UGANDA&CHAMBER&OF&MINES&&&PETROLEUM&

MINERAL&WEALTH&CONFERENCE& 1st92nd&OCTOBER&2013&

1&

East&African&Mining&Ltd,&carrying&out&exploraMon&in& Kaabong&district,&Karamoja& & ! A!look!at!the!industry!from!an!investment! perspec6ve!and!the!prac6cal!challenges!facing! explora6on!companies!in!Uganda!

2&

Uganda&has&much&opportunity&for&development&in&the& minerals&sector& && Very&early&stage&for&the&industry&here&9&relaMvely& unknown&in&global&terms& && No&large&producers&in&Uganda&&yet& && We&believe&in&the&future&for&the&industry&in&Uganda&and& are&commiYed&to&spreading&the&word&about&this& wonderful&country&
3&

Understanding&the&environment&9&the&wider&economic&picture& in&the&mining&industry& && Mining&stocks&have&had&a&hard&Mme& && 2013&9&Market&capitalizaMon&fell&for&37&of&the&top&40& companies&losing&over&$200&billion,&or&17%&since&the&end& of&2012.&(PWC)& && ParMcularly&tough&for&gold,&despite&high&prices& Margins&have&been&driven&down& & Uncertainty&over&future&prices&

4&

Diculty&in&raising&capital&for&early&stage&exploraMon& && Opportunity&cost&for&investors& Why&buy&early&stage&exploraMon&when&you&can&buy& resource&or&even&producMon&cheaply?& For&Uganda,&why&invest&here&when&you&can&invest&in& Ghana&etc?& Performance&of&share&price&in&Junior&Mining&companies& has&been&dreadful,&many&going&bust&

5&

What&worries&large&mining&companies?& && Cost!& Labour&cost& Commodity&price&&decreasing&margins& & EecMve&capital&deployment&&making&each&dollar&work& for&shareholders& External&factors&&naMonalizaMon&etc.& ConcentraMng&on&eciency&rather&than&expansion&&
6&

What&makes&for&a&good&project?&What&would&you&invest&in?& && Can&the&project&begin&to&generate&cashow?&You&cant&keep& going&back&to&investors&indenitely& Reduce&dependence&on&external&factors&such&as& markets,&investor&senMment,&short&term&risk& &&& Can&a&large&resource&be&dened?& Shillings&must&go&in&the&ground& && The&right&kind&of&resource:&high&grade,&cheap&to&extract& Larger&margins&create&safety&and&more&predictable&returns&&
7&

Developing&a&resource&

8&

Quality&of&work& && All&technical&work&to&internaMonal& standards&&NI&439101,&JORC&

9&

Developing&a&resource& && Reaching&milestones&&linked&to&capital&requirements&

10&

Corporate&Social&Responsibility& Important&to&address&social,&environmental&issues&& involve&the&community& Companies&with&good&CSR&and&transparency&tend&to& aYract&investment&

11&

Geung&to&producMon& How&long&will&that&take?& Typically&10&years&or&more&&no&income&for&company& unMl&that&point&

12&

Why&do&early&stage&exploraMon?& && The&upside& & PotenMal&for&a&good&return&on&investment& && The&downside& & Risky&&might&not&be&an&economic&resource,& ownership,&government,&local&partners& Takes&a&long&Mme,&many&years& Expensive& No&exit&/&return&on&investment&
13&

The&exit?&Who&is&buying&early&stage&projects?& && Few&acquisiMons&are&being&made&at&the&moment&9&major& companies&have&cut&back&on&exploraMon&and&acquisiMons& Normally&exploraMon&companies&develop&resources&to&a& certain&level&and&sell&to&majors&&this&cycle&is&currently& broken& With&junior&companies&having&no&funding,&who&will&make& the&discoveries?& ProducMon&needs&large&capital&investment&&
14&

Infrastructure&&helps&aYract&investors&for&the&next&stage& && Power&&massive&part&of&the&cost&for&producMon,& heavily&aects&margin&9&diesel&generators&much&more& expensive&than&grid&power& TransportaMon:&Roads&&makes&exploraMon&cheaper& and&quicker,&less&work&lost&in&rainy&season& Railways&&route&to&market&for&bulk&commodiMes& Human&resources&&well&trained,&moMvated&workers,& from&technical&to&manual&labour&
15&

ExpectaMon& && ExpectaMon&of&license&holders&

The&value&of&the&project&

ExpectaMon&of&communiMes&
CommunicaMon&and&educaMon&

ExpectaMon&of&ocials&
It&takes&Mme&and&large&amounts&of&money&to&develop&a& resource&&and&10&years&or&more&to&producMon&
16&

The&future& && For&EAG&&moving&on&to&the&next&stage&in&a&project&that&we& believe&in,&both&in&terms&of&its&technical&merit&and&the& people&and&region& && For&the&Ugandan&mining&industry,&it&will&take&Mme& && To&understand&the&parMcular&requirements&in&the&sector,& especially&in&these&hard&Mmes&for&the&industry& &&
17&

Look&at&things&from&the&investors&point&of&view&to&aYract& good&investment& & Be&exible&in&the&face&of&economic&uncertainty& Transparent&processes&and&well&considered&regulaMon& PaMence&and&educaMon&&take&the&long&view& AYract&the&right&kind&of&investor& && Work&together&to&help&to&make&it&work&for&everyone,&the& country,&the&company&and&the&community& &&
18&