bankers presentation LONG v1 by wuyunyi

VIEWS: 1 PAGES: 97

									    KAMOTO PROJECT




PRESENTATION TO BANKERS
        AUGUST




                          ISCOR
                          mining
 PRESENTATION CONTENT

•BACKGROUND
•PROJECT BACKGROUND OPERATIONS
•FINANCIAL
•MARKETING
•PROJECT RISKS
•ENVIRONMENTAL MANAGEMENT
•CONCLUSION
                                  ISCOR
                                  mining




                 KAMOTO PROJECT
INTRODUCTION


KAMOTO
PROJECT
                    ISCOR
                    mining




   KAMOTO PROJECT
 INTRODUCTION: MAP OF DEMOCRATIC REPUBLIC OF CONGO




                                        Area of Interest


                                                           ISCOR
                                                           mining
Democratic
Republic of
Congo
INTRODUCTION: LOCATION PLAN OF KAMOTO PROJECT




                                                ISCOR
                                                mining




                KAMOTO PROJECT
    BACKGROUND: THE ROAD TO A FINAL AGREEMENT

•   GECAMINES OFFERS ISCOR THE OPPORTUNITIES OF LOOKING AT    JUNE 1996
    KAMOTO
•   ISCOR AND GECAMINES SIGN H.O.A. (PENDING GOVERNMENT       JULY 1996
    APPROVAL)
•   GOVERNMENT APPROVES H.O.A                                FEB 1997
•   ISCOR COMPLETES FEASIBILITY STUDY                        SEPT 1997
•   ISCOR AND GECAMINES SIGN DA AND CONVENTION               22 FEB 1998
    (PENDING GOVERNMENT APPROVAL)
•   ISCOR AND GECAMINES HAND DA AND CONVENTION TO            23 FEB 1998
    MINISTER OF MINES OR DRC
•   ISCOR AND GECAMINES AND DRC INTERMINISTERIAL
    COMMISSION OF EXPERTS AGREE ON FEASIBILITY STUDY, DA AND
    CONVENTION AND SIGN THIS OFF (PENDING GOVERNMENT
    RATIFICATION                                             29 JUN 1998
                                                                                ISCOR
                                                                                mining
•   DRC GOVERNMENT RATIFICATION EXPECTED DURING 3RD QUARTER 1998
                                                                           R2



                           KAMOTO PROJECT
              INTRODUCTION




The Kamoto Project comprises the Kamoto
underground mine, Kamoto concentrator and
the Luilu refinery all of which is operated as a
part of the Group West division of
Gécamines, a state controlled mining
company with operations in the Katanga
province of DRC
                                                   ISCOR
                                                   mining




                KAMOTO PROJECT
       INTRODUCTION: ISCOR STRATEGY

Iscor’s overall strategy is to consolidate its position in
steel (improve productivity and product quality with no
additional planned production capacity) and to grow in
its mining arm. Iscor Mining is focusing activities in
Sub-Saharan Africa, in particular in the Democratic
Republic of Congo (DRC), due to the excellent
metallogenic potential and residual prospectivity.
A draft Heads of Agreement regarding a co-operation
venture to refurbish and operate the Kamoto mine was
concluded with Gécamines on 31 July 1996. The necessary
Government ratification of this agreement, after discussion
and amendment, was obtained and the agreement was             ISCOR
                                                              mining
signed on 27 February 1997.
                     KAMOTO PROJECT
 INTRODUCTION: FEASIBILITY STUDY




A feasibility study was completed by
September 1997 and proved that the
Kamoto project represents an excellent
opportunity to invest in a world class
copper/cobalt mine at low technical risk
and favourable returns.

                                           ISCOR
                                           mining




            KAMOTO PROJECT
BACKGROUND


KAMOTO
PROJECT
                    ISCOR
                    mining




   KAMOTO PROJECT
BACKGROUND: KEY POINTS OF DEFINITIVE AGREEMENT

•   ISCOR MANAGES MINE AND KT02 CONCENTRATOR AND GECAMINES
    MANAGES LUILU
•   PHASED IMPLEMENTATION
•   PERIOD 10 YEARS
•   ISCOR SHARE IN PROFITS 30%, GECAMINES 70%
•   70% OF FREE CASH FLOW USED TO REDEEM CAPITAL
•   ISCOR RESPONSIBLE FOR RAISING CAPITAL UP TO PEAK US$105M
    (INCLUDING US$12,5M FOR LUILU)
•   JOINT MARKETING
•   OWNERSHIP OF METAL VESTS IN BANK
•   OFF-SHORE ESCROW ACCOUNT
•   JMC (EQUAL REPRESENTATION - ARBITRATION)
•   PRE EMPTIVE RIGHT
•   GUARANTEES WRT RECOVERIES AND METAL QUALITIES EX LUILU.
    REFINING COSTS FIXED TO MAXIMUM AND LINKED TO ELECTRICAL        ISCOR
    COSTS                                                           mining

                                                               R2
•   ARBITRATION/FORCE MAJEURE ETC
                        KAMOTO PROJECT
BACKGROUND: KEY POINTS OF DEFINITIVE AGREEMENT
JMC

• EQUAL REPRESENTATION 3 FROM ISCOR AND 3 FROM
  GECAMINES
• GM OPERATIONS (ISCOR) AND DEPUTY GM (OPERATIONS)
  GECAMINES) WILL SERVE ON JMC
• MEET ONCE PER QUARTER
• IF DEADLOCK - PROJECT PROCEEDS AND DEADLOCK REFERRED
  TO CHAIRMAN GECAMINES AND MD ISCOR. IF THEY FAIL TO
  RESOLVE THE DEADLOCK REFER TO ARBITRATION
• JMC WILL ADMINISTER THE TOTAL OPERATION OF THE
  PROJECT. IT WILL GIVE DIRECTION TO THE PROJECT
• THE MANAGEMENT OF THE PROJECT, IN ALL RESPECTS SHALL
  BE ENTRUSTED TO THE GM OPERATIONS                         ISCOR
                                                            mining
   – PROVIDE A ANNUAL WORK PROGRAM/BUDGET ON A YEARLY
      BASIS FOR APPROVAL BY JMC                        R2



                    KAMOTO PROJECT
BACKGROUND: KEY POINTS OF DEFINITIVE AGREEMENT
LUILU REFINERY

•   MANAGED BY GECAMINES
•   GECAMINES PROVIDE ISCOR WITH GUARANTEES WITH
     – THROUGHPUT
     – RECOVERIES
     – PRODUCT QUALITIES
     (IF PROBLEM RECOUP THIS FROM GECAMINES SHARE OF PROFITS)
     ANY IMPROVEMENT SHARED BY BOTH PARTIES
•   REFINING OPERATING COST FIXED FOR FIRST 3 YEARS. AFTER THIS MAXIMUM
    COST FIXED (YR 3) BUT INTENT IS TO PAY FOR THIS AT COST ALSO LINKED TO
    ELECTRICITY COST
•   ISCOR PROVIDE US$12,5M FOR REFURBISHMENT
•   ISCOR HAS FULL ACCESS
•   ISCOR MANAGES METAL ACCOUNTING
•   ISCOR WILL ASSIST GECAMINES IN THE MANAGEMENT OF LUILU IF NECESSARY
•   PROVISION FOR MAJOR REPAIRS (MAINTENANCE PROCEDURE)                           ISCOR
                                                                                  mining

                                                                             R2



                           KAMOTO PROJECT
BACKGROUND: KEY POINTS OF DEFINITIVE AGREEMENT

LUILU (CONT)

•   SECURITY
     – PRODUCT MARKED
     – LOADING MANAGED AND CONTROLLED BY BOTH PARTIES
     – INDEPENDENT SECURITY COMPANY WILL BE APPOINTED BY JMC
       TO MANAGER THE SECURITY OF PRODUCTS
     – SECURITY COMPANY WILL REPORTS TO JMC
     – JMC WILL DEFINE CONTROL MECHANISMS FOR PRODUCTS IN
       TRANSIT
     – PRODUCTS WILL BE FULLY INSURED DURING TRANSPORT




                                                                    ISCOR
                                                                    mining

                                                               R2



                        KAMOTO PROJECT
BACKGROUND: KEY POINTS OF REGIME FOR TAX, CUSTOM DUTIES
               AND OTHER GUARANTEES


 •   KAMOTO DA AND “CONVENTION: AN INTEGRAL PART OF NEW
     GECAMINES MINING CONVENTION
 •   NB GUARANTEES
      – RIGHTS AND TITLES 9PAID UP AND FREE OF ANY
        ENCUMBRANCES)
      – NO OBLIGATION TO THIRD PARTIES
      – NOT ACCOUNTABLE/RESPONSIBLE FOR PAST
        ENVIRONMENTAL DAMAGE
      – TAXES PAID-UP AND MINE AND CONCENTRATOR ARE FREE
        OF AND TAX LIABILITY
      – NO LAWSUITS IMPACT ON PROJECT
      – RECOUPMENT OF INVESTMENT
      – STAFF GIVES ITS FULL SUPPORT TO PROJECT
      – AVAILABILITIES OF SERVICES STATE TO ASSIST
                                                                ISCOR
      – EXCLUSIVE AND PRE-EMPTIVE RIGHTS                        mining

                                                           R2



                       KAMOTO PROJECT
BACKGROUND: KEY POINTS OF REGIME FOR TAX, CUSTOM DUTIES
               AND OTHER GUARANTEES



TAX REGIME
•1% IMPORT AND 1% TURNOVER TAX
•COMPANY TAX YEAR 1 TO YEAR 5                  0
•COMPANY TAX YEAR 6 TO YEAR 10                 5%
•NORMAL TAX ON EXPATS YEAR 1 TO YEAR 10        5%
•EXCEPTIONAL TAX ON EXPATS YEAR 1 TO YEAR 5    0
•EXCEPTIONAL TAX ON EXPATS YEAR 6 TP YEAR 10   5%
TAX DEDUCTABLE



                                                               ISCOR
                                                               mining

                                                          R2



                        KAMOTO PROJECT
         BACKGROUND: FUNDING AND FLOW OF ACTIVITIES
                                               8) Bank (independent
                                               trustee) repays loans
                                               out of ESCROW
                       Gecamines               account as per DA                     Iscor
                                                                                                                   Finco
                                                                            1) Iscor provides
                       9) Free cash flow
                                                                            finance for Project
                        paid to Parties
                                                        JMC                                                            3) Payment of
BANK/TRUSTEE                                                                                                           capital projects


                                                                        Directs
                                              2) OPENS AND
                                                                       the Project
                                              DETERMINES
                                                                       as per DA
                                              RULES

                  JMC Escrow
                                                                                            6) JMC markets and sells
                    account                                    Kamoto                       metal to customers on
                                                                                            behalf of trustee
                       4) Transfer funds to
                                                               Project
                       operating account

5) Bank/ is the
    owner
 of the metal                                                                                        Customers
  ex refinery
                                              7) Customers pay
                                              proceeds into
                                              escrow account                                                                              ISCOR
                                                                                                                                          mining




                                              KAMOTO PROJECT
BACKGROUND: KAMOTO PROJECT MANAGEMENT STRUCTURE


                                   Government

     Iscor                                                             Gècamines



                                                    Agreement
                                                    defining
                                    Definitive      interrelationships
                                                                                      Operator
                                   Agreement
                                                                                      of
                                                                                      Refinery
         Equal
         representation
                                     Joint
                                  Management
                                   Committee
               Joint direction
               of the Project
                                  Director of
                                  Operations                                    Luilu
             Management
             of the mine
                                                                               Refinery
                                                                                                 ISCOR
             and the
                                                      - Kamoto   delivers                        mining
             concentrator          Kamoto Mine        concentrate
             as per DA                                - Luilu delivers metal
                                 and Concentrator
PROJECT BACKGROUND


 KAMOTO
 PROJECT
OPERATIONS             ISCOR
                       mining




      KAMOTO PROJECT
 PROJECT BACKGROUND: OVERARCHING OBJECTIVES


IT IS THE INTENTION OF THE KAMOTO TEAM TO ESTABLISH A SUCCESSFUL
AND PROFITABLE NEW BUSINESS FOR ISCOR --- THE KAMOTO PROJECT
THE OVERARCHING OBJECTIVES SET BY THE TEAM AND WITHIN WHICH
FRAME BUSINESS DECISIONS ARE MADE ARE:
          •REDUCE CAPEX
          •EARLY INCREASE IN THROUGHPUT (MONEY IN THE BANK)
          •MANAGE AND REDUCE PROJECT ASSOCIATED RISKS
          •REDUCE TRANSPORTATION COSTS
          •ACQUIRE FULL UNDERSTANDING OF EACH BUSINESS PROCESS
          •CONTINUALLY EXTEND ISCOR’S SPHERE OF CONTROL AND
          INFLUENCE

                                                                   ISCOR
                                                                   mining




                          KAMOTO PROJECT
                 PROJECT BACKGROUND: PROCESS FLOW




                                    SP           Mill No. 1     Flotation
                                    B2
  Kamoto                                                                               Liquid
Underground                SP                                                       Concentrate
   Mine                    A                                                          to Luilu

                                    SP           Mill No. 2     Flotation
                                    B2
              Waste                                                             TAILS




                      Transport     Transport
                                                                                    Concentrate
 Customer                 to            to          Warehouse        Refining
                                                                                     Receiving
                       Durban     Johannesburg

                                                                                                  ISCOR
                                                                                                  mining
                                                                                           R2



                                    KAMOTO PROJECT
                 PROJECT BACKGROUND:KAMOTO MINE

•Fully mechanised, trackless underground copper and cobalt mine
•World class reserve/resource with 55 million tons @ average 4,5% copper and 0,6% cobalt
•Operations commenced in 1972
•The design capacity of 3 million tons/year was achieved throughout the 1980’s
•A major pillar collapse during 1990 destroyed underground infrastructure,equipment,   access
drives to ore, ventilation drives and crusher installation
•Current production < 300 000 tons per annum.
  BOTTLENECKS/PROJECT DRIVERS                          EARLY CAPITAL REQUIRED FOR
  •INSUFFICIENT VENTILATION                   •NEW VENTILATION SHAFT AND FANS
  •VIRTUALLY NO EXPOSED ORE                   •CRITICAL DEVELOPMENT
  •LACK OF EQUIPMENT                          •PRIMARY AND SECONDARY EQUIPMENT
                                              •EXISTING SHAFTS AND FANS REFURBISHMENT
                                              •WORKSHOP EQUIPMENT
                                                                                                ISCOR
                                              •SPARES AND CONSUMABLES                           mining




                                        KAMOTO PROJECT
PROJECT BACKGROUND:KAMOTO MINE




                                 ISCOR
                                 mining




         KAMOTO PROJECT
    PROJECT BACKGROUND:CRITICAL DEVELOPMENT



Entails the following:

   Decline 10 to zones 8 & 9. (900 m)
   Access to 6C vent shaft. (380 m).
   Inclines 15 & 16 to Zones 2, 3 & 4 and part of 6. (900 m)
   Inclines 13 & 14 to Zones 6 & 7. (850 m)
   Crusher infrastructure. (260 m)
   Koumal 5 & 6 to crusher. (400 m)
   ARAS. (380 m)
   430 return airway system. (1000 m)
                                                                ISCOR
                                                                mining




                        KAMOTO PROJECT
PROJECT BACKGROUND: KAMOTO MINE SCHEMATIC GEOLOGY




                                                         ISCOR
                                                         mining



                                                    R2



                 KAMOTO PROJECT
     PROJECT BACKGROUND: RESOURCES

Extensive exploration of the Kamoto ore body has been carried out by
Gécamines. Apart from the surface boreholes approximately 1 200
boreholes have been drilled from underground workings.

The resources at Kamoto have been estimated at 57 Mt grading at 4,5
% copper and 0,6 % cobalt.

Resource estimates have been made from the drilling and analytical
data using a variety of classical and geostatistical techniques. The
proven and probable resources at Kamoto have been calculated
independently by Gécamines, SRK and Geostokos - Dr I. Clarke
(Tables 4.5.1,4.5.2 & 4.5.3 refer).



Although the measured resources at Kamoto vary greatly between the
three sources, this is largely as a result of accurately predicting the
grades in areas where there are insufficient boreholes. There is high
confidence of the resource (tonnage being available). SRK have
stated that there are sufficient resources at Kamoto to ensure a mine
life of at least 20 years at a production rate of 2.2 Mt of ore from
underground.                                                              ISCOR
                                                                          mining




                        KAMOTO PROJECT
PROJECT BACKGROUND: MINE GEOLOGY
                                altered alternating microsandstone
                                and argilitic beds
                   RGS




                                 non altered dolomitic sandstone

                   CMN           altered argilitic, siliceous coarse
                                 sandstone


    Main Aquifer




                   SD
                                microsandstone and argilitic beds


                                argilitic stratified dolomites
                                Orebody Superior


                   OB    20 m    massive stromatolitic dolomite



                                Orebody Inferior

                                - non altered massive argilitic,
                                dolomitic microsandstone               ISCOR
                   RAT          - altered massive argilitic
                                microsandstone or breccia              mining




                   KAMOTO PROJECT
PROJECT BACKGROUND: CONCENTRATOR KTO2 STREAM

•The KTO2 concentrator is characterized as a traditional base metal concentration
route ie. milling, flotation, tailings disposal and concentrate dispatch to the refinery
•Design capacity for sulphide ores is 1,8 million tons per annum
•Commissioned between 1968 and 1972
•Current capacity < 900 000 tons per annum

  BOTTLENECKS/PROJECT DRIVERS            EARLY CAPITAL REQUIRED FOR
  •FLOTATION CAPACITY                    •REFURBISHMENT
  •MILLING CAPACITY                      •NEW EQUIPMENT AND PIPE LINES
  •EQUIPMENT                             •INSTRUMENTATION
  •CONCENTRATE HANDLING                  •LABORATORY
  •TAILINGS HANDLING                     •NEW TAILINGS DAM
  •PROCESS CONTROL                       •OFFICE SPACE                                     ISCOR
                                                                                           mining

                                         •WORKSHOP EQUIPMENT
                                  KAMOTO PROJECT
 PROJECT BACKGROUND: CONCENTRATOR KTO2 STREAM

                                KAMOTO 2                 KAMOTO 1



                                                STORAGE
   LUILU
                                      CM 4   CM 3        CM 2    CM 1   BM 1 BM 1          Stock KTO   ROM

Low Cobalt Conc K1&2                           MILLING
DOLO CONC K1&2
High Cobalt Conc K1&2




                                              FLOTATION



                                                                                    REAGENTS



                                      SAND TREATMENT & COLUMNS

                        REJECTS KTO                                                 SCHEMATIC LAYOUT
                                                                                     SCHEMATIC LAYOUT
                                                     2       1
                                         THICKENERS                                                          ISCOR
                                                         3                                                   mining
                                                                    PLANT WATER


                                                    KAMOTO PROJECT
        PROJECT BACKGROUND: LUILU REFINERY


•The Luilu refinery is a hydrometallurgical plant recovering copper and cobalt
from concentrates by roasting, leaching with sulphuric acid and then
electrodepositing of metals
•Design capacity 150 000 to 175 000 tons copper and 7 000 tons cobalt per
annum
 BOTTLENECKS/PROJECT DRIVERS          EARLY CAPITAL REQUIRED FOR
 •GENERALLY RUN DOWN                  •REFURBISHMENT
 CONDITION
                                      •NEW EQUIPMENT
 •CONCENTRATE RECEPTION
                                      •ROASTER REBUILDS
 •CONCENTRATE FILTRATION
                                      •FILTER REBUILDS
 •ROASTING CAPACITY
                                      •INSTRUMENTATION
 •PROCESS CONTROL
                                      •LABORATORY
 •QUALITY CONTROL
                                      •DEDICATED STORAGE FACILITY                ISCOR

 •METAL CONTROL                                                                  mining




                               KAMOTO PROJECT
PROJECT BACKGROUND: LUILU REFINERY
     Co.Cu Hydrates            Dolomitic Conc

     + Other Oxides                                              Neutralisation
                                     H2SO4             Ca(OH)2                       Fe, Al
                                                                                     precipitate

                   Leach                                            Cu+ ppt.


                                                                                     Ca(OH)2
                                              De-Copperised Cu
                  Classify
                                                                                      Cu/Co
          Wash                                                      Cu   ++
                                                                              ppt.     ppt.
                                         To ppt.
                    Filter               Fe (instead      Co powder             NaHS(l)
                                         of Lime)                                         H2SO4
                                                                      De Ni
       Rejects
                                                  NiS Matte                            H2S
          Tank House Storage
                                              To Likasi               De Zn
                                                                                 Na2CO3
                                                           ZnS                   (neutralisation)
                                                                 10g/l Co
                                                                                     Ca(OH)2
           Cu Electro Winning
                                                                      Co ppt.
                                                                                     Co(OH)2
                                                    H2SO4

          Cu Cathodes                                               Co Leach


                                                                      Filtration                > 30g/ l Co
                                                Residue
     Sell or       To Likasi                                  Co Electro Winning
                 (for re-refining)                                                     (l)
                                                 Co Flakes


                                             De-gassing Furnaces

                                                                                                              ISCOR
                                                 Co Flakes
                                                                                                              mining
                                                     99,8%




                             KAMOTO PROJECT
                   PROJECT BACKGROUND: MINING PRODUCTION

                                                         PRODUCTION


         160 000



         140 000



         120 000



         100 000
TONNES




          80 000



          60 000



          40 000



          20 000




                   1   2   3   4   5   6   7   8     9   10     11   12   13   14   15   16    17   18   19   20   21   22   23   24
                                                                     M ONTHS                                                           ISCOR
                                                   ORE TONNES         TOTAL TONNES            WASTE TONNES                             mining




                                                   KAMOTO PROJECT
                       PROJECT BACKGROUND: BREAK EVEN TONNES




                                     3 000
Ore tons pe r annum




                                     2 500

                                     2 000

                                     1 500

                                     1 000

                                      500

                                         0
                                              1     2      3       4       5           6      7       8       9       10

                      Break even ore tonnes   400   480    590     741     755         870    986    1 015    874    1 009
                      Production ore tonnes   102   872   1 596   2 002   2 157    2 048     2 191   2 307   2 299   2 656
                                                                                                                             ISCOR
                                                                               Years                                         mining




                                                        KAMOTO PROJECT
      PROJECT BACKGROUND: MINING COST




MINING METHOD        COST/TON     TOTAL TONS PER
                     (US$)        METHOD (MT)

WASTE DEVELOPMENT         13.67              3.01

ORE DEVELOPMENT           15.09              4.88

ORE SLIPING               13.11              3.74

ORE PRODUCTION            11.42              9.59

WASTE FILLING              1.50              3.25

BACKFILLING                3.69              6.53

TOTAL/TON/ROM             14.24                    -
                                                       ISCOR
                                                       mining




                  KAMOTO PROJECT
PROJECT BACKGROUND: PRODUCTION BUILD-UP


              250,000
                                 3 Cascade mill


              200,000
                             2 Cascade mill
 ROM (tpm)




                                                                                                           Big + 2 small roasters in
              150,000

                                                                             Big + One small roasters in

               100,000
             1 Cascade mill
                                                                   Big roaster in

               50,000

                                              One small roaster

                     0
                         0             12          24         36           48         60        72          84         96         108   120

                                                                                    Months                                                    ISCOR
                                                                                                                                              mining
                                       Mine                              Refinery                           Concentrator

                                                              KAMOTO PROJECT
     PROJECT BACKGROUND: PRODUCTION INFORMATION



                                                Total/Average   1997      1998    1999    2000    2001    2002    2003    2004    2005    2006
Total tonnage waste                  000 tons       3 034        218.0    612.6   467.6   374.8   367.6   309.5   241.1   183.2   136.3   123.5
Total tonnage mined - ROM ore        000 tons      18 229        101.6    872.2 1,595.6 2,001.9 2,157.2 2,048.0 2,190.8 2,306.8 2,299.1 2,655.8
Weighted average Cu mill headgrade      %           4.08%         4.21%   4.46% 4.48% 4.51% 4.23% 4.19% 4.09% 3.83% 3.82% 3.60%
Weighted average Co mill headgrade      %           0.47%         0.56%   0.46% 0.38% 0.41% 0.48% 0.46% 0.43% 0.46% 0.51% 0.61%
Cu headfeed                          000 tons       743.6          4.28   38.90   71.55   90.35   91.28   85.89   89.59   88.29   87.88   95.59
Co headfeed                          000 tons       86.4           0.57    4.01    6.09    8.18   10.36    9.35    9.37   10.67   11.63   16.15
Cu metal produced                    000 tons       591.5          3.05   29.11   57.96   73.18   73.94   68.03   70.96   69.93   69.60   75.71
Co metal produced                    000 tons       34.6           0.19    1.54    2.50    3.35    4.14    3.74    3.75    4.27    4.65    6.46
Cu sold                              000 tons       591.5          1.17   23.86   55.56   70.68   73.81   69.00   70.47   70.10   69.66   87.15
Co sold                              000 tons       34.6           0.08    1.32    2.42    3.21    4.01    3.81    3.75    4.18    4.59    7.23




                                                                                                                                                  ISCOR
                                                                                                                                                  mining




                                                            KAMOTO PROJECT
FINANCIAL


KAMOTO
PROJECT
                  ISCOR
                  mining




 KAMOTO PROJECT
                    FINANCIAL: TOTAL CAPITAL INVESTMENT




     DESCRIPTION          Total       MINE           CONCENTRATOR     REFINERY OTHER
INITIAL CAPEX     $ MIL   118.2               67.2             24.2         13.7             13.1
REPLACEMENT CAPEX $ MIL    55.8               50.4              1.7          0.3              3.4
TOTAL CAPEX       $ MIL   174.0              117.6             25.9         14.0             16.5

CONTROL OF ASSETS                 KAMOTO PROJECT     KAMOTO PROJECT   GECAMINES   KAMOTO PROJECT




                                                                                                    ISCOR
                                                                                                    mining




                                    KAMOTO PROJECT
                          FINANCIAL: ISCOR ANNUAL CASH FLOW


                                                  (Nominal terms)



                  100


                    50
$ million




                     0


                   -50


                  -100
                            1       2       3        4         5             6      7      8      9     10

            May budget     -88.8   -14.0   44.0     85.1     71.0           20.9   16.2   18.9   24.5   45.8
            June budget    -64.1   -21.2   24.5     65.9     75.5           26.4   21.0   24.1   31.5   60.7
                                                                                                               ISCOR
                                                                    Years                                      mining




                                           KAMOTO PROJECT
              FINANCIAL: ISCOR CUMULATIVE CASH FLOW


                                                             (Nominal terms)



                                      280
                                      210
$ million




                                      140
                                       70
                                        0
                                      -70
                                     -140
                                             1        2       3         4       5             6       7       8       9       10

            May 98 Peak funding (Opt 6)             -106.9
            June 98 Peak funding (Opt 9)            -91.4
            May 98 Budget (Opt 6)           -88.8   -102.8   -58.8    26.2     97.2          118.1   134.3   153.2   177.8   223.6
            June 98 Budget (Opt 9)          -64.1   -85.3    -60.7     5.1     80.7          107.1   128.1   152.2   183.7   244.4
                                                                                      YEAR
                                                                                                                                     ISCOR
                                                                                                                                     mining




                                                     KAMOTO PROJECT
                                 FINANCIAL: ANNUAL CAPEX


                                                (Nominal terms)




                    80
                    70
                    60
$ million




                    50
                    40
                    30
                    20
                    10
                     0
                           1       2      3        4         5            6     7     8     9     10

            May budget    72.2    41.3   27.1      8.7      4.5           4.0   9.2   7.6   4.6   4.4
            June budget   47.2    35.9   35.2     16.2      8.1           4.6   8.0   7.9   5.3   5.6
                                                                  Years                                 ISCOR
                                                                                                        mining




                                         KAMOTO PROJECT
                   FINANCIAL: CUMULATIVE CAPEX


                                                  (Nominal terms)




                  200


                  150
$ million




                  100


                    50


                     0
                           1      2        3         4         5            6    7       8       9       10

            May budget    72.2   113.5    140.6    149.3     153.8      157.8   167.0   174.6   179.1   183.5
            June budget   47.2   83.1     118.3    134.5     142.6      147.2   155.2   163.1   168.4   174.0
                                                                                                                ISCOR
                                                                    Years                                       mining




                                         KAMOTO PROJECT
    FINANCIAL: ISCOR’S EXPOSURE (YEAR END FIGURES)


                                                EXPOSURE (CASH FLOW)


                                 35

                                  0
$ million




                                 -35

                                 -70

                                -105
                                        1                   2                  3       4
            Feasibility study          -87.3               -91.5              -69.7   5.8
            May 98 Budget (Opt 6)      -88.8              -102.8              -58.8   26.2
            June 98 Budget (Opt 9)     -64.1               -85.3              -60.7   5.1
                                                                       YEAR
                                                                                             ISCOR
                                                                                             mining




                                               KAMOTO PROJECT
                                         FINANCIAL: ISCOR RESULTS


KAMOTO PROJECT
Results of different scenario's                              SCENARIO 6        SCENARIO 7          SCENARIO 8      SCENARIO 9      SCENARIO 10


Description                                                  Budget - May      Budget - June     Budget - June Budget - June Budget - June
                                                                             Capex Re, No lease Capex Re, Lease Capex Re, Lease Capex Re, Lease
                                                                                                                 2 month delay exchange rate

ISCOR RESULTS - PROFIT DISTRIBUTION
Evaluation term                                   Years                10                   10               10              10               10
REAL IRR                                                            33.3%                34.7%            37.0%           36.1%            39.2%
After tax NPV @ ($ million)                        10%               99.9                111.0            110.5           108.3            112.6
After tax NPV @ ($ million)                        20%               39.3                 44.8             46.8            44.4             49.8
After tax NPV @ ($ million)                        15%               64.6                  72.3            73.2            70.8             75.9
Peak funding inclu. Loan and F.S. costs          $ million         (106.9)               (103.4)          (88.7)          (91.4)           (85.1)
Capital payback period                            Years               3.7                   3.7             3.7             3.9              3.6
Average annual cash flow after capital payback   $ million           35.4                  39.8            38.7            40.2             37.9    ISCOR
                                                                                                                                                    mining




                                                         KAMOTO PROJECT
                 FINANCIAL: PROJECT STAND ALONE RESULTS



Results of different scenario's                             SCENARIO 6        SCENARIO 7         SCENARIO 8       SCENARIO 9      SCENARIO 10


Description                                                 Budget - May      Budget - June Budget - June Budget - June Budget - June
                                                                            Capex Re, No lease Capex Re, Lease Capex Re, Lease Capex Re, Lease
                                                                                                                2 month delay exchange rate
PROJECT RESULTS - STAND ALONE
Evaluation term                                  Years                10                   10               10              10               10
Internal rate of return (IRR)                                      56.7%                58.4%            62.4%           60.2%            66.4%
After tax NPV @                                   10%              299.0                336.4            336.3           327.5            345.4
After tax NPV @                                   20%              152.1                169.6            171.9           163.3            179.3
After tax NPV @                                   15%              212.7                238.0            239.3           230.3            247.5
Peak funding                                     $ mil.            (99.9)               (95.7)           (86.8)          (89.3)           (83.2)
Capital payback period                           Years               3.3                  3.3              3.3             3.4              3.2
Average annual cash flow after capital payback   $ mil.             91.5                104.9            103.5           105.8            103.6    ISCOR
                                                                                                                                                   mining




                                                          KAMOTO PROJECT
            FINANCIAL: COST DISTRIBUTION


                                                      JMC
                                                                Mining
                                Marketing              0%
                                                                 12%
                                  17%


                        Royalties                                          Consen + eng
                           0%                                                  10%




                                                                            Eng
                        Refinery                                            14%
                          29%
                                                                         Finance
                                                                            1%
                                            MM
                                                                 HR
                                            1%
                                                                15%
                                            IS - IT
                                              1%

                                                                                                                 ISCOR
Mining   Consen + eng     Eng     Finance     HR      IS - IT   MM    Refinery     Royalties   Marketing   JMC
                                                                                                                 mining




                                     KAMOTO PROJECT
                                         FINANCIAL: FIXED COSTS AS % OF TOTAL COSTS


                                                                  (Nom inal term s)


                                   60%
Percentage of total annual costs




                                          53%
                                   50%

                                   40%
                                                30%   29%
                                   30%                      26%
                                                                      23%        22%                        21%
                                                                                          21%   20%   20%
                                   20%

                                   10%

                                   0%
                                           1    2      3     4          5             6    7     8    9     10
                                                                            Years
                                                                                                                  ISCOR
                                                                                                                  mining




                                                            KAMOTO PROJECT
             FINANCIAL: TOTAL REVENUE VERSUS TOTAL COSTS


                                             (Nom inal term s)



            400
            350
            300
            250
$ million




            200
            150
            100
             50
              0
                  1   2     3           4         5           6    7       8     9   10
                                                      Years
                                                                                          ISCOR
                          Fixed costs             Variable costs       Revenue            mining




                                            KAMOTO PROJECT
                       FINANCIAL: LABOUR SENSITIVITY




LABOUR                                                -10%        Budget - June      +10%
Evaluation term                            Years            10                 10              10
REAL IRR                                                 36.5%              36.1%           35.7%
After tax NPV @ ($ million)                 10%          109.5              108.3           107.0
After tax NPV @ ($ million)                 20%           45.4               44.4            43.5
After tax NPV @ ($ million)                 15%           71.8               70.8            69.7
Peak funding inclu. Loan and F.S. costs   $ million      (91.0)             (91.4)          (91.8)
Capital payback period                     Years           3.9                3.9             4.0
Average cash flow after capital payback   $ million       40.3               40.2            40.1



                                                                                                     ISCOR
                                                                                                     mining




                                          KAMOTO PROJECT
                          FINANCIAL: PRICE SENSITIVITY



REVENUE                                               -10%        Budget - June      +10%
Evaluation term                            Years            10                 10              10
REAL IRR                                                 27.1%              36.1%           44.9%
After tax NPV @ ($ million)                 10%           76.0              108.3           140.8
After tax NPV @ ($ million)                 20%           21.1               44.4            66.4
After tax NPV @ ($ million)                 15%           43.6               70.8            97.2
Peak funding inclu. Loan and F.S. costs   $ million      (95.2)             (91.4)          (89.1)
Capital payback period                     Years           4.6                3.9             3.4
Average cash flow after capital payback   $ million       36.0               40.2            45.6




                                                                                                     ISCOR
                                                                                                     mining




                                          KAMOTO PROJECT
                            FINANCIAL: OPEX SENSITIVITY



OPEX                                                  -10%        Budget - June      +10%
Evaluation term                            Years            10                 10              10
REAL IRR                                                 41.0%              36.1%           31.1%
After tax NPV @ ($ million)                 10%          125.1              108.3            91.5
After tax NPV @ ($ million)                 20%           56.2               44.4            32.1
After tax NPV @ ($ million)                 15%           84.7               70.8            56.5
Peak funding inclu. Loan and F.S. costs   $ million      (88.3)             (91.4)          (94.6)
Capital payback period                     Years           3.6                3.9             4.2
Average cash flow after capital payback   $ million       42.6               40.2            38.0




                                                                                                     ISCOR
                                                                                                     mining




                                          KAMOTO PROJECT
                          FINANCIAL: CAPEX SENSITIVITY



CAPEX - FIRST 3 YEARS                                 -10%        Budget - June      +10%
Evaluation term                            Years            10                 10              10
REAL IRR                                                 38.9%              36.1%           33.6%
After tax NPV @ ($ million)                 10%          110.6              108.3           106.0
After tax NPV @ ($ million)                 20%           48.0               44.4            40.7
After tax NPV @ ($ million)                 15%           73.8               70.8            67.6
Peak funding inclu. Loan and F.S. costs   $ million      (84.7)             (91.4)          (98.1)
Capital payback period                     Years           3.7                3.9             4.1
Average cash flow after capital payback   $ million       39.0               40.2            41.5




                                                                                                     ISCOR
                                                                                                     mining




                                          KAMOTO PROJECT
                                 FINANCIAL: ANNUAL REVENUE




                  400

                  350

                  300

                  250
$ million




                  200

                  150

                  100

                    50

                     0
                           1       2       3       4       5           6    7       8       9       10

            May budget    13.4    119.2   203.5   246.5   254.4    215.0   210.3   231.2   263.2   316.3
            June budget   5.8     100.5   196.3   237.4   250.4    217.8   209.2   230.2   262.3   361.3       ISCOR
                                                                                                               mining
                                                               Years
                                                                                                           N


                                            KAMOTO PROJECT
              FINANCIAL:CAPEX AND WORKING CAPITAL



                  100
                    80
                    60
                    40
$ million




                    20
                     0
                   -20
                   -40
                   -60
                   -80
                           1      2      3      4      5             6      7      8     9      10

            May budget    89.1   57.3   39.4   16.6   5.9        -0.5      10.7   10.7   8.4   -53.9
            June budget   60.6   51.5   50.3   24.1   10.3           1.2   8.6    11.1   9.2   -53.0
                                                                                                            ISCOR
                                                             Years
                                                                                                            mining

                                                                                                       R2


                                          KAMOTO PROJECT
               FINANCIAL: CAPEX AND WORKING CAPITAL
                            CUMULATIVE



                  250


                  200
$ million




                  150


                  100


                    50


                     0
                           1      2       3       4       5           6    7       8       9       10

            May budget    89.1   146.4   185.7   202.3   208.2    207.7   218.4   229.1   237.4   183.5
            June budget   60.6   112.1   162.4   186.5   196.9    198.0   206.7   217.8   227.0   174.0
                                                                                                               ISCOR
                                                              Years
                                                                                                               mining

                                                                                                          R2


                                           KAMOTO PROJECT
                     FINANCIAL: Cu REVENUE AND PRICES


                                               (Nom inal term s)
                                                                                                           $ per lb
                   300                                                                                       1.40

                   250                                                                                       1.20

                                                                                                             1.00
                   200
$ million




                                                                                                             0.80
                   150
                                                                                                             0.60
                   100
                                                                                                             0.40

                     50                                                                                      0.20

                      0                                                                                      0.00
                          1      2      3         4        5           6    7       8       9       10

            Cu revenue    2.0   44.2   108.8    140.7    147.4     139.0   147.4   164.3   188.5   242.6
            Cu $ per lb   0.8   0.9     0.9      1.0      1.0       1.0     1.0     1.1     1.3     1.3

                                                               Years                                                      ISCOR
                                                                                                                          mining

                                                                                                                      N


                                        KAMOTO PROJECT
                     FINANCIAL: Co REVENUE AND PRICES

                                               (Nom inal term s)
                                                                                                          $ per lb
                    140                                                                                      25.0
                                                                                                             23.0
                    120
                                                                                                             21.0
                    100                                                                                      19.0
$ million




                     80                                                                                      17.0
                                                                                                             15.0
                     60                                                                                      13.0
                     40                                                                                      11.0
                                                                                                             9.0
                     20
                                                                                                             7.0
                      0                                                                                      5.0
                           1      2      3        4        5           6      7      8      9      10

            Co revenue    3.8    56.3   87.4     96.7    103.1     78.9      61.8   65.9   73.8   118.7
            Co $ per lb   24.0   20.5   16.5     13.8     11.8         9.5   7.6    7.2    7.4     7.5
                                                                                                                         ISCOR
                                                               Years
                                                                                                                         mining

                                                                                                                     N


                                        KAMOTO PROJECT
                                             FINANCIAL:
                             PERCENTAGE CONTRIBUTION TO REVENUE PER PRODUCT

                                                  (Nominal terms)




                           80%
Contribution per product




                                                                                    Cu: 64%
                           70%
                           60%
                           50%
                                                                                          Co: 36%
                           40%
                           30%
                           20%
                           10%
                           0%
                                 1   2   3    4        5            6   7   8   9    10


                                                                                                    ISCOR
                                                           Years
                                                                                                    mining




                                             KAMOTO PROJECT
                             FINANCIAL: ISCOR’s PROFIT SHARE


                                                      (Nominal terms)


                                250


                                200
$ million




                                150


                                100

                                 50


                                  0
                                         1      2      3        4        5           6    7       8        9       10

            Iscor profit share in FCF   0.02   2.47   6.80     9.35     13.35    25.94   20.18   23.20   30.95    60.06
            Free Cash Flow              0.08   8.24   22.67   31.18     44.48    86.46   67.27   77.35   103.16   200.21
                                                                                                                           ISCOR
                                                                             Years                                         mining




                                                KAMOTO PROJECT
MARKETING


KAMOTO
PROJECT
                   ISCOR
                   mining




  KAMOTO PROJECT
MARKETING: PRICE FORECASTS - COPPER AND COBALT


   •RESOURCE STRATEGIES INFORMATION USED FOR PRICE FORECASTS
       •Peter Searle for cobalt and adjusted downward by Iscor
       •CRU ( Commodoties Research Unit London) for copper

   USED SOME OF THE BEST MINERAL ECONOMIC CONSULTANTS IN THE WORLD
   BASED ON SUPPLY AND DEMAND FUNDAMENTALS, WHICH ARE MORE LONG TERM IN
   NATURE
   STATISTICAL MONTE CARLO ANALYSES HAVE INDICATED A HIGH PROBABILITY OF THE
   PRICES REALISING
   FORECAST HAVE BEEN ADAPTED, TAKING INTO ACCOUNT SUPPLY AND DEMAND
   INFLUENCES THAT HAVE MANIFESTED THEMSELVES SINCE THE ORIGINAL FORECAST
   WERE DONE – EG. THE ASIAN CRISIS (2 GRAPHS)
   OUR ADAPTED COBALT PRICE IS MORE CONSERVATIVE THAN THE CONSULTANT’S
   ADAPTED PRICE (GRAPH)
   THE FORECASTS OF LONG-TERM REAL PRICES ARE CONSERVATIVE WHEN COMPARED
   TO OTHER INDUSTRY FORECASTS
   THE PRODUCT DISCOUNTS ARE VIEWED AS VERY CONSERVATIVE, INTER ALIA BY
   MARKETING AGENTS AND GECAMINES
   THE TRENDS OF THE FORECASTS ARE CONSISTENT WITH LONG-TERM HISTORICAL
                                                                                ISCOR
   TRENDS (GRAPH)                                                               mining
   ALL IN ALL, VIEWED AS A REALISTIC FORECAST

                                  KAMOTO PROJECT
        MARKETING:LONG-TERM NOMINAL COPPER PRICE

      4500



      4000



      3500



      3000
                                                                                                        STD DEV
                                                                                                                                                                  y = 40.15x + 610.41
      2500
$/t




      2000



      1500
                                                                                                                                                                       PRICE 1998/07/14 = US$ 1575
                                                                                                                                       STD DEV
      1000



      500



        0                                                                                                                                                                                                                             ISCOR
             1955
                    1957

                           1959

                                  1961

                                         1963
                                                1965

                                                       1967

                                                              1969
                                                                     1971

                                                                            1973

                                                                                   1975

                                                                                          1977
                                                                                                 1979

                                                                                                        1981

                                                                                                               1983

                                                                                                                      1985
                                                                                                                             1987

                                                                                                                                    1989

                                                                                                                                           1991
                                                                                                                                                  1993

                                                                                                                                                         1995

                                                                                                                                                                1997

                                                                                                                                                                       1999
                                                                                                                                                                              2001

                                                                                                                                                                                     2003

                                                                                                                                                                                            2005
                                                                                                                                                                                                   2007

                                                                                                                                                                                                          2009

                                                                                                                                                                                                                 2011

                                                                                                                                                                                                                        2013
                                                                                                                                                                                                                               2015
                                                                                                                                                                                                                                      mining

      -500

                                                                                   KAMOTO PROJECT
        MARKETING:NEW COPPER PRICE FORECAST

       4000


                  AVERAGE COPPER PRICE 1998 US$ 17723/TON (US$ 0.77/lb)
                  HIGH US$ 1879/TON (US$ 0.85/lb)
       3500
                  LOW US$ 1572.5/TON (US$ 0.71/lb)
                  PRICE 0N 1998-07-27 US$ 1742/TON (US$ 0.79/lb)                                     NOMINAL


       3000
$/t




       2500




                                                                                                                                              REAL
       2000




                                        OWN NEW FORECAST

       1500
                1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012   2013   2014    2015

      Series1   2226   2275   1957   2054   2176   2153   2140   2123   2175   2277   2682   2999   2839   2692   3094   3640   3490   2732    2584   3400
                2226   2225   1869   1914   1980   1910   1850   1789   1785   1822   2092   2279   2104   1944   2177   2497   2333   1780    1641   2105
                                                                                                                                                             ISCOR
      Series2
      Series3   2226   2275   1792   1915   2076   2112   2140                                                                                               mining

      Series4   2226 2225.2 1711.4 1784.5   1889 1873.6   1850



                                                     KAMOTO PROJECT
          MARKETING:NOMINAL AND REAL COBALT PRICE
                 FORECASTS (PETER SEARLE)
       30.00

                                                                                        AVERAGE PRICE 1998 US$ 53131/TON (US$ 24.1/lb)
                                                                                        HIGH US$ 56658/TON (US$ 25.7/lb)
       25.00
                                                  NEW NOMINAL                           LOW US$ 48501/TON (US$ 22/lb)
                                                                                        PRICE ON 1998-07-27 US$ 48501/TON (US$ 22/lb)
       20.00
$/lb




       15.00

                                                  NEW REAL



       10.00


                                                                                                                                                          NOMINAL


         5.00
                                                                                                                  REAL




         0.00
                 1996     1997     1998   1999     2000   2001   2002    2003    2004     2005     2006    2007    2008    2009    2010     2011   2012   2013   2014    2015

       Series1   25.91   22.1521   17.3   12.68    7.5    5.85   5.82    5.79    5.76     5.74     5.71    5.68    5.65    5.62    5.59     5.57   5.54   5.51   5.48    5.45
       Series2   25.91   22.648 18.1146 13.6075 8.24242 6.59427 6.73232 6.87097 7.01849 7.17342 7.32037 7.47447 7.62374 7.78243 7.94463 8.11966 8.28744 8.45692 8.62908 8.80285   ISCOR
       Series3   25.91   22.648    25      25      23     18      15     12.5     11       8      7.32037 7.47447 7.62374 7.78243 7.94463                                         mining
       Series4   25.91   22.1521 23.8758 23.296 20.9283 15.9684 12.9673 10.5334 9.02759 6.40141    5.71




                                                                 KAMOTO PROJECT
                        MARKETING: COPPER COST CURVE


              140

              120

                        1994        2003
              100
US c per lb




              80                               Konkola, 54c

              60

              40                         Kamoto with Co credits (with Co price falling to US$ 3.00 /lb), 39c
                                 Grasberg / Ertsberg, 39c
              20
                          Escondida, 36c
                        Kamoto with Co credits (with Co price falling to US$ 5.60 /lb), 29c
               0
                    0      2000             4000              6000           8000             10000            12000

                               Cumulative production (tonnes x 1000 per annum)                                         ISCOR
                                                                                                                       mining




                                            KAMOTO PROJECT
                     MARKETING: COBALT COST CURVE



                      Estimated Cobalt Production Cost 1996
                16
                                                              Inco
                14                                            Gecamines
                12                                            Norilsk
cost ($ / lb)




                10                                            ZCCM
                                                              Union
                 8
                                                              Falconbridge
                 6
                                                              Sumitomo
                 4                                            China
                 2                                            Sherrit
                 0                                            OMG
                                                                             ISCOR
                                                                             mining




                               KAMOTO PROJECT
                        COST PER POUND OF Cu METAL
                                                (REAL TERMS)




                                                                              New price    Old price    Scenario 9
                                                          F.S.    DA Case    dd 4/16/1998 dd 4/16/1998 dd 29/06/1998
                                               Years       10       10            10           10           10
Cash Cost per lb Cu without Co credits        US $ c\lb     0.643    0.674           0.733        0.726        0.756
Cash Cost per lb Cu with Co credits           US $ c\lb     0.170    0.302           0.224        0.354        0.258
Royalty to GECAMINES                                          out      out              in           in          out

Cash Cost per lb Cu without Co refining costs US $ c\lb    0.569     0.614          0.660        0.655        0.696




                                                                                                                       ISCOR
                                                                                                                       mining




                                            KAMOTO PROJECT
MARKETING:PRODUCTS AND PRODUCTION RATIO



 Ratios
 Copper Cathodes:                         Year 1&2   Thereafter
 – Electrowon Spot Blue (Cu 99.9%)        30%        70%
 – Electrowon Standard (Cu 99.8%)         60%        20%
 – Electrolytic Decopperised (Cu 99.7%)   10%        10%

 Cobalt Electrowon:
 – Super High (Co 99.9%)                  0%         50%
 – High (Co 99.8%)                        20%        50%
 – Medium (Co 99.6%)                      30%        0%           ISCOR
                                                                  mining
 – Low (Co 99.3)                          50%        0%
                       KAMOTO PROJECT
MARKETING:PRODUCTS SPECIFICATIONS

   COPPER              Spot Blue         Standard            Decopperised
   % Cu (min)            99.9              99.8                  99.7
   Pb ppm (max)              10             15                 10 to 100
   Co ppm (max)              20             20                 10 to 40
   S ppm (max)               60             60                100 to 150
   Se ppm (max)               2             2                   1 to 3

   COBALT            Super High    High             Medium               Low
   % Co (min)           99.9       99.8              99.6                99.3
   Ni ppm (max)         600        1000                                 3000
   Cu ppm (max)          50         60                                   150
   Fe ppm (max)          80        100                                   300
   Mn ppm (max)          10         20                                   100
   C ppm (max)          100        200                                   500
   S ppm (max)           50        150                                   800
   Pb ppm (max)          5          10                                   300
   Se ppm (max)          5          5                                    10     ISCOR
                                                                                mining
   Zn+Cd ppm (max)       50        100                                   300


                          KAMOTO PROJECT
          MARKETING: QUALITY DISCOUNTS



Copper Cathodes:                         1998 - 2000   2001-15
– Electrowon Spot Blue (Cu 99.9%)        $ 80 / ton    $ 80 / ton
– Electrowon Standard (Cu 99.8%)         $ 150 / ton   $ 150 / ton
– Electrolytic Decopperised (Cu 99.7%)   $ 250 / ton   $ 250 / ton

Cobalt Electrowon:
– Super High (Co 99.9%)                  $ 0 / lb      $ 0 / lb
– High (Co 99.8%)                        $ 0 / lb      $ 0 / lb
– Medium (Co 99.6%)                      $ 1.50 / lb   $ 0.50 / lb
– Low (Co 99.3)                          $ 3.00 / lb   $ 1.50 / lb   ISCOR
                                                                     mining




                      KAMOTO PROJECT
          MARKETING:MARKETING STRATEGY


• Spot sales during first year
   – To gain customer trust
   – To gain experience
   – Contract negotiations during October
• Direct sales vs Agents
• Centralization and full integration of all Supply Chain Activities
• Establish Long Term Sales Contracts
• Pricing Strategy
• Urgent need to establish a strong customer base before the cobalt
  market enters the period of oversupply
• Establish a good relationship with cobalt producers in the DRC and
  Zambia
• Arrange swap of material to ensure that customer needs are covered in
  the event of an unforeseen disruptions
• Ensure that Kamoto is a reliable supplier of consistent quality products.   ISCOR
                                                                              mining




                           KAMOTO PROJECT
MARKETING:COPPER MARKETS GEOGRAPHIC TARGETS



   • South East Asia
   • China
   • Japan
   • India
   • Eastern Europe
   • Western Europe
   • USA

                                              ISCOR
                                              mining




                       KAMOTO PROJECT
MARKETING:COBALT MARKETS SECTOR TARGETS



• Chemicals Sector
• Super Alloys Sector
• HS Steel Sector
• Hard Facing Sector
• Carbides & Diamonds Sector
• Magnets Sector
                                          ISCOR
                                          mining




                    KAMOTO PROJECT
 MARKETING:COBALT MARKETS SECTOR CONDITIONS

• Super Alloy Sector:
   During 1994, cobalt consumption in the super alloy sector continued to
  decline, largely as a result of reduction in spending in the defense
  industries, but also because of substitution in favour of lower priced
  nickel based alloys. With the increased aircraft orders, consumption in
  this sector is increasing.
• Magnets Sector:
  This sector is sensitive to fluctuations in the cobalt price.
• Carbides & Diamond Sector:
  This sector increased significantly due to increases in manufacturing
  in both Europe and North America.
• Chemical Sector:
  This sector continues to show growth in consumption. The chemical
  sector are forecast to be the most rapidly growing sector. CRU expect
  that the Oxide sub-sector will grow with 10%.                             ISCOR
                                                                            mining




                            KAMOTO PROJECT
   MARKETING:COBALT MARKETS CHANNELS



• Existing and Potential Agents
  – Japan: Mitsui and Mitsubishi
  – Russia & China: SMC (Specialty Metals Company)
  – India: Sepulchre
  – USA: American Metals Corporation (50% owned by Gecamines)

• Iscor or Gecamine Office
  – Gecamines Offices in London, Brussels, USA and Johannesburg)
  – Iscor Beijing and Amsterdam Offices

                                                                   ISCOR
                                                                   mining




                       KAMOTO PROJECT
PROJECT RISKS


KAMOTO
PROJECT
                    ISCOR
                    mining




   KAMOTO PROJECT
   PROJECT RISKS: RISK OVERVIEW



                      Political related risks

Commercial (product is not translated into revenue as planned)

   Late                   Negative deviation in
   start                  planned production



           Business process inefficiencies (profit burners)
PROJECT RISKS: RISK MANAGEMENT PROCESS



   •RISK IDENTIFICATION
   •RISK EVALUATION
   •RISK CLASSIFICATION
   •BASE CONSEQUENCE IMPACT
   •TIME EXPOSURE RATING
   •PROBABILITY RATING
   •CONSEQUENCE RATING
   •MANAGEMENT INTERVENTION
   •COST OF INTERVENTION
   •RISK MANAGEMENT AND STRUCTURE
   •CONTROLS                             ISCOR
                                         mining




               KAMOTO PROJECT
  PROJECT RISKS: RISK CONSEQUENCE BASIS

 The worst case scenarios have been taken in every case.

                                       CAPITAL PAY BACK: ISCOR PARTICIPATION
  $ million

           Continuous risks:
 240
 215
 190
 165
 140
 115
  90
  65
  40
  15
 -10
 -35
 -60
 -85
-110
       1           2               3              4            5             6             7           8        9         10
                                                                     YEARS

                       Annual cash flow - Iscor       Peak funding      Cumulative cash flow - Iscor
                                                                                                                               ISCOR
                                                                                                                               mining
           $5M - $10M                       $10M - $20M                      $20M - $50M                   $50M - $100M
           $100M - $200M                    $200M +

                                                  KAMOTO PROJECT
             PROJECT RISKS: RISK BY PRIORITY

The prioritisation is based on the standard Iscor Risk Classification System:

                                                      Risk Priority
             Country risk                                   1
             Creditor attachment                            1
             Ongoing solvency of Gecamines                  1
             Iscor cash flow/failure to finance project     1
             Late delivery of equip, etc.                   1
             Environmental damage                           1
             Plant unavailable for production               2
             Seizure of assets financed by the project      3
             Negate the DA                                  3
             Critical development delays                    3
             Metal price forecast wrong                     3                   ISCOR

             Iscor's ability to acquire capital             3                   mining


             Currency risk                                  4
PROJECT RISKS:KEY CATEGORIES OF RISK
 • POLITICAL       •   INBOUND LOGISTICS
                   •   MINE
                   •   CONCENTRATOR
 • OPERATIONS      •   REFINERY
                   •   OUTBOUND LOGISTICS

                   •   MARKETING
 • COMMERCIAL      •   CURRENCY RISK
                   •   ESCROW ACCOUNT
                   •   METAL ATTACHMENT
                   •   FINANCIAL CONTROLS
                   •   LATE START
 • ENVIRONMENTAL
        PROJECT RISKS: POLITICAL


•   Loss of sustainable production
•   Seizure of assets financed by the project
•   Loss of management expertise
•   Seizure of finished goods
•   Definitive Agreement between Iscor,
    Gecamines and the DRC government is negated

                                                  ISCOR
                                                  mining




                  KAMOTO PROJECT
         PROJECT RISKS: SPECIFIC RISKS
                           (POLITICAL ASSOCIATED RISKS)


SEIZURE OF ASSEST FINANCED BY ISCOR (US$ 91MIL)

•Historically unlikely
•World pressure and influence of SADEC countries and neighbouring states
•Minimize capital expenditure
•Increase revenue ie reduce exposure period (clean sheet capital re-design)
•Lease equipment
•Ownership of equipment purchased vests in Iscor
•Country in need of investors (consortium involvement)
•Country risk insurance
•Force Majeure
•Kabila’s latest debt re-structuring efforts and liaison with World bank                     ISCOR

•Congolese political unrest more likely to take place in the north and east of the country
                                                                                             mining




                                   KAMOTO PROJECT
            PROJECT RISKS: SPECIFIC RISKS
                          (GECAMINES SOLVENCY RELATED RISKS)


CREDITOR ATTACHMENT (US$ 16 MIL)
•Metal becomes the property of the bank at the refinery
•Metal batched, numbered, marked and dispatched not under Gecamine’s name
•Separate warehouse at Luilu for project metal
•Iscor has been approached by some creditors
•Contact with creditors
•Creditor list via the Consortium
•Discussions with world financial institutions
•DRC government guarantees no encumberances on the mine, concentrator and refinery


                                                                                     ISCOR
                                                                                     mining




                                    KAMOTO PROJECT
                          PROJECT RISKS: SPECIFIC RISKS
                             (ENVIRONMENTAL RELATED RISKS)


ACCOUNTABILITY FOR PAST AND FUTURE ENVIRONMENTAL DAMAGE (US$ 50 MIL)

•New paddock type tailings dam
•Do not deposit tailings on top of old Gecamines tailings dams
•No valley impoundment
•Management of tailings disposal under Iscor control
•New tailings pipe line
•New concentrate pipe line
•Environmental management plan
•Independent environmental management monitoring



                                                                       ISCOR
                                                                       mining




                                    KAMOTO PROJECT
                          PROJECT RISKS: SPECIFIC RISKS
                                (TECHNICAL RELATED RISKS)


INSTALLATIONS (INCLUDING LUILU) UNAVAILABLE FOR PRODUCTION (US$ 32 MIL)

•Refurbishment and installation of new equipment
•Early surplus capacity to offset low plant availabilities
•Buffer stockpiles in process line
•Supplier support
•Maintenance management agreement and monitoring as per DA
•Maintenance costs included in refining costs to be paid by the project
•Allowance to keep funds in reserve for major replacements at Luilu
•Luilu refinery is the life line of Gecamines
•Gecamines investment in Luilu
•Commercial risk insurance
                                                                          ISCOR
                                                                          mining




                                     KAMOTO PROJECT
                     PROJECT RISKS: SPECIFIC RISKS
                                    (COMMERCIAL)


 MARKETING
•Small volume copper related to total world market
•Low cost producer
•Conservative price forecast and discounts used
•Joint marketing and control
•Long term contracts to be established
•Gecamine’s knowledge of copper and cobalt market
•Iscor could market the copper if so preferred subject to joint control
•Upgrading of poor quality copper to wire bar standard is possible
•Other major mining houses used higher price forecasts
•Peter Searl’s cobalt price forecast adjusted to be more conservative
•Discounts allowed for poor quality copper higher than actual
                                                                          ISCOR
•Discounts had not been downward adjusted with lower copper prices        mining




                                  KAMOTO PROJECT
PROJECT RISKS:OPERATIONS - INBOUND
            LOGISTICS
    INBOUND                CONCEN-              OUTBOUND
                MINE                 REFINERY
    LOGISTICS              TRATOR               LOGISTICS


•   Labour problems
•   Logistical failures
•   Late delivery of equipment, spares, etc.
•   Quality of equipment, spares delivered, etc.
•   Electricity availability
•   Water availability                                      ISCOR
                                                            mining




                       KAMOTO PROJECT
       PROJECT RISKS: OPERATIONS - MINE

    INBOUND                CONCEN-              OUTBOUND
                 MINE                REFINERY
    LOGISTICS              TRATOR               LOGISTICS


•    Labour problems
•    Ventilation
•    Pipe bursts
•    Hoisting shafts
•    Pillar collapse
•    Crusher failure
•    Critical development delays                            ISCOR


•
                                                            mining

     Reserves
                        KAMOTO PROJECT
PROJECT RISKS: OPERATIONS - CONCENTRATOR

  INBOUND                CONCEN-                OUTBOUND
               MINE                  REFINERY
  LOGISTICS              TRATOR                 LOGISTICS




  •   Labour problems
  •   Milling capacity
  •   Tailings disposal
  •   Resource sharing conflicts
  •   Mixing of feedstock to mills
                                                            ISCOR
                                                            mining




                      KAMOTO PROJECT
    PROJECT RISKS:OPERATIONS - REFINERY

INBOUND                CONCEN-              OUTBOUND
             MINE                REFINERY
LOGISTICS              TRATOR               LOGISTICS




•   Plant unavailable for production when required
•   Poor product
•   Metal security
•   Metal accounting and control
                                                        ISCOR
                                                        mining




                    KAMOTO PROJECT
     PROJECT RISKS:OPERATIONS - OUTBOUND
                  LOGISTICS
    INBOUND                          CONCEN-              OUTBOUND
                      MINE                     REFINERY
    LOGISTICS                        TRATOR               LOGISTICS

•    Distribution system failure
•    Cost-intensive distribution system(s)
•    Infrastructure failure
•    Administrative disputes
•    Damage to and loss of product
•    Quality disputes
•    Leakage
•    Creditor attachment
•    Demurrage
•    Sabotage                                                         ISCOR
                                                                      mining




                              KAMOTO PROJECT
ENVIRONMENTAL MANAGEMENT



     KAMOTO
     PROJECT
                           ISCOR
                           mining




         KAMOTO PROJECT
  ENVIRONMENTAL MANAGEMENT:PRODUCTION
      ENVIRONMENT AND EMS STRUCTURE

                                            EROSION CONTROL    CHEMICAL STOCKING CONTROL
                                                DUST CONTROL
                                                   NOISE CONTROL


                   BACK FILL (TAILS)                             CONCENTRATOR PIPE
KAMOTO                                                              (MONITORING SYSTEM)
                     MINE WATER               CONENTRATOR
 MINE


                             EFFLUENT CONTROL
BACK
FILLING      DOLOMITIC
             WASTE                          STRUCTURAL CONTROL

                                       EFFLUENT CONTROL
                   STRUCTURAL
CURRENT            CONTROL
PRACTICE
(EXISTING)
                                                             DADOCK DUMPING SYSTEM
              EFFLUENT CONTROL                               CONSTRUCTION WILL CONSIDER:
                                                             - LOCAL POPULATION CONCERNS   ISCOR
      CONTROLS : AS PER 1S0 CD 14031                         - TECHNICAL CRITERIAS         mining
                                                               (150 14000)

                                 KAMOTO PROJECT
      ENVIRONMENTAL MANAGEMENT: KAMOTO
                  PROJECT

ENVIRONMENTAL SURVEY:
ISO 14001/14010/14012 AS GUIDLINE

- 6 MONTH BEFORE OPERATIONAL                             KAMOTO EMP
  DATE
- SURVEY OF SOILS AND WATER
  INCLUDING : EFFLUENTS, RIVERS,
  DAMS, DUMPS
- GENERATE DATA BASE


DRC APPLICABLE LAWS                              INTERNATIONAL ACCEPTED STANDARDS


 RSA ENVIRONMENTAL LAW               AIDE - MEMOIRE (RSA)

                                     ISCOR POLICY
                                     ISO 14001 TO BE USED AS
                                     GUIDELINE ONLY, IMPLEMENTATION
                                     WILL BE SOUGHT AFTER 3 YEARS


                                                                                    ISCOR
                                     CONSULTANTS
                                                                                    mining




                                    KAMOTO PROJECT
     ENVIRONMENTAL MANAGEMENT:
ISO CD 14031 = PERFORMANCE EVALUATION

                  PLAN
                  Planning environmental performance evaluation

                  1. Management considerations
                  2. Selecting indicators
                     2.1 … for the management area
                     2.2 … for the operational area
                     2.3 … for the environmental area

                                                            CHECK AND ACT
   DO                                                       Reviewing and improving
                                                            Environmental Performance
   Evaluating environmental performances                    Evaluation
   1. Collecting data
   2. Analysing data
   3. Evaluating information
   4. Reporting and communicating
      4.1 Internal reporting and communicating                                          ISCOR
                                                                                        mining
      4.2 External reporting and communicating

                              KAMOTO PROJECT
                                  EMS - MACRO ENVIRONMENT



MANAGEMENT OF THE MINING ENVIRONMENT

• Geology
•   Climate
•   Topography
•   Soil
•   Pre-mining land capability
•   Land use
•   Natural vegetation/plant life
•   Animal life
•   Surface water
•   Ground-water
•   Air quality
•   Noise
•   Sites of archaeological and cultural interest
•   Sensitive landscapes
•   Visual aspects
•   Regional socio-economic structure
•   Interested and affected parties
                                                            ISCOR
                                                            mining




                                          KAMOTO PROJECT

								
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