Kabanga Nickel Project P Presentation t ti to t Ausmine A i December 01, 2010

TOPICS 1. Location 2. Ownership and History 3. Project j Description p • • • •

Geology Mine Process Plant Site Infrastructure

4 Project Challenges 4. • Tanzania Infrastructure • Human Resources • Resettlement

5. Questions 2

LOCATION

3

Location

TANZANIA

Lake Victoria

Mwanza

K b Kabanga Tulawaka

Bulyanhulu Kahama

Shinyanga

Ngara

0 km

20

40

T A N Z A N I A Rulenge Bukiriro

Keza

Ngara District

Dar es Salaam

Kabanga Kabanga Muganza

BURUNDI

4

Kabanga Site

MNB Zone Drill Camps

North Zone

Tembo Zone

Main Zone

Kabanga Camp

5

OWNERSHIP AND HISTORY

6

Ownership and Management • Shareholders’ Agreement April 2005 – Barrick Gold 50% – Xstrata Nickel 50% • Xstrata Nickel is the project manager • Xstrata Nickel funded first $145 million of expenditures - current and ongoing expenditures funded 50/50 • Total project expenditure from 2005 to end November 2010 approximately pp y$ $240 million • Xstrata Nickel will process up to 17,500 tpa contained Ni in concentrate through Xstrata smelter and refinery at preset terms

7

Ownership History • Late 1970s: Nickel sulphide mineralization discovered at Kabanga during UNDP regional exploration • 1990/92: Sutton Resources secured Kabanga and Kagera concessions • 1992-1995: Sutton-BHP joint venture • 1997-2000: 1997 2000 Anglo-American A l A i JV with ith S Sutton tt ((acquired i db by B Barrick i k iin 1999) 1999). • 2000-2005: Barrick sole ownership Barrick-Falconbridge Falconbridge joint venture agreement signed • April 2005: Barrick • August 2006: Xstrata PLC acquired Falconbridge Limited • 2005-2010: Conducted Scoping, Pre-feasibility and Feasibility Studies

8

PROJECT DESCRIPTION

9

Overall Site Layout

10

Mine and Plant Site Layout

11

General Description – Site Facilities • Underground nickel mine starting at 600 ktpa and ramping to 2.2 Mtpa • Concentrator • Tailings T ili di disposall ffacility ilit • Access road 5km • Camp • Airstrip • Diesel power plant (contract) (HDS, RO) • Waste water treatment (HDS • Sewage treatment • Security S it ffences (camp, ( mine i site) it ) and d game ffences (TDF (TDF, airstrip) i ti ) • Paste fill preparation plant

12

General Description – Off Site • Rock quarry (construction and paste plant feed) • Sand pits and sand wash plant • Concentrate shipment: – 2t bulk bags, initially by road, later by road/rail 1,200 km to port at Dar es Salaam – Initial handling using existing facilities – will require construction of additional handling facilities at Isaka railhead and Dar es Salaam port (bag storage/handling) • Future power line

13

Project Strengths • High quality mineral resource – well understood • Robust process flow-sheet based on well-defined metallurgy • Guaranteed access to smelting and refining capacity • Excellent additional resource potential y long g mine life • Potentially • Project welcomed by the community • Diversification of Tanzanian mining sector

14

Project Challenges • Remote location – no nearby towns • Tanzanian infrastructure (power supply, rail transport) • Security • Proximity to Burundi (security, environmental) • Limited skills base • Concentrate oxidises rapidly → heat • Resettlement (300 households)

15

Health, Safety and Environment • Kabanga Nickel is committed to – Prevention of accidents accidents, incidents, illnesses and pollution – Regulatory compliance – Continual improvement in health safety and health, environmental performance

3.9 million effort hours (1,300 days) without a lost time injury 16

0.0

60,000 7.6

100,000

20,000

2005

10.6

7.7 6.8 6.1 6.8 6.0 0 5.4 4.7 4.2 3.8 3.4 3.1 9.4 2.9 9.1 2.7 8.6 2.5 10.1 2.8 9.8 3.0 10.0 2.8 9.8 2.7 9.1 2.5 8.9 2.4 8.7 2.2 8.2 2.1 8.4 2.0 8.3 1.9 8.6 1.9 8.2 1.8 8.4 1.7 8.0 1.6 7.7 1.6 7.5 1.5 7.2 1.5 6.9 1.4 6.7 1.4 6.7 1.4 6.6 6 1.3 6.6 6 1.3 6.4 6 1.3 6.3 1.3 6.2 1.3 6.2 1.3 6.1 6.0 1.2 1 0 1.2 1 5.9 9 1.2 1 5.9 9 1.2 1 5.8 8 1.2 1 5.8 8 1.2 1 5.7 5.7 1.2 1 5.7 1.2 1 5.7 1.2 1 5.7 1.2 1 5.7 1.2 1 5.6 1.2 1 5.6 1.2 1 5.6 1.2 1 5.6 1.2 1 5.6 1.1 1 5.6 1.1 1 5.6 1.1 1

40,000 6.6 6

6.1

6.9

80,000

5.1

4.9

120,000

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apri May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec

Mo onthly Work Ho ours 200,000 Worked Hours

2006

LTI LTIFR

2007

TRIFR

180,000

160,000

140,000

0

2008 2009 2010

12

11

10

9

8

LTIFR & TRIFR R

Health and Safety

• Safety performance improved steadily since 2005

• LTI and TRI frequency rates continue to decline

• Currently 3.9 M effort hours since last LTI (1,299 days) Work Hours & LTIFR & TRIFR (Frequency base 1,000,000 Hrs) 20

19

18

17

16

15

14

13

7

6

5

4

3

2

1

0

17

GEOLOGY

18

Regional and Tectonic Geology • Kabanga occurs in the Great Lakes Ni Belt, Eastern Margin of the Proterozoic Kibaran Orogenic Belt (1.4 Ma) Kabanga

• Th The B Belt lt extends t d through th h Burundi, B di Tanzania and into Uganda • The Kibaran Belt is known to host Ni-occurrences

19

Kabanga

• 4 zones of Massive Sulphides –North –Tembo –Main –MNB •A Associated i t d with ith ultramafic lt fi iintrusions t i into i t metasediments (schists, metapelites, quartzites)

20

Kabanga Nickel Deposits Deposits Shown Projected to Surface (Plan Map) and Projected to Depth (Vertical Section) Plan Map

Airstrip TemboDeposit

Mine site Area MNB Deposit

Main Deposit

C Current t Camp

NorthDeposit NorthDeposit Road

Schematic Plan Section

Surface

North Deposit

Main Deposit

Tembo Deposit MNB Deposit 1.2km Depth

Schematic Cross Section

Vertical Section Looking NW

Kabanga Nickel Deposits Vertical Cross-Section North Deep

5300 0E

5300 0E

5300 0E

5400 0E

5500 0E

North Deep – 12200N Geological Units

1000m

LQZT – Lower Quartzite LQZT LSSC – Lower Spotted Schist 900m

BNPU – Banded Pelitic Unit LRPU – Lower Pelitic Unit UMAF – Ultramafic

800m

MSSX – Massive Sulphide LRPU 700m

100 metres 600m

1000m asl = 600m below surface

Section looking Grid North (028°)

Kabanga Mineral Resource • 577 km drilling since inception • Kabanga K b mineral i l resource 58 Mt. Mt • Contains 36% Inferred Resources

North

41 1Mt @ 2.81% 41.1Mt 2 81% Ni

Tembo 13.2Mt @ 2.20% Ni Main

3.0Mt @ 1.93% Ni

MNB

0.7Mt @ 1.50% Ni

Total

58.0Mt @ 2.61% Ni

Geological Information - 3.5Mt @ 1.80% Ni

Kabanga Mineral Resource Kabanga Nickel Project Resources North h

Main i

MNB

Tembo b MSSX SS

Tembo b UMIN

North h UMIN

60

50

Tonn nes (Mt)

40

30

20

10

May 05

Jul 06

May 07

Jun 08

Model Version

Jun 09

Jun 10

MINING

25

Key Features of Mine Plan • Underground mine - ramp haulage with trucks • Single portal to access North – drift from North to access Tembo • Twin declines for first 300 meters (one for ventilation) • First production 2 years after start of project development • Initial production rate +/-600 thousand tonnes per year • Steady state production rate 2.2 million tonnes per year

26

Mining • Contract mining for development and early production years • Post Pillar mining initially, then Blast Hole stopes where orebody thickness and dip permit, Cut and Fill otherwise • C Cemented t d Rock R k Fill iin upper portion, ti paste t b backfill kfill when h ttonnage rate increases • Future vent shaft conversion to skip hoisting • Future refrigeration plant • 11kV electrical reticulation, 1000v feed to mining equipment • 3 x permanent pump stations with 4 helical rotor pumps each, plus 6 intermediate i t di t ttravelling lli pumps • Explosive – Emulsion + AN, peaking +/- 4.5 tpd (mine and quarry combined) 27

Design Basis - Decline

28

Mining Equipment List (peak numbers) • 10 underground haultrucks (60t units) • 9 LHD units (8.5 m3 buckets) • 6 Jumbo drills • 1 cable bolter g drills ((hydraulic y top p hammer units)) • 5 longhole • 5 Integrated Tool Carriers • 2 shotcrete sprayers • 5 agi-trucks • 4 emergency vehicles • 20 LV’s

29

PROCESS PLANT

30

Design Criteria - Ultimate • Initial production rate 600 ktpa (75 tph) • Steady state ore treatment rate 2.2 million tonnes/year (275 tph) • Head grade: Ni=2.39%, Cu=0.32%, Co=0.18% (including dilution) • Grind size 80% passing 100 microns grade 19% Ni,, 10% H2O • Concentrate g • Recovery of Ni to concentrate 89% • Concentrate production (wet) – Initial 240 tpd, 79,000 tpa – Final 700 tpd, p , 275,000 , tpa p • Initial concentrator converts to paste preparation after ramp-up to 2.2 Mtpa (grinding and Po rejection) 31

Process Flowsheet (initial)

32

Process Flowsheet (ultimate)

KNCL

33

Process Challenges Pyrrhotite/Pentlandite ratio >10:1 – ore prone to rapid oxidation – sintering, sintering decreased Ni recovery – separation (aeration + lime) very good - >95% Po rejection. – still significant g Po in concentrate ---> self-heating. g – rougher tailings +/- 70% Po – cannot be used directly for backfill • Po flotation to desulphurise but results in low mass remaining • Need to crush/grind additional material for paste (waste, quarried rock)

34

Mill Building Plan View

Process Equipment List (Initial) • Primary jaw crusher 75mm CSS • Secondary cone crusher 20mm CSS • Double deck screen 13mm bottom deck aperture (P80 10mm) • Ball mill 3.6m D, 6m EGL, 1,200 kW • 6 x 250mm hydrocyclones • 2 x 30m3 aeration tanks + 2 x 30m3 conditioning tanks g flotation cells • 6 x 33m3 rougher • 5 x 20m3 cleaner cells • 3 x 20m3 cleaner scavenger cells • 1 x 7m concentrate thickener • 2 x plate and frame pressure filters • Concentrate bagging system

36

Process Equipment List (Final) • Primary jaw crusher 100mm CSS • SAG mill 6 6.1m 1m D D, 2 2.74m 74m EGL EGL, 1 1,800 800 kW • 1 x double deck SAG discharge screen • 1 x pebble crusher (cone) • 2 x ball mills 4.27m D, 4.88m EGL • 4 x 375mm hydrocyclones g tanks • 2 x 50m3 aeration tanks + 2 x 50m3 conditioning • 8 x 33m3 rougher flotation cells • 5 x 20m3 cleaner cells • 3 x 20m3 cleaner scavenger cells • 1 x 13m concentrate thickener 37

Consumables • SAG balls (125mm) – 420 g/t • Ball mill balls (75mm) – 380 g/t initial initial, 440 g/t final • Reagents (indicative consumptions only) – CaO – 4.0 4 0 kg/t – PEX – 180 g/t – Aero 3477 p promoter – 125 g g/t – Na2SO3 depressant – 300 g/t – MIBC frother – 15 g/t – Anionic poly acrylamide flocculant (used for concentrate thickener and WWTP clarifier)

38

KABANGA INFRASTRUCTURE

39

On-Site Infrastructure • Water supply – mine dewatering and recycling. Pipeline from Ruvubu river (15 km) in later years years. Potable and makeup from boreholes • Diesel p power p plant ((8 MW installed)) – BOO contract • Sewage treatment – RBC and UV disinfection - separate plants for camp and mine site • Potable water plant • WWT plant (HDS and RO) – 350 m3/h at peak • Satellite-based voice and data communications • M Modern d security it system t – CCTV monitoring, it i card d access control, t l electrified fence. • 1800m gravel airstrip (early in construction) 40

On-Site Infrastructure (cont’d) • Permanent camp – 400 rooms with provision for expansion, recreation facilities facilities, laundry etc. etc Includes separate security accommodation block • Office,, change g house,, laboratoryy etc • Maintenance and warehouse facilities • Rock dump (lined) • Tailings disposal facility (lined) + seepage containment • Future backfill plant – Crush and grind waste rock and quarry rock – Desulphurised tailings (Po flotation) – Paste preparation and pumping, u/g reticulation • Possible future refrigeration plant – 5-8 5 8 MW(R) • Fuel storage (500 m3 supplier inventory + 100 m3 day storage)

41

Village Layout New permanent village Executives – 10 rooms Senior staff - 152 rooms Junior staff – 184 rooms Security – 48 rooms C Common ffacilities iliti – •

Admin Building / Clinic

•

Kitchen / Dining

•

Wet Mess and Recreation

•

Construction contractors to provide own accommodation at drill camp

Surface Vehicles & Equipment

43

Off-Site Infrastructure • In-country – Future connection to grid (full scale) – Concentrate handling at Isaka (railhead) – Concentrate storage g and handling g facilities in Dar es Salaam • Off-shore – Concentrate storage g and handling g facilities ((Port of Q Quebec)) – Concentrate-receiving facilities (Canada smelter)

44

TANZANIA INFRASTRUCTURE

45

Power Supply to Kabanga Challenges Ahead – Generation Capacity • Additional generation capacity is required – Transmission Constraint • Reinforcement of Iringa-Singida-Shinyanga (800km line) – funding imminent – Construction of Bulyanhulu-Nyakahura line • Funding for the transmission line

46

TANESCO System

Iringa-Singida-Shinyanga

Bulyanhulu-Nyakahura

Nyakahura-Kabanga

47

Transportation Challenges Ahead – Significant increase in road traffic • Maintenance • Safety, y, noise,, dust – Rail network • Poor condition – requires huge investment in track, locos, wagons • Previously privatised (RITES concession) but now selfself managed • Proposed upgrade/extension to Rwanda and Burundi – Port operations • Significant delays in both bulk and container handling in Dar • Shortage of land for handling facilities 48

Rwanda/Burundi Link

Kigali Bugesera

Rusumo Ruvubu R.

Keza

Nyabikere

Gitega Waga

Muremera Mukanda

Isaka

Musongati

Tabora

Dodoma

Dar es Salaam Morogoro

49

16.03.2009

Rwanda/Burundi Link

Kigali

Bugesera Rusumo

Keza R Ruvubu R.

Nyabikere

Gitega Waga

Muremera

Mukanda

Isaka

Musongati 50

16.03.2009

Transportation Overview Kabanga

340k 340km

980km

17,340km

1,200km ,

Total distance 19,860km 19 860km 51

Concentrate Bag Handling Ship loading bags of nickel sulphide concentrate

52

HUMAN RESOURCES

53

Challenges • Very small skilled resource pool – short history of mining – small number of mines – no other base metal mines • Education levels generally poor • “Magpie” Magpie mentality • Still some security issues (proximity to Burundi)

54

Training and Development • Internal – Pre-employment Pre employment training for local employment pool – Integrated succession planning and training – Dedicated training g department p – Basic training centre with multiple computers and on-line access already in place – On-line O li ttraining i i and d simulators i l t – Developmental work assignments g

55

Training and Development • External – Training assignment to parent company operations – Partnering with Tanzanian and international training institutions – Training gp programmes g hosted in local communities – Support through scholarships, co-op programs, summer jobs, providing guest instructors, sponsoring chairs, projects, etc. – Partner P t with ith other th mining i i companies i to t supportt training t i i initiatives i iti ti

56

RESETTLEMENT

57

Resettlement Principles • Approximately 300households • Guiding principles – Resettlement will be avoided or minimized to the extent possible. – Systematic consultation with affected communities – Households being resettled will enjoy improved socioeconomic conditions – Compensation will be fair and equitable – A monitoring and grievance procedure will be implemented

58

Resettlement Map Homesteads on Project Site 0

2.0km

N

Potential Mine Impact Footprint Area

LEGEND Si ifi Significant t Sit Sites within ithi Mine Mi Area A Homesteads Graves

Mine Infrastructure Area

Spiritual Sites Other Features Mine Impact Area Mine Infrastructure Area Pipeline (water) Roads

Water Pipeline

Tailings Dam Area

Pathways Homesteads Outside Mine Footprint Area

59

Potential Relocation Sites • 22 potential sites identified through the RWG process • Majority of sites are within 10km of mine impact area

60

Path Forward • 2011 – complete approvals process (EIS (EIS, SML SML, MDA MDA, funding) – carry out essential engineering • H1 2012 – Resettlement activities – Complete p detailed engineering g g • Mid 2012 – Commence construction

61

Potential Relocation Sites

62