The State of African Mining Speaker: Chris Hinde, Editorial Director, SNL Metals & Mining Mining On Top: Africa - London Summit 24-26 June 2014 | London

1. The State of African Mining
Chris Hinde
Mining on Top, London
June 25, 2014

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5. Overview
Commodity Prices
Exploration and Development
Centres of African Mining
Production and Costs (Gold)
Mergers and Acquisitions
Financing

6. Bulk-Sector Prices
Recession bites
$92/t
$74/t
Thermal Coal
FOB Richards Bay

7. Other Metals Faring Better
Worst over?

8. Exploration v Metals Prices
Exploration has been
high (until recently)
as drilling activity has
followed prices for
the past 25 years

9. Exploration: All Change
Majors
Juniors
Gov’t / Other
Intermediate
Recession: Juniors
short of funds

10. No Funds: Grassroots Work Suffers
Grassroots
Late Stage
Minesite
Recession bites

11. Major Producers OK
Two-year blip
during the
recession

12. Regional Exploration Expenditure (10 Years)
15% share
Land area = 30m km2 (20%)

13. Drilling Announcements (past two years)
Africa = 16%
29%
9%
20%
19%
7%

14. Latin America
26.7%
Rest of World
16.5%
Africa
16.5%
Canada
13.3%
Australia
13.1%
United States
7.2%
Pacific/SE Asia
6.7%
Worldwide Exploration (2013)
Similar share for
Africa last year but
big fall in Australia

15. Gold: Recent Decline

16. Result: Two-Year Global Slump

17. African Exploration
Focus on
West Africa

18. Gold Drilling (Individual Prospects)
Q1, 2014:
13.5% share

19. New Gold Resources
Africa hard hit by withdrawal of juniors
16.3%

20. New Gold Reserves
Dreadful March quarter
(as measured in mid-April)
8%

21. Other Exploration Activity

22. Project Locations

23. Feasibility Studies
AFRICAN FEASIBILITY STUDIES (2013 and Q1 2014)
Feasibility Study (US$m)
Country Project Commodities Significant Owner Capital Cost NPV
Burkina Faso Balogo Gold Golden Rim Resources Ltd 40.2 47.5
Banfora Gold Gryphon Minerals Ltd 125.1 154.0
Hounde Gold Endeavour Mining Corp 403.0 230.0
Nami Gold True Gold Mining Inc 171.5 178.2
Congo (DRC) Dikulushi Copper, Silver Mawson West Ltd 10.1 3.0
Kipoi North Cobalt, Copper Tiger Resources Ltd 755.0
Congo (Republic) Hinda Phosphate, Uranium Cominco Resources Ltd 563.0 2,010.0
Eritrea Gupo Gold Sunridge Gold Corp 403.0 443.0
Ethiopia Nova (Danakhil) Potash Allana Potash Corp 642.0 1,320.0
Ghana Esaase Gold Asanko Gold Inc 286.4 354.7
Prestea Gold Golden Star Resources Ltd 150.1 114.0
Guinea Nimba Iron ore Sable Mining Africa Ltd 299.3
Liberia Kokoya Gold Amlib Holdings plc 35.0 45.4
Mali Fekola Gold Papillon Resources Ltd 269.3
Syama Gold Resolute Mining Ltd 85.6
Morocco Achmmach Tin Kasbah Resources Ltd 252.0 126.0
Zgounder Silver Maya Gold & Silver Inc 3.8 36.2
Namibia Luderitz ML111 Diamonds Afri-Can Marine Minerals Corp 11.1 25.3
Omitiomire Copper International Base Metals Ltd 38.5 12.0
Otjikoto Gold B2Gold Corp 244.2 243.4
Niger Madaouela Molybdenum, Uranium GoviEx Uranium Inc 646.0 251.0
Nigeria Agbaja Iron ore, Magnetite Kogi Iron Ltd 497.1 420.0
Senegal Gora Gold Teranga Gold Corp 50.0 105.0
Kourouloulou Gold Teranga Gold Corp 504.7 558.0
Sierra Leone Baomahun Gold Amara Mining plc 143.0 50.0
South Africa Makhado Coal Coal of Africa Ltd 406.3 697.0
Zambia Dunrobin Copper, Gold, Iron ore Luiri Gold Ltd 21.0
Kitumba Copper, Gold, Uranium Blackthorn Resources Ltd 357.7 108.0
Source: SNL Metals & Mining 6,659.0 8,286.6
28
17 US$6.7bn US$8.3bn

24. Global Development Projects
Numbers continue to fall
but capex rising (at last)
*
*Reason for increased consultancy activity?
*

25. Development Projects
Flat NPV, overall,
for the past year
Africa: Mixed and low

26. Planned Development Spending

27. Production: Mined Revenue

28. African Gold Production
AFRICAN SHARE
Excluding by-product gold and artisanal output,
the continent contributed 14% of the global
mined supply of 97Moz in 2013.
African primary gold production exceeded
13.7Moz last year (under 13.4Moz in 2012).
The continent yielded 3.53Moz in the quarter to
end-March, compared with 3.17Moz in the
year-ago quarter, 3.29Moz in Q1 2012 and
3.34Moz in Q1 2011.

29. African Gold Production
NATIONAL RANKING
South Africa's share of the African total fell from 39%
in 2011 to 35% in each of the past two years (and
only 32% in the quarter just ended).
Nevertheless, with almost 4.9Moz in 2013, South
Africa remains easily the continent's largest primary
gold producer.
Ghana was in second place last year (2.85Moz),
followed by Mali (1.42Moz), Tanzania (1.17Moz) and
Burkina Faso (0.77Moz).

30. African Gold Production
0
200
400
600
800
1000
1200
1400
1600
1800
2000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2011 2012 2013 2014
Goldprice(US$/oz)
Goldproduction(oz)
South Africa
Zimbabwe
Tanzania
Suriname
Sudan
Niger
Namibia
Mauritania
Mali
Guinea
Ghana
Egypt
Eritrea
Côte d'Ivoire
Burkina Faso
Botswana
Gold price
Black line = Gold price
(right-hand scale)

31. African Gold Production
NEW GOLD MINES
These include:
2013: Q1 - Nordgold's Bissa mine (Burkina Faso)
Q3 - Newmont's Akyem mine (Ghana)
Q4 - Randgold/Anglogold's Kibali (DRC)
2014: Q1 - Endeavour's Agbaou (Ivory Coast)
Once complete, the integrated open pit and underground
operation at Kibali is expected to produce an average of
600,000oz/y over the first twelve years of its life, which
currently extends to 2031. The mine is targeting 550,000oz
this year.
New major gold mine
almost every quarter

32. Cost of African Gold
AFRICAN COSTS
Based on data from over 90 African gold mines, total cash costs
(including royalty payments) rose in 2011 and 2012 but generally
fell last year and in the first quarter of 2014.
With the closure of some high-cost operations, the continent's
average total cash cost fell to US$881oz last year, and
improved further to US$828/oz in the quarter to end-March.
The average gold price last year was US$1,393/oz.
The continent's primary gold mines have been able to widen their
net operating revenue (gold price minus total cash costs) to
around US$500/oz. This is still well below the African average of
US$788/oz recorded in the March quarter two years ago.

33. Cost of African Gold
0
500
1000
1500
2000
2500
0 10 20 30 40 50 60 70 80 90 100
TotalCashCosts(US$/oz)
Cumulative Share (% gold)
African Gold Mine Cash Costs (2013)
South Africa
Other Africa
Average 2013 Gold price: US$1393/oz
Africa Total Cash Cost: US$881/oz
South Africa average cash cost: US$1184/oz

34. Cash Cost of African Gold (ex SA)
Cash cost of
US$791/oz in
March quarter
Strip out South African operations
(US$905/oz in March quarter)

35. Cost of African Gold
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
TotalCashCosts(US$/oz)
Cumulative Share (‘000oz)
2011
2012
2013
Q1 2014 (NB:
production data
annualised)
Total Cash Costs
Note: Q1 2014 gold production
has been annualised

36. M&A: Low but Improving
Deal values are
rising strongly

37. M&A in March Quarter
83% of
total
71% of
total
BUT still all
quiet on the
Africa front

38. Capital Raising
85% of total
Continued cash crisis for juniors

39. Exploration Capital Raising
Not much, and it
isn’t for Africa

40. Dire Global Mining Market (end March)
57%
21%
6%
16%

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