HAWSONS IRON LTD — Investor Presentation 2015

Nov 11, 2015

Hawsons Iron Project Mining 2015 Brisbane 11-12[th ] November

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

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ORES AIN’T ORES
HAWSONS SUPERGRADE AND SUPERSOFT ORE CAN PROSPER THROUGH THE CYCLE
carpentariaex.com.au
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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.

Carpentaria - Snapshot

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Our Goal Be the preferred supplier of super grade iron products to growing markets in Asia and the Middle East to benefit our shareholders, customers and communities

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ASX : CAP Listed: 2007 SHARES: 124 M CASH : $2.5 M September 30,2015 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)

100% focussed on Hawsons Iron Project (CAP 62%, Pure Metals PL 38%)

Major Shareholders

Silvergate Capital 18.2%

Australia Conglin Int. Group 11.4%

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Project Team - Experts in their field

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Ray Koenig - Consultant
• Technical Director ₋	Technical feasibility
• One of Australia’s leading magnetite ₋	Risk reduction
engineers; ex-Savage River magnetite and pellets Adam Wheatley - Consultant ₋	Project financing and
• Financing expert	bankability
• (e.g. Gindalbie/Kararra, Hancock/Hope Downs, Aztec/Koolan
Island) Lou Jelenich - Consultant ₋	Marketing saleable product
• Market and steel expert • Ex-BHPB iron ore technical marketer ₋	Offtake arrangements

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Key Points

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• Ores ain’t ores – the iron ore market is segmented and the high grade market will grow the fastest due to productivity and environmental benefits

• Buyers strongly influence which projects get developed, through offtake support

• Buyers are willing to support competitive new sources of high grade supply that are sustainable through the cycle to diversify supply.

• Hawsons is now at the front of the high-grade offtake line because of recent Supergrade results that are a game changer.

• Opportunity is to convert the initial offtake interest in Supergrade from buyers into offtake support and cornerstone investor support and secure the path to development.

• Supergrade results

%	Fe	SiO2	Al2O3	P	S	Mn	CaO	MgO	TiO2	K2O	V	Na2O	LOI 1000
	70.3	1.99	0.29	0.007	0.001	0.022	0.11	0.20	0.11	0.05	0.03	0.032	-3.0

Hawsons Iron Project is a stand out

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• Super grade – highest seaborne grade in the world will attract offtake support in high value markets and attract the highest revenues

• Super location – existing port, rail and power infrastructure and workforce saves over USD1 billion in capital, reduces development risk.

• Super competitive – soft ore allows lowest magnetite mining and processing cost targets

• High demand - market seeking new high grade supply

• Potential robust margins in current market and the right attributes for development based on PFS level engineering studies and Inferred Resources.

• Project Concept – deliver 10 Mtpa of world’s leading grade magnetite concentrate >69.5% Fe, for a mine life of over 25years

Super Location – Access to over $1B of existing infrastructure

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Population – 20,000 people
Community support
Power – up
to 300MW
Water – high yield
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Super Location – Access to over $1B of existing infrastructure

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25 t axle load rail, Port Pirie Spare Berths
13 Mtpa spare capacity First right of refusal 12 Mtpa
Closest to markets
25-50% closer
than competitors
Cape Size capacity
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Super Soft, Super Grade – Resources and mining

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Resource JORC Inferred (88%) plus indicated (12%)

• 1.8 Bt at 15% mass recovery for 263 Mt of 69.7% Fe concentrate (refer Appendix 1)

• 26 years at 10Mtpa, significant exploration potential to support over 40 years mine life in a single pit (refer Appendix 1)

Mining:

• Low strip ratio 0.47:1 waste:ore, falling to near zero by year 8

• Low cost bulk mining methods – in-pit crushing and conveying

• Rock strength soft

• Unconfined compressive strength (UCS) 50-90 Mega Pascals (Mpa), cf. 350 MPa.

• Large optimisation opportunities

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 26 March 2014.

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What is Super grade?

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Indicative %Fe of Seaborne Traded Ores
69
67
65
63
61
59
57
55
Source –Company Data, LFJ Consulting
HAWSONS IRON PROJECT (SG)
Fe %
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Super grade – highest seaborne grade in the world will attract off take support and meets direct reduction quality standards (DR)

Why buyers are willing to support high grade supply

• New independent source of high grade (and DR) supply restores some price power

• Higher productivity for a blast furnace allows for lower cost per tonne of steel

• Allows balance of ever rising levels of impurities

• Allows simple way to reduce emissions and pollution

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Supergrade from unique siltstone ore

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50um

Natural grain size <50um easily achieved

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Ball Milling 100% <40um 7kwh/t

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1000um

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45% rejection at first magnetic separation

Crushing stage generates high proportion of fines ~30% <150um

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Elutriation removes free silica upgrade > 69%Fe

After second magnetic separation 66%Fe

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Recent results – 99% Iron recovery through cleaning circuit

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~67.3 6.24
21.5%
78.5% 16.2%
5.3%
Iron recovery
through cleaning
circuit
~99%
500kg concentrate 94.7 70.26 2.25 5.3 14.15 66.24
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Possible high grade cleaning circuit corrected version after from ASX Announcement 14 Oct. 2015

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Hawson cost targets/aims - strength through the cycle

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$ 6.90$ 6.90 $1.40 $1.40 $9
$6$6
$36 -$36 - $30 -$30 -
4545 4040
FOB Port FOB Port freight freight InterestInterest Fe quality Additional Target/aim
adjustment
Pirie OPEX Pirie cost CFR CFR magnetite break even
pellet feed
targettarget ChinaChina range
premium
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• Based on PFS level engineering and Inferred Resources

• Competitive capital cost target of USD1.4-1.9bn (inclusive of preproduction cost and contingency)

**Potential revenues based on base 62% Fe price plus premium $24/t concentrate derived from index based pricing formula from recent Shanghai Metals Market survey of prices paid by Chinese steel mills (covering 25% of industry) for pellet feed in May2015 (discounted to reflect potential lowest case in the break even scenario).

• Includes royalties, sustaining capital, 1AUD buys 0.72USD

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Outlook

Iron and steel are robust long term industries

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• Iron and steel are long term growth industries. World Steel Association May 2015 forecast 455Mt extra of steel demand from 2014 to 2030 globally

• That’s 28mtpa steel and up to 46mtpa of new iron ore demand each year, for 16 years.

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• Future steel growth driven by infrastructure and urbanisation demand from ASEAN, India and MENA economies (source OECD) (China included at near zero)

• China’s is the upside in this scenario, RIO forecast an extra 150Mtpa from China by 2030 or another 10mtpa every year based on very detailed analysis.

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Outlook

Over supply won’t last

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• Iron ore market is suffering from over supply, prices are volatile

• Major expansions will be largely complete by end 2017 and over supply will end

• Significant high cost tonnage must exit during this time.

• Steel demand growth will continue

• New projects are required to meet demand growth and replace depleted mines

• Iron ore prices are required to rise to incentivise development of these new projects noting that all the low cost expansions have largely been done

• Development window for new projects therefore is late 2017 and onwards Hawsons opportunity is to be ready for development at that time.

• Target price- long term – one view - USD$75 is required to incentivise lowest cost new production of sinter fines from Brazil (Metal Bulletin Oct. 2015)

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Direct reduction (DR) is a different high value market with a growing supply deficit

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• Only about 12 projects produce DR quality with ~ 75% of production concentrated from four companies (Metal Bulletin)

• Swing producers largely withdrawn (Wood Mac 2015).

• Market requires new, long term, low cost supply.

• Very encouraging product feedback from Middle East enterprises who favour diversification of supply.

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Direct reduction market (DR)

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Direct reduction pellet feed cost curve
Source – Metal Bulletin Oct.2015
Hawsons
adjusted
FOB cost
aim
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USD
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Dominant producers are from Brazil When adjustments are made for freight and quality Hawsons is competitve

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Hawsons comparison with Brazilian
DR hematite dmt.
$ 4
$6
$26
$36
- 35
- 45
FOB Port freight Fe quality Hawsons
Pirie cost advantage adjustment adjusted
target* to Middle cost
East over targets
Brazil
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• Includes royalties, sustaining capital, 1AUD buys 0.72USD

• **includes $4/t for Fe units and $2/t for magnetite pelletising productivity benefits

carpentariaex.com.au

Key Points

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• Ores ain’t ores – the iron ore market is segmented and the high grade market will grow the fastest due to productivity and environmental benefits

• Buyers strongly influence which projects get developed, through offtake support

• Buyers are willing to support competitive new sources of high grade supply that are sustainable through the cycle to diversify supply.

• Hawsons is now at the front of the high-grade offtake line because of recent Supergrade results that are a game changer.

• Opportunity is to convert the initial offtake interest in Supergrade from buyers into offtake support and cornerstone investor support and secure the path to development.

Disclaimer Thank you for your attention

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Phone: +61 7 3220 2022 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.