HAWSONS IRON LTD — AGM Information 2017

Oct 24, 2017

ASX ANNOUNCEMENT

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Managing Director ’ s Review of Operations

25 October 2017

Attached is a copy of the MD’s review of operations as delivered at today’s annual general meeting.

For further information please contact:

Bob Hair Company Secretary +61 7 3220 2022

We find it. We prove it. We make it possible.

Level 6, 345 Ann St, Brisbane Queensland 4000

PO Box 10919, Adelaide Street, Brisbane Queensland 4000 Phone: + 61 7 3220 2022 Fax: + 61 7 3220 1291 info@capex.net.au www.carpentariaex.net.au ABN 63 095 117 981 ASX : CAP We find it, We prove it, We make it possible

Annual General Meeting Brisbane 25[th] October, 2017

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Managing Director’s review of operations

WE FIND IT. WE PROVE IT. WE MAKE IT POSSIBLE.

1

Disclaimer

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This presentation has been prepared by the management of Carpentaria Exploration Limited (CAP) for the benefit of customers, analysts, brokers and investors and not as specific advice to any particular party or persons. The information is based on publicly available information, internally developed data and other sources. Where an opinion is expressed in this presentation, it is based on the assumptions and limitations mentioned herein and is an expression of present opinion only. No warranties or representations can be made as to origin, validity, accuracy, completeness, currency or reliability of the information. CAP disclaims and excludes all liability (to the extent permitted by law) for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information, its accuracy, completeness or by reason of reliance by any person on any of it. Where CAP expresses or implies an expectation or belief as to the success of future exploration and the economic viability of future project evaluations, such expectation or belief is expressed in good faith and is believed to have a reasonable basis. However, such expected outcomes are subject to risks, uncertainties and other factors which could cause actual results to differ materially from expected future results. Such risks include, but are not limited to, exploration success, metal price volatility, changes to current mineral resource estimates or targets, changes to assumptions for capital and operating costs as well as political and operational risks and governmental regulation outcomes. CAP does not have any obligation to advise any person if it becomes aware of any inaccuracy in or omission from any forecast or to update such forecast.

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Carpentaria Exploration Limited

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Near term goal

√ 2016 – position Hawsons first in the development queue

2017 – secure bankable feasibility funding (BFS) on favourable terms and start to realise project value for shareholders Presentation content

1. Capital raising and expenditure summary

2. Prefeasibility study (PFS) summary

3. Iron ore outlook

4. Company outlook

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3

Carpentaria is delivering, more to do

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ASX : CAP Listed: 2007 SHARES: 180M CASH : $1.37 M 13 October, 2017 100% focussed on Hawsons Iron Project development (CAP 66.5%, Pure Metals PL 33.5%)

Dr Neil Williams - Chairman Mr Quentin Hill - Managing Director Mr Bin Cai - Director (non-exec.) Mr Paul Cholakos - Director (non-exec.) Mr Robert Hair - (Company Secretary)

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Product
High 9.5c
offtake LOIs
Resource PFS
upgrade delivery
Low 2c
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Major Shareholders Silvergate Capital 12.5% Australia Conglin Int. Group 7.8% SG Hiscock and Company 5.5%

carpentariaex.com.au

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Capital raising and expenditure summary

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Expenditure

2016 - reduced non project expenditure by $700k last year (to 12 mths to Sept’16)

2017 - further reduced costs, increased exploration share from 47% to 73%

Capital raised

Sept. 16 - Jan 17 $2.3m at an average price of 5.0 cents, for ~46m new shares via placement and rights issue

50% increase in share price over the past 12 months, 5.0 cents to 7.5 cents

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73%
47%
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Capital raising and expenditure summary

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Capital raising - October 2017

13[th] October, Placement of 10,800,000 new shares at $0.072 for $777,600 substantially to new and existing institutional shareholders.

31[st] October, Rights offer closes - 1 new share for 10 existing shares at $0.072 to raise $1.3m

Use of funds

Maintain project schedule – EIS works, final spring ecology, water bore drilling etc

Working capital while the most appropriate BFS solution is sought (A$25-30m)

Project Schedule- subject to funding

Task	2017	2017	2017	2017	2018	2018	2018	2018	2019	2019	2019	2019	2020	2020	2020	2020
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Phase 1 Approvals and bankable feasibility study test work					test work
Phase 2 Bankable feasibility study and engineering
Construction and production

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Hawsons Iron Project PFS – delivered on targets

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Hawsons PFS cost targets 2016 at 1 AUD buys 0.75 USD

Pellet feed all in OPEX US$45-54/t - delivered US$48/t (lower end of range) √ Capital intensity US$146/t – 208/t - delivered US$140/t (below the range) √ Hawsons is first in the queue √

Hawsons is the leading undeveloped iron concentrate/pellet feed project operating costs

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$
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Source CRU, July 2017

Hawsons is one of the lowest capital cost undeveloped iron concentrate/pellet feed projects

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Capital
Hawsons
cost per
tonne of
product $
Concentrate and pellet feed projects
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Source CRU, July 2017

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Hawsons Iron Project PFS – cash flow positive at 62%Fe prices <US$30/t

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Hawsons PFS preproduction costs (yr 1-2) USD (m)	Hawsons operating and sustaining costs (after prestrip, ~YR 3-22) USD/dmt product
Preproduction mining costs including pre-strip 194	Mining 12.14
Mining 242	Processing 8.23
Processing 398	Infrastructure and admin. 1.48
Infrastructure and administration 359	rail and port 11.23
Rail and port 208	Total C1 FOB 33.08
Total 1,2,3 1401	sustaining capital 4,5 3.48
1incl EPCM 12.5% / contract management 3% of US$127m	royalties 3.18
2incl. contingency and design growth (av. 16.5%)	Total all in FOB 39.74
3excludes finance costs	sea freight 8.29
	Total CFR China 48.03
4excludes new in-pit conveyor in yr 5 of US$120m	less Supergrade premium 25.00
_5net of salvage _	62%Fe equivalent total CFR 23.03

Base case 10mtpa Hawsons Supergrade® production exported through Port Pirie

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Hawsons Iron Project PFS – outstanding returns

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Hawsons PFS key economic results Base case	Hawsons PFS key economic results Base case	At 5 October 2017 prices 65%Fe fines US$86.55/t (62%Fe fines US$61.35/t)
Equity IRR (post tax, geared) 29.9%		38.4%
Equity NPV (10%) (post tax, geared) US$1,091m		US$1,667m
Project IRR (post tax, ungeared) 17.8%		22.9%
Project NPV (10%) (post tax, ungeared) US$867m		US$1,475m
Life of mine ave. annual revenue US$881m		US$997m
Life of mine ave. annual all in costs US$480m		US$486m
Life of mine annual margin(EBITDA) US$401m		US$511m
	Key Hawsons PFS assumptions
total ore mined 1423mt	62% Fe fines benchmark* US$63/t	AUD:USD 0.75
total waste mine 717mt	65%Fe fines benchmark* US$75/t	debt:equity 65:35
total product 201mt	plus 5 x Fe 1% US$1.10 US$5.50/t	corporate tax 30%
product specification 70%Fe	plus magnetite premium US$7.50/t	loan term 10.5 yrs
annual production 10mt	product revenue (dmt) US$88.00/t	delivered rebated diesel price A$0.89/L
moisture 8%	*ave. (mean) price forecast for 2020-2030 (real 2016)	deliveredpowerprice A$95/MWhr

Base case 10mtpa Hawsons Supergrade® production exported through Port Pirie

The Company confirms that all assumptions and technical parameters underpinning the resource and

reserve estimates continue to apply and have not materially changed since first reported on 28 July 2017.

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Hawsons Iron Project PFS – 1[st] quartile costs, robust through the cycle

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Hawsons is in the first quartile of the CRU global iron ore cost curve

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Source CRU, July 2017, Global iron ore business cost curve

CRU's Business Cost includes all costs of operations up to delivery at the buyers’ port and also includes a value in use adjustment that normalises all operations to the benchmark 62% iron ore price delivered to China, to allow for direct comparison. Cost curve includes projects. CRU’s adjustment for Hawsons Supergrade is ~US$18.

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Hawsons Iron Project PFS – Maiden reserve statement

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• Total resources >330mt concentrate

• Maiden Reserve >110mt concentrate

• Conversion rate from Inferred to Indicated Resources was outstanding at 96%, giving confidence in future upgrades

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1km
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3km

• High value concentrate grade and recovery unchanged after ~40% more data point

							Concentrate Grades	Concentrate Grades	Concentrate Grades
Category	Mt		DTR	Fe Head %	Fe %	Al2O3			SiO2	TiO2
		DTR %	Mt			%	P %	S %	%	%	LOI %
Probable Reserves	755	14.7	111	17.5	69.9	0.19	0.003	0.002	2.60	0.03	-3.03
Indicated (incl. Reserves)	840	14.5	121	17.4	69.9	0.19	0.004	0.002	2.61	0.03	-3.04
Inferred	1,660	13.6	227	16.8	69.7	0.20	0.004	0.003	2.91	0.03	-3.04
Total	2,500	13.9	348	17.0	69.7	0.20	0.004	0.002	2.81	0.03	-3.04

The Company confirms that all assumptions and technical parameters underpinning the resource and reserve estimates continue to apply and have not materially changed since first reported on 28 July 2017. Reported at a 9.5%DTR cut off grade, and 38micron grind.

11

Iron ore outlook – strong fundamentals

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Finished steel forecast demand 2017 (World Steel Oct. ’17)

• China forecast up 23 mtpa (~3%) *

• Rest of world forecast up 26mtpa (~2.6%)

Population growth, urbanisation rates and economic development underscore long term demand growth, esp. India, Middle East and ASEAN

• BHP forecasts CAGR of 1.9-2.1% in steel production out to 2030

World Steel

• That is 35-40mtpa new steel each year

Supply gap 2019-2021

• New supply from majors** estimates at only 12mtpa in 2020.

• Mills and traders are planning now

*corrected for production outside official figures

**RIO, BHP, Vale, FMG, Roy Hill from company data, reports

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World Steel

12

Iron ore outlook - shift to productivity driven steel making

Hawsons Supergrade pellet feed ~US$92/t

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• Record high quality differentials reflect current productivity driven steel making in China

• Forecast to be a structural shift over time as China shifts to the same blast furnace operating practices as Europe and Japan

• Increasing environmental regulation enforcement and increasingly frequent production shut downs mean high productivity ores at a premium

• Hawsons Supergrade is the world’s best pellet feed and in demand

13

Company outlook – BFS funding strategy

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• Offtake demand for Hawsons Supergrade® product is strong across several markets

~~Company~~	Volume
Formosa Plastics	2.6 Mtpa
Bahrain Steel	3.0 Mtpa
Shagang	2.5 Mtpa
Mitsubishi Corp. RtM	1.0 Mtpa
Gunvor	1.0 Mtpa
Kuwait Steel	1.0 Mtpa
Emirates Steel	0.9 Mtpa
~~Total~~	~~12.0 Mtpa~~

• Discussions commenced with leading project finance banks, initial feedback on customer quality and project metrics is encouraging

• Bankable feasibility study (BFS) funding sought ~A$25-30m

• Engaged with multiple third parties capable of substantially funding the BFS

• These parties are undertaking pre-transaction due diligence, and therefore the nature of any transaction that may possibly result is uncertain

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Summary

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• Carpentaria has met its targets this year

• Shareholder value has increased

• Hawsons Iron Project is the world’s leading high quality iron ore project

• Hawsons Iron Project and Supergrade® product has strategic value in the direct reduction market and the Asian blast furnace market

• Short term goal - secure BFS funding on favourable terms by converting this strategic value, increasing shareholder value

• Medium term goal - position the project to be a bankable development opportunity increasing shareholder value

• Long term goal - be a profitable and reliable producer of the highest quality iron ore increasing shareholder value

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Disclaimer Thank you for your attention ~~Phone: +61 7 3220 2022~~

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To find out more, visit us at www.capex.net.au

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The information in this presentation that relates to Exploration Results, Exploration targets and Resources is based on information compiled by Q.S. Hill, who is a member of the Australian Institute of Geoscientists and has had sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Q.S.Hill is an employee of Carpentaria and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.