SYDNEY MINING CLUB PRESENTATION

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SYDNEY MINING CLUBPRESENTATIONThe voice of
the Customer

• MARK CUTIFANI, Managing Director
• SONS OF GWALIA LTD
• 6 September 2001

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AGENDA

• Introduction
• Business context
• Tantalum - A case study
• Sons of Gwalia - Strategic directions
• Summary - Portfolio position

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SONS OF GWALIA LTD - AN AUSTRALIAN MINER
MINERAL SANDS Low risk opportunity
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SONS OF GWALIA OPERATIONS
Gold
Advanced Minerals
Port Hedland
Wodgina
Laverton Region
Leonora Region
Kalgoorlie
Southern Cross Region
Perth
Murray Basin JV
Greenbushes
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FOCUS ON RESULTS
EPS (cents)
Profit A million
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MAJOR GOLD COMPANIES - 2000 ROIC
Sons of Gwalia - 24
Source Merrill Lynch, May 2001
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RELATIVE PERFORMANCE
Sons of Gwalia
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BUSINESS CONTEXT

• Changing the rules
• Implications of change
• Tantalum - A case study

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BUSINESS CONTEXT - A CHANGING WORLD

• Information and Communication
• Faster / Higher - Focus on performance
• Life cycle costs
• Technology obsolescence
• Environment - Energy efficiency

THE CUSTOMER IS LOOKING FOR NEW SOLUTIONS TO OLD
PROBLEMS
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BUSINESS CONTEXT - IMPLICATIONS

• A new world - Looking for new solutions
• Material Sciences - Identifying possibilities
• Light Metals - The new wave
• Base Metals - Future position?

HOW DOES THE MINERALS INDUSTRY MEET
THESE CHALLENGES?
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TANTALUM - A CASE STUDY

• Properties - A competitive edge
• Applications - An emerging position
• Market Growth - What can we see
• Gwalias response to the customer

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WHAT IS TANTALUM?

• Grey-blue metal
• Soft, ductile
• High melting (2,997ºC) and boiling points (5,425
  ºC)
• Low co-efficient of thermal expansion
• Excellent capacity to store and release
  electrical charge
• Exceptional resistance to corrosion

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TANTALUM APPLICATIONS

• Electronics
• PCs, Palm Pilots
• Video Cameras, Sony Playstations
• Automotive electronics
• Telecommunications
• Mobile Phones
• Base Stations
• Alloys
• Turbine blades in powerstations
• Aerospace

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TANTALUM USAGE - 2000
TANTALUM DEMAND - 2000 5 million lbs Tantalum 6.3
million lbs Ta2O5
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TANTALUM DEMAND GROWTH
Forecast _at_ 8pa
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GLOBAL TANTALUM RESERVE BASE - 2001
Sons of Gwalia - 75
Source US Geological Survey - January 2001
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SOURCES OF RAW MATERIAL - 2000
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MAJOR TANTALUM MINES POST EXPANSIONS
Canada
Brazil
China
Ethiopia
China
Brazil
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TANTALUM - ORGANIC GROWTH

• Dominant Resource position
• Regional positions / Established infrastructure
• Low cost production
• Take or Pay Contracts
• Growth profile
• Revenues protected
• Multiple options for growth

FOCUS ON STABILISING THE MARKET AND DELIVERING
VALUE TO OUR CUSTOMERS
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MANAGING THE MARKET

• Customer needs
• Value Chain
• Supply Chain Integration
• Product Research
• Promotion

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STRATEGIC DEVELOPMENT

• Business model
• Core skills
• Core values
• Objectives
• Portfolio assessment

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STRATEGIC DIRECTIONS - BUSINESS MODEL

• Commodity - Growth potential
• - Resource positions
• Capital Intensity - Establishment
• - Risk profile
• Margin Potential - Cost structures
• - Revenue risks

DOES THE INDUSTRY STRUCTURE GIVE AN OPPORTUNITY
TO MANAGE RETURNS?
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SONS OF GWALIA - CORE SKILLS

• Geology - Regional exploration
• - Working-over ground
• Mining - Low Capital intensity
• - No frills
• Process - Breakers and Shakers
• - Infrastructure hubs

UNDERSTANDING OUR SKILLS BASE KEEPS US FOCUSSED
ON WHERE WE CAN ADD VALUE
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STRATEGIC DEVELOPMENT OBJECTIVES

• GOLD - Secure production base
• - Improve quality of returns
• - Establish industry relevant position
• TANTALUM - Secure resource position
• - Establish critical mass and low cost growth
  platform
• - Increase market penetration
• MINERAL - Establish Resource base
• SANDS - Establish product quality and market
  potential
• - Promote Murray Basin brand

POSITION FOR EXCEPTIONAL RETURNS AND PROFITABLE
GROWTH
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GOLD - A CORE BUSINESS

• Profitable, high cash flow business
• Underwrite revenue through hedging
• Focus on capital efficiency total returns
• Infrastructure hub
• Flexible ore sources
• Rationalise to reduce costs
• 3 strategic regions
• Leonora
• Southern Cross
• Laverton

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PACMIN BID - RATIONALE

• Strengthen Regional Positions
• Secures Production / Cost Base
• Enables more Effective Capital allocation
• Improves Industry Gold Position
• Strengthens Balance Sheet / Cash Flows

EARNINGS ACCRETIVE WHILE STRENGTHEN BASE TO
MANAGE PROFITABLE GROWTH
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TANTALUM PRODUCTION SALES
Forecast
GROWTH SECURED BY CONTRACTED TAKE OR PAY SALES
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MURRAY BASIN TITANIUM

• First mineral sands producer
• Commissioned March 01
• Sales contracts in place
• First shipments June 01
• Production
• 30,000tpa rutile
• 10,000tpa zircon
• 30,000tpa ilmenite
• Total Resources 15.4Mt HMC
• 156 increase in Resourcesin 12 months
• Excellent exploration potential

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MURRAY BASIN 2002 BUSINESS OBJECTIVES

• Ramp production to full capacity
• Establish Murray Basin Titanium Brand
• Rutile
• Zircon
• Consolidate Resource base to underwrite Stage II
  potential
• Confirm ilmenite processing market quality

• POSITION FOR NEXT DEVELOPMENT PHASE

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SONS OF GWALIA - OPPORTUNITIES

• TITANIUM - The third wave?
• LITHIUM - The fourth wave?
• OTHER - New technologies
• - New applications

FOCUS ON CUSTOMER NEEDS WILL PLAY A SIGNIFICANT
PART IN DIRECTING OUR FUTURE DEVELOPMENT
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SONS OF GWALIA - ASSET PORTFOLIO

• GOLD - Long-term sustainable profits
• TANTALUM - Growth profile
• MINERAL SANDS - Seeding an Opportunity
• OPPORTUNITIES - Identifying strategic fit

PORTFOLIO STRUCTURED TO DELIVER RETURNS AND
PROFITABLE GROWTH
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SONS OF GWALIA - FOCUS ON RESULTS
EPS (cents)
Profit A million
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SONS OF GWALIA
www.sog.com.au
SONS OF GWALIA LTD