HAWSONS IRON LTD — Investor Presentation 2017

Dec 10, 2017

Investor Presentation

December 2017

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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.

2

Hawsons Iron Project – Key messages

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• Global steel industry increasingly needs high quality iron ore products and is paying a premium for it

• Hawsons Supergrade® will be the world’s best iron ore product

• Hawsons Iron Project is the world’s leading undeveloped high quality iron ore project for cost and quality

• Hawsons has the right product, in the right place, at the right time to attract strategic investment and deliver for shareholders

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3

Hawsons Iron Project – Key update

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• CAP seeking A$25-30m for bankable feasibility funding (BFS) on the right terms

• October 2017 - multiple third parties capable of substantially funding the BFS undertaking pre-transaction due diligence. (The nature of any transaction is uncertain).

• November and December 2017 - Following recent visits to China and Middle East additional market participants are also seeking to secure off-take and support project development.

• The additional parties are also undertaking due diligence and are capable of substantially funding the BFS. (The nature of any transaction is uncertain).

4

Carpentaria is delivering

ASX : CAP Listed: 2007 SHARES: 199M CASH : $2.3M 30 November, 2017

Deliver the worlds best iron ore to the worlds leading steel mills from the development of Hawsons Iron Project (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 13.0c
offtake LOIs
Resource PFS
Low 2c upgrade delivery
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Major Shareholders Silvergate Capital group 11.3% SG Hiscock and Company 7.8% Australia Conglin Int. group 7.0%

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5

Hawsons Iron Project - Highlights

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Hawsons Supergrade® will be the world’s best iron ore product at 70%Fe

Buyers are prepared to pay a premium for it

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DR Pellet
BF Pellet
70%Fe
65%Fe
Hawsons
62%Fe margin
~US$52/t
58%Fe Hawsons
cost
~US$48/t
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*under pricing formula in slide 21

• ** Vale stated 2018 pellet premium December 8, 2017 (plus iron adjustment) (DR pellet US$62/t, BF US$58/t)

6

Hawsons Iron Project – Highlights profitable and sustainable

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Prefeasibility study equity returns ~30% IRR - results 62%Fe equivalent all in CFR cost US$23/t

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

2,000mtpa

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.

7

Project Team - Experts in their field

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- Ray Koenig Technical Director • Australia’s leading magnetite ₋ Technical feasibility engineers; ex-Savage River ₋ Risk reduction magnetite and pellets - Adam Wheatley Iron ore financing expert ₋ Project financing and • (e.g. Gindalbie/Kararra, bankability

• (e.g. Gindalbie/Kararra, Hancock/Hope Downs, Aztec/Koolan Island)

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– Lou Jelenich Product Marketing Director

₋ Marketing saleable product ₋ Offtake arrangements

• Iron ore marketing and steel expert

• • Ex-BHPB iron ore technical marketer

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8

Hawsons Iron Project - Concept

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• Mine and process on site for 10Mtpa concentrate production

• Hawsons’ unique soft ore makes the difference on cost and product quality

• Power from reliable eastern states grid

• Water from defined high yield saline aquifer 90km south

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• Slurry product in pipeline to Broken Hill

• Rail to Port Pirie or port Whyalla on existing rail (13Mtpa spare capacity)

• Transhipment to Capesize vessels to customers in Asia and Middle East

9

Why Hawsons Supergrade? – Structural change in China favours high quality ore

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Chinese steel industry restructure has changed the global iron ore market

High quality iron ores are favoured today and over the long term because

• The Chinese industry is approaching structural profitability

• mills seeking higher productivity to maximise profits

• Pellet feed and pellets are favoured as the most efficient furnace feed

• pollution costs are higher

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10

Why Hawsons Supergrade? – Pellet feed the real winner

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Hawsons Supergrade is the world’s best pellet feed for chemical and physical properties, other pellet feed producers are under pressure.

11

Why Hawsons Supergrade? – World’s leading undeveloped concentrate project

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

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$
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Source CRU, July 2017

150mt

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

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

12

Project development, funding and delivery for shareholders

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Structural increase in global pellet feed demand

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New competition for scarce pellet feed across all markets

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China taking market share from Middle East , Japan, Korea, Taiwan

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Competition for scare supply to drive strategic investment in Hawsons

13

Project development, funding and delivery for shareholders

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Customer diversity underscores competition across different markets

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Company Volume Product
Formosa Plastics 2.6 Mtpa Concentrate/pellet feed
Direct reduction (DR) pellet
Bahrain Steel 3.0 Mtpa
feed
Shagang 2.5 Mtpa Pellet feed
Mitsubishi Corp. RtM 1.0 Mtpa Pellet feed
Gunvor 1.0 Mtpa Concentrate
Kuwait Steel 1.0 Mtpa DR pellet feed
Emirates Steel 0.9 Mtpa DR pellets
Total 12.0 Mtpa
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14

Project development, funding and delivery for shareholders

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Bankable Feasibility study (BFS) Cost ~A$25-30 million Time <18 months

• Multiple third parties capable of substantially funding the BFS undertaking pre-transaction due diligence. (The nature of any transaction is uncertain).

• CAP seeking the right solution for shareholders to benefit from potential uplift in project value during BFS

Project construction Cost ~US$1.4 billion Time ~18 months Funding options open as long as possible including project finance

• Leading project finance banks provided encouraging feedback on suitability of customers

• Equity component - potential from direct investment and prepayment from blue chip off take partners

• Shareholders to benefit from uplift in project value 15

Project development, funding and delivery for shareholders

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• Project value is increasing, equity investment to have excellent returns (equity IRR ~30% - PFS July 28[th] , 2017 see appendix)

• Hawsons has additional value to others with funding capability, management focussed on realising this value

• Supply chain security in a tight market

End users

• Maximise capacity utilisation – higher capital efficiency and lower unit costs

Traders

• Secure rare, long term trading opportunities in a tight market

Infrastructure

owners

• Secure volumes

• Capacity utilisation – higher capital efficiency and lower unit costs

16

Project update

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• Environmental impact statement progressing, water monitoring drilling completed, environmental surveys completed.

• Logistics discussions underway with both port operators

• • Experienced project team planning and reviewing options for-

• BFS, construction and operations

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

17

Hawsons Iron Project – Summary

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• Global steel industry increasingly needs high quality iron ore products and pay a premium for it

• Hawsons has the world’s best iron ore product and is best placed to deliver

• A number of potential funding parties are engaged

• Hawsons has the right product, in the right place, at the right time to attract strategic investment and deliver for shareholders

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18

Disclaimer Thank you for your attention

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~~Please refer appendix for additional~~ information Phone: +61 7 3220 2022 To find out more, visit us at www.carpentariares.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.

Hawsons Iron Project – PFS results 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

20

Hawsons Iron Project – Prefeasibility study results, outstanding returns

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Hawsons PFS key economic results Base case	Hawsons PFS key economic results Base case	at prices 65%Fe fines US$85.40/t
Equity IRR (post tax, geared) 29.9%		37.9%
Equity NPV (10%) (post tax, geared) US$1,091m		US$1,626m
Project IRR (post tax, ungeared) 17.8%		22.6%
Project NPV (10%) (post tax, ungeared) US$867m		US$1,432m
Life of mine ave. annual revenue	US$881m	US$983m
Life of mine ave. annual all in costs	US$480m	US$486m
Life of mine annualmargin (EBITDA)	US$401m	US$497m
	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.

21

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.

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22

Product quality

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Elements and Compounds	Elements and Compounds	Supergrade Pellet Feed (ALS, CISRI)	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

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

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