BRR - Straight from the source

MR. MARK BOJANJAC, MANAGING DIRECTOR OF ADAMUS RESOURCES LIMITED (ADU)

“Africa Downunder Conference Presentation”

http://www.brr.com.au/event/51056

FRIDAY, SEPTEMBER 5, 2008, 01:30 PM.

            ADU     Thank you and thank you for the opportunity to be here. What is a pretty interesting market out there I’m sure most of you would agree, but I’m just

10                    walking around some of the berths today, and I must say it’s a very opportune market to go investing. Personally, I set myself an objective that I thought I’d walk the floor and go and pick these top four or five stocks out there, put some money into them, and just sit on them because I don’t think you’ll buy cheaper anywhere right now. Adamus is no exceptions and I’ll take you

15                    through it as we go on. I think I will.

                        We’re in Ghana, as you’ve just heard from Mr. (inaudible) (00:00:39), it’s one of the best places to do business in the world. I’ve absolutely endorsed that. We found it to be very easy to go away from home, but it’s certainly very

20                    much for us as easy as it gets if you’re leaving Australia to go overseas. If you’re going to Africa, I think it really is a shining light, so easy to do business, the government departments are very supportive. They understand the business you’re in and they understand the sensitivities on both sides. We’re on the Ashanti Trend in Ghana. I’ll show you shortly, it’s literally one of

25                    the best addresses on the planet. We’re just on 2 million ounces. We’re growing that rapidly at the moment. Most of us measured and indicated 85% in that category. That’s not only shallow you standing on it, it’s from surface, that all goes for very low strip ratios. You’re literally shovelling it off from the top and taking it straight to the plant. We have proven economics, we’ve

30                    finished the Bankable Feasibility Study mid last year and upgraded the cost , in fact, earlier this year. We’re in a region which is surrounded with infrastructure, thanks to other mining companies over the last 50 years.

                        A quick look at Ghana, I’m not going to tell you too much you haven’t already

35                    heard here, but a third of the export revenue every year is gold, and that matters, I mean gold matters to Ghana. For that reason, they’re very, very supportive. We certainly found our permitting process there has ran quite smoothly because they understand the business you’re in. With 500 sq km of Tema, we only two weeks we increased that to 626. It’s growing rapidly.

40                    We’re in a region which is surrounded by over 100 million ounces within an 80 km radius. As I put it to you now, it would be very, very unlucky not to have 2 or 3 million ounces within Artenia in the recently short term given its address alone. We’re right down on the coast.

45                    A quick look at the company itself, capitalized at only $43 million at the moment and to give you a feel for how opportune that is, a total cash spent on a project developing it to a minable reserve at this point slightly exceeds that. You really are getting in a cost at this point. In terms of market metrics, a little on to $20 on resource ounce and bear in mind most of these are measures and indicated and only $44 a reserve ounce, and bear in mind most of those reserve ounces are proven. A strong shareholder base, safe to say we’re one of those companies who can afford to get on and do things in a tough market. Certainly our largest shareholders are experienced and they understand market cycles.

                        Quick look at the resource, as I said 85% of it measured and indicated, most of that measured. That’s top shelf it means it’s real. You’ll notice there’s not much an inferred, it’s not because there isn’t any but simply because we

10                    spent the last two years really improving up the project into minable reserve. Now, it’s only just this year that we’ve gone back to the deeper material to really increase the Inferred and Indicated categories. Expect the season some big numbers there on the next year.

15                    Of the reserve, over 80% of it’s proven. This really is as close as it gets to having a gold bank in the ground at this stage. We’re absolutely ready to go to production. The biggest decision points for us in the next little while be the funding mechanisms to go and do this. Just under a million ounces so far in the Work In Progress reserve, I’d call it, I absolutely no doubt whatsoever will

20                    be talking a million ounces in minable reserve by the time we’re churning out gold bars.

                        Good Board, I’m not going into live resumes today because I don’t think there’s sufficient time, but safe to say we got a team of people here who are a

25                    pleasure to work with. Each of them is skilled in their own right and everyone of them is dedicate to the course. A good team of Ghanaians, these guys are all ex-mining companies in Ghana specializing in these particular cases in social and environmental aspects, and those things matter. We have a small village we need to move and the Ghana government has been very

30                    supportive in going through the process to put and meet that and ultimately build a sustainable environment for everybody.

                        Quick look at Ghana, it was an English colony much like us in fact, although they had independence since 1957. They’re a happy group and the picture on

35                    the right hand side is down on site. These…you don’t have to look too far to find a smiling face there on site where we are. It is in English legal system by base. It is a very stable political environment, and has a strongly business-oriented government. In terms of proximity, you’re directly south of London, only 6 or 7 hours flight, so it’s easy to get to, and it’s quite strongly Christian

40                    for the most part.

                        That’s where we are, that’s our 626 sq km. If you look around us you’ll see everything within our immediate…pictures either on a road within easy tracking distance, that’s no accident. After the right hand side, it’s Takoradi

45                    Port and it’s pretty much Fremantle grade, and to the north of us about 60 or 70 km is Tarkwa, and Tarkwa is very the Kalgoorlie of Ghana.

                        A quick look at the resource, 2 million ounces is roughly split of it, 45% Anwia, a 9 kilometeres up to the East Salman. It’s reasonable grade to a little under 2 grams and over 2 grams in the mine. Sealed roads all the way to Artenia. When you get there the port facility at Takoradi really is Fremantle size, it’s quite real. Most of the heavy equipment for this whole region of West Africa goes through it, in fact. They sell fine works all over Artenia. That grid power

5                      station is actually on our property, so the 9 km are kept to connect to it, and the whole thing is fuelled by one of the world’s largest hydro facilities. This thing, to give you a feel for it, something like 260 tonnes of volume of Sydney harbour. So, there’s serious infrastructure in Ghana and it’s very focused on mining.

                        Let’s have a look at the resource reserve, Salman first. It’s 9 km of straight link that we’ve drilled up to date. A sea just standing on it, its looks in the best part of it absolutely like this, typically 2- or 3-gram material but there’s a really good juicy core of 3-, 4-, or 5-gram material at surface for start-up, and what

15                    that means is this churns out a lot of cash in the first two years with a very low cash cost. Every now and then you will see 20 or 30 meters in cross-cutting port stretches of 20 to 30 meter intercepts of 9 12 grams, and we would think that would probably lead deposit of reconciliation on mining.

20                    A quick look on that in 3D which is almost as good as taking you there, that’s our core 500 sq km down on the coast and you’ll see we’re surrounded by a number of other mines in country. All of which are substantially larger than us because they’re substantially older than us and have been in business for many years. Tarkwa was probably the nearest with 40 million ounces. To the

25                    north of us is Bogoso and Prestea which are owned by Golden Star. A quick look on that in 3D, this is digital photography and true topography. So, what you’re about to see is what it really looks like. There are a number of mineralized deposits on it. The only ones that are currently in the resource is Salman and Anwia, the others are whole grade. I’ll show you more of those

30                    later and will come in at a later time.

                        The focus has been on drilling surface oxides at Salman initially, and as you fly down the 9 km of the strike link to date towards the coast, what you’re seeing there is only oxide drilling we’ve done predominantly in the top 60 to

35                    80 meters. It’s focused on shallow because that’s where the easy surface oxide free milling material is. It definitely continues below it in refractory sulphides, and they look like they could be economic as well and I’ll show you a little more on that shortly. It’s quite dependable. Flying across the topography is very much King’s path grade, hilly. It’s not mountainous by any

40                    means. It’s not on a forestry reserve and most of it has a number of cash crops within it, and we’re as quite different. This is us on a (inaudible) (00:09:12) ) at this time and a number of stock (inaudible) (00:09:14). We’ve only really optimized this down to a 140 meters to date and that’s what it’ll look like mined, an $800 gold for us. It’s one conical pit to date. We expected

45                    it to continue at depth and I’ll show you why shortly. At this stage it’s a little perplexing geologically, we’re don’t fully understand what the source of the mineralization is, and in fact, we’re going back to country this month to try knock that out with some specialist.

                        Headed north to Salman, this looks very similar to what Red Back looked like as they opened up Chirano at six to seven pits in a line. Most of them 40, 60, or the absolute max, 80 meters deep, they’re all on east facing hillside, which all goes below strip ratio. The best of it is southernmost section, which we call

5                      Salman Central. You’re literally cutting away half a hillside here, and the max depth, as I said, is only 80 meters. Cheap to mine, the plant will be between the two. There’s an existing road which connects that to Anwia and the plant you see designed here is an absolutely standard vanilla CIP plant being done 100 times all around the world, so low technical risk and fairly robust

10                    economics in any market.

                        What’s it look like economically? I read in these numbers a week ago with an $830 gold price that it’s pretty robust even at that. In particular, what does that all mean? A $175 million net cash pre-tax for this even on an $830 gold

15                    price equates to about $1.20 a share and bear in mind, we’re currently at about $0.30. So this thing can make four times its current value next out of mining what we know so far. Pay back’s under two years but very robust, cash costs are brilliant, year 1’s only a little over $300 an ounce. Life of mines comfortably under $500 an ounce so this is good at any gold price. To 1.3

20                    million tonne per annum design, we think it’ll do substantially more than that in surface oxides. It’s got a very juicy core to that 2.7 full grams for just under 600,000 ounces, and at the moment Artenia mine life, we actually expect that it’ll be substantially longer than that and we expect that we should be able to produce more per annum than the hundred thousand ounces we’re currently

25                    scheduling. It will take 1 ½ to 2 years to build it, that’ll depend on how much used equipment we use. We’d expect at this stage a fairly current capital cost of little or north of $80 million in this current market.

                        That’s what it looked like last year in our feasibility study, a good cash margin,

30                    it’s even better at $835 and I’ll tell you what, a thousand dollars an ounce with $400 to $500 cash cost, this thing looks good for the long term. What’s that telling me at the moment? Tells me every new ounce could generate about $400 profit per ounce. If you wrap your mine around those metrics, even another 100,000 ounces is another $40 million value to this company, and

35                    we’re only capitalized at $40 million. So, we can add a lot of value very quickly drilling this as we go and that’s exactly what we’re doing.  Expect it to be bigger and worth a lot more by the time it’s churning out gold.

                        Fast forward, number of things here, we have a mining license. Thanks to Mr.

40                    (inaudible) (00:13:00) and his team. April earlier this year, we’re currently going through the final sign off with the environmental protection agency there, and in fact, Mark Connolly was busy at forums with the local people for the last couple of weeks. We’d expect in the next four or five weeks to have the final sign off and be able to break ground.

45

                        Going through financing, in a topical market fortunately our shareholder base is well up to that. We are poised to make a decision on plant. We have a number of second hand or used equipment options in front of us right now,

                        and we’re already gone to tender for a new mill and ready to pull the trigger on that subject to finance, and expects a more reserve updates before the year is out.

5                      Targets, more ounces. Where from, you say? We think there’s an excess of a million ounces in oxides and certainly more in refractory sulphides as we go through this thing over time. Why do I say that? We’re infill-drilling Anwia and we got 15 meters at 24 grams per tonne in an existing pit outline we proposed to dig, not a bad place to find it. Below that mine is 50 meters towards the off

10                    section, we got 14 meters at 11.5. Good grade on a hole, you’re about to dig to get there anyway, that’s for sure. That’s not the only one, Bokrobo is an interesting story. It’s only a few hundred meters south of Anwia and it is bonanza grade, I know it’s a bit hard to read those off slide during a presentation, but if are a bit lost, it’s not unusual at all to see 10 to 15 grams

15                    an ounce, and this time it’s in free milling courts visible from surface. We didn’t discover it, the locals did. In fact, they mined it up to the next in water, so that’s kind of become a little self-limiting for the moment. We’ve only drilled that down to 100 meters, the grades look quite good but it does move around a bit of depth because there are a number of stages of deformation in this

20                    ground. It’s wide open and it’s not the only one. There are a number of satellite deposits here, none of which are currently in the existing reserve, and all of which looked like they’re ore grade deposits near surface. Avrebo’s a particularly interesting one. It’s directly south of Castle Minerals ground at the moment over the (inaudible) (00:15:14). We have no doubt whatsoever

25                    that there’s going to be a couple of hundred thousand ounces coming from that region, and the road runs right away through it, so you’re potentially looking at another deposit only 10 kilometers the other side of the Salman Mill.

30                    Depth at Salman, that’s a long section. Up and down the 9 kilometers, we’ve focused in on the southernmost section of that. Let me drill it to 100 meters so it’s very, very shallow drilled because we’ve been targeting oxides, but we can start to see that north to south plunge on this thing. On terms of regional comparisons, Bogoso is very, very similar geology to this. It’s, by road of that,

35                    70 kilometers to the north of us but it’s on the same geological terrain. They’re under 350 meters and of several million ounces in refractory sulphides below their oxides. They’ve mined the oxides some years ago but there’s every reason to believe there’s going to be more below this, and we’ve proved that already in our first deeper drilling program announced only

40                    last month. Quick look at those figures and bear in mind this is long section, so you’ve drilled through the good stuff to get to it, but safe to say it extends in every case. We’re already well aware of 500,000 ounces in the sulphides below the existing projected pit and we’d expect at least another 200,000 ounces come out of this new drill results, only announced a couple of weeks

45                    ago. So, we will see an increase in the resource in these refractory sulphides.

                        Before you start worrying about refractory sulphides, we’ve done some test work on it. We’ve proved that it’ll do a simple float. We know that it’s amenable to BIOX treatment at the moment like Golden Star and a number of others are doing that in Ghana. In simple terms, we can make 3 grams or 30 grams. At the moment we’re doing some optimisation test work to see whether we can make that 3 grams, 40 to 60 grams. The relevance of that is this really, you know, at 60 grams/ton, this is about US$1600 per ounce, and

5                      we know from our novice that it cost about $300 a tonne to go on $1600 per tonne I should say if you can concentrate that level, and we know it cost about $300 to go in process to extract the gold. So there’s a lot of margin to mine it and track it to the nearby BIOX facility.

10                    I’m holding in my hand there a single ounce of gold, and it’s important to get these things in perspective sometimes. You know, that in rough terms is about A$1,000 value in my hand there, we’ve got 2 million ounces of this. We know a million of it’s going to be economic and if you think that through that’s a billion dollars in economic gold on this deposit right now, yet we kept it $40

15                    million. So, if there’s a better investment out there, please come and see me and I’ll put some more of my money into that as well.

                        What do we look like in the market? Capped at about $44 of reserved ounce and bear in mind this is the bullet-proof proven reserve, it doesn’t get much

20                    better than that. The guys at to the right there are producers, they capped it substantially more than us and they should be, they’re in production, that’s what we’re aiming for. Red Back’s particularly interesting. That, 4 ½ years ago, was exactly the same as our company. A million ounces on the ground, their case a little under 2 grams a tonne, I think at that stage you’re capped at

25                    about $60 million. That thing today is capped at the best part of $1.5 billion, only 4 ½ years later. Why? They drill deeper and they bought other projects and good on them. The others weren’t ….those marked in the yellow were assets sold for cash pre-production. They are in exactly the stage Adamus is right now, about to go to production and sold by their owners for cash take

30                    home money. They were sold last year in a better market than today. Any one of those is 3, 4, or 5 times our net value and they’re not better projects. Let’s have a quick look at the bottom here, (inaudible) (00:19:18) 3 grams similar grades, slightly better. They sold that for $270 million cash. Now to be fair, they almost built their plants so you could take off $70 capital, but its $200

35                    million versus our $40 and a (inaudible) (00:19:33) Mauritania which doesn’t have the attraction Ghana has, doesn’t have the same infrastructure we have and it’s a much harsher place to operate. (inaudible) (00:19:41) likewise, it was only 60 km to the southeast of us, sorry it’s only about 40, that was sold nearly four years ago now for $90 an ounce. We capped at 1/5 of that. It’s 4

40                    grams but it wasn’t big enough to be staying the line, in fact, Golden Star who bought that are tracking it 70 km from the southeast of us to the north of us to put through their water plant.

                        My point is simply this, these assets were a lot on the open market let alone

45                    in production even where it is. You know, this really is a file safe investment at this point and I encourage you to go and have a look at it and I encourage you to keep a eye on it because the refractory sulphides under this thing could multiply very substantially over the coming years.

                        Thank you.

INTERVIEW CONCLUDED

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