EFTA00730641

GLENCOKE WINGS ENTERPRISES, INC • Pig Iron Specialtv/Chemical Oxides ThoPtiodcTableof the Ergret He - - .frwyec Payamackx i i Ba 3orcorcLiyforircrincratnehor t il 0 Na le [M•loY.< Naua dm 'na , . Mg Al SI P Ga EC TI 1/ Cr Nn F. co pdi Cu Ln ba G* Ms Ti lat. Sr V Yr NI, Mo Te Ru ah Pil Ag Cd In Sa U.1 ShrIlha Ca ' lai Hl Ta W Po Oy te N Au Hg TI Ph Oi Po AI Ro H 'Ia Rf Dh So Bh Ha M. .1•••• s.h..“1,••• 1.19", Pm In. Eu Gd Tb Dy Ho Er Tim Vb Customer Footprin A c VI Pa LI HpPu Am Ca. Ok Cl EaPo.Mallo Proposed Pig Iron Plant EFTA00730641 GLENCOU Geography -5,000 miles to Crystal City • Sweden (Wings) -6,000+ miles to Eastern Europe 600 miles • 3 BOr is wst«, A Ir tAr via Warn . 2 CAT via Rail 3.000 Miles to Gulf of Mexico Brazil EFTA00730642 GLENCOU Wings Layout Represents Wings Operations Represents KinderMorgan Operations Represents Kobe Steel Operations 45 mile pipeline -a Beneficiation O Pig Iron Facility Facility CO CO CO Tailings Mine -0 I I -0 • 4 MT Fe203 • 150 MT Iron Ore Resource • 1 MT Fe304 • 57% Iron Ore CD • 1MT Phos / Tailings Lake Apatite Grade Facility • 600KT Pyrite • 4MTPA Annual Prod'n • 75KT REO • 30 Year Mine Life Phase Capex Needs $mm I Initial capital raise (miscellaneous uses) $40.0 Pevelopmeni costs • Initial Capital Rake Breakout II Mine development costs $180.0 Payoff existing liabilities $20.0 II Iron ore beneficiation facility $150.0 Complete feasability studies $7.0 II Tailings lake facility $150.0 Misc working capital $13.0 Total (Gross) $520.0 Total $40.0 Tailings monetization (@> 25% disc. rate) ($215.4) Total (Net) $304.6 FXCIlldfli Kobe Steel development (1) Pig Iron Facility = $400mm4)700mm Fxrludes Kindermrvgart tioveloomeit; (2) Port= $600mm EFTA00730643 GLENCO1K Overview of Process 6mm tonnes iron ore mined (-57% Fe) Beneficiation 1 4mm tonnes of concentrate (-70% Fe) All sold to Pig Iron Partner for 1mm tonnes of OXIDES 3mm tonnes of IRON ORE pig iron - Specialty oxides (70%-71% Fe) - -70% Fe production - Chemical oxides (71.6% Fe) I 2mm tonnes of final PIG IRON product - -97% Fe, 3% carbon (Pig Iron/Wings) owns (20%/80%) of pig iron process EFTA00730644 Product Margins and Free Cash Flow Yield Calculations Products Oxide Margins Iron Ore Margins Pig iron Margins Price ($ftonne) $250 donne Price ($0.86:dmtu) $60 ;tonne Price ($lonne) $400 ;tonne Volume (tonnes) 0.600 Volume (tonnes) 3.400 volume (tonnes) 2.244 Revenue $150 Revenue $204 Revenue $898 Cash cost $60 /tonne $36 Cash cost $47 /tonne $160 Cash cost $300 /tonne $673 Transportation $10 donne $6 Transportation $2 /tonne $7 Transportation $10 /tonne $22 Total cost $70 /tonne $42 Total cost $49 /tonne $167 Total cost $310 /tonne $696 SITDA E180 /tonne $108 EBITDA $11 /tonne $37 SITDA $90 /tonne $202 r 6347 % margin 72% % margin 18% % margin 23% Wings ownership (100%) $108 Wings ownership (100%) S37 Wings ownership (80%) $162 $307 Free Cash Flow Yields Unlevered FCF Yield % Financial Partner Levered FCF Yield % Msc start-up costs $50 Financial Partner hvestment $150 Tailings facility $150 Mne development costs $180 Levered FCF (steady state) $171 Benet ication tacily $150 Ownership % 70% Roane $70 Financial Partner FCF $119 Total (Gross) $600 Tailings monetization ($175) yield % 80% Total (Net) $425 Unlevered FCF (LOM average) $176 yield % 41% 5 EFTA00730645 GLENCOU Overview #1: Oxides • -1mm tonne market in the U.S. • There are only two mines globally which contain sufficient Fe content to produce specialty and chemical oxides • Historically, the Pea Ridge Mine was the sole supplier of oxides to the U.S. market • When Pea Ridge closed in 2001, oxide purchasers were required to switch to the Kiruna Mine in Sweden -The distance from most U.S. oxide purchasers to the Kiruna Mine is over 5,000 miles • Jim Kennedy can hire Gene Koebbe, the former Quality Control and Customer Representative for Pea Ridge, now working for Reiss Viking / Koch as well as someone from Prince and Akers Type End Market Customers Price/ton Volume Revenue Specialty wade . Water treatment ___ Kemira. General Chemical $130-$170 _ . 100.000 tons _ . _ _ $15.0. Heavy media Akers. Massey $180-$220 400.000 tons $80.0 Chemical grade 71% Pigments Prince. Penn Mag $230-$350 200.000 tons $58.0 Chemical grade ++71% Brake pads. ceramics Misc 5400-$1.200 150.000 tons $120.0 $321 850,000 tons $273.0 Production and Logistical Cost Comparison Reiss-Viking (Kiruna Mine in Sweden) vs. Wings Enterprises (Pea Ridge Mine in Missouri) 5450 Oxide Margins Price ($11onne) S250 lonne $400 3541t:n a um Volume (tonnes) 0.600 $350 Revenue $150 $100 Cash cost $60 /tonne $36 $314/v. OHM ins Transportation $10 'tonne $6 $250 Total cost cog ice mtg. $70 /tonne $42 $200 EBITDA 5180 /tonne $108 $150 % margin 72% $100 Mho' $50 • Mena Iffeleassid 71.0%Ft Pt t0:1011 nulled 70% Fe Speclolty Gude Iron Oxides 71% Ft un.sizad Cnorr. ca2 Grade "On OakleS and Sind °Iowa, kanaeldes Glade 6 EFTA00730646 GLENCOU Overview #2: Iron Ore • The ideal strategy is to lock in 3mm tons of iron ore sales to our pig iron partner -The vast majority of iron ore is concentrated in the Mesabi region of the U.S. and is owned by vertically integrated BOF steel producers - Cleveland Cliffs is the only major merchant iron ore producers in the U.S. - The market is very tight with few imports/exports - Merchant sales of iron is a suboptimal strategy - Wings' cash cost is competitive, but it would be reliant on robust steel production such that BOFs possess insufficient capacity Iron Ore Cost and Margin Comparison Production Cost per Ton Finished Ton Average 65% Fe North American Steel Grade Iron Ore vs. 70% Fe Wings Special Grade Iron Ore Wings Production Cost/Ton S zo Hoisted Cost Per Ton $22.45 x 6mm tpy $33.40 70°A Fe Concentrate $11.50 x 4mm tpy $11.50 Pipeline to River $2.10 x 4mm tpy $2.10 Stan Fully Diluted Worst Case Production Cost° $47.00 S too WingartOretka craft Cleveland Cliffs Cash Operating Expenses $1.499 SW Tonnes (mmj 22.7 Oi S18.5/ton (22%) Cash Cost (Mona) $66.04 SWUM toff margin (18%) gloss romp. Iron Ore Margins Soo Price ($0.66/dirtu) $60 :Yonne S91 Roo SWAM martio Moo Volume (tonnes) 3.400 Market Price S'o 65%Fle MM $66/ton 70%f de Revenue $204 wing ere gaol We roma prodtxtion SOne. Cash cost 5471tonne $160 Con Vitt t Transportation $2 :Yonne $7 $20 Clit rAft Total cost $49 itonne $167 SO EBITDA $11 /tonne $37 Onent Noah Aintica, AVMS.% Wimp Preforms % margin 18% Wings ownership 100% $37 I Includes dewatering cost at River Site 7 2 Wings 70% magnetite concentrate. If one assuming a $1.32dmtu. then Wings' product would earn $1.32 x 5= -$6.5arton more than Cleveland Cliffs EFTA00730647 GLENCOR Overview #3: Pig Iron • Market Overview: -The U.S. imports 4-10mm tons of pig iron annually from Brazil (70% of imports) and Eastern Europe (20%) • 3 types of pig iron: End Market Ingredients Basic EAF steel production & iron castings <1.5% Silicon. 0.5.1.0% M2. <0.12% Phos Foundry grade Grey iron castings <1.5%-3.5% Silicon, 0.5-1.0% Mg, <0.12% Phos ▪i t Wings will produce foundry grade (15-20% premium) godurar— iron castings Z.55.% alnPhos • Pricing: - Pricing is a function of scrap price and capacity utilization in steel mills (i.e.- it scrap price I or utilization t then pig iron price I) - Kobe Steel estimates the long-term price of pig iron to be $400/ton - Brazilian pig iron cash costs are about $500/ton FOB - When pig iron prices last hit $250/ton, 80% of Brazilian capacity was curtailed •Strategy: - Wings has close geographic proximity to 27 EAFs in the region Pig Iron Margins Price ($itonne) $400 "tonne volume (tonnes) 2.244 Revenue $898 Cash cost $300 /tonne $673 Transportation $10 donne $22 Taal cost $310 donne $696 EBITDA S90 Ronne $202 8 % margin 23% EFTA00730648 GLENCOU Overview #3: Pig Iron Pig Iron Cost Comparison (Wings vs. Brazil) Wings Brazil Consumption Unit Unit Cost/ton CosVton per ton Amount Cost Nuggets Nuggets Iron oxide (I) 1.5 $47 $71 $208 Coal (0 0.5 $325 $163 $163 Natural gas (GJoules) 5.0 $4.00 $20 $33 Other ($) $64 $45 Subtotal $317 $449 Logistics Brazil C $32 Ocean Freight C $20 Logistics USA $10 $13 Total $327 $514 Yield increasetost Decrease 10% 0% Total Cost ($Iron) $294 $514 I 75% greater Foundry grade premium ($50) Total Cost (Snon) • w. foundry prem. $244 $514 110% greater Wings willproduce a 4.70% Fe. increasing yields by 10% or more. 9 EFTA00730649 GLENCOR Overview #3: Pig Iron (Cont'd) • Existing project: Mesabi Nugget Project — Steel Dynamics and Kobe Steel • Currently producing 500.000 tons and plans to increase production (all for Steel Dynamics internal consumption) • Start-up capex per unit $200mm-$250mm • Kobe Steel also has a project in Vietnam producing 2mm tons per year with 3 units • Kobe would arrange financing for 70%-80% of the pig iron facility •There are currently no merchant pig iron producers in the United States - Almost all domestic iron ore is controlled by vertically integrated BOFs who do not to supply their EAF competitors with supplies - Pig iron production has historically been a very pollutive and energy intensive endeavor - EAFs historically purchased pig iron from Brazil which lacked environmental regulations and access to cheap charcoal/coke - Coal currently sells for $325/ton - Pig iron production normally requires 0.5-0.6 tons of charcoal/ coke for each ton of iron ore • Wings' pig iron technology - Kobe system is attractive because it requires half the levels of charcoal/coke - Wing's technology reduces emissions by 40% and energy use by 30% -We can use Kobe Steel's ITkm3 technology to produce pig iron with a cost/ton of $300/ton - Jim Kennedy prefers to use Omnisource's technology with a cost/ton of $200-$280/ton 10 EFTA00730650 GLENCO1< Historical Pricing BRAZIL MPI PRICE DEVELOPMENT SCRAP-MPI PRICE DEVELOPMENT 5100) ...in•enfolern/31104111001310•1 -11310.01101,101emilliell NIADUANMPIPRKU 5c. Oc 1110 INK 5403 SIM PO) WO< 5603 Current value: 00010n FOB Ism 5103 550C $4,3 51m 1111111~1miiillllllll 5303 'MC 5203 5103 slm So 5: No •I MO, MP MN IMP Mel h•IN Mo, NINI rn le 1.•••01 Area: 1•• l7 On 0) /N•011 Apt Ot : A Iron ore prices (5/metric ton based on 64% iron content) Current value: -$125/ton CFR ($price and 96 change) 175 • Lump 87% 150 125 100 • 4 10 year average = $71/ton = $1.10dm 7536 SO • 25 0 0 Source: Otis and vanous industry pu bbCatiOnSfrepOrtS DMTU: $0.47 $0.55 $0.63 $1.25 $1.17 $1.25 $2.20 $1.14 $1.95 EFTA00730651 GLENCOKE Pig Iron Data USA Ore Based Metallics Imports - Tonnes MPI - VALUE CHAIN $100 0,01000 PAN 1Y0k31 value chain 10:0.000 tWOUL. $35 4003000 $SCO 0:30000 ganef !ma WM. US 1.10$000 Min 5400 • SOMA • TAMA! 3=000 IP Veitnab $100 CurcOak $195 1500.000 • Uttar* • Mime 1.0.0.003 • GYM 131.014 UMW $200 1X0$000 1.401.154 1,161.461 $103 100000 so 2003 31P1 29:19 IAN 1003 001 I0091101 2008 DRI/HBI Production MPI COST STRUCTURE 20 Raw Materials 18 - Iron ore ("1600 kg / 1000 kg pig iron) 16 - 2008 World DRI/HBI Coke or charcoal (500600 kg or 2.5-3.0mt / 1000 kg pig iron] Mellon Metric Tons 14 12 - production: 68.5 mt Fluxes, etc. Diamond = •Production 8 • Smelting • metal treatment + casting HSI countries 6 4 +Logistics 2 • Delivery to FOB lbente/rail/terminal, etc.) 0 iDnfor=— • Ocean Freight I • Delivery to customer Iclischarge/barip/rael/truck/stockyard, etc.) it iHi i i i1 8 1 1 1 I $* 1 ❖Financing a 1 Dots scurvy lAldre• Technologies l NOM +Trader/distributor margin 12 EFTA00730652 GLENCOU Rare Earth Metals • Pea Ridge possesses the highest value of heavy rare earth elements of any permitted mine globally • The Pea Ridge deposit is classified as a "Strategic and Critical- asset by the USGS • Producing 20,000tpy of rare earth concentrates could possibly be more valuable than the 4mm tonnes of iron ore concentrates • Much of Wings rare earth ore production will be at no cost, as it is a byproduct of the normal beneficiation process for the iron ore • China controls '-97% of total rare earth supply • Global demand expected to grow to190-210kt REO per year by 2014, representing a +10% CAGR over 2008 levels (124kt) • China expected to supply only 160 -170kt per year by 2014 -The numbers above suggest a minimum shortfall of 30kt annually. GMP notes that the shortage could be as high as 50kt annually -Global availability of REOs will depend to a large extent on China's export policies. Further restrictions will increase the planned shortfall. • The lower value REE from the mine could sell for $11/kilo ($11,000/ton) — volume would be -5,000 tpy • The higher value REE from the breccia pipes could sell for $18/kilo ($18,000/ton) - volume would be -10,000 tpy Pea Ridge has the highest value Heavy Rare Earths Distribution of any Rare Earths Suppty IS Demand Permitted mine in the World 19,,000 Relative REO Distribution of Lanthanides Pea Ridge vs. Other Deposits 30,,000 se UGY geftd, Pr. Oy •GSA ( 1 100 • Inc ) 95 Inc 90 aS 13%.• SOW so.= 10 21%- Nd.. Pr., Dy. 75 66%- Ce. + La. 70 2008 2108E 1010E 2011E 2017E 2013E 2314E 6S 60 Ctela Se* oft0INS.pm —Cara Cenrd GOA Derund Mt Pass 0rotou MI Weld Nol•nt Pea 0.46. SEGY = Heaviest and Most Valuable (Samarium. Europium. Gadolinium. Yttrium. and Terbrum) Nd. Pr. Dy = The kiddie REO Values (Neodymium. Praseodymium and Dysprosium) Ce • La • The Light abundant and lowest value (Cerium and Lanthanum) 13 EFTA00730653 GLENCOR Investment Merits • One of the two highest quality magnetite reserves mines in the world (57% Fe ore and 70% Fe concentrate) - Capable of serving the specialty and chemical oxides markets (+$250/ton price) and foundry grade pig iron (15-20% premium to basic) • Low cost producer at $47/ton - Iron ore: $47/ton fully diluted cost vs. $65-$75/ton for the industry' • $40/ton 'apples to apples- cost comparison with 65% Fe producers and '-$28/ton if byproduct production is included2 - Oxides: Kiruna Mine (Sweden) has 4x higher cost structure excluding transportation cost of -$50/ton - Pig iron: Cost basis (FOB) could be the lowest globally - $300/ton potential + $10/ton transportation = $310/ton • Logistical advantage - Pig iron — Wings can function as the only U.S. merchant pig iron producer servicing a 500 mile circumference primarily by barge • 4-10mm tons demand currently serviced by Brazil (+3,000 miles from Nola) and Eastern Europe (+6,000 miles from Nola) - Oxides— Specialty/chemical oxide producers currently source product from the Kiruna Mine in Sweden (+5,000 miles) • Upside Potential From Other Assets • Byproducts (cob rock, phosphorous, and REM) could generate north of $2,000mm LOM 14 (1) $65-$70/ton operating cost for Cleveland Cliffs and $75tIon-for NA: Australia estimated at $4Mon: China can range from $40,ton-$80ff on (2) $40/ton effective cost = f$47.00 $1.32 x (70%-65%)]; Byproducts could reduce cost/ton by another $10-$14/ton EFTA00730654 GLENCOlk Financial Model 15 EFTA00730655 GLENCO1< Liquidation Analysis ASSET LIQUIDATION VALUATION SUMMARY Mcnt; Full Feasability Sale Value S Under Ground Iron Ore Deposit. 150mm tons of proven reserves = 3x reserves = $450mm - $330mm startup costs $120mm 105mm tons of finished iron ore It would cost over $150mm to discover and "prove out" a green field ore body of similar size today (no permits or infrastructure included) Existing Operations: 330.000 tons at surface of mine Residual from 38 yrs of running the mill $20mm This is finished inventory: Sold as off spec oxides [330kT x (1-31% loss)] x ($120/ton - $18/ton) = $24mm Tailings Lake Reserve • (1) Rare Earth: REE willing to pay $25mm for 25% of the $240mm rare earths = $100mm value (2) Hematite - 4MT x $77/ton (price) - $15.1ton (transport) - $18/ton (processing) = $175mm (3) Maanetite - 1MT x 31% loss = 700kT x $200/ton (price) -$151ton (transport)-$18/ton (processing) = $115mm MINUS $150mm cost for tailings lake facility River Property/Port Jefferson County has approved $21mm of Industrial S10mm Revenue Bonds for other real estate properties. Wings would own 2.5 miles of therfront properties. Am believes the value is: $50-100mm Total $390mm Value Not Included (1) Capex funded by Bethlehem Steel from the 1950s-2001 (invested $75mm into the mine in 1950s alone) (2) Two major rail lines (BNSF and Union Pacific) intersecting on the property (3) Two shafts in the mine which go down 2.500 feet (4) 5 miles of underground roads (5) 30MW of electrical service onsite 16 EFTA00730656 GLENCOU Sources & Uses SOURCES ($mm) USES Sinm Lain la gat $amt 24 Debt: pipeline $70 10% 4.0% Phase I Msc start-up costs $40 6% (a) Debt: nine development & f acilities $240 36% 8.0% Iron ore development costs (b) Taillings Monetization $215 32% NA Phase Nine dev. costs (start up) $180 27% Financial Partner - Correnn Equity $150 22% NA Phase!! Iron ore beneficiation facity $150 22% TOTAL $675 100% Phase II Taings Lake lack/ $150 22% Phase!! Pipeful system w . dew ater $70 10% Equity Ownership Existinq Post Deal Phase II Cash on balance sheet $85 13% Jim KennedyNna Abboud 30% 30% Dividend Glencore 70% 30% TOTAL $675 100% Financial Partner - 40% TOTAL 100% 100% (a) Debt: Mine Development and Facilities Asset Amt %Debt Debt Arnt Tailings lacility $150.0 50% $75.0 Mine development costs $180.0 50% $90.0 Benelication facility $150.0 50% $75.0 $480.0 1 $240.0 (b) Tailings Monetization Year 1 Year 2 Year 3 Year 4 Year 5 Total Rthenue $850.0 170.0 170.0 170.0 170.0 170.0 850.0 EBIMA $400.0 80.0 80.0 80.0 80.0 80.0 400.0 NPV 631. 24.9% $215.4 17 EFTA00730657 GLENCOU Assumptions Cumuluati% Over 5 yrs Iron ore tailings monetization INCLUDED in the Model Revenue EBIIDA 1) Hematite - 4.8MT x 31% loss = 3,360kt x $120/ton (price) - $15/ton (transport) - $18/ton (process $403.2 $292.3 2) Magnetite - 1MT x 31% loss = 700kT x $200/ton (price) -$15/ton (transport)-$18/ton (processing) 1412-4 11E.2 543.2 409.2 Phosphorous and rare earth tailings EXCLUDED from Model 1) Phosohnrmic - 1MT x $100/ton (price) - $15/ton (transport)-$18/ton (processing) 100.0 67.0 2) REM - 75KT x $10/kilo (price) x 1000 kilos/ton -$15/ton (transport)-$18/ton (processing) 750.0 746.0 $850.0 $813.0 Cumulative over 30 yrs ▪ All non-tailings byproducts EXCLUDED from the Model EBITDA 1) Cob Rock - 1MT/yr x $14/ton (price) = $14mm/yr x 30 years $420.0 2) Phosphorous - 300KT/yr (for 5 yrs) and 50kT/yr (for 25 yrs) x $100/ton 275.0 3) REM - 144KT x $10/kilo (price) x 1000 kilos/ton 1.440.0 $2,135.0 ▪ Pricing - Iron ore: $1.10/dmtu (model) vs. $1.95 $/dmtu current value' - Pig imn:$400/ton (model) vs. $500/ton current value - Specialty and chemical oxides: $250/ton (model) vs. $320/ton (guidance) - Low end oxides sell for $140/ton: Heavy: $220/ton: Specialty: +$700/ton - Pricing groat!): 0% Opex - Iron ore: $47/ton (model) vs. $47/ton guidance - Pio Iron: $300/ton (model) vs. $280/ton guidance - Oxides: $60/ton (model) vs. $47/ton guidance .'-Transportation cost - Iron ore: $2/ton - Pig Iron: $10/ton - Oxides: $10/ton '. -Tax rate of 35% vs. 23% guidance 18 I) Implies $0.86 for every 1% of Fe. Wings' iron ore contains -70% Fe which equals a price of $0.86 x 70 = $60.00/ton EFTA00730658 GLENCOU EBITDA Build EBITDA BUILD UP Year -4 -3 -2 1 2 3 4 5 6 7 8 Specialty/Chemical Oxides 8. Iron Ore 2006 2009 2010 2011 2012 2013 2014 2015 2016 2017 2016 2010 Production (mm tones) Crude Ore c- 6rnm fon capacity 1.752 5.025 5.500 6.000 6.000 6.030 6.030 6.000 Flotation Concentrate Weight Yield @ % 69.0 <-- % of code ore that becomes saleable volume 1.209 3.467 3.795 4.140 4.140 4.140 4.140 4.140 Revenue ore.ktity thanlrol Addax Vottsne (tones) 0.600 <- U.S. market size - !mm tones 0.600 0.603 0.600 0.600 0.600 0.600 0.603 0.600 Pnce (Stone) $250.00 <- Low end: $140: Heavy: $220: Specialty: $700. $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 Revenue Specialty/Chemical Oxides 150.0 (50.0 150.0 150.0 150.0 150.0 (50.0 150.0 kin fa Volume available alter oxide sales 0.609 2.867 3.195 3.540 3.540 3.540 3.540 3.540 Iron Om Fine;Pig Iron Grade. % Fe 70.0 <- Avg% Fe grade Fines Concentrate feed. Um ei Sfdrntu $0.86' <- Omen, value is $1.95 Price (Stone) $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 $60.00 Revenue (Iron Ore) 36.5 1720 f9f.7 2(2.4 212.4 2124 2124 212.4 Revenue (Existing Operations)' 4.4 4.4 4.4 4.4 3.2 Revenue (Total) 4.4 190.9 326.4 346.1 365.6 362.4 362.4 362.4 362.4 Operating Cots Specialty/Chemical Oxides $60.00 <-- A4a)ontyai $47non. Chemical can be 20-30% high 36.0 36.0 36.0 36.0 36.0 36.0 36.0 36.0 Iron ore (70% Fe) $47.00 Fully °fluted *a.Y in-: embeds $6.lon of mine develops 28.6 134.8 150.2 166.4 166.4 166.4 166.4 166.4 Total Operating Cast 64.6 1'70.8 (86.2 202.4 202.4 202.4 2024 202.4 Transportation Cost (oxides) $10.00 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Transportation Cost ((otron ore) $2.00 1.2 5.7 6.4 7.1 7.I 7.f 7.f 7.1 bits= Fully loaded operating cost c- Eftecuve 'MC cast $53.45 $49.25 $49.06 $48.88 $48.88 $48.88 $48.88 $48.88 EBITDA 4.4 119.1 I43.9 147.6 150.1 146.9 1469 (46.9 1469 man ,: Concentrate available alter oxide sales 0.609 2.867 3.195 3.540 3.540 3.540 3.540 3.540 Pig iron volume 66.7% <-. f.5mm tons concentrate makes lmm tan pig Ira 0.406 1.912 2.130 2.360 2.360 2.360 2.360 2.360 Price ($350/tome • $sOttome premium) $400.00' <-- Current value is $500 FOB . $30 transport from 8 $400.00 $400.00 $400.00 $400.00 8400.00 $400.00 $400.00 $400.00 Revenue Pig Ion c-- Earns an extra 15-20% to (pondy grade quality 162.4 764.6 852.0 944.0 944.0 944.0 944.0 944.0 Operating Cots Pig ton Costs $300.00 <-- Brazil - $50Ctilon; Kobe System - $309Ton; own 121.8 573.5 639.0 708.0 708.0 708.0 708.0 708.0 Total Operating Cast 12/.8 573.5 639.0 708.0 708.0 708.0 708.0 708.0 Transpananon Cost (peg iron) $10.00 c--Same cost 4. I 19.1 21.3 23.6 23.6 216 216 23.6 Pig Iron EBITDA 36.5 172.0 191.7 2124 2124 212.4 212.4 212.4 Kobe Steel ownership (20%) 7.3 34.4 38.3 42.5 42.5 42.5 42.5 42.5 Wings ownership (80%) 29.2 137.6 153.4 169.9 169.9 169.9 169.9 10'9 Existing operations consists of a minimum of 330.000 tons 010(0 sitting at the surface of the mine: this volume is the result of spillage over the 38 years from when the mine was in production Math on existing operations: $120/ton $30/ton costs x 330.000 tons x (1.30% loss) = $21 inventory EBITDA over 5 years EFTA00730659 G L E NCOKE Consolidated Financials Case #2: Pig Iron & Oxides - Byproducts ( -2 -1 1 2 3 4 5 6 7 8 9 10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Memo: Revenue 320.8 938.1 1.027.7 1.120.8 1.117.6 1.117.6 1.117.6 1.117.6 1.117.6 1.117.6 Operating Costs 172.5 656.5 726.8 800.7 800.7 800.7 800.7 800.7 800.7 800.7 EBITDA - Mine 0.0 4.4 148.3 281.6 300.9 320.0 316.9 316.9 316.9 316.9 316.9 316.9 . EBITDA - Tailings - - - - - - - - - Depreciation 8 Amortization 0.0 100.0 101.9 107.3 113.3 119.9 126.4 32.9 37.6 38.6 39.1 39.1 EB1T 0.0 (95.6) 48.5 174.2 187.6 200.1 190.5 283.9 279.3 278.2 277.7 277.7 1.0% Interest income 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 8.0% Interpol Expense - Project Financing 19.2 14.4 4.8 - - - 4.0% Interpol Expense - Pipeline 2.8 2.8 1.4 - - - Profit before tax (117.1) 29.7 168.5 188.0 200.6 190.9 284.4 279.7 278.7 278.2 278.2 NOLs 1171 87.4 - - - - - - Taxable income - 81.1 188.0 200.6 190.9 284.4 279.7 278.7 276.2 278.2 Taxes 35.0% - 28.4 65.8 70.2 66.8 99.5 97.9 97.5 97.4 97.4 Net income (117.1) 29.7 140.1 122.2 130.4 124.1 184.9 181.8 181.2 180.8 180.8 CASH FLOW STATEMENT Net income (117.1) 29.7 140.1 122.2 130.4 124.1 184.9 181.8 181.2 180.8 180.8 Depreciation 8 Amortization 100.0 101.9 107.3 113.3 119.9 126.4 32.9 37.6 38.6 39.1 39.1 A Waking Ca lel Operating Cash Flow (17A) 131.6 247.5 235.6 250.3 250.5 217.8 219.4 219.8 219.9 219.9 lExpandonary Capital Expenditures Cumulative Pig Iron Plant Construction Tailings Lake Facility (150.0) (150.0) Beneficiation Plant (150.0) (150.0) Mine Development Costs (180.0) (180.0) Pipeline (70.0) (70.0) Misr: Start-Up Costs (50.0) (50.0) Expansionary Capin (600.0) (600.0) 3.5% Maintenance Capex (979.8) (11.2) (32.8) (36.0) (39.2) (39.1) (39.1) (39.1) (39.1) (39.1) (39.1) Cash Flow from Inwstirg (1.579.8) (600.0) (11.2) (32.8) (36.0) (39.2) (39.1) (39.1) (39.1) (39.1) (39.1) (39.1) Cash Flow Available or Debt Paydown 120.4 214.6 199.6 211.0 211.4 178.7 180.3 180.6 180.8 180.8 Minmetals debt payoff (14.0) bdustrial revenue bond paydown (120.4) (119.6) Pig Iron debt paydown Pipeline debt paydown (70.0) Cash Flow from Financing (14.0) (120.4) (189.6) Cash Flow Available for Dividends 25.0 199.8 211.0 211.4 178.7 180.3 180.6 180.8 180.8 EFTA00730660 GLENCOKE IRR Analysis •1 2 3 4 6 8 9 10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Qffidefrit Jim KemedyiNine Abboud 30.0% L5 59.9 63.3 63.4 53.6 5t.1 54.2 54.2 512 Glamor° 30.0% 7.5 59.9 63.3 63.4 53.6 54.1 54.2 54.2 54.2 Financial Penner 40.0% 10.0 79.8 84.4 84.5 71.5 72.1 72.3 72.3 723 Tots 1t» 0, , 25.0 199.6 211.0 211.4 178.7 180.3 180.6 180.8 180.8 Escrease,(Oecrease) in Cash on B'S (631.1) RETURNS ANALYSIS - FINANCIAL PARTIER Imestmeni (150.0) Dardends from operations - (40% equity stake) 10.0 79.8 84.4 84.5 71.5 72.1 72.3 72.3 72.3 Total (150.0) 10.0 79.8 84.4 84.5 71.5 72.1 72.3 72.3 72.3 IRR (held for LOM) 28.4% MOIC 10.8x Le‘ered FCF - Taal (17.1) 120.4 214.6 199.6 211.0 211.4 176.7 180.3 190.6 180.8 180.8 Leered FCF Financial Penner (40% equdy) 1150.0j (6.9) 48.1 85.9 79.8 81.4 84.5 71.5 72.1 72.3 72.3 72.3 Yield % (4.6%) 321% 57.2% 53.2% 56.3% 58.4% 47.6% 48.1% 48.2% 48.2% 48.2.4 Assume Sale of Asset in 2015 (Year 5): EBITDA in 2016 5317 Mahal.) 5.08 Enterprise Value 1.584 - Debt 0 Cash 44 &pity Value 1.629 Finacial Penner Ownership (40%) asI IRR (Sale In Year 5) 34.1%J RETURNS ANALYSIS - FULL PROJECT Unlegmed FCF (460.0) 37.9. 120.8 187.8 199.3 210.7 211.1 178.4 180.0 180.4 180.5 180.5 Yield% 32% 26.3% 40.8% 43.3% 4S8% 45.9% 3a" 39.1% 39.2% 39.2% 39.2% IRR 31.1%1 NPV 0% 12,130 NPV 4)10% $715 NPV WO% 3215 NPV WO% 87 21 EFTA00730661 GLENCOU Balance Sheet and Operating Stats BALANCE SHEET -1 1 2 3 4 5 6 7 8 Assets Latestil t/- 125/611Bagi 2011 2012 2013 2014 2015 2018 2017 2018 2019 Current Assets: Cash 0.0 675.4 675.4 44.3 44.3 44.3 44.3 44.3 44.3 44.3 44.3 44.3 .ler __QA 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Subtotal 1.0 676.4 45.2 45.2 45.2 45.2 45.2 45.2 45.2 45.2 45.2 Gross PP8E 4.4 4.4 604.4 615.6 648.4 684.4 723.6 762.7 801.9 841.0 880.1 Acc. Depr. (0.7) (0.7) (100.71 ( k02. (309.9) (423.31 (643.2) (669.6) (7025) (740.0) (778.6) Net PP&E 3.6 3.6 503.6 413.0 338.5 261.1 180.5 93.2 99.4 100.9 101.5 Total 4.6 675.4 680.0 508.9 458.2 383.7 306.3 225.7 138.4 144.6 106.2 146.7 l iabilities X. Fixity Curren1 Liabilties 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Debt Existing Debt 14.0 10.0 Debt: pteine - 70.0 70.0 70.0 70.0 Debt: mire developmen1 8 taciities - 210.0 210.0 240.0 119.6 Debt: Pig Iron Facility - - - Subtotal 14.0 321.0 310.0 189.6 Existing Common Stock 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Glencore . Equity - - - - - Financial Penner- Equity - 150.0 150.0 150.0 160.0 160.0 150.0 150.0 150.0 150.0 150.0 160.0 Retained Earnings (10.51 215.4 204.9 87.7 117.4 232.6 155.2 74.6 (12.7) (6.5) 15.01 (4.51 Subtotal (10.4) 355.0 237.8 267.5 382.7 3C6.3 224.7 137.4 1416 145.1 145.6 Total 4.6 675.4 680.0 548.9 468.2 383.7 306.3 226.7 138.4 144.6 146.2 146.7 Check OK OK OK OK OK OK OK OK OK OK OK OK OPERATING & FINANCIAL METRICS 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Raceme (womb % 192.4% 9.5% 9.1% 10.3%) 0.0% 0.0% 0.0% Opex margin 53.8% 70.0% 70.7% 71.4% 71.6% 71.6% 71.6% 71.6% EBITDA margin 46.2% 30.0% 29.3% 28.6% 28.0% 28.4% 28.4% 28.4% EBIF margin 14.6% 18.6% 18.3% 17.9% 17.0% 25.4% 25.0% 24.9% Net income margin 9.3% 14.9% 11.9% 11.6% 11.1% 16.5% 16.3% 16.2% Capex as 14 of sales (3.5%) (3.5%) (3.5%) (3.5%) (3.5%) (3.5%) (3.5%) (3.5%) DebtfEBI1DA 70.3x 1.3x 0.0x 0.0x 0.Ox 0.0x 0.Ox 0.0x 0.Ox EBI1DAiinterest 0.2x 10.3x 58.8x NA NA NA NA NA NA EFTA00730662 GLENCOU Sensitivities Sale in Year 5 - Exit at 5x 2016 EBITDA Sensitivities at: $47 Iron Ore Cost / $300 Pig Iron Cost IRR Sensitized to PIG IRON PRICE and OXIDE PRICE Oxide Price ($/tonne) 150 $200 $250 $300 $350 $400 $300 21% 25% OC $350 22% 25% 28% 31% 34% a." ce $400 29% 32% 34% 37% 39% 41% $450 37% 39% 41% 43% 45% 47% $500 43% 45% 47% 49% 50% 52% $550 49% 50% 52% 53% 55% 56% 23 EFTA00730663 GLENCOU Appendix 24 EFTA00730664 GLENCO1< U.S. Steel Supply/Demand (MT) •Productim • Consume= 135 132 122 suraptIort Gt 119 s con 4% 117 114 110 '09 4-s• 112 709 108 110 101 104 104 104 011 100 114 86 44 89 nn so 2004 2005 2006 2007 2006 2009 20110E 2011E 2012E 2015E 2014E 2015E Net imports as a%ef 17% 12% 19% 11% 9% 10% 976 ION 10% 11% 11% 11% consumption Source. Metal Strategies 25 EFTA00730665 GLENCOKE Iron Ore Transaction Comps Cipacily Resents —outom Implied Transaction Multiple Premium Production of Implied FY Average Adjusted Resources *4_""9. AdNsled Implied AV ' Ate. Implied FY 44. Paid seåke Rasmos Acquirer Date <KW Porto Full Capacity acRY Ore IMO Grade Regemes6' (MO Ore (MU wad* Resources"' GM Reserves 1055'1) Resources N981) DS rose Mnattnetment) Acquwee PM% I% Fe) Xel PAWN. Australian Precedents Autos Remote,' Mee Ilen 10810-10 123 173.0% 100% 6.0 20.5 238 45% 106 456 45% 206 1.2 Col United Meer.) Cary BHP Men 16-0d4.19 185 450% ICO% We nl O We Ne 158 58% 92 We 20 Femme Lid ChIneReelellylArlerlare 09-33-09 11 1.9% 12% We We Na We Ne 87 59% 39 Ne 23 Untied MerteraM C*19 ChIneReelellylArlerlare 035.49 23 22.4% 11% We We Na We Ne 158 SS% 92 Ne 22 Waraick Resources Ada hen/Hannay osseper3 36 18.3% 78% Na Na rda Na n% 26 56% 15 Na 32 At a% Rosette** Baaalad 28.Aug.29 246 108%) 15% 250 46.9 O Ws nY 649 57% 126 Na 8.9 BMPEI Rio Patters JV 81P13Ø 054n06 5.600 200% 5% 4250 272.3 4.774 61% 2.916 24.923 60% 15.070 382 7.7 Weeiern Khan ~wages vrtSCO 04.51524)9 13 Ni 50% We Na M nå ne 589 35% 202 We 13 Forlesore Huron Valk 243~9 822 192% 16% 550 90.8 1.66 50% 957 1.799 59% 1364 5.2 4.7 Hammereley Iron Cheek* 1236:09 5.150 Ni IC% 1700 202.0 1525 6114 991 5.910 61% 3515 36.6 9.7 Centric «CO 1500,08 148 11.1% 40% Ne We Ne tel Ne 685 55% 483 We COS AMC 50 MA% 11% 100 e2% 66 132 7.1 lAeun1G1beon Iron 034:/o4.08 10/3 46.7 67 sax 35 13.2 7.1 sisetteare 67 MS% 14% Uls1-1181131g1X dams (Midst.* Metals) Amigo iron &Steel CO-Nes-08 109 »ex 24% Ne We 3614 6 1.69 33% 4.0 13 Me alien Bulk Minerals Grange Retsawces 25-Ses-08 667 o.Ses IGO% 2.4 230.3 0.489 a 231 52% 10.4 6.6 il“lialoilWilR Golden Weil Resources Hs« WM 12.Aug-09 29 12.0% 11% Ne We tn Ne 119 59% We 29 Strike Resources Geier« 26-MM 46 34.1% Ne We tel Ne 172 62% We 4.5 dengue Lid WeetwnKing 8544008 IS 27% 10% Ne We tel Ne 94 59% We 75 Midwest Sheskel Madera 1.107 51.7% 103% 7.5 147.4 58% 5 568 41% 4.0 Cap* lambert Chew Metellursied 25h006 374 Ni 100% Ne nl tn Ne 979 31% Ne 1.2 Centres Cleeteu 25-8m-07 3S Ni 50% Ne We Ne Ne 250 36% lit 17 PUStfOilltåig. Sheuglre 214.0.47 121 (13.0%) 50% 114 21.1 We Ne 1.100 31% sul 17 Mineralogy MCPeale 314~03 415 Ni 100% 27.6 15.0 We Ne LOW 32% lit Col Mean 42.9% 114.3 15.8 3.7 Median 26.2% 68.8 11.0 29 Other Precedents Slmandou 30.4pr.10 Ni 51% We Ne vel tel Ne 5.000 58% 2300 Wit 1.7 Vale 25:0 (BSG Resources Guinea) CharesirqChoowarg 66.7 192 1.780 37% 6.1 07 Asia iron Moldings Lid Mroes-09 260 60% 5.0 37es 71.0 lea consonance Thompson viumn 3044.05 240 16.8% 20% BA 150.8 n➢ vel WA 1.133 2/95 330 Na 3.7 Corumbo Vale 30Jna 750 NA KO% 2.0 375.0 209 67% 140 298 4E% 197 5,4 3.8 Perlman Ltd CloglaneCalls Inc 11 Sep.08 432 21.5% 15% 8.4 347.1 95 62% 586 141 62% 67 49.5 313 JMendes UemOse 01-Feb* 1.900 FU 160% 292 6.1 1.460 47% 802 2.350 47% IMO 2.8 1.4 Minas4bo 1.94% Project 174,003 5.500 FU 51% 218 ng ng Ma 1.485 33% 454 nh 206 leg% American 3036 74 Amapa Mine MMX Protect 70% 6.5 ng ng Ma 40% 29 Mean 20.1% 119 16.0 106 Median 20.1% 119 $7 37 Toed 1~ rwe as %Mal Median 5.7 2.9 Source: Citi Investment Banking 6x multiple on 150MT of reserves = $900mm 26 EFTA00730666 GLENCOKE Management and Advisors Management Advisors During Feasibility Study James Kennedy Terry Gooding President Former Senior Mining Manager for Pea Ridge - Designed and constructed the iron ore beneficiation facility at Pea Ridge Larry Tucker - Former portfolio manager for Kennedy Capital Management with AUM of $100M Former Chief Underground Mine Manager and - 13 years as a securities research analyst and Acting Geologist for Pea Ridge marketing representative funding over $300M in early 1990s. David James Former Senior Mine Engineer for Pea Ridge Laurence M. Nuelle Chief Geologist Tom Gallagher - Transitioning to become the company's full time Former Senior Personnel and Safety Officer for geologist - Completed extensive work at Pea Ridge under the Pea Ridge USGS, specifically relating to the rare earth deposit - Will coordinate the laboratory and processing for the production of rare earth concentrates from the Apatite and the heavy rare earths from the breccia pipes Martin Schaper Interim CFO jay Norwood Interim COO 27 EFTA00730667 GLENCOR Pig Iron Data MPI STRUCTURE: BRAZIL MPI EXPORTS - mt ibrak ea • ern•e. • heu at 4And••••INel &VASICA S' rfl. WIM 3/1 • ;Anew Ina IMMS L'Z..111=.1.rn 2.1 G0 I-1 16 60 KULA ctzLIL a MUNI LIMrn a MEMO 12 C'S =SO 62 to Total Braiilian nameplate capacity is now about 15 million tonnes per year with 80.90 companies and 163 charcoal-fired 10)1 100) blast furnaces. 20 16 CROSS BORDER PA E RCHANT PIG IRON TRADE million tonnes Total MPI trade D, IIA-- •••••••- 1 4ul 7 I - I iporn H. I I III International trade = 17-18 mtpy 4I 14 14 — 11.1 11 12.412.4 WILI Domestic trade 11.71 —L4 10 [Russia, Brazil, India, Japan, South Africa, EU, etc.] = ± 9 mtpy China domestic trade = 30 mtpy ??? II +Total excl. China = ± 27 mtpy Total incl. China = ± 57 mtpy ??? 200) 2001 /0112 1004 10%4 20,5 7006 1001 T 14 207.9 28 EFTA00730668