HAWSONS IRON LTD — AGM Information 2018

Oct 14, 2018

ASX Announcement

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15 October 2018

Managing Director’s AGM Presentation

A copy of the Carpentaria Resources Managing Director’s AGM presentation is appended hereto.

For further information please contact:

Bob Hair Company Secretary +61 7 3220 2022

Carpentaria Resources Limited ABN : 63 095 117 981 ASX : CAP

Level 6, 345 Ann Street Brisbane Qld 4000

PO Box 10919, Adelaide St Brisbane Qld 4000

info@capex.net.au

carpentariares.com

Page 1 of 1

ANNUAL GENERAL MEETING Managing Director’s review of operations Quentin Hill

Cautionary Statement

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This presentation has been prepared by the management of Carpentaria Resources 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.

Key messages

Your Company + continues to direct expenditure to attract and maximise bankable feasibility study (BFS) funding terms + is best positioned to benefit from the transformation of the iron ore market + has the expertise to secure funding, continue development and create value

Presentation content

1. Expenditure summary

2. Strategy and BFS funding

3. Commodity outlook

4. Company outlook

CARPENTARIA IS DELIVERING

Delivered

1. Product offtake LOIs

2. Resource upgrade

3. PFS

4. Mitsui commit

Corporate

• Shares 214m + Cash (Sept. 30) $1.65m + Hawsons 68.7%

Top Shareholders + Silvergate Capital 9.8% + S.G. Hiscock 8.2% + Australia Conglin 6.6%

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4
3
2
1
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Expenditure Summary

• High ratio of activity to administration spending 77%

• A$2.6m capital raised since 2017 AGM

• Last two years, share price up 80%, market capitalisation tripled

• Continued support from institutional shareholders

• Spending focussed to support and attract BFS funding

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ASX:CAP expenditure summary

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A$ '000's
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3500
Exploration and
evaluation
3000
2500
2000
Business
1500 development
1000
500
Administration
0
and staff costs
12 mths to 12 mths to 12mths to
Sept 2016 Sept 2017 Sept 18
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Strategy

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100% committed to realising the $1billion value of Hawsons Iron Project , the next milestone is raising the remaining 80% of the BFS funding. CAP has a compelling case.

CAP has a team that can deliver, it has the customer relationships and the team has people that have financed, designed, built and commissioned large scale projects.

CAP has demonstrated it has a credible path to construction finance that is required to convince BFS funding groups to invest.

Our construction finance plan has been developed after consultation with leading project finance banks and the Hawsons PFS results meet the parameters of the plan. Our project finance model is:-

• 65:35 debt to equity split, lenders will also likely require;

• ~20% cost overrun facility (~US$300m, Mitsui option price is $US60m)

• A large balance sheet company at the project level, therefore a minority asset level sell down is required at the end of the BFS

Iron ore and steel markets have moved in our favour and good returns are forecast

Project Economics

Outstanding prefeasibility study (PFS) results;

• ➢ Cash flow positive at benchmark 62%Fe under US$30/t

• ➢ Excellent returns

• ➢ High project value

• ➢ 10mtpa production

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PFS COST ESTIMATES	PFS Price Assumption	PFS Price Assumption	PFS Price Assumption	August 21 2018 Iron Ore Price Assumption	August 21 2018 Iron Ore Price Assumption
Operating costs - C1 FOB	US$33.08			US$33.08
Operating costs - All in	US$39.74			US$39.74
		$.
Operating costs - CFR China		US$48.03			US$48.03
Supergrade price premium	US$25.00			US$38.03
Equivalent 62%Fe CFR cost	US$23.03			US$10.00
Capital cost inclusive of contingency	US$1.40Bn			US$1.40Bn
PFS FINANCIALS
Annual profit margin	US$401m			US$569m
Equity IRR			29.9%	43.0%
Equity NPV	US$1,091m
				US$1,973m
tonne of supergrade (70%Fe)	201m			201m
Mine life / pay back period	20 / 3-4 years			20 / 3 years
62%Feprice assumption	US$63/t			US$67.95/t

Refer appendix slides 15 and 16 for assumptions

Iron ore market shift

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+ Good steel mill margins spur demand for productivity

• High grade ore and pellets boost productivity

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Source Wood Mackenzie

May 2016 Oct 2018

June 2015 Oct 2018

THE PELLET MARKET NEEDS NEW SUPPLY SOURCES

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Hawsons is the world’s leading undeveloped pellet feed project

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SLIDE | 10

www.carpentariares.com

Hawson’s a standout project

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IRR and product grades for unfinanced projects

+ High grade projects show higher rates of return

+ Wood Mackenzie says they

“expect high grade concentrate and pellet feed projects to be the focus of project finance in the near term” (Tokyo August 2018)

• • Wood Mackenzie data shows Hawsons is the leading pellet feed project of its type in the world

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30
Hawsons at todays prices
(ASX:CAP internal analysis only)
25
20
15 Hawsons
Simandou
10 Marillana El Aouj
Mary River Phase 2 Central Eyre Iron
Buckland Project
Kami
5
Pedra de Ferro
Pilbara Iron Ore
Corunna Downs Project Southdown
0
55 60 65 70 75
Kalia Mbalam
-5
Post tax IRR (%)
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Fe grade (%)

• *Pre-feasibility study or later stage

• *Bubble size represents annual production capacity

• *Excludes replacement projects being proposed by the majors

• *Marillana IRR based on trucking to port. It is currently investigating a rail option that may change the project economics

• *based on Wood Mackenzie long term price forecasts Source: Wood Mackenzie

www.carpentariares.com

SLIDE | 11

Quality makes the difference

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• Seaborne iron ore cash costs by operator 2018 (CFR China, 62% Fe fines equivalent)

• • Hawsons near the front of today’s quality adjusted cost curve
• • Hawsons 70%Fe product is forecast to have a premium of ~$30/t longer term over the 62%Fe benchmark
• • Today’s premium (not reflected on this curve) is closer to $35/t

Source : Wood Mackenzie

Company Outlook

• • Mitsui agreement generated additional interest, validating CAP’s market position
• • Recent marketing trip leads to progress in BFS funding negotiations
• • Parties agreed to work towards and within certain timeframes
• • Prospects of construction funding also promoted

Key messages

Your Company

• continues to direct expenditure to attract favourable bankable feasibility study (BFS) funding terms

• is best positioned to benefit from the transformation of the iron ore market + has the expertise to secure funding, continue development and create value

Quentin Hill Managing Director Email quentin.hill@capres.net.au Phone +61 7 3220 2022 Mobile +61 4 2396 8786

www.carpentariares.com

PROJECT PREFEASIBILITY STUDY RESULTS

Hawsons PFS preproduction costs (yr 1-2) USD (m)	Hawsons PFS preproduction costs (yr 1-2) USD (m)	Hawsons operating and sustaining costs (after prestrip, ~YR 3-22) USD/dmt product	Hawsons operating and sustaining costs (after prestrip, ~YR 3-22) USD/dmt product	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

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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.

SLIDE | 16

www.carpentariares.com

PROJECT PREFEASIBILITY STUDY RESULTS

		at August 20, 2018 prices 65%Fe fines
Hawsons PFS key economic results	Base case	US$94.55/t
		62%Fe price US$67.95
Equity IRR (post tax, geared)	29.90%	43.04%
Equity NPV (10%) (post tax, geared)	US$1,091m	US$1,973m
Project IRR (post tax, ungeared)	17.80%	25.63%
Project NPV (10%) (post tax, ungeared)	US$867m	US$1,793m
Life of mine ave. annual revenue	US$881m	US$1059m
Life of mine ave. annual all in costs	US$480m	US$490m
Life of mine annual margin(EBITDA)	US$401m	US$569m

	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

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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.

SLIDE | 17

www.carpentariares.com

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MR QUENTIN HILL

ADAM WHEATLEY

RAY KOENIG

LOU JELENICH

MANAGING DIRECTOR (~5yrs)

PROJECT FINANCING DIRECTOR

PROJECT DIRECTOR

PRODUCT MARKETING DIRECTOR

Geologist, >20 years’ experience Integral part of Hawsons discovery team, driving development, formerly Delta Gold

One of Australia’s leading magnetite engineers; ex-Savage River magnetite and pellets.

• Technical feasibility

• Risk reduction

(Past projects, Gindalbie/Kararra, Hancock/Hope Downs, Aztec/Koolan Island)

• Project financing and bankability

Iron ore marketing and steel expert Ex-BHPB lead iron ore technical marketer

• Marketing saleable product

• • Offtake arrangements

Carpentaria Resources Board of Directors

Dr Neil Williams Chairman- Former - Chief Geologist Exploration MIM, CEO Geoscience Australia Mr Paul Cholakos NED - Mining Engineer, currently Executive General Manager, Technical Services Oil Search (ASX:OSH) Mr Jon Parker NED - Former General Manager Commercial Rio Tinto Iron ore, MD Felix Resources, MD Norton Goldfields – Mr Quentin Hill Managing Director

CUSTOMER DEMAND

COMPANY	VOLUME
Mitsui & Co	2.0 Mtpa*
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	14.0 Mtpa

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• ➢ Companies signed letters of intent (LOI) with ASX:CAP

• ➢ Combined annual revenue >US$170 billion

• ➢ 150% of remaining 8mtpa under LOI

• ➢ Competition for offtake to drive development

* Secured option

Resource increase, 30+ year mine life

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• Total resources >330mt concentrate

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

1km

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

3km

Category	Mt	DTR %	DTR Mt	Fe Head %			Concentrate Grades	Concentrate Grades	Concentrate Grades
					Fe %	Al2O3 %	P %	S %	SiO2 %	TiO2 %	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 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.

carpentariaex.com.au

20

HAWSONS SUPERGRADE® PRODUCT

+ World’s best pellet feed,

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Elements and Compounds	Elements and Compounds	Supergrade Pellet Feed (ALS, CISRI)	Supergrade Pellet Feed (ALS, CISRI)	Supergrade Pellet Feed (ALS, CISRI)	Supergrade Pellet Feed (ALS, CISRI)	Supergrade Pellet Feed (ALS, CISRI)	Supergrade pellets (CISRI) Fired at 12300C	Supergrade pellets (CISRI) Fired at 12300C	Supergrade pellets (CISRI) Fired at 12300C	Midrex DR Specifications*
chemical Analysis (%) (on dry basis)	Fe		70.3				67.80			67.00 min.
	SiO2		1.99				2.39
	Al2O3	0.29					0.44
	SiO2+ Al2O3	2.28					2.83			3.00 max.
	CaO	0.11					0.15
	MgO	0.2					0.22
	P	0.007					0.008			0.030 max.
	S	0.001					0.003			0.008 max.
	TiO2	0.11					0.10			0.15 max.
	Na2O	0.032					0.056
	K2O	0.05					0.054
				.
Physical Properties	Blaine Index (cm2/g)			1910
	Tumble(% +6.3mm)						96.53			NA
	Abrasion(% -0.5mm)						2.99			NA
	CCS(Kg/pellet)						324			>250
lurgical erties	Reducibility Index (%)						62.04
	Reduction swelling index (%)						13.92
Metal Prop	Softening/Melting (Kpa.0C)							551

• Highest iron content, + DR spec. - 70%Fe, <2% Silica + Ideal physical properties

• Excellent metallurgical properties

Hawsons’ indicative specifications based on bulk pellet feed test work (ASX Announcement, 14 October 2015) and China Iron and Steel Research Institute test work (CISRI) in Beijing February 2016). *P8 The Midrex Process by Midrex 2015

www.carpentariares.com

SLIDE | 21

PROJECT SUMMARY

• • Located 60km SW of Broken Hill
• • Power from reliable eastern states grid
• • Water from defined high yield saline aquifer 90km south
• • Mine and process on site for 10mtpa concentrate production
• • Hawsons’ unique soft ore makes the difference on cost and product quality
• • Workforce in Broken Hill

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SLIDE | 22

www.carpentariares.com

HAWSONS IRON PROJECTLogistics and approvals

• • Slurry product 55km in pipeline to Broken Hill
• • Rail to Port Pirie or Whyalla on existing rail (12 mtpa spare capacity) we have engagement with all the infrastructure owners
• • Transhipment to Capesize vessels to customers in Asia and Middle East
• • Product quality 70% Fe, (tested by customers)
• • Federal Govt. Major Project Status March 2018

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www.carpentariares.com

SLIDE | 23