Frieda River Copper-Gold Project

June 2016

Special Mining Lease Application

Frieda River Copper-Gold Project

• The Project is located in the northern foothills of the New Guinea Highlands in Sandaun Province, with key infrastructure and transport corridors located in the East Sepik Province. It sits in a remote area approximately 200km from the northern coast and 70km from the closest navigable point on the Sepik River (approx 110km by planned road)

• The Project is held by the Frieda River Joint Venture (unincorporated): owned 80% by Frieda River Limited (manages the Project), a wholly owned subsidiary of PanAust Limited; and 20% by Highlands Frieda Limited, a wholly owned subsidiary of Highlands Pacific Limited

• The Independent State of Papua New Guinea has a right, prior to the grant of an SML or Mining Lease, to purchase up to 30% equity in the Project

Slide 2

One of the world’s largest

undeveloped copper resources

0 5 10 15 20 25 30 35

Agua RicaWafi Golpu

Frieda River (HITEK)Frieda River (global)

El PachonTampakanLa Granja

KamoaCobre Panama

ResolutionUdokan

Reko DiqPebble (+69Mt)

Copper equivalent tonnes (millions) Source: Company reports; copper equivalents estimated by Frieda River Limited using the following commodity prices – copper US$3.30/lb, gold US$1,455/oz, silver US$23/oz Frieda River (global) includes the Nena deposit.

Slide 3

The HITEK deposits contain an estimated 12Mt of copper and

19Moz of gold

A Project of national significance

• Potential to secure a world-class, long-life copper-gold resource and enhance regional trade and investment links through its supporting infrastructure

• A nation-building opportunity for the advancement of a least developed and remote region of Papua New Guinea (PNG)

• Drive job creation and positive health, education and other beneficial socio-economic outcomes

• The next stage of development of PNG’s mining sector

• “The benefits from the project would be felt throughout the economy…[and have the] potential to improve the quality of life of Papua New Guineans by providing essential services and enhancing the country’s productivity”*

*Source: ACIL Allen Consulting, Frieda River Economic Impact Assessment, June 2016 Slide 4

Papua New Guinea

Economic impacts

• The Frieda River Project stands to be a major contributor both directly and indirectly to the people and Government of PNG

• “Revenues arising from the Frieda River Project have the potential to underpin a wide range of economically and socially beneficial investments leading to improved outcomes in line with the objectives of the PNG government’s ‘Vision 2050’ plan.”*

• Delivers direct capital investment of more than US$5.9Bn

• Recurrent operating expenditure, including a significant level of local; spending on support services, averaging US$487M per annum

• Tax royalty and production levy revenue totalling PGK10.2Bn over the life of the project

*Source: ACIL Allen Consulting, Frieda River Economic Impact Assessment, June 2016 Slide 5

Benefits to the host provinces

Opportunities for shared use infrastructure:

• Ocean, river and air ports • Power generation • Roads • Communications

Source: ACIL Allen Consulting, Frieda River Economic Impact Assessment, June 2016 Slide 6

The first major large-scale natural resource project in the provinces of Sandaun and East Sepik

Over the period to year 2040 the Project would result in:

• An increase in real GDP by a cumulative total of PGK36Bn

• An increase in real income totalling PGK5.2Bn

Slide 7

Special Mining Lease application

• The renewal of EL58 is subject to conditions, including:

– “The tenement holder shall lodge with the Mineral Resources Authority, on or before 30 June 2016, an application for a Special Mining Lease in respect of the Frieda River Mining Prospect.”

Tenements

Slide 8

Frieda River Joint Venture

conditions

The following proposal for development is made subject to a number of conditions being met, and on the basis that those conditions are satisfied on terms acceptable to the Management Committee of the Frieda River Joint Venture

The conditions are required to ensure that key Project risks are adequately managed and, ultimately, that a positive final investment decision can be made. The conditions include, but are not limited to:

• Supportive copper and other commodity prices

• Completion of satisfactory financing arrangements and execution of all necessary debt and equity agreements

• Agreement with the State of a Mining Development Contract on terms acceptable to the Management Committee of the Frieda River Joint Venture which at a minimum are no less favourable than those granted to other projects, including in relation to fiscal terms, fiscal stability, and protection against changes in law that adversely affect the Project

• Securing an SML and supporting tenements with a term of 40 years as provided for in the Mining Act

• No material adverse change in circumstances

• Approval by the Management Committee of the Frieda River Joint Venture of the decision to proceed to development of the Project

Slide 9

Proposal for development

Subject to but not limited to the conditions as outlined above it is proposed to develop the Project as follows:

• Develop and mine the ore body in accordance with the mine plan set out in Chapter 7 (Mine Operations) of the feasibility study report

• Construct and process the ore through the processing facilities described in Chapter 8 (Mineral Processing)

• Construct and bring into operation the infrastructure facilities described in Chapter 5 (Site Access and Layout), Chapter 9 (Waste Rock, Tailings and Water Management), Chapter 10 (Power Supply and Distribution), and Chapter 11 (Non-Process Infrastructure)

• Implement the employee training proposals in the Employment and Training Plan

• Implement the proposals concerning business development contained in the Business Development, Supply and Procurement Plan

Slide 10

Slide 11

Frieda River

Project

Overview

Frieda River Project scope

• Large-scale conventional open-pit operation feeding ore to a 40Mtpa conventional comminution and flotation process plant producing a copper-gold concentrate for export to custom smelters

• Average annual metal in concentrate production of 175,000t copper and 250,000oz gold; total mill feed of 700Mt; life of mine C1 cash cost in the first quartile of global copper production

• Mine waste rock and tailings will be stored subaqueously within an engineered integrated storage facility designed to Australian National Committee on Large Dams Incorporated (ANCOLD) standards

• A riverine-based logistics network solution will support Project construction and operations

• Initial Project: six-year implementation (four years of construction) followed by production over 17 years

• The large Mineral Resource together with additional known deposits and exploration targets provide the potential for expansion and mine life extension

Slide 12

Feasibility study Project physicals

Area Scope

Mineral Resources Horse-Ivaal-Trukai, Ekwai and Koki porphyry copper-gold deposits

Mining method Large-scale conventional open-pit, truck and shovel operation

Total material mined 1,170 million tonnes (700Mt mill feed; 470Mt waste)

Mining rate Peak total material movement 85Mtpa

Mill throughput Average 41Mtpa (5,000tph)

Concentrate Average 670,000dmt per annum; peak 860,000dmt

Metal production Average steady state (after initial ramp-up) 175kt copper, 250koz gold

Integrated storage facility Subaqueous deposition; embankment height up to 171m; 875Mm3 storage (1,210Mt)

Power supply IFO/hydroelectric power; peak 140MW; hydroelectric generation up to 102MW

Site access road 110km unsealed road from Sepik River port to concentrator

Peak workforce numbers Construction: 3,720; Operations, Year 1-9: 3,025 and Year 10-17: 1,960

Project life 6 years implementation (4 years construction) 17 years operation

Slide 13

Project economics

Description Unit Base Case

Post-tax NPV7.8 real US$M 820 Post-tax NPV0 US$M 6,670 Post-tax IRR % 10.8 Post-tax Payback yr 6 NPAT (avg. Year 1 to Year 5) US$M/yr 440 NPAT (avg. life of mine) US$M/yr 270 C1 cash cost US$/lb 0.69 All-in sustaining cost US$/lb 1.23 Copper concentrate (average) dmt/yr 670 Copper in concentrate (average after initial ramp-up) kt/yr 175 Gold in concentrate (average after initial ramp-up) koz/yr 250 Pre-production capital cost US$M 3,605 Sustaining capital (life of mine) US$M 2,320

Capital intensity US$/tpa copper

eq. 17,000

Life of mine yr 17

Slide 14

• Approximately 25% of the pre-production capital cost is for infrastructure due to the Project’s remote location.

• Provision of shared-use infrastructure by the PNG Government or another third party presents a significant opportunity to support development of the Project and reduce initial capital expenditure.

Assumptions: US$3.30/lb copper, US$1,455/oz gold and US$23/oz silver (source: Wood Mackenzie)

C1 cash cost: Brook Hunt convention for the reporting of direct cash costs comprising: mine site, product transportation and freight, treatment and refining charges and marketing costs. Based on payable metal content.

All-in sustaining costs reported are: the C1 cash cost plus royalties; corporate support and shared services costs; sustaining capital; and lease principal and interest charges

Sensitivity to copper price

Slide 15

Other commodity prices: gold US$1,455/oz, silver US$23/oz

A nominal 40Mtpa process throughput rate generates a lower breakeven copper price and significantly higher NPV

Copper price

(US$/lb)

Post-tax NPV7.8

(US$ million) NPAT

(US$ million) Post-tax NPV0

(US$ million) 3.50 1,130 5,340 7,500 3.30 820 4,520 6,670 3.25 730 4,290 6,440 3.00 340 3,240 5,430 2.75 -60 2,190 4,400 2.50 -445 1,140 3,460

Mining and logistics

Slide 16

Mine site to Sepik River port

Slide 17

Mine site

Slide 18

HITEK open-pits

Slide 19

Integrated storage facility

Slide 20

Leveraging experience in Laos

Operational excellence Project development

Similar terrain

Sustainability

Logistics

Slide 21

Mountainous terrain

Project development

Social licence

Logistics

Operational experience

Opportunities

A strategic project that could operate for 30+ years

A nation-building ‘Project of National Significance’ capable of opening up the region and boosting economic development

Slide 22

Creating new trade and

investment and boosting

infrastructure at a location

proximate to the markets of Asia

River port

Ocean port

Riverine

logistics

Integrated storage

facility and power Frieda River

process plant Airport

Road

Unlocking the value

• The large Mineral Resource requires a staged development approach to unlock the full value of the Project and maximise Resource potential

• The feasibility study outlined a base case or initial starter project. There are multiple pathways to further expand and extend the Project with mine plans indicating the mill feed could increase from 700Mt to 1,700Mt on current known resources

• Future expansion and life extension opportunities include:

– Expansion of the HITEK concentrator

– Inclusion of the nearby high-grade Nena epithermal copper-gold deposit

– Mine life extension based on the residual Mineral Resource in the HITEK open-pits

– Extension of resources at depth may support underground development; mineralisation at the HITEK deposits also remains open laterally

– Development of regional infrastructure by third parties may allow the project to proceed at materially lower commodity prices and therefore be developed sooner

Slide 23

Slide 24

Sustainability

We value sustainability

Slide 25

Small business development

Health care

Agriculture

Infrastructure Education

Environment

• PNG has a well-established legislative framework for the approval and regulation of mining projects

• An Environment Impact Statement is being prepared for the Project (scheduled for submission in December quarter 2016) under the provisions of the Environmental Act 2000 and in accordance with the Conservation and Environment Protection Agencies guidelines

• The Project is designed to limit fugitive sediment emissions from the mine site and the potential for acid rock drainage using an engineered integrated storage facility to store mine waste rock and process tailings subaqueously

• Key management and mitigation measures will include: minimising the Project’s footprint, minimising side-casting of spoil during construction and development of spoil stockpiles, active water treatment of open-pit water (contact water) and subaqueous disposal of tailings and waste rock

• The environment management programs will be guided by PanAust Group standards; PanAust is an internationally recognised leader in environmental management and sustainability

Slide 26

External stakeholders

Communities

Provincial, District and Local Level Government

National Government Landowners

NGOs

Effective engagement with key Project stakeholders will be critical in obtaining approval for the Project’s SML and in maintaining the Project’s social licence to operate

Slide 27

Landowner and community

The landowner and community engagement strategy supports the Project’s goals of:

• Securing an SML and other associated tenements

• Negotiating a fair and durable compensation agreement with landowners

• Understanding and managing socio-economic impacts and opportunities

• Ensuring an enduring social licence to operate throughout the Project’s implementation and into operations

Slide 28

Benefits for communities

Landowning communities will benefit from royalties, compensation and community development projects focusing on skills development and healthy living including:

• Employment and training

• Local business development, supply and procurement

• Community development

• Improved access to health, education and other government services

• Financial literacy training

• Law and order planning and support

Slide 29

Development studies: principles

PanAust seeks to ensure benefits: • Build local capacity, reflect local values, and

support local development aspirations • Provide an enduring uplift for current and

future generations • Target women, youth and other vulnerable

groups • Are commensurate with the level of impact

and activity level • Minimise cash handouts where possible • Protect the project from disruption • Minimise the discretionary spend the Project

makes

Slide 30

Priority zones

Slide 31

Zone 1: SML and supporting tenement landowners Zone 2: Sepik River corridor Zone 3: Sandaun and East Sepik Provinces Zone 4: Papua New Guinea

Priority zones will underpin: Employment and Training Plan, Business Development, Supply and Procurement Plan, and community development strategies

Landownership: Special Mining Lease

• Tenement ‘A’

• Shows basis for ‘joint ownership’ – basically impossible to determine ‘boundaries’

• While now ‘jointly owned’ (for purposes of royalties), there will remain ‘spheres of influence’ when it comes to compensation

Landownership

• Persons who belong to the landowning groups of the Telefol villages of Wabia and Ok Isai and the landowning groups of the Miyan villages of Wameimin 1, Wameimin 2, Amaromin and Sokamin as represented by their appointed representatives (who are named in the mediation agreement)

• Persons who fit the landowner qualification criteria for the Miyan groups and for the Telefol groups as annexed to the mediation agreement

• Following from 1. and 2., persons who are held within the ‘landowner household register’ currently maintained by the Frieda River Project Community Affairs department and regularly updated by the leaders of the landowner groups

Slide 32

Landownership: Integrated Storage Facility

• Tenements

– ‘B’ – ISF West LMP – ‘C’ - ISF East LMP – ‘E’ – Quarry ML – ‘F’ – Ok Binai ME

• ISF tenements x 3

– Map from LIR 2 used as basis for ‘Nena ISF Agreement’ (Oct 2015)

– Boundaries of hatching were agreed upon by three parties

– Royalty and compensation split yet to be finalised

• ‘F’ – Telefol group with possible dominance by Ok Isai

Landownership of the ISF

Slide 33

Landownership: ISF to Frieda River Port

• Tenements:

– ‘G’ – ISF to Kaugumi ME (road, pipeline)

– ‘D’ – Kaugumi Creek Airport LMP

– ‘H’ – Kaugumi Creek Airport to Frieda River Port ME (road)

– ‘J’ – Frieda River Port LMP

• Map from LIR 2 checked during 2015 / 2016 land investigations

• Tenements fit under ‘Paiyamo’ group (Paupe village)

– ‘G’ – Merepare clan

– ‘D’ – Nasuna and Aiyamo clans

– ‘H’ – Aiyamo, Nesia and Inaku clans

– ‘J’ – Nesia clan

Slide 34

• Three groups

– Wario

– Sanio

– Wogamus

• Hatching shows extent of territory

• Pink shading is approximate ‘road’ corridor

Slide 35

Landownership: Frieda crossing to Sepik River Port

Slide 36

• Tenement

– ‘K’ – Frieda Crossing to Sepik River Port

• Four clans from Wario group (Wusok and Sinen villages)

• 25 clans from Sanio group (various villages)

Landownership: Frieda crossing to Sepik River Port

Landownership: Sepik River Port

Tenement

• ‘L’ – Sepik River Port LMP

Issue

• Port location changed a number of times (was previously on top of Kubkain)

• Previous land investigation did not cover current location (upstream on Wario river)

• New land investigation occurred Q1 2016 (after confirmation of final location)

• Site is under ‘disagreement’ (not yet registered as a ‘land dispute’) • Claimants have been identified - Ambunti meeting in April 2016 signed

a ‘Consent Agreement’ to allow work to proceed whilst they follow the process of land mediation and/or Local Land Court

Findings (‘possible’ landownership/claimants)

• Possible two more ethnic groups • Possible two more villages

Slide 37

Employment and Training Plan

• Linked to the human resources operational strategy embedded in the Frieda River feasibility study report

• The Employment and Training Plan:

– Provides an overview of the philosophy, principles and techniques that Frieda River Limited will adopt to ensure the company develops and operates a mine that has a workforce consisting of predominantly PNG landowner, Sepik logistics Corridor and East Sepik and Sandaun employees

– Ensure employment and development is undertaken in a methodical and planned way to maintain a safe and efficient workforce

– Identify training needs and resources (pre-start-up, external and on the job)

• Total operations workforce is estimated to be approximately 2,900 with a target of 95% PNG nationals

• Recruitment zones will define preferences to ensure landowner and host communities are given priority

• Training programs will ensure competency in required operational roles

• The recruitment strategy includes hiring expatriate employees where suitable candidates cannot be sourced within PNG

• Fly-in fly-out workforce

Slide 38

Business Development Plan

Objectives

• Develop a business community in the Frieda River area which will help meet the goods and services demands that are required both directly and indirectly by the Project, Frieda River area communities, and elsewhere

• Provide business opportunities to the businesses of Sandaun and East Sepik provinces and the rest of PNG to supply the Project with goods and services

• Create and assist businesses which will remain sustainable and viable after the mine’s mineral reserves are depleted and the mine is closed

• Support the realistic desires of the landowners and communities of Frieda River with regard to local business development

• Meet the requirements of the Papua New Guinea Government with regard to local business development

Slide 39

Business Development Strategy

• Business Development office to be established to support local business; priority focus on:

- Zone 1a – Representative Company - Zones 1a to 1c – Lancos and SMEs - Zones 2 and 3 – Lancos and SMEs - Zones 1 to 3 – casual contracts

• Assist in the formation and operation of RepCo

• Assist individual businesses formed from clan, sub-clan, family groups or individuals including women’s groups and individual women

• Provide opportunities to community-based groups to undertake casual contracts

• Pre-qualification assessments commensurate with risk and criticality of the services or goods

Slide 40

The path ahead

Feasibility study released

SML application per ministerial condition: now

Project implementation

Final investment decision

PRODUCTION Permitting and approvals

Slide 41

Conditions for development met

Important Notice

Slide 42

This presentation has been prepared by Frieda River Limited in its capacity as Manager of the Frieda River Joint Venture.

The information contained in the presentation is based on publicly available information, internally developed data, data developed by consultants and other sources. Except where specifically stated, no independent verification of those sources has been undertaken and where any opinion is expressed in this presentation it is based on the assumptions and limitations mentioned herein and is an expression of present opinion only. No warranties or representations can be made as to the origin, validity, accuracy, completeness, currency or reliability of the information. Frieda River Limited, in its capacity as Manager of the Frieda River Joint Venture and on behalf of the joint venture participants, disclaims and excludes all liability (to the extent permitted by law), for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information, its accuracy, completeness or by reason of reliance by any person on any of it.

Disclaimer as to forward looking statements and information

This presentation includes certain ‘Forward-Looking Statements’. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding forecast cash operating costs and financial performance, potential mineralisation, resources, exploration results and future expansion plans and development objectives of Frieda River Limited are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Any party reviewing this presentation should perform its own risk assessment, and should not rely on this report’s identification, implication or characterisation of risks.

Distribution of report

This presentation is the exclusive property of the joint venture participants, Frieda River Limited and Highlands Frieda Limited. This presentation may only be distributed to third parties with the written permission of Frieda River Limited in its capacity as Manager of the Frieda River Joint Venture.