Hot Chili Ltd (HCH) Productora rising. Table 1 Peer comparison of selected ASX-listed copper companies

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1 18 July 2012 Analyst Michael Lovesey (Change of Analyst) Authorisation Trent Allen Hot Chili Ltd (HCH) Productora rising Recommendation Buy (Accumulate) Price $0.44 Target (12 months) $0.75 (Unchanged) Risk Speculative Expected Return Capital growth 70% Dividend yield 0% Total expected return 70% Company Data & Ratios Enterprise value Market cap Issued capital $75.3m $93.3m 212m Free float 49% Avg. daily vol. (52wk) 180, month price range $0.41-$0.73 GICS sector Materials Disclosure: Bell Potter acted as Manager of a private placement of $22.3m through the issue of 37.1m shares at $0.60 per share in February Price Performance (1m) (3m) (12m) Price (A$) Absolute (%) Rel market (%) Absolute Price $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 Jul 10 Jan 11 Jul 11 Jan 12 HCH S&P 300 Rebased Productora consolidation, infrastructure deals, new projects Hot Chili Ltd (HCH) has completed the consolidation at its flagship Productora copper project on the Chilean coastline, securing the last critical lease. This milestone is a major step towards resource growth and development and follows significant recent progress at Productora. HCH recently signed key Letters of Intent (LOI) with major Chilean iron ore producer Compania Minera del Pacifico S.A. (CMP) to secure infrastructure access and co-operate in the technical assessment of iron at Productora. Further, HCH has consolidated its project pipeline in Chile with the acquisition of two new copper projects close to Productora. Drilling at Productora has progressed well (higher copper grades intersected) and HCH is on track to deliver an upgraded resource estimate in late September, ahead of a Scoping Study in October. We recommend Buy (Speculative), with a 12 month target price of $0.75/sh, based on peer comparable companies. Strong news flow expected to continue in H2, 2012 HCH is undertaking a 70,000m drilling programme over 9.5km of strike length at Productora and is likely to deliver a significant upgrade to the maiden JORC resource estimate (85Mt at 0.6% Cu, 0.1g/t Au and 146ppm Mo for 482kt of Cu, 290koz Au and 12.4kt of Mo). Recent infill/extension drilling encountered higher copper grades, which bodes well for a resource upgrade in late September. We anticipate that a robust Scoping Study for Productora in October could be a key catalyst for HCH in H2, CY12. Investment view Buy (Speculative), Target Price $0.75/sh We view HCH as an encouraging emerging copper-gold play with significant potential for resource expansion at Productora. We have a 12 month target price of $0.75/sh, based on EV multiples for comparable peer companies, (average $210/t) which values Productora at $142m (-30% risked EV/t). We have assumed HCH achieves its 170Mt resource target and we have assumed estimated cash of ~$18m (June 2012e). We expect HCH will move quickly through the Prefeasibility stage once the Scoping Study is completed in October. We recommend Buy (Speculative) on share price weakness. Table 1 Peer comparison of selected ASX-listed copper companies Company/Code EV ($m) Cu Resource Cu Metal (Mt) EV/t Aditya Birla Minerals Ltd (ABY) 17 41Mt (2.14%) Altona Mining Ltd (AOH) Mt (0.64%) Avanco Resources Ltd (AVB) Mt (1.23%) Blackthorn Resources Ltd (BTR) Mt (1.14%) Cudeco Ltd (CDU) Mt (0.62%)* Discovery Metals Ltd (DML) Mt (1.3%) Hillgrove Resources Ltd (HGO) Mt (0.8%) Metminco Ltd (MNC) Bt (0.4%) PanAust Ltd (PNA) Mt (0.39%) Rex Minerals Ltd (RXM) Mt (0.7%) Tiger Resources Ltd (TGS) Mt (6.8%) SOURCE: IRESS BELL POTTER SECURITIES LIMITED ACN AFSL Average EV/t of contained copper ( * Cu equivalent) 210 SOURCE: BELL POTTER SECURITIES ESTIMATES DISCLAIMER AND DISCLOSURES THIS REPORT MUST BE READ WITH THE DISCLAIMER AND DISCLOSURES ON PAGE 13 THAT FORM PART OF IT. Page 1

2 Investment summary and valuation Investment highlights Productora has attractive growth potential; we expect ongoing drilling to upgrade HCH s resource base (increase in tonnes and grade). Mineralisation remains open along 9.5km of prospective strike and the current resource accounts for only 15% of this strike. Productora geometry, grade and location amenable to potential open pit mining; HCH has outlined broad, shallow mineralisation which is likely amenable to bulk tonnage open pit mining (averages grades of 0.58% Cu and 0.10g/t Au). The higher grade component of the central resource (28Mt at 0.78% Cu) is within 200m from surface. Productora is well located relative to infrastructure; at comparatively low altitude (800m elevation), and only 40km from the established port of Huasco. HCH is well placed to benefit from existing infrastructure, following its enhanced business partnerships. Strong local partners; HCH is partnered with two of Chile s largest mining companies Codelco (copper) and CMP (iron ore). CMP s parent is a 3.7% shareholder in HCH. The Productora project sits within the heart of CMP s northern infrastructure corridor. Valuation We have an assessed value and target price of $0.75, which is a 70% premium to HCH s current share price. Our Productora project valuation is based on EV/resource ($/t Cu Eq) ratios of comparable companies. The peer group average is currently $210/t contained Cu resource, which we have risked by -30% because Productora is at a relatively early stage of development. In our numbers we assume that HCH is successful in doubling the size of the Productora resource to ~170Mt for ~966kt of contained copper metal. Using these metrics (risk adjusted), we value Productora at $142m (current EV $76m). We include ~$18m in cash (June 2012e) to arrive at a valuation of $160m and 12 month target price for HCH of $0.75/sh (212m shares). Our conservative valuation is based on resource upside and does not include exploration potential. Table 2 Implied market value from peer group EV multiples Tonnes Grade Tonnes Cu EV EV Market Value (Mt) (% Cu) (,000t) ($/t Cu) ($M) ($M)* Productora - Target Mineralisation (Target not yet delineated in compliance with JORC code) * Market Value ($160m) is determined by adjusting our EV ($142m) for cash (+$18m). SOURCE: BELL POTTER SECURITIES LTD Table 3 EV/t comparison of selected ASX-listed copper companies C o mp any/ C o d e EV ( $m) C u R eso urce C o p p er M et al ( M t ) EV / t Aditya Birla Minerals Ltd (ABY) 17 41Mt (2.14%) Altona M ining Ltd (AOH) M t (0.64%) Avanco Resources Ltd (AVB) Mt (1.23%) Blackthorn Resources Ltd (BTR) Mt (1.14%) Cudeco Ltd (CDU) M t (0.62%) * Discovery M etals Ltd (DM L) M t (1.3%) Hillgrove Resources Ltd (HGO) Mt (0.8%) M etminco Ltd (M NC) Bt (0.4%) PanAust Ltd (PNA) M t (0.39%) Rex M inerals Ltd (RXM ) M t (0.7%) Tiger Resources Ltd (TGS) Mt (6.8%) Average EV/t of contained copper (* copper equivalent) 2 10 SOURCE: BELL POTTER SECURITIES ESTIMATES LTD Page 2

3 Productora consolidation complete HCH has secured the final critical lease at Productora HCH has secured the last critical lease within the centre of its flagship Productora copper project in Chile. The Uranio 1 to 70 lease, owned by the Chilean Commission for Nuclear Energy (CCHEN), represents an additional 1.2km of strike within the central portion of the Productora project. A 30-year, 100% lease agreement for exploration and exploitation has been formally prepared by CCHEN and marks an important step forward for HCH. HCH has spent more than four years consolidating the Productora project area and the Uranio 1 to 70 lease was the final major piece in HCH s bid to develop a large scale, central pit at Productora. The lease is an encircling landholding around the company s existing JORC-compliant resource of 85Mt at 0.6% Cu, 0.10g/t Au and 146ppm Mo at Productora. HCH has commenced design of a new drilling programme to assess direct extensions to the central resource within the new lease and is confident of rapidly defining a significant addition to its resource inventory. Historical drilling by General Minerals (GMC) and Teck in the late 1990 s has confirmed that the Productora resource extends through the new lease area. HCH has now been officially notified that it was successful in its bid for the Uranio 1 to 70 lease. A contract reflecting the terms of the successful bid is currently being prepared by CCHEN before final notarisation and inscription against the deed to the lease. HCH will now apply to CCHEN for an early access waiver to allow immediate drilling activities within the lease. Figure 1 Location of the Uranio 1/70 lease within the Productora project The consolidation at Productora is a major step towards resource growth and development. SOURCE: HOT CHILI LTD Page 3

4 Moving ahead with infrastructure solution HCH working towards joint infrastructure agreement with CMP HCH recently announced it had executed two non-binding Letters of Intent (LOI) with CMP (Chile s largest iron ore producer and integrated steel business). The LOIs outlined the intentions of both companies to: negotiate for joint infrastructure options to develop the Productora copper project and; co-operate in the technical assessment of iron potential at Productora and negotiate details of any future iron production from the project. We note that these advanced negotiations are a significant step forward for HCH and provide a positive framework for the development of Productora and growth of HCH s copper business in Chile. Formalising these agreements would be a significant de-risking milestone. CMP is a major partner in Productora and its parent company Compania de Aceros del Pacifico (CAP) is a 3.7% shareholder in HCH. Sociedad Minera El Aguila (SMEAL - HCH's 100%-owned Chilean subsidiary), at its own cost, and with co-operation with CMP, will study infrastructure options for Productora. These include: Surface rights for the project; Corridor lines for infrastructure (CMP easements, ownership of rail, corridors or others); Port access and; Maritime concessions for water intake and pertinent surface rights. Importantly, all of these infrastructure options at the project are owned, operated and controlled by CMP. A successful outcome to negotiations with CMP would ensure that HCH has a significant advantage with respect to establishing a shorter timeframe and reduced start-up capital cost than comparable emerging copper companies. We expect the agreements could be formalised within 6-12 months. CMP eyes iron potential at Productora HCH has identified several zones of coarse grained magnetite at Productora, with low impurities expected under company guidance. A large parallel magnetic anomaly (magnetite zone) runs alongside the western margin of the NNE-trending breccia zone which hosts the copper at Productora. This is one of three main magnetic anomalies which warrant further studies. HCH has undertaken a preliminary assessment of the iron mineralisation at Productora and early indications suggest this material (averaging approximately 22% Fe) could be desirable to CMP, given its infrastructure in the area. CMP is undertaking a major expansion of its existing nearby magnetite export operations to increase production from 12Mtpa to 30Mtpa. The iron grades at Productora would likely compare favourably to CMP s current head grades of production and offer a significant potential production source close to existing operations (~12km trucking distance). This is likely the main reason CMP is willing to negotiate joint access infrastructure agreements for port access with HCH. The sale of this ore to CMP could provide HCH with an additional revenue stream. Given a component of the parallel magnetite zone has to be mined as the western waste wall of any open pit development, the iron represents a potential additional revenue stream to HCH without further operating cost. We understand that HCH and CMP will co-operate to complete technical studies on the iron potential with a view to formalising an agreement within 18 months. HCH owns approximately 80% of the magnetite at the Productora project. Page 4

5 New copper projects acquired Expanding copper foothold in Chile (Banderas and Frontera) HCH has executed agreements with a number of private parties to acquire majority interests in two new copper projects within close proximity to Productora on the Chilean coastline. These include a five year option agreement to acquire 100% and 65% interests in 7,156ha, 50km north of Productora (Banderas project) and a purchase option agreement to acquire 100% interest in 270ha, 70km south of Productora (Frontera project). HCH has spent the past 18 months assessing suitable coastal range projects in Chile in line with plans to establish Productora as a future operating centre leveraged towards copper production growth. We expect that with exploration success at these new properties, existing properties and with further project acquisitions, HCH could move quickly towards resource development. We are cognisant that HCH will likely announce further project acquisitions in the near-term, further strengthening its position around Productora. The newly acquired licenses will likely be drilled next year once HCH can free up a drill rig from Productora where infill drilling is in progress (three rigs). HCH remains committed to fast tracking development at Productora, but will continue to explore its advanced exploration projects at Los Mantos (240km south of Productora) and Chile Norte (northern Chile) in CY13. The Banderas and Frontera copper projects may offer HCH future operating synergies and any infrastructure deals associated with Productora could have a positive impact on HCH s ability to commercialise nearby copper prospects and allow HCH to benefit from additional expansion opportunities. Figure 2 Location of new copper projects in Chile (Banderas and Frontera) HCH remains committed to fast-tracking development of Productora. The new copper projects may offer future operating synergies. SOURCE: HOT CHILI LTD Banderas project (50km north of Productora) The Banderas project is located at low altitude (<1,000m) approximately 50km north of Productora and adjacent to the Pan American highway in Region III of Chile. There is evidence of some historical, small-scale, copper mining within an extensive, large-scale alteration system. SMEAL has entered into several option agreements to purchase 65% Page 5

6 and 100% interests in each of the mining exploitation and exploration concessions at the Banderas project. The project landholding comprises 7,156ha. Frontera project (70km south of Productora) The Frontera project is located 70km south of Productora in Region IV of Chile. There is some historical drilling and a small-scale, historical, copper-oxide open pit within the project area. The landholding comprises 270ha. HCH will undertake first pass drilling at Frontera and Banderas in CY13, following completion of the current large-scale drilling programme at Productora. Figure 3 Location of the Banderas project (left) and the Frontera project (right) in Chile SOURCE: HOT CHILI LTD Key catalysts in H2 (strong news flow anticipated) HCH is approaching several near-term milestones and strong news flow is expected in H2, CY12. This includes: Further positive drilling results from Productora (strike extensions, improved grades). Resource upgrade for Productora in late September and subsequent updates (we expect a significant increase in resource tonnes and grade based on the success of recent drilling). Positive results for metallurgical test work in Q3 (high recoveries, coarse grind size). Scoping Study in October (expected to outline attractive economics for an open pit mine at Productora and will pave the way for Prefeasibility studies). Enhanced business partnerships between HCH and Codelco/CMP. We expect greater clarity on the infrastructure solution as agreements are finalised with CMP over the next 12 months. Page 6

7 Productora copper-gold project Significant resource upgrade expected in late September HCH s flagship Productora project in Chile is located 15km south of the township of Vallenar, at low altitude. Since drilling commenced in August 2011, HCH has delineated a large-scale, bulk tonnage copper-gold-molybdenum deposit over 9.5km of strike length. In September 2011, HCH announced a maiden resource estimate within the central 1.4km zone of the deposit. This contained 85Mt at 0.6% Cu, 0.1g/t Au and 146ppm Mo (0.8% copper equivalent) for 482kt of copper, 290koz of gold, and 12.4kt of molybdenum (644kt of copper equivalent) and represented 15% of the 9.5km strike length at Productora. HCH is undertaking a 70,000m drilling programme to upgrade the resource and a revised estimate is expected in Q3. This will underpin the Scoping Study which commenced in January 2012 and should be completed in October. HCH aims to fast-track a decision to mine by late December 2013 and is advanced in most of the aspects required to complete a Prefeasibility Study. We visited the Productora project in May and we were impressed by the scale of the project, its exploration potential and most importantly the infrastructure. There is excellent existing infrastructure in close proximity to Productora which HCH could take advantage of via arrangements with CMP. This includes the Pan American Highway, rail, power, easement corridor and a functional port (Huasco port is 40km from Productora). Figure 4 Productora southern extension (higher grades identified) HCH is undertaking a 70,000m drilling programme at Productora, a revised resource estimate is expected in Q3. SOURCE: BELL POTTER SECURITIES LTD Resource drilling has been very encouraging HCH is completing 65,000m of RC drilling and 5,000m of diamond drilling at Productora as part of a Phase 2 drilling programme. Drilling (three rigs operating) has tested the 9.5km deposit footprint with first pass drilling and infill drilling will shortly be completed. The latest drilling has indicated that the grade of the Central Area has increased and mineralisation has been extended to the south. The latest drilling results from Productora included 47.3m at 1.3% copper equivalent (0.9% Cu, 0.2g/t Au, 327ppm Mo) from 225.7m and 39m at 0.9% copper equivalent (0.6% Cu, 0.2g/t Au, 155ppm Mo from 253m in the Central Area. HCH believes these results (larger sample size) indicate better grade reconciliation within the central zone of the Productora Page 7

8 indicated resource (0-200m vertical depth) and that earlier drilling may have underestimated the grade of the inferred resource in the Productora central zone (200m- 400m vertical depth). With a larger sample size HCH has reported higher grades in the inferred portion of the resource 200m below surface, which should bode well for the pit optimisation. Figure 5 New significant diamond drilling intersections at the Central Area The latest drilling has indicated that the grade of the Central Area has increased and mineralisation has been extended towards the south. SOURCE: HOT CHILI LTD Significant copper resource upgrade anticipated in Q3 Following completion of a successful drilling programme at Productora over the past nine months, HCH is confident of expanding the current 85Mt resource to 170Mt with a significant increase in shallow tonnes. The resource upgrade could include strike extensions to the south and north which will include recent extensional RC drilling including 56m at 0.6% copper equivalent (0.5% Cu, 0.1g/t Au) from surface and 40m at 0.6% copper equivalent (0.5% Cu, 0.1g/t Au, 122ppm Mo) from 170m. HCH aims to establish a minimum 300Mt resource base (+0.5% Cu) by the end of 2013, by which time the company will make a decision to mine. Figure 6 Diamond drilling at Productora (Phase 2) for a resource upgrade in Q3 HCH aims to establish a minimum resource base of 300Mt at +0.5% Cu by the end of CY13. SOURCE: BELL POTTER SECURITIES LTD Page 8

9 Figure 7 New significant targets and intersections at Productora The Uranio 1 to 70 lease provides additional scope to signifcantly expand the existing resource along strike. Extensional drilling at Productora has confirmed the potential to increase the tonnes and grade for the revised resource estimate. SOURCE: HOT CHILI LTD Scoping Study expected to outline robust parameters HCH is finalising a Scoping Study for a potential 10Mtpa open pit operation at Productora (20 year mine life for open pit). Engineering group AUSENCO was appointed to manage the Study, in cooperation with HCH. Scoping Study work has included preliminary pit design and lay-out assessment, preliminary copper soluble work, chalcopyrite flotation recovery and grind size test work, oxide and transitional zone modelling and delineation, hydrology and environmental baseline studies. HCH is now well advanced on the site layout and is ~50% of the way through on the requirements for Prefeasibility work. We understand the outcomes from this preliminary work have been encouraging and the Scoping Study remains on track for completion in October. This will provide greater clarity for development. Metallurgical test work has been completed and we anticipate favourable recoveries. There is a good indication that HCH can achieve good recoveries of 93-96% Cu at Productora with a coarse grind size (200 micron). We understand that metallurgical test work has progressed well and HCH is likely to provide an update shortly. Figure 8 Diamond drill core at Productora There is a good indication that HCH can achieve good recoveries (93-96% Cu) at Productora with a coarse grind size (200 micron). SOURCE: BELL POTTER SECURITIES LTD Page 9

10 Additional projects Los Mantos The Los Mantos IOCG project is HCH s most advanced exploration project after Productora. It is located 60km south of the coastal town of La Serena. HCH secured a 5- year purchase option agreement over the project. Los Mantos has extensive historical underground and surface development and small scale mining continues at present. First pass drilling undertaken in H1 FY12 tested zones of copper-gold mineralisation exposed at surface and underground workings. Results of the first 21 holes indicated multiple zones of shallow, moderate width, copper mineralisation along 1.5km of strike length. Results highlighted the potential for breccia-hosted bulk tonnage copper-gold mineralisation. The latest assay results included the widest drilling intersection recorded (hole MNP0056 intersected 36m at 1.4% Cu and 0.2g/t Au from 49m down-hole). The hole was drilled within the southern extent of the project where further drilling has confirmed the location of a large potassic-altered tourmaline breccia. Follow-up work is planned for CY13, and should include the completion of 3D geological model and a diamond drilling programme to assess the southern breccia zone at depth. Further work will focus on extensional potential of the Los Mantos project. HCH has commenced preliminary discussions with surrounding landholders at Los Mantos to assess the potential to expand the size of the current landholding. Chile Norte (Northern Chile) Chile Norte is located 50km south of the coastal town of Iquique. HCH has secured a 5- year agreement with Codelco to earn an interest in a large contiguous landholding adjacent to HCH s own large landholding at the project. Evaluation is at an early stage. During H1 FY12 HCH undertook a second airborne magnetic and radiometric survey over the Chile Norte project. The survey extended the original survey to cover HCH s northern landholdings as well as those of Codelco, HCH s partner at the project. Once data processing and interpretation of this dataset is complete HCH plans to review targets with a view to designing follow-up surface geochemical programme. Figure 9 Malachite mineralisation visible in outcrop at Productora SOURCE: BELL POTTER SECURITIES LTD Page 10

11 Hot Chili Ltd (HCH) Company overview HCH has interests in three large, multi-commodity copper projects in Chile and has recently signed agreements to earn major interest in another two projects. The company is currently undertaking a large scale drilling programme (70,000m) over 9.5km of strike length at its flagship Productora project with a view to establishing a revised resource estimate for the project in Q3. HCH is targeting a resource of 300Mt at +0.05% Cu by the end of The company has several other projects (including recently acquired properties) in close proximity to Productora. HCH is working with major mining groups Codelco and CMP, two of Chile s largest mining companies, to establish joint venture infrastructure agreements for a successful copper mining business in Chile. Productora is located 40km from the established port of Huasco. Investment strategy: Buy (Speculative) HCH plans to deliver a significant upgrade to the current maiden JORC resource estimate (85Mt at 0.60% Cu) in September. Recent infill drilling encountered higher copper grades and bodes well for the resource upgrade. Key catalysts in H2 could include a significant resource upgrade (~170Mt at circa 0.50% % Cu) and a robust Scoping Study. We view HCH s advanced negotiations with CMP as a significant step forward and we expect the formalisation of these Letters of Intent with confirmation of access to infrastructure (6-12 months) could provide a significant de-risking milestone for HCH. We recommend Buy (Speculative), with a 12 month target price of $0.75/sh. Valuation We have an assessed value and target price of $0.75, based on EV/resource ($/t Cu Eq) ratios of comparable companies (average $210/t for contained Cu), which we have risked by -30%. In our numbers we assume a doubling of the Productora resource to ~170Mt for ~966kt of contained copper metal. Using these metrics (risk adjusted), we value Productora at $142m. With circa ~$18m in cash we arrive at a valuation of $160m and 12 month target price for HCH of $0.75/sh. Risks ( 1 ) Evaluation is at a formative stage; no formal Feasibility Study has been carried out to establish the economic viability of potential bulk-tonnage open pit mining at Productora. At this stage no JORC resources have been delineated at the Los Mantos and Chile Norte projects (or the Banderas and Frontera projects). ( 2 ) Project funding; there are significant funding requirements for development of Productora (10Mtpa). The source of project funding is not known at this stage, and may present a challenge. ( 3 ) Project permitting and mining lease approval; there are significant funding requirements for HCH to acquire 100% equity in its tenement holdings at Productora. We estimate HCH will need to spend approximately $7-8m to exercise various earn-in and options agreements with landholders and to fund development studies on behalf of CMP. HCH will need to secure mining and environmental approvals. ( 4 ) Regulation of uranium mining in Chile; the Productora project contains uranium, which is regulated under the Chilean mining code. HCH is considering extracting uranium owing to very low levels (~22ppm U average). Page 11

12 Directors and Management Murray Black, Non-Executive Chairman Mr Black has over 35 years of experience in the mineral exploration and mining industry and has served as an executive director and chairman for several listed Australian exploration and mining companies. He part-owns and manages a substantial private Australian drilling business, has interests in several commercial developments and has significant experience in capital financing. Christian Easterday, Managing Director Mr Easterday is a geologist with over 12 years of experience in the mineral exploration and mining industry. He holds an honours degree in geology from the University of Western Australia, a Masters degree in Mineral Economics from Curtin University of Technology and a Masters degree in Business Administration from Curtin s Graduate School of Business. Mr Easterday has held several senior positions and exploration management roles with top-tier gold companies including Placer Dome, Hill 50 Gold and Harmony Gold, specialising in structural geology, resource development and mineral economic valuation. For the past five years, Mr Easterday has been involved in various aspects of project negotiation. This work has involved negotiations and valuations covering gold, copper, uranium, iron ore, nickel, and tantalum resource projects in Australia and overseas. Mr Easterday is a member of The Australian Institute of Geoscientists. Allan Trench, Non-Executive Director Dr Allan Trench is a geologist/geophysicist and business management consultant with over 20 years of experience across a broad range of commodities. His minerals sector experience spans strategy formulation, exploration, project development and mining operations. He holds degrees in geology, a doctorate in geophysics, a Masters degree in Mineral Economics and a Masters degree in Business Administration. He currently acts as independent director to a number of emerging resources companies, both in Australia and overseas. Allan has previously worked with McKinsey & Company as a management consultant, with Woodside Petroleum in strategy development and with WMC both as a geophysicist and exploration manager. He is an Associate Consultant with international metals and mining advisory firm CRU Group and has contributed to the development of that company's uranium practice, having previously managed the CRU Group global copper research team. Mr Michael Anderson, Non-Executive Director Mr Anderson has 20 years industry experience, largely in southern Africa and Australia. His career commenced as a geologist with Anglo American, followed by roles in the metallurgical and engineering industries with Mintek, Bateman and Kellogg Brown & Root. He subsequently held senior management positions including Corporate Development Manager at Gallery Gold Limited, and most recently and relevantly as Managing Director at Exco Resources Limited, where he successfully oversaw the funding and development of the White Dam Gold Project, and the completion of feasibility studies on the Company s Cloncurry Copper Project prior to its sale to Xstrata. He joined Taurus as a Director in August 2011 and is also a Non-Executive Director of ASX-listed Base Resources Ltd and of ASX-listed Ampella Mining Ltd Page 12

13 Recommendation structure Buy: Expect >15% total return on a 12 month view. For stocks regarded as Speculative a return of >30% is expected. Research Team Staff Member John Gleeson Industrials Sam Haddad Toby Molineaux Title/Sector Research Manager Emerging Growth Emerging Growth Phone jgleeson shaddad tmolineaux Accumulate: Expect total return between 5% and 15% on a 12 month view. For stocks regarded as Speculative a return of between 5% and 30% is expected. Hold: Expect total return between -5% and 5% on a 12 month view John O Shea Jonathan Snape Bryson Calwell Stuart Roberts Tanushree Jain Financials TS Lim Lafitani Sotiriou Emerging Growth Emerging Growth Emerging Growth Associate Healthcare/Biotech Healthcare/Biotech Associate Banks/Regionals Diversified joshea jsnape bcalwell sroberts tnjain tslim lsotiriou Reduce: Expect total return between - Resources 15% and -5% on a 12 month view Stuart Howe Bulks & Copper showe Sell: Expect <-15% total return on a 12 month view Fred Truong Trent Allen Michael Lovesey Bulks & Copper Emerging Growth Emerging Growth ftruong tcallen mlovesey Speculative Investments are either start-up enterprises with nil or only prospective operations or recently commenced operations with only forecast cash flows, or companies that have commenced operations or have been in operation for some time but have only forecast cash Johan Hedstrom Stephen Thomas Quantitative Janice Tai Fixed Income Damien Williamson Barry Ziegler Energy Gold & Nickel Quantitative & System Fixed Income Fixed Income jhedstrom sthomas jtai dwilliamson bziegler flows and/or a stressed balance sheet. Such investments may carry an exceptionally high level of capital risk and volatility of returns. Bell Potter Securities Limited ACN Level 38, Aurora Place 88 Phillip Street, Sydney 2000 Telephone The following may affect your legal rights. Important Disclaimer: This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries.this is general investment advice only and does not constitute personal advice to any person. Because this document has been prepared without consideration of any specific client s financial situation, particular needs and investment objectives ( relevant personal circumstances ), a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the representative of such licensee, who has provided you with this report by arraignment with Bell Potter Securities Limited) should be made aware of your relevant personal circumstances and consulted before any investment decision is made on the basis of this document. While this document is based on information from sources which are considered reliable, Bell Potter Securities Limited has not verified independently the information contained in the document and Bell Potter Securities Limited and its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility for updating any advice, views opinions, or recommendations contained in this document or for correcting any error or omission which may become apparent after the document has been issued. Except insofar as liability under any statute cannot be excluded. Bell Potter Limited and its directors, employees and consultants do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this document or any other person. Disclosure of interest: Bell Potter Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may from time to time hold interests in the securities referred to in this document. Page 13