HAWSONS IRON LTD — Investor Presentation 2014

Dec 4, 2014

Carpentaria Exploration Ltd We find it. We prove it. We make it possible. 11[th] SA Exploration and Mining Conference 5 December 2014, Adelaide

Disclaimer

This presentation has been prepared by the management of Carpentaria Exploration Limited (CAP) for the benefit of 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

Company Snapshot

ASX Code : CAP

FLOATED : Nov 2007 CASH: AUD 4.7 million (Sept. 30 2014) QUOTED SECURITIES: 124 m shares

SHARE PRICE : $0.04

Top Shareholders: Silvergate: 18.2% Conglin Group: 11.4% Directors & Management: 5.3%

• Strong cash position

• History of good capital management

• Major asset Hawsons Iron Project 60%

• Focussed on development of Hawsons

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Company Focus

Company Aim

• Become a long term, low cost producer of premium iron products

In response to tight market conditions

• Balance protecting and promoting Hawsons

• Significant cost reductions across the company

Company near term goals

• Build a platform for further investment in Hawsons with targeted work programmes to increase certainty of key project aspects by end 2014 and get the project BFS ready

• Attract additional investment/project partners to advance Hawsons BFS and grow value for shareholders leveraging off

• Increasing trend of higher premiums for high quality iron products and

• Recent metallurgical results confirming high grade product

• Realise value from other tenements

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Balanced and Experienced Board and Management

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Dr Neil Williams – Chairman

• 40 years experience

• Australia’s Chief Government Geologist 1995 - 2010

• One of Australia's eminent geoscientists

Mr Bob Hair

• 30yrs experience as a lawyer

• Former General Manager Commercial MIM holdings

• Former CEO of AIM listed Ferrum Crescent

Mr Paul Cholakos

• 25 yrs experience in resources

• Mining Engineer

• Current Executive General Manager Project Development – Oil Search

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Mr Quentin Hill – Managing Director

• 18 yrs experience in exploration, development and management

• Part of Hawsons discovery team

• Geologist

Ray Koenig - Hawsons Technical Director

• 45 years experience

• Chief Metallurgist Savage River Magnetite Mines

• Business Group Leader Mining and Metals for GHD

• Magnetite due diligence as a consultant

Mr Bin Cai

• Conglin Australia representative

• 18 years experience investing in emerging resource companies

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Hawsons Iron Project Concept

• Deliver 10 million tonnes per year of “best quality” pellet feed magnetite concentrate at premium prices to end users needing high purity feed over the long term

• Exploit very large resource with favourable mining and processing attributes and achieve very low cost production

• Use the existing, high capacity, power, water, rail, and workforce all less than 90km from site and existing port to achieve very competitive low capital and operating costs

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Project Concept –Transport logistics

• Location is everything

• Mine to rail head via new slurry – 50km

• Existing open access rail to new stockpile at Port Pirie – 360km

• New stockpile to existing port berths via new conveyor

• Barge transport to 180,000t vessels – 15-30km

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Recent Results

Pilot plant achieves high grade

	Fe%	**SiO2% **	Al2O3%	P%	S%
Hawsons flow sheet pilot plant test concentrate	68.3	3.56	0.39	0.007	<0.001
Hawsons floatation bench test concentrate	69.1	1.19	0.54	0.025	NA

• Tested new flow sheet at Iron Ore Technical Centre (ALS Ammtec, Perth)

Impact crushing to 100% passing 1mm

Magnetic separation 45% tailings rejection

• Increases confidence in flow sheet assumptions and cost estimates

• Confirms low energy, single stage ball milling can meet grain size and grade targets

Ball Milling to 100% passing 38 micron

• Upgrading with Hydroseparator

• Separate floatation test work results from South Africa open new opportunity for direct reduction iron (DR) feed potential – recoveries very good

Magnetic separation ~66%Fe ~6% SiO2

• Results being finalised

• Over 1 tonne of concentrate to be produced for future test work

• Allows planning of larger pilot plant run

Hydroseparation >68%Fe, 3.6%SiO2

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Key achievements last 12 month (cont.)

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Technical Director Ray Koenig and the cleaner magnetic separator top, Hydroseparator column right

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Current and future work

Current program designed to get all project elements BFS ready and

Build a platform for further investment Complete December 2014

• Finalise process test work

• Rail – port -marine prefeasibility study

• Power network capability study

• Detailed BFS work schedule

• Optimise business case based on new test work opportunities and traditional markets

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Rail-Port-Marine Pre feasibility Study Port Pirie

Jointly funded with Flinders Ports

• 10-30mtpa export solution with multi user capability

Goal – is a profitable, sustainable supply chain that is environmentally sound and supports Port Pirie

• Conveyor to berths – pipe conveyor has lowest dust and noise and greatest flexibility

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• Transhipment

• Self propelled, self unloading barges

• Potential for capacity well over 20Mtpa

• Other options being finalised

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Other key project elements

Resource

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Resource outline
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• JORC* resource 1.8 Billion tonnes at 15% mass recovery for 263Mt of 69.7% Fe, 2.9% SiO2 (mine 100t to produce 15t concentrate)

Mining – detailed study work

• 3000m x 600m ore body –low mining costs

• bulk mining methods

• waste : ore 0.3 : 1

• material movement and mining costs comparable to higher grade projects

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600m
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• Potential for large resource extensions and long life

• Siltstone rock very soft - easy on mining equipment

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• Refer Appendix 1

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Project key elements (cont.) Siltstone ore is different to typical iron formations

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Grind size and energy intensity (after Credit Suisse Dec 2011)
25.8
Well known deposits, from company data
21.5 5 x
17.2 4 x
12.9 3 x
8.6 2 x
4.3
Hawsons
0
20 60 100 140 180 220 260 300
Grind Size (P80 microns)
Processing circuit capacity required per tonne of concentrate (MW)
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• very different ore - soft

• natural grain size 10-50 microns, don’t break the crystals

• ~ one quarter energy use of typical magnetite ores per tonne of concentrate (BWI 6-7)

• produces high purity concentrate

• large processing cost savings up to $5-15/t concentrate

• Comparatively low technical risk

• Its about costs and quality not head grade

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Project pathway is clear and achievable Differentiates Hawsons from others

		Hawsons	Others
resource	>250Mt concentratepotential for much more		most
mining	standard and inpit crush and convey		most
water	does not use sea water,highyield water source		few
processing	one stage ofgrinding,no regrinding		few
	two stages magnetic separation		few
	DR feed option		v.few
power	low costgridpower available		few
transport	existingopen access rail line		few
	existing port access secured		few
permitting	No Native Title		few
	EIS seasonal surveys complete		few
	MiningLease Application lodged		some
	Government support-State Significant Development		most
	Stable low risk country		some

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Targeted CFR China Costs

• Carpentaria is targeting the second quartile of the all in CFR China cost curve indexed to 62% Fe

• Approx. US$56

• Approx. US$64 (69% basis)

• Withstand price fluctuations

• Premium price expected

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Source - After Credit Suisse 21 August 2013

1 Reported cash costs are C1 costs

2 all-in cash costs include royalties, sustaining capital, corporates costs but not finance costs

3 includes a freight adjustment to CFR China and indexed to a 62% product

4 exchange rate 0.85USD = 1.00AUD

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Capital Intensity – benefits of existing infrastructure

Low capital intensity

10Mtpa start up case utilising existing infrastructure targets:

• Low capital cost per tonne of capacity (capital intensity ~$140150USD)

• Capital intensity similar to hematite projects

• Lower than comparable magnetite projects

• Low capital service costs

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350
Magnetite Projects (grey)
Range 67-69%Fe
Minas Rio 68% Fe
300
Karara
250
Southdown
Fusion
200 Some typical
Central Eyre
hematite projects (red)
150
Hawsons Mblam 63%Fe
Hawsons
Roy Hill 58-61%Fe
100 10 Mtpa aim 20 Mtpa aim
Pilbara 333 62%Fe
50
Roper Bar 60%fe RIO TINTO
0
0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000
Total Capital Cost estimate USD M
Source - refer Appendix 4
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Pricing premium approx. $20/t

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Current $4.00
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$87/t
$71/t
$59/t
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DEC -14
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Source Vale

Source Custeel.com

Premium currently $4.00/%Fe (16/4%)

At 69% Fe reasonable to expect $2.50-$3.50/%Fe Or $17-$25/t above 62% price

Discounts for lower grade are similar so conceivably a $38 difference in 69%Fe price and 58%Fe

Premiums driven by

• Efficiencies using higher grade

• Environmental pressures becoming stronger (long term trend)

• Lump and Pellets perform even better

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Steel making trends new opportunity Increase in DRI demand to feed electric arc furnaces

Electric Arc Furnace (EAF) steel making predicted to increase because

• more efficient

• lower energy requirements

• lower emissions

• esp India, Middle East

EAF feed

• EAF relies on high quality feed (SiO2<2%)

• • Feed balance currently approx.

• ~80% scrap metal

• ~20% direct reduction iron (DRI)

• Demand for DRI feed set to increase

• DRI feed attracts added premium

• Few projects with a DR feed option

• New opportunity to explore for Hawsons

Global crude steel production by type

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1600
1400
1200
Blast Furnace
1000
800 Electric Arc Furnace
600 Projected DRI
Requirements
400
CAP DRI projection
past 2010
200
0
2000 2005 2010 2015 2020 2025 2030
Source Metal Bulletin
Millions of tonnes
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Summary

Project pathway is clear and achievable

Potentially attractive returns at forecast long term Fe prices from high grade concentrate Clear strategy to attract funding partners and grow value

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Carpentaria Exploration

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

Phone: +61 7 3220 2022 To find out more, visit us at Booth 37 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.

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CARPENTARIA

APPENDIX 1 – Resources

							Concentrate Grades	Concentrate Grades	Concentrate Grades
		Category	Billion Tonnes		Magnetite DTR%	Fe%	Al2O3%	P%1	SiO2%	LOI%		Contained Concentrate Million Tonnes
		Inferred	1.554		14.7	69.6	0.20	0.004	2.9	-3.0		228
		Indicated	0.215		16.2	69.8	0.20	0.005	2.8	-3.0		35
		Total	1.769		14.9	69.7	0.20	0.004	2.9	-3.0		263
		Indicated and									Exploration
		Inferred										potential
		Resource area

Reported under JORC 2012 – no material change since first published 26 March 2014

The Company is not aware of any new information or data that materially affects the information included in the relevant market announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed.

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CARPENTARIA APPENDIX 2

Mining

• low strip ratio 0.3:1 waste to ore falling to 0.1:1 by year 4

• Low cost bulk mining methodsin pit crush and convey

• 600m mining widths

• UCS 50-90Mpa cf 350Mpa

Processing

• simple flow sheet

• very low energy

• Don’t break the magnetite

• very high grade product

• Bond Work Index 6-7Kwhr/t (cf 18-40)

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magnetite quartz
5o micron
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Image of concentrate
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Photomicrograph of rock

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CARPENTARIA EXPLORATION APPENDIX 3 – Processing Flow Sheet

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ROM Hydroseparator
Rougher Mag Sep
Impact Crushing
50%
+10 mm 50% Cleaner Mag Sep
Ball
Mill
-10 mm
Fines -1mm
Barmac
Crusher
Stockpile
Cyclone
Concentrate
despatching
Fines -1mm Tailings
Tailings disposal
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*Before recent results confirmation

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CARPENTARIA EXPLORATION APPENDIX 4 – Capital Intensity Chart

Project	Operator	Capex A$M	Annual M Tonnes	Capex/Tonne A$M	Product %Fe
Roy Hill₁	Hancock	[10,000]	55	[180]	[55]
Karara₂	Karara JV	3000	10	300	68
Central Eyre₃	Iron Road	2590	12.4	210	67
Fusion₄	Eyre Iron	2600	10	260	67
Mbalam₅	Sundance	4700-7830	35	134-224	63
Southdown₆	Grange	2885	10	289	69
Minas Rio₈	Anglo	9300	26.5-30	350-310	68
Pilbara 333₉	Rio	15740	113	139	62
Roper Bar₁₁	West Desert	180	3	60	60

• ₁ http://www.royhill.com.au/sites/default/files/Tim%20Treadgold%27s%20article.pdf

• ₂ http://gindpublic.powercreations.com.au/images/gind---iebohvaiti.pdf

• ₃ http://www.ironroadlimited.com.au/images/files/projects/20110614%20Iron%20Road%20-%20CEIP%20Prefeasibility%20.pdf

• ₄ http://centrexmetals.com.au/wp-content/sharelink/20120503-mine-and-port-scoping-study-completed-and-dfs-commenced87554443598698511.pdf

₅ http://www.sundanceresources.com.au/IRM/Company/ShowPage.aspx/PDFs/2675-51552764/PresentationResourcesRisingStars

• ₆http://www.grangeresources.com.au/clients/grange/downloads/item150/southdown_dfs_presentation_-_albany_16_may_2012.pdf

₈ http://www.angloamerican.com/business/ironore/projects.aspx , http://www.mining-technology.com/projects/minas-rio-iron-ore-brazil/ ₉http://www.riotinto.com/documents/110324_New_opportunities_for_industry_growth_Sam_Walsh.pdf

₁₁ ASX550 : Investor Notice of Presentation 20 Sep 2013.pdf USD/AUD conversion at 0.94

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