Phoenix Global Mining 9 October 2015

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1 For distribution only to Investment Professionals, Regulated or Certified Sophisticated Investors with experience in participating in unregulated schemes. Persons who do not have professional experience in such schemes should not rely on this document. Phoenix Global Mining 9 October 2015 Re-developing the Empire Skarn deposit Price: Target Price: Sector: Company Description Metals & Mining Phoenix Global Mining is a private resource company with an option to acquire the past producing Empire Mine (Cu, Ag and Ag) in Idaho, USA. Phoenix Global Mining is a private resource company incorporated in the British Virgin Islands that has an option to acquire an 80% interest in the past producing Empire copper, gold, silver and tungsten mine located in Idaho USA. While the project is still in the early stages of development, the company is targeting production (late 2017 or early 2018) of 7,000t of copper cathode per annum from an open pit and heap leach operation. Despite the downward pressure on copper prices against the backdrop of weaker demand from China we see support at the current levels as high-cost producing mines continue to exit the market. As such, we believe the Empire mine has the potential to be a relatively low-cost producer and an attractive play on the recovery in the copper price. Historic reserve with upside potential Key Data Market: TIDM: 1 Year Hi/Lo: Existing Shares: 48.1 Market Cap: ISIN: SEDOL: Co. Website: pgmining.com A non-compliant historical reserve (oxides) of some 12.9M tons grading 0.55% Cu, 0.25% Zn, 0.41g/t Au and 13.2g/t Ag has been calculated by SRK in 1997 based on drilling by previous owners (Cambior Exploration and others). Since then, additional drill holes and exploration work has been completed and a JORC-compliant resource is expected in Q Metallurgical testwork by Metcom and Kappes Cassidy indicate that the oxides are amenable to heap leaching with a 65% recovery through solvent extraction electro winning (SE/EW). Additional resources could be defined from deeper and higher grade sulphide ore with significant potential for poly-metallic mineralisation including gold, silver, zinc and tungsten. Preliminary mine plan Notwithstanding funding and execution risks, Phoenix is targeting Phase 1 production of 7,000t of copper cathode per annum over an initial period of 10 years from a proposed open pit. The cost of production has been estimated at US$1.20/lb and an initial capex at US$53m, including a circuit to recover the precious metal content. Phase 2 mine development will focus on the deeper sulphide reserves for 2019/2020. Valuation: Relative value of US$3.8m and DCF value of US$28.1m heldon Modeland, P.Geo. Research Analyst sheldon.modeland@beaufortsecurities.com Based on our selected copper explorers peer group, we calculate a weighted average EV/resource value of US$59.42/t of in-situ copper. This would imply an attributable EV of US$3.8m ( 2.6m) for Phoenix using the Empire mine s historical non-compliant resource. Of note, our relative valuation assumes a Cu equivalent grade based on current spot prices for gold, silver and zinc. In absolute terms, using a discount rate of 10% and a flat long term copper price of US$2.50/lb, we calculate a DCF-derived valuation of US$28.1m ( 18.7m) attributable to Phoenix based on a preliminary life of mine of 10 years with an annual production rate of 7,150t of copper cathode and an initial capex of US$45m ( 30m). At this stage, our DCF model excludes the production of any by-products and assumes copper cathode production with a total cash cost estimated at US$1.20/lb. THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: For full disclosures, please see the back page. Beaufort Securities Ltd Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.

2 Company Description: Emerging copper play Phoenix Global Mining (Phoenix) is a private company focused on re-developing the Empire skarn deposit comprising copper, silver, gold and tungsten mineralisation located in Idaho, USA. The Empire mine is a past producing underground mine that operated from 1901 to 1944 and produced 765,000 tons grading 3.64% Cu, 0.048oz/t (1.6g/t) Au and 1.57g/t Ag. Since then, several junior exploration companies have undertook extensive surface exploration and drilling of the open pit. Based on the historical (1997) open pit reserves (non-compliant), Phoenix has a production target of 7,000t of copper cathode with initial production to commence in late 2017 to early We understand that Phoenix is considering listing on the London AIM market in Acquisition of 80% of Konnex On 15 July 2015, Phoenix signed an earn-in agreement to acquire 80% of Konnex Resources from ExGen Resources. Under the terms of the agreement, Phoenix will pay US$100,000 to ExGen per year untill completion of a Definative Feasibility Study (DFS) with the next payment due 16 July Phoenix has also issued five million shares paid to ExGen. On top of this, Phoenix has agreed to spend US$1m in expenditures within 12 months or less and issue an additional 5M shares. Konnex will pay a 2.5% NSR to ExGen from commerical production and ExGen s carried interest until construction cash call will be 20% and subject to dilution. Empire Mine acquisition Source: Phoenix Global Mining. Empire Mine: Brown-fields site within a mining friendly jurisdiction The Empire Mine is located near the mining town of Mackay, Idaho USA. Since mine closure in 1944, exploration through several junior explorers has focused on the oxide ore potential representing less than 30% of the overall strike length of the mineralised skarn system. The licence area comprises 50 claims, of which 23 are on private land covering some 744 acres (301 ha). Accessibility to the licence area is via an all-weather road. Power and rail cross the Empire mine area. According to the Fraser Institute Annual Mining Survey (2014), Idaho ranks 20 out of 122 for mining investment attractiveness. THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to Page 2

3 Empire Mine location Idaho, USA Source: Phoenix Global Mining. Empire mine mineral Claims Source: Phoenix Global Mining. THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to Page 3

4 Geology and mineralisation The area surrounding the Empire Mine is underlain by Mississippian aged siltstone and carbonate rocks intruded by Tertiary aged granites. The contact between the carbonate rocks and the granite intrusives has been locally metasomatised to a garnet-diopside skarn. The north-trending contact zone between the granitic complex (Mackay Granite and Granite porphyry) and the Paleozoic limestone (White Knob limestone) hosts poly-metallic copper mineralisation. The Mackay Igneous Complex (MIC) and the Granite porphyry are responsible for the poly-metallic mineralisation (Cu + Zn + Au ± Mo) forming a 150m wide belt extending 2,500m on the eastern side of the MIC. While high grade tungsten (WO 3) mineralisation has been noted, very little tungsten was produced and mining was restricted to high grade copper ore bodies. Geological setting of Empire Skarn deposit Source: Phoenix Global Mining. 1) JORC compliant resource update by Q1 2016, Timeline of project objectives 2) Completion of Preliminary Economic Assessment by Q2 2016, 3) Assessment of deeper copper gold tungsten potential by Q2 2016, 4) Complete a feasibility study on the oxide copper, silver, gold in the AP open pit a) Increase open pit mineable oxide and sulphide reserves along strike b) Timeline of 18 months, 5) Commence assessment of the 50km wide 2,500m strike length and 1,000m down dip extension resources in the Empire deposit below the oxides, 6) Secure agreements on the claims to the north (White Knob claims and south (Granite claims) of the existing Empire claim, THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to Page 4

5 7) Construction start up for AP pit for Q2 2017, 8) Target Stage 2 mine development from deeper sulphide reserves for Source: Phoenix Global Mining Relative valuation: Weighted average of US$59.42/t Based on our selected peer group of copper explorers we calculated an average in-situ value of US$59.42/t (weighted average). Given the non-compliant historical resource of 16.5Mt grading 0.49% Cu, 0.19% Zn, 0.48g/t Au and 13.5g/t Ag, we calculated an implied EV of US$3.8m ( 2.6m) attributable to Phoenix. Of note is that we have calculated a Cu equivalent grade of 0.91% using commodity prices of US$1,100/oz Au, US$5.51/t Cu and US$14/oz Ag. Peer Comparison Company name Market Cap Cash Net Debt EV EV/Resource US$m US$m US$m US$m US$/t Nevada Copper Avanco Resoiurces Copper Fox Metals The MAC Resources Xanadu Hot Chili Lowell Copper KGL Resources Metminco Lorraine Copper Mag Copper Herencia Resources Weighted average Source: Bloomberg (as at 02/10/15), Company reports, Beaufort Securities. Absolute valuation: DCF-derived valuation of US$28.1m ( 18.7m) Our DCF-derived valuation of US$28.1m ( 18.7m) is based on a 10 year cash flow forecast and a 10% discount rate. Other salient features of our DCF-valuation are listed in the tables below. Of note is that we have, at this stage, neglected the potential revenue streams from the Au and Ag by-products and have adjusted the initial capex estimate excluding the precious metals recovery. THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to Page 5

6 Preliminary economic analysis Assumptions for DCF valuation - OCTOBER 2015 Parameter Unit Value Average annual copper production over life of mine Tonnes 7,150 Recovery rate % 65 Initial capex US$m 45 Sustaining capex US$m - Average total annual operating costs US$m 18.5 Opex per kg recovered Cu US$/t 2,554 Period of ore extraction Year Tax rate % 40 Copper price (2015) US$/t 5,510 Copper price (long term) US$/t 5,510 Minority interest % 20 Source: Company reports, Beaufort Securities. Summary of DCF valuation Free cash flow NOPAT $m DD&A $m CAPEX $m FCF $m Discount rate % Discount factor # DFCF $m Sum of DFCF $m 42.5 PV of DFCF (attributable) $m 28.1 Source: Company reports, Beaufort Securities. Risks and sensitivities Commodity pricing: We view our flat copper price of US$5,510/t (2.50/lb) as rather conservation and note that a 10% increase in our long-term copper price would increase the Empire Mine s DCF value by 33% Cash cost performance: Given the poly-metallic nature of the Empire Mine we would expect the mine to operate as a low cost producer. While at this stage we have neglected any benefits from the potential by-products we note that a 10% increase in the estimated total cash costs would lower our DCF-valuation by 16%. Discount rates: All other things being equal a 1% increase in our estimated discount rate results in 9.5% reduction in our DCF value estimate. THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to Page 6

7 Strengths and Weaknesses Strengths The Empire mine is located within a mining friendly jurisdiction with nearly half of the claims being patented, which gives the owner title to the surface and other resources Project can be relatively fast tracked to construction Experienced management team with successful track record of discovery and developing mines Poly-metallic deposit with potential economic mineralization of tungsten, gold, silver, zinc and cobalt. Weaknesses Mining exploration projects present many risks including permitting issues Given weak investor sentiment, securing funding for a copper project may be difficult Capex and opex cost overruns as well as construction or commissioning delays could be significant risks to the project Subject to fluctuations commodity prices especially copper prices. Source: Beaufort Securities. THIS RESEARCH BROCHURE IS A MARKETING COMMUNICATION: It has not been prepared in accordance with legal requirements designed to Page 7

8 Recommendation Breakdown During the six months to end-june 2015, the number of stocks on which Beaufort Securities has published recommendations was 278, and the recommendations were as follows: Buy - 89; Speculative Buy - 138; Hold - 42; Sell - 8. Full definitions of the recommendations used by Beaufort Securities in its publications and their respective meanings can be found on our website here. Disclaimer This report is published by Beaufort Securities ( Beaufort Securities ). Beaufort Securities is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. This research is non-independent and is classified as a Marketing Communication under FCA rules. 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