Zimbabwe: a great place to mine?

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Objective Capital's Africa Resources Investment Congress 2011Ironmongers' Hall, City of London14-15 June 2011Day 2: Focus on ZimbabweSpeaker: Andrew Cranswick, African Consolidated Resources

Text of Zimbabwe: a great place to mine?

  • 1.AFRICA RESOURCESINVESTMENT CONGRESS Zimbabwe: a great place to mine? Andrew Cranswick African Consolidated ResourcesIRONMONGERS HALL, CITY OF LONDON TUESDAY-WEDNESDAY, 14-15 JUN 2011www.ObjectiveCapitalConferences.com

2. African Consolidated Resources plc Company Update Exploration & Mining in ZimbabweJune 2011 Exploration, development and production in Zimbabwe 3. DisclaimerThis presentation (Presentation) has been presented to selected parties (Recipients). The Presentation and the information containedhere is confidential to African Consolidated Resources Plc (ACR or the Company). It is not intended for and should not be distributed toany other person other than as permitted herein.By viewing this Presentation, the Recipient agrees that he/she will not transmit, reproduce or make available the Presentation (or anyinformation contained herein) to anyone other than to his/her professional advisers without the prior consent of ACR. Any such disclosure tothe advisers of the Recipient must be on a confidential basis, for the purpose only of assessing the information contained herein as adviser tothe Recipient.This Presentation has been prepared as a summary only and does not contain all information about the Companys assets and liabilities,financial position and performance, profits and losses, prospects and rights and liabilities.The information contained in this Presentation or subsequently provided to the Recipient of this Presentation whether orally or in writing byor on behalf of ACR and its directors, officers, employees, advisers, agents or consultants (Information) is provided to the Recipients on theterms and conditions set out in this notice.The purpose of this Presentation is to provide Recipients with Information relating to ACR. The Presentation has been prepared by ACR andeach Recipient must make his/her own independent assessment and investigation of ACR and its business and assets and should not rely onany statement or the adequacy and accuracy of any Information contained in this Presentation.ACR makes no representation or warranty (express or implied) as to the accuracy, reliability or completeness of the Information. ACR and itsdirectors, employees, agents or consultants shall have no liability (including liability to any person by reason of negligence or negligentmisstatement) for any statements, opinions, information or matters (express or implied) arising out of, contained in or derived from, or anyomissions from the Presentation, except liability under statute that cannot be excluded.The Presentation contains reference to certain intentions, expectations and plans of ACR. These intentions, expectations and plans may ormay not be achieved. They are based on certain assumptions which may or may not be met or on which views may differ. The performanceand operations of ACR may be influenced by a number of factors, many of which are outside the control of ACR. No representation orwarranty, express or implied, is made by ACR any of its directors, officers, employees, advisers, agents or consultants that any intentions,expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. This Presentation doesnot constitute in any way an offer or invitation to subscribe for securities in ACR.3 4. WHY ZIMBABWE ? GEOLOGY INFRASTRUCTURE PEOPLE SKILLS BASE, LITERACY etc Judged by a Higher Standard WORKING ENVIRONMENT COUNTER-CYCLICAL OPPORTUNITY Remember Zambia, South Africa, Russia,Columbia etcStraw hats in Winter 4 5. The Commercial Imperative A Commodity - Hungry world withdiminishing resources can no longerafford to ignore the Zimbabwe treasuretrove Zimbabwe - A rare concentration ofdifferent geological terranes offering anextraordinarily diverse & intense mixtureof mineral deposits FIRST MOVER ADVANTAGE - SCIENCE + RISK-CONTROL 5 6. Zimbabwean Geology Continental SettingZimbabwe Craton The Right Address untapped potential 6 7. The Zimbabwe OpportunityGEOLOGY OPERATORS Gold ACR (multi-mineral) Rock phosphate Impala PGMsPlatinum Diamonds Aquarius NickelPlatinum Copper Anglo-Plats Coal ENRC (PGMs) Ferrochrome Mwana Africa Tantalum New Dawn Lithium Mining (Gold) Corundum RIO Tinto (& TungstenRIO Zim) Uranium Caledonian Emeralds(Gold) Duration Gold(Whetstone) World-class minerals - few competitors 7 8. HOW GOOD CAN IT GET?Western Australia vs Zimbabwe - Gold ProductionPoint of International De-Regulation9Moz8Moz7Moz Zimbabwe6MozOunce Au / pa5Moz YilgarnPotential ???4Moz3Moz2Moz Gold price1Moz1985 19952005 1975 Year 8 9. Discoveries Kalgoorlie - WA 1975 - 2002Greenstone Gold Discoveries - 25 years : N Kanowna Belle (Western Australia)+10MOz in Felsics , Red Lake Deeps (Ontario) +8MOz,Golden Sunrise Dam (WA) +6MOz Mile Granny Smith (WA) +2MOzIn 25 years the number of deposits >1Moz Au70km radius of Kalgoorlie increased from 2 to10 through modern exploration techniques.LACK OF EXPLORATION - ZimbabweLooming Large Discoveries20k m Kalgoorlie Region 1975 vs 2002 (red > 1Moz) 10. Western Australia- ZimbabweComparison NDalnyHarare Giant / Blue RockPickstone& PeerlessGokweGoldenCam & MotorMile One Step KwekweGlobe &PhoenixGreat Dyke WandererN20km30km Pre-1975 Midlands Greenstone belt (blackKalgoorlie Pre-1975 (red > 1Moz) 10 squares >1Moz) 11. Zimbabwe The Business EnvironmentPolitical stability - factorsPres Health; SADC involvement; Lack of CertaintyTitle/administration/regulationStrong Regulations tired but effective administrationRegulatory inconsistencies No major issues except Indigenisation effectsTaxation & Royalties Favourable (eg Gold Royalty @ 4.5% + 15% Corp tax)Infrastructure Solid national infrastructure needs modernisation & ongoing investment. Repairs have recommencedSocioeconomic/environmentalGood, potentially too lenient. Needs self-imposed standardsGeological databaseExcellent fully digitised by ACRMines & Minerals Act Excellent But Empowerment law needs rationalisationLabour issuesAcceptable labour Laws; high unemployment = friendly UnionsSecurity Good. Especially in terms of regional peer comparisonsFROM where; TO where? --- Improving Trajectory 11 12. Room for ImprovementCompete for Investor $$Understand driving forcesZIMBABWE: Heal thyselfModernise BUT dont fiddle with a great ActThe Investment Value Window is open but not forever 12 13. ZIMBABWE: needs to COMPETE for investment 14. What next? Timing?PoliticsMining Sector vs OTHERSWhen to Invest ?How to Invest ?Re-Building the JEWELThe Investment Value Window is open but not forever 14 15. WHY ACR ? Zimbabwean founded & managed Access to International Capital Risk Identification & Risk Management 21st Century Science A Time Capsule Broad, Multi-mineral footprint = Best Betfor COUNTER-CYCLICAL OPPORTUNITYand resulting equity value uplift Ethical Investment Straw hats in Winter 15 16. ACR: History, Strategy & Positioning AIM-listed (2006), exploration development & production company;focus: Zimbabwe & Southern Africa Zimbabwean Co. - Active in Mineral Exploration since 2003, firstmover advantage; strong local relationships GOAL: Established a formidable balance sheet of world class assets atvarious stages of development multi-mineral robustness Significant successes consolidating gold licences to form critical massprojects. Resource Definition in full swing -- now at 1.4m troz Goldand growing. Further Upgrades Expected - mid-June & July 2011 Highly experienced board and management team based in Zimbabwe Well positioned -- Building Mines of the Future 16 17. Asset Development: Vision & Foresight Exploration to Mining: a 10 15 year cycle Strategy - find deposit define Resource establish mine extract value Macro-TargetingGround staked Geo-Chemistry$ Value$ ValueAccretionAccretionGeo-Physics Targeted Exploration Drilling$ Value AccretionValue to Shareholders :RESOURCE DEFINITION DrillingJMine developmentOR Joint Venture - specialistsPre-Feasibility & BFSC Production & DividendsMaximum Value-realisation dependent on perceived & actual security of investment Build Zimbabwes future: STARTS with EXPLORATION 17 18. Capabilities, Facilities & completions Highly competent management &technical team all in-country In-house XRF assay lab base metal,gold- indicator tests; diamond-indicator picking Full Blown Fire-assay Gold Lab In-country geophysics contractors(Aeromagnetic, radiometrics, EM, IP) Employee Profile 98% Zimbabwean Sampling 120,000+ soil samples done Drilling 145,000+ metres drilled todate High Volume throughput Low cost Good Science 18 19. Project Map 20. Portfolio Summary Commodity Name StatusGoldPickstone-Peerless JORC resources of 513,000troz ; Internal Feasibility Ph.1 production; 13 months EBITDA $18m. Discussion - Indigenous Capital @ advanced StageGoldGadzema25,000 metres drilled since Aug 2010;. Current JORC 912,000 troz Au. TARGET: > 1 million troz by Aug 2011 & >2 million troz by Dec 2012GoldChakari & others Highly Prospective Green-field District; RAB Drilling. Plus Brownfield siteNickelHorseshoe OxideGood metallurgy, large scale, next step: EIA for JORC drilling 2012Nickel Sulphide Perseverance 30km strike sulphide-rich body Drilling for Down-Hole EM CommencedRock PhosphateChishanyaCarbonatite: First Phase Drilling completed; Awaiting Met (flotation)PGMs Great Dyke Exploration Drilling to define Resource Drilling Targets Awaiting EIACopperCedric Exploration Drilling Complete Medium scale production feas in discussionDiamondsMultiple Targets Marange + multiple Kimberlites defined -- awaiting Government discussionZAMBIAN Projects REEs & IOCG REE JV signed; Core & Rock chip analysis complete 4% to 22% TREO.Target IOCG target Ground Consolidation; Geophysics; Exploration holes 20 21. Gadzema Gold 30km Greenstone Belt with 900 registered historical workings 10km consolidated ground - ACR Includes Giant Mi