Catalpa Resources Limited

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Catalpa resources Limited

WA

Res

ourc

es: G

old

CAH.asxBuy

Valuation:

Brief Business Description:

Hartleys Brief Investment Conclusion

Chairman & MD

Top ShareholdersHSBC Custody Nom Aust Ltd 16.8%ANZ Nom Ltd Cash Income A/C 8.3%Citicorp Nom Pl 5.2%Company Address

Issued Capital - fully dilutedMarket Cap - fully dilutedCash (31 March '10) $26.4mDebt (31 March '10)EVEV/Resource OzEV/Reserve Oz

FY2009A FY2010F FY2011FProd (koz Au) 0.0 26.0 120.1Op Cash Flw -3.3 4.4 66.9NPAT -6.8 -1.9 36.5CF/Share (cps) -4.6 1.9 33.2EPS (cps) -4.7 -1.2 22.6P/E -30.8x -116.5x 6.4xN.D. / equity na 0.4 0.0ROE -15.3% -1.6% 23.1%

Resources (koz Au) 1,886Reserves (koz Au) 1,068

Author:Andrew MuirSenior Resources AnalystPh: +61 8 9268 3045E: [email protected]

$234.0m$253.0m

$50.0m$257.6m$137/oz$241/oz

Peter Maloney (Non-Exec. Chair)Bruce McFadzean (MD)

Level 1, 9 Havelock StreetWest Perth, WA, 6005

161.3m174.5m

1 Jun 2010Share Price (last): $1.45

$2.02

New mid-tier gold producer

New +100kozpa gold producer from the Edna May project. Low grades offset by excellent hedge book. Also 30% of Cracow goldmine.

CATALPA RESOURCES LIMITED Latest +100koz Producer, Hedge Book Reduces Risk Catalpa Resources Limited (“Catalpa”, “CAH”, “Company”) is an emerging ASX listed mid tier gold company, currently focussing on the open pit development of its 100kozpa Edna May Gold Project, located ~300km east of Perth in WA. The Company also has a 30% share of the Cracow Gold Mine, located in Queensland and operated by Newcrest Mining Limited. Catalpa’s share of production from Cracow is ~30kozpa.

Edna May Commences Production Catalpa has recently completed its first gold pour at its 100% owned Edna May project, approximately 2 months ahead of the original schedule. The Company has completed construction, with production ramping up to yield ~90koz in FY2011 from Edna May. The pour caps a very busy year for Catalpa which included the merger with its major shareholder Lion Selection Group, completion of construction of Edna May, a capital reconstruction, the restructuring of its debt, as well as raising ~A$59m.

Low Grades Boosted by Attractive Hedge Book The Edna May deposit is relatively low grade at just over 1g/t Au. However, with a large mill, low strip ratios, efficient mining practices and recoveries of ~92%, the Company is targeting life of mine cash costs of ~A$640/oz.

In addition, 70% of the operations production is hedged at an average price of A$1,557/oz for five years, yielding excellent margins. This delivery price compares well to the current spot price of ~A$1,450/oz.

We see this hedge book, as well as Edna Mays long mine life, as key differentiating factors from its peers. The hedge book removes short to medium term revenue risk, with the 10 year mine life enabling exposure to long term gold price movements. We note that if the gold price does move above A$1,557, CAH still has almost 50% of its total targeted production unhedged.

Cracow Provides Steady Ongoing Cashflow The Company’s 30% ownership of Cracow also generates annual total cashflow of ~A$12m. Whilst Cracow has a relatively small reserve base, we expect the mine life to be at least four years given the operations long operational history and exploration potential.

Initiate Coverage with a Buy Recommendation We see Catalpa as a good quality emerging gold producer, with its excellent in the money hedge book underpinning margins and substantially reducing risk. Edna May has upside via the likely addition of high grade underground ore, as well as mine life extensions. At full capacity, Catalpa should produce +130kozpa, positioning the Company firmly within the ASX mid tier gold sector.

The Company is trading at a substantial discount to our $2.02 per share valuation and compares favourably to its peers on a number of key metrics. We expect the Company to be re-rated as Edna May is successfully commissioned, and initiate coverage of Catalpa Resources Limited with a Buy recommendation.

Hartleys Limited ABN 33 104 195 057 (AFSL 230052) 141 St Georges Terrace, Perth, Western Australia, 6000 Hartleys does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single

factor in making their investment decision.

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May-10Jan-10Oct-09Jun-09

Volume - RHSCAH Shareprice - LHSSector (S&P/ASX SMALL RESOURCES) - LHS

A$ M

Catalpa Resources

Source: IRESS

Hartleys Limited Catalpa Resources Limited 1 June 2010

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SUMMARY MODEL

Catalpa Resources Limited Share PriceCAH $1.45 Buy

Key Market Information Directors Company Information

Share Price $1.45 Peter Maloney (Non-Exec. Chair) Level 1, 9 Havelock StreetMarket Capitalisation $234m Bruce McFadzean (MD) West Perth, WA, 600552 Week High-Low $1.96-$1.445 John Row e (Non-Exec. Dir) Tel: +61 8 9321 3088Issued Capital 161.3m Barry Sullivan (Non-Exec. Dir) Fax: +61 8 9321 8804Issued Capital (fully diluted inc. ITM options) 174.5m Murray Pollock (Non-Exec. Dir) w w w .catalparesources.com.auOptions 14.6m@$A0.97 Graham Freestone (Non-Exec. Dir)Hedging 352koz @ A$1,557/ozYearly Turnover/Volume $93.3m/311.5m shares Top 10 Shareholders m shares %Liquidity Measure (Yearly Turnover/Issued Capital) 187%Valuation $2.02 HSBC Custody Nom Aust Ltd 27.04 16.8%

ANZ Nom Ltd Cash Income A/C 13.40 8.3%Financial Performance Unit FY2009A FY2010F FY2011F FY2012F Citicorp Nom Pl 8.40 5.2%

National Nom Ltd 7.40 4.6%Net Revenue A$m 0.1 27.1 172.0 180.0 Cogent Nom Pl 5.95 3.7%Total Costs A$m (6.9) (22.1) (92.3) (87.3) Lion Manager Pl 4.82 3.0%EBITDA A$m (6.8) 5.0 79.7 92.7 J P Morgan Nom Aust 3.78 2.3%Depreciation/Amort A$m (0.2) (5.0) (17.2) (21.4) Creasy Mark Gareth 3.22 2.0%EBIT A$m (7.0) 0.0 62.6 71.3 Reneagle Pl Sharnem Inv A/C 1.88 1.2%Net Interest A$m 0.2 (1.3) (10.5) (8.5)Pre-Tax Profit A$m (6.8) (1.3) 52.1 62.8Tax Expense A$m 0.0 (0.6) (15.6) (18.8) Reserves & Resources Mt g/t Au Koz Attrib.NPAT A$m (6.8) (1.9) 36.5 43.9Abnormal Items A$m - - - - ResourcesReported Profit A$m (6.8) (1.9) 36.5 43.9 Edna May (M+I+I) 48.10 0.99 1,526 1,526

Greenfinch (M+I+I) 4.00 1.02 130 130 Cracow (M+I+I) 3.00 8.10 800 230 Total 55.10 1.38 2,456 1,886

Financial Position Unit FY2009A FY2010F FY2011F FY2012FReserves

Cash A$m 32.3 19.6 56.4 105.3 Edna May 25.5 1.09 892 892 Other Current Assets A$m 4.4 9.6 20.3 20.9 Edna May Stockpiles 1.6 0.65 34 34 Total Current Assets A$m 36.7 29.2 76.8 126.2 Greenfinch 2.5 1.07 86 86 Property, Plant & Equip. A$m 7.5 104.0 102.1 97.8 Cracow 0.80 7.10 188 56 Exploration A$m 1.5 73.7 70.8 72.0 Total 30.4 1.22 1,200 1,068 Investments/other A$m 3.7 3.3 3.3 3.3Tot Non-Curr. Assets A$m 12.6 181.0 176.3 173.1 Production Summary Unit FY2009A FY2010F FY2011F FY2012FTotal Assets A$m 49.3 210.2 253.1 299.3 *Attributable

Payable Gold Metal 000oz 0 26 120 125Short Term Borrow ings A$m (0.0) (7.8) (7.8) (7.8) Cash Cost $A/oz 0 673 703 633Other A$m (4.2) (12.2) (10.2) (10.6)Total Curr. Liabilities A$m (4.2) (20.0) (17.9) (18.4) Price Assumptions Unit FY2009A FY2010F FY2011F FY2012FLong Term Borrow ings A$m (0.1) (57.2) (50.0) (30.0)Other A$m (0.4) (11.7) (27.3) (43.2) Gold US$/oz 874 1,068 1,100 1,050 Total Non-Curr. Liabil. A$m (0.5) (68.9) (77.3) (73.2) Exchange Rate A$/US$ 0.75 0.89 0.89 0.83 Total Liabilities A$m (4.7) (88.9) (95.2) (91.6) $A Gold A$/oz 1,170 1,195 1,239 1,273

Net Assets A$m 44.6 121.3 157.8 207.7Hedging Unit FY2009A FY2010F FY2011F FY2012F

Cashflow Unit FY2009A FY2010F FY2011F FY2012FTotal Forw ard Sales - Gold 000oz - - 70 70

Operating Cashflow A$m (3.3) 4.4 66.9 92.6 Forw ard Gold Price $A/oz 0 0 1,557 1,557 Income Tax Paid A$m - (0.3) - (2.9)Interest & Other A$m 0.3 (1.0) (10.5) (8.5) Sensitivity Analysis Valuation ($/s) NPAT EPS (¢) CFPS (¢)Operating Activities A$m (3.0) 3.1 56.4 81.1

Base Case 2.02 36.5 22.5 33.3Property, Plant & Equip. A$m (7.1) (89.9) (8.2) (8.2) Exchange Rate +10% 1.89 32.6 20.2 31.0Exploration and Devel. A$m (1.5) (10.9) (4.2) (10.0) Exchange Rate -10% 2.18 40.9 25.4 36.1Investments A$m - 6.4 - - Gold Price +10% 2.17 40.4 25.1 35.8Investment Activities A$m (8.6) (94.4) (12.5) (18.2) Gold Price -10% 1.88 32.3 20.0 30.7

Operating Costs +10% 1.84 30.4 18.9 29.6Repayment of Borrow ings A$m (0.0) (0.0) (7.2) (20.0) Operating Costs -10% 2.21 42.3 26.2 37.0Equity A$m 41.1 80.3 0.0 5.9 *N.B. NPAT, EPS, CFPS forecasts are for FY2011Dividends Paid A$m - - - -Financing Activities A$m 41.1 78.6 (7.2) (14.1)

Share Price Valuation (NAV) Est. $m Est. $/shareNet Cashflow A$m 29.5 (12.7) 36.8 48.8

Edna May (NPV @ 10%) 237.6 1.36Ratio Analysis Unit FY2009A FY2010F FY2011F FY2012F Cracow (NPV @ 8%) 36.1 0.21

Exploration 25.0 0.14Cashflow Per Share A¢ (4.6) 1.9 33.2 39.2 Cash 26.4 0.15Cashflow Multiple X (31.5) 75.4 4.4 3.7 Forw ards 90.8 0.52Earnings Per Share A¢ (4.7) (1.2) 22.6 26.3 Corporate Overheads (17.6) (0.10)Price to Earnings Ratio X (30.8) (116.5) 6.4 5.5 Total Debt (65.0) (0.37)Dividends Per Share A¢ - - - - Tax Losses 7.8 0.04Dividend Yield % - - - - Options & Other Equity 11.6 0.07Net Debt / Equity % na 0.4 0.0 na Total 352.8 2.02Interest Cover X 0.0 6.0 8.4 -Return on Equity % na na 23% 21%

Analyst: Andrew MuirPhone: +61 8 9268 3045

Sources: IRESS, Company Information, Hartleys Research

June 2010

Last Updated: 01/06/2010


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HIGHLIGHTS Company highlights include:

• Completion of the merger with its major shareholder Lion Selection Limited

• 30% owners of the Cracow Gold Mine in Qld

• Developed the 100% owned Edna May Gold Project in WA for first gold pour in April 2010

• Two production centres set to deliver annualised gold production of ~130koz at cash costs around A$620/oz

• 70% of Edna May production hedged at A$1557/oz over 5 years

BUSINESS OVERVIEW Catalpa was originally listed on the ASX as Westonia Mines Limited in 2002 with the Edna May project and surrounding tenements covering the vast majority of the Westonia greenstone belt. After completing the purchase of the Big Bell gold processing plant, the Company undertook a bankable feasibility study into the development of Edna May in 2004. Development was not justified at the time due to insufficient returns at the prevailing gold price (2004 average gold price A$556/oz).

In 2008, the Company changed its name to Catalpa Resources Limited, and re-examined the potential for the development of Edna May due to the much higher gold price (2008 average gold price A$1,034/oz). In late 2009, the Company completed a merger with its largest shareholder, Lion Selection Limited (“Lion”), following a capital reconstruction, to give the Company its current form. The merger, via a scheme of arrangement, saw Lion contributing 30% of Cracow, with Catalpa contributing 100% of its Edna May operation.

Fig. 1: Catalpa Gold Operations

Source: Catalpa Resources Limited

Two production centres

Forecast attr ibutable annualised production of 130koz at cash cost

of ~A$620/oz

Listed as Westonia Mines Limited in 2002

Name changed to Catalpa Resources

Limited in 2008, then merged wi th L ion

Select ion in late 2009

Austral ian located projects in WA and

QLD


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EDNA MAY GOLD PROJECT

Fig. 2: Edna May Snap Shot

EDNA MAY

• Interest: 100%

• Operation: Open pit, with underground potential

• Strip Ratio: 2:1

• Annualised Production: 100koz Au

• Processing Capacity: 2.8Mtpa, increasing to 3.2Mtpa

• Reserve: 1.01Moz Au

• Resource: 1.66Moz Au

• Target Life of Mine Cash Cost (C1): A$636/oz

• Average Cash Operating Margin: A$72m pa

• Hedging: 352,317oz @ A$1,557.5/oz (~70% of first 5 years production)


The Edna May project is located within the Westonia Greenstone belt, half way between Perth and Kalgoorlie in Western Australia. The area has had historic mining on and off since 1911. Most of the mining has been via underground methods, though there was an open cut operation between 1986 and 1989 operated by ACM Gold Limited on the main Edna May deposit. ACM underground mining was terminated in 1991 when barren pegmatites were intersected and the inflow of groundwater was unable to be effectively dealt with by the pumping capacity at the time.

The mineralisation at Edna May is contained within the Edna May gneiss, Greenfinch gneiss and the Golden Point gneiss. Current resources are 52.1Mt @ 0.99g/t Au for 1.66Moz. Total reserves are 29.6Mt @ 1.06g/t Au for 1.01Moz gold. The targeted annual production rate of ~100kozpa gives a 10 year mine life for the project on a reserve basis. Whilst the overall resource and reserve grades are relatively low, we understand that there is some high grade mineralisation contained within arcuate quartz veins in the gneiss. These higher grade quartz veins were the main target during underground mining, with periods of historic mining returning average grades of +20g/t Au. We understand that the distribution of these zones is not fully understood as yet, and consequently the higher grades have been conservatively modelled, giving the potential for grade overcalls when the open pit ore is processed.

Catalpa started construction in July 2009, with earth moving operations for the open pit development commencing in November 2009. The treatment plant is a standard carbon in leach gold plant, having being refurbished following its use at the Big Bell operation between 1989 and 2000. Catalpa commissioned the gravity and carbon recovery circuits in mid April 2010 for its first gold pour in late April 2010, some two months ahead of the original schedule.

The initial throughput rate of 2.8Mtpa is planned to increase to 3.2Mtpa from mid 2012. The total capital cost, including open pit pre-strip, is budgeted at $92m, of which the $46m plant construction cost is at a guaranteed maximum price. We understand that if the cost of the plant construction comes in under budget, the

Main gold producing asset located in the

Westonia Greenstone Belt

Histor ic underground mining on & of f s ince

1911

Mineralisat ion contained with in the

Edna May Gneiss

Forecast annualised gold product ion at

Edna May of 100koz

10 year mine l i fe

First gold pour was in late Apri l 2010

Total capex of A$92m to re-start operations


Page 5 of 21

Company and the construction contractor split the difference between budget and actual cost.

Fig. 3: Edna May Operations Plan (LHS) & Plant (RHS)


Even though the reserve grade is relatively low, the good metallurgy of the ore, the large plant size, and simple open pit mining methods have the Company targeting life of mine cash costs of A$636/oz. Recoveries are 88% in oxide ore and 92% in fresh ore.

We understand that at the applied cut-off grade the ore zones are large and homogenous, which should result in minimal dilution during the mining process. In addition, the average grade of all assays from drilling within the Edna May gneiss is 0.9g/t Au. This compares to a break even grade of 0.4g/t Au, implying that there is little risk of unprofitable ore being processed. Steady-state production is likely to be achieved around August 2010.

Golden Point While the Company is focused on the commissioning and ramp-up of the Edna May operations it has also continued with resource definition and exploration activities in order to extent mine life. Recent drilling at the Golden Point prospect within the Golden Point Gneiss, located only a few hundred metres from the current Edna May operations continues to delineate encouraging mineralisation including:

• 8m @ 3.39g/t Au from 52m;

• 3m @ 8.21/t Au from 83m; and

• 9m @ 4.79/t Au from 58m.

The results from this drilling have recently been incorporated into a JORC compliant resource and reserve, which the Company has recently released. The initial reserve for Golden Point is 37koz; however, we understand that this reserve only goes down to 100m depth. The mineralisation remains open below this as well to the south, indicating good potential for further resource and reserve upgrades in the future.

Targeting l i fe of mine cash costs of

A$636/oz

Large low grade orebody, d i lut ion

effect minimal

Near surface intercepts at Golden

Point has the potential to increase ore

reserves and increase mine l i fe

Init ial 37Koz reserve for Golden Point


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Fig. 4: Golden Point Plan (RHS) & Cross Section (LHS)


Underground Potential The Company has undertaken substantial drilling at depth, identifying some high grade mineralisation with good potential to be accessed via the existing underground infrastructure. Whilst this mineralisation represents an opportunity to augment the low grade open pit material with high grade ore, the Company has yet to undertake a study into the viability of an underground operation. However, based on the drill intercepts to date, the grades appear to be able to support a small underground operation.

Any underground opportunities would be accessed via the existing decline on the footwall between the two ore bodies. However, the decline would need dewatering and refurbishment before being able to be accessed. The Company will further assess the strike and down dip extension of the Golden Point Gneiss which appears to remain open down dip and down plunge.

Fig. 5: Edna May and Golden Point Mineralised Zones


High Grades at depth

Exist ing decline in place but would need

to be refurbished

Mineralisat ion below 300m has not been

included in the current Resource


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Regional Exploration Potential The Company has initiated a regional exploration program focused on exploring untested ‘greenfields’ targets within its tenements over the Westonia Greenstone Belt. The targets are located within a 15km radius of the Edna May plant and include ‘gold-in-auger’ anomalies, untested historical workings and Edna May ‘look-alike magnetic lows’. Recent work has involved regional RAB drilling comprising 345 holes for 6,116m. One anomaly (Townrow East), located only 1km from the Edna May open pit, defined a broad 35m downhole intercept of gold anomalism containing 3m @ 1.15g/t Au. The intercept occurs in the favourable hanging wall position of a mineralised Edna May Gneiss dyke.

Shallow drilling of broad auger anomalies at Stoneman, Battler West and Colossus North has enabled interpretation for the probable source of the gold anomalism and allowed for more detailed deeper drilling which is proposed. As well as targeting some of the above targets, the drill testing of the historical workings at Battler and other ‘magnetic low’ targets surrounding the Rutherfords Reward gold mine is proposed.

Fig. 6: Regional exploration targets around Edna May


Untested targets within 15km radius of

processing plant

Anomalous areas of gold requir ing dr i l l-

test ing


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CRACOW GOLD PROJECT

Fig. 7: Cracow Snap Shot

CRACOW

• Interest: 30% CAH; 70% NCM

• Operation: Underground

• Annualised Production: 100koz Au for ~30koz attributable

• Processing Capacity: 0.44Mtpa

• Reserve (attributable): 56koz Au

• Resource (attributable): 230Moz Au

• Cash Cost (C1): <A$600/oz

• Unhedged


The Cracow gold mine is located in central Queensland, ~500km north-west of Brisbane. The underground mine commenced operations in November 2004 and is producing ~100koz pa. Ore throughput capacity exceeds 400ktpa with ore currently being sourced from the Royal, Sovereign, Klondyke, Kilkenny and Crown mineralised zones. The gold mineralisation occurs in steeply dipping low sulphidation epithermal fissure quartz veins developed at the intersection of major structures. The mine is operated by Newcrest. Catalpa acquired its interest in the project through the merger with Lion Selection Limited and receives 30% of the gold, minus its share of operating and capital costs as well as exploration expenses. Catalpa has first right of refusal on Newcrest’s 70% share of the mine, should Newcrest choose to sell the project.

Total CY2009 production was 104koz at cash cost of A$505/oz. As at 31 December 2009, reserves were 188koz at a grade of 7.1g/t Au. Resources were ~800koz at a grade of 8.1g/t. Given production of 100koz pa, the reserves imply a remaining mine life of around two years. However, Catalpa believes that this mine life is likely to be extended via the conversion of inferred resources as well as exploration success, as evidenced by the delineation of additional mineralisation at both Kilkenny and the discovery of the Phoenix structure.

Fig. 8: Cracow Operations


30% interest in the Cracow Gold Project

in QLD

Unhedged

Mine l i fe l ikely to be extended through

resource conversion

First r ight of refusal on Newcrest’s 70%

interest should NCM choose to sell

Catalpas share of Cracow production is

~30koz of gold per annum


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Catalpa’s 30% share of gold produced at the Cracow Gold Mine for the first quarter of CY2010 was 6,437oz Au at cash operating cost of A$610/oz. Cracow is unhedged and continues to be fully exposed to the high A$ gold price providing a strong cash flow stream.

RESOURCES AND RESERVES

Fig. 9: Resources and Reserves Reserves & Resources Category Mt g/t Au Koz Attrib. Resources Edna May M+I+I 48.1 0.99 1,526 1,526 Greenfinch M+I+I 4.0 1.02 130 130 Cracow M+I+I 3.0 8.10 800 230 Total M+I+I 55.1 1.38 2,456 1,886

Reserves Edna May P+P 25.5 1.09 892 892 Edna May Stockpiles P+P 1.6 0.65 34 34 Greenfinch P+P 2.5 1.07 86 86 Cracow P+P 0.80 7.10 188 56 Total P+P 30.4 1.22 1,200 1,068


COMPARATIVES GOLD COMPARATIVES

Fig. 10: ASX Peer Market Capitalisation: Producers (A$m)

Source: IRESS; Prices at close of 24 May 2010

Catalpa has a market capitalisation around A$240m (at a price of $1.50) and current comparable resource base to Medusa Mining Limited (MML), and Focus Minerals Limited (FML) at ~1.9Moz.

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Current Reserve of 1.1 Moz Au


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Fig. 11: Producers JORC Compliant Reserves (LHS) and Resources (RHS)

Source: Company Reports

Catalpa’s targeted annual production rate of ~100kozpa for the Edna May Project implies a 10 year mine life on a current reserve position.

Fig. 12: Producers EV/ Oz Charts: Reserves (LHS) and Resources (RHS)

Source: Hartleys Estimates

On an EV to reserve ounce basis, Catalpa is well below the producer average.

On an EV to resource ounce basis, Catalpa is just below the producer average of ~A$150/oz. The Company is looking to increase its current resource position through an accelerated near mine and regional exploration program.

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Page 11 of 21

FINANCIALS Given that the Catalpa – Lion Selection merger had yet to occur as at June 30 2009, and that the Company was still very much in development mode for Edna May, the financial performance for FY2009 was not representative of the Company going forward.

Based on our assumptions, as detailed in our valuation section, Catalpa makes a small loss in FY2010 as the Company completes development of Edna May though whilst receiving cashflow from Cracow, moving into a profit making position in FY2011 following a full year of production from Edna May.

FINANCIAL PERFORMANCE

Fig. 13: Financial Performance Financial Performance Unit FY2009A FY2010F FY2011F FY2012F Net Revenue A$m 0.1 27.1 172.0 180.0 Total Costs A$m (6.9) (22.1) (92.3) (87.3) EBITDA A$m (6.8) 5.0 79.7 92.7 Depreciation/Amort A$m (0.2) (5.0) (17.2) (20.8) EBIT A$m (7.0) 0.0 62.6 71.8 Net Interest A$m 0.2 (1.3) (10.5) (8.5) Pre-Tax Profit A$m (6.8) (1.3) 52.1 63.4 Tax Expense A$m 0.0 (0.6) (15.6) (19.0) NPAT A$m (6.8) (1.9) 36.5 44.4 Abnormal Items A$m - - - - Reported Profit A$m (6.8) (1.9) 36.5 44.4

Source: Catalpa Resources Limited; Hartleys Research Estimates

BALANCE SHEET

Fig. 14: Balance Sheet Financial Position Unit FY2009A FY2010F FY2011F FY2012F Cash A$m 32.3 19.6 56.4 106.8 Other Current Assets A$m 4.4 9.6 20.3 20.9 Total Current Assets A$m 36.7 29.2 76.8 127.7 PP&E + Development A$m 7.5 104.0 102.1 98.0 Exploration A$m 1.5 73.7 70.8 69.8 Investments/other A$m 3.7 3.3 3.3 3.3 Tot Non-Curr. Assets A$m 12.6 181.0 176.3 171.2 Total Assets A$m 49.3 210.2 253.1 298.9

Short Term Borrowings A$m (0.0) (7.8) (7.8) (7.8) Other A$m (4.2) (12.2) (10.2) (10.6) Total Curr. Liabilities A$m (4.2) (20.0) (17.9) (18.4) Long Term Borrowings A$m (0.1) (57.2) (50.0) (30.0) Other A$m (0.4) (11.7) (27.3) (42.4) Total Non-Curr. Liabil. A$m (0.5) (68.9) (77.3) (72.4) Total Liabilities A$m (4.7) (88.9) (95.2) (90.8)

Net Assets A$m 44.6 121.3 157.8 208.1 Source: Catalpa Resources Limited; Hartleys Research Estimates

Good margins boost cash f lows once Edna

May comes online, with maiden prof it

forecast for FY2011.


Page 12 of 21

CASH FLOW

Fig. 15: Cash Flow Statement Cashflow Unit FY2009A FY2010F FY2011F FY2012F Operating Cashflow A$m (3.3) 4.4 66.9 92.5 Income Tax Paid A$m - (0.3) - (3.9) Interest & Other A$m 0.3 (1.0) (10.5) (8.5) Operating Activities A$m (3.0) 3.1 56.4 80.2

PP&E + Development A$m (7.1) (89.9) (8.2) (8.2) Exploration A$m (1.5) (10.9) (4.2) (7.5) Investments A$m - 6.4 - - Investment Activities A$m (8.6) (94.4) (12.5) (15.7)

Repayment of Borrowings A$m (0.0) (0.0) (7.2) (20.0) Equity A$m 41.1 80.3 0.0 5.9 Dividends Paid A$m - - - - Financing Activities A$m 41.1 78.6 (7.2) (14.1)

Net Cashflow A$m 29.5 (12.7) 36.8 50.4 Source: Catalpa Resources Limited; Hartleys Research Estimates

DEBT AND EQUITY As at 21 May 2010, the Company had 161.275M shares on issue, 6.94m listed options and 8.079m unlisted options on issue, exercisable at various dates and times.

At 31 March 2010, the Company had cash of A$19m, and had drawn down ~A$50m of its A$65m debt facility. Of the A$65m debt, we understand that A$7m of cash is required to be retained within a cash retention account, making the effective debt position A$58m. The debt facility was put in place as part of the finance package for the construction of Edna May. Of this, A$10m was a Mezzanine Loan Facility (MLF) with Macquarie Bank.

However, the Company has since undertaken a restructuring of the debt to convert the MLF into senior debt. The change has not altered Catalpa’s total debt position, but should lower the ongoing interest costs by 2.5% pa on the A$10m converted. Macquarie has consequently forgone its entitlement to 6.06m Catalpa options with an exercise price of A$0.825 that were part of the MLF package. In consideration for this, Catalpa has issued Macquarie with 500,000 CAH fully paid ordinary shares.

In conjunction with the debt restructure, Catalpa undertook a share placement to raise A$20m, with the funds to be used to accelerate resource and exploration drilling at Edna May as well as provide a working capital buffer during the commissioning phase of Edna May.

HEDGING As part of the financing package for Edna May, the Company took out a substantial flat forward hedging package of 352koz of gold at a delivery price A$1,557/oz. The delivery schedule is ~70kozpa over five years.

Given Edna May’s production profile of ~100kozpa, this represents 70% of the operation’s annual production over the first five years. However, as Cracow contributes ~30kozpa, the hedging represents only 54% of total annual production. As the hedges are currently substantially in the money, we see little risk of defaulting on any hedge commitments as the Company could easily sell the forwards.

A$65m debt faci l i ty, drawn to A$50m as at

31 March 2010

Recent restructure of Mezzanine f inance component of debt

Recent A$20m rais ing to boost working

capi tal and advance explorat ion

Excel lent hedge book of 350koz at A$1,557/oz


Page 13 of 21

DIRECTORS, SENIOR PERSONNEL AND MAJOR SHAREHOLDERS The following information has been taken directly from Catalpa Resources Limited website and latest Annual Report.

DIRECTORS Mr Peter Maloney – Non Executive Chairman

Mr Maloney, has broad commercial, financial and management expertise and experience. In a long career with WMC Resources, he held the positions of Treasurer, Executive Vice President Americas, and Manager Commercial and Marketing –WA. He has also been Executive General Manager, Finance at Santos and Chief Financial Officer at FH Faulding. Mr Maloney has also been a director of several companies and organizations including Indophil Resources and Barra Resources, and was chairman of Southern Health, the largest health care provider in Victoria, during a period of improvement in management and financial performance. He has been Chief Financial Officer of Lion Selection (and its predecessor companies) since 2003. Mr Maloney has been an Executive Director of Lion Manager since August 2007.

Mr Bruce McFadzean – Managing Director

Mr McFadzean, a mining engineer, brings over 30 years of management, mining, processing and project "start up" experience to the organisation, half of which was gained in the employ of global resources brands, Rio Tinto and BHP Billiton. Mr McFadzean has broad commodity experience in gold, iron ore, diamonds and nickel/cobalt and in a wide range of roles including corporate, managerial, technical and operational. Mr McFadzean is a Non-Executive Director of Venture Minerals Limited.

Mr John Rowe – Non Executive Director

Mr Rowe brings a wealth of geological and business development skills to the Company. Mr Rowe has 35 years experience within the Nickel and Gold industries of Western Australia. He has held a variety of positions in mine management, exploration and business development and was previously employed as an executive of Lion Ore in Australia. Mr Rowe is also a Non-Executive Director of Panoramic Resources Limited (PAN).

Mr Barry Sullivan – Non Executive Director

Mr Sullivan is an experienced and successful mining engineer with a career spanning 40 years. His initial mining experience was gained in the South African gold mining industry, followed by more than 20 years with Mount Isa Mines. In the final 5 years of his tenure with MIM, Mr Sullivan was Executive General Manager responsible for the extensive Mount Isa and Hilton operations. More recently, Mr Sullivan has been working with a number of smaller exploration and mining companies. Mr Sullivan is a Non-Executive Chairman of Exco Resources, Non-Executive Director of Sedimentary Holding also a Non Executive Director for Lion Selection.


Page 14 of 21

Mr Murray Pollock – Non Executive Director

Mr Pollock is a businessman with 40 years experience within the mineral resource sector, principally in drilling. Mr Pollock is a drilling and mine management services consultant for several companies.

Mr Graham Freestone – Non Executive Director

Mr Freestone has over 30 years experience in the finance and natural resources industry in Australia and internationally. He has a broad based finance, corporate and commercial background obtained from various senior finance positions with the Shell Group, Acacia Resources and AngloGold. Graham was comprehensively involved in the float of the Shell Group’s mineral interests through Acacia Resources Limited.

SENIOR PERSONNEL Mr Erik Palmbachs – Chief Financial Officer

Mr Palmbachs is an experienced CFO and holds an MSc in Mineral Economics and a Bachelor of Business (Accounting). He is a member of the Australian Society of Accountants (AASA, CPA) and has an impressive resume with over 30 years hands-on experience, much of which was gained in the resources sector.

Mr Stuart Pether – General Manager- Operations

Mr Pether is an experienced Mining Engineer and holds a BEng (Mining) with an impressive resume with over 20 years hands-on and technical experience in the resources sector. Mr Pether has worked in various operational, managerial, technical and corporate roles in Australia and Canada in his career covering several commodities predominately in gold, nickel and zinc. Mr Pether is equally skilled in both open pit and underground mining environments.

Mr John Fraser – Resident Manager

Mr Fraser holds a BSc(Eng) in Metallurgy, Minerals Processing Option, and has over 25 years of processing experience covering operational and technical roles. This includes recent project management and commissioning experience. In Mr Fraser’s career he has predominately worked in the nickel and minerals sands commodities.

Mr Adrian Pelliccia –Manager Geology

Mr Pelliccia holds a B.Sc. Hons (Geology), a Postgraduate Diploma in Applied Finance and Investment and is a Member of the Australasian Institute of Mining and Metallurgy. He has worked in various operational, technical and corporate roles in his career within the gold and nickel industries of Western Australia and Victoria. Mr Pelliccia is experienced in mineral resource evaluation and developing and leading operational geological teams in both underground and open pit environments.


Page 15 of 21

Fig. 16: Economic Exposure of Key Management

Name Position Options Shares Total Exposure

(‘000) (‘000) (‘000) P Maloney Non Executive Chairman

1,379.6 1,379.6

B McFadzean Managing Director 924.8 97.4 1,022.1

M Pollock Non-Executive Director 386.6 1,754.4 2,141.0

B Sullivan Non-Executive Director 45.5 111.0 156.5

J Rowe Non-Executive Director 181.8 95.7 277.5

G Freestone Non-Executive Director

58.2 58.2

Total

1,539 3,496 5,035

% of Total Issue 2.17% 2.86%

Source: Catalpa Resource Limited; all numbers in thousands

MAJOR SHAREHOLDERS

Fig. 17: Top 10 Shareholders as at 31 May 2010

Holder Units Held (m) % Units Issued

1 HSBC Custody Nom Aust Ltd 27.04 16.8%

2 ANZ Nom Ltd Cash Income A/C 13.40 8.3%

3 Citicorp Nom Pl 8.40 5.2%

4 National Nom Ltd 7.40 4.6%

5 Cogent Nom Pl 5.95 3.7%

6 Lion Manager Pl 4.82 3.0%

7 J P Morgan Nom Aust 3.78 2.3%

8 Creasy Mark Gareth 3.22 2.0%

9 Reneagle Pl Sharnem Inv A/C 1.88 1.2%

10 Goldrich Hldgs Pl 1.53 1.0%

77.42 48.0%

Source: Catalpa Resources Ltd; all numbers in millions


Page 16 of 21

VALUATION METHODOLOGY We have a sum of parts valuation for Catalpa of $2.02 per share. This is dominated by our NPV10 for Edna May of $1.36 per share, our NPV8 for the hedge book of 52cps and NPV8 for Cracow of 21cps.

Fig. 18: Catalpa Valuation Share Price Valuation (NAV) Est. $m Est. $/share

Edna May (NPV @ 10%)

237.6 1.36

Cracow (NPV @ 8%)

36.1 0.21

Exploration

25.0 0.14

Cash

26.4 0.15

Forwards

90.8 0.52

Corporate Overheads

(17.6) (0.10)

Total Debt

(65.0) (0.37)

Tax Losses

7.8 0.04

Options & Other Equity 11.6 0.07

Total 352.8 2.02


Edna May We have been conservative in our valuation of Edna May by only incorporating the Edna May, Greenfinch and Golden Point reserves as well as stockpiles (29.6Mt @ 1.06g/t for 1.01Moz). Our valuation is based on initial production of ~90kozpa for FY11, 95koz in FY12 and then ~100kozpa from FY13 onwards once the plant throughput is increased to 3.2Mtpa. We have average life of mine costs of ~A$650/oz. Based on the current reserves, we model a mine life of 10 years. This results in total recovered gold of ~950koz, using an average recovery of ~92%, though with lower recoveries during the first few quarters. We see room for valuation uplift via:

• open pit resource and reserves expansions,

• the addition of high grade underground production,

• the delineation of any additional higher grade feed, as well as

• regional exploration discoveries.

Cracow Our Cracow valuation is based on a mine life of ~4.5 years, with consistent annual production of ~100koz, of which 30% is attributable to Catalpa. Life of mine cash costs are assumed to be ~A$590/oz.

Total production under this scenario is ~490koz, of which ~150koz is attributable to Catalpa. Whilst this is significantly above the current reserve base, we expect reserves to be steadily replenished over this period, and note that these recovered ounces are still less than the current ~800koz resource base.

Given the long history of mining at Cracow, we see good potential for mine life extensions, however, at this stage will retain our 4 year life in our valuation.

$2.02/share valuation for Catalpa

Valuat ion dominated by Edna May, Hedges

and Cracow

Conservative valuation assumpt ions for Edna May with no addit ional resource

conversion or underground ore

Assumed +4 year mine l i fe for Cracow, but further extensions

l ikely


Page 17 of 21

Fig. 19: Annual Gold Production


Hedge Book To attribute a value for the hedge book independent of either Edna May or Cracow, we have undertaken a DCF on the value difference between our forecast gold price and the hedge price (A$1,557/oz), assuming constant delivery of 70kozpa over 5 years. This methodology derives a value for Catalpa’s hedge book of ~A$91m, or 57cps.

Fig. 20: Hedged & Unhedged Production – assuming A$1,200/oz spot gold price


Other Our valuation incorporates the full A$65m debt, the A$19m in cash as at March 31 2010, as well as the A$7m in cash in the retention account for the debt.

580

600

620

640

660

680

700

720

740

0

20

40

60

80

100

120

140

2HFY10 FY11 FY12 FY13 FY14 FY15 FY16

A$/

oz

Koz

Gol

d

Edna May Cracow A$ Cash Cost

0

200

400

600

800

1000

1200

1400

1600

0

20

40

60

80

100

120

140

2HFY10 FY11 FY12 FY13 FY14 FY15 FY16

A$/

oz

Koz

Gol

d

Unhedged production Hedged production

A$ Cash Cost Effective Received price

Product ion peaks at 130koz in FY13 & 14

in our scenar io

Hedge book al lows signif icant margins


Page 18 of 21

SENSITIVITIES As can be seen from our sensitivity analysis, due to the Catalpa A$ denominated hedge book, the Company is less exposed to variations in exchange rates and the gold price.

Fig. 21: Valuation Sensitivities on A$353m valuation +10% -10% +10% -10% A$m A$m % change % change Exchange Rate 330 381 -6% 8% Operating Costs 320 385 -9% 9% Gold Price 378 328 7% -7%


By way of comparison, a valuation using the current spot exchange rate (AUDUSD: 0.85) and spot gold price (US$1,210/oz), yields a valuation of $2.27/share, with the valuation for Cracow and Edna May increasing, whereas the hedge book value decreases as expected.

RISKS We see the key risk for Catalpa being lower than anticipated production from Edna May which could cause a default on the debt facility.

To minimise this risk, the Company will need to maintain the efficient movement of open pit ore to the mill, as well as the mill being able to treat the ore at the designed capacity, with recoveries being close to expectations. Given the relatively large size of the open pit and therefore ease of mining efficiently, we do not see a lack of earthmoving as a likely impediment. Conversely, we see the underperformance of the plant as the largest risk. However, given that the metallurgy of the ore is well understood due to it having being treated historically, as well as the substantial metallurgical testwork undertaken by the Company, we believe that this risk has been mitigated as best as can be prior to start up.

SIMPLE S.W.O.T. TABLE Strengths Strong management team

Exceptional in the money hedge book Low geological risk at Edna May due to extensive drilling and large orebody

Weaknesses Low grade yields less margin for error Cracow has perception of short mine life Moderate debt position

Opportunities Possible potential to purchase remainder of Cracow Further acquisitions beyond Cracow and Edna May to boost production

Threats Good hedge book and long mine life may be attractive to predators General rise in industry costs threatening margins

Source: Hartleys Research

Hedge book lowers valuation sensit ivi ty to

exchange rate and gold price

Spot valuation increases to $2.27/share

Low grades for Edna May means that CAH wil l need to maintain

eff icient mining, maintain ing mi l l throughput and

achieving targeted recoveries


Page 19 of 21

INVESTMENT THESIS & RECOMMENDATION We see Catalpa as a good quality emerging producer, with a solid base lode production of 30koz pa from Cracow, with Edna May boosting production to over ~130kozpa once the plant upgrade has been completed in ~2 years time. The Company has substantial upside to Edna May with potential high grades from underground that could substantially boost production given the relatively low grade from the open pit. In addition, there is good potential for mine life extensions via exploration success as evidenced by the recent good drill results from Golden Point.

Whilst the grade of Edna May is low relative to its peers, the operation is not high cost given the large capacity of the plant. The excellent hedge position also builds in a large degree of comfort allowing Catalpa to yield margins substantially above those delivering into spot prices.

The Company also has excellent management with significant development experience. As production from Edna May continues to ramp up, we expect the Company to be re-rated. The Company is trading at a substantial discount to our $2.02 per share valuation, and has attractive forward looking earnings ratios and cashflow multiples, as well as comparing favourably to its peers on a number of multiples. We recommend Catalpa Resources Limited as a Buy.

Good quality, lower r isk emerging

producer

Hedge book and long mine l i fe d if ferent iate

CAH from its peers

Init iat ing coverage with a Buy

recommendation

Page 20 of 21

HARTLEYS RESEARCH COVERAGE LIST Hartleys Research Coverage Hartleys

Name Ticker Last M. CAP EV Research IndustryPrice* (A$m) (A$m) Recommendation

Oil & Gas1. Woodside Petroleum Ltd WPL 43.49 33,802 37,980 Buy Major

2. Nexus Energy Ltd NXS 0.265 254 576 Neutral Developer / Explorer

3. Carnarvon Petroleum Ltd CVN 0.350 240 211 Buy Producer / Explorer

4. Tap Oil Ltd TAP 0.920 144 83 Buy Producer / Explorer

5. Cooper Energy Ltd COE 0.445 130 34 Buy Producer / Explorer

6. Otto Energy Ltd OEL 0.095 102 79 Buy Explorer / Producer

7. Strike Energy Ltd STX 0.240 79 71 Buy Explorer / Producer

8. Adelphi Energy Ltd ADI 0.415 70 60 Buy Producer / Developer

9. Red Fork Energy Ltd RFE 0.450 62 34 Buy Explorer / Producer

10. Amadeus Energy Ltd AMU 0.190 58 101 Buy Producer / Explorer

11. First Australian Resources Ltd FAR 0.062 41 22 Speculative Buy Explorer / Producer

12. Entek Energy Ltd ETE 0.170 38 29 Speculative Buy Producer / Explorer

13. European Gas Ltd EPG 0.150 30 94 Speculative Buy Producer / Explorer14. Sun Resources NL SUR 0.058 20 15 Speculative Buy Explorer / Producer15. Oilex Ltd OEX 0.088 19 1 Neutral Explorer / Producer

Sub-Total 35,089 39,391

Resources1. Riversdale Mining Limited RIV 9.65 1,818 1,550 Speculative Buy Coal

2. Atlas Iron Limited AGO 2.040 912 767 Buy Iron Ore

3. Western Areas NL WSA 4.09 732 911 No Rating Nickel

4. Dominion Mining Limited DOM 2.730 282 301 Speculative Buy Gold

5. Silver Lake Resources Limited SLR 1.565 280 249 Speculative Buy Gold

6. Catalpa Resources Limited CAH 1.460 236 274 Buy Gold Producer

7. Intrepid Mines Limited IAU 0.550 235 188 Speculative Buy Gold

8. Gold One International Limited GDO 0.275 221 292 Buy Gold

9. Jabiru Metals Limited JML 0.310 171 146 Buy Zinc-Copper

10. Tanami Gold NL TAM 0.040 142 184 No Rating Gold Producer

11. Focus Minerals Ltd FML 0.046 132 125 Speculative Buy Gold Producer12. Magma Metals Limited MMB 0.520 85 64 Speculative Buy PGM-Cu-Ni

13. Peninsula Minerals Ltd PEN 0.037 51 42 Buy Uranium Developer / Explorer

14. Emmerson Resources Limited ERM 0.210 43 30 Speculative Buy Junior Explorer

15. Hazelw ood Resources Ltd HAZ 0.210 40 35 Speculative Buy Junior Developer

16. YTC Resources Limited YTC 0.230 38 25 Buy Junior Explorer

17. Centaurus Metals Ltd CTM 0.060 36 29 Speculative Buy Iron Ore Developer

18. Ausquest Limited AQD 0.145 33 7 Speculative Buy Junior Explorer

19. Shaw River Resources Limited SRR 0.150 30 23 Speculative Buy Junior Explorer

20. Ferrum Crescent Limited FCR 0.170 27 25 Speculative Buy Iron Ore

21. Orion Gold NL ORN 0.025 19 15 Speculative Buy Gold

22. Impact Minerals Limited IPT 0.130 15 11 Speculative Buy Junior Explorer

23. Southern Gold Limited SAU 0.088 12 8 Speculative Buy Junior ExplorerSub-Total 5,417 5,183

Industrials1. West Australia New s Hdgs Ltd WAN 6.61 1,532 1,807 Buy Media

2. Monadelphous Group Limited MND 12.810 1,102 970 Buy Mining Services

3. Clough Limited CLO 0.775 527 587 No Rating Oil & Gas Services (C t ti )4. Mermaid Marine Australia Ltd MRM 2.50 465 599 Buy Oil & Gas Services

5. Fleetw ood Corporation FWD 8.500 459 452 Neutral Consumer & Mining Services

6. Austal Limited ASB 2.19 412 423 Speculative Buy Capital Goods

7. Macmahon Holdings Limited MAH 0.550 404 376 Buy Mining & Civil Construction

8. Ausdrill Limited ASL 1.845 386 608 Buy Mining Services (Drilling & C t t Mi i )9. NRW Holdings Ltd NWH 0.960 241 306 Buy Mining & Civil Construction

10. Cash Converters Limited CCV 0.595 216 173 Buy Retail & Consumer Finance

11. Decmil Group Limited DCG 1.440 176 143 Buy Mining & Civil Construction

12. Imdex Ltd IMD 0.725 141 155 Buy Oil & Gas / Mining Drilling S13. Southern Cross Electrical

E i iSXE 1.110 134 118 Speculative Buy Mining Services (Electrical)

14. Lycopodium Limited LYL 3.240 125 110 Buy Mining & Industrial Services

15. Neptune Marine Ltd NMS 0.235 113 142 Speculative Buy Oil & Gas Services

16. RCR Tomlinson Ltd RCR 0.850 112 156 Buy Mining & Industrial Services17. Sw ick Mining Services Ltd SWK 0.380 90 139 Speculative Buy Mining Services (Drilling)18. VDM Group Limited VMG 0.360 76 95 Buy Mining & Civil Construction19. Pacif ic Energy Ltd PEA 0.280 52 107 Buy Mining Services / Pow er

20. LogiCamms Limited LCM 0.870 52 42 Buy Resource Services

21. Nomad Building Solutions Ltd NOD 0.145 20 43 Neutral Residential & Mining Services

Sub-Total 6,836 7,549

GRAND TOTAL 47,342 52,124

Source: IRESS, Hartleys Research. * 1 Jun 2010

Page 21 of 21

HARTLEYS CORPORATE DIRECTORY Research Trent Barnett Head of Research +61 8 9268 3052 Andrew Muir Senior Resources Analyst +61 8 9268 3045 Mike Millikan Resources Analyst +61 8 9268 2805 David Wall Oil and Gas Analyst +61 8 9268 2826 Nikki Ermongkonchai Industrial Analyst +61 8 9268 2837 Janine Hodges Research Assistant +61 8 9268 2831

Corporate Finance Grey Egerton-Warburton

Head of Corporate Finance +61 8 9268 2851

Richard Simpson Director - Corporate Finance +61 8 9268 2824 Paul Fryer Director - Corporate Finance +61 8 9268 2819 Dale Bryan Director - Corporate Finance +61 8 9268 2829 Ben Wale Matt Szwedzicki

Manager - Corporate Finance Manager - Corporate Finance

+61 8 9268 3055 +61 8 9268 3047

Scott Weir Corporate Finance Exec. +61 8 9268 2821

Registered Office Level 6, 141 St Georges Tce Perth WA 6000 Australia Postal Address GPO Box 2777 Perth WA 6001 Australia Contact Details Telephone: +61 8 9268 2888 Facsimile: +61 8 9268 2800 Website: www.hartleys.com.au Email: [email protected] Note: personal email addresses of company employees are

structured in the following manner: [email protected]

Hartleys Recommendation Categories No Rating No recommendation. Buy Share price appreciation anticipated Speculative Buy Share price appreciation anticipated but it is higher

risk than a “Buy”. For the share price to rise it may be contingent on the outcome of an uncertain or distant event.

Neutral Take no action. Stock is already trading near the share price target and there are no foreseeable near term catalysts.

Reduce / Take profits

Stock is trading above the share price target and there is a near term negative catalyst that could cause temporary weakness.

Sell Significant price depreciation anticipated

Institutional Sales Carrick Ryan +61 8 9268 2864 Justin Stewart +61 8 9268 3062 Simon van den Berg +61 8 9268 2867 Steven Boyce +61 8 9268 2817 Nick Wheeler +61 8 9268 3053

Wealth Management Nicola Bond +61 8 9268 2840 Bradley Booth +61 8 9268 2873 Adrian Brant +61 8 9268 3065 Nathan Bray +61 8 9268 2874 Sven Burrell +61 8 9268 2847 Simon Casey +61 8 9268 2875 Tony Chien +61 8 9268 2850 Travis Clark +61 8 9268 2876 David Cross +61 8 9268 2860 Nicholas Draper +61 8 9268 2883 John Featherby +61 8 9268 2811 Ben Fleay +61 8 9268 2844 John Georgiades +61 8 9268 2887 John Goodlad +61 8 9268 2890 Andrew Gribble +61 8 9268 2842 Neil Inglis +61 8 9268 2894 Murray Jacob +61 8 9268 2892 Gavin Lehmann +61 8 9268 2895 Shane Lehmann +61 8 9268 2897 Steven Loxley +61 8 9268 2857 Andrew Macnaughtan +61 8 9268 2898 Christian Marriott +61 8 9268 2828 Scott Metcalf +61 8 9268 2807 David Michael +61 8 9268 2835 Nicole Morcombe +61 8 9268 2896 Jamie Moullin +61 8 9268 2856 Chris Munro +61 8 9268 2858 Michael Munro +61 8 9268 2820 Ian Parker +61 8 9268 2810 Ian Plowman +61 8 9268 3054 Margaret Radici +61 8 9268 3051 Charlie Ransom (CEO) +61 8 9268 2868 Elliott Rowton +61 8 9268 3059 Conlie Salvemini +61 8 9268 2833 David Smyth +61 8 9268 2839 Greg Soudure +61 8 9268 2834 Sonya Soudure +61 8 9268 2865 Dirk Vanderstruyf +61 8 9268 2855 Marlene White +61 8 9268 2806

Disclaimer/Disclosure The author of this publication, Hartleys Limited ABN 33 104 195 057 (“Hartleys”), its Directors and their Associates from time to time may hold shares in the security/securities mentioned in this Research document and therefore may benefit from any increase in the price of those securities. Hartleys and its Advisers may earn brokerage, fees, commissions, other benefits or advantages as a result of a transaction arising from any advice mentioned in publications to clients.

Any financial product advice contained in this document is unsolicited general information only. Do not act on this advice without first consulting your investment adviser to determine whether the advice is appropriate for your investment objectives, financial situation and particular needs. Hartleys believes that any information or advice (including any financial product advice) contained in this document is accurate when issued. Hartleys however, does not warrant its accuracy or reliability. Hartleys, its officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law.

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Catalpa Resources Limited