117-18 May 2016 |

PERSPECTIVES ON DIAMOND

RESOURCE DEVELOPMENT AND

REGULATORY COMPLIANCE

JAMES AH CAMPBELL

CEO, ROCKWELL DIAMONDS INC“uncover ing the face ts o f our po tent ia l ”

SAMREC/SAMVAL COMPANION VOLUME CONFERENCE

17-18 MAY 2016

217-18 May 2016 |

OUTLINE

• PUBLIC REPORTING

• MINERAL REPORTING STANDARDS AND CODES

• REGULATORY REQUIREMENTS

• DIAMOND MINING

• ASSESSING DIAMOND POTENTIAL

• JUNIOR MINERS

• CASE STUDIES

• KIMBERLITE MINING

• ALLUVIAL MINING

• IMPLICATIONS FOR INVESTORS

• IMPLICATIONS FOR PUBLIC REPORTING

• CONCLUDING REMARKS

James Campbell is President and CEO of

Rockwell Diamonds Inc. Previous roles

include Non Executive Director of Stellar

Diamonds plc, Vice President - New Business

for Lucara Diamond Corp, Managing Director

of African Diamonds plc, Executive Deputy

Chairman of West African Diamonds plc.

James worked at De Beers for over twenty

years; his roles included General Manager for

Advanced Exploration & Resource Delivery

and Nicky Oppenheimer's Personal Assistant.

James holds a degree in Mining & Exploration

Geology from the Royal School of Mines

(Imperial College, London University) and an

MBA with distinction from Durham University.

He is a Fellow of the Institute of Mining,

Metallurgy & Materials, South African Institute

of Mining & Metallurgy and Institute of

Directors of South Africa. He is also a

Chartered Engineer (UK), Chartered Scientist

(UK) and a Professional Natural Scientist

(RSA).

James also chairs two NPO’s and is

deeply committed to South Africa.

317-18 May 2016 |

REGULATORY & REPORTING REQUIREMENTS

417-18 May 2016 |

PUBLIC REPORTING

Public reporting refers to all disclosure, such as press

releases, website postings, presentations, technical reports

and technical disclosure accompanying financial reports

(statements of Mineral Resources and Reserves)

Public reporting must be

♦ Material. i.e. present all reasonably expected information

♦ Transparent, i.e. presented in a clear and unambiguous

manner

♦ Prepared by Competent Persons (CP)

Competent Persons must

♦ Be a Member or Fellow of a Recognised Professional

Organisation (RPO).

♦ Have a minimum of five years’ relevant experience in the

style of mineralisation or type of deposit under consideration

and in the activity which that person is undertaking.

♦ Be satisfied that they could face their peers and

demonstrate competence in the commodity, type of deposit

and situation under consideration.

Professional codes of practice

set minimum standards for public

reporting.

Public reports must be prepared

by a Competent Person (CP)

Codes differ slightly on the

requirements for CP’s relevant

experience

Membership in the RPO should

be primarily on the basis of

academic qualifications and

experience

RPOs should have enforceable

disciplinary processes including

the powers to suspend or expel

a member

Source: CRIRSCO

517-18 May 2016 |

MINERAL REPORTING STANDARDS & CODES

National reporting standards for selected countries

International initiative launched

in South Africa in 1994

Working group established to

develop a set of standard

definitions for reporting of

mineral resources and mineral

reserves

Today most national reporting

standards share a common set

of codes and guidelines

The Canadian mining sector’s

credibility improved greatly

after the NI 43-101 was

introduced in 2001

19971994 1999 2000

International

initiative to

standardise

definitions for

market-related

reporting

(CRIRSCO)

Agreement on

definitions for

Mineral

Resources and

Mineral

Reserves

(Denver Accord)

Alignment with

United Nations

Framework

Classification

Updated JORC

Code published

(first release 1989)

Other national

reporting

standards/codes

published, e.g.

SAMREC, CIM

Country Reporting Standard/Code

Australia JORC Code (2012)

Canada CIM Definition Standards for Mineral Resources and

Reserves – NI 43-101 (2014)

Europe/UK PERC Reporting Standard (2013)

Russia NAEN Code (2011)

South Africa SAMREC Code (2007)

SAMVAL Code (2008)

USA SME Guide (2014)

Source: CRIRSCO, PWC

617-18 May 2016 |

REGULATORY REQUIREMENTS

Mining reporting requirements applicable in selected jurisdictions

Stock

Exchange

Mining-specific Reporting

Requirements (post-listing)

Mineral Reporting

Standard

ASX Annual and half-year financial report

Quarterly report by CP on production

and development activities (incl.

expenditure); exploration activities;

mineral results & ore results

JORC

JSE Annual and quarterly financial report

Description of exploration and mining

activities by CP; mineral resource and

reserve statement

SAMREC

TSX/TSXV Annual and quarterly financial report CIM (NI 43-101)

LSE/AIM Annual and half-year financial report

Interim management statement

Resource updates by CP (AIM)

JORC, SAMREC, CIM,

other selected codes

HKEx/GEM Annual and quarterly financial report

Half-yearly updates on mining

JORC, SAMREC, CIM

The world’s largest diversified

mining groups are listed on LSE

In 2013, TSX and TSX-V

combined were home to 57% of

the world’s publicly listed mining

companies

Cross border international

listings and dual/triple listings of

miners on AIM, TSX and ASX

continue to increase

HKEx is becoming a destination

of choice for mining companies.

However, companies with only

inferred resources are not

eligible for listing

Source: PWC, Mining Association of Canada

717-18 May 2016 |

DIAMOND MINING

817-18 May 2016 |

DIAMOND MINING – TWO SCENARIOS

KIMBERLITES

• High establishment costs

• Open pit and underground

operations (with progression

in some cases)

• Grade, diamond distribution

can be constrained with

sampling and modelling

• Higher resource confidence

can mitigate uncertainty

ALLUVIALS

• Lower start-up costs

• Low grade, high variability

• High uncertainty

• High volume, low cost approach

• Scarcity of larger (high-value)

diamonds

• Volumes are key to repeatability

Alluvial operations perceived

as being better suited to

smaller operators (juniors)

than kimberlites

Most juniors and mid-tiers own

kimberlite projects

Majors such as De Beers have

been running large-scale

alluvial operations

Diamonds from alluvial

operations are on average

larger (cts/stone) and more

valuable ($/ct)

Attracting equity and debt

funding is challenging in

current markets

917-18 May 2016 |

LISTED DIAMOND MINING IN SOUTH AFRICA

Company Size Listing SA operations

(K = kimberlite;

A = alluvial)

Annual

Production

(cts)

Annual

Revenue

(US$)

Blue Rock

Diamonds

Junior AIM Kareevlei (K) Ramp-up N/A

De Beers Major N/A Venetia,

Voorspoed (K)

4.5M No SA

reports

Diamcor

Mining

Junior TSX-V,

OTC

Krone-Endora (A) +/- 20,000

(incidental)

+/- 3M

DiamondCorp Junior AIM Lace (K) +/- 7,000

(ramp-up)

N/A

Petra

Diamonds

Mid-

tier

LSE Cullinan, Finsch,

Kimberley,

Koffiefontein (K)

3M 360M

Rockwell

Diamonds

Junior TSX,

JSE

Middle Orange

River (A)

36,000 51M

Trans Hex Junior JSE Lower Orange

River,

Namaqualand (A)

62,000 83M

South Africa currently produces

8% of world diamonds by

volume

In 2014 SA produced 8.1 million

carats of diamonds (nearly half

as pre-GFC levels)

The bulk of SA diamond

production is from primary

sources (kimberlites)

Operators are chiefly junior /

mid-tier companies

No new discoveries, nor

significant projects in the

pipelineSource: company websites, SA Chamber of Mines

Many private diamond mining companies too

1017-18 May 2016 |

A PERSPECTIVE ON JUNIOR MINERS

Source: Investopedia; mineralsnorth.ca; undervaluedequity

Some common traits of juniors Some common traits of majors

• Discoverers and developers of

new economic deposits

• Typically small-cap companies

• Exploration spend is their

lifeblood

• No/little production cashflow to

fund exploration activities

• Funding derived from share

issues & management

• No dividends paid - shareholders

rewarded by share price increase

• Results attract high degree of

public scrutiny and assurance

• Subject to full extent of regulatory

and reporting obligations

• Technical management teams

with deep practical experience

• Innovative, agile and fast

• Owners of mining operations

• Typically more than one mine

• Publicly traded, well capitalised

companies

• Exploration activities internally

funded by production cashflow

• Exploration spend viewed as

discretionary

• Steady, predictable cashflow

• Large corporate structures

• Complex decision processes

• Internal assurance processes

• Able to adjust production to

changing market conditions

• Large technical and non-

technical management

departments.

What defines a junior miner?

♦ No single definition

♦ Prospectors and developers

♦ “The exploration division of

the mining industry”

♦ No marked separation

between junior and mid-tier

1117-18 May 2016 |

ASSESSING DIAMOND POTENTIAL FOR MINING (GENERALISED PROCESS)

Confidence in the

deposit/resource improves as

new information is analysed and

assumptions are re-visited

As confidence increases, so do

costs and timeframes

Technology plays a critical role in

resource assessment process,

as do risk modelling simulations

Accurate and reliable resource

models are essential inputs to a

sound economic assessment

Expert operators are able to

shorten timeframes, without

compromising on quality of

resource assessment

Deep knowledge, expertise are

key differentiators

Mapping,

sampling,

geophysics

Core drilling or

trenching

(100’s kg)

Initial bulk

sampling

(10-100’s t)

Infill drilling,

bulk sampling

(1000’s t)

Inferred

Resource

Indicated

Resource

Diamond potential,

surface size

estimate

Preliminary grade

estimate, prelim.

geological model

Global grade,

preliminary value

estimate

Geological,

density, volume,

grade, value

models

Preliminary

Economic

Assessment

Pre-Feasibility

Study

Bankable

Feasibility Study

DepositTarget /

Anomaly

Activity

Ou

tco

me

sM

inera

l

Re

sou

rce

Eco

no

mic

Stu

die

s

INCREASING COSTS & TIMEFRAMES

DECREASING UNCERTAINTY & RISK

Duration: months

Cost: R millions

Duration: years

Cost: R tens of millions

1217-18 May 2016 |

ASSESSING DIAMOND VALUE

Unlike other mineral commodities, diamonds don’t have set prices

Equity funders require that a rough diamond pricing model be decided upfront in a deal

Two models in diamond valuation: fixed price book or open tender

Open tenders have the following advantages:

♦ Market related price

♦ Competitive bidding

♦ Pricing transparency

♦ Clients get the goods they want

♦ Premium paid for valued goods

Disadvantages of open tenders include:

♦ Less predictable cash flows

♦ Higher risk of price volatility

♦ Speculative buying

Open tenders are on the increase

♦ Initiated by juniors seeking transparent pricing models

♦ Majors have been integrating tenders into their sales

Five Models underpin a diamond

resource: Geological, Density,

Volume, Grade, Value

Modelling of value is unique to

diamond resource estimation

Value estimates require a

substantial investment in order

for a representative sample to be

obtained

Understanding the size

distribution of diamonds in a

deposit is critical in designing an

effective treatment plant

The value of diamonds

recovered can be optimised

through the selection of a

suitable bottom cut-off size

(BCOS)

Source: GIA, Rockwell

1317-18 May 2016 |

DIAMOND MINING CASE STUDIES

1417-18 May 2016 |

A KIMBERLITE CASE STUDY: AK6 (KAROWE MINE)

AK6 is a diamondiferous

kimberlite pipe located in the

Orapa kimberlite field in north-

eastern Botswana

Discovered by De Beers in 1969,

but deemed low priority

Evaluated in 2003-2007 by

De Beers – African Diamonds JV

Now called Karowe Mine and is

owned and mined by Lucara

Diamond Corp

Mining began in 2012

Anticipated LoM is 15 years

Source: Lucara, JAH Campbell

1517-18 May 2016 |

AK6 - THE JOURNEY

Initial

evaluation by

De Beers

Preliminary

size, grade,

value

encouraging

Boteti JV:

African

Diamonds, De

Beers (49/51)

Evaluation

Phase 1

Inferred

Mineral

Resource

Positive

sampling

results

released

Decision to

fast-track

evaluation

Evaluation

Phase 2

Indicated

Mineral

Resource

Conceptual

Study (DB):

marginal

economics;

capital

USD380M

Pre-Feasibility

Study (AFD):

robust

economics

Feasibility

Study (DB):

marginal

economics

Mining

Licence (2008)

Value

Engineering

Study (AFD):

robust

economics;

capital

USD88M

Lucara

acquires DB’s

share in Boteti

Feasibility

Study (Lucara):

robust

economics;

capital

USD156M

Lucara

acquires AFD’s

share in Boteti

Construction &

Commissioning

Cost:

USD110M

Mining begins

in Q2 2012

2003-5 2010-122005-6 2006-7 AK6 initially downgraded due

to small size (3.3ha), low

grade (3cpht) and poor mineral

chemistry

Re-assessed by De Beers

(Debot) in 2003

Boteti JV (AFD-DB) formed in

2004, prior to initial evaluation

results being released

Facilitated by AFD, Debot sold

its share to Lucara in 2009, in

the wake of the GFC and due

to apparent marginal

economics

AFD exited in 2010 following

significant share premium

buyout from Lucara

2008-9

1617-18 May 2016 |

AK6 EVALUATION PROGRAMME (2003-2007)

Extensive evaluation:

♦ +/-23,000m core drilling

♦ +/- 12,500m LDD

♦ +25,000t samples collected

(not all processed)

Total cost of evaluation

programme USD26.8M

High levels of diamond

damage observed

High abundance of high value

Type II diamonds

Phase Technique Objective Results

Initia

l

eva

lua

tio

n LDD

5x12¼”

Macro potential, preliminary

grade

97t (in situ)

25cpht (+1mm)

138USD/ct

High-resolution

geophysics

Surface area, geological

model9.5ha

Eva

lua

tio

n P

ha

se

1 Percussion drilling

44x6.5”

Delineation, geological model,

mineral chemistry, macro

4,575m

28t (in situ)

29.6cpht (+1mm)

Core drilling

17xinclined

12xvertical

Internal geology, LDD pilots,

micro

9,883m

South Lobe

increased

LDD

13x23” @70m

Grade and revenue – inferred

resource 500ct for valuation

2,747t (in situ)

689cts

25.1cpht (+1mm)

Eva

lua

tio

n P

ha

se

2

Core drilling

11xvertical

29xinclined

Delineation, internal geology,

LDD pilots

12,860m

Kimberlite at

884m

LDD

12x23” @50m

Grade and revenue –

indicated resource 3000ct for

valuation

3,298t (in situ)

483cts

17.8 cpht (+1mm)

Trenching (S Lobe)Grade and revenue 7.393t (in situ)

Trenching (C Lobe)Grade and revenue 12,074t (in situ)

Source: Lucara, JAH Campbell

1717-18 May 2016 |

AK6 / KAROWE RESOURCE STATEMENTS

Karowe Mineral

Resource / Reserve

(2013)

Tonnes

(000,000’s)

Grade

(cpht)

M Carats

(+1.25mm)

Value

(USD/ct)

Probable Reserve

(to 324m)33.1 15.5 5.1 394

Indicated Resource

(to 400m)48.07 16 7.61 393

Inferred Resource

(400-750m)21 14 3.04 412

Source: JAH Campbell, Lucara

2003-7 evaluation programme led to first mineral resource estimate for AK6 (2009)

Grades regarded as conservative; improvement anticipated with further work

Considerable upside expected in diamond values (revised upwards by +25% in 2010)

Latest Karowe resource statement (2013) reflects a drop in grades and increase in values

Higher BCOS (1.25mm) accounts for grade decrease

Value increase chiefly due to incorporation of production and sales data into estimates

2013 value estimation qualified as conservative

AK6 Mineral

Resource (2009)

Tonnes

(000,000’s)

Grade

(cpht)

M Carats

(+1 mm)

Value

(USD/ct)

Indicated Resource

(to 372m)40 22 8.9 153

Inferred Resource

(372-758m)31 19 6 139

1817-18 May 2016 |

KAROWE PRODUCTION PERFORMANCE

A proven large stone producer

2015 large stone recoveries:

20 greater than 200cts

7 greater than 300cts

Three exceptional stones

recovered from South Lobe in

November 2015, including

world’s second largest

diamond: 1,111cts Type IIa

Lesedi La Rona

Year

Tonnes

mined

(000,000’s)

Tonnes

treated

(000,000’s)

Carats

recovered

Grade

(cpht)

Ave

$/ct

sold

Stones

>10.8ct

s

2015 3.18 2.24 365,690 16.3 593 727

2014 3.32 2.42 430,292 17.7 644 815

2013 3.94 2.35 440,751 18.8 411 732

Source: Lucara

Operating costs are USD33-35 per tonne treated

Lobes

1917-18 May 2016 |

REFLECTIONS ON AK6

Quality and abundance of large

diamonds initially

underestimated

Type IIa diamonds typically

colourless and extremely

transparent (notable examples

are the Cullinan and Koh-i-Noor)

Valuation models: market tender

vs. price book

Joint Venture dynamics: different

perspectives; funding structure

Fit-for-purpose approach to plant

design

Risk modelling / simulations

Impact of global events:

timing is crucial

Diamond value

♦ Type IIa diamonds recovered during bulk sampling

♦ Abundance of Type II and larger diamonds inadequately

considered in initial valuations

♦ Diamond value underestimated in financial modelling

♦ Karowe consistently delivering large and exceptional stones

Joint Venture

♦ Agreement signed ahead of first bulk sampling results

♦ JV operated by a major

♦ Substantial variance in

› Risk appetite

› Plant design philosophy

› Capital estimates

› Project economics

Economic context

♦ Global Financial Crisis

♦ Change in De Beers’ strategy

♦ Investors’ reluctance to fund a project deemed marginal

2017-18 May 2016 |

AN ALLUVIAL CASE STUDY: SAXENDRIFT MINE

Alluvial diamond operation on

the south bank of the Orange

River, 160 km from Kimberley

Mined by TransHex in 2000-6

Purchased by Rockwell

Diamonds (RDI) in 2008

LoM extended by acquisition of

Saxendrift Extension in 2012

First full SA implementation of

Bourevestnik bulk X-Ray

technology in operational

environment

Saxendrift Mine has produced

numerous +100ct stones,

including the Alana (169cts)

and the Rockwell (287cts)

2117-18 May 2016 |

SAXENDRIFT MINE

Three terrace complexes with

associated palaeochannel

depositional packages identified

on Saxendrift Mine:

Brakfontein Hill (“BHC”)

Saxendrift Hill (“SHC”)

Saxendrift River (“SRC”)

Saxendrift project properties

extend over 5,120.55ha,

comprising both Mining Rights

and Prospecting Rights

Saxendrift Mine also includes

Kwartelspan Complex (KPC),

contiguous to the east

Saxendrift River

Complex (SRC)

Saxendrift Hill Complex

(SHC)

Brakfontein Hill Complex

(BHC)

2217-18 May 2016 |

SAXENDRIFT HISTORY

Early

artisanal

diggings in

mid 1920’s

98,000cts

recovered

Hard

calcrete

cover, poor

returns

Diggings end

by 1950

Mapping and

bulk

sampling by

Broadacres,

Moonstone

NCDM&E

operating

Saxendrift,

Brakfontein

Gem buys

NCDM&E

(1998)

TransHex,

Gem merge

(1999)

TransHex

acquires

permit (2000)

Saxendrift

Mine

commissioned

MOR

exploration

2001: 216ct

stone found

2003:

45,000$/ct for

blue diamond

Saxendrift

put on C&M

76,803cts

produced

RDI buys

Saxendrift

(2008)

New plant

installed

BHC bulk

sampling

(2008-9) and

trial mining

(2009-10)

BHC mining

(2011-2015)

SRC bulk

sampling

(2012-14)

SHC bulk

sampling

(2013-14)

KPC bulk

sampling

(2014)

RC drilling

for volume

estimations

(2015)

1920-50’s 2006-101980-90’sEarly digging activities dating

back to 1920’s-1950’s

Bulk sampling in 1980’s-90’s

Formal mining in late 1990’s

Blasting and earthmoving

equipment used to rip and

remove hard calcrete

Mined by TransHex since

2000, Rockwell since 2008

Concurrent bulk-sampling and

mining since late-2000’s

Drillhole material from volume

estimation not sampled for

diamonds (low grade)

2000-5 2011-16

Source: Rockwell, Explorations Unlimited

2317-18 May 2016 |

SAXENDRIFT BULK SAMPLING / TRIAL MINING (2008-2014)

Due to the low grades and large

stone sizes in alluvial diamond

deposits, bulk samples are

collected and processed to

determine in-situ grades

Recovered diamonds are sold

on the open market to determine

realisable value

Mining in one area of an alluvial

diamond mine can occur

concurrently with trial-mining

and/or bulk-sampling operations

in other areas

The transition to trial mining and

onto production mining can be

seamless

Area Volume (m3) CaratsGrade

(ct/100m3)Stones

Size

(ct/st)

Average

value

(USD/ct)

BH

C 194,287

2,398,009

2,436.73

14,073.49

1.25

0.62

1,414 (2009)

1,956 (2010)

SR

C

2,218,210 13,523.10 0.61 3,089 4.38 1,726 (2014)

SH

C

1,007,781 4,209.27 0.42 761 5.53 1,904 (2014)

KP

C

80,590 450.62 0.57 187 2.41 1,072 (2014)

Source: Rockwell, Explorations Unlimited

2417-18 May 2016 |

SAXENDRIFT MINERAL RESOURCE

0

500

1000

1500

2000

2500

3000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2007 2009 2010 2012 2014 2015U

SD

/ct

Vo

lum

e (

m3)

MINERAL RESOURCE ESTIMATES

Inferred Indicated Value

2007 third party Mineral

Resource estimate re-modelled

in 2009 to Rockwell’s group

standards: drop in volumes,

increase in grades

Change in mining method in

2010 (entire sequence mined)

explains increase in volumes

and drop in grade

Bottom cut-off size increased

from 2mm to 5mm in 2011

(fewer carats recovered)

Upgrade of Inferred to Indicated

Resource in 2012 due to

proximity to mining face

Two-year moving average

of value from 2013

GFC

BCOS 5mm

Inf Res upgrade

0.68

0.41 1.01

0.72

0.66

0.56

0.47

0.47

0.45

0.53

0.42

0.5

RDI

model

Mining

method

Grade

2517-18 May 2016 |

SAXENDRIFT PRODUCTION PERFORMANCE

Recovered grades in line with

modelled grades

Rigour applied to resource

modelling (and NI 43-101

reporting) leads to consistent

production performance

Mining feedback validates

resource assessment

Optimised EMV fleet is

paramount to operational

performance

Notable recoveries in 2014-15

included 6 stones over 100cts

YearVolume treated

(m3)

Carats

recovered

Grade

(cts/100m3)

Ave $/ct

sold

2015 2,559,000 10,442 0.41 2,363

2014 2,296,000 12,701 0.55 2,338

2013 1,775,130 8,373 0.47 1,918

2012 1,469,215 6,944 0.47 2,444

2011 1,449,875 6,705 0.46 2,003

2010 1,216,503 8834 0.73 1968

2009 194,287 2,437 1.18 1,767

0

500

1000

1500

2000

2500

3000

3500

0

100000

200000

300000

400000

500000

600000

700000

800000

Q1-F14 Q2-F14 Q3-F14 Q4-F14 Q1-F15 Q2-F15 Q3-F15 Q4-F15U

SD

/ct

Vo

lum

e (

m3)

Saxendrift production 2014-15

Volume processed ValueSource: Rockwelll AR’s

0.39

Grade

0.54 0.76 0.50 0.64 0.34 0.39 0.32

2617-18 May 2016 |

IMPLICATIONS FOR INVESTORS AND REPORTING

2717-18 May 2016 |

JUNIOR FUNDING

Equity financing is the juniors’

dominant source of funding,

while the majority of mining

debt financings are undertaken

by large market cap companies

In 2013, 62% of global mining

equity financing was raised on

TSX and TSX-V

ASX, TSX and AIM are funding

junior exploration and

development companies

Juniors are responsible for the

majority of further issues,

reflecting their need for cash to

fund exploration and feasibility

studies

Source: PDAC, PWC

2817-18 May 2016 |

IMPLICATIONS FOR INVESTORS

Mining investors view favourably:

♦ Companies with experienced management teams, exploring

in prospective areas and with reasonable project timelines

♦ The use of new technology, as it demonstrates an ability to

work faster and cost-effectively

♦ Clarity on a company’s position with respect to key drivers

of future value (the investors’ reward lies in the increase in

share price)

♦ Companies who “graduate” from the venture to the main

board of a stock exchange, as this implies additional

corporate governance and due diligence effort

Mining investors view less favourably:

♦ New discoveries without a demonstrable way to mine the

mineral resource economically

♦ Junior miners with little or no track record, especially so

during cyclical mining downturns

Typically, juniors have to raise

equity to fund their

exploration/evaluation

activities all the way to

feasibility stage (whereas

majors are able to self-fund

this process)

Attracting and retaining

investors’ interest requires an

ongoing effort

Information of relevance to

investors is disclosed through

public reporting

Caution must be exercised not

to overstate the potential of a

project in an effort to keep

investors’ interest alive

Source: Canadian Mining Journal. PWC, Pinnacle Digest

2917-18 May 2016 |

IMPLICATIONS FOR PUBLIC REPORTING

Public reporting is expected to:

♦ Provide high levels of assurance to accompany disclosure

of information of a financial or operational nature

♦ Provide clearly defined and highly reliable measures that

have the potential to influence markets

♦ Include non-GAAP performance measures - such as

production volumes, resources/reserves and cash costs –

which investors use in their analyses

♦ Report accurately on responsible operational activities in an

unambiguous, timely fashion

Accurate and transparent reports are critical in securing

subscriptions to further share issues, as IPOs generally raise

funds to cover only the first 2-3 years of exploration

Juniors are subject to a high

degree of public scrutiny and

assurance (majors tend to

conduct these internally)

Mineral resource estimates

and other non-GAAP

measures are increasingly

scrutinised by investors

Shortened project timeframes

are appealing, as long as

accuracy of information is not

compromised

Relevant and accurate

reporting helps to sustain

interest throughout the

lifecycle of a project

3017-18 May 2016 |

CONCLUDING REMARKS

Mineral resource development is a complex and costly process

with a high degree of risk

Technology has a key role to play in the risk reduction process

Plant design philosophy can make or break a project

Experienced technical management is probably the most

important critical success factor

In order to comply with regulatory requirements, project results

must be reported within accepted frameworks

Stringent reporting parameters don’t always allow for the full

characterisation of future potential of a mining project

(commentary is just as important)

Accepted reporting standards are primarily designed to protect

investors from misrepresentation of resource value

There is a fine line between compliance and excessive caution,

which may result in conservative understatements of future

potential

Reporting and regulatory

requirements place a

significant burden of

compliance on juniors

However, relevance and

transparency of reporting is

increasingly important in

attracting junior funding

Rigour and diligence applied to

resource development pays off

in resource performance and

repeatability of results

Accelerated project timeframes

are appealing, but there is no

room for compromise on

resource assessment