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Rare and Minor Metals Company ReviewExploration, Development & ProductionMarch Quarter 2011

Resource Capital Research


Suite 1306 183 Kent Street Sydney, NSW 2000

Tel: +612 9252 9405 Fax: +612 9251 2859 Email: [email protected]: www.rcresearch.com.au

Resource Capital Research ACN 111 622 489

Rare and Minor Metals Company ReviewMarch Quarter 2011

Resource Analyst (Rare and Minor Metals): Dr Trent Allen

Resource Analyst: Dr Tony Parry

Resource Analyst: John Wilson

This report is subject to copyright and may not be redistributed without written permission from RCR. Copies are available for purchase from RCR.

16 February 2011


Rare and Minor Metals Company Review, March Q 2011. Disclaimer and disclosure attached. Copyright© 2010 by Resource Capital Research Pty Ltd. All rights reserved. 2

Contents Contents .............................................................................................................................. 2 Overview and Investment Comment ........................................................................................ 3 Featured Company Summary .................................................................................................. 4 [Explorers‟ Development Cycle, March Q 2011 ........................................................................... ] [Comparative Charts ............................................................................................................... ] Financial Data ....................................................................................................................... 5 Company Statistics ................................................................................................................ 5 Reserves, Resources and Historic Mineralisation ........................................................................ 6 Valuation and Performance Data ............................................................................................. 6 Exploration, Development and Production Companies

[Alkane Exploration Limited ........................................................................................... ] Arafura Resources Limited ............................................................................................ 7 Avalon Rare Metals Inc ................................................................................................. 9 [Galaxy Resources Limited ............................................................................................. ] Globe Metals & Mining Limited .................................................................................... 11 Greenland Minerals & Energy Limited ........................................................................... 13 [Hazelwood Resources Limited ....................................................................................... ] [Icon Resources Limited ................................................................................................ ] [King Island Scheelite Limited ........................................................................................ ] Latin Resources Limited ............................................................................................. 15 Lynas Corporation Limited .......................................................................................... 17 [Northern Minerals Limited ............................................................................................ ] Orocobre Limited ....................................................................................................... 19 [Rodinia Lithium Inc ...................................................................................................... ] [TNR Gold Corp ............................................................................................................ ]

Market Update: Lithium ........................................................................................................ 21 Market Update: Niobium ...................................................................................................... 23 Market Update: Tantalum ..................................................................................................... 27 Market Update: Tungsten ..................................................................................................... 29 Market update: Rare Earth Elements ...................................................................................... 25

Selected Rare and Minor Metal Price Data and Production Statistics ........................................... 31 Exchange Rates of some Rare and Minor Metals, Producers and Consumers. ............................... 32 [Rare and Minor Metal Company Share Performance Tables ......................................................... ] Report Contributors ............................................................................................................. 33 Disclosure and Disclaimer ..................................................................................................... 34

[This is the Abridged Report version of the March Quarter RCR Rare and Minor Metals Company Review. The

purchase price of RCR‟s March quarter subscriber reports (including uranium, gold, rare and minor metals, and

iron ore) is A$110. The annual rate for RCR reports – commodities covered may vary from quarter to quarter –

is A$440. Purchase details and research services for institutional investors can be found at

www.rcresearch.com.au]



Overview and Investment Comment

The outlook for rare and minor metals

Analyst: Dr Trent Allen

Rare and minor metals (RMM) equities have made considerable share price

(sp) gains in the past 12 months (sp +118%), in parallel with metal prices,

but speculation has cooled in the past quarter (sp +5%, for a basket of

304 stocks). Companies with good-quality projects have retained most of

their gains from the second half of 2010 and remain close to yearly share-

price highs.

The main commodity and equity market driver is China. This has been the

case for the past several years and is likely to remain so for the

foreseeable future. China is reforming its RMM sectors, by raising tariffs,

reducing export quotas, stockpiling metal to ensure steady supply, and

encouraging consolidation and vertical integration of production. China‟s

stated aims are to increase domestic value-adding and use of the RMM,

conserve resources, and improve industry monitoring and efficiency.

China‟s actions could boost global RMM production.

Some examples of commodities with a stable to strong demand outlook for

the next several years:

Lithium: Increasing intensity of use will require additional supply

beyond 2014, although new mines could lead to oversupply.

Niobium: Industry forecasts are for FeNb consumption growth of ~15%

per annum to 2014.

Rare earth elements (REE): Forecasts are for 6-10% annual growth

in demand to 2015. Export prices (China) up 679% year-on-year.

Tantalum: A supply shortfall is expected to hand a competitive

advantage to companies that provide a long-term supply of ethically

produced tantalum, including Wodinga (WA, to be recommissioned).

Tungsten: Supply shortages are indicated from 2013.

RMM deposits can take 5+ years to develop as mines, sometimes due to

their geochemical complexity, and the challenge of financing projects that

are still considered to be outside the resources mainstream.

This provides an opportunity for companies with projects that are advanced

or can be fast-tracked, e.g. due to location, favourable chemistry, size

and/or high grades).

Equity performances

Globally, RMM stocks have matched or outperformed most exchange-based

indices in the past 12 months. Share price performances have been

studied, for 304 exchange-listed companies with one or more RMM projects

(in six groups: lithium, REE, tungsten, zirconium, niobium, tantalum).

The unweighted average performance over 1 month (to February 16) was

+6%, compared to 5% for Australia‟s ASX S&P300 Metals and Mining

Index, and also 5% for the ASX All Ords. Twelve-month performance was

+118% (S&P300 MM, +25%; All Ords +9%). The average RMM company

share price is 25% below its yearly high and 249% above a 12-month low.

The current market

driver is China‟s

policy of

rationalising supply

and cutting exports.

Strong medium to

long term market

and price growth is

likely for many RMMs

Companies with

strong projects

should continue to

benefit from the

buoyant RMM

markets.

Share prices of rare

and minor metal

companies have

outperformed the

ASX over the past

year, with +118%

annual growth.



RCR March Quarter 2011 Featured Company Summary

AUSTRALIA

Company Code Commodities Comment

Alkane Exploration Limited ALK Definitive Feasibility Study

The Tomingley Project (840koz Au) has advanced to the stage of project financing (A$95m needed).

ALK has raised $21m at $1.05/share to complete a DFS on the Dubbo Zirconia Project (DZP), which

could be producing Zr, Nb and REE (up to 6.5ktpa) by 4Q12.

Arafura Resources Limited ARU Bankable Feasibility Study

A major drilling program at the Nolans Project (NT) could upgrade the current 30.3mt resource, and

justify expanding future REO production beyond 20ktpa. Demonstration-level process testing is

running successfully and to schedule, as part of the BFS (expected 4Q11).

Galaxy Resources Limited GXY Production

With Li production started at Mt Cattlin (WA, expected Li2O ~8.2ktpa) GXY can add value through

vertical integration, as a near-term provider of lithium carbonate (Jiangsu, China) and possibly Li ion

batteries. HK listing in 1Q11 could bring additional US$260m funding.

Globe Metals & Mining Limited GBE Bankable Feasibility Study (BFS)

An A$41m investment by China's ECE in the 60Mt Kanyika Niobium Project (Malawi) should go

ahead in 1Q11, paving the way for a completed BFS. Exploration programs at Machinga and Mount

Muambe have found highly encouraging levels of rare earths.

Greenland Minerals & Energy Limited GGG Pre-Feasibility Study

Mineralisation is confirmed 7km from the Kvanefjeld resource, with 185m @ 1.2% TREO, 442ppm

U3O8, 0.34% Zn. GGG has permission to evaluate the deposit's multi-element potential, including

uranium (forecast REE 43.7kt/yr, U3O8 3.9kt/yr). A DFS should start 2H11.

Hazelwood Resources Limited HAZ Project Construction

HAZ has rapidly built up its WO3 assets to supplement the Big Hill project with ATC (Mar '10) and

Mt Mulgine (Sep '10). Meanwhile, FeW prices have been climbing steadily. Further funding will be

required for HAZ to realise its global WO3 player aspirations.

Icon Resources Limited III Scoping Study

Mt Carbine (QLD) could be producing tungsten from historic mine tailings this year, in a 2 year

operation. Encouraging results of ore sorting trials mean the project could expand to retreatment of

low-grade stockpiles (4-6 years), followed by hard rock mining (10+ years).

King Island Scheelite Limited KIS Feasibility

Rising tungsten prices, and regaining 100% control of the King Island Project, have led to a market

re-rating of KIS: share price +113% in three months. Potential for 3.6kt/yr WO3 from a reserve

grading 1.3% WO3, with initial 1kt/yr from reprocessed tailings.

Latin Resources Limited LRS Mid Exploration

The share price of this recent, Peru-focused ASX listing has surged on news of a sevenfold increase

in the scale of its Guadalupito mineral sands project. Drilling of the iron-rich sands, and of magnetite

skarns near Ilo, is planned for coming weeks.

Lynas Corporation Limited LYC Project Construction

LYC has a stong competitive position in rare earths due to its world class resource, integrated mine

to market approach, first mover advantage in offering new supply from a source outside China, and

its pricing and cost advantages.

Northern Minerals Limited NTU Mid Exploration

The re-named NTU (formerly Northern Uranium) now has the rights to explore for multiple

commodities in the Tanami region (WA-NT), widening its focus to include rare earths and gold. With

cash A$7.4m in December 2010, intensive exploration is planned for 2011.

Orocobre Limited ORE Definitive Feasibility Study

The Salar de Olaroz deposit has the characteristics to become the world's next large scale, low cost

lithium-potash brine operation: attractive chemistry, a JORC compliant resource, proximity of

infrastructure and the financial support of Toyota Tsusho.

CANADA

Avalon Rare Metals Inc AVL Bankable Feasibility Study (BFS)

Indicated resources in the Basal Zone of the world class Nechalcho REE Project (Canada) were

recently expanded by 181%. A Bankable Feasibility Study is expected in 2Q12 and the project

could be producing 10ktpa total REO in 2015, along with Nb, Ta and Zr. Share price +177% over 12

months.Rodinia Lithium Inc RM Early to Mid Exploration

Rodinia is anticipating initial resource statements in 1Q11 at two lithium brine projects in the US and

Argentina. The strategy is to explore salars near high grade Li and pre-existing infrastructure. Strong

exploration results have led to share price +70% in 6 months.

TNR Gold Corp TNR Early to Advanced Exploration

TNR's near-term exploration program will focus on lithium brine projects at Mariana (ARG) and

Clayton Valley (Nevada), as well as gold at Shotgun (Alaska). The proposed TSX spin-out of Li and

REE assets as International Lithium Corp (ILC) could proceed in 2011.

Iron ore, mineral

sands (rare earths,

zircon, tungsten,

andalusite)

Lithium, Tantalum,

Manganese, Iron

Tungsten, Gold,

Base Metals, PGE

Tungsten

Tungsten, Copper,

Gold

Rare Earths,

Niobium, Tantalum,

Zirconium

Lithium

Gold, Copper,

Lithium, Rare

Earths

Lithium

Lithium

Gold, Rare Earths,

Zirconium, Base

Metals

Rare Earths,

Phosphorus,

Uranium, Gold

Niobium, Tantalum,

Rare Earths,

Uranium, Fluorine

Rare Earths,

Uranium, Zinc,

Sodium Fluoride

Rare earths



Financial Data

C OM P A N Y Aust Canada USA Europe other

Listed

opt ions Share Price (LC$/share)3

2 Fully

Diluted

M arket

Cap Book

Enterprise

Value

Code Status1

Yr End 52 week Current Shares Opt+W2

C. Notes2

Shares (undiluted) Cash Debt Value (Undiluted)

16 F ebruary 2011 Hi Low (m) (m) (m) (m) (LC$m)3

(LC$m)3

(LC$m)3

(LC$m)3

(LC$m)3

AUSTRALIA (A$)

Alkane Explorat ion Limited Equinox M inAZXls LimitedALK E Dec ASX OTC ARUO 1.25 0.23 1.22 269 0 0 269 328 22.1 0.0 65 328

Arafura Resources Limited ARU E June ASX 1.79 0.38 1.33 335 17 0 352 445 93.4 0.0 146 445

Galaxy Resources Limited GXY P June ASX GXYO 1.82 0.91 1.53 193 52 12 245 294 400.2 168.4 401 463

Globe M etals & M ining Limited GBE E June ASX 0.51 0.12 0.31 106 2 0 108 32 41.4 0.0 57 32

Greenland M inerals & Energy Limited GGG E Dec ASX GGGO 1.37 0.31 1.30 311 114 0 425 404 9.5 0.0 61 404

Hazelwood Resources Limited HAZ I June ASX 0.33 0.17 0.22 230 33 0 263 49 0.3 4.0 21 53

Icon Resources Limited III I June ASX 0.23 0.06 0.15 119 22 0 141 17 0.9 0.0 8 17

King Island Scheelite Limited KIS I June ASX 0.34 0.14 0.32 62 5 0 67 20 1.8 0.0 31 20

Lat in Resources Limited Uranex NLLRS E June ASX LRSO 0.35 0.14 0.35 133 50 0 183 46 1.2 0.0 4 46

Lynas Corporat ion Limited LYC E June ASX ADR 2.35 0.38 1.93 1663 85 0 1748 3201 146.5 0.0 555 3201

Northern M inerals Limited Uranex NLNTU E June ASX 0.69 0.06 0.63 166 38 0 204 105 6.8 0.0 9 105

Orocobre Limited Uranex NLORE E June ASX TSX 4.05 1.50 3.25 96 1 0 97 312 39.8 0.0 70 312

Total : (A$) 763.8 172.4 1428.9 5427

CANADA (C$)

Avalon Rare M etals Inc AVL E Aug TSX OTCQX 8.14 1.89 7.49 92 11 0 103 692 30.9 0.0 75 692

Rodinia Lithium Inc RM E Dec TSX.V OTCQX 0.74 0.25 0.51 87 31 0 118 44 12.3 0.0 25 44

TNR Gold Corp TNR E Dec TSX.V 0.31 0.15 0.17 131 21 0 152 22 3.9 0.0 21 22

Total : (C$) 47.1 0.0 120.4 758

(1) P: Producer; E: Explorer; I: Imminent - includes companies with bankable feasibility studies and likely to be in production within 3 years (2) Fully Diluted (shares, opt ions + warrants (opt. + w), convert ible notes (Conv. N), other obligat ions)

(3) L.C. - Local Currency unit ; 1Q11 forecast(4) AUD/USD:1.01; CAN/USD: 0.99 Colour code: Actuals in black, forecasts in blue. Numbers for FY2010 can be either, depending on when the FY ends and companies' report ing schedules.

Exchanges

Company Statistics

C OM P A N Y

Code Land (A)/(A+B) %

16 F ebruary 2011 ('000 ha) Dec-10 M ar-11 2010 2011 Dec-10 M ar-11 2010 2011 Dec-10 M ar-11 2010 2011 M ar-11 2010 2011

AUSTRALIA (A$)

Alkane Explorat ion Limited ALK 181 3.8 3.8 21.2 15.0 1.5 2.0 7.7 6.5 0.3 0.3 1.4 1.2 88 85 85

Arafura Resources Limited ARU 500 6.3 11.6 15.0 47.4 3.0 3.0 13.2 13.4 2.0 1.8 6.0 6.3 63 69 68

Galaxy Resources Limited GXY 145 5.0 5.0 21.8 20.0 1.0 0.5 7.1 3.0 5.0 5.0 8.9 22.8 9 44 11

Globe M etals & M ining Limited GBE 279 5.0 5.0 20.0 14.7 0.5 0.5 5.4 2.8 0.4 0.4 1.0 1.5 59 84 65

Greenland M inerals & Energy Limited GGG 211 5.0 5.0 8.0 21.0 2.0 2.9 6.5 8.9 1.4 3.8 5.8 7.8 44 53 53

Hazelwood Resources Limited HAZ 254 0.0 0.0 0.0 0.0 0.5 0.9 7.9 2.4 1.0 1.0 2.5 3.8 47 76 39

Icon Resources Limited III 441 1.0 1.0 8.0 4.0 0.2 0.1 2.2 1.3 0.2 0.1 0.3 0.4 50 88 77

King Island Scheelite Limited KIS 0.0 0.0 0.0 0.0 0.0 0.3 0.1 0.7 0.6 0.3 0.3 1.1 0.9 30 38 38

Latin Resources Limited LRS 80 5.0 0.0 0.0 5.0 0.8 0.9 0.0 2.9 0.4 0.3 0.4 1.6 76 0 64

Lynas Corporat ion Limited LYC 2 0.0 2.0 0.0 2.0 1.0 1.0 0.2 2.3 15.0 23.5 22.4 59.6 4 1 4

Northern M inerals Limited NTU 1,802 5.0 0.0 1.5 8.0 1.0 0.6 3.0 3.4 0.4 0.5 1.0 1.8 55 76 66

Orocobre Limited ORE 300 0.0 0.0 0.0 0.0 4.0 5.0 11.9 19.3 0.7 0.7 3.0 3.6 88 80 84

4,194 36.0 33.4 95.5 137.1 15.7 9.9 50.6 38.7 26.9 37.4 53.7 111.2 51 58 55

CANADA (C$)

Avalon Rare M etals Inc AVL 4 7.0 7.0 22.2 29.8 3.0 3.0 13.0 13.4 0.5 0.5 2.0 2.2 86 87 86

Rodinia Lithium Inc RM 31 0.6 0.6 2.3 2.4 0.8 0.8 4.5 3.2 0.5 0.5 1.8 1.8 64 72 64

TNR Gold Corp TNR 34 3.5 0.0 2.3 3.5 0.7 0.7 1.2 2.7 0.3 0.3 2.4 1.3 68 34 68

Total or Average: 69 11 8 26.8 35.7 4 4 18.8 19.2 1 1.3 6.2 5.3 73 64 73

(A) Explorat ion (L.C.$m) (B) Corporate (L.C.$m)Drilling ('000 m)

Prepared by Dr Trent Allen



Reserves, Resources and Historic Mineralisation

C OM P A N Y

Code Status1

Contained Other Contained Other Contained Other

16 F ebruary 2011 Element M t oxide% kt oxide Element M t oxide% kt oxide Element M t oxide% kt oxide

AUSTRALIA

Alkane Explorat ion Limited ALK E REE 0.0 REE 73 0.75 549.0 2.8moz Au 0.0

Arafura Resources Limited ARU E REE 0.0 REE 30 2.80 848.0 3.9mt P2O5 0.0

Galaxy Resources Limited GXY P Li 11 1.05 119.4 1.7kt Ta2O5 Li 16 1.08 171.5 2.5kt Ta2O5 0.0

Globe M etals & M ining Limited GBE E Nb 0.0 Nb 60 0.29 174.0 8.4kt Ta2O5 0.0

Greenland M inerals & Energy Limited GGG E REE 0.0 REE 279 1.07 2982.8 177mlb U3O8 0.0

Hazelwood Resources Limited HAZ I W 25 0.11 28.1 W 47 0.10 48.1 0.0

Icon Resources Limited III I W 0.0 W 115 0.06 70.6 29.8kt Cu W 18 0.05-0.08 12.2

King Island Scheelite Limited KIS E W 2.2 1.17 25.8 W 11 0.89 101.3 0.0

Latin Resources Limited LRS E Heavy mins 0.0 Heavy M ins 0.0 0.0

Lynas Corporat ion Limited LYC P REE 0.0 REE 20 7.615 1523.0 0.0

Northern M inerals Limited NTU E REE 0.0 REE 0.0 0.0

Orocobre Limited ORE E Li 0.0 Li 350mkL 800g/kL 1500kt Li2CO3 equiv 0.0

CANADA (C$)

Avalon Rare M etals Inc AVL E REO 12 1.7 204.2 REE 312 1.37 4274.0 1031kt Nb2O5 0.0

Rodinia Lithium Inc RM E 0.0 Li 0.0 0.0

TNR Gold Corp TNR E 0.0 Li 0.0 0.0 490koz Au

(1) P: Producer; E: Explorer; I: Imminent - includes companies with bankable feasibility studies and likely to be in production within 3 years; IHC: Investment Holding Company

(2) Reserves, resources and mineralised material published by the relevant company.

The applicable mineral resource codes are by country: Australian: JORC, Canadian: NI 43-101.

Focus commodity Focus commodity Focus commodity

Reserves (Equity)2

Resources (Equity)2

Historical/M ineralised M aterial (Equity)2

Valuation and Performance Data

C OM P A N Y EV-Cash EV-Cash Production

Code P/Book P/Net Cash /Reserves /Res'v+resources Commencement

16 F ebruary 2011 (x) (x) US$/kt1

US$/kt Year 1 month 3 month 6 month 12 month Hi Lo

AUSTRALIA

Alkane Explorat ion Limited ALK 5.0 14.9 na 0.56 na 15 72 194 300 2 430

Arafura Resources Limited ARU 3.0 4.8 na 0.42 na -15 16 93 65 26 250

Galaxy Resources Limited GXY 0.7 1.3 0.53 0.37 2010 -12 -1 39 21 16 69

Globe M etals & M ining Limited GBE 0.6 0.8 na -0.05 na -10 -10 69 39 40 165

Greenland M inerals & Energy Limited GGG 6.6 42.7 na 0.13 na 2 98 na 134 5 319

Hazelwood Resources Limited HAZ 2.3 -13.2 1.91 1.12 2011 2 -4 19 16 35 30

Icon Resources Limited III 2.3 19.6 na 0.23 4Q10 -6 7 81 38 36 134

King Island Scheelite Limited KIS 0.6 11.2 0.71 0.18 na 23 113 100 19 6 129

Latin Resources Limited LRS 13.3 37.4 na na na 67 119 na na 0 150

Lynas Corporat ion Limited LYC 5.8 21.9 na 2.03 1Q11 -5 46 112 267 18 413

Northern M inerals Limited NTU 11.1 15.3 na na na 18 81 576 399 9 1025

Orocobre Limited ORE 4.4 7.8 na na na -19 23 70 88 20 117

Total/Total Average 6 46 88 100 18 209

CANADA

Avalon Rare M etals Inc AVL 9.2 22.4 3.23 0.15 na 31 139 201 177 8 296

Rodinia Lithium Inc RM 1.8 3.6 na na na -22 6 70 -15 31 104

TNR Gold Corp TNR 1.0 5.5 na na na -3 -8 -25 -37 47 10

Total/Total Average 2 34 61 31 21 103

(1) EV-Cash / Reserves or / Resources applies to kt of focus commodity

(%)

Share Price Performance Current Share Price

% off 12 month

Prepared by Dr Trent Allen



Arafura Resources Limited

1.79

Debt (A$m) - Mar 11F

Enterprise value (A$m)

Avg monthly volume (m)

Cash (A$m) - Mar 11F

Price/Cash (x) Cash (A$m)

Price/Book (x)

Listed company options: Net asset backing (Ac/share)

*Quarters refer to calendar year. ^Raising capex A$950m in 4Q11, assumed 50/50 equity/debt.

Resources

Mineralised Material (est., non compliant with JORC)

Contacts Directors

Dr Steve Ward

Managing Director, CEO

Tel: +61 (0) 8 6210 7666

Perth, WA, Australia


[email protected] C Tonkin (Non Exec)

166.5

0

Shares on issue (pr end) (m shares)

na

2010a

-

366.3

Drilling - RAB (m)

-

Arafura Resources Limited

40.64.7

0 0

A$ 1.33

Production and Financial Forecasts

0.00

Capital raisings (A$m)^

Equity %

P2O5

163

Classification Project c/off

(JORC)

Measured

REO

30.3

U

Mt

1.0

Key Projects

344

Location

REE %

1.0

2.60

2.80

0.0

Drilling - Other/Diamond (m) 15,00011,625

0.00

Company Comment

125.6

-

367.9

Indicated 12.3 1.0

REO

96.7

0.0

Land holding ('000 ha)

Tenement costs ($k per year) -

Partner

Ore

93.4

Vein

na

M Muir (Non Exec)

S Ward (MD, CEO) Type

www.arafuraresources.com.au

Rare Earth Elements, Phosphorus, Uranium

"

Nolans Total

Reserves and Resources/Mineralised MaterialCode for reporting mineral resources - Australian:

4.40

Dec-10a

500

0.0

90.80

Major shareholders: JP Morgan Nominees (24.6%), Institutions (20.5%)

0.0

Australia

Bankable Feasibility Study

ARU.AU

489.3

to

0.0

367.9Number of shares (m)

Convertible notes (m)

0.38

384.4

3.3

42

Fully diluted (m)

489.3

World-class rare earth element (REE) deposit at Nolans

Project, with total resources of 30.3mt and production

expected in 2013.

Nolans Project valuation of A$2057m and NAV

A$3.08/share (10% nom, exchange 0.82, post funding)

at REO blend value US$30/kg, current is ~US$75/kg.

Good infrastructure at NT mine site (railway, gas,

highway). Downstream chemical plant site will be at

Whyalla port in SA: given Major Project status by State.

Mine life +20 years with production of 20ktpa rare earth

oxides (REO), plus phosphoric acid, uranium, gypsum.

REO blend has high proportions of desirable "magnet

feed" REE: Nd, Pr and Dy. Value has increased 275%

since mid 2010. Uranium market is also improving.

Project risk should further decrease through 2011 with

final technology demonstration, mine and chemical plant

EIS/approvals, BFS and project finance (both 4Q11).

A$90m placement at A$1.20/share to fund BFS,

resource drilling.

Market capitalisation (undiluted) (A$m)

I Laurance (Chairman)

Investment Points

No

East China Min Expl & Devel Bureau (ECE, 17.6%)

na

-

0.0

40.1

Inferred

Exchanges: ASX:ARU

Share price (A$) 1.33

Options and warrants (m)

Capital Profile

A major drilling program at the Nolans Project (NT) could upgrade the

current 30.3mt resource, and justify expanding future REO production

beyond 20ktpa. Demonstration-level process testing is running

successfully and to schedule, as part of the BFS (expected 4Q11).

12.00

52 week range (A$/share)

16.5

16 February 2011

Funding duration at current burn (years)

1.49

6963 60

500

6,250

1.2

500

47,375

290.6

1.75

68

30,375

2012F

487.9

0

2011F

13.38

0

YEAR END: June*

8.006.31

Exploration and evaluation (A$m)

Exploration/(Expl.+ Corporate) (%) 75

Mar-11F

5.99Corporate (A$m)

3.00 13.25

42.439.8

93.4

26.3

20.8

8.1

23.5

348.6

500

0.0

Cash backing (Ac/share) 26.4

I Kowalick (Non Exec)

none

Aileron / Reynolds 100%/(40%)

812.55.2

Funding from JV partners (A$m)

500

33.92

L Shasha (Exec)

T Jackson (Non Exec)

Nolans

Kurinelli

REE, P, Fe

kt

475

0.0

mlb

848 3.9

2.9 0.7

5.6333

5.3

0.0

1.7

Option Metal

92.76

ProjectJV

91.8

25.4

Nolans Project

Project

Leach

none

none

100% REE, P, U

Rare Earth Elements

Reserves

2.80

ProcessOwnership/ Target

"

Mid Expl.

na

100% 1.05.1 3.20

12.8

StatusRoute

Reef

Various

Aust (NT)

Early Expl.na

Feasibility

none

M'morphic

Sulphide

Aust (NT)

Aust (NT)

(Ngalia)

0.0 0.0 0.0

13.3

mt

1.6

Fe, VA Losada-Calderon 100% Aust (NT)Mid. Expl.

(Non Exec)

Hammer Hill 100%

Au100%

Ni,Cu

Jervois

Aust (NT)Early Expl.na

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Feb

-10

Mar-

10

Apr-

10

Jun-1

0

Jul-10

Aug-1

0

Sep-1

0

Oct-10

Nov-

10

Dec-

10

Jan-1

1

Sh

are

Pri

ce

($/S

hare

)

ARU - Arafura Resources Limited

Source: Bloomberg

Introduction: Arafura‟s flagship is the Nolans Rare Earths-Phosphate-Uranium Project (NT), 135km NNW of Alice Springs. The deposit has a JORC resource of 30.3mt containing 848kt of rare earth oxides (REO), 3.9mt of phosphate (P2O5), and 13.3mlbs of uranium (U3O8), with potential to expand. A Bankable Feasibility Study (BFS) is expected in 4Q11. Mining is planned for 2013, when the Nolans Project could supply ~10% of the global rare earths market. ARU holds +5,000km

2 of grassroots to advanced exploration +projects (REE, Au, Fe, Ni) in the NT.

Nolans Project: Planned annual production from Nolans is 20kt REO, 80kt P2O5 (as phosphoric acid), 0.5mt CaSO4 (gypsum) and 0.33mlbs (150t) U3O8, with 400kt CaCl2 as residue that could be recycled into the chemical process. Mining rate, by open cut, will be 1mtpa with mine life +20 years. Processing will be in three broad stages: concentration; acid leaching into RE/uranium and phosphate streams; and production of final commodities such as REOs. Key inputs are chloralkali and sulphuric acid. The waste material would include Th, which is slightly radioactive (alpha) and must be stored appropriately. Forecast capital costs are A$950m (@ A/US 0.95) with 20% contingency, including A$690m for the chemical plant. Opex could be A$376mpa (chem. plant A$291mpa), i.e. US$376/t ore at 1mtpa. Infrastructure (NT), includes a railway and gas pipeline. Road distance to the Darwin-Adelaide rail line is 65km. On-site concentrate production would precede rail transport to a chemical plant. Exploration: a major drilling program (46,500m RC and diamond) will start this month, and run for ~6 months. It aims to upgrade Inferred resources to Indicated status, and to increase the resource depth from 150m to 250m (ie a potential 66% increase). A larger resource could justify increasing future REO production beyond 20ktpa. Whyalla Rare Earths Complex (SA): The major industrial port of Whyalla (1400km rail from Nolans) was chosen in Sep „10 as location for the chemical plant. ARU has signed an Exclusivity Deed for 800ha land with OneSteel (ASX:OST), which controls the port. The purchase is expected to be finalised during 1H11. The Complex will include facilities for producing feed chemicals and final products. The SA Gov‟t has granted Major Project status, providing certainty for work programs. A final decision to build should follow the BFS and project finance. Development schedule: The Nolans Bankable Feasibility Study (BFS) is expected in 4Q11. Groundwater studies began 2Q10 ahead of an EIS for the mine site in 2Q11. Process de-risking via pilot and demonstration plant testing is under way - focused on beneficiation, the RE/REO stream, and acid recycling - and is proceeding well, and to schedule. Subject to finance in 4Q11, construction could begin in 2012 and production in 2013. Asset sale: Mt Porter, Frances Creek (Au) divested, A$1.5m plus scrip (subject to buyer‟s ASX listing in 2011). Valuation: NAV is highly sensitive to REO prices. At a long term US$30/kg for the Nolans REO blend (current +US$75/kg), with U3O8 at US$50/lb (current US$73/lb), phosphate US$750/t and gypsum US$25/t, revenue would be US$689m/yr. Using opex/capex from the Oct ‟10 economic update and a 30% pre-BFS discount, Nolans after-tax NPV is A$2057m (10% DR, AU/US 0.82). NAV could be A$3.08/share (fully diluted, with cash and exploration assets), assuming dilution from raising 50% of A$950m at a nominal A$2.00/share. Risks to the valuation (upside and downside) include exchange rates and the China-controlled REO market, especially elevated LREE prices. There is upside risk from an increase in the Nolans resource, and downside in delays (process, permits, finance). Investment Comment: ARU‟s market cap moved from A$184m to A$524m in 2010, with a share price increase of 108% (after two cap raisings). The force driving Nolans to production will continue to be increasing REE demand (7%-9%pa) over the next 5 years, against a background of supply constraint and falling export quotas in China. We maintain our November 2010 forecast, that if the market stays strong and ARU meets development milestones, a price of +A$3.00/share could be reached after project finance is established (expected 4Q11).



Nolans Project economics are sensitive to the REO price. The NAV at US$30/kg for Nolans‟

blend is A$5.40/share, or ~A$3.08/share with dilution in 4Q11 or 1H12 to raise 50% of

capex (A$950m) at A$2/share. Current REO blend value is +US$75/kg.

ARAFURA RESOURCES VALUATION

Target Price

(at US$30/kg) (Low) (High)

Equity REO Valuation A$m A$m A$m

Projects (kt) US$/kg

+ Nolans Resource 100% 848 1.92 1,989 75 8,787

+ Regional Exploration 100% 20 10 30

Sub Total 2,009 85 8,817

+ Cash 93.4 93.4 93.4

+ Tax Losses 0.0 0.0 0.0

- Debt 0.0 0.0 0.0

- Corporate 45.4 45.4 45.4

Sub Total 48.0 48.0 48.0

ARU NET ASSET VALUE 2057 133 8865

Capital Structure

Shares 367.9 367.9 367.9

Fully Diluted Shares 384.4 384.4 384.4

ARU NET ASSET VALUE PER SHARE :A$/share 5.59 0.36 24.10

ARU NET ASSET VALUE DILUTED :A$/share fully diluted 5.40 0.40 23.11

NOLANS PROJECT (NPV based on current resource, October 2007 PFS, August 2009 BFS uppdate, October 2010 project update)

Equity

LONG TERM PRICE FOR NOLANS' REO BLEND :US$/kg 20 40 60 80 100

EXCHANGE RATE :AUUS 0.82 0.82 0.82 0.82 0.82

NOLANS NPV @ 10% NOMINAL* :A$m 100% -242 3,965 4,932 6,876 8,787

NOLANS NPV @ 10% NOMINAL* :US$m 100% -198 3,252 4,045 5,639 7,205

NPV/SHARE (fully diluted) :A$/share na 10.32 12.83 17.89 22.86

* Includes a pre-BFS project discount of 30% of the project valuation: 30%

*Assumes constant long term prices for phosphoric acid, of US$750/t; and uranium, of US$50/lb

NOLANS RARE EARTHS-PHOSPHATE-URANIUM PROJECT, KEY ASSUMPTIONS*

RESOURCE ESTIMATES

Current JORC Measured, Indicated and Inferred resource (1% REE cut-off) Ore REO P2O5 U3O8

Mt % % lb/t

30.3 2.80 12.900 0.44

Contained metal, kt 848 3900 5.9 (=13.3mlbs U3O8)

MINING METHOD Open Pit

PROCESS METHOD On site: heavy media separation and flotation (beneficiation)

At chemical complex: hydrochloric acid leach removing phosphate as liquid

From liquid, phosphoric acid, gypsum (via CaCl2); from solid, production of REE, uranium

Year 1 Year 20

PRODUCTION RATE :mtpa 0.5 1.0 Production ramp up: 25-75% yr1, 75% yr 2; 100% yr3

:ktpa REO 10 20 Head grade and blend are same as resource grade

:tpa P2O5 40 80

:mlbspa U308 0.17 0.33 ie 150ktpa at full production

:ktpa CaSO4 250 500 ie Gypsum

:strip ratio 1.0 1.0

CAPITAL COSTS :A$m At AU/US 0.95. Sustaining capex 4%pa

RECOVERIES TO CONCENTRATE :% Heavy media recovers 90% of apatite and REE minerals

DOWNSTREAM RECOVERY :% For REO; 85% phosphoric acid; 80% U3O8

OPERATING COSTS :$Am/yr At AU/US 0.95

TAX :%

ROYALTY :%

MINE LIFE :Years

COMMISSION DATE :

950

90

86

* These figures are preliminary in nature and are intended to provide only a general indication of project potential scale and economic robustness.

Considerable refinement may result from Bankable Feasibility study, expected in 4Q11.

Valuation Sensitivity

Sensitivity

376

30

3

20+

2013



Avalon Rare Metals Inc

8.14

Debt (C$m) - Feb 11F

Enterprise value (C$m)


Cash (C$m) -Feb 11F

Price/Cash (x) Cash (C$m)

Price/Book (x)

Listed company warrants: Net asset backing (Cc/share)

Quarters refer to calendar year.

Contacts Directors

Mr Donald Bubar

President, Director, CEO

Tel: +1 (416) 364 4938

Toronto, ON, Canada


Capital raisings (C$m)

-

16.2

0.0 0.0

* Cut offs defined on basis of Net Metal Return (NMR) in PFS financial modelling. ^Indicated total has 0.26% HREO, 2.7% ZrO2

to

D Bubar (Pres, CEO)

D Connelly

9.2

7.49

1.89

A Ferry (Non Exec Chair)

LocationType

Investment Points

Land holding ('000 ha)*

Funding from JV partners (C$m)

AVL.WT

c/off

feldspar

-

0.0

MFC Global Investment Management US, LLC (15.6%)

[email protected]

Igneous

Partner

1.11.8

Drilling - Other/Diamond (m) 22,2177,000

92.4

0

28,000

92.4

Drilling - RAB (m)

C$ 7.49


2012F2010a 2011F

Avalon Rare Metals Inc

Shares on issue (pr end) (m shares) 92.4 92.4 79.1

0 00

4.35 3.00

Corporate (C$m)

Nov-10a Feb-11F

86

Exploration and evaluation (C$m)

Exploration/(Expl.+ Corporate) (%)

AVL.CN

692.1

0.0

92.4Number of shares (m)

10.6Options and warrants (m)

Capital Profile

52 week range (C$/share)

Exchanges: TSX:AVL, NYSE-Amex:AVL

50

Fully diluted (m)

692.1

Nechalacho Project: REE resource in advanced stages

of development (Canada, NWT), includes 1.35mt of

Total REE Oxides (TREO) as Indicated, grading 1.53%.

Rare earths in Basal Zone of the deposit are 20.7%

heavy rare earths, implying a high value ore: recent

181% upgrade in Basal Indicated Resource (Jan '11).

Thor Lake Pre-Feasibility Study (June 2010): capex

C$900m, opex C$267/t (mined) for 10ktpa TREO, LOM

18yrs, pre-tax NPV (10%) of C$246m (C$2.78/share).

A viable metallurgical process has been defined for

REE, with valuable by-products (zirconium, niobium,

gallium). Low thorium, no significant contaminants.

Well-funded to finish BFS in 1H12, with Jan '11 cash

C$37m (and no debt) after C$30m share placement and

C$9.6m exercise of warrants.

Three-month share price +139% in tight REE market

marked by Chinese export cuts and stockpiling.

Market capitalisation (undiluted) (C$m)

Major shareholders:

0.0

Canada

Bankable Feasibility Study (BFS)

Share price (C$)

13.00

Indicated resources in the Basal Zone of the world class Nechalacho REE

Project (Canada) were recently expanded by 181%. A Bankable Feasibility

Study is expected in 2Q12 and the project could be producing 10ktpa total

REO in 2015, along with Nb, Ta and Zr. Share price +177% over 12 months.

0.5

12.0013.35

YEAR END: August

16 February 2011


0.72


103.0

Rare Metals

2.002.220.50

86

2.02

8786 86

0

4

8,757

4

16.8337.81 0.00

44

Tenement costs ($k per year)

8.8

14.9

30.1

4

29,757

- - -

0.00

20.4

Cash backing (Cc/share) 42.4

39.2

0.0

34.0

0.034.0

82.5

Company Comment

81.081.2 49.8 80.1

Ta

Separation Rapids Igneous

Process

P Fontaine

H Panday Canada (ON)Exploration

Permitting

na

na

none

P McCarter

BD MacEachenwww.avalonraremetals.com

100%

100%

100%

none

none

REE,Nb,Ta100%

100%

Sn,In,Ga

Li

none

none

Option Metal

37.81

Project

27.8

36.7

6.9

JV

Lilypad Lakes Igneous

IgneousWarren Township

Ownership/ Target

Project

East Kemptville

Nechalacho

Canada (ON)

na

Route

Financing

Scoping

na

PFS Canada (NWT)Float, hydromet

Status

Canada (ON)

Canada (NS)

Key Projects

Igneous

TREO

Equity Mt %

Reserves - Nechalacho

Reserves and Resources/Mineralised MaterialCode for reporting mineral resources - Canadian: NI 43-101

Rare Metals Classification Project Ore Nb2O5 Ta2O5TREO

kt

260 204.2

% ppmC$/t NMR*

57.5 1.56 260

0.41 410100% 12.0 1.70

Resources - Nechalacho

897 0.40 396Basal Zone Indicated 100%

Upper Zone Indicated 100% 30.6 1.48 260 453 0.31 192

Basal Zone Inferred 100% 107.6 1.35 260 1,453 0.37 354

Upper Zone Inferred 100% 116.0 1.27 260 1,473 0.34 196

1,348 0.37Total Indicated^ 88.1 3251.53

Mineralised Material (est., non compliant with JORC) 0.0 0.0 0.0

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Feb

-10

Mar-

10

Apr-

10

May-

10

Jul-10

Aug-1

0

Sep-1

0

Oct-10

Nov-

10

Dec-

10

Jan-1

1

Share

Price (

$/S

hare

)

AVL - Avalon Rare Metals Inc

Source: Bloomberg

Introduction: AVL owns five rare metals and minerals projects in Canada, of which four are at advanced stages of development. Its main asset is the 100% owned Nechalacho Rare Earth Element Deposit. Nechalacho (REE, Nb, Ta, Zr): The project is at Thor Lake, 100km SE of Yellowknife. The deposit, an igneous intrusion, is enriched in valuable HREE (heavy rare earth elements). Since 2005, Avalon has spent +C$25m on exploration and development, and there have been regular resource upgrades and expansions. It is focusing on high-grade, HREE-rich resources in the large Basal Zone, which (as of January 2011) contains Indicated Resources of 57.5mt @ 1.56% TREO (total rare earth oxides) with 20.7% HREO/TREO, at a $260 Net Metallurgical Return (NMR) cut-off. At a higher $600 cut-off, Basal Zone Indicated is 14.7mt @ 2.2% TREO. Total Inferred Resources are 226.9mt @ 1.3% TREO (Upper and Basal zones). The deposit also contains Ta, Nb, Zr, Hf and Ga. Less than 10% of the property has been drilled. Recent discoveries include a near-surface zone (North Tardiff) with 11m @ 10.78% TREO. The main deposit is open in three directions. Winter drilling (29,000m program) commenced Jan ‟11. Pre-Feasibility Study: This June 2010 study was of an 18-year mine life, operating underground (~200m depth) on a 12mt reserve in the deposit‟s Basal Zone, ramping from 5ktpa up to 10ktpa TREO (total rare earth oxides), 18ktpa ZrO2, 1.7ktpa Nb2O5 and 100t Ta2O5. Opex is expected to be C$267/t. Capex is C$900m with 22% contingency, including C$589.3m for an underground mine, onsite mill (crush, flotation; 8.4MW by diesel at 2,000tpd) and offsite hydrometallurgical separation plant. The PFS contemplates a plant in the tailings area of an historic mine (Pine Point), to reduce environmental impacts and allow hydroelectric power during summer (7.3MW). In this scenario, concentrate will be barged in summer from Thor Lake via Great Slave Lake to the plant. Combined recoveries are 84.6% for flotation, 90% for the hydro plant. A Scoping Study of plant costs (Oct ‟10) estimates capex at C$345m. The PFS estimates pre-tax NCF of C$2.1bn ($1.5bn post tax). REEs contribute ~56% of revenue at US$21.94/kg TREO. Development: Possible start date for full capacity production is 2015, with 24-30 months construction from 2013 upon receipt of land and water permits and financing. Pilot and bench-scale testing of flotation and hydrometallurgical processes is ongoing – a 30 tonne sample could be tested in 2H11. The PFS could be updated in mid 2011 and a Bankable Feasibility Study is expected in 1H12, ahead of project financing. Permitting: Avalon commenced application for Type A Land Use Permit and Water Licence, in 2Q10 – an Environmental Assessment can take ~1.5-2.5 years to complete, prior to official approval. AVL has recently signed Negotiation Agreements with two local First Nations, a possible precursor to Accommodation Agreements. Other Projects: There are three other advanced projects in Canada, i.e. East Kemptville (tin-indium-gallium-germanium; Nova Scotia), Separation Rapids (lithium, Ontario) and Warren Township (calcium feldspar; Ontario; currently inactive pending resolution of permitting issue). A fifth project, Lilypad Lakes (tantalum; Ontario) is early stage. These projects could move forward under Joint Venture or be monetised while AVL develops Nechalacho. Investment Comment: Nechalacho has world class resources of REE and niobium. Avalon estimates the pre-tax NPV10 of Nechalacho is C$812m with IRR 28%, including potential optimisations. AVL‟s market capitalisation is ~C$690m. In line with other REE equities, the share price increased dramatically after July 2010 due to dramatic cuts in Chinese rare earth exports, pulled back due to profit taking and stabilisation of the market, and regained ground on news of further quota cuts for 1H11. AVL remains highly leveraged to REE prices.



Avalon Rare Metals Inc project location map: from a recent company presentation, this

graphic shows the main focus is on Thor Lake, where AVL has the Nechalacho and North T

Deposits. Total Indicated Resources include 1.4mt of Rare Earth Oxides (REO).

Thor Lake, schedule to production: Avalon plans to have the Nechalacho REE Deposit in

production in late 2015. The project is expected to progress along four lines: community

engagement, permitting, marketing and Bankable Feasibility Study (BFS).



Globe Metals & Mining Limited

0.51






Price/Book (x)

Listed company options Net asset backing (Ac/share)


Resources


*5Mt measured, 18Mt Indicated, 37Mt Inferred

Contacts Directors

Mr Mark Sumich

Managing Director

Tel: +61 (0) 8 9486 1779

West Perth, WA, Australia

MW100%/20% U ASX:RSL S'stone na Adv Expl

0.0 0.0 0.0

174.00.29 0.15 0.014 0.009Kanyika Meas, Ind, Inf* 100% 60.0

% %

Reserves 0.0 0.0

Equity Mt

c/off

% Nb2O5%

Nb, Ta, U Classification Project Ore Nb2O5

0.00.0 0.00

Ta2O5 U3O8 Nb2O5

kt

0.0

Key Projects

0.00

Status

Target ProcessOwnership/

BFS MW

Mid Expl

MW


0.0

16.0

(JORC)

1.5

1.5

Company Comment

36.1

97.5

10.1

Option Metal

42.48

Project

0.0

Early Expl

na

93.75

5.9

1.401.52

MW

MZ

Early Expl

F, REE Carb'tite

Salambidwe

Mount Muambe

J Stephens (Non Exec)

W Hayden (Non Exec)

Livingstonia

Reserves and Resources/Mineralised Material

5.29

2.5

1.48 41.00

26.1

0.0

Type

ASX:RSL

none

Partner

JV

Project

Machinga

Kanyika 100%

158.7

3,000

279

No

41.4

17.3

2.30.7


0.35

65

1.03

8459

16 February 2011

0.12

Rare Metals, Uranium, Fluorine

Exchanges: ASX:GBE

Share price (A$)

0.53

65

Exploration and evaluation (A$m)*

Exploration/(Expl.+ Corporate) (%)Performance shares (m)

108 1.0

5.36

0.31

An A$41m investment by China's ECE in the 60Mt Kanyika Niobium

Project (Malawi) should go ahead in 1Q11, paving the way for a

completed BFS. Exploration programs at Machinga and Mount

Muambe have found highly encouraging levels of rare earths.

0.4

2.002.76

59

Dec-10a 2011F


9

Fully diluted (m)

30.8

Valuation gap: Globe NAV (10% nom, 1Q11) based on

scoping/feasibility study is A$0.61/share post ECE

investment, DFS and development funding.

Kanyika Project BFS results due 2011. Expected

production is 4ktpa Nb as FeNb, opex US$13/kg-

US$20/kg Nb, capex US$155m.

Key economic driver is niobium, used in steel. Nb price is

extremely stable, LT forecast US$39/kg in FeNb, current

US$53.8/kg (CN). Nb 70-85% revenue; tantalum 15-30%.

Planned 51% investment by China's ECE may bring initial

A$41m,subject to shareholder approvals (expected Mar

'11), and could lead to project funding.

MOU's for offtake covering 45% of forecast production.

Portfolio of exploration projects in Africa. Strong HREE

drilling results from Machinga Project (REE,Nb,Ta) in Jan

'11; results from Mt Muambe (REE, F) expected Feb '11.

Kanyika resource of 60mt has 174kt Nb2O5 grading


Major shareholders: HSBC Custody Nom (7.6%)

0.0

Malawi, Mozambique

Bankable Feasibility Study (BFS)

GBE.AU

30.8

to

5

101Number of shares (m)

2.2Options and warrants (m)

Capital Profile



YEAR END: June

0.97 0.50

Corporate (A$m)

A$ 0.31


2012FMar-11F 2010a

Globe Metals & Mining Limited

Drilling - Other/Diamond (m)

92.9

00

20,000

219.8

5,000

101.0

Drilling - RAB (m) 0

28.73.7

279

48.8

313.6

0

20,00014,688

0

279

Ragusa Investments (6.7%), JP Morgan Nom (6.3%)

M Sumich (Exec Chair, MD)

Investment Points

0.5

Code for reporting mineral resources - Australian:

Land holding ('000 ha)* 279

-

279

Tenement costs ($k per year) -

41.4

Acid leachU (Nb,Ta)

REE0%/80%

none

ASX:RSL100%

0%/90%

Location

na

Granitoid

Pegmatite

na

Route

Pegmatite

[email protected]

REEwww.globemetalsandmining.com.au

D Sumich (Non Exec)

-

31.1

47.2

- -

16.7

Capital raisings (A$m)

Funding from JV partners (A$m) 0.0

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

Feb

-10

Mar-

10

Apr-

10

Jun-1

0

Jul-10

Aug-1

0

Sep-1

0

Oct-10

Nov-

10

Jan-1

1

Feb

-11

Sh

are

Pri

ce

($/S

hare

)

GBE - Globe Metals & Mining Limited

Source: Bloomberg

Introduction: Globe Metals & Mining listed on the ASX in December 2005. It is an African-focused rare metals resource company. Its main project is the multi-commodity Kanyika Niobium Project. Globe also has exploration projects focused on rare metals, fluorite and uranium projects. Investment by ECE: An A$41m buy-in at A$0.345/share should see the East China Mineral Exploration and Development Bureau own 51% of GBE. ECE plans to help GBE with project finance and development. Government approvals have been received; the deal should be finalised at an EGM in Mar ‟11. In the interim, A$1.35m working capital was raised at A$0.25 in Dec ‟10. Kanyika (uranium, central Malawi): GBE is targeting rare metals (niobium, tantalum), zirconium and uranium mineralisation in an alkalic granitoid in central Malawi. The main ore minerals are disseminated pyrochlore (Nb, Ta, U) and zircon (Zr). GBE aims to bring Kanyika into production in late 2012, or 2013. Resource and grade – The current resource is 60mt, with a recent 77% increase in Measured and Indicated tonnes (now 23Mt). The resource is defined to 300m width, 250m depth and 2.3km of ~3.8km known strike within 5 zones: 60mt @ 0.29% Nb2O5 (174kt), 0.009% U3O8 (11.9mlbs), 0.014% Ta2O5 (18.5mlbs) and 0.5% ZrSiO4. There is a high-grade resource at 3,000ppm Nb2O5 cut-off, of 21mt with 0.41% Nb2O5 of which 10mt is M&I grading 0.47% Nb2O5 The deposit is open along strike in both directions (N-S). There is a high-grade Exploration Target of 40-50Mt @ 0.37-0.4% Nb2O5. Metallurgy – GBE aims to produce ferro-niobium (FeNb) for the steel industry, as well as oxides of niobium, tantalum and uranium, and possibly magnetite (iron oxide) and zircon. Two initial study phases reported encouraging costs and recoveries. Results for Stage 3 (bulk testing pilot program) are expected. Mining Potential - The deposit could be mined open-pit with low strip ratio of 0.5-0.9. Higher-grade, near surface Measured and Indicated resources could be targeted first (critical for early payback of capex). A Scoping Study (Coffey, Jun ‟08) and subsequent updates propose mining 1.5mt-2.5mtpa, for 3,000tpa Nb as FeNb alloy and 192tpa Ta2O5 over 20 year life-of-mine, with 11.4-13.7ktpa ZrSiO4, and uranium reporting to aluminous slag for potential future processing. Opex expected to be US$40.3/t. Capex is US$155m; a planned US$351m investment by the USA in Malawi‟s power sector could lead to grid supply for Kanyika and reduce capital costs. A Development Agreement between Globe and Malawi, similar to that over the Kayelekera Uranium Mine (ASX:PDN), is expected in 3Q11 and could lead to a Mining Licence. An EIA and Bankable Feasibility Study (BFS) are in progress. Other Projects: GBE has promising exploration projects in Malawi and Mozambique. The main focus is Machinga (manager ASX:RSL), for pegmatite-hosted REE-Nb-Ta-Zr. Drilling found heavy REE, with 11m @ 1.0% TREO (total REO) and 330ppm dysprosium oxide (a high-value element), with av. 32% HREO. Drilling results from the Mount Muambe Project (REE-Fluorite) are expected Feb ‟11. Surface samples show high REE values (peak >1.2% TREO) with av. 29% HREO/TREO. Further is planned for 2011. Investment Comment: GBE‟s share price has benefitted from exploration success and the 2H10 jump in REE prices. Company NAV is A$328m, or A$1.84/share based on funding 50% of capex at A$1.00/share. The sale of 51% to ECE for A$41m at A$0.375/share moves this NAV to A$0.61/share, above the 4Q07 high of +A$0.60/share and a reasonable target, subject to ECE‟s investment and a successful BFS.



Kanyika Project valuation: economics are sensitive to the niobium price, with RCR long

term Nb at US$39/kg in ferroniobium (current is ~US$54/kg). Our share price target for

GBE is A$0.61/share, post financing 50% of capex at A$0.50/share and the sale to ECE.

GLOBE METALS AND MINING VALUATION

Target

Price (Low) (High)

Equity Niobium Valuation A$m A$m A$m

Projects (kt) US$/kg

+ Kanyika Resource 100% 174 1.10 234 23 730

+ Kanyika exploration 100% 160 0.20 39 5 98

+ Regional exploration 100% 15 10 25

Sub Total 288 38 853

+ Cash 41.4 41.4 41.4

+ Tax Losses 0.0 0.0 0.0

- Debt 0.0 0.0 0.0

- Corporate 1.7 1.7 1.7

Sub Total 39.7 39.7 39.7

GBE NET ASSET VALUE 328 78 892

Capital Structure

Shares 101 101 101

Fully Diluted Shares 103 103 103

GBE NET ASSET VALUE PER SHARE :A$/share 3.24 0.77 8.83

GBE NET ASSET VALUE DILUTED :A$/share fully diluted 3.18 0.76 8.65

With dilution at A$1/share to raise 50% of US$150m :A$/share fully diluted 1.84

With dilution at A$0.50/share to raise 50% of US$150m :A$/share fully diluted 1.29

With dilution at A$1/share, after sale of 51% for A$41m cash :A$/share fully diluted 0.61

KANYIKA SPECIALTY METALS PROJECT (NPV based on June 2010 resource, June 2008 Scoping Study and May 2009 update)

Equity

LONG TERM NIOBIUM PRICE (per kg in FeNb alloy)^ :US$/kg 25 35 45 55 65

EXCHANGE RATE :AUUS 0.82 0.82 0.82 0.82 0.82

KANYIKA NPV @ 10% NOMINAL* :A$m 100% -31 159 348 538 727

KANYIKA NPV @ 10% NOMINAL* :US$m 100% -25 130 286 441 596

NPV/SHARE :A$/share -0.30 1.57 3.45 5.32 7.20

* Includes a pre-BFS discount of 30% of the project valuation: 30%

^Niobium prices are modelled as f lat line from start of production. Long term FeNb is US$39/kg (Nb), Ta2O5 US$65/lb, U3O8 US$55/lb

GBE's equity assumed to be 100%; however, Govt of Malawi could hold 15% in return for fiscal trade-offs such as tax and royalty reductions

KANYIKA SPECIALTY METALS PROJECT KEY ASSUMPTIONS*

RESOURCE ESTIMATES

Current JORC Indicated and Inferred resource (1,500ppm Nb2O5 cut-off) Ore Nb2O5 Ta2O5 ZrSiO4 U3O8

Mt % % % %

Model does not include zircon production 60 0.29 0.014 0.50 0.009

Contained metal, mlbs 383.6 18.5 661.4 11.9

Contained metal, kt 174.0 8.4 300.0 5.4

MINING METHOD Open Pit

PROCESS METHOD Dedicated Specialty Metals Plant

Concentrate: crush, gravity (incl. seperation of zircon and magnetite), flotation.

Downstream: weak then strong acid leaches, calcining (Nb, Ta, U), smelting with Fe (FeNb).

Year 1 Year 10

PRODUCTION RATE :mtpa 1.72 2.3 Head grade falls from 0.38% Nb2O5 to 0.29% Nb2O5

:tpa Nb 3,000 3,000

:strip ratio 0.6 1.9

CAPITAL COSTS :US$ 155m Excludes working capital; sustaining capex $4mpa.

RECOVERIES TO CONCENTRATE :% 65 All products (Nb, Ta, U)

DOWNSTREAM RECOVERY :% 69

OPERATING COSTS :US$/t 40 to 43 (Includes US$2.80/t mined, US$26 to 34/t milled)

TAX :% 30 Company tax in Malawi

ROYALTY :% 3 ASX:PDN at Kayelekera pays 1.5% for first 3 yrs, then 3%

MINE LIFE :Years 10+

COMMISSION DATE : 3Q13

Valuation Sensitivity

Sensitivity

* These figures are preliminary in nature and are intended to provide only a general indication of project potential scale and economic robustness.

Considerable refinement may result from bankable feasibility study, expected in 2011.



Greenland Minerals & Energy Limited

1.37






Price/Book (x)


Mineralised Material (est., non compliant w ith JORC)

Contacts Directors

Mr Roderick McIllree M Hutchinson (Chair)

Managing Director

Tel: 61 (0) 8 9382 2322 S Cato (Exec Dir)

Subiaco, WA, Australia J Whybrow (Expl Dir)


0.0

Kt Kt

A$ 1.30

Mlb

TREO Eqty

* Year has ended but some actuals not yet published.

2011F

20,000

Equity

0.0

-

TREO

4,890

0.53 6.45

Fully diluted (m)

[email protected]

114.2

Number of shares (m) 310.9 Exploration and evaluation (A$m)


Exploration/(Expl.+ Corporate) (%)

Corporate (A$m)

45

1.58

425.1

288.7


Drilling - RAB (m)


0.0

7.5

8.91

1

53

7.82

1.7

6

53

3.0

2

20.8 26.5

-

29.1

3.4

7.6

-

20.4


Major shareholders: Citicorp Nom (16.7%), National Nom (16.7%),

402.7

402.7

5,000

0



44

424.7

0

310.2 226.8

211

0

211

GGG.AU

Rare Earth Elements, Uranium, Zinc, Sodium Fluoride

Greenland

Pre-Feasibility Study

Production and Financial Forecasts Capital Profile

Mineralisation is confirmed 7km from the Kvanefjeld resource, with

185m @ 1.2% TREO, 442ppm U3O8, 0.34% Zn. GGG has permission

to evaluate the deposit's multi-element potential, including uranium

(forecast REE 43.7kt/yr, U3O8 3.9kt/yr). A DFS should start 2H11.

JP Morgan Nom (15.9%), HSBC Nom (7.6%), Westrip Hold. (5.9%)

16 February 2011

Exchanges: ASX:GGG

0.31 to


Convertible notes (m) 0.0


20,000

0

Greenland Minerals and Energy Ltd

3.77


-

14.7

Dec-10a 2010F*Mar-11FYear End: December


33.1

13,000

25

211 211

2012F

21.0

4.9

19.4

5.40

4.00

47

Company Comment


TREO

0

6.8

11.6 9.5

19.6

Project TREO

2.91

-

211

2

424.7

2.2

1.6

5,000

0

4.4 0.0

(JORC)



Classification

0

Cut OffOre

Process

U, REO

0.0

10,7801.07

IgneousWestrip

ppm

U3O8

%

Resources

Kvanefjeld*

Mt

61%

0.0

Kvanefjeld Advanced Expl

Metal Type

Greenland

Ownership/

Option StatusPartnerProject

Multi-element focus at Kvanefjeld - uranium component

valued in-ground (4Q10) at ~US$17.5 billion (US$62/lb)

and REE at ~US$146 billion (US$30/kg).

Potential to be one of the world's largest REE and U

deposits - plus economic potential NaF, Zn and Sn.

Resource includes 283mlbs U3O8, 4.9mt REO, 1mt Zn

and 3.1mt NaF- defined over 2km x 1km; open at depth

(>300m) and along strike, regional prospectivity is high.

Metallurgical studies are advanced, with further progress

likely: flow sheet includes alkaline/carbonate pressure

leach for uranium, and flotation and leach for REO.

Pre-feasibility study, Feb '10: processing 10.8mtpa for 23

years, producing 43.7ktpa REO and 8.6mlbspa U3O8 .

Capex is US$2.31bn, opex US$41/t. NPV US$2.18bn.

Greenland Government has approved investigation of

uranium potential (Dec '10), including a DFS.

Well funded by likely $40m option conversions in 1H11.

Indicated, inferred

Reserves

U3O8

Project

150

0.0

Route

61%/100%

Location

Target

457 2,983

JV

*Also uranium (283mlbs contained @ 0.028%), Zn (0.99mt contained @ 0.22%) and NaF (3.09mt contained @ 0.85% NaF).

0.0

na

Key Projects

42.6

Investment Points

6.6

GGGO

T Ho (Non-Exec)www.ggg.gl

9.5

Uranium


R McIllree (MD)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Feb

-10

Mar-

10

Apr-

10

May-

10

Jul-10

Sep-1

0

Nov-

10

Dec-

10

Jan-1

1

Sh

are

Pri

ce

($/S

hare

)

GGG - Greenland Minerals and Energy Limited

Source: Bloomberg

Overview: Greenland Minerals and Energy Limited listed on the ASX in June 2006 (ASX:GGG). It is evaluating the uranium-rich Kvanefjeld multi-element project in Greenland. Kvanefjeld (uranium, Greenland): The project (80km

2) is located on the SW tip of Greenland, at

Narsaq. Within the Ilimaussaq alkaline intrusive igneous complex, it is one of the world‟s largest rare earth elements and uranium deposits. Other elements and minerals include zinc, tin and sodium fluoride. GGG‟s 61% ownership can move to 90% with A$10m payment, and 100% with A$50m, subject to the results of litigation brought by its JV partner, Westrip Holdings Ltd (see disclaimer). The deposit: is a flat-lying slab of disseminated mineralisation, open at depth and in three directions. Current JORC resource (Jun ‟09) is 457mt @ 0.028% U3O8 for 283mlbs, 1.07% REO for 4.91mt (includes yttrium) and 0.22% Zn for 0.99mt, with 79% of these in the Indicated category. There is also 363mt @ 0.85% NaF for 3.09mt. The resource covers 2km by 1km and extends from surface to 280m depth. Exploration: There is resource upside within the ~6km x 4km Ilimaussaq intrusive. Also, regional and resource development drilling (~11,000m from Jun ‟10) intersected black lujavrite at Zone 2 (6km SE of Kvanefjeld), similar to mineralised rocks of the resource: assays include 131m @ 1.3% TREO, 447 ppm U3O8, 0.34% Zn (Feb ‟11). Modelling suggests lujavrite is present as a continuous layer at depth. Metallurgical and mineralogical tests are at an advanced stage. Current process flow sheet includes alkaline pressure leach (CPL) to remove uranium, recovering 84%, followed by flotation and acid leach to produce REE carbonate (rec. 34%). There is potential to improve recoveries, and to beneficiate the ore prior to the CPL circuit and reduce costs. There is also the possibility of generating a zinc concentrate (ZnS). Fluorine and thorium can both convert to insoluble compounds during CPL. A mineralogical study at UBC (Uni British Columbia) should help refine the processing methodology. Pre-Feasibility Study (updated January 2010): Calls for open cut mining, 10.8mtpa processing, for 43.7kt REO and 3.9kt (8.6mlbs) U3O8. Total capital cost is US$2.31bn with contingency. Operating costs are US$3.83/t mining, US$23.55/t for the CPL uranium circuit (US$29.61/lb at head grade 365ppm U3O8), which includes some of the REO flowsheet, and a further US$13.62/t for the REO circuit (US$3.36/kg at head grade 1.19% REO). Construction is scheduled for 2013 and production for 2015. The study places mid-point NPV (10% disc) at US$2.18bn (pre-tax). Base commodity prices are US$80/lb U3O8 (current LT contract price ~US$75/lb) and US$13/kg REO (could now be +US$30/kg). Break even U3O8 is US$37/lb. A Definitive Feasibility Study (DFS) should start in 2H11. Permitting: In Dec „10, the Greenland Government approved full evaluation of the deposit‟s economic potential, including uranium. This, importantly, includes permission for a DFS. Critical studies will include Environmental and Social Impact Assessments, for which contracts have been awarded (Feb ‟11). Corporate: GGG raised working capital in 2Q10, placing A$6m in equity at $0.34/share, and has organised a further $15m equity facility that can be drawn down when needed over the next 5 years. Timely option conversions, the majority at $0.2/share, could raise $40m in 4Q10-2Q11 ($11.9m to date). Investment Comment: As we first forecast in March 2008, GGG has grown from a <$200m to >$500m company (fully diluted), helped by strong REE and resurgent uranium markets, a softening of Greenland‟s stance on uranium, and exploration success. The mid-point NPV in the 2010 Pre-Feasibility Study of US$2.18bn shows the share price could go further. Potential positive share price catalysts: the DFS with further process improvements; resource expansion; permission to mine; project finance; and a move from 61% to 90% ownership of Kvanefjeld. In view of increasing project confidence, especially following positive exploration results and their potential effect on NPV, we revise our mid-term sp target upwards from A$1.46/share (in Nov „10) to $1.80/share.



Block section showing Kvanefjeld and the Zone 2 exploration target, southern Greenland: there is

considerable potential to extend the current resource (incl .283mlbs U3O8 and 4.9mt of rare earth oxides).

Mineralised lujavrite may form a continuous layer at depth, a theory supported by recent Zone 2 drilling

(185m @ 1.2% TREO).

Development schedule for Kvanefjeld: The updated PFS is expected in 2Q11. As hoped, the Greenland Gov‟t has given permission for a DFS, which should include pilot and demonstration level processing

plants. Production is possible in 2015.



Latin Resources Limited

Capital Profile Production and Financial Forecasts

0.35






Price/Book (x)


*Unlisted until September 2010. Quarters stated on calendar year basis.

Investment Points Company Comment

Cape Lambert largest shareholder.

Reserves and Resources/Mineralised MaterialCode for reporting mineral resources - Australian: (JORC)

Contacts Directors Key Projects

Mr Chris Gale R Brown (Non Exec Chair)

(Managing Director) C Gale (MD)

Tel: +61 8 94850601 D Vilensky (Non Exec)

Perth, WA, Australia M Rowbottam (Non Exec)

www.latinresources.com.au J Moran (CFO)


[email protected]

0.0

%

1.40

0.3

mt mt

Fe Cut Off Fe Fe Equity

0.0

Iron (Fe) Classification Project Ore

2010a* 2011F

Corporate (A$m) 0.49 0.29 na

2012F

Exploration and evaluation (A$m) 0.78 0.90 na 2.86 3.00

YEAR END: June Dec-10a Mar-11F

Exploration/(Expl.+ Corporate) (%) 61 76 na 64 68

Funding duration at current burn (years) na 0.0 0.5

Shares on issue (pr end) (m shares) 132.8 132.8 0.1 132.8 150.3

Drilling - RAB (m) 0 0 0 2,300 9,200

53 80

Drilling - Other/Diamond (m) 0 0 0 2,700 10,800

0.40 0.00

Land holding ('000 ha)* 39 53

Tenement costs ($k per year) - - - -


Cash backing (Ac/share) 1.9 0.1

0.0 0.0


2.6 1.2

0.9 1.4

2.6 na 2.4 5.4

na

3.0

0.0 0.0

0.2 2.1

1.58

2.00 7.40 7.00

na

-

Equity mt %


52 week range (A$/share) 0.14 to

182.7

0.0

0.0

LRSO

Mineral exploration and development company based in

Peru, focused on iron ore (skarn and placer deposits).

Guadalupito Project: magnetite-rich iron sands, also

prospective for rare earths, zircon, tungsten, andalusite

and gold. Close to Chimbote, site of major iron smelter.

Guadalupito area has recently increased sevenfold - LRS

now holds ~50km underexplored strike, potential world

class project. Drilling February 2011.

Portfolio of hard rock iron ore prospects in Ilo near major

port. Drilling 2,700m program from April 2011 on covered

magnetic targets defined by Teck (NYSE:TCK).

Recent listing (Sep '10) but more than 2 years of

exploration work and $3m spent to date.

Cape Lambert (ASX:CFE; mkt cap ~$426m) is largest

shareholder.

Strong experienced management team.

Market capitalisation (undiluted, A$m) 46.5

0.0

Reserves

Number of shares (m) 132.8

Number of options (m) 49.9

Convertible notes (m) 0

Number of securities (fully diluted, m)

Mid Exploration

Exchanges: ASX:LRS

0.0

45.2

Major shareholders: Cape Lambert Iron Ore (17%),

Fidelis Corp (11.0%), Lascelles Holdings (8.6%)

2

1.2

37.4

13.3

LRS.AU A$ 0.35

16 February 2011 The share price of this recent, Peru-focused ASX listing has

surged on news of a sevenfold increase in the scale of its

Guadalupito mineral sands project. Drilling of the iron-rich sands,

and of magnetite skarns near Ilo, is planned for coming weeks.

Iron Ore, Mineral Sands (Fe, REE, Zr, W, Au, Andalusite)

Peru

Status

PeruIlo Norte, Ilo Sur 100%


Latin Resources Limited

0.0 0.0

Resources

Ownership/ JV Target Process

LocationType Route

Project

Fe na Skarn na Mid Expl

Project Option Metal Partner

Guadalupito 100% Fe,REE na Sands na Mid Expl Peru

Pampa de Pongo 100% Fe (Cu,Au) na IOCG na Early Expl Peru

Early Expl PeruFerro Tacna 100% Fe (Cu,Au) na IOCG na

Toray 100% Fe na Skarn na Early Expl Peru

Coribeni 100% Fe na Skarn na Early Expl Peru

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

Apr-

10

May-

10

Jun-1

0

Jun-1

0

Jul-10

Aug-1

0

Aug-1

0

Sep-1

0

Oct-10

Nov-

10

Dec-

10

Jan-1

1

Feb

-11

Sh

are

Pri

ce

($/S

hare

)

LRS - Latin Resource Limited

Source: Bloomberg

Overview: Latin Resource listed on the ASX in September 2010, via an IPO at A$0.20/share to raise $6m, including $1m in oversubscriptions. It is focused on iron ore exploration and development in Peru (holding +500km

2), with an interest in iron sands and deposits of rare, minor and precious metals.

Strategy: Peru is a traditional producer of precious and base metals, and is now the focus of considerable iron ore exploration, including +$1Bn, +1Bn tonne developments by each of Shougang and Nianjinzhao (China) in the Pampa de Pongo area. Latin‟s iron ore assets are close to infrastructure, including road and port. Exploration in 2011 should help to identify a flagship project, where Latin may then establish a JORC-qualifying resource and commence mineral production. Guadalupito Project (mineral sands): 200km N of Lima, 20km S of the port town of Chimbote, which has Peru‟s largest iron smelter, and 5km from the Pan American Highway. The targets are beach placer deposits along the current shoreline, extending up to 5km inland. The project area was recently expanded sevenfold, from 22km

2 (option) to 163km

2, significantly increasing contiguous strike length to

40-50km (for a purchase price of US$20m over 10 years with $1.6m in 2011-12). Of this area, 60km2 is

thought to be highly prospective. Potentially economic minerals/metals include low-Ti magnetite and other Fe-Ti-V oxides, monazite (which contains light rare earths), andalusite (an aluminosilicate used in steelmaking), zircon, tungsten minerals and gold. Peru has little or no history of sand mining; sporadic work has been done in the area since the 1960s, focused on gold exploration. LRS has dug four test pits: average grade of these samples is 16.5% Fe, 146ppb Au, 1.16% Ti, 79ppm W, 99ppm Zr and 117ppm La. Mineral concentrates from gravity and magnetic separation assayed 63.5%-64% Fe: a typical sample (11.5% mass recovery) has assayed 63.5% Fe, 4.9% TiO2, 0.4% V2O5, 1.1% Al2O3, 0.1% P and 2.5% SiO2. Further assays are pending. Gold could be an important byproduct, with grades 3ppb to 278ppb, and 69% recovered to the -150μm fraction. These numbers are competitive with global iron sands projects. Sand mines in general have low operating costs (opex) due to simple extraction (free dig) and processing. An advantage of Guadalupito is that its placers are geologically recent, so the sediments are clean and potentially unaffected by slimes or oxide grain coatings. Unlike many areas of Peru, where landowners can make development difficult, the tenements are controlled by the Government. Drilling is planned for February 2011, with results expected in March. Ilo Project (iron ore): Divided into Ilo Norte and Ilo Sur tenements (103km

2 and 72km

2), 45km N and

40km S (respectively) of the Port at Ilo in southern Peru (800km S of Lima). Both areas have iron ore drill targets, after airborne magnetic surveys by Latin‟s partner Teck (8200 line km costing $2.5m; Teck can earn 50c/t royalty on Fe production and a 40% free carry on copper-gold discoveries). The current focus is on Ilo Norte, where Latin has conducted ground magnetic surveys over five areas (Mariela, and Essendon 2, 4, 5, 6). The targets are skarns, measuring 600m x 400m to 100-300m depth, and assaying up to 34.6% Fe (with veins to 56.2%). A particular focus will be Mariela, which is a high amplitude, covered magnetic anomaly. Drilling (2700m) at Ilo Norte and Sur is planned for April 2011, with results expected in May. Investment comment: The recent acquisition at Guadalupito has transformed it from an interesting prospect to a potentially world class mineral sands project. This potential is being recognised, as shown by recent share price gains. Latin Resources is competitively capitalised relative to other ASX-listed iron ore explorers focused on South America, e.g. Strike (Peru, A$62m) and Centaurus (Brazil, A$101m). Such explorers have a strong “tradition” of adding value via resource definition and development. As a recent listing, Latin is only at the beginning of this process, so share price gains can be expected if exploration in 2011 is successful.



Guadalupito Project: a recent transaction has expanded Latin‟s holding to 16,268ha and extended strike to ~50km, creating in the process a potentially world class magnetite and mineral sands project. Other target

commodities are monazite (rare earths), zircon, tungsten and gold.

Near-term schedule: drilling is planned for 1Q11, with results expected in March-May. Work in the Ilo area (magnetite skarns) can commence after site and road preparation is completed. Latin‟s projects are close

to major infrastructure.



Lynas Corporation Limited

2.38



Major shareholders:




Price/Book (x)

Listed company options: Net Asset Backing (Ac/share)


Contacts Directors

Mr. Nicholas Curtis

Executive Chairman

Tel: 61 (2) 8259 7100

Sydney, NSW, Australia

Associate: Greg Burns

Flotation

Cut Off

164

3.5

14.4 2.5

Process

0.0

1,160


19.2Swan**

Classification

94.9

Kt%

Cash Backing (Ac/share)

Malawi

17.1

8.4

[email protected]

Indicated & Inferred 6.32100%

Carb'tite

Ownership/

Option

100%

Carb'titenone

none

Central Lanthanide Measured

ppm

0.0

TLnO

LYC has a stong competitive position in rare earths due to its

world class resource, integrated mine to market approach, first

mover advantage in offering new supply from a source outside

China, and its pricing and cost advantages.

A$ 1.93


YEAR END: June Dec-10a

na

1,680

1,084

2,700

Y2O3Ore REO

Mt REO %

1.5

0

0

Exploration and Evaluation (A$m) 0 1

LYC.AU

85

Rare Earths

Australia (WA), Malaysia

Project Construction

Exchanges: ASX:LYC, ADR:LYSDY

Capital Profile


Lynas Corporation Ltd

to

16 February 2011

Share price (A$)

Number of shares (m) 1663


1.93

0.35Mar-11F 2011F

0.00

3208.6

1748

12

Rare Earth Production (koz) 0.0 0.0

0

2010a

Market capitalisation (undiluted) (A$m) 4.1

Convertible notes (m) 4

Cash Costs (US$/kg)

16.3

100% rare earths focus in two geographical regions (WA

& Malawi), with a mine to customer business model.

By late 2011 will offer the first new source of REO

supply outside of China.

Mount Weld (WA, 100% LYC) is the richest known

deposit of REE in the world at 17.5mt @ 8.1% REO.

Commissioning of the 33ktpa concentration plant to start

in Mar'11.

LAMP (Malaysia, 100% LYC) under construction with

Phase 1 production of 11ktpa of separated REO due to

start-up during 3Q11.

Agreement with Sojitz to provide US$250m for Phase 2

expansion that will double the size of both operations.

Final commitment expected Apr '11 for 2012 start-up.

REE

842

Fully diluted (m)

3208.6

21.9

Investment Points

5.8

No

146.5

Morgan Stanley (13%), JP Morgan Chase (5%), Capital Group (4.7%)

0.0

Status

Resources

Kangankunde, Malawi

Project

Key Projects

8.1

Reserves

ProjectRare Earth Elements


10.0

37.7

100%Indicated

Inferred

Route

0.0

Gravity

Commissioning

Mid Expl.

Location

0.0

2.5

2.5

1,416

2,450

REO

Duncan

%

Duncan 2.5

na

1,523

475

107

Company Comment

1.1

Partner

100%

0.0

N Curtis (Exec Chairman)

W Forde (Non Exec)

60.4

* Polymetallic deposit.

Project

** Phosphate deposit

Target

Type

JV

Metal

REE

Mount Weld

100%


J Klein (Non Exec)

www.lynascorp.com Z Switkowski (Non Exec)

D Davidson (Non Exec)

Kangankunde

Crown* Indicated & Inferred

Aus (WA)

Total Mount Weld

20.02

17.49

2.53

Central Lanthanide

5.5

1.3

3.97

100% 4.2

Indicated & Inferred 100% 4.1

7.9

5.22013.65

3.9

Measured

0.0

100%

14.35113.55100%

2012F

0.0 3.20.0

2

59.6

0

820

0

60.0

3.7 6.3

0

2

0.8

8.8

35.0 33.4

540

0.0

8.5


22.4

Exploration/(Expl.+ Corporate) (%) 1.1

(JORC)

Equity

0

2,000

271.6 146.5

1,662

Drilling - RAB (m) 0

Corporate (A$m) 11.3 23.5

1,662 1,662

0

2,0000 5,000

2 2

Capital Raisings (A$m) 0.0 431.5

1,662 1,655

Drilling - Other/Diamond (m) 0


2

Funding from JV partners (A$m) 0 0 0

405.2 56.8

0

Land holding ('000 ha)* 2

0

5.7

37.4 31.8

24.5 3.4

0

0.5

1

1.5

2

2.5

Feb

-10

Mar-

10

Apr-

10

May-

10

Jul-10

Aug-1

0

Sep-1

0

Oct-10

Nov-

10

Dec-

10

Jan-1

1

Sh

are

Pri

ce

($/S

hare

)

LYC - Lynas Corporation Ltd

Source: Bloomberg

Overview: LYC is a rare earth element (REE) exploration company, poised to become a producer during 2011. Association with the Mount Weld REE project started in Oct‟01 when Anaconda Nickel sold its interest for ~$5m. Funding packages secured in FY08 were withdrawn during the GFC and led to the suspension of construction in Feb‟09. A $450m equity raising in Nov‟09 enabled development to restart. During this period to-date, prices for Mt Weld‟s RE oxide (REO) blend have climbed from US$5/kg to US$70/kg. Mount Weld is the richest known REE deposit in the world at 17.5mt @ 8.1% REO. Located near Laverton (WA) it underpins LYC‟s strategy to create a fully integrated REE supplier. The current mine plan is based upon the Central Lanthanide deposit. The first (contract) mining campaign is complete, with 773kt of ore stockpiled. The 33ktpa concentration plant is due to be commissioned in Mar‟11. Concentrate will be containerised, trucked 1,000km to Fremantle and shipped to the Lynas Advanced Materials Plant (LAMP) in Kuantan, near Pahang, Malaysia. LAMP incorporates the latest technology and is world scaled. Initial capacity is 11ktpa of separated REO, with expansion to 22ktpa. First feed to kiln is scheduled for 3Q11. In Nov‟10, agreement was reached with Sojitz Corp that could accelerate expansion plans at the concentration plant (to 66ktpa) and LAMP (to 22ktpa). The key terms include Sojitz securing US$250m in funding to cover expansion costs in return for ~8,500tpa allocation of REO for the Japanese market. Together with six other offtake agreements already signed, approximately 70% of LAMP‟s 22ktpa capacity has been allocated. If implemented, the LAMP expansion could be committed to by Apr‟11. Malawi: LYC has secured Govt of Malawi approval to acquire the fully permitted Kangankunde REE resource. This US$4m acquisition was announced in Sep‟07. The deposit has an inferred resource of 2.5mt @ 4.24% REO. This acquisition differentiates LYC from most REE miners as having two significant ore resources in different geographic regions. Investment Comment: LYC‟s share price has doubled in the past three months due to high REE prices and reflecting solid progress towards development milestones. Our NAV for LYC is $2.61/share (assuming US$35/kg long term price, A$/US$0.82). Derisking issues like successful commissioning of operations and the satisfactory loan negotiations with Sojitz should energise the share price.



LYC‟s Mt Weld project economics are sensitive to the REO price. Using our base case of

US$35/kg REO long term, the NAV is A$2.68/share, or A$2.61 diluted for options.

Sensitivity Sensitivity

LONG TERM RARE EARTH PRICE US$25/kg US$50/kg

AUUS EXCHANGE RATE 0.82 0.82 0.82

A$m A$m

MT WELD BASE CASE NPV @ 12% 1,405 4,883

+ Cash 272 272

+ Exploration 28 28

+ Tax Losses 46 46

- Corporate 424 424

LYC NET ASSET VALUE 1326 4804

LYC NET ASSET VALUE PER SHARE :A$/share 0.80 2.90

LYC NET ASSET VALUE DILUTED :A$/share dil 0.81 2.81

RESOURCE VALUATION 2.5% REO CUTOFF :US$/kg REO 0.83 2.84

Sensitivity analysis assumes flat nominal REE price for life of project.

RESOURCE ESTIMATES

Rare Earth Resource Tonnes Grade REO

Cutoff Mt % REO Kt

MEASURED, INDICATED & INFERRED Lanthanide 2.5% 9.9 10.7 1,057

MEASURED, INDICATED & INFERRED Duncan 2.5% 7.6 4.8 366

TOTAL 2.5% 17.5 8.1 1,416

MINING METHOD OPEN PIT

1. Contract truck and excavator operation. First campaign finished with 773kt stockpiled.

PROCESS METHOD CONCENTRATION PLANT (WA)

1. Conventional crushing, grinding, floatation & filter press process.

2. Initial capacity is 121ktpa ore to produce 33ktpa REE concentration @ 40% REO.

PROCESSING PLANT (MALAYSIA)

1. Rotary kiln, leaching, purification process.

2. Initial capacity is 11,000tpa separated rare earth products.

BASE CASE ASSUMPTIONS

Phase 1 Phase 2

PRODUCTION RATE Concentration 33,000tpa 66,000tpa

Processing 11,000tpa 22,000tpa

CAPITAL COSTS :A$m 555 300

SUSTAINING CAPEX :A$m 22 32

OPERATING COSTS :US$/kg 20.00 9.00

TAX :% 12 year tax exemption & $80m in tax losses.

COMMISSIONING DATES Concentration Q1 2011 Q2 2012

Processing Q4 2011 Q1 2013

4,521

272

28

MT WELD RARE EARTH PROJECT KEY ASSUMPTIONS

46

2.61

2.68

424

2.63

LYNAS CORPORATION VALUATION

Base Case

US$35/kg

4442

A$m



Orocobre Limited

4.05






Price/Book (x)

Listed company options: Net asset backing (A¢/share)

Quarters stated on calendar year basis.

equivalent to:

Reserves

Resources


Contact Directors

Mr Richard Seville

(Managing Director)

Tel: +61 7 3871 3985

Milton, QLD, Australia

Salar de Cauchari

Salar de Guayatoyoc


Associate: J-F Bertincourt

Salar de Olaroz to be announced 1Q11

Early ExplPump

Salar de Olaroz 100% Pump

Project

Location

ArgentinaBrineLi, K

100% 350

Project

Ownership/ Target

800

Partner

Salar de Olaroz

Key Projects

Metal

Argentina

Brine

Salinas Grandes 85% Li, K

Argentina

85%

85%

Brine

na PumpBrine

Reserves and Resources/Mineralised MaterialCode for reporting mineral resources - Australian: (JORC)

J Gibson (Non Exec)

N Stuart (Non Exec)

39.812.1

StatusType

JV

6,600Inferred

300 300

-

35.00

million kL

Volume

0.00 00.00


2012F

Exploration and evaluation (A$m)

79

Dec-10F

88

101.9

2.10

Mar-11F

5.16 5.00

4.380.70 2.801.35

Orocobre Limited

The Salar de Olaroz deposit has the characteristics to become the

world's next large scale, low cost lithium-potash brine operation:

attractive chemistry, a JORC compliant resource, proximity of

infrastructure and the financial support of Toyota Tsusho.

2011F

15.55 16.0019.00

A$ 3.25

2010a

Corporate (A$m)

0

Capital Profile


52 week range (A$/share) to

1.29

Share price (A$)

Number of shares (m) 95.9

0

0

Lithium, Potash, Boron

Argentina

Definitive Feasibility Study

Exchanges: ASX:ORE, TSX:ORL


YEAR END: June3.25

1.50

91.2

35.00

88Exploration/(Expl.+ Corporate) (%)

- -

300

0



0

0.6

87

0

1.9

91.2 101.9

78

7.0

0

7.8


Drilling - RAB (m)

0.4

101.9

00

1.1

0

0

5

Fully diluted (m)

311.5

www.orocobre.com.au

none

4.4

16 February 2011

311.5

ORE.AU





97.1

13.2

HSBC - GSCO ECA (5%), Fairground (5%)

0.0


39.8

Lithium carbonate demand of 110ktpa could increase

threefold in 10 years according to market

commentators, driven by demand for Electric Vehicle

batteries.

Orocobre is a near term producer of lithium carbonate

and potash with quality assets in Argentina.

Salar de Olaroz deposit (100% owned or with rights to

purchase 100%) is set to be one of the world's low cost

lithium-potash brine operation.

Production is expected to be 15,000tpa of lithium

carbonate and 36,000tpa of potash from 2012. DFS

expected 1Q11 with construction starting soon after.

Development and construction costs are fully funded

through an agreement with Toyota Tsusho.

Based on a flat lithium carbonate price of $6,000/t and

other conceptual operating parameters assumptions,

our project valuation is about $3.50/share.

Investment Points

Cash backing (A¢/share)

Project

67.2

39.0

Lithium / Potash Classification Li2CO3

41.3

g/kL

69.0

-

g/kL

Li

13.2

7.9

Company Comment

Argentina

DFS

25.0

mt

4.4

68.3

1.5

KCl

Pump Mid Exploration

Early Expl

23.42

300

04.73

41.3

300

-

Major shareholders: Lithium Investors LLC (9%), CDS & Co (8%), Richard Seville (5%)

Route

J Calaway (Chairman)

R Seville (MD)

12.1

Process

Equity

F Nicholson (Non Exec) na

C Pratt (Non Exec)

F Oris de Roa (Non Exec)

[email protected]

K

Li, K

0.0

K

0.18

Option

0.0

7.7

0.00

24.6

mt

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Feb

-10

Mar-

10

Apr-

10

Jun-1

0

Jul-10

Aug-1

0

Sep-1

0

Oct-10

Nov-

10

Dec-

10

Jan-1

1

Sh

are

Pri

ce

($/S

hare

)

ORE - Orocobre Limited

Source: Commsec

Overview: Orocobre is the leading lithium-potash resource developer in the prolific salt lake region of Argentina (Puna region). The Salar de Olaroz flagship project has very attractive brine chemistry, an established JORC compliant resource readily available infrastructure and expected project financing through an agreement with Toyota Tsusho Corp. (22% owned by Toyota Motor Corporation and battery supplier of Toyota, Panasonic and Sanyo). Salar de Olaroz: displays some desirable characteristics, i.e. high lithium (800g/kL) and potassium (6,600g/kL) grades, low magnesium to lithium ratio (2.8x) and high evaporation rates. It is also well served by infrastructure with access by sealed road and nearby high voltage electricity, gas pipelines and rail. The current inferred resource is equivalent to 1.5 million tonnes of lithium carbonate and 4.4 million tonnes of potash and has substantial upside potential at depth. The DFS is undertaken by SKM engineers, who are well experienced in lithium brine operations. Expected in 1Q11, it includes a resource upgrade in terms of both quantity and confidence level and follows the best industry standards aiming at bankable status. The processing flow sheet has been developed and tested over the last 18 months resulting in pilot plant production of lithium carbonate on site. It typically follows the established method used at the Silver Peak mine since the 1960s in Nevada, where lower grade brines are pumped. In the first stage, production starting in 2012 will be at a rate of 15,000tpa of lithium carbonate and 36,000tpa of potash. Salinas Grandes: is an exploration property where pit sampling has reported some of the highest brine grades in Argentina (>2,000mg/L Li over ~60km

2 area, >20,000mg/L K over ~40km

2 and over 500mg/L

boron over 50km2, while the Mg/Li ratio remains low at 2.6. If those metrics (similar to the Atacama brines)

are confirmed, the area could become one of the lowest cost brine operations in the world. Due to its proximity, the project has also the potential to be partly integrated in the Olaroz project. An initial drilling program (1,200m) started early Nov „10 with the objective of estimating an inferred resource in 1Q11. Off-take agreement: a marketing and sales plan is to be developed between Orocobre and Toyota Tsusho Corp. to maximize the value of the project with Toyota Tsusho having the opportunity to negotiate an off-take agreement with Orocobre as part of the Joint Venture. Corporate: Development and construction costs should be fully funded through the purchase by Toyota Tsusho Corp. of a 25% interest in ORE based on the DFS NPV and the provision of a low interest debt facility guaranteed by JOGMEC for at least 60% of the project capital expenditure. The agreement is to be finalized once the DFS is completed. Investment Comment: Orocobre‟s Salar de Olaroz project is 100% owned, well advanced with secure funding and expected healthy profit margins over an extended mine life. Its share price is leveraged to the price of lithium carbonate. Lithium prices are forecast to increase due to advances in long life batteries and electronics, and strong environmental policies in China and the US. Based on a lithium carbonate of US$6,000/t, capex of US$100m and opex of US$1,700/t lithium (after by-product credits), Orocobre‟s NPV (8% real, post-tax, 75% project equity, exchange rate of 0.98) is estimated at A$364m with IRR 42% giving a value of about $3.50/share. Besides the DFS results, the maiden JORC resource at Salinas Grandes and an increase in Li prices could provide further upside in the share price.



Lithium supply: more than 70% of the world‟s lithium carbonate comes from brines in the “Lithium Triangle”. The red dots represent smaller brine deposits.

Source: Orocobre, Roskill

Orocobre valuation based on operating Salar de Olaroz project

Unit Equity

Long term lithium carbonate price US$/t 4,000 5,000 6,000 7,000 8,000

AUD/USD exchange rate x 0.98 0.98 0.98 0.98 0.98

Salar de Olaroz NPV @ 8% real US$m 75% 157 258 357 457 557

Salar de Olaroz NPV @ 8% real A$m 75% 160 263 364 466 568

NPV/share A$/share 1.57 2.53 3.50 4.48 5.47

75% JV share after finalisation of agreement with Toyota Tsusho Corporation.

Key Assumptions*

Unit Notes

MINING METHOD Brine pumping

PROCESS METHOD Evaporation, reaction with sodium carbonate, potash produced as a by-product

PRODUCTION RATE tpa 2012 5,000 Ramping up in 2012

2013 15,000 Conceptual study

2016 25,000 Assumed increase due to Salinas Grandes coming on stream or other

CAPITAL COSTS US$m 100 Plus US$25m in 2015 for increased capacity

OPERATING COSTS US$/t LC 1,700 After by-product credits

TAX % 30 Argentina

ROYALTY % 1.5

MINE LIFE years 22 22 years modelled or 500,000 lithium carbonate produced vs. 1.5 mt resource

COMMISSION DATE 2012 5,000t produced that year

* These figures are conceptual in nature. BFS results will provide adequate production parameters.

Sensitivity



Market Update: Lithium

Investment Comment

Increasing intensity of lithium use could require new capacity beyond

2014, though a rush of new producers could bring oversupply – at which

stage, successful suppliers will be those that can provide consistent

volumes at competitive price. In the short-medium term, resources are

ample but could be slow to bring online, due to financial and technical

hurdles faced by some projects. There is an opportunity for developers,

with projects that can be advanced quickly, to gain market share.

Pricing

Lithium carbonate is currently at US$5,070-US$5,291/t. The CAGR of Li

carbonate 2005-2009 was 6.2%, with 2.0% forecast for 2010-2014

(Source: ASX:GXY). By 2015, nominal prices are expected to approach

those seen before the GFC (2007, US$6,731/t; 2015, US$6,757/t).

Chinese lithium carbonate export prices in US$/t 2000-2009,

plus forecast 2010-2015.

Source: Galaxy Resources

Market: Supply and Demand

The main producers of lithium in 2010 were Chile (brines, 8.8kt Li),

Australia (pegmatites, 8.5kt), China (4.5kt) and Argentina (2.9kt), with

a total 25.3kt Li, up from 18.8kt in 2009 (Source: USGS estimates). Li

converts to Li carbonate at ~1:5 by mass. Global reserves are thought

to be 9.9Mt Li, of which 76% are in Chile.

World consumption of Li by end use (t Li Carbonate; Roskill)

Lithium producers,

current or near-term,

will be well placed to

take advantage of

forecast increases in Li

price and demand.

Lithium carbonate

price, large contracts

(cont. USA) is

US$5,070-US$5,291/t.

CAGR of 2% is

forecast for 2010-

2014.

Li is produced from

brines and pegmatites,

with 25.3kt Li supplied

in 2010.

Other than batteries,

uses include ceramics

and glass, and

lubricants.



Li carbonate consumption in 2008 was ~120kt but fell 15% in 2009 due

to the GFC. It is expected to recover by +11% to ~113ktpa in 2010 and

be ~148kt by 2013 (+31.5% from 2010). [Source: USGS, Roskill]. The

three main uses of lithium by industry sector in 2010 were ceramics and

glass (31%), batteries (23%) and greases (9%-10%). Sales volumes for

major lithium producers were reported to be up +30% by mid-2010.

The USGS (US Geological Survey) publishes an annual commodity

summary about Li. Important points from the 2011 edition:

Batteries, especially rechargeables, are the market for lithium

compounds with the largest growth potential.

Automobile companies are developing lithium batteries for

electric vehicles, although most such vehicles currently use other types.

Asian technology companies continue to invest in domestic and

overseas lithium operations, with a focus more on security of supply

than cost.

Li batteries are gaining favour due to low heavy metal content (e.g. Pb,

Cd, Hg), long life, fast recharge and high power/weight ratios compared

to traditional Pb acid, NiCad and Ni hydride rechargeables.

Galaxy Resources (after Market Avenue) reported that Li-ion battery

output increased 29% between 2007 and 2008, with sales of

US$8.03Bn. The market shrank by ~2% in 2009 but pre-GFC growth

rates are expected to return going forward, in line with global demand

for electric vehicles, especially in China.

Current and forecast total lithium carbonate demand versus

productive capacity, 2008-2020.

Source: Roskill

Elemental Facts

Lithium is the lightest solid element, with atomic number 3. It is highly

reactive, with a high electrochemical potential and specific heat

capacity. These attributes make it especially useful for making batteries

and ceramics/glass. The most commonly traded forms of lithium are

mineral concentrates and refined lithium carbonate. Lithium is extracted

from pegmatites (igneous), brines (salar lakes) and hectorite clays.


Consumption of

~113kt is expected in

2010, for annual

growth of +11%.

The main growth area

for Li is battery

manufacture,

especially for electric

and hybrid vehicles.

The US has paid

US$940M to support

its domestic lithium

supply chain.

Li ion battery

manufacture increased

29% in 2007-2008,

decrease by 2% in

2009 and should

increase from 2010.

This rate of growth

could require new Li

carbonate capacity

from 2014 onwards.

Lithium‟s low mass

and high electro-

chemical potential

make it useful for

battery manufacture.



Market Update: Niobium

Investment Comment

Industry forecasts are for ferroniobium (FeNb) consumption growth of

~15% per annum to 2014. New niobium producers have a chance to

meet this increase in demand and find secure revenue in the form of

long-term supply contracts. Prices should remain stable (RCR long term

US$39/kg in FeNb) so long as price-setter CBMM does not feel its

dominant market position to be threatened, which is unlikely, as most

advanced Nb projects are of a much smaller scale than Araxa.

Pricing

All measures show that Nb prices have risen in the past several years,

and were quite resistant to the GFC, likely because Nb is only a small

portion of steel production costs, and the price is set by the main

producer, CBMM.

The current price of Nb is US$43.50-$44/kg (contained in FeNb, EU

price, Metal Pages). The 2009 low, of US$34/kg, was reached in March

2009. This was ~25% below the previous high (in March 2008), which

compares favourably to declines in base metal prices of ~40% or more

over the same period. RCR‟s long-term forecast for modelling purposes

is US$39/kg Nb in FeNb, based on the apparent stability of Nb prices.

Ferroniobium import prices, Chinese yuan (66% Nb from Brazil)


In 2010, 74% of niobium in the US was used for steel production

(followed by superalloys with 26%). Over the period 2002-2009, the

CAGR of global Nb production (11.2%) was more than 2.5x the rate of

growth in steel production (4.2%; USGS data). This demonstrates

increasing intensity of Nb use over time.

With 15% pa growth forecast, and a steady price, the outlook for Nb is strong. Prices were resilient in the face of the Global Financial Crisis … … assisted by the refusal of CBMM to lower its price, which the steel mills continued to pay. The Nb market has shown consistent long-term growth: 11.2% per annum between 2002 and 2009.



FeNb consumption versus crude steel production

Prior to the GFC, global production of FeNb was ~60kt (contained Nb).

Media reports in mid 2010 from the leading producer, CBMM of Brazil,

indicated that volumes had recovered to ~80% of these levels and that

the market could be fully recovered by early 2011. Brazil is by far the

largest producer of Nb, with 93.5% of world production (Source: USGS).

China is a major force in consumption of the metal: it currently

represents ~35% of FeNb use and >50% of the growth in this market.

This gap could close over the next 20 years due to modernisation and

increasing sophistication of steel production in China and other

developing markets; over this period, the percentage of steel products

using niobium could increase from 10-12% presently to more than 20%

(Sources: GBE and Roskill Information Services; RCR).

In terms of companies, there are currently three major producers of

ferro-niobium: industry leader CBMM (Araxa deposit, Brazil), and two

„second tier‟ producers, Anglo American (Catalao mine, Brazil) and

IAMGOLD (Niobec mine, Canada). CBMM currently holds 76% market

share, with 6-8% each for the others. The Araxa reserve grade at 2.5%

Nb2O5 is orders of magnitude higher than its competitors‟ (1.2%

Catalao, 0.6% Niobec) and at 500mt it is more than ten times as large

as the other two put together. In other words, CBMM dominates global

Nb production. In terms of new projects coming online, only Mabounié in

Gabon (Eramet) could threaten any of CBMM‟s market share (resource

350mt @ 1% Nb2O5) but the project must overcome poor recoveries and

high capex before it can enter production.

Elemental Facts

Approximately 90% of Nb is consumed as FeNb by the steel industry, in

high-strength low alloy (HSLA) steel products for construction projects,

oil and gas pipelines and the automobile and shipping industries.

Niobium is not an exchange traded commodity: 95% of FeNb is sold

under individually negotiated contracts based on a benchmark price set

by the main producer, CBMM (Brazil). Analyst: Dr Trent Allen

Ferroniobium producer Niobec forecast 15% compound annual growth rate (CAGR) for FeNb consumption in 2010. China consumes 35% of FeNb but is the driving force behind increasing intensity of usage. World Nb production is dominated by Brazil (estimated 92% in 2010) and specifically by one producer, CBMM, which sets the FeNb price. Niobium is used primarily by the steel industry. Prices are decided by negotiation of individual contracts.



Market update: Rare Earth Elements

Investment Comment

RCR recently attended the Sixth International Rare Earths Conference,

organised by Roskill and Metal Events, to gain a clearer picture of this

complex sector. Industry forecasts are for 6%-10% annual growth in

total REE demand to 2015. Given China‟s current dominance of REE

production (~95%), there is an opportunity for new producers to take

advantage of high prices and demand by ensuring security of supply to

non-Chinese buyers, while China increasingly seeks to retain and

domestically add value to its REE resources. Rare earth projects, due to

their chemical complexity, can take up to 20 years to develop, so only

advanced or geochemically simple projects will be able to come online in

the near term.

Pricing

Recovery from the GFC, combined with China‟s decision to cut REO

quotas in 2H10 and 1H11, has driven some prices to historic highs. This

includes the LREE, which are more common and less valuable the HREE.

For example, the biggest gain has been cerium (Ce) over 12 months, up

1611%. These prices will only be sustainable in the medium and long

term to the extent they are driven by supply-demand fundamentals.

This could favour the MREE (middle REE) and HREE, which in the past

three months have shown significant price gains due to expectations of

constrained supply, e.g. dysprosium +39%.

Changes in reported REO prices over 3 and 12 months

Rare Earth Oxide

Current

price

US$/kg

16-Nov-10 16-Feb-103mth %

change

12mth %

change

Lanthanum 73.0 49.0 5.5 49 1227

Cerium 71.0 49.0 4.2 45 1611

Praseodymium 114.5 76.5 25.8 50 345

Neodymium 124.5 73.5 26.8 69 365

Samarium 61.0 34.5 4.5 77 1256

Europium 650.0 630.0 480.0 3 35

Gadolinium 73.5 44.5 7.7 65 861

Dysprosium 410.0 295.0 132.5 39 209

Terbium 630.0 605.0 350.0 4 80

Yttrium 92.5 50.5 10.3 83 802

Light Rare Earths

Heavy Rare Earths

USD FOB ex-China per kg, 99.999% purity; prices are bid-offer mid points. Source: Metal Pages, 16 Feb 2011

Source: Metal Pages, RCR


World REO production in 2009 and 2010 (USGS estimated) was 133kt

and 134kt respectively, of which 130kt (97%) came from China. It also

estimates that China has 50% of the total global REO economic reserves

of 110mt (a 10% increase on 2009 global reserves), followed by the CIS

(17%) and USA (12%).

The main importer of REE metals and compounds is Japan, with a

combined 34.3kt in 2008, while China exported 55kt (BGS). It is clear

that the majority of rare earths are both mined and consumed in China.

BCC Research forecast 7-9% compound annual growth rate in global

REE demand over 5 years from 2009, which equates to a +60kt increase

Companies with

advanced projects are

well positioned to gain

from the rare earths

boom, as China

curtails exports to

conserve domestic

supplies.

Some REO prices are

at 10 year highs.

The average,

unweighted 12 month

price increase for the

REO shown in this

table is 679%. The

most valuable

elements (Dy, Eu and

Tb) each have 25%

export tariffs in China;

the others 15%.

China dominates the

global REE trade, with

97% of the 134kt

production in 2010.

Demand for REE is

forecast to grow at 7-

9% per annum over

the five years to 2014.



in demand, against a supply increase of +40kt. The IMCOA forecasts 6-

10% growth from 2010-2015. Looking forward to 2015, actual

consumption is forecast to be 180-185kt TREO (total rare earth oxides)

by both BCC and the IMCOA. However, more than this will need to be

produced, as the mined REO ratios do not match the spectrum of

demand, creating pinch points for some elements (e.g. dysprosium for

magnets) and excess of others (e.g. the more common cerium).

Accordingly, it is forecast that supply will have to be in the range of 200-

210kt REO. Recently (August 2010) the China Society of Rare Earths

stated China could supply 160-170kt REO in 2015; sufficient for its own

needs (120kt) plus some exports, but 30-50kt short of global demand.

Rare earths, forecast supply and demand curves

Source: IMCOA, Roskill

China‟s REO export quota for 2H10 was 7,976t, a 64.2% decrease from

the 22,282t REO allocated in 1H10 to both Chinese and foreign-owned

companies (16,304t to Chinese-owned companies) and a 72% drop from

the 28,417t allocated in 2H09. This brought the export quota for 2010

down to 30,258t REO, -40% from the 2009 quota. The quota for 1H11 is

even lower, at 14,508t, a 35% reduction from 1H10. China‟s reasoning

is that it wants to conserve REE resources and add value to them in

China (this includes foreign-owned processing facilities). It also plans to

reduce the inefficiency, environmental damage and REE smuggling that

are a consequence of having numerous small-scale unregulated

producers (e.g. the REE clay mines of southern China). Industry sources

report that by 2015, China's domestic rare earth separation processing

enterprises are expected to be reduced to 20 from the current +100.

Elemental Facts

The rare earth elements (REE) are the 15 lanthanoid elements (atomic

numbers 57 to 71). They are divided into the light rare earths (LREE,

lanthanum to samarium) and heavy rare earths (HREE, europium to

lutetium). Many deposits are related to alkaline igneous rocks or

weathered materials such as laterites. REE are used in high growth

sectors: energy, electronics, and the environment, e.g. they are a

component in some rechargeable batteries and the magnets in electric

motors. REE are also used as phosphors in energy-efficient light globes,

and in the screens of LCD displays. In 2010, according to the IMCOA,

uses of REO (rare earth oxides) will include magnets (21%), catalysts

(20%), alloys (18%), polishing (15%) and glass (9%). Analyst: Dr Trent Allen

This could create

severe undersupply of

some elements,

especially the scarce

middle and heavy rare

earths.

This graph shows the

looming supply issues

for the REE market.

Demand growth must

be met by production

outside China.

China dramatically cut

export quotas for

2H10 and 1H11.

China is seeking to

rationalise its REE

sector.

The main REE minerals

are bastnäsite and

monazite

REE have numerous

high growth

applications.



Market Update: Tantalum

Investment Comment

A tantalum supply shortfall has lifted prices and is expected to last until

at least 2013, although this could be alleviated earlier with the planned

recommissioning of Australia‟s Wodinga Mine. Producers will be expected

to provide a supply of ethically produced tantalum. RCR‟s long-term

price forecast, based on the assumptions of Ta industry participants

(e.g. ASX:GBE) is US$143/kg (US$65/lb) Ta2O5.

Pricing

The current price of Ta as tantalite (30% Ta2O5) is US$117.50/lb Ta2O5

(Metal Pages). This is (on average) 208% higher than the same date in

2010 and 239% higher than the 2009 low (August, 2009; US$33.00-

36.00/lb Ta2O5), which was the lowest price since March 2007

(US$32.22-34.33/lb Ta2O5).

The increase is recent and is due largely to anticipation of a supply

shortage as the market is starved of DRC tantalite. This shortage is

expected to last until at least 2013 (Source: Gippsland Minerals).

Tantalite basis 30% Ta2O5


Before the GFC, global Ta2O5 consumption was estimated to be 6mlbs

per annum. Industry commentators suggest that the market is growing

at ~ 7% per annum (Sources: GBE, Gippsland Ltd).

Leading commercial consumers are HC Starck GmbH ( part of German

conglomerate Bayer AG), as well as Cabot Corporation (USA), Ulba OJSC

(Kazakhstan), Mitsui-Kinzoku (Japan) and Ningxia Non-Ferrous Metals

(China) plus various other Chinese groups.

The supply deficit in Ta markets could last to 2013.

Tantalum prices are commonly reported as lbs of its main ore mineral, tantalite. Ta prices have soared 208% in the past year, partly due to international measures taken against the DRC, which supplies “conflict tantalum”. Ta consumers are manufacturers of advanced technology, in Europe, Asia and the USA.



According to the USGS, world mine production of Ta metal in 2009 and

2010 was 665-670t. From 2005-2008, approximately equal proportions

were supplied as ores and concentrates, metal, and scrap.

For concentrates, from 2006-2009, 66% were supplied by Australia. The

major producer by metal content in 2010 was Brazil (~27%). In 2009,

the biggest secondary producer (waste and scrap) was China (27%).

Until 2009, the major corporate producer of tantalum was Talison

Minerals, from its Wodinga mine near Greenbushes in WA‟s Pilbara.

However, this closed during the GFC. Obviously, the coincident

downturn in Ta-intensive industries prevented any problems with

undersupply. It was announced in Jan ‟11, with tantalite prices pushing

close to US$120/lb, that Wodinga would reopen under the control of

GAM (Global Advanced Minerals). Production will be 700,000lbpa (261t,

or 39% of 2009 global demand). This will leave excess capacity at

Wodinga; tantalite concentrate from Mt Cattlin (ASX:GXY) will also be

processed there (75t over five years).

In recent times the market has been clouded by the considerable black

market for Ta (about 20% of the global market), illegally supplied by

artisanal mines in the Democratic Republic of Congo (DRC) and allegedly

used to fund a civil war in that country, ie. “conflict tantalum”.

In July 2010, however, the US Congress passed the Financial Stability

Act, which requires US companies to disclose if their products contain

tantalum (and tin, tungsten or gold) that is sourced from the DRC or

adjoining countries. This should prevent the use of DRC material and,

due to the stringent supply chain reporting requirements of the Act, may

also turn buyers away from the adjoining countries (being Uganda,

Rwanda, Burundi, Kenya, Tanzania, Zambia, Angola, Republic of Congo

[Brazzaville], Sudan and the Central African Republic).

By 4Q10, metal traders were widely reporting that DRC supply had dried

up and that material from its neighbours was hard to obtain. This supply

squeeze has led to price increases. The reopening of Wodinga should

alleviate supply problems beyond 2012

Elemental Facts

Tantalum is used in diverse high technology applications. It is resistant

to corrosion, has a low thermal coefficient of expansion, and a high

dielectric constant, so its main uses are in capacitors (e.g. for consumer

electronics), chemical plant and equipment, aviation turbine blades and,

as tantalum carbide, for cutting tools. It can be substituted by niobium

and titanium in some applications, thought at the expense of larger

component size (Nb) and/or higher cost (Ti). The majority of the world‟s

tantalum is sold via long-term offtake agreements. Analyst: Dr Trent Allen

Historically, Brazil and Australia are major producers of tantalum. Australia‟s Wodinga Tantalum Mine, the world‟s largest, is set to reopen in 2011. DRC illegal production complicates the market but the US Conflict Minerals Bill should remedy the problem.

Tantalum is used in

high-tech applications

such as capacitors

and alloys.



Market Update: Tungsten

Investment Comment

As we stated in November 2010, industry participants and

commentators are bullish about the medium-term outlook for tungsten.

For example, Icon Resources (III:ASX) recently stated: “The market

price for [concentrates and APT] has improved from mid-2009 returning

to pre-GFC levels. Recent market analysis has projected longer-term

strength for tungsten, particularly for non-Chinese supply beyond 2012,

with supply shortages indicated from 2013.” Annual Report 2010.

These forecasts are based partly on concern about security of supply for

manufacturers, in view of China‟s policy of falling export quotas and high

tariffs (e.g. 20% on ferrotungsten), and its intent to boost

manufacturing. This scenario favours existing producers, and companies

with tungsten projects that can enter production within 2-3 years.

Pricing

Prices have recovered to pre-GFC levels, during which they had a

relatively soft landing due to simultaneous cuts in demand and

production. For mine modelling, RCR has used US$150/mtu contained

tungsten in 65% concentrate.

The price of ferrotungsten in Europe at 75% W is US$445-450/mtu (of

contained W), APT to China (FOB) is US$338-343/mtu and concentrate

in China at 65% W is US$280-281/mtu (contained W). These figures are

typical of the value-add for increased tungsten processing (i.e. ~21%

from conc. to APT, and ~30% from APT to ferrotungsten. Concentrate

prices are up 60% year-on-year, 2010-2011, and 20% quarter-on

quarter, as global demand continues its post-GFC recovery. In 2010,

Roskill forecast that nominal APT prices could reach US$445/mtu by

2015, i.e. ~US$351/mtu for concentrate using the 21% value-add.


Global consumption of tungsten in 2010 was ~55.5kt (Wolf Minerals,

Nov ‟10) and is forecast to increase to 88.5kt in 2015 (CAGR 9.8%).

World forecast tungsten demand, 2000 to 2015 (t W).

Advanced tungsten developments could benefit from elevated prices, due to Chinese control (~85%) of supply. Prices held steady during the GFC due to synchronous falls in supply and demand. Concentrate prices are up 60% Y-O-Y. The market outlook to 2015 is positive, with W demand forecast to increase from 55ktpa in 2010 to 88.5ktpa, i.e. CAGR 9.5%.



China is the metal's prime consumer, accounting for 62% of it in 2009.

From 2002 to end-2007, global consumption of tungsten grew at 10%

per annum, with the other significant tungsten consumers being the

U.S., Western Europe and Japan. Consumption fell 25% Y-O-Y to 55kt

in 2009, but was forecast to reach 66kt in 2010, and 80kt in 2013.

China dominated world tungsten production in 2010 (~85%).

China85%

Other5%

Russia4%

Canada0%

Austria2%

Bolivia2% Portugal

2%

Source: USGS.

Global tungsten metal production in 2009 was 61.3kt (USGS) and an

estimated 61kt in 2010. Of the 2010 estimate, China accounted for

85%, producing 52kt. It was followed by Russia (2.5kt), Bolivia (1.1kt)

and Austria (1kt). China has banned export of concentrates, and ships

only semi-refined and refined powders. Recycled tungsten makes up

~35% of the market (Source: North American Tungsten Corp)

Elemental Facts

Tungsten is the hardest metal, and has a high density (19.25g/cc;

slightly less than gold, 19.3g/cc), melting point and tensile strength.

Tungsten is mined from or adjacent to igneous rocks (e.g. in skarns). It

has two economically important minerals: wolframite ((Fe,Mn)WO4) and

scheelite (CaWO4). The majority of the world‟s 2.9Mt economic reserves

are held by China (with 1.9Mt or 55%. Source :USGS).

Tungsten is primarily used in wear-resistant cemented carbides aka

hardmetals (56%) and steel/alloys (20%), as well as in lighting,

heating, and welding applications. Tungsten chemical compounds are

used in catalysts, inorganic pigments, and high-temperature lubricants.

Tungsten is sold in five common forms – APT (ammonium

paratungstate), ferrotungsten, tungsten concentrate (usually 65%

WO3), and tungsten carbide and oxides. Prices are quoted in $US or

RMB and the main units are mtu (metric tonne units, of 10kg WO3, ie

7.9kg W) and kilograms. It is usually sold on long-term contract.


The world‟s largest consumer of tungsten is China (62% in 2009). Global 2010 mine production was ~61kt, of which China accounted for ~85%. China has banned exports of tungsten concentrate. The main application for tungsten is in „hardmetal‟, as tungsten carbide. In China, steel-making accounts for the highest % use. Ferrotungsten is used for steelmaking, while APT feeds into the cemented carbide and chemical stream.



Selected rare and minor metal price data and production statistics.

Selected rare and minor metal price data and production statistics

Be

To self: advance x axis max

0

1

2

3

4

5

6

7

Jul-03

Oct-03

Jan-0

4

Apr-

04

Jul-04

Oct-04

Jan-0

5

Apr-

05

Jul-05

Oct-05

Jan-0

6

Apr-

06

Jul-06

Oct-06

Jan-0

7

Apr-

07

Jul-07

Oct-07

Jan-0

8

Apr-

08

Jul-08

Oct-08

Jan-0

9

Apr-

09

Jul-09

Oct-09

Jan-1

0

Apr-

10

Jul-10

Oct-10

Jan-1

1

(%)

US Federal Funds Rate (%)

Source: Bloomberg

0

20

40

60

80

100

120

140

160

Feb

-01

Jun-0

1

Oct-01

Feb

-02

Jun-0

2

Oct-02

Feb

-03

Jun-0

3

Oct-03

Feb

-04

Jun-0

4

Oct-04

Feb

-05

Jun-0

5

Oct-05

Feb

-06

Jun-0

6

Oct-06

Feb

-07

Jun-0

7

Oct-07

Feb

-08

Jun-0

8

Oct-08

Feb

-09

Jun-0

9

Oct-09

Feb

-10

Jun-1

0

Oct-10

Feb

-11

(US

$, b

bl)

Oil price

Source: Bloomberg

0

200

400

600

800

1000

1200

1400

1600

1800

Nov-

06

Jan-0

7

Mar-

07

May-

07

Jul-07

Sep-0

7

Nov-

07

Jan-0

8

Mar-

08

May-

08

Jul-08

Sep-0

8

Nov-

08

Jan-0

9

Mar-

09

May-

09

Jul-09

Sep-0

9

Nov-

09

Jan-1

0

Mar-

10

May-

10

Jul-10

Sep-1

0

Nov-

10

Jan-1

1

Mar-

11

(RM

B/t

)

Average Iron Ore Fines Spot Price, Hebei China

Source: Bloomberg (Met. Bulletin)

30

230

430

630

830

1030

1230

1430

Feb

-01

Jun-0

1

Oct-01

Feb

-02

Jun-0

2

Oct-02

Feb

-03

Jun-0

3

Oct-03

Feb

-04

Jun-0

4

Oct-04

Feb

-05

Jun-0

5

Oct-05

Feb

-06

Jun-0

6

Oct-06

Feb

-07

Jun-0

7

Oct-07

Feb

-08

Jun-0

8

Oct-08

Feb

-09

Jun-0

9

Oct-09

Feb

-10

Jun-1

0

Oct-10

Feb

-11

(US

$/t

)

Zirconium ore, premium, to Europe FOB

Source: Bloomberg

0

2

4

6

8

10

12

14

16

18

20

Jul-08

Sep-0

8

Nov-

08

Jan-0

9

Mar-

09

May-

09

Jul-09

Sep-0

9

Nov-

09

Jan-1

0

Mar-

10

May-

10

Jul-10

Sep-1

0

Nov-

10

Jan-1

1

(US

$)

China output, tungsten and related products, value

Source: Bloomberg

60

70

80

90

100

110

120

130

Oct-06

Dec-

06

Feb

-07

Apr-

07

Jun-0

7

Aug-0

7

Oct-07

Dec-

07

Feb

-08

Apr-

08

Jun-0

8

Aug-0

8

Oct-08

Dec-

08

Feb

-09

Apr-

09

Jun-0

9

Aug-0

9

Oct-09

Dec-

09

Feb

-10

Apr-

10

Jun-1

0

Aug-1

0

Oct-10

Dec-

10

Feb

-11

(mt,

mo

nth

ly)

IISI crude steel production index

Source: Bloomberg

150

200

250

300

350

400

Jun-0

8

Aug-0

8

Oct-08

Dec-

08

Feb

-09

Apr-

09

Jun-0

9

Aug-0

9

Oct-09

Dec-

09

Feb

-10

Apr-

10

Jun-1

0

Aug-1

0

Oct-10

Dec-

10

Feb

-11

(US

$/m

tu)

Tungsten APT: EU Prices

Source: Bloomberg

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Feb

-06

Jun-0

6

Oct-06

Feb

-07

Jun-0

7

Oct-07

Feb

-08

Jun-0

8

Oct-08

Feb

-09

Jun-0

9

Oct-09

Feb

-10

Jun-1

0

Oct-10

Feb

-11

(US

$/t

)

Cerium oxide 99% min China FOB

Source: Metal Pages



ASX indices and exchange rates of some rare and minor metals producers and consumers.

Exchange rates of some rare and minor metals, producers and consumers.

25/05/2001

28/05/2001

29/05/2001

30/05/2001

31/05/2001

1/06/2001

4/06/2001

5/06/2001

6/06/2001

7/06/2001

8/06/2001

11/06/2001

12/06/2001

13/06/2001

14/06/2001

15/06/2001

18/06/2001

19/06/2001

20/06/2001

21/06/2001

22/06/2001

25/06/2001

26/06/2001

27/06/2001

28/06/2001

29/06/2001

2/07/2001

3/07/2001

4/07/2001

5/07/2001

6/07/2001

9/07/2001

10/07/2001

11/07/2001

12/07/2001

13/07/2001

16/07/2001

17/07/2001

18/07/2001

19/07/2001

20/07/2001

0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

Feb

-01

Dec-

01

Aug-0

2

Apr-

03

Dec-

03

Sep-0

4

May-

05

Jan-0

6

Sep-0

6

Jun-0

7

Feb

-08

Oct-08

Jun-0

9

Mar-

10

Nov-

10

(AU

D/U

SD

)

Exchange rate: Australia / USA

Source: Bloomberg

0.6

0.7

0.8

0.9

1

1.1

1.2

Feb

-01

Dec-

01

Aug-0

2

Apr-

03

Dec-

03

Sep-0

4

May-

05

Jan-0

6

Sep-0

6

Jun-0

7

Feb

-08

Oct-08

Jun-0

9

Mar-

10

Nov-

10

(CA

D/U

SD

)

Exchange rate: Canada / USA

Source: Bloomberg

0.1

0.105

0.11

0.115

0.12

0.125

0.13

0.135

0.14

0.145

0.15

Feb

-01

Dec-

01

Aug-0

2

Apr-

03

Dec-

03

Sep-0

4

May-

05

Jan-0

6

Sep-0

6

Jun-0

7

Feb

-08

Oct-08

Jun-0

9

Mar-

10

Nov-

10

(CN

Y/U

SD

)

Exchange rate: China / USA

Source: Bloomberg

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Feb

-01

Dec-

01

Aug-0

2

Apr-

03

Dec-

03

Sep-0

4

May-

05

Jan-0

6

Sep-0

6

Jun-0

7

Feb

-08

Oct-08

Jun-0

9

Mar-

10

Nov-

10

(Re

al/U

SD

)

Exchange rate: Brazil / USA

Source: Bloomberg

0.006

0.007

0.008

0.009

0.01

0.011

0.012

0.013

Feb

-01

Dec-

01

Aug-0

2

Apr-

03

Dec-

03

Sep-0

4

May-

05

Jan-0

6

Sep-0

6

Jun-0

7

Feb

-08

Oct-08

Jun-0

9

Mar-

10

Nov-

10

(Ro

ub

le/U

SD

)

Exchange rate: Japan / USA

Source: Bloomberg

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Feb

-01

Dec-

01

Aug-0

2

Apr-

03

Dec-

03

Sep-0

4

May-

05

Jan-0

6

Sep-0

6

Jun-0

7

Feb

-08

Oct-08

Jun-0

9

Mar-

10

Nov-

10

(Ru

pe

e/U

SD

)

Exchange rate: USA / Korea

Source: Bloomberg

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Nov-

06

Jan-0

7

Apr-

07

Jul-07

Oct-07

Dec-

07

Mar-

08

Jun-0

8

Sep-0

8

Dec-

08

Feb

-09

May-

09

Aug-0

9

Nov-

09

Jan-1

0

Apr-

10

Jul-10

Oct-10

Dec-

10

ASX All Ordinaries Index

Source: Bloomberg

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Nov-

06

Jan-0

7

Apr-

07

Jul-07

Oct-07

Dec-

07

Mar-

08

Jun-0

8

Sep-0

8

Dec-

08

Feb

-09

May-

09

Aug-0

9

Nov-

09

Jan-1

0

Apr-

10

Jul-10

Oct-10

Dec-

10

ASX S&P300 Metals & Mining Index

Source: Bloomberg



Report Contributors Trent Allen: Trent has a BSc (Hons) and a PhD from the University of Sydney, specialising in the

petrology, trace-element geochemistry and economic geology of alkaline igneous rocks. His

Australian mining industry experience includes several years with Newcrest‟s Cadia Valley

gold/copper mines, where he was engaged in resource definition and geotechnical engineering.

Trent has also worked as an exploration consultant, university lecturer in geology and civil

engineering, and as a journalist and newspaper editor.

Tony Parry: Tony has extensive experience in metallurgical process development, (working with MIM

Limited for five years) and in mining equity research, equity sales and mining corporate finance

(working in London for five years and subsequently Perth). He was a founding Director and CEO of

an ASX listed exploration company and has been engaged extensively as a strategic planning

consultant to many small-medium enterprises. Tony‟s qualifications include a BSc (Hons) in

Metallurgy and a PhD in Metallurgy from the University of NSW.

Greg Burns: Greg has over 25 years‟ experience in the stockbroking/trading industry with companies

such as Jacksons, Capel Court Capel, BBY, Bain & Co, and BZW/ABN Amro. As an institutional

financial analyst, he has covered both the supply and demand side of the resource sector. Greg has

substantial experience in corporate work including underwritings, equity raisings and corporate

takeovers. Qualifications include an MEc from Macquarie University and a Bachelor of Economics

from the University of Sydney. Greg has also completed his Chartered Accounting qualification and

the Australian Defence Industry Study program.

John Wilson: John has a background in mining, finance and equity research. He worked on Wall

Street for 6 years and has covered US, Australian and Latin American mining stocks. He has also

worked with BHP in their minerals division. Qualifications include an MBA from the Wharton School

of the University of Pennsylvania and a Bachelor of Engineering from the University of Sydney.



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RCR, its affiliates and their respective officers, directors and employees may hold positions in the securities of the companies featured in this report and may purchase and/or sell them from time to time and RCR and its affiliates may also from time to time perform investment banking or other services for, or solicit investment banking or other business from, entities mentioned in this report. Globe Metals & Mining Ltd, Greenland Minerals and Energy Ltd* and Latin Resources Ltd commissioned RCR to compile their company reviews in this report. In consideration, RCR received from each a cash consultancy fee of less than $15,000. RCR may receive referral fees from issuing companies or their advisors in respect of investors that RCR refers to companies looking to raise capital. Those fees vary, but are generally between 0 - 1% of the value of capital raised from referrals made by RCR. RCR received referral fees in relation to recent capital raisings for Globe Uranium Limited, PepinNini Minerals Limited and Uranex NL and may receive fees in relation to Adamus Resources and Eleckra Mines. At the date of this report, neither RCR, nor any of its associates, hold any interests or entitlements in shares mentioned in this report with the exception that either or both of John Wilson (either directly or through Resource Capital Investments Pty Limited (RCI)), or RCI, as trustee of the Resource Capital Investments Fund owns shares in BHP and Rio Tinto.

* Greenland Minerals and Energy Ltd is currently defending civil proceedings in Western Australia brought by Westrip Holdings Ltd, its JV partner. The Company has been advised by Senior Counsel in writing that the action has no merit and the Joint Venture remains in full standing and effect.

Analyst Certification: All observations, conclusions and opinions expressed in this report reflect the personal views of RCR analysts and no part of the analyst‟s or RCR‟s compensation was, is, or will be, directly or indirectly related to specific recommendations or views expressed in the report. Officers, directors, consultants, employees and independent contractors of RCR are prohibited from trading in the securities of U.S. companies that are, or are expected to be, the subject of research reports or other investment advice transmitted to RCR clients for a blackout window of 14 days extending before and after the date such report is transmitted to clients or released to the market.

Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources: RCR publishes mineral resources based on standards recognized and required under securities legislation where listed mining and exploration companies make their exchange filings and uses the terms “measured", "indicated" and "inferred" mineral resources. U.S. investors are advised that while such terms are recognized and required under foreign securities legislation, the SEC allows disclosure only of mineral deposits that can be economically and legally extracted. United States investors are cautioned not to assume that all or any part of measured, indicated or inferred resources can be converted into reserves or economically or legally mined. We recommend that US investors consult Securities and Exchange Commission Industry Guide 7 – “Description of Property by Issuers Engaged or to Be Engaged in Significant Mining Operations” for further information about the use of defined terms and the presentation of information included in this report.

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