BATSALANI JUNIOR MINING:
BLACK OWNED JUNIOR MINING INVESTMENT COMPANY
Toronto: 4 March 2008
Farouk Abrahams
Chief Executive: Batsalani Junior Mining
BATSALANI JUNIOR MINING
GROWTH OPPORTUNITIES IN MINING IN SOUTH AFRICA
Batsalani is a Setswana word meaning PARTNERSHIP, a
philosophy our team shares with our associated strategic
alliances, investors, partners, lenders, BEE consortia and
portfolio investee companies
www.batsalani.co.za
AGENDA

GROUP
–
Background
–
Existing Investments

MARKET OPPORTUNITY

BATSALANI JUNIOR MINING
–
Executive Summary
–
Pipeline
–
Smokey Hills PGM Project
–
Investment Model
–
Exit Strategies
–
Conclusion
THE GROUP
BACKGROUND

Batsalani is a black owned investment company owner managed by experienced
entrepreunial investment bankers.

Independent with a sound proven track record in its focus areas and was founded by the
late Frank Molobi, Farouk Abrahams (CE) and Ibrahim Khan (Chair).

Batsalani aims to identify, source and secure a portfolio of assets that provides a
consistent and sustainable cash flow.

Our vision is to leverage Funding, Strategic industry insight, Relationships, and
Transaction execution capabilities to unlock value in our portfolio companies.
Batsalani focuses on the following sectors:
TELECOMMS-MEDIATECHNOLOGY
Services and
procurement
MINING & RESOURCES
Mining Assets
“Incl. Junior Mines”
PROPERTY
Beneficiation
Existing Investments
Name of Company
Nature of Transaction
Mining: The Group is part of consortium who has a
Business
PGM producer
21.45% stake in the Smokey Hills PGM project in the
Limpopo Province.
TMT: The Group was awarded a portion of Welkom
Naspers is a multinational media company with
Yizani and Phuthuma Nathi BEE schemes launched by
principal operations in electronic media and print
Naspers late in 2006 & early 2007
media
Property: The Group is part of the Buhlobo
Vukile is a property Loan stock company listed on
Consortium who has direct stake in Vukile Property.
the JSE. Sanlam Life is the major shareholder.
TMT: The Group has a 30,95% stake in rapidly
Largest Independent African Operator = 25% Market
growing SA based multinational telecoms company
Share. Voice & data management & routing to &
with offices in Johannesburg, London, Brussels,
from 34 African countries primarily using satellite
Geneva, and several African countries
Networks. GTV – a pan African pay – TV satellite
delivered service
TMT: The Group has a 40% stake in this UK based
A UK based mobile prepaid transaction or airtime
company which operates in the prepaid airtime and
electronic pin-based distributor
electronic product market
THE MARKET OPPORTUNITY
Market Opportunity
Factors such as
structurally higher
demand in terms of
“Chindia effect”, the
weakening US$
and consolidation
in supply, remain
positive factors
South Africa is the
world’s richest and
most diverse
repository of
mineral
commodities.
Globally, largest
producer of gold,
vermiculite,
platinum and
chromium.
Major deposits of
antimony, coal, iron
ore, manganese,
nickel, phosphates,
tin, uranium,
diamonds, copper
and vanadium
Mineral and Petroleum Resources Development Act (MPRDA) 2002
 Prospecting rights applied for between May 2004 and October 2007 totaled:
–
–
–
–
7 547 received
5 948 accepted
2 789 granted
2 033 issued
 Mining permits applied for between May 2004 and October 2007 totalled:
– 3 840 received
– 3 255 accepted
– 1 318 issued
 The natural consequence of the MPRDA and related legislation over the last
3 years resulted in conclusion of over US$ 10 billion BEE deals
 Creation of black owned mining companies – Anooraq, BSC Resources
 Creation of Partnership/JV’s – Platinum Australia, GVM Metals, Homeland
Corp
Source: SAMDA
South Africa’s Exploration Expenditure
2003-2006
South Africa's Exploration Expenditure
2,500.00
1,936
R Billion
2,000.00
1,500.00
1,218.40
1,265
1,239
2003
2004
2005
1,000.00
500.00
0.00
2006
Year
Dominant targets for recent exploration activity in South Africa:
PGM’s, Diamonds, Gold, Uranium and Coal
Source: SAMI Report – 2006-2007
South Africa’s Role in World Mineral Production
South Africa's Role In World Mineral Production, 2006
1
60
Percentage of World Production
50
1
1
1
1
40
Number = World Ranking
30
20
2
1
10
4
0
Source: Data from SAMI Report – 2006-2007
5
8
7
9
9
9
11 13
16
17
22
The Listed Junior/Mid Tier Mining Companies
By Market Capitalisation
New BEE
regulations (2002)
have added some
life into the
industry by
attracting smaller
mining players to
join the fray.
With the major
players focusing
on crossacquisition, it is the
smaller miners that
are now expected
to revive the
industry.
Sector Exposure
Source: Business
Monitor International
Source: Nedcor Securities, as at 15/2/08
Why Junior/Mid Tier Mining Isn’t What It Used To Be?
Growth in Junior Listed Sector
120000
111913.1
106000.02
100000
91846.54
72972.74
60000
Market Cap
40000
33195.24
20000
Source: Data from NedSec Junior Mining and Exploration Index and I-Net Bridge
18
-F
eb
-0
8
31
-D
ec
-0
7
ay
-0
7
31
-M
31
-J
an
-0
7
31
-J
an
-0
6
5197.52
0
19
95
The junior
mining space in
South Africa has
increased
massively in
value
R Billion
80000
BATSALANI JUNIOR MINING
Executive Summary

The opportunity to benefit from investing into mining projects in South Africa.

Via a black owned investment company managed by an experienced team of technical and
financial entrepreneurs/professionals

Intend on partnering with junior/mid-tier mining operators which have a successful track-record in both
green and brown fields projects and/or

Or do some early stage development i.e. take it up the value curve and/or

Use different mineral hubs for consolidation in the industry

Strong pipe line in Commodities – PGM, coal, nickel and base metals

To generate capital appreciation, with a view to extracting long term growth from profitable portfolio
investments in the junior mining sector

We are not:


Operational company such PLA or BSC Resources

Nor private equity or asset management company in the strict sense
We are development company - combination
Pipeline

Black owned and managed investment firm

Strong and experienced financial and technical team

Has established key relationships with all stakeholders in the industry
Project and/or Partner
Status
Level of participation
Platinum Australia’s Smokey Hills PGM
project
Mining right granted
BEE partner to PLA
PGM project
Prospecting Right
imminent
BEE partner to junior
Coal project
PR imminent
Batsalani will commence
with early stage
development
In discussion with junior to
jointly developed
PR granted
Iron Ore project
Various commodities
MOU signed with
Either partner or commence
company that has
with early stage
several PR granted,
development
pending and new
PLA Smokey Hills PGM Project
•
Located on the eastern limb of the Bushveld Complex in the Limpopo Province
•
PLA commenced a resource definition drilling program on the project in July 2005
•
Mining Right issued & construction commenced in November 2007
•
Open Pit Mining started in January 2008
•
Commissioning in June 2008
BFS
Feb 2008
Base1
July 062
Base1
Feb 083
Capital
US$ Million
40
40
46
49
Ongoing Capex
US$ Million
14
14
14
14
Cash Costs
US$/oz 4E
225
225
270
240
Basket price
US$/oz 4E
677
1,296
677
1,530
70%
800%
40%
140%
140
+500
100
+500
IRR (Pre Tax)
Cashflow (Pre Tax)
US$ Million
Investment Model

3 C’s
–
Counterparty
–
Country
–
Commodity

Leverage own capital using favourable developmental funding for BEE deals

Cost curve analysis
Source: NAMF Annual Report
Exit Strategies

Following results from early stage development either trade sale to and/or partner with a
junior mining/mid tier company

Management Buy Out (“MBO”)

Leveraged Buy Out (“LBO”), possibly coupled with a share buy back

Initial Public Offering (“IPO”)

Acquisition by major mining company

Hold
Concluding Remarks

Global demand for commodities

South Africa “response” to this global demand

Batsalani Junior Mining:
– Black owned investment company
– Structured multi-disciplinary management team – highly experienced in mining and
finance
– Strong existing relationships with key players in the industry
– Strong pipeline of deal flow at advanced stages
 Interested parties as investors, assets or relationship with potential
sources of junior mines are invited to meet with management to discuss
possibilities
Contact details
South Africa – Johannesburg
Physical Location:
222 Rivonia Road
Morningside Close
Block A, 1st Floor
Morningside
21496
Postal Address:
P O Box 781809
Sandton
2146
+27 (0) 11 656 6816/7
+27 (0) 11 656 6804
Telephone:
Fax:
Website: www.batsalani.co.za
Farouk Abrahams
Tel: +27 (0) 11 656 6816/7
fabrahams@batsalani.co.za
QUESTIONS
&
ANSWERS