Dragon Energy Limited Corporate Presentation September 2012
Disclaimer This document has been prepared by Dragon Energy Ltd ( DLE ) (ABN 38 119 992 175) and provided as a basic overview on the Company. This document does not purport to be all-inclusive or to contain all the information that someone may require to evaluate the prospects or assets of DLE. None of DLE, any of its related bodies corporate or any of their representatives assume any responsibility for, or makes any representation or warranty, express or implied, with respect to the accuracy, reliability or completeness of the information contained in this document and none of those parties have or assume any obligation to provide any additional information or to update this document. To the fullest extent permitted by law, DLE, its related bodies corporate and their representatives expressly disclaim liability for any loss or damage arising in respect of your reliance on the information contained in this document (including your reliance on the accuracy, completeness or reliability of that information), or any errors in or omissions from this document, including any liability arising from negligence. Although reasonable care has been taken to ensure that the facts stated in this presentation are accurate and or that the opinions expressed are fair and reasonable, no reliance can be placed for any purpose whatsoever on the information contained in this document or on its completeness. This document contains statements which may be in the nature of forward-looking statements. Actual results and developments may differ materially from those expressed or implied by these forward looking statements depending on a variety of factors. No representation or warranty is given, and nothing in this document or any other information made available by DLE or any other party should be relied upon as a promise or representation, as to the future condition of the respective businesses and operations of DLE. This document is not intended to be an offer for subscription, invitation, solicitation or recommendation with respect to securities in DLE in any jurisdiction. Without limiting the foregoing, this document is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security in any jurisdiction or to any person to whom it is unlawful to make such an offer, invitation, solicitation or recommendation. This document does not constitute an advertisement for an offer or proposed offer of securities. It is not intended to induce any person to engage in, or refrain from engaging in, any transaction.
Corporate Overview Capital Structure (3 Sept 2012) Shares on issue 206.4m Options on issue (A$0.35 expiry18/11/2014) 47.46m Cash (at 30 June 2011) A$9.43m Shareholders China Shandong Group 70.3% Mr Gang Xu 6.6% Top 20 Shareholders 88.2% Directors Jie Chen Executive Chairman More than 20 yrs experience in the mining industry in China. Previously Chairman of Shandong Taishan Group, awarded Top 20 best mine manager in China. Gang Xu Managing Director Over 20 yrs experience in mining and energy industry in China and Australia. Senior roles at Sino Gold Ltd and China National Nuclear Corporation. Founder of Dragon Energy Ltd. Timothy Williams COO, Executive Director Over 5 yrs experience as a corporate and resources and energy lawyer. Legal adviser on several foreign investment deals in Australia. Anthony Ho Company Secretary Over 25 yrs experience in corporate and finance services. Principal of corporate advisory and services firm. Director and secretary to several ASX listed companies Mark Hafer Exploration Manager Over 12 yrs experience in iron, gold and base metals exploration. Field experience in WA, SA and Kazakhstan. Senior Geologist at Mt Gibson Iron. 3
Investment Highlights Attractive project economics as indicated in GHD scoping study Direct shipping ore (DSO) characteristics, shallow deposits with low strip ratio and mining costs. Strong Chinese management and shareholder support will ensure optimum partnerships and customer relationships within target Chinese market. Project significantly de-risked: Significant amount of resources upgraded to JORC Indicated category. Mining Lease application lodged and native title negotiations well advanced. Major environmental studies completed and further studies and approvals well progressed. Marketing activities well progressed with high level of acceptance from Chinese mills for DLE fines as sinter feed. Short-list of transportation solutions identified for BFS assessment. 4
DLE Planning and Strategy August 2011 August 2012 August 2013 Completed Activities Updated JORC Resources for PIP deposits Acquisition of Murchison Rocklea Project Positive Scoping Study for Pilbara Iron Project (PIP) development Completed first phase of environmental studies PIP Development Complete heritage agreements Obtain Mining Lease(s) Complete environmental studies and approvals Undertake BFS Secure finance and JV partner(s) Select infrastructure solution 3 year plan Secure mine and infrastructure approvals Commence mining in 2013/14 Secure user rights to Anketell project Consider additional acquisition of Pilbara based Iron Ore assets Exploration and development of non-pilbara tenements 5
Recent Pilbara Iron Project Highlights Acquisition of Murchison s Rocklea Project in August 2012 consolidates Dragon s Iron Ore assets in Pilbara with extra 89Mt Iron ore added to DLE s JORC Resources. Resource upgrades completed in July 2012 for Rocklea and Nameless deposits with JORC Mineral Resource for flagship Pilbara Iron Ore Project (PIP) increased from 62.70Mt to 263.6Mt @ 52.6% Fe (58.8% cafe). Concluded positive Scoping Study for PIP in December 2011 indicating strong project economics. Completed significant environmental studies for PIP including flora and fauna surveys. Applications lodged in 2011 for mining leases for Rocklea and Nameless projects with native title negotiations well advanced. Investigation of short and long term transport/infrastructure solutions is well advanced and will be concluded during BFS. Granted further exploration licences for additional tenements in prospective areas in Ashburton region of the southern Pilbara, as well as Meekathara region for Gold. 6
Pilbara Iron Project (PIP) Flagship Project Two centrally located advanced iron ore exploration projects (Rocklea and Nameless) in the prolific Pilbara region 1 of Western Australia. Total JORC Mineral Resource of 263.6Mt @ 52.6% Fe 2 (58.8% cafe 3 ) Including JORC Indicated Resource of 93.9Mt @ 52.5% Fe 2 (59.4% cafe 3 ) 1 In 2010, the Pilbara region accounted for 92.5% of Australia s total iron ore production and 79.5% of total identified resources (source: Geoscience Australia) 2 Applies a 50% Fe cut-off grade 3 cafe% = Fe / (100 LOI) x 100. 7
Rocklea Deposit JORC Resource of 182.6Mt @ 52.7% Fe (59.5% cafe) including JORC Indicated Resource of 93.9Mt @ 52.5% Fe (59.4% cafe). Over 200Mt with a lower grade cut-off of 45% Fe for Dragon s Rocklea and 50% Fe cut-off for Murchison s Rocklea. Mining Lease application, native title negotiations and environmental studies for the Main and North parts of the deposit are well advanced. Simple ore body geometry and shallow deposit with low strip ratio and mining costs. Direct shipping ore (DSO) characteristics. 50% cut-off grade Mt Fe cafe SiO 2 Al 2 O 3 P LOI % % % % % % Rocklea Main Deposit Main Indicated 78.94 52.37 59.31 8.48 3.27 0.030 11.71 Inferred 9.44 51.40 58.49 8.69 3.58 0.030 12.13 North Pod Inferred 5.22 50.97 58.11 8.00 4.62 0.034 12.28 sub-total 93.59 52.19 59.16 8.48 3.37 0.030 11.78 Rocklea South Deposit Indicated 15.0 53.2 60.0 7.7 4.0 0.040 11.4 Inferred 74.0 53.2 59.9 8.3 3.4 0.030 11.2 sub-total 89.0 53.2 59.9 8.2 3.5 0.032 11.2 Total Mineral Resource 182.6 52.7 59.5 8.3 3.4 0.031 11.5 8
Nameless Deposit JORC Inferred Resource of 81.0Mt @ 52.39% Fe (57.08% cafe) using a 50% Fe cut-off grade. Inferred Resource of 159.0Mt @ 49.43% Fe (53.85% cafe) with a lower grade cut-off of 45% Fe. Mining Lease application and native title negotiations are well advanced. Simple ore body geometry and shallow deposit with low strip ratio and mining costs. Direct shipping ore characteristics. Deposit open to the west for further exploration. 9
Scoping Study Summary Scoping study completed by GHD in December 2011 assessed two scenarios: Case 1 - a low volume (2Mtpa) short-term operation; and Case 2 - a 10Mtpa long-term operation via Anketell point. Scoping Study indicated positive economics and technical viability of PIP for both Cases with project NPV of $344.80 million for Case 1. Early indications of highly favourable economics for Case 2 to be confirmed upon the Project resources reaching in excess of 200Mt at an indicated level. GHD Scoping Study Results Case 1 Annual production 2Mtpa Total Production 62.7Mt Minimum production life 33 years Estimated CAPEX $46.4million Estimated OPEX $45.82 / tonne NPV $344.8million IRR 31% 10
PIP Development Strategy Targeting production in early 2014. DLE focussed on de-risking the PIP in next 12 months: Secure native title heritage agreement; Secure mining lease; Pursue infrastructure solution; Finalise JV and development partners; Complete environmental approvals; Undertake BFS; Secure project finance. Pursue new equity investment to reduce dominance of major shareholder and improve liquidity. Exploration and resource expansion. 11
Pilbara Iron Project - Infrastructure Multiple paths to market for both large and smaller volume operations. Anketell Point Port Headland Cape Preston Other existing facilities New Dragon infrastructure Mine gate sale Plan to commence PIP operations via a short to medium term low volume (2 to 5 Mtpa) truck and barge operation. Significant work already undertaken to indentify short term solution with BFS study to confirm preferred infrastructure option. Long term solution - Negotiations underway with various consortiums pursuing a lead proponent role on Anketell project. 12
Pilbara Iron Project - Upside Nameless deposit open to the west for further exploration. Potential exploration targets to be identified in the area of the newly acquired Murchison Rocklea tenements. Possibility of higher grade zones within the PIP deposits as target for initial production. 13
Exploration activities Exploration of non-pip tenements: 24 additional tenements across 7 projects about 1500km 2 ; Exploration targets for iron, gold and base metals. Actively pursue development partnerships and/or sale of all non-core assets once sufficiently derisked. Pursue further acquisitions and JV s to add to DLE s exploration ground. 14
Exploration Lee Steere Tenement E69/2126-I, E69/2377-I Location 200km north-east of Wiluna Area 155km 2 Targets Manganese, Iron Status Encouraging surface sampling results Drill testing planned 15
Exploration Ashburton Tenement E08/2209-2211, E47/2417 Location Pilbara region, close to Paraburdoo infrastructure Area 507km 2 Targets CID, detrital Iron, Gold Status Targets identified Drilling planned this year 16
Exploration Carters Well Tenement E59/1639 Location 30km south of Mt Magnet gold mining district Area 142km 2 Targets Gold Status Completed MMI survey. Drilling planned. Identified 4 anomalous zones, namely a 3.5km NE striking gold and coincident silver anomaly. Cu, Pb and Zn anomalies also identified - these elements used as pathfinders for some gold deposits in the Mt Magnet district. 17
Exploration Mt Gibson Tenement E59/1637-38, E59/1686-87 Location 80km north-east of Wubin, 30km to Extension Hill Iron Project, adjacent to Mt Gibson Gold Mine Area 265km 2 Targets Gold, Base metals Status Surface sampling of E1638 & E59/1687 Further surface sampling planned for E59/1686 & E59/1637 18
Exploration Meekatharra Tenement P51/2734 2744 Location 13km south-east of Meekatharra Area 22km 2 Targets Gold Status Gold and arsenic anomalies identified by previous (limited) exploration activities MMI surface sampling completed 19
Exploration Milly Milly Tenement E09/1811 Location 196km west of Meekatharra, 58km east of Jack Hills iron project Area 191km 2 Targets Iron, Base metals Status Exploration programme planned 20
Exploration Yamarna Tenement E38/2665 Location 120km north-east of Laverton Area 75km 2 Targets Base metals, Gold Status Greenstone succession at Mt Venn (Cu, Ni) is also present on E38/2665 21
Path Forward Pilbara Iron Project Securing transport and port access Project financing Commencing feasibility studies Other de-risking activities WA Exploration Projects Ongoing exploration on existing tenements Corporate Seek strategic partners Evaluate new targets and acquisitions 22
Competent Person / Exploration Target Competent Person s Statement The information in the report to which this statement is attached that relates to Exploration Results is based on information compiled by Mr Mark Hafer, who is a Member of The Australian Institute of Geoscientists. Mr Hafer is a full-time employee of the company. The information that relates to the Nameless Mineral Resource Estimate has been compiled by Dr. Bielin Shi who is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists, and an employee of CSA Global Pty Ltd. The information that relates to the Rocklea (Dragon) Mineral Resource Estimate is based on information compiled by Mr Stephen Godfrey who is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists, and an employee of Golder Associates Pty Ltd. The information that relates to the Rocklea (Murchison) Mineral Resource Estimate has been compiled by Mr. Daniel Guibal who is a Fellow of the Australasian Institute of Mining and Metallurgy, and an employee of SRK Consulting. Messrs Hafer, Shi, Godfrey and Guibal have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Messrs Hafer, Shi, Godfrey and Guibal consent to the inclusion in the report of the matters based on their information in the form and context in which it appears. 23
Contact Information Gang Xu Managing Director Timothy Williams COO & Executive Director ASX code: Website: Email: Telephone: Address: DLE www.dragonenergyltd.com info@dragonenergyltd.com +61 (8) 9322 6009 Suite 8, 1297 Hay Street West Perth WA 6005 24