HAWSONS IRON LTD — Investor Presentation 2017

Feb 27, 2017

Investor Presentation February 2017

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

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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.

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Hawsons Iron Project – Key messages

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• Hawsons is the right project at right time with the right development strategy

• Iron ore demand will not fall off a cliff – new projects will be required to meet demand growth

• Specific supply opportunities for the right products by 2020 - Hawsons is targeting direct reduction grade (DR) pellet feed and high grade blast furnace (BF) pellet feed markets and has blue chip customers signed on

• Value underwritten by project strategic value to end users and infrastructure owners

• Completed PFS due end Q2 - potential to boost value near term, lift to investment grade and attract a new class of investors and strategic partners in line with improving steel and iron markets

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Carpentaria - Snapshot

Resource Upgrade – February 2017

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High 7.7c

Target

PFS completion ~Q2 2017

ASX : CAP Listed: 2007 SHARES: 169 M CASH : $2.19 M 31 December, 2017

Low 2.5c

100% focussed on Hawsons Iron Project (CAP 64%, Pure Metals PL 36% diluting)

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

Major Shareholders Silvergate Capital 13.3% Australia Conglin Int. Group 8.3% SG Hiscock and Company 5.0%

carpentariaex.com.au

4

Hawsons Iron Project – Resource upgrade

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Previous two years

• Maximising opportunities - processing and pellet test work developed Hawsons Supergrade® product, amongst the best iron making raw materials in the world, blue chip off-takers

• Minimising risk – lifting engineering aspects to a prefeasibility level of understanding incl. port, rail, power, water, processing

Current work - align resource confidence with rest of project

• Drilling December 2016

• Delivery of new resource estimate to support a prefeasibility study (February 2017)

• Prefeasibility study underway

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Resources – Expected outstanding result,

potential long life and strategic value

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• Threefold increase in Indicated Resource to 119mt of contained concentrate at 69.9%Fe from 36mt

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1km
3km
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• Conversion rate from Inferred to Indicated Resources was outstanding at 96%, giving confidence in future upgrades

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

			Concentrate Grades	Concentrate Grades	Concentrate Grades	Concentrate Grades	Concentrate Grades
Category	million Tonnes	Magnetite DTR%	Fe%	Al2O3 %	P%1	Si2O2%	LOI%	Contained Concentrate (Mt)
Indicated	810	14.6	69.9	0.19	0.004	2.61	-3.0	119
Inferred	1570	13.9	69.6	0.20	0.004	2.94	-3.0	217
Total	2380	14.1	69.7	0.20	0.004	2.83	-3.0	336

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 27 February 2017. Reported at a 10%DTR cut off grade, and 38micron grind.

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Hawsons Iron Project – resource upgrade what it means

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block model

• Very large size and little internal dilution, low strip ratio (previous 0.47:1 waste:ore)

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• “Bath tub” geometry ideal for simple mining

• Underscores confidence in use of large scale mining methods and low costs in pit conveying that needs long run 700m mining width

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3km
1km
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• Early mining to focus on Indicated Resources

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Indicated
Resources
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• Stable grade and recovery results support previously stated assumptions such as

• ore softness

• ~~processing upgrade to Hawsons~~ Supergrade® quality

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Cross section

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Hawsons Iron Project - Introduction

Location - 60km south west Broken Hill

JORC Resource - 2.4Bt at 14.1% mass recovery for 336mt of concentrate (of which 119mt is Indicated)

Unique siltstone ore type - allows stand out mining cost, processing cost and product quality targets

Product quality - amongst the worlds best, allows stand out customer base and revenue (>70%Fe <2% silica)

Existing infrastructure in place - power, water, rail, port and pellet plant allows potential stand out capital cost and low development risk for various production scenarios

Characteristics to elevate project to first in the development queue

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Project Team - Experts in their field

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Ray Koenig - Technical Director • One of 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 Hancock/Hope Downs, Aztec/Koolan Island) Lou Jelenich – Product Marketing ₋ Director Marketing saleable product • Iron ore marketing and steel expert ₋ Offtake arrangements • Ex-BHPB iron ore technical marketer

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Hawsons Iron Project - Concept

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• Mine and process on site

• Power from reliable eastern states grid

• Water from defined high yield saline aquifer 90km south

• Slurry product in pipeline to Broken Hill

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

• Potential to access upgrading to pellets at Whyalla

• Transhipment to Capesize vessels to customers- Bahrain Steel, Emirates Steel, Gunvor, Formosa and Mitsubishi

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Near term growth drivers – Milestones Pre-feasibility study cost targets

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HAWSONS SUPERGRADE HAWSONS DIRECT BLAST FURNACE PELLET FEED REDUCTION PELLETS

TIER ONE PILBARA FINES

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target
margin
margin
$48-57 $68-77
target
$45
margin
$43-52 $100 $51-60 $128 $27 $72
CFR Revenue CFR Revenue BHP 62%Fe
China 62%Fe fines China 62%Fe fines break fines
cost plus cost plus Platts even CRU Platts
target premium target DR index 2016
premium
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• Cost targets based on 2013 PFS level engineering and Inferred Resources (excluding pelletising)

• Potential margins at US$72, better than tier one Pilbara margins based on Platts index pricing, and steel mill pricing formula (see Appendix for formula)

• Competitive capital cost target of US$1.4-2.0bn (inclusive of preproduction cost and contingency)

• Aim to review - existing mining, power, water and labour capital inputs; and

  • production rate scenarios, complete Q2 2017.

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

• All figures USD

**Shanghai Metals Market formula based on Platts prices 9/11/16, see appendix

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Iron ore and steel demand – signs of growth

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• Steel production has returned to growth

Jan-17 7% total

• 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

• That is 35-40mtpa new steel each year (RIO and World Steel are similar)

• At 33% scrap usage, then still 30-40mtpa of new iron ore demand each year to 2030

• New supply 2017-2018 ~105Mt (Roy Hill, Vale) Post 2018 very few new projects

• Supply deficit circa 2019-2021

World Steel

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BHP 2016

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Iron ore and steel demand- shift to high grade and pellets

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• Steel prices at 2.5 year highs as demand increases

• Increasing confidence in long term steel prices as steel utilisation increases following meaningful progress in Chinese capacity closures,

• 45mtpa in 2016, more this year

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World Steel
Hawsons slag volume is amongst the lowest
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• Increasing steel mill focus on productivity and pollution reduction driving increasing price premiums

• Fixed volume blast furnace can only fit so much liquid, lower slag → more iron, less pollution

• Hawsons ~one third slag of tier 1 Pilbara.

• Premiums for 65%Fe fines and the 58%Fe discounts at historic level in percentage terms

• 24 Feb ’17 58% Fe price discounted 40%

• is there a structural shift in pricing?

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svi
LFJ Consulting
Hawsons Supergrade
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Platts
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Supply opportunity

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• Shift to productivity and pollution driven steel making in China to drive demand and premiums for high grade pellet feed and concentrates

• Pellet feed is typically high cost because of grinding and iron losses during upgrade

• Hawsons‘ unique ore type potential to deliver the lowest grinding costs and the least losses meaning very cost competitive

• Supply opportunity into China and direct reduction market in Middle East

• Hawsons Supergrade® has a lower future market risk than low grade fines

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Hawsons targets, life of mine

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Source: SMM, 2015; Unit - RMB/wmt (excl. VAT, ex-work, includes depreciation, port surcharge); 6.1RMB : 1 USD: 0.75 AUD

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Investment case - Development prospects and strategic value

In front of the development queue

• Unique strategic value of new, competitive supply of Supergrade material to:

• direct reduction iron (DRI) market in Middle East and India

• blast furnace feed to Asian steelmakers

• Unique low development risk for new supply:

• existing infrastructure

• potentially highly competitive cost structure (against both low quality and high quality ores)

• low market risk

• Hawsons resource is natural fit to maximise returns for pellet plant and port at Whyalla

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Unique strategic value of Hawsons – Direct reduction (DR) feed

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Currently US$66
Source Platts
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DR feed highest value iron ore product – DR pellet currently 62%Fe fines plus US$55 Middle East DRI-EAF steel lower cost than Europe scrap – EAF steel making (see appendix) DR product quality is rare - supply concentrated by four majors (~90%)* - supplied by ~ 10 projects **

New and diversified sources of direct reduction feed required in the Middle East to

1. support DRI industry growth

2. offset pricing power of existing producers Bahrain Steel and Emirates Steel have signed for 3.9Mtpa of Hawsons DR feed under LOIs, demonstrating strategic interest

Wood Mackenzie, 2015, *MBR, 2015

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Unique strategic value of Hawsons Supergrade – blast furnace

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• Medium term consensus price 62%Fe fines is ~US$60/t*

• High grade products and pellet feed increasingly difficult to source, given lower iron ore price environment

• Mills that can access high grade and pellets to have a competitive advantage

• Hawsons is unique low cost high grade pellet feed

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April 2016 Sep 2016 Feb 2017
Source Platts
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Blue chip demand for Hawsons Supergrade demonstrated by LOIs with

• Mitsubishi

• Gunvor

• Formosa

*Source https://www.vuma.com/public/consensus/rio

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Unique strategic value – Whyalla infrastructure

Hawsons is suitable for Whyalla port and pellet plant assets

• Rail from Broken Hill direct to Whyalla

• Port ~16mtpa capacity

• Mining reserves suffering depletion

• Spare capacity in the pellet plant

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Rail loop
Berths
Pellet plant
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Arrium Whyalla facility

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Hawsons Iron Project – First in the queue for development

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Right project – competitive cost targets and existing infrastructure →low development risk

Right product – Supergrade, the worlds best pellet feed one of the few products that meet the highest growth end of the steel industry→ low market risk

– Right strategy

• develop end user support for the Supergrade product

• complete PFS to achieve investment grade for strategic and institutional funding

• • secure end user support to build the project and meet the market demand for new iron ore

• Right Company to leverage Asia and MENA’s continuing development, near term and long term

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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.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.

Appendix – Resource at 12% DTR cut off rade g

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Category	Mt	DTR %	DTR Mt	Fe %	Al2O 3 %	P %	S %	SiO2 %	TiO2 %	LOI %	Concentrate tonnes Mt
Indicated	667	15.4	102.9	69.9	0.2	0.004	0.002	2.62	0.03	-3.04	103
Inferred	1,095	15.1	165.1	69.7	0.2	0.004	0.002	2.92	0.03	-3.03	165
Total	1,762	15.2	268.0	69.7	0.2	0.004	0.002	2.80	0.03	-3.03	268

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 27 February 2017. Reported at a 12%DTR cut off grade, and 38micron grind.

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Appendix - Suggested pricing for CAP’s pellet feed

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Suggested Pricing for CAP’s Pellet Feed and Pellet

Benchmark Pellet Feed	Platts 65%	Fe	Fe	S	S	Si	Al	P	P	$/dmt	$/dmt	Fe Differential ($/dmt)
		65%		0.02%		3.50%	1%	0.075%		68.75		1.2
		Fe S Si Al P 70% 0.002% 1.50% 0.23% 0.004%
	CAP Pellet Feed	Fe		S		Si	Al	P
		70%		0.002%		1.50%	0.23%	0.004%
	Benchmark Price ($/dmt)		Fe Adjustment						Pellet Feed Premium ($/dmt)		Price ($/dmt)
	Platts 65%		Fe Differential against Benchmark		Unit Fe adjustment ($/dmt)		Total Fe Adjustment
	68.75		5		1.2		6		10*		84.75

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CAP Pellet	Fe	Fe	S	S	Si	Si	Al	P	P	P
	68%		0.002%		1.50%		0.23%	0.004%
Benchmark Price ($/dmt)		Fe Adjustment							Pellet Premium ($/dmt)	Price ($/dmt)
Platts 65%		Fe Differential against Benchmark		Unit Fe adjustment ($/dmt)		Total Fe Adjustment
68.75		3		1.2		3.6			30	102.35

Pellet

Note: Platts price here is based on 22[nd] May US$60.25/t for 62%Fe fines.

Result based on survey of Chinese steel plants totalling 25% of Chinese industry

*This adjustment varied in the survey between US$4-12/t depending on source and product

© SMM. All rights reserved. 22

Appendix – Iron ore price chart

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Platts

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Appendix – Hawsons 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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Appendix – benefits of product

Highest iron grade in the seaborne trade supports premium prices

Very high iron: slag ratio 70.3% Fe (~97% magnetite : ~3% waste)

• typical Pilbara fines generate 2.3 to > 3x more slag*

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• 67%Fe magnetite concentrate

• generates > 2 x more slag

Unique fineness - best pellet feed** 100% <40 micron gives

• highest strength pellets, ~1.0>3.5% higher yields for end user

• outstanding furnace properties for stable and efficient iron making

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Blaine index is one measure of fineness

* Calcined basis

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Appendix - Strong fundamentals for steel and iron ore demand

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• China set 60% urbanisation target by 2020, or 72 million people from today (more than UK population)

• Trend to 68% by 2030 for over 140m people

• Chinese demand to become clearer in 2017 – steel stocks a long way to run

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Source Aust. Treasury, 2012
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Appendix - Direct reduction iron

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Benefits of DRI / EAF vs Blast furnace

• Less capital investment

• Less operating costs

• Shorter construction period

• Relies on availability of natural gas

• Boosted by shortage of coking coal

• Flexibility of production capacity, can be on or off more easily than a BF

• Less CO2 emissions

DRI production to increase in MENA to 2020

• DRI reduction agent is gas not metallurgical coal.

• As metallurgical prices rise, DRI becomes more competitive

• India would benefit from a supplement to its hematite and goethite DR feed to increase productivity

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Source World Steel, Midrex , Wood Mackenzie May 2016

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Appendix - Carbon Price supporting information

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information
Country	CO2/t(USD)
Sweden	168.00	Carbon tax subject to exchange rate change since 2014
Denmark	31.00	Carbon tax subject to exchange rate change since 2014
Euro ETS est av. for 2020-2030	20.79	Eurozone ETS est av. PwC survey2016 for 2020-2030
United Kingdom	15.75	Carbon tax on electricity generation
Korea	15.20	Emmissions tradingon Korean markets March 2016
Euro ETS ave. est. 2013-2020av.	12.19	Eurozone ETS ave. est. 2013-2020av. PwC survey2016 for 2013-2020
Euro ETS	8.25	Eurozone emission tradingscheme
China(Beijing)	7.50	China tradingmarket Chinacarbon.net,will applyto steel
Australia	7.37	Direct Action benchmarkpaid,2015
China(Hubei 12mnth spot)	4.05	China tradingmarket Chinacarbon.net
Japan	2.00	Carbon tax subject to exchange rate change since 2014

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Beijing Carbon Market, source ChinaCarbon.net

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Appendix - 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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Appendix : Iron ore and steel outlook

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Hawsons targets production in 2020, the right time

Source CRU March 2016

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