Loss per share (p) (0.18) (0.11)

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1 Mining Speculative Buy, 2.125p, Market Cap. 7.96m* is an AIM quoted exploration and development company. It is the owner of a high purity iron, vanadium and titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa. expects to mine its own VTM ore as feedstock for a 15MW DC smelter which will produce High Purity Iron powder (HPI) as well as vanadium and titanium products. The company has offtake agreements in place for all of these products for the first 5 years of production. On 6 October 2016, the company announced that IDC funding for the BBBEE share of the project capex had been approved and it is negotiating the remaining debt agreements for the project. On 11 April 2017, it entered into two non-binding MoUs on the potential acquisition of a 7.5MW smelting plant and associated independent power plant. is currently engaged in discussions with a number of potential providers of project finance including the IDC and anticipates that these talks will lead to an offer to provide funding to enable the purchase and refurbishment of this 7.5MW smelting plant. It believes that this potential acquisition is a unique opportunity which would be transformational, noting that with this deal it anticipates profitable production of HPI powder, vanadium and titanium from Q1 2018, significantly earlier than previously envisaged and enabling supply to its agreed offtake partners. However, represents a speculative investment opportunity and hence is not without risk with its share price having been weak. On 21 June 2017, the company announced it had raised 2.1m (gross) in a firm and conditional placing at 2p a share with institutional and other investors. Non-Executive Chairman, Giles Clarke is subscribing for 40,000 with Nick Harrison, Non-Executive Director 5,000. The proceeds will be used for working capital including the repayment of the outstanding R15m (c. 0.9m) principal amount of the Sylvania loan facility and will also enable the company to continue to progress the potential smelter business acquisition. The placing is in two tranches - firm and conditional, the latter subject to shareholder approval in General Meeting which will be held on 10 July Application will be made for the firm placing shares to be admitted to trading on AIM and it is expected that dealings in these new shares will commence on 26 June Key Strengths Key Weaknesses Experienced Board and management team with it having strong relationships with its BBBE partners/bbbee structures in place. World class project in high purity iron powder (HPI), titanium and vanadium supported by an excellent infrastructure of roads, rail and access to power and water. Potential smelter deal seen as enabling earlier production and helping de-risk the project. Offtake agreements secured across all 3 of its products, South African Government/IDC project funding package approved (including BBBEE contribution) and is negotiating the remaining debt agreements for the project. ** Note commodity prices both a potential strength and a weakness. Dependency on one project only and geo-political risk of operating in South Africa with no guarantee of the project ultimately being a commercial or economic success. Exploration and development activities are high risk undertakings and subject to factors including timing of approvals, regulatory/legal aspects, geology, environmental and social/community issues plus operational and technical facets. Conclusion of remaining debt agreements on the project awaited and no certainty that talks on project finance for the potential smelter acquisition will be secured & may need further funding in the future. Research Disclosures Important Notice Please see pages 4 to 5. Shares in issue Pre* Post firm placing AIM Ticker 52 week high/low (p) Price spread (p) NMS Analyst Date 374,641, ,641,278 IRON 6.525p/2.00p 2.00p/2.25p 20,000 Trisha Reay 22 June 2017 Year end 30 June 2016A H1 2017A Operating Loss 000 (494)) (297) Loss before Tax 000 (585) (385) Loss per share (p) (0.18) (0.11) SVS Securities Plc. Registered in England and Wales no Authorised and regulated by the Financial Conduct Authority, Firm No A Member of the London Stock Exchange and a HM Revenue & Customs Approved ISA Manager. Registered Office: 2 nd Floor, 20 Ropemaker Street, London, EC2Y 9AR. t: +44 (0) f: +44 (0) w: e: info@svssecurities.com 1

2 Company Backdrop is an AIM quoted exploration and development company focused on the development of a new integrated high purity iron, vanadium and titanium project situated on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa. An experienced Board and management team is in place with the former including; Giles Clarke as Chairman, Peter Cox as CEO, Vred von Ketelhodt as CFO with Nick Harrison and Rupert Fraser as Non-Executive Directors. The project will see mining its own Vanadiferous Titaniferous Magnetite (VTM) deposits as feedstock for a 15MW DC smelter which will produce high purity iron powder as well as vanadium and titanium products. Project Overview and Key Milestones Total Project Mineral Resource contains 32Mt of Iron in situ. Definitive Feasibility Study (DFS) released in April 2014 illustrated robust project economics and trial testing delivered ore that requires no beneficiation beyond crushing. Key mining rights and prospecting rights together with the relevant approvals in place to enable mining to start. Project scale is supported by excellent infrastructure of roads, rail and has access to power and water - see also map below. Formal letter received from Eskom confirming power supply availability. Budget quote received from Eskom for the 15MW power supply. Lease terms received for the planned smelter on Farm Altona and is currently finalising terms with the Department of Rural Development and Land Reform with in the process of appointing Tenova Pyromet (part of Techint Group) to design and supply the smelter. Offtake secured for all three products for the first 5 years of production. IDC debt and equity funding package including BBBEE contribution agreed - see details below. Products High Purity Iron Powder (HPI) Iron powder products are classified by purity, production method, grain and density. Iron powders are widely used in powder metallurgy (PM), and seen as a growing market by the company driven by continuous introduction of new materials and technologies in magnetic materials and in the manufacture of welding rods. Vanadium Vanadium is a hard, ductile, silver-grey metal. Whilst predominately used in the steel industry, it is the development of vanadium redox flow battery systems (VRB) for grid energy storage applications that believes has the most potential to impact on the demand for vanadium. Titanium Titanium slag is an upgraded white pigment that is used in the manufacture of paint, paper and plastics. Titanium seen as a key part of a new battery technology. IDC Funding On 6 October 2016, announced that the Industrial Development Corporation (IDC)* had approved a R244m ($17.9m) funding package for the project and was in the process of executing formal funding agreements. The funds will form part of an approx. R871m financing package for the development of the project. The IDC is providing funding for the Broad-Based Black Economic Empowerment s (BBBEE) capital contribution in Smelting (Pty) (in line with its 26% shareholding in the smelting project**). The company noted that it was negotiating the remaining debt agreements for the project. * Established in 1940, the IDC is a national development finance institution set up to promote economic growth and industrial development. It is owned by the South African government with the IDC s main objective to be the primary source of commercially sustainable development and innovation to benefit both South Africa and the rest of Africa. ** As per the BBBEE s Code of Good Practice and the Mining Charter, its shareholding amounts to 26% in Smelting (Pty) Ltd the company which will own and operate the 15MW DC smelter. Interim Results and Placing Source: Company On 29 March 2017, announced its Interim Results for the 6 months to end December These showed a LBT of 385,000 and it had cash of 413,000 as at 31 December In October 2016, it raised 1.8m in a placing at 4.5p. 2

3 Smelting Business Potential Acquisition In April 2017, announced it had signed two non-binding MoUs to acquire Siyanda Smelting and Refining (Pty) Ltd and Power Alt (Pty) Ltd for an initial consideration of R50m ( 2.9m) in cash and shares with two further staged payments each of R69m ( 4m) in cash. This is a production ready smelting plant with a 7.5MW furnace and independent power producing plant (IPP) generating 10.6MW of electricity. The plant and IPP are strategically located near the town of Middelburg c. 300km from s project via a national highway. In its fundraising announcement of 21 June 2017, the company noted it was currently engaged in discussions with a number of potential providers of project finance including the IDC, with it anticipating that these will lead to an offer to provide funding to enable the purchase and refurbishment of this 7.5MW smelting plant. intends to put down R8.8m (c. 0.5m) of the net proceeds as a refundable deposit towards the potential acquisition and will at that time seek to reach agreement on the terms of various agreements relating to it including toll smelting, operating for own account with a rental or royalty fee, all subject to obtaining the necessary project finance. The acquisition would provide with a readymade smelter, enabling early production of HPI, vanadium and titanium and would facilitate supply into the company s offtake agreements. In addition, it noted that the deal would significantly de-risk the project, as well as delivering attractive economic returns and free cash flow. If does acquire the smelting plant, it plans a refurbishment programme and installation of the necessary equipment to convert the plant to produce HPI, vanadium and titanium products to the company s specifications. It is anticipated that this would take up to 6 months. Following this conversion and a period of commissioning, it is anticipated that the smelting plant would from Q have a projected annual production of: 21,000 tons of HPI powder tons of vanadium in slag grading 36% V. placing and second admission, and subject to shareholder approval, Giles Clarke will hold 2.3% and Nick Harrison 0.9% of the enlarged issued share capital. Westleigh Investments Holdings Limited (WIHL), a company wholly owned and controlled by Giles Clarke and Nick Harrison which has not participated will hold 2.1% of the enlarged issued share capital. The proceeds will be used for working capital including the repayment of the outstanding R15m (c. 0.9m) principal amount of the Sylvania loan facility and will also enable the company to continue to progress the potential acquisition of the 7.5MW smelting plant. The placing is in two tranches with a firm placing under its existing authorities of 70m new shares and a conditional placing of 35m new shares, the latter subject to shareholder approval in General Meeting which will be held on 10 July Application will be made for the firm placing shares to be admitted to trading on AIM and dealings in these new shares are expected to commence on 26 June Post first admission, will have 444,641,278 ordinary shares in issue. Application will be made for the conditional placing shares to be admitted to trading on AIM and it is expected that dealings in these new shares will commence on 11 July 2017, subject to the passing of the Resolutions at the General Meeting. Following the second admission, the company will have 479,641,278 ordinary shares in issue. Conclusion represents a speculative investment opportunity and hence is not without risk with its share price having been weak. The company notes that the proceeds from this fundraise will strengthen its Balance Sheet and enable it to continue the discussions with potential providers of project finance for the acquisition of the 7.5MW smelting plant from a position of strength. The company added that it believes the acquisition is a unique opportunity and would be transformational, with it anticipating profitable production of HPI powder, vanadium and titanium from Q1 2018, significantly earlier than previously envisaged and enabling supply to its agreed offtake partners. 4,134.5 tons of titanium in slag grading 65% TiO 2. As previously announced, the company has entered into offtake agreements for all three of these products, with it anticipated that they will be sold to the offtake partners at Smelter Gate. Sale of the products to s offtake partners will both provide revenues and allow the company to ensure certification of the products which will reduce commissioning time of the 15MW smelter when this is later developed. Fundraising On 21 June 2017, announced it had raised 2.1m (gross) in a firm and conditional placing of 105m new ordinary shares at 2p per share with institutional and other investors. Non- Executive Chairman, Giles Clarke and Non-Executive Director, Nick Harrison are participating in the placing subscribing for 40,000 and 5,000 respectively. Following completion of the 3

4 Research Disclosures This document has been issued in the UK by SVS Securities Plc (SVS) which is authorised and regulated by the Financial Conduct Authority ( FCA ) and is a member of The London Stock Exchange PLC. This report has been prepared by its author(s) as non-impartial research in relation to Company (the Company ), and is provided for background information only. Analyst Certification: The analyst(s) responsible for preparing this research report or sections of this report, in whole or in part, hereby certify/ies that, with respect to any and all of the securities or issuers that the analyst(s) cover(s) in this report, the views expressed in this report accurately reflect the individual research analyst s personal views. In addition, no part of the research analyst s compensation was, is, or will be directly or indirectly, related to the specific recommendations or view expressed in this report or summary. Disclosure Lists: Author: Trisha Reay Publication date: 22 June Research Disclosures Applicable to this Recommendation: N/A The clauses below apply to this recommendation: 1. SVS Securities Plc (SVS) is acting as broker, market maker or placing agent. 2. SVS has previously acted for the Company as broker, market maker or placing agent within the last 12 months. 3. SVS holds 0.5% or more of the Company s total issued share capital. 4. SVS holds 5% or more of the Company s total issued share capital. 5. SVS and or its affiliates, holds options or warrants in the Company which on conversion would represent 0.5% or more of the Company s total issued share capital. 6. The authoring analyst or any associate of the authoring analyst has a long or short position in the Company s securities held directly, or through derivatives. 7. A director, officer, employee or agent of SVS Securities Plc is an officer, director, partner, employee or agent of the Company. Recommendation Definitions: Buy - stocks are recommended with this rating where we have a reasonable basis to expect significantly positive share price performance. Speculative buy - stocks are recommended with this rating where we have a reasonable basis to expect significantly positive share price performance with a significantly higher level of downside risk than a buy recommendation. Such stocks may not be generating profits or revenues at the present time. Hold - stocks are recommended with this rating where we have a reasonable basis to expect neither significantly positive or negative share price performance. Sell - stocks are recommended with this rating where we have a reasonable basis to expect significantly negative share price performance. Recommendation history for this recommendation for previous 12 months: 26 October 2016 Speculative Buy. Recommendation history for previous 12 months: During the 12 months ended 22 June 2017, 0 of SVS Securities principal recommendations have been on a hold basis and 29 of SVS Securities principal recommendations has been on a speculative buy basis. Recommendation update frequency: Our research is primarily event driven and as a result, there is no planned frequency for updates and rather updates will be published as and when the analyst believes there is a reason to publish. 4

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