery

Upside

Costs

Technology

Mining

Processing

Environmental management

Key success factors for investing in resources

23

Management Who is it?

General capability

Background & experience

Commitment

Teamwork

Licence to operate

Government relations

Community engagement

Culture of sustainability

Day-to-day management

Financial management

Continuous improvement

Growth orientation

EMR Capital : Contacts

Jason Chang

Managing Director and CEO

Phone: +613 8644 1388 (Australia)

Mobile: +61 438 003388 (Australia)

Email: jasonchang@emrcapital.com

24

Owen Hegarty

Chairman

Phone: +613 8644 1353 (Australia)

Email: owenhegarty@emrcapital.com

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KPMG ASPAC MINING INVESTMENT EXPO

Investing in Energy and Natural Resources Owen Hegarty Chairman EMR Capital Sydney, 16 November 2011