Mining Group Ltd

Page 1 – Copyright © 2012 RM Research – www.rmresearch.com.au - Please read the disclaimer for terms.

Site Visit Confirms PotentialRM Research conducted a site visit (23 May 2012) on the Company’s flagshipComval Project situated approximately 90 kilometres north of the regional city ofDavao, the capital city of Mindanao (Philippines). The project is strategicallylocated on the eastern flank of the prolific Philippine Fault known to host a numberof significant copper and gold deposits (Dilwalwal, 10.2Mt @ 9.6 g/t Au; Maco, 3Mt@ 5.9 g/t Au; Amacan, 110Mt @ 0.30 % Cu, 0.40 g/t Au; King King, 962Mt @0.25% Cu, 0.30 g/t Au; Co-o 6.3Mt @ 9.6 g/t).

After acquiring an 80% interest in the Comval Project from TSX-V listed CadanResources in January 2012 (which included cash payments of $3.0 million, andissue of 2.6 million Shares in the Company), Mining Group is in the early phaseof follow up exploration on key prospects including Tagpura, Bayag Bayag andMaangob.

The targets are skarn hosted Cu+/-Au mineralisation (Tagpura, Bayag Bayag,Maangob) and porphyry hosted Cu/Au (Kalamatan).

Drilling UnderwayDrilling is currently underway at the Tagpura and Bayag Bayag Prospects.

The current program comprises approximately 3,000 metres of diamond core, withassay results due in July-August 2012.

Exploration TargetOur exploration target over the next 12-24 months is for clusters of Cu+/- Auskarns hosted within both diorite intrusions and altered limestone and volcanicunits totalling perhaps 8-12 Mt each.

RM Research considers that global resources in the order of 200,000-300,000tonnes of contained copper+/- gold credits could be sufficient to sustain a stand-alone operation using conventional flotation methods. In other words, JORCResources of perhaps 30-40Mt grading 0.80-1.0% Copper equiv (including Au, Agcredits).

Economic ModelCAPEX for a 3Mt p.a. operation could be in the range of A$200 million (includingworking capital) in a potentially low operating cost environment <US$1.50/lb(compared to peer ASX listed entities), based on other copper operators onMindanao.

Price CatalystNear term share price drivers – diamond drill results from Tagpura and BayagBayag due 2H CY 2012.

Action and RecommendationAccumulate between 20 to 30 cents.

*Capital Structure

Sector MaterialsShare Price (A$) 0.25Fully Paid Ordinary Shares (m) 50.2Opt (ex 20c, exp 31/07/14) (m) 21.9Opt-Class A (ex 20c, exp 7/14) (m) 1.5

Opt-Class B (ex 55/60c, exp 14/15) (m) 0.75

Market Cap (undil) (A$m) 18.6

Market Cap (dil) (A$m) 12.6

Share Price Year H-L (A$) 0.78-0.19

Approx Cash (A$m) 1.5

*as at 9 June 2012

Directors & Management

Winton Willesee Non–Exec ChairmanAndrew Maurice Managing DirectorColin Johnstone Non Exec DirectorRobert Buchart Non Exec Director

Major Shareholders

JR & BM Fraser <Fraser S/F A/C> 8.96%Cadan Resources Corporation 6.18%Longreach Manag.Gp. Ltd <BVI Co A/C> 4.98%

Analyst

GT Le Page +61 8 9488 0800

Share Price Performance

INITIATING COVERAGEMining Group LtdRM Research site visit confirms Skarn/Porphyry copper-goldpotential adjacent to prolific Philippine Fault

2 July 2012

ASX Code: MNEAccumulate

Page 2 – Copyright © 2012 RM Research - www.rmresearch.com.au

2 July 2012

INVESTMENT CASEComval Copper-Gold Project: Based on the medium term exploration target of 30-40Mt @0.8 to 1.0% Cu (equiv) (or 200-300,000 tonnes of contained Cu equiv) at the Tagpura, Maangoband Bayag Bayag Prospects (part of the Comval Cu+/-Au Project) in the Philippines. RMResearch considers a resource of this tonnage and grade may be sufficient to justify a stand-alone operation.

DEPOSIT/COMPANY RESOURCES MARKETCAPITALISATION

Co O Gold Mine, Medusa Mining (ASX: MML) 2.7 M oz Au AUD 912M

King King Cu Au Porphyry Dep.,St Augustine (TSX: SAU.TO)

11.9 M oz Au,5.4B lbs Cu

CAD 35.7M

Tampakan Cu-Au Porphyry deposit,X-Strata 67.5%, Indophil Resources 32.5% (ASX: IRN)


GBP 34.8B (X-Strata)AUD 360.5M (IRN)

Tayshan Cu-Au Porphyry deposit,Crazy Horse Resources (TSX-V:CZH)

2.5 M oz Au,4.6B lbs Cu,20.4 M oz Ag,

CAD 7.9M

Siana Au Mine, Red 5 (ASX: RED) 1.3M oz Au,2.4M oz Ag

AUD 186.8M

Dilwalwal Au Mine, Philippines Mining, Not listed >10 M oz Au N/A

Boyongan/Bayugo Au Project, Philex Gold Holdings,unlisted


N/A

Active Exploration Program: The identification of untested regional anomalies will presentthe Company with a number of important targets with little or no previous exploration. Resultsfrom the current round of diamond drilling are due July-August this year. Future explorationwill see a far more integrated and thorough approach to exploration on a project wherecomplex geology requires attention to detail. Drilling is ongoing.

Leverage to Success: Assuming the Company lives up to our JORC resource target above,RM Research believes that MNE has upside to A$1.50 over the next 24 months based onpeer copper explorers/developers listed on ASX/TSX.

Infrastructure Advantages: A deep-water port is situated 70 kilometres south of the ComvalProject area with good access to roads. This provides ready access to local smelters andexport markets of China and India.

Government Pro-Development: The Philippine Government has shown a willingness toefficiently deal with the permitting and approval process with a strong pipeline of newdevelopments (e.g. Masbate – CGA Corp, Co-O, - Medusa Mining and Siana–Red 5).

World Class Mineral Endowment: The Philippines has over 45 million ounces of gold and 50billion pounds of contained copper making it the fourth highest copper endowment and thirdhighest gold endowment in the world. Comval is strategically located on the eastern side ofthe Philippine Fault, a key focus of the majority of economic mineralization on Mindanao.

Low Cost operating environment: Our review of a suite of Philippines Cu+/-Au producersindicates that operating costs average <US$1.70/lb/Cu (equiv) compared to an average ofUS$2.00/lb Cu (equiv).

Outlook for Copper remains strong: During the recent annual Copper CESCO Week held inSantiago, Chile, LME prices for copper reached 41 month lows however we believe withdeclining inventories, projected supply deficits and stabilisation of emerging economies shouldresult in price support above US$7,000/tonne over the medium term.

TABLE 1: SignificantCopper+/-Gold deposits inMindanao, Philippines(source: Mining Group,website, July 2012).

Page 3 – Copyright © 2012 RM Research – www.rmresearch.com.au

2 July 2012

COMPANY OVERVIEWMining Group Limited (“Mining Group”,MNE or “the Company”) listed on theAustralian Securities Exchange (“ASX”) on 1July 2011 raising A$2.5 million via the issue12.5 million shares @ 20 cents per share.

The Company was listed on the back of aportfolio of Western Australia explorationprojects (Figure 1) comprising the Boorara,Teutonic and Lake Christopher Projects. TheBoorara Project is prospective primarily forgold and is situated in the East CoolgardieMineral Field (Western Australia) and coversapproximately 206 hectares.

The Teutonic Project is located in theEastern Goldfields of Western Australia andcovers approximately 1,613 hectares. Ananomalous gold trend within the Teutonic

Project area is yet to be systematically tested below the weathered zone and the base metalpotential of the property has yet to be tested using modern exploration techniques despite theproperty being located in an emerging base metals province.

More recently (MiningGroup, ASX

Announcement,17/01/2012) theCompany acquired an80% interest in theComval Copper Goldproject in the Philippines(Figure 2).

The project coversapproximately 4,310hectares over twogranted explorationpermits and isprospective for Cu+/-Auskarn/porphyry andepithermal Aumineralisation.

With over 24,000 metresof historical drilling, thisproject has the potentialto fast track the Companyinto an early JORCResource later in CY2012.

FIGURE 1: MiningGroup’s Australian andPhilippine explorationportfolio (source: MiningGroup, website, June2012).

FIGURE 2: ComvalProject and othersignificant deposits/mines(source: Mining Group,Presentation, June 2012).


2 July 2012

EXPLORATION OVERVIEWComval Copper Gold Project (MNE: 80%, an Resources: 20%)

Background

In January 2012, MNE completed the acquisition of an 80% interest in the Comval Projectfrom an Resources Corporation (TSX-V: ), via the acquisition of an 80% interest inCXD subsidiary Philco Mining Corporation which in turn owns a 100% interest in EP-000001-XI (‘EP1’) and EP0000002-09-XI (‘EP2’). remains free carried for the first A$48.0million in exploration expenditure over six years.

Total consideration payable was:

Up to A$4.0 million in cash,

The issue of up to 5.2 million MNE shares (2.6 million to be issued in the event thatMNE trades above A$1.00/share for 30 consecutive days), and

The issue of 500,000 Shares @ 20 cents and 2 million MNE options exercisable at$0.20 before the 1st of July 2014.

As part of the acquisition, MNE also have a nine-month option to acquire 80% of the BatotoGold and Silver Project from .

FIGURE 3: ComvalProject and significantProspects (source:Mining Group,Presentation, June 2012).


2 July 2012

Location and Access

The Comval Project is located in theCompostela Valley in East Mindanao,approximately 90 kilometres north of thecapital, Davao (Figure 2, 4).

The Project is cross cut by a number ofroads that access local villages and anumber of secondary roads and trailsthat access old workings.

FIGURE 4: ComvalProject showing regionalgeological geology andsignificant prospects(source: Mining Group,Presentation, June 2012).

Note: APSA 246-XI andEXPA 109-XI are subjectto the Batoto option-seebelow “Other Projects”).

FIGURE 5: Philco MiningExploration Manager MaxTuesley (left) talking withFox Davies representativeMr Peter Rose (right) atthe Comval Project siteoffice (source: RMResearch, May 2012).


2 July 2012

Geology and Mineralisation

A portion of the Philippine Fault Zone known to host epithermal gold, copper- gold porphyryand copper-gold magnetite skarn type mineralisation transects the project area. There arealso numerous outcrops of copper and gold mineralisation on the contacts of quartz dioritesand associated porphyries.

This Cu+/-Au belt is well endowed and includes the King-King (5B lb Cu and 10M oz AU) andthe Dilwalwal deposits (10M oz Au) and the Co-O Mine (1.3M oz Au) (Table 1, Figure 2).

The mineralization model has improved inrecent months and appears moreexpansive than a simple skarn stylereplacement of limestone. Skarnmineralization has also been observedoccurring in contact with diorite lithologiesthroughout the tenement.

The above observation has prompted re-logging of many of the previous RC anddiamond holes that had misidentified hostrocks in many instances.

At least four styles of mineralization haveso far been identified with the mostprominent including an assemblage ofmagnetite-epidote-iron carbonate+-chalcopyrite+/-pyrite (Figure 6).

Higher grades appear to be associatedwith zones of high-magnetiteconcentrations involving limestonereplacement. Porphyry hosted

mineralisation has also been identified at the Kalamatan Prospect.

Exploration and Mining History

Copper and gold mineralisation was first discovered in the Comval Project area during the1960’s. At the Tagpura Prospect from 1979-1981, open Pit mining was undertaken whichresulted in the production of 12,650 tonnes of copper, 9,586 ounces of gold and 61,855ounces of silver. Production ceased during 1981 due to depressed copper prices.

Recent Exploration

Exploration work completed byincluded surface mapping, trenching,geophysical surveys, preliminarymetallurgical studies and over 24,000metres of diamond and RC drilling.

The majority of exploration took place on theTagpura Prospect including approximately16,000 metres of diamond drilling.Exploration at the Comval Project hasresulted in the delineation of a number ofCu+/-Au prospects including Tagpura,Maangob and Kalamatan.

A new high-resolution magnetic survey(Figure 7) has also given the company agreater understanding of potentiallycontrolling structures to mineralisation.

FIGURE 6: High-gradeMagnetite rich skarnmineralisation at theTagpura Prospect,Comval Project (source:RM Research, May2012).

FIGURE 7: Highresolution magneticsurvey at Comval Project(source: Mining Group,Presentation, June 2012).


2 July 2012

Exploration by Mining Group

Recent exploration by the Company has included synthesis and re-logging of previousdiamond and RC drill logs (20,000 metres) including the construction of a JORC compliantinterrelational database. Other geological, geochemical and geophysical data is also being re-interpreted.

Perth based consultants Simulus Pty Ltd are also undertaking metallurgical testwork andprocess flow sheet design. Nick Oliver, from Queensland based HCO Associates Pty Ltd, hasalso been undertaking detailed mapping, petrological and structural work with a view toproviding more reliable vectors for mineralization on the project. Little of this detailed work hasbeen undertaken in the past and these technical studies will be critical in providing theexploration team with greater focus.

A high-resolution ground magnetic survey has commenced and is covering extensions toTagpura in addition to the Bayag Bayag skarn prospect identified earlier this year.

One drill rig is currently on site with around 10 holes planned for approximately 1,448 metreswith key targets outlined in Figure 10.

Tagpura Prospect

The Tagpura Prospect haspreviously been subject to open pitmining in the late 1970’s early1980’s as mentioned above.

A total of 16,359 metres of RC anddiamond drilling was completed byCXD (Figure 11, 12) with drilling inQ4 2011 returning a number of highgrade intercepts including TAG110Dwith 10.70 metres downhole @2.96% Cu and 0.79 g/t Au fromsurface and TAG112D with 26.0metres @ 1.95% Cu and 0.74 g/t Aufrom 39.00 metres.

FIGURE 8: Diamonddrilling at the BayagBayag Prospect, ComvalProject (source: RMResearch, May 2012).

FIGURE 9: ExplorationManager Max Tuesleylooking north towards theold Tagpura Open Pit atthe Comval Project(source: RM Research,May 2012).


2 July 2012

The targets as set out in Figure 10 can therefore be summarized as:

High-grade skarns generally, individually sub 15 million tonne range with approximatelytotal lower tonnage <50 million tonnes at approx. 1% Cu equiv

Historical mined and proven skarn targets in the south3 drilled another two identified from mappingTagpura, Mangob, Bayag Bayag, Tagpura East and Kapanawan skarns

Porphyry – large tonnage, lower grade, 0.5%Cu + gold:

Skarn/porphyry target at KalamatanPorphyry/epithermal and skarn targets in the northern areas and quartz veinshistorically exploited by small-scale miners.

FIGURE 10: ComvalProject showing regionalgeology, key prospectsand target areas (source:Mining GroupPresentation, June 2012).


2 July 2012

The goal at Tagpura is to outline a JORC Resource in the range of 10-20Mt @ 0.6%-1.0% Cuequiv (including gold credits).

QED drilling company was underway on hole number 7 at Tagpura during our site visit witharound 2,000 metres of drilling so far completed. All samples will be dispatched to MacPharlaboratories in Manila for analysis.

FIGURE 11: TagpuraProspect showing surfaceprojection of gradecontours and drill holelocations (source: MiningGroup Presentation, June2012).

FIGURE 12: TagpuraProspect cross-sectionshowing grade contoursand drill hole traces(source: Mining GroupPresentation, June 2012).


2 July 2012

Maangob Prospect

A total of approximately 4,680 metres of RC and diamond drilling has been completed atMaangob in addition to sampling and mapping of roughly half of the 800 metres of adits. Thissampling by CXD returned some impressive results including the W1 Adit with 86.0 metres @1.01% Cu, 0.20g/t Au and 1.56 g/t Ag and the S2 Adit with 40.0 metres @ 0.78% Cu, 0.12g/tAu and 0.95 g/t Ag. RM Research is confident that the Company will reach its ExplorationTarget 20-40Mt @ 0.6%-1.0% Cu equiv within the next 12-18 months.

Previous drilling by returned high-grade intersections including 38 metres @ 1.72% Cuand 30 metres @ 0.98% Cu. had previously estimated a “conceptual” target of 20-40Mt@ 0.5-0.7% Cu and 0.2-0.31g/t Au at Maangob.

FIGURE 13: MaangobProspect showing surfaceprojection of gradecontours, adits and drillhole locations (source:Mining GroupPresentation, June 2012).

FIGURE 14: MaangobProspect high-gradecopper mineralisation(source: Mining GroupPresentation, June 2012).


2 July 2012

Kalamatan Prospect

The Kalamatan target (Figure 15)was discovered in 1974 and islocated 5 kilometres north of theTagpura target.

The prospect is largelyunderexplored with historicexploration work limited to trenching,1,300 metres of undergroundexploration adits and a first pass drillprogram of 14 holes for 1,604metres. Significant assays recordedto date include 107 metres @ 0.43%Cu and 84 metres 0.38% Cuhas previously estimated a‘conceptual’ tonnage for the

Kalamatan target of 100-525Mt @ 0.27-0.55% Cu and 0.11-0.45 g/t Au. MNE has yet to verifyan initial resource target for the Kalamatan Prospect.

Bayag Bayag Prospect

Another recently emerging prospect is Bayag Bayag (Figure 16) located just 800 metres southof the Tagpura Pit. The prospect contains outcropping skarn mineralization with the first drillhole (BCPDH – 00001) returning an impressive 44.0 metres @ 0.64% Cu from 39.0 metresdownhole (Mining Group ASX Announcement 16/05/2012). Mapping has now indicated atarget of at least 800 metres in strike length and results are awaited on a recently completed 9hole diamond drill program. Logging has confirmed the occurrence of visible coppermineralization. This investigation has also identified further skarn targets in the vicinity ofTagpura which are likely to be followed up in the near term.

FIGURE 15: Crosssection showinginterpreted geology atKalamatan Prospect(source: Mining GroupPresentation, June 2012).

FIGURE 16: Bayag BayagProspect showingproximity to TagpuraProspect and otherimportant targets (source:Mining GroupPresentation, June 2012).


2 July 2012

OTHER PROJECTSBatoto Au-Ag Project: (MNE option to acquire 80%, Mindanao, Philippines): ComprisingEXPA-00109-XI and APSA-00246-XI) the Company has the option to acquire 80% via thepayment of A$3.0 million cash and the issue of 5.2 million MNE Shares. Mineralisation isassociated with quartz stockwork and pyrite sericite alteration. In 1981, the previousowners estimated a non JORC compliant resource of 39Mt @ 1.8 g/t Au for 2.2 millionounces of Au. In the early 1980’s approximately 80,000 tonnes of ore was processed @4.0–5.0 g/t Au.

Boorara Project: (MNE earning up to 70%, East Coolgardie Mineral Field, WesternAustralia): Covers 206 hectares over two Prospecting Licenses. Gold and Base Metals. Acomprehensive soil sampling program is currently being planned.

Teutonic Project: (MNE earning up to 70%, Eastern Goldfields Province, WesternAustralia): One granted Exploration License covering 1,613 hectares. Gold and BaseMetals. Interpretation of a high resolution magnetic survey is near completion.

Lake Christopher Project: (MNE 100%, Rawlinson Range, Western Australia): One ELAcovering 22,100 hectares. Gold, diamonds and uranium. Access agreements arecurrently under negotiation.


2 July 2012

COPPER MARKET OUTLOOKMacro themes give copper a boost

Copper rose (Figure 17) over 4% (29June 2012), its biggest one-day gainsince November 2011 as the latest euro-zone rescue deal boosted commodityprices across the board. Short coveringalso contributed to sharp rises.Even after the Friday’s sharp gains,copper still ended 2Q down approximately8% in New York and 9% in London, itssharpest quarterly decline since the

middle of 2011.Leaders of the 17-nation euro zone agreed rescue funds could be used for sovereign debtpurchases without forcing countries to take on additional austerity measures. Countries willalso be able to recapitalize banks directly without increasing their respective budget deficits.

Looking at the last 12 months, there was a healthy run up in the copper price before sharpfalls as Europe’s debt mess and a downgrade of annual growth forecasts for China to 7.5 percent pa triggered fears about the strength of the global economy (Figure 18).

RM Research remains optimistic that the Eurozone will stabilise in 2013, however we see aflat outlook for commodity prices in the near term relative to the fairly strong performance overthe last twelve months (Figure 20).

Copper closely tied to economic activity

The outlook for copper,which is used extensivelyin wiring, constructionand electronics, is tightlybound to economicactivity in developingmarkets. China is theworld’s biggest consumerof the industrial metal,and disappointing first-quarter GDP figuresreleased last month castmore doubt on futuredemand. Another recentworry for copper investors is the decline of China’s manufacturing sector. HSBC’s Flash ChinaManufacturing Purchasing Managers’ Index for May fell to 48.7 from 49.3 the previous month.

Growth Outlook remains robust

Overall we see copper demand outstripping supply by in excess of 30,000 tonnes this yearwith projected growth through to 2015 estimated at around 4-5% annualised. Factor in thegrowth of electric cars, a recovery in China and continued growth in India and we remainpositive on the medium term outlook for copper.

FIGURE 17: LME CopperPrice (Kitco Metals, July2012)

FIGURE 18: LME 1 yearCopper Price (KitcoMetals, July 2012)

FIGURE 19: LME 1 yearCopper Inventory (KitcoMetals, June 2012).

FIGURE 20: CommodityPrice performance last 12months (RM Research,July 2012).

2 July

PEE

and aMindavaluat(Equiv) f

COMP CODE EV/T Cu equiv ($) Cu Equiv (Mt)

Discov ASX-DML $802.3 0.582

Rex M ASX-RSM $48.8 1.780

Hillgro ASX-AGO $601.3 0.296

Havila ASX-HAV $64.7 1.043

St Aug TSX_SAU $44.1 4.700

Indoph ASX-IRN $83.0 18.400

Exxco ASX_EXS $227.8 0.610

Crazy TSX-CZH $6.4 2.600

Mining ASX-MNE $50.1 0.240

Sandfi ASX-SFR $1,592.4 0.812

Cudec ASX-CDU $491.4 1.067

Ventno ASX-VRX $85.8 0.200

Intrepi ASX-IAU $15.3 11.671

Altona ASX-AOH $180.4 0.858

*Assum

The dResouTuju A$15.sold dare likExplor

Early dsensibaround

$

$20

$40

$60

$80

$1,00

$1,20

$1,40

$1,60

$1,80

FIGURE 21: ASX-TSXlisted copperexplorers/developers(source: RM Researchinternal modelling, June2012).

RM Research

TABLE 2: ASX-TSX listedcopperexplorers/developers(source: RM Researchinternal modelling, June2012).

Our base case scenario suggests ashare price of A$1.50 is possiblebased on an EV of A$300/t Cu forMNE

Page 14 – Copyright © 2012

y 2012

ER ANALYSIS AND ESTIMATE OFexamined comparable ASX listed explorers

also included a number of TSX listed explorers/danao (the Philippines). Overall our valuations havetions of risk assets over recent months with the averfalling to around A$300/tonne from A$450/tonne (Febru

PANY CODE EV/T Cu equ Cu Equiv (Mt)

very Metals ASX-DML $802.3 0.582

Minerals ASX-RSM $48.8 1.780

ove Resources ASX-AGO $601.3 0.296

ah Resources ASX-HAV $64.7 1.043

gustine TSX_SAU $44.1 4.700

hil ASX-IRN $83.0 18.400

Resources ASX_EXS $227.8 0.610

Horse Resources TSX-CZH $6.4 2.600

g Group ASX-MNE $50.1 0.240

ire Resources ASX-SFR $1,592. 0.812

co Limited ASX-CDU $491.4 1.067

or Resources ASX-VRX $85.8 0.200

d Mines ASX-IAU $15.3 11.671

a Mining ASX-AOH $180.4 0.858

mes maiden JORC Resource of 200Kt of contained copper by

data above is somewhat skewed by the high-gradurces, ASX: SFR) while lower grade/larger tonnage Bukit deposit (1,700Mt @ 0.41% Cu) have been00/tonne Cu (Equiv). Notably Ventnor Resources Limi

down from A$280 to A$85/tonne Cu (Equiv). The Thadunkely to fall in the range of 20-25Mt @ 1% Cu anration Targets of MNE in the range of 30-40Mt @ 0.70-

days for MNE and we will wait for a “normalised markeble metrics before taking this analysis much further. d A$300/tonne, a 24 month target in the range of A$1.5

$0.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

00.00

SFR DML HGO CDU AVG EXS AOH VRX IRN

EV/T Cu Equiv selected ASX EFIGURE 21: ASX-TSXlisted copperexplorers/developers(source: RM Researchinternal modelling, June2012).

RM Research


Our base case scenarishare price of A$1.50 ibased on an EV of A$3MNE

RM Research – www.rmresearch.com.au

F VALUEs/developers (Figure 21, Table 2)evelopers currently operating in

e softened in line with decliningrage enterprise value/tonne of Cuuary 2012).

COMPANY CODE uiv ($) Cu Equiv (Mt)

Discovery Metals ASX-DML 3 0.582

Rex Minerals ASX-RSM 1.780

Hillgrove Resources ASX-AGO 3 0.296

Havilah Resources ASX-HAV 1.043

St Augustine TSX_SAU 4.700

Indophil ASX-IRN 18.400

Exxco Resources ASX_EXS 8 0.610

Crazy Horse Resources TSX-CZH 2.600

Mining Group ASX-MNE 0.240

Sandfire Resources ASX-SFR .4 0.812

Cudeco Limited ASX-CDU 4 1.067

Ventnor Resources ASX-VRX 0.200

Intrepid Mines ASX-IAU 11.671

Altona Mining ASX-AOH 4 0.858

y CY 2012.

de DeGrussa Deposit (Sandfiredeposits such as Intrepid Minesn discounted by the market atted (ASX: VRX) has been heavilyna/Green Dragon deposits of VRXd therefore not dissimilar to the-0.8% Cu (Equiv).

et” and valuations to return to moreBased on the sector average of

50 is not unreasonable for MNE.

HAV MNE RXM SAU IAU CZH

Explorers/DevelopersFIGURE 21: ASX-TSXlisted copperexplorers/developers(source: RM Researchinternal modelling, June2012).

RM Research


io suggests ais possible300/t Cu for


2 July 2012

RISK ANALYSISExploration Risk: Mineral exploration is high risk and there is potential for MNE’sexploration programs at its exploration portfolio may fail to outline any potentiallyeconomic mineralisation. Our site visit confirmed the complex nature of copper+/- goldmineralisation that will require detailed and patient work to resolve.

Metallurgical and Processing Risks: The metallurgy of mineral deposits, for exampleskarn deposits similar to Comval, may present challenging metallurgical issues that maylead to an increase in operating and/or capital costs, or alternatively adversely affectvaluations and project economics.

Land Owners: Failure to execute agreements relating to access and mining with thelocal land owners could impair exploration and/or development at key projects.

Financial Position: The Company does not currently have the financial reserves to fullyevaluate all of its exploration projects and is likely to be dependent on raising capital fromthe equity markets in the medium term.

Infrastructure Risks: Delays in infrastructure (port, roads) have the potential tosignificant delay production plans, particularly for Comval. We see this risk however aslow to moderate. A sealed road is likely to be completed within 4 kilometres of the projectarea within the next 24 months. The lack of sufficient power in Mindanao remains aproblem and the Company will most likely be reliant on building its own power plant in theevent of production.

Peer Underperformance: Underperformance of peer Cu+/-Au explorers and/ordevelopers has the potential to adversely affect market sentiment and lead to lowervaluations for MNE.

Commodity Risks: The Company is primarily exposed to Copper and Gold. Declines inthese metals may adversely affect the valuation and project economics of key projectssuch as Comval in the Philippines which may in turn, struggle to attract the requiredcapital to enable further exploration and/or development.

Market Risks: Further declines in equity markets may continue to put pressure on juniorresource companies as investors switch out of “risk” into perceived safe haveninvestments.

CORPORATERecent corporate activity has included:

July 2011: A$2.5 million via the issue of 12.5 million Shares as part of the IPO in July2011.

January 2012: the Company issued 2.6 million Shares at 20 cents each (A$0.52 million)and 2.0 million options (exercisable at 20 cents on or before 31/7/2014) at an issue priceof 1 cents each as part consideration for the acquisition of Comval.

January 2012: Issued 8.5 million options (exercisable at $0.20 each on/ before1/7/2014), for nil consideration to Cygnet Capital Pty Ltd.

January 2012: issued 1.5 million options (exercisable at $0.20 each on/ before 1/7/2014)to Technical Adviser, Mr Zeffron Reeves.

March/April 2012: Placed 6 million Shares @ 50 cents each to raise $3 million (beforecosts).

March 2012: Issue of 400,000 unlisted options (exercisable at 55 cents each on/before28/2/2014) to nominees of Cygnet Capital Pty Ltd.


2 July 2012

DIRECTORS AND MANAGEMENTMr Winton Willesee B.Bus, DipEd, PGDipBus, MCom, FFin, CPA, MAICD NON EXEC CHAIRMAN

Mr Willesee is an experienced Director in the small and medium capitalisation sector of ASX.He brings a broad range of experience in strategy, company administration, corporategovernance, company public listings, merger and acquisition transactions, reconstructions andcorporate finance from his background with listed and unlisted public and other companies.Mr Willesee is the Chairman of BioProspect Limited and Cove Resources Limited, aDirector of Torrens Energy Limited, a Director and Company Secretary of Base ResourcesLimited, Coretrack Limited, Newera Resources Limited and Otis Energy Limited,Company Secretary of Greenvale Mining NL and Mantle Mining Corporation Ltd and JointCompany Secretary of Tawana Resources NL.

Mr Andrew Maurice, B.Bus, GradCertMgnt, MBA, MAICD MANAGING DIRECTOR

Mr. Maurice is an organisational business development professional with 16 years experienceworking with start up businesses and providing business advice to growing companies in arange of industries. More recently, he was founding Managing Director of Waratah GoldLimited, an ASX listed resource company that, under Mr Maurice’s management, acquiredthe Youkou iron ore project in West Africa. His business advisory skills lie in the areas ofbusiness and strategic planning, project management, marketing and human resourcemanagement. He also is a Board member of Curtin University’s School of Management anddirector of Management West.

Mr Colin (Cobb) Johnstone, BE,(Mine) NON EXECUTIVE DIRECTOR

Mr Johnstone was formerly COO of Equinox Minerals Limited, and Sino Gold MiningLimited prior to their respective acquisitions by Barrick Gold Corporation and EldoradoGold Corporation. Most recently, he was Managing Director of Territory ResourcesLimited. He is a mining engineer with over 30 years’ experience in the copper, gold andmetalliferous mining industries, including both large open cut and underground operations. MrJohnstone has extensive industry experience, having served as General Manager at some ofAustralia’s largest mines, including KCGM, Olympic Dam and Northparkes. He hassuccessfully constructed and operated mines in offshore jurisdictions including Zambia, China,Canada, Argentina as well as Australia.

Mr Robert Butchart NON EXECUTIVE DIRECTORMr Butchart has been involved in the mining industry for more than 25 years. He has ownedand operated exploration companies and drilling rigs in Australia and overseas, and has beeninvolved in heap leaching operations and narrow vein underground gold mines. Robert isPresident and Chief Executive Officer of Cadan Resources.

CONCLUSIONOur site visit confirms the potential of Comval to host economic deposits of skarn/porphyry-hosted copper+/- gold mineralisation. Despite approximately 24,000 metres of historicaldrilling on the project in the hands of previous operators, there has been surprisingly littlesystematic work undertaken to piece the fairly complex geology together. The current round ofdrilling is obviously important to further upgrade key prospects however there is also aconsiderable amount of work required to synthesize previous exploration data, re-log old drillholes and re-interpret the geology. The Company appears to have this in hand and we aresatisfied that on-site practices are at acceptable standards. While the complex geology isbeing unravelled we believe there is considerable potential to find additional prospects ofinterest in addition to further resolving and extending existing prospects. The next round ofdrill results (July-August 2012) will obviously be important and should give RM Research abetter understanding of the tenor and geometry of the mineralisation. As mentioned earlier,the exploration model is to find clusters of perhaps 5-10Mt orebodies grading >0.70% Cu equiv.With negative macro themes overhanging risk assets we are proposing a somewhat lessaggressive accumulation of the stock between 20-30 cents during periods of marketweakness. RM Research is maintaining an Accumulate recommendation.


2 July 2012

Registered OfficesPerthL 2, 6 Kings Park RdWest Perth WA 6005

Phone: +61 8 9488 0800Fax: +61 8 9488 0899

PO Box 154West Perth WA 6872

Email / [email protected]

RM Research Recommendation CategoriesCare has been taken to define the level of risk to return associated with a particular company.Our recommendation ranking system is as follows:

Buy Companies with ‘Buy’ recommendations have been cash flow positive for some time and have a moderate tolow risk profile. We expect these to outperform the broader market.

Speculative Buy We forecast strong earnings growth or value creation that may achieve a return well above that of thebroader market. These companies also carry a higher than normal level of risk.

Hold A sound well managed company that may achieve market performance or less, perhaps due to anovervalued share price, broader sector issues, or internal challenges.

Sell Risk is high and upside low or very difficult to determine. We expect a strong underperformance relative tothe market and see better opportunities elsewhere.

Disclaimer / DisclosureThis report was produced by RM Research Pty Ltd, which is a Corporate Authorised Representative of RM Capital Pty Ltd (Licence no.221938). RM Research will receive payment of A$35,000 for the compilation and distribution of four research reports. RM Research PtyLtd has made every effort to ensure that the information and material contained in this report is accurate and correct and has beenobtained from reliable sources. However, no representation is made about the accuracy or completeness of the information andmaterial and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law,RM Research Pty Ltd does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on,the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation withrespect to the sale or purchase of any securities. The securities recommended by RM Research carry no guarantee with respect toreturn of capital or the market value of those securities. There are general risks associated with any investment in securities. Investorsshould be aware that these risks might result in loss of income and capital invested. Neither RM Research nor any of its associatesguarantees the repayment of capital.WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to ortaking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on anyrecommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. Allinvestors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs,before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for thatproduct (if any) before making any decision.DISCLOSURE: RM Research Pty Ltd and/or its directors, associates, employees or representatives may not effect a transaction uponits or their own account in the investments referred to in this report or any related investment until the expiry of 24 hours after the reporthas been published. Additionally, RM Research Pty Ltd may have, within the previous twelve months, provided advice or financialservices to the companies mentioned in this report. As at the date of this report, the directors, associates, employees, representativesor Authorised Representatives of RM Research Pty Ltd and RM Capital Pty Ltd may hold shares in Mining Group Limited.

Documents

Mining Group Ltd