bmo copper miners - strategies for an active copper sector

8/8/2019 BMO Copper Miners - Strategies for an Active Copper Sector

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Global MiningResearch

This report was prepared in part by an Analyst or Analysts employed by BMO Capital Markets Ltd, authorised and regulated by the

Financial Services Authority in the UK. The Analyst(s) is not registered as an Analyst under FINRA rules. For disclosure statements,including the Analysts Certification, please refer to pages 23 to 25.

February 27, 2009 Copper Miners

Strategies for an Active Copper Sector

Short-term funding and corporate activity are on the rise and equitiesare up from their lows. In addition to our preferred stocks, BMOResearch highlights some copper strategies for exposure to leverageand potential corporate activity.

1. BMO Researchs preferred sector exposure is through ANTO and FM,

which both offer stronger balance sheets, scale and growth.

2. Copper consumption remains subdued; however, the worst may beover and prices may well improve into H2/09. While price risks remain,QUA, FM and larger-capitalized FCX offer higher price leverage.

3. QUA, FM, EQN and KAT offer relatively cheap growth with attractivepaybacks. We view them as potential corporate takeover targets.

Stock Rating

Market Cap

US$M Target

ANTO Antofagasta OP 5,999 5.25

FM First Quantum OP 1,725 C$ 38.00

CCT Centenario Copper Mkt (S) 36 na

EQN Equinox Mkt 620 C$ 1.65

FCC Frontera Copper Mkt (S) 40 na

F CX F ree port Mc MoRan Mk t 11 ,23 0 $30 .00

IMN Inmet Mining Mkt 1,063 C$ 28.00

QUA Quadra Mining Mkt 160 C$ 4.00

KAT Katanga Und 74 na

Company

Source: BMO Capital MarketsPricing date February 26, 2009

Fig 1: NPV Leverage to US$0.25/lb Change in Copper Price Assumption

IMN ANTO CCT EQN KAT FCX QUA FM FCC0%

10%

20%

30%

40%

ChangeinNPV(%) Increasing leverage

Source: BMO Capital Markets

David RadclyffeBMO Capital Markets Ltd.+44 (20) 7246 [email protected]

David CotterellBMO Nesbitt Burns Inc.(416) [email protected]

Fig 2: Potential Value From a Corporate Perspective

0 2 4 6 8 100

5

10

15

20

Years for Net Cash to equal Market Cap

2009E-2011EPriceEarningGrowth(PEG)

EQN

TCK

KAT

FM

IMN

FCCCCT

QUA

AAL

BHP

RIO

XTA

ANTO

FCX

Increasing corporate potential



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Global Mining Research

Copper MinersFebruary 27, 2009

Page 2 of 25

1. FM & ANTO Current PreferredStocks

Copper could turn in H2/09as low inventories andcutbacks impact.

Outlook Clouded, but BMO Research Sees Upside for Copper in H2/09

A return to even moderate consumption in China, coupled with low stocklevels and production cutbacks and deferrals, could point to copper rising inH2/09. Supply cutbacks now represent some 3% of supply in 2009. In total,announced cutbacks and deferrals represent some 1.5 Mt of production or10% of global mine supply.

Logically, stocksunderpriced for growth andwith short paybacks couldattract corporate interest,such as QUA, EQN, KAT and

FM.

Corporate Activity on the Rise

Corporate activity in the base metal sector is clearly on the rise with FronteraCentenario, and Oz Minerals under takeover, and Chinalco seeking topurchase interests in Rio Tinto operations. Logically, stocks underpriced forgrowth and with short paybacks could attract corporate interest. On thisbasis, its not surprising that FCC and CCT are takeover targets. Other stocks

that might attract attention on this basis are KAT, QUA, EQN and FM.

Raisings focusing onrepairing balance sheets.

Raisings Focus on Balance Sheets

Over the last few weeks there has been an increase in capital raising activityfrom the sector primarily focused on improving balance sheets. ANTOcontinues to have the strongest balance sheet position; FCX has taken stepsto reduce pressures, while EQN needs to meet 2009 targets.

QUA, FM and FCX showgood copper price leverage.

QUA, FM and FCX Show Good Copper Price Leverage

QUA and FM offer good leverage in mid-capitalization stocks, while FCX offerslarge-capitalization leverage. Of note, a US$0.25/lb change in the BMOResearch copper price assumption increases NPV per share for FCX by $13,FM by $15 and QUA by $3. ANTO and IMN show lower copper price leverage

than their peers.

EQN target price raised toC$1.65.

Revised Target Prices: EQN - C$1.65 and IMN - C$28.00

Following recent company guidance of ramp-up at Lumwana, BMO Researchhas increased 2009 estimates and the EQN target price to C$1.65 (fromC$1.50). The IMN price target has also been increased to C$28 (from C$21)on a relative basis to its peers.

Fig 3: BMO Research Copper Producer Coverage

(M) (US$M) (X) (X) %

First Quantum Outperform C$ 33.70 67 1725 C$ 70.15 48% 5.7 2.6 -30% C$ 38.00

Equinox Market Perform C$ 1.29 593 620 C$ 4.04 32% 3.1 3.0 +>100% C$ 1.65

Katanga Underperform C$ 0.45 206 74 C$ 7.51 6% NA 11.8 57% na

Centenario Copper Market Perform (S) C$ 0.91 51 36 C$ 8.48 11% 5.0 6.3 +>100.0 na

Frontera Copper Market Perform (S) C$ 0.76 65 40 C$ 1.50 51% 50 -8.1 ->100.0 na

Inmet Mining Market Perform C$ 27.19 48 1063 C$ 32.64 83% 6.8 3.5 -30% C$ 28.00

Quadra Mining Market Perform C$ 3.44 66 160 C$ 11.54 30% 4.6 1.2 -64% C$ 4.00

Antofagasta Outperform 4.27 986 5999 6.32 68% 18.4 4.8 -62% 5.25

Freeport McMoRan Market Perform $29.32 483 11230 $49.04 60% 50 5.5 -94% $30.00

Total/Average 43% 7.3 3.4

Company Rating Share PriceShares

O/SMarket Cap NPV/Share

SharePrice/NPV

2009E P/E2009E

EV/EBITDA2009E EPS

GrowthTargetPrice

Source: BMO Capital Markets. Pricing date February 26, 2009


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Page 3 of 25

2. BMO Copper Stocks

ANTO has strong growth andbalance sheet position.

Antofagasta (ANTO-LSE) - ANTOs premium rating to its copper peersreflects an established business backed by a strong balance sheet making it

more resilient to lower copper prices. Further, a strong cash balance supportsthe ability to pursue additional growth opportunities. BMO Research maintainsits Outperform rating with a 5.25 target price.

Centenario (CCT-TSX) - Quadra Mining and Centenario Copper haveannounced a friendly merger with Quadra to acquire all the outstandingshares of Centenario. The exchange ratio is 0.28 Quadra shares for eachCentenario share. CCT is rated Market Perform.

Frontera (FCC-TSX) - Invecture announced an increased bid ofC$0.75/share in cash (from C$0.59/share) for all outstanding shares of

Frontera. The increased bid represents a 15.4% premium to SouthernCoppers offer of C$0.65/share in cash, and values Frontera at C$49M. BMO

Research rates FCC Market Perform (Speculative).

EQN target price raised toC$1.65 and 2009 EPS toUS$0.34 on increased 2009production outlook.

Equinox (EQN-TSX) Short-term issues are of market focus, but thereremains good potential for EQN to grow and diversify the business beyond theLumwana ramp-up in 2009. Production for 2009 has been increased by 28%to 153 kt on recent company ramp-up guidance but remains below EQNstarget. 2009 EPS has increased 16% to US$0.34. BMO Research rates EQNMarket Perform with a revised C$1.65 target price (from C$1.50).

Leveraged large-capitalization copper play;raising reduces balancesheet pressure.

Freeport (FCX-US) The recent US$750M capital injection provides FCXwith greater financial flexibility in the current low copper price market, whichhas constrained the business and increased the focus on Grasberg in 2009.BMO Research reiterates its Market Perform rating with a target price ofUS$30.

Attractive on a number ofmeasures.

First Quantum (FM-TSX) The company is well positioned to its peers,

offering leverage to copper, a solid balance sheet and long-term growthopportunities. BMO Research maintains its Outperform rating with a C$38target price.

IMN target price increased toC$28 (from C$21).

Inmet (IMN-TSX) - Inmet is rated Market Perform with a C$28 target price.The start-up of Las Cruces in April 2009 is forecast to add copper productionof over 50% at operating cash costs of around US$0.80/lb. Inmets othergrowth project is Petaquilla, which the company has indicated remains key tothe longer-term production profile.

Remains a high-riskproposition.

Katanga (KAT-TSX) - Until details emerge from the business technical

review and funding initiative, the company remains in a high-risk position.

BMO Research rates KAT Underperform.

Quadra (QUA-TSX) The acquisition of CCT fits with Quadras growth-through-acquisition strategy. The key asset for CCT is the nearly completeFranke project, an SX-EW operation in northern Chile. Assuming a successfultransaction, Quadra would have three operating mines and created an

operating base in Chile. BMO Research maintains a Market Perform rating andC$4 target price. BMO calculates this deal to be NPV accretive by 7%.


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Page 4 of 25

3. Clouded Outlook but Worst Over?

A return to even moderateconsumption in China wouldlikely mean prices lift toaround US$2.00/lb in H2/09.

The deepening global recession continues to subdue copper consumption. Theprospect of reduced Chinese demand, especially in the next several months,has prompted BMO Research to project a 300400 kt surplus and a relativelypoor price environment for much of 2009.

While it would not be a big surprise to see the metal price drop further in theshort run, there are signs from China that the worst of the correction may

already be over. A return to even moderate consumption in China would likelymean that the LME is tapped for supply, lifting prices to around US$2/lb inH2/09.

Rapid mine closures, declines in secondary supply and signs thatinfrastructure spending is under way are factors that give some confidencethat higher prices are around the corner.

Supply cutbacks representsome 3% of supply in 2009.

Cutbacks and deferralrepresent some 1.5 Mt ofproduction or 10% of globalmine supply.

Fig 4: Supply Cutbacks and Deferrals in the Copper Market

FNXMining

N.AmericanPalladiu

CampbellResources

WeatherlyInternatio

ZarumaResources

TVIPacific

Breakwater

MatrixMetals

TamayaResources

Oceanagold

AfricanCopper

CopperCo

Gearbulk

Kazakhmys

AravaMines

FronteraCopper

NovaVentura

OzMinerals

StraitsResources

UniversalResources

GoldReserve

IncaPacific

KatangaMining

NewGoldInc

Newmont

Misc.

BajaMining

FirstQuantum

NewcrestMining

AnvilMining

J&WInvestments

RussianCopperCo.

CentralAfricanM&E

Vale

AngloAmerican

FreeportMcMoran

0

50

100

150

200

250

300

(kt)

Source: BMO Capital Markets & Brook Hunt

At 10 days of supply

inventories on LME, levelshave risen back toward thehistoric mean.

During previous downturnsinventories have increasedtoward 20 days supply.

Fig 5: LME Copper Inventories Days of Supply

04/01/1980

04/11/1983

04/09/1987

05/07/1991

19/05/1995

19/03/1999

17/01/2003

17/11/2006

0

5

10

15

20

25

30

Days Supply at LME



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Page 5 of 25

4. FM, QUA and FCX for Leverage

QUA and FM offer goodleverage in mid-capitalizationstocks, while FCX offerslarge-capitalization leverage.

The following charts highlight the EPS and NPV leverage of the nine BMO

Research copper stocks. Shorter-term earnings leverage is based on 2010EEPS numbers and represents the percentage change in earnings for aUS$0.25/lb change in the copper price to the base US$2.50/lb assumption.

Longer-term leverage is measured by NPV in similar US$0.25/lb increments(BMO Research has the long-term copper price at US$2.20/lb).

Overall, this analysis highlights that QUA and FM offer good leverage in mid-capitalization stocks, while FCX offers large-capitalization leverage.

FCC is highly leveraged withits high cost but is under

takeover. KAT also is aleveraged, high-costproducer with current cashcosts >US$2/lb.

QUA and FM show goodearnings leverage tochanging copper prices, at>20% per US$0.25/lb changein copper.

Low cash costs and hedginglimit EQNs earnings

leverage.

Fig 6: 2010E EPS Leverage to US$0.25/lb Change in Copper Price Assumption

EQN IMN ANTO FCX CCT FM KAT QUA FCC0%

10%

20%

30%

40%

Changein2010EPS(%)

Increasing leverage


A US$0.25/lb change in thecopper price assumptionincreases:

FCXs NPV by $13/share

FMs NPV by $15/share

QUAs NPV by $3/share

ANTO and IMN, with theirlower-cost base, show thelowest leverage of the group.

Fig 7: NPV Leverage to US$0.25/lb Change in Copper Price Assumption

IMN ANTO CCT EQN KAT FCX QUA FM FCC0%

10%

20%

30%

40%

Chang

einNPV(%) Increasing leverage



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Page 6 of 25

5. Corporate Activity on the Rise

Base metal corporate activityon the rise, driven byChinese and LatinAmericans.

Corporate activity in the base metal sector is clearly on the rise with Frontera,Centenario, and Oz Minerals under takeover, and Chinalco seeking to

purchase interests in Rio Tinto operations.

This interest has come from the Chinese (Minmetals and Chinalco) and also

Latin America (Southern Copper and Invecture) rather than more preoccupiedNorth American corporates.

Deals represent some 23%of copper and 5% of zincglobal mine supply.

Significantly, these proposed transactions represent meaningful volumes ofcopper and zinc. BMO Research estimates the Chinese could acquire some 23% of global copper mine supply and around 5% of mine zinc supply throughthe acquisition of both Oz Minerals and selective positions in RIO assets.

Other Stocks May Attract Corporate InterestThe following chart plots a PEG (price to growth) ratio versus implied stockpayback and highlights recent corporate activity in the base metal sector andstocks potentially of corporate interest. The PEG ratio is taken as the three-year prospective average of BMO Research EPS growth forecasts. Impliedpayback is calculated as the number of years taken for the net cash position

of a company to equal its current market capitalization.

Stocks that plot in the bottom left-hand quadrant on this chart are viewed asthose most potentially attractive to other corporates, with attractively pricedgrowth and short paybacks. Not surprisingly, FCC and CCT, both undertakeover, plot in this position. Other stocks that plot close to this position areKAT, QUA, EQN and FM.

Bottom left quartile is theoptimum position.

Not surprisingly, recentcorporate activity has beenfocused here with CCT andFCC bids.

Other stocks attractivelyplaced are FM, EQN, KAT

and QUA.

Fig 8: Potential Value From a Corporate Perspective PEG vs. Payback

0 2 4 6 8 100

5

10

15

20

Years for Net Cash to equal Market Cap

2009E-20

11EPriceEarningGrowth(PEG)

EQN

TCK

KAT

FM

IMN

FCCCCT

QUA

AAL

BHP

RIO

XTA

ANTO

FCX


Source: BMO Capital Markets FCC and CCT under takeover offers


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Page 7 of 25

Same Group Highlighted, Looking at P/NPV and EV/EBITDA

The following chart plots the same group of stocks, looking at current price toNPV and 2010E EV/EBITDA multiples. While there is some autocorrelation,this measure highlights the same group of stocks as in the previous figureand is still a relevant comparison. IMN also appears to offer value on a low2010E EV/EBITDA, but it trades at a higher P/NPV than most of the group.

Same group of stocks ishighlighted on NPV andEBITDA basis.

INM also looking cheap on2010E EV/EBITDA, if at ahigher P/NPV.

Fig 9: P/NPV Against 2010E EV/EBITDA

0% 20% 40% 60% 80% 100%0

1

2

3

4

5

Price to NPV

2010E

EV/EBITDA

EQN

TCK

KAT

FM

IMN

FCCCCT

QUA

BHP

RIO

XTAANTO

FCX


Source: BMO Capital Markets FCC and CCT under takeover offers

QUA, FM, EQN and KAT Are Potential Corporate Takeover Targets

A review of the BMO Research copper universe, looking at a number ofmetrics including price to growth, price to NPV, cash payback and cash flowmultiples, therefore highlights a group of stocks that appear potentially more

attractive to their peers corporately. These stocks are QUA, FM, EQN and KAT.

KAT - has significant copper assets, but Glencore has a significant interest(through KAT debt) and the business requires some US$250M of newcapital to achieve a sustainable footing.

EQN with its scale and future growth potential might represent anattractive bolt-on transaction to an existing base metal producer.However, FM has a key equity block of EQN, which might represent alarge hurdle to any interested party other than itself.

FM could play the role ofregional consolidator or offeran African footprint.

FM a strong balance sheet and scale to its African peers put FM in the

position to be a regional consolidator. However, FM might also offer

an attractive and established production base for a larger peer lookingto build an African base metal business.

QUA - a combined QUA-CCT might well be attractive to its peers given itsgrowth upside and that key projects are located in low-sovereign-riskregions.


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Page 8 of 25

Corporates Paying EV/EBITDA ~6x,


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Page 9 of 25

Market Factoring US$1.90/lb

Current stock prices appear to be implying a copper price (i.e., the long-term copper price required for NPV to equal the market capitalization) forthe BMO Research copper sector of around US$1.90/lb. This is about 20%above current spot prices.

Market continues to factor apremium to spot prices.

Fig 14: Implied Copper Price

KAT CCT EQN FM QUA ANTO FCX IMN FCC0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

US$/lb

Spot Copper

$1.32$1.39

$1.73$1.87 $1.89

$1.96

$2.11

$2.32

$1.98



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Page 10 of 25

6. Raisings Focus on Balance Sheet

Over the last few weeks there has been an increase in capital raising activityfrom the sector primarily focused on improving balance sheets. These include:

FCX raised US$750M.FCX raised US$750M through an at-market offering of stock at

$28. While slightly short of a US$1-2B estimated by BMOResearch, the new stock issue reduces short-term fundingpressure for the business.

KAT seeking additionalUS$250M.

KAT raised US$265.3M in a convertible loan underwritten byGlencore, which represents US$100M of new funds allowingfor the revised Glencore loan. This funds the companythrough Q1/09, and KAT stated it is seeking an additionalUS$250M in growth funding.

RIO asset sales relating tocopper total US$4.5B

RIO recently announced a US$19.5B capital raising initiative

through a combination of asset sale and issue of convertiblebonds. Significantly, proposed asset sales relating to copperamount to US$4.5B.

ANTO well positioned.ANTO Well Positioned, EQN Under Some Pressure

ANTO continues to have the best-placed balance sheet in the sector with net

cash of US$3B funding growth activity in 2009. Following the recent equityissue FCX has decreased net debt to slightly more manageable levels with afavourable repayment schedule.

EQN needs to meet targets in2009 to generate sufficientcash flow for September 2009

repayment.

EQN continues to have high debt levels, with the market focused on thecompany generating sufficient cash to meet a US$183M principal debtrepayment at the end of September. This matches BMO Researchs estimatesbut remains dependent on volumes and copper prices. EQN has its US$243Min-the-money copper hedge book and a US$45M overrun facility as a potentialbackstop to meeting the payment.

Fig 15: 2009E Net Debt/(Cash)

ANTO IMN QUA FCC CCT KAT FM EQN FCX-2000

0

2000

4000

6000

2009ENetDebt(US$M)

Stronger balance sheet


Fig 16: 2009E Net Debt / Equity Ratio

ANTO QUA IMN FM KAT FCC EQN FCX CCT0%

25%

50%

75%

100%

2

009EN

etDebt/Equity



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Page 11 of 25

The following charts highlight the balance sheet profiles of these copperstocks.

Fig 17: ANTO Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

1,500

3,000

4,500

6,000

7,500

9,000

NetCash/(Debt)(US$M)


Fig 18: FCX Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

-6,000

-4,000

-2,000

0

2,000

4,000



Fig 19: FM Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

-1,000

0

1,000

2,000

3,000

4,000



Fig 20: EQN Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

-1,000

0

1,000

2,000



Fig 21: KAT Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

-500

0

500

1,000



Fig 22: IMN Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

500

1,000

1,500

2,000



Fig 23: QUA Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

500

1,000



Fig 24: CCT Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

-200

0

200

400



Fig 25: FCC Net Cash/(Debt)

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

-100

0

100

200




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Page 12 of 25

7. Coppers Remain Priced Below NPV

Average 50% discount to NPV.On average, the copper sector continues to trade at approximately 50% of

estimated NPV, which continues to be a steep discount to BMO Researchvaluations.

BMO Research uses aUS$2.20/lb long-term copperprice.

Fig 26: Price to NPV for BMO Research Copper Producer Universe (%)

AVMKAT

CCT

XTA

OGCRIO

VALE

QUAFMBHP

FCC

EQN

FCXIMN

ANTO

ANG

NCMTCK

NEMABXGG

KGC

0%

20%

40%

60%

80%

100%

120%

140%

PricetoNPV

Diversified stocks Gold stocks Copper stocks

Cheaper


Plotting capitalization to P/NPV offers a method to compare the sector on a sizebasis. In addition, applying a line of best fit to the data points is a reasonableproxy for fair value. Stocks that plot above this line are cheaper on a relativebasis than those that plot below the line.

ANTO and FM are preferredand trade above the line.

FCX looks attractive on arelative basis but it has higherdebt levels and lower mid-term growth possibilities.

Fig 27: Market Capitalization to P/NPV10 Using BMO Metal Forecasts

0% 20% 40% 60% 80% 100% 120% 140%10

30

100

300

1000

3000

10000

30000

NPV premium to share price (%)

Logofmar

ketcapitalisation(US$M)

FM

FCX

CHEAP

EXPENSIVE

Fairv

alue

FCCCCT

QUA

IMN TCK

EQNTALV

KAT

AVM

XTAANTO



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Page 13 of 25

8. Growth Potential

ANTO, EQN and IMN havestronger mid-term growthprofiles.

The following charts highlight the production profiles of these copper stocks.ANTO, EQN and IMN have stronger mid-term growth profiles. In addition, the

proposed friendly merger of Centenario by Quadra Mining is expected to add30 ktpa of copper to Quadras production profile from 2010.

Fig 28: ANTO Copper Production

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

100

200

300

400

500

AnnualCopperProduction(000t)


Fig 29: FCX Copper Production

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

1,000

2,000

3,000

Annual

CopperProduction(000t)


Fig 30: FM Copper Production

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

100

200

300

400



Fig 31: EQN Copper Production

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

50

100

150

200



Fig 32: KAT Copper Production

2008

E

2009E

2010E

2011

E

2012E

2013E

2014E

2015E

0

20

40

60

80

AnnualCopp

erProduction(000t)


Fig 33:IMN Copper Production

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

20

40

60

80

100

120

140

AnnualCopp

erProduction(000t)


Fig 34: QUA Copper Production

2008E

2009E

2010E

2011E

2012E

2013E

2014E

2015E

0

20

40

60

80

100

120



Fig 35: CCT Copper Production

2008E

2009E

2010E

2011E

2012E

2013

E

2014E

2015E

0

10

20

30

40



Fig 36: FCC Copper Production

2008E

2009E

2010E

2011E

2012

E

2013E

2014E

2015E

0

10

20

30

40




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Page 14 of 25

Antofagasta ANTO CASH FLOW ANALYSIS - US$MLSE (Dec Year End) 2007A 2008E 2009E 2010E 2011E

As at 26-Feb-09Recommendat ion Outperform Analysts: Cash Flows From Operating Activities

David Radclyffe Recei pts From Cu stom ers 3 83 2.9 4 07 4. 5 20 25 .0 2 93 4.1 4 451 .5

Payments To Suppl iers (1148. 8) ( 1467 .7 ) (1329. 4) (1433.8 ) (1714. 4)Net Interest 91.1 62.8 106.6 18.9 37.4

Share Price (US$) $6.08 Share Price () 4.27 Tax and Other (621.9) (464.6) (213.0) (392.2) (720.3)

Model Derived Model Derived Cash Flows From Investing Activities

Target Value (US$) $7.48 Target Value () 5.25 Acq.of Property, Plant and Equip. (481.7) (1367.5) (2328.3) ( 665.6) ( 137.6)NPV (US$) $9.01 NPV () 6.32 Exploration Expenditure (48.1) (42.4) (30.0) (30.0) (30.0)

Other 36.3 1401.2 0.0 0.0 0.0Ord inary Shares (M) 985 .9

Options + Notes (M) 0.0 Cash Flows From Financing ActivitiesNet Change in Borrowings (92.3) (107.1) (83.6) (75.3) 0.0

Market Cap (US$M) $5,999 Market Cap ($M) 4,210 Dividends Paid (1166.4) (491.1) (59.2) (177.5) (315.5)Other incl Share Issue or Buy Back (0.9) 0.0 0.0 0.0 0.0

Net Increase In Cash Held 400.2 1598.1 (1911.8) 178.6 1571.2

PRICE ASSUMPTIONS Cash At End of Year 2212.5 3810.5 1 898.7 2077.3 3648.5

(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate GBP/US$ 0.50 0.54 0.69 0.63 0.59Exchange Rate A$/US$ 0.84 0.85 0.68 0.78 0.81 BALANCE SHEET ANALYSIS - US$MCopper UScents/lb 323.0 315.7 185.0 250.0 290.0 (Dec Year End) 2007A 2008E 2009E 2010E 2011E

Gold US$/oz 696 873 888 925 925 Current AssetsMolybdenum UScents/lb 3072.4 3001.7 1350.0 1500.0 1500.0 Cash and Liquids 2212.5 3810.6 1898.7 2077.3 3648.5

Other 670.7 687.2 687.2 687.2 687.2

Non-Current Assets

Investments 6.0 6.0 6.0 6.0 6.0

Fixed Assets 2679.8 3883.6 6056.3 6562.7 6542.0

FINANCIAL SUMMARY Other 259.1 207.7 207.7 207.7 207.7

(Dec Year End) 2007A 2008E 2009E 2010E 2011ECurrent Liabilities

NPAT (pre-Abs) (US$M) 1382.1 849.4 326.7 644.0 1255.8 Borrowings 101.8 0.0 0.0 0.0 0.0EPS (ps) 140.2 86.2 33.1 65.3 127.4 Creditors 246.5 246.5 246.5 246.5 246.5

PER (x) 4.3 7.1 18.4 9.3 4.8 Other 18.3 16.9 16.9 16.9 16.9

EPS Growth (%) 1.9 -38.5 -61.5 97.1 95.0

EBITDA (US$M) 2816.1 1896.1 878.0 1658.9 2901.3 Non-Current Liabilities

EBITDA per Share (ps) 285.7 192.3 89.1 168.3 294.3 Borrowings 164.2 158.9 75.3 0.0 0.0EV/EBITDA (x) 1.4 1.2 4.8 2.4 0.8 Other 418.2 418.2 418.2 418.2 418.2

Dividend (ps) 49.6 8.4 11.0 23.0 45.0 Minority Interest 84 1.5 85 1.5 8 61 .5 8 71 .5 8 81 .5Yield (%) 8.2 1.4 1.8 3.8 7.4 SHAREHOLDERS FUNDS 4906.5 7754.5 8099.0 8859.3 10409.8

P/FCF (x) 3.7 7.5 NM 13.9 3.2 Net Debt(Cash) (1946.5) (3651.7) (1823.4) (2077.3) (3648.5)FCF Yield (%) 27 13.3 NM 7.2 31.5 Net Debt(Cash)/Equity % -33.9% -42.4% -20.3% -21.3% -32.3%

PROFIT AND LOSS STATEMENT - US$M DIVISIONAL EARNINGS (EBIT) - US$M(Dec Year End) 2007A 2008E 2009E 2010E 2011E (Dec Year End) 2007A 2008E 2009E 2010E 2011E

Sales Revenue 3832.9 4074.5 2025.0 2934.1 4451.5 El Tesoro 100% 380.3 326.7 89.3 173.4 216.0Other Revenue 215.3 -618.8 237.1 236.5 254.4 Michilla 100% 154.0 118.7 -9.9 0.0 0.0

Operating Costs 1148.8 1467.7 1329.4 1433.8 1714.4 Los Pelambres 100% 2098. 6 2110. 8 581 .2 1265. 9 1647.2

Gross Operating Profit 2899.4 1988.0 932.7 1736.8 2991.5 Esperenza 100% 0.0 0.0 0.0 0.0 638.6

Depreciation 161.3 173.7 165.6 169.2 168.2 Railw ay and W ater 100% 65.4 91.3 87.2 87.9 88.7Exploration and Royalties 38.1 55.3 36.7 59.8 72.3

Corporate and Other 45.2 3 6.6 1 8.0 1 8.0 1 8.0 Exploration, R&D 38.1 32.4 20.0 20.0 20.0

EBIT 2654.8 1722.4 712.5 1489.7 2733.1 Corporate and Other Costs 45.2 36.6 18.0 18.0 18.0

Less Net Interest Expense -95.4 -62.8 -106.6 -18.9 -37.4 EBIT (before minorities) 2654.8 1722.4 712.5 1489.7 2733.1

Pre-Tax Profits 2750.2 1785.1 819.1 1508.7 2770.5Less Tax 638.4 464.6 213.0 392.2 720.3 FINANCIAL MULTIPLESLess Minorities 729.7 471.1 279.4 472.4 794.3 ROA (%) 45.6 20.0 8.0 15.6 24.6Less Pref Dividends 0.0 0.0 0.0 0.0 0.0 ROE (%) 28.2 11.0 4.0 7.3 12.1

NPAT (pre-Abs) 1382.1 849.4 326.7 644.0 1255.8 ROIC (%) 51.3 21.8 8.7 16.8 26.3Net Abnormals 0.0 0.0 0.0 0.0 0.0

Reported Profit 1382.1 849.4 326.7 644.0 1255.8

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT/DIVISIONNPV US$M Attributable Contained Mine Percent 2007A 2008E 2009E 2010E 2011E

Metal L ife Copper Production Owned

El Tesoro 395 (Mt) (Years) El Tesoro 70% 9 30 00 7 94 50 6 64 13 6 33 94 5 741 1

Michilla -5 Copper Reserves 15 18 Michilla 74% 33390 35393 28225 0 0

Los Pelambres 4,340 Copper Resources 25 31 Los Pelambres 60% 174000 190320 176306 233105 244570

Railway and Water 477 Cu Guesstimate 22 28 Esperenza 70% 0 0 0 0 91679

Esperenza 1785 Total Attrib Copper - Tonnes 300390 305163 270943 296499 393659Corporat e and O ther - 299

Hedge Book 0 Molybdenum Production

Net Cash & Other 2,189 Los Pelambres 60% 6060 4680 4860 4667 4896

TOTAL NPV (US$M) 8,881 6060 4680 4860 4667 4896NPV per Share (US$) 9 .01

Cu Cash Cost US$/lb 0.93 1.19 1.14 1.13 1.16

*Co-Product Basis



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Page 15 of 25

Centenario Copper CCT CASH FLOW ANALYSIS - US$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E

As at 27-Feb-09 Analysts:Recommendation Market Perform (S) David Cotterell Cash Flows From Operating Activities

Receipts From Customers ( 24.2) ( 0.0) 83.7 157.4 194.4

Payments To Suppliers 0.0 (4.2) (59.4) (84.2) (94.2)Net Interest 0.0 0.9 (6.3) (4.2) (3.5)

Share Price (US$) $0.74 Share Price (C$) $0.91 Tax and Other 0.6 0.0 0.0 (8.2) (12.5)

Model Derived Model Derived Cash Flows From Investing ActivitiesTarget Value (US$) $1.30 Target Value (C$) na Acq.of Property, Plant and Equip. (0.3) (187.0) (25.5) (3.8) (3.9)NPV (US$) $6.87 NPV (C$) $8.48 Exploration Expenditure 0.0 0 .0 0.0 0.0 0.0

Other (29.4) 0.0 0.0 0.0 0.0Ord inary Shares (M) 51.2Opt io ns + Notes (M) 2 .5 Cash Flows From Financing Activities

Net Change in Borr owings 0.0 110.0 (11.0) (10.0) ( 45.0)Market Cap (US$M) $36 Market Cap (C$M) $44 Dividends Paid 0.0 (0.0) (0.0) (0.0) (0.0)

Other 75.7 54.0 0.0 0 .0 0.0

Net Increase In Cash Held 22.5 (26.3) (18.5) 47.0 35.2PRICE ASSUMPTIONS Cash At End of Year 31.9 5.7 (12.8) 34.2 69.4(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.88 0.94 0.83 0.88 0.92Copper UScents/lb 323.0 315.7 185.0 250.0 290.0 BALANCE SHEET ANALYSIS - US$MGold US$/oz 696 873 888 925 925 (Dec Year End) 2007A 2008E 2009E 2010E 2011ESilver US$/oz 13.4 15.0 12.8 14.0 14.0 Current AssetsMolybdenum US$/lb 30.7 30.0 13.5 15.0 15.0 Cash and Liquids 39.2 1 2.9 (5.6) 41.4 76.6

Other 10.0 10.0 10.0 10.0 10.0

Non-Current Assets

Investments 0.0 0.0 0.0 0.0 0.0

F ixed Assets 42.6 210.4 225.8 208.7 189.8FINANCIAL SUMMARY Other 4.5 0.0 0.0 0.0 0.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Current Liabilities

NPAT (pre-Abs) (US$M) -14.0 -22.4 7.9 40.0 61.3 Borrowings 10.3 10.3 10.3 10.3 10.3EPS (US$ps) -0.4 -0.4 0.2 0.8 1.2 Creditors 0.0 0.0 0.0 0.0 0.0PER (x) 50 50 5.0 1.0 0.7 Other 1.0 0.0 0.0 0.0 0.0EPS Growth (%) 38.4 -7.7 +>100.0 +>100.0 53.2EBITDA (US$M) -18.1 -34.4 22.6 70.8 97.5 Non-Current LiabilitiesEBITDA per Share (US$ps) -0.5 -0.7 0.4 1.3 1.9 Borrowings 0.0 110.0 99.0 89.0 44.0EV/EBITDA (x) 0.7 -4.0 6.3 1.2 0.1 Other 15.4 15.4 15.4 15.4 15.4Dividend (US$ps) 0.0 0.0 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 0.0 (0.0)Yield (%) 0.0 0.0 0.0 0.0 0.0 SHAREHOLDERS FUNDS 69.6 97.6 105.5 145.4 206.7P/FCF (x) NM NM NM 0.6 0.4 Net Cash/(Net Debt) 28.9 (107.4) (114.9) (57.8) 22.3FCF Yield (%) NM NM NM 158 223 Net Debt/Equity % -41.5% 110.0% 108.9% 39.8% -10.8%


Sales Revenue 0.0 0.0 83.7 157.4 194.4Other Revenue 0.0 0.0 0.0 0.0 0.0 Franke -11 -19 19 57 82

Operating Costs 0.0 0 .0 54.2 78.6 88.4Gross Operating Profit 0.0 0.0 29.5 78.8 106.0 Capital spending 0.3 187.0 25.5 3.8 3.9Depreciation 0.0 0.0 10.0 18.4 20.1 Corporate and Other Costs 4.9 4.2 5.0 5.0 5.0Exploration and Royalties 11.0 19.1 0.4 3.1 3.5Corporate and Other 4.9 4.2 5.0 5.0 5.0 Total EBIT -16 -23 14 52 77EBIT (not incl associates) -15.9 -23.3 14.1 52.4 77.3Less Net Interest Expense -1.2 -0.9 6.3 4.2 3.5Pre-Tax Profits -14.8 -22.4 7.9 48.2 73.8Less Tax -0.7 0.0 0.0 8.2 12.5Plus Associates less Divds 0.0 0.0 0.0 0.0 0.0Less Minorities 0.0 0.0 0.0 0.0 0.0NPAT (pre-Abs) -14.0 -22.4 7.9 40.0 61.3Net Abnormals -9.9 31.6 0.0 0.0 0.0Reported Profit -23.9 9.2 7.9 40.0 61.3

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT/D IVISIONNPV US$M Attributable Contained Mine Percent 2007A 2008E 2009E 2010E 2011E

Metal Li fe Copper Production OwnedFranke 385.1 (Mt) (Years) Franke 100% (000t) 0 0 1 5 28 30Net Cash & Other -13.4 Copper Reserves 0.31 8.9Co rpo rate & Other -19 .0 Copper Resources 0.37 10.5Hedge Book 16 Cu Guesstimate 0.35 10.2 Cu Cash Cost US$/lb 0.00 0.00 1.62 1.28 1.32

*Co-Product Basis

TOTAL NPV (US$M) 369.1NPV per Share (US$) 6 .87



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Page 16 of 25

Equinox Minerals EQN CASH FLOW ANALYSIS - US$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E

As at 26-Feb-09

Recommendation Market Perform Analysts: Cash Flows From Operating ActivitiesDavid Radclyffe Receipts From Customers 0.0 9.7 683.7 918.0 1075.2

Payments To S uppliers (11.3) (9.7) (389.2) (385.3) (436.0)Net Interest 1.8 (10.9) (32.4) (15.3) (1.9)Share Price (US$) $1.04 Share Price (C$) $1.29 Tax and Other (33.0) (60.4) 5.6 (135.5) (171.0)

Model Derived Model Derived Cash Flows From Investing ActivitiesTarget Value (US$) $1.34 Target Value (C$) $1.65 Acq.of Property, Plant and Equip. (420.3) (320.0) (28.1) (16.0) (18.4)NPV (US$) $3.27 NPV (C$) $4.04 Exploration Expenditure 0.0 (11.3) (12.5) (8.8) (8.9)

Other (1.3) 27.0 27.2 0.0 0.0

Ordinary Shares (M) 593.0Options + Notes (M) 20.8 Cash Flows From Financing Activities

Net Change in Borrowings 286 .1 300 .0 (160 .0 ) (300.0) (116 .6 )

Market Cap (US$M) $620 Market Cap (C$M) $765 Dividends Paid (0.0) (0.0) (0.0) (30.7) (38.7)Other 184.0 58.8 0.0 0.0 0.0

Net Increase In Cash Held 6.0 (16.9) 94.2 26.6 283.7PRICE ASSUMPTIONS Cash At End of Year 73.4 56.5 150.8 177.4 461.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.88 0.94 0.83 0.88 0.92Exchange Rate A$/US$ 0.84 0.85 0.68 0.78 0.81 BALANCE SHEET ANALYSIS - US$MCopper UScents/lb 323 316 185 250 290 (Dec Year End) 2007A 2008E 2009E 2010E 2011ECobalt UScents/lb 3072 3877 1650 2000 1000 Current AssetsUranium US$/lb 99.1 63.0 55.0 60.0 60.0 Cash and Liquids 99.0 82.1 176.3 202.9 486.6Gold US$/oz 696.3 872.5 887.5 925.0 925.0 Other 31.9 31.9 31.9 31.9 31.9

Non-Current Assets

Investments 4.3 4.3 4.3 4.3 4.3

Fixed Assets 677.2 998.0 978.2 937.0 897.1

FINANCIAL SUM MARY Other 15.6 (11.4) (38.6) (38.6) (38.6)(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Current Liabilities

NPAT (pre-Abs) (US$M) -17.1 -21.9 207.2 316.1 399.1 Borrowings 13.5 13.5 0.0 0.0 0.0EPS (ps) -5.2 -3.1 34.0 51.7 65.3 Creditors 64.0 64.0 64.0 64.0 64.0PER (x) 50 50 3.1 2.0 1.6 Other 4.3 4.3 4.3 4.3 4.3EPS Growth (%) ->100.0 41.6 +>100.0 52.2 26.2

EBITDA (US$M) -6.4 0.8 284.3 526.4 632.8 Non-Current Liabilities

EBITDA per Share (ps) -1.0 0.1 46.3 85.8 103.1 Borrowings 263.1 563.1 416.6 116.6 0.0EV/EBITDA (x) ->100.0 +>100.0 3.0 1.0 0.2 Other 64.8 64.8 64.8 64.8 64.8Dividend (ps) 0.0 0.0 0.0 5.2 6.5 Minority Interest 0.0 0.0 0.0 0.0 0.0Yield (%) 0.0 0.0 0.0 5.0 6.2 SHAREHOLDERS FUNDS 418.3 395.2 602.4 887.8 1248.2

P/FCF (x) NM NM 2.7 1.7 1.4 Net Cash/ (Net Debt) (177.6) (494.5) (240.2) 86.4 486.6

FCF Yield (%) NM NM 36.6 57.7 70.8 Net Debt/Equity % 42.5 125.1 39.9 -9.7 -39.0

PROFIT AND LOSS STATEMENT - US$M DIVISIONAL EARNINGS (EBIT) - US$M

(Dec Year End) 2007A 2008E 2009E 2010E 2011E (Dec Year End) 2007A 2008E 2009E 2010E 2011E

Sales Revenue 0.0 0.0 573.4 909.2 1083.8Other Revenue 0.0 9.7 110.3 8.9 -8.6 Lumwana -7 -10 132 466 588Operating Costs 0.0 0.0 364.0 350.0 356.0

Gross Operating Profit 0.0 9.7 319.7 568.0 719.2 Total -7 -10 132 466 588Depreciation 0.1 0.3 48.9 58.2 59.3Exploration and Royalties 7.1 10.3 28.7 35.0 79.9Corporate and Other 11.3 9.7 8.0 8.0 8.0 FINANCIAL MULTIPLESEBIT (not incl associates) -18.5 -10.5 234.0 466.8 572.0Less Net Interest Expense -1.8 10.9 32.4 15.3 1.9 ROA (%) NM NM 20.3 41.0 41.4

Pre-Tax Profits -16.8 -21.4 201.7 451.5 570.1 ROE (%) NM NM 34.4 35.6 32.0Less Tax 0.3 0.4 -5.6 135.5 171.0 ROIC (%) NM NM 23.0 46.5 45.8Plus Associates less Divds 0.0 0.0 0.0 0.0 0.0NPAT (pre-Abs) -17.1 -21.9 207.2 316.1 399.1

Net Abnormals -12.4 3.6 0.0 0.0 0.0

Reported Profit -29.4 -18.3 207.2 316.1 399.1

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT /DIVISIONNPV US$M Attributable Contained Mine 2007A 2008E 2009E 2010E 2011E

Metal L ife Production - Copper

Lumwana (Copper) 2,440 (Mt) (Years) Lumwana (000t) 100.0% 0 0 148 176 179

Lumwana (Uranium) 0 Copper Reserves 2.3 12Hedge Book 80 Copper Resources 2.7 14 Committed HedgingCorporate & Other -67 Cu Guesstimate 3.7 19 Copper (000 t) 54 57 8

Net Cash -447 Price (US$/lb) 2.78 2.57 2.43Cobalt Reserves 0.0 12

TOTAL NPV (US$M) 2,006 Cobalt Resources 0.1 14 Production - UraniumNPV per Share (US$) 3.27 Co Guesstimate 0.0 19 Lumwana (000t) 100.0% 0 0 0 0 0

Cu Cash Cost US$/lb 0.00 0.00 1.27 1.06 1.06

*Co-Product Basis



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Page 17 of 25

First Quantum FM CASH FLOW ANALYSIS - US$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E 2011E

As at 26-Feb-09Recommendation Outperform Analyst: Cash Flows From Operating Activities

David Radclyffe Receipts F rom Customers 1 53 9.2 1 91 2.9 1 46 9.2 1 79 0.7 2 32 2.2 2 32 2.2

Payments To Suppl iers (574.2) (864.5) (721.8) (880.5) (1109.1) (1109.1)

Net Interest (28.9) (22.8) (13.3) (7.3) 7.5 7.5Share Price (US$) $27.30 Share Price (C$) $33.70 Tax and Other (396.1) (242.2) (190.8) (229.7) (322.2) (322.2)

Model Derived Model Derived Cash Flows From Investing ActivitiesTarget Value (US$) $ 30. 78 Target Value (C$) $38. 00 Acq. of Propert y, P lan t and Equip . (3 19. 6) ( 445. 2) ( 189 .0) ( 308. 8) (8 2.8 ) (82. 8)NPV (US$) $56.82 NPV (C$) $70.15 Exploration Expenditure 0.0 (26.3) (21.2) (12.2) (23.8) (23.8)

Other (290.7) (307.3) 0.0 0.0 0.0 0.0Ord in ary Shares (M) 6 7.3

Options + Notes (M) 0.4 Cash Flows From Financing ActivitiesNet Change in Borrowings 69.3 25.0 50.0 (436.2) 0.0 0.0

Market Cap (US$M) $1,725 Market Cap (C$M) $2,130 Dividends Paid (51.7) (53.5) (29.6) (55.3) (79.4) (79.4)Other 11.5 5.0 0.0 0.0 0.0 0.0

Net Increase In Cash Held (49 .5 ) (19 .0 ) 3 53 .6 (139 .2 ) 7 12 .3 7 12 .3

PRICE ASSUMPTIONS Cash At End of Year 200.0 181.0 534.6 395.4 1107.7 1107.7

(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.93 0.94 0.83 0.88 0.92

Exchange Rate A$/US$ 0.84 0.85 0.68 0.78 0.81 BALANCE SHEET ANALYSIS - US$MCopper UScents/lb 323 316 185 250 290 (Dec Year End) 2007A 2008E 2009E 2010E 2011E 2011EGold US$/oz 696 873 888 925 925 Current AssetsCobalt UScents/lb 3072 3877 1650 2000 1000 Cash and Liquids 222.5 203.5 557.1 417.9 1130.2 1130.2Nickel UScents/lb 1688 960 575 700 800 Other 564.1 564.1 564.1 564.1 564.1 564.1

Non-Current AssetsInvestments 567.0 567.0 567.0 567.0 567.0 567.0

Fixed Assets 1320.5 1660.8 1714.9 1898.5 1858.6 1858.6

FINANCIAL SUMMARY Other 8.6 315.9 315.9 315.9 315.9 315.9

(Dec Year End) 2007A 2008E 2009E 2010E 2011ECurrent Liabilities

NPAT (pre-Abs) (US$M) 520.3 469.1 333.1 461.4 625.0 Borrowings 73.7 73.7 0.0 0.0 0.0 0.0EPS (ps) 762.0 678.5 477.4 661.0 895.2 Creditors 104.9 104.9 104.9 104.9 104.9 104.9

PER (x) 3.6 4.0 5.7 4.1 3.0 Other 150.7 51.7 53.5 29.6 55.3 55.3EPS Growth (%) 1.6 -10.7 -29.6 38.5 35.4

EBITDA (US$M) 813.5 890.6 674.6 826.0 1064.9 Non-Current LiabilitiesEBITDA per Share (ps) 1187.1 1274.5 965.3 1182.0 1523.9 Borrowings 287.5 312.5 436.2 0.0 0.0 0.0EV/EBITDA (x) 2.4 2.3 2.6 1.8 0.7 Other 264.5 264.5 264.5 264.5 264.5 264.5

Dividend (ps) 74.5 50.8 48.0 99.8 135.2 Minority Interest 215.4 25.0 25.0 25.0 30.0 30.0Yield (%) 2.7 1.9 1.8 3.7 5.0 SHAREHOLDERS FUNDS 1586.0 2479.0 2834.9 3339.4 3981.1 3981.1P/FCF (x) 7.8 5.5 5 4.9 2.2 Net Cash/ (Net Debt) (138.7) (182.7) 120.9 417.9 1130.2 1130.2

FCF Yield (%) 13 18 19.3 20 46 Net Debt/Equity % 8.7% 7 .4% -4.3% -12.5% -28.4% -28.4%

PROFIT AND LOSS STATEMENT - US$M DIVISIONAL EARNINGS (EBIT) - US$M(Dec Year End) 2007A 2008E 2009E 2010E 2011E (Dec Year End) 2007A 2008E 2009E 2010E 2011E 2011E

Sales Revenue 1539.2 2147.6 1449.2 1790.7 2322.2 Bwana Mkubwa 5.0 -21.3 0.0 0.0 0.0 2.8Other Revenue 0.0 -234.6 20.0 0.0 0.0 Kansanshi 711.7 745.2 264.6 350.9 482.4 10.0

Operating Costs 544.3 772.1 642.3 787.0 993.5 Guelb Moghrein 138.5 153.5 85.2 138.8 169.7 925.0Gross Operating Profit 994.9 1140.8 826.9 1003.8 1328.6 Frontier 7.8 257.9 149.3 220.5 256.6 14.0Depreciation 81.2 105.9 136.9 127.1 124.7 Kolwezi tailings 0.0 0.0 0.0 -7.0 108.4 0.0

Exploration and Royalties 25.1 209.0 55.1 55.8 83.1 Kevista 0.0 0.0 0.0 0.0 0.0 0.0Corporate and Other 25.2 -91.2 43.5 47.9 54.3

EBIT 863.4 917.2 591.4 773.0 1066.6 Capital spending 319.6 445.2 189.0 308.8 82.8 54.3Less Net Interest Expense 28.9 22.8 13.3 7.3 -7.5 Corporate and Other Costs 25.2 (91.2) 43.5 47.9 54.3 54.3

Pre-Tax Profits 834.5 894.3 578.1 765.6 1074.1 EBIT 863.4 917.2 591.4 773.0 1066.6 1066.6Less Tax 182.8 292.2 190.8 229.7 322.2Less Minorities 131.4 133.0 54.2 74.6 126.8 FINANCIAL MULTIPLESPlus Associates 0.0 0.0 0.0 0.0 0.0 ROA (%) 32.2 27.7 15.9 20.5 24.0 24.0

NPAT (pre-Abs) 520.3 469.1 333.1 461.4 625.0 ROE (%) 32.8 7.0 11.8 13.8 15.7 15.7

Net Abnormals 0.0 -296.0 0.0 0.0 0.0 ROIC (%) 44.3 32.0 18.1 23.1 26.8 26.8

Reported Profit 520.3 173.1 333.1 461.4 625.0

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT/DIVISIONNPV US$M Attributable Contained Mine 2007A 2008E 2009E 2010E 2011E 2011E

Bwana Mkubwa 0 Metal Life Attributable Copper Production (100%)Kansanshi 1,689 (Mt) (Years) Bwana Mkubwa (000t) 25 6 0 0 0 0

Guelb Moghrein 449 Copper Reserves 3.8 10 Kansanshi (000t) 162 213 242 208 204 204Frontier 1,223 Copper Resources 11.4 29 Guelb Moghrein (000t) 28 32 36 44 44 44

Mopani 10 Cu Guesstimate 8.3 21 Frontier (000t) 8 78 94 85 80 80

Kolwezi Tailings 402 Kolwezi tailings (000t) 0 0 0 0 29 29Kevista 34 Attributable Con tained Mine Kevista (000t) 0 0 0 0 0 0Corporate and Other -209 Metal Life Total Attrib Copper 224 328 372 337 357 357Investments (inc. EQN) 373 (Moz) (Years) Gold ProductionHedge Book -16 Gold Reserves 1.8 7 Kansanshi (000oz) 30 30 140 107 89 89Net Cash -107 Gold Resources 4.9 18 Guelb Moghrein (000oz) 54 66 99 110 120 120

TOTAL NPV (US$M) 3,848 Au Guesstimate 3.3 12 Cu Cash Cost US$/lb 1.13 1.26 0.97 1.27 1.40 0.00NPV per Share (US$) 56.8233 *Co-Product Basis



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Page 18 of 25

Freeport McMoRan FCX CASH FLOW ANALYSIS - US$MNYSE (Dec Year End) 2008A 2009E 2010E 2011E

As at 26-Feb-09Recommendation Market Perform Analysts: Cash Flows From Operating Activities

David Radclyffe Receip ts From Cu stomers 1 779 6 1 188 3 1 468 2 165 38

Tony Robson Payments To Suppliers (9533) (7668) (8164) (9253)Share Price (US$) $29.32 Net Interest (584) (474) (472) (429)JV Div,Tax and Other (4309) (2171) (2772) (2971)

Model Derived

Target Value (US$) $30.00 Cash Flows From Investing ActivitiesNPV (US$) $49.04 Acq.of Property, Plant and Equip. (2708) (1262) (1059) (2007)

Exploration Expenditure 0 0 0 0Ordinary Shares (M) 411.0 Other 390 0 0 0Options + Notes (M) 71 .7

Cash Flows From Financing Activities

Market Cap (US$M) $11,230 Net Change in Borrowings 124 (67) (10) (135)Dividends Paid (948) (270) (246) (281)Other incl Share Issue or Buy Back (982) 693 (98) (117)

PRICE ASSUMPTIONS Net Increase In Cash Held (754) 664 1861 1345(Dec Year End) 2008A 2009E 2010E 2011E Cash At End of Year 873 1537 3398 4743

Exchange Rate A$/US$ 0.852 0.682 0.781 0.810

Copper UScents/lb 315.7 185.0 250.0 290.0 BALANCE SHEET ANALYSIS - US$MCobalt UScents/lb 3877 1650 2000 1000 (Dec Year End) 2008A 2009E 2010E 2011EMolybdenum US$/lb 30.0 13.5 15.0 15.0 Current AssetsGold US$/oz 873 888 925 925 Cash and Liquids 872 1536 3397 4743

Silver US$/oz 15.01 12.75 14.00 14.00 Other 4279 4279 4279 4279

Non-Current Assets

Investments 0 0 0 0

Fixed Assets 16002 16336 16423 17425

FINANCIAL SUMMARY Other 2118 973 973 973

(Dec Year End) 2008A 2009E 2010E 2011ECurrent Liabilities

NPAT (pre-Abs) (US$M) 2615 167 1729 2256 Borrowings 67 0 0 0EPS (ps) 576 35 358 467 Creditors 2715 1813 2240 2523PER (x) 5 50 8 6 Other 369 369 370 370EPS Growth (%) -41 -94 +>100.0 30

EBITDA (US$M) 7058 3624 5507 5997 Non-Current Liabilities

EBITDA per Share (ps) 1556 751 1141 1242 Borrowings 7284 7284 7274 7139EV/EBITDA (x) 3 5.5 3 3 Other 5718 5718 5718 5719

Dividend (ps) 138 0 0 100 Minority Interest 1328 1328 1328 1328Yield (%) 4.7 0.0 0.0 3.4 SHAREHOLDERS FUNDS 5790 6612 8143 10341P/FCF (x) 17 36 5 6 Net Cash(Debt) (6479) (5748) (3877) (2396)FCF Yield (%) 5.9 3 20 17 Net Debt/Equity % 112% 87% 48% 23%

PROFIT AND LOSS STATEMENT - US$M DIVISIONAL EARNINGS (EBIT) - US$M(Dec Year End) 2008A 2009E 2010E 2011E (Dec Year End) 2008A 2009E 2010E 2011E

Sales Revenue 17796 11883 14682 16538 Grasberg 1307 2237 2900 2192Other Revenue 0 0 0 0 Bagdad/Sierrita 1091 367 735 1085Operating Costs 9533 7668 8164 9253 Morenci 357 -38 125 323

Gross Operating Profit 8263 4215 6518 7285 Cerro Verde 987 397 710 1114Depreciation 1782 1002 1068 1152 Candelaria 383 176 354 693Exploration 292 75 97 147 El Abra 441 95 285 431

Corporate/Royalties/Other 302 180 231 278 Tenke Fungurume -12 98 564 606

EBIT 5887 2958 5122 5709 Primary and by-produ ct molybd en um 74 8 -22 13 8 23 8Less Net Interest Expense 584 474 472 429 Rod & Refining 22 13 16 18

Pre-Tax Profits 5303 2484 4649 5279 Atlantic Copper Refinery (100%) 10 16 22 29Less Tax 1812 1739 2092 2112Less Minori ti es and Smelter Losses 602 332 679 860 FINANCIAL M ULTIPLESPlus Associates less Divs -274 -246 -149 -52 ROA 25.3 12.8 20.4 20.8

NPAT (pre-Abs) 2615 167 1729 2256 ROE nm 2.5 21.2 21.8Net Abnormals -13956 0 0 0 ROIC 44.8 21.3 33.2 32.7

Reported Profit -11341 167 1729 2256

DIVISIONAL VALUATION PROJECT/DIVISIONNPV US$M Contained Mine 2008A 2009E 2010E 2011E

Met al L ife NORTH AMERICA DIVISIONGrasberg (90.6% of PT-FI) 14,370 (Mt) (Years) Copper (000t) 641 489 417 547Bagdad/Sierrita 4,139 61.3 22 Molybdenum (t) 31752 26878 26947 29708Morenci 3,218 113.6 40 SOUTH AMERICA DIVISIONCandelaria 1,437 79.2 28 Copper (000t) 690 628 597 692Cerro Verde 2,271 Molybdenum (t) 998 726 710 847El Abra 811 1.2 14 Gold (000oz) 114 117 106 120

Tenke Fungurume 2,676 2.8 34 INDONESIA DIVISIONMolybdenum 1,529 1.8 22 Copper (000t) 504 615 641 521Rod & Refining 85 Gold (000oz) 1182 2100 2030 1541Atlantic Copper Refinery (100 375 0.3 13 SOUTHERN AFRICA DIVISIONPT Smelting 75 0.7 29 Copper (000t) 0 27 98 112

Corporate & Other -1,575 0.9 36 Cobalt (000t) 0 2 8 8

Net Cash (In cl JV d ebt ) -5,7 39 (Moz) ( Years)

TOTAL NPV (US$M) 23,671 173.7 62 Copper Total (Bln lb) 4.0 3.9 3.9 4.1NPV per Share (US$) 49.04 219.3 78 Molybdenum Total (Bln lb) 72 61 61 67

99.9 36Co- Prod uct Cash Cost US$/ lb 1. 45 1.05 1.1 3 1.3 3



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Frontera Copper FCC CASH FLOW ANALYSIS - US$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E

As at 26-Feb-09 Analysts:Recommendation Market Perform (S) David Cotterell Cash Flows From Operating Activities

R eceipt s From Custom ers 31.8 114.4 50.4 153.5 199.5

Payments To Suppliers 0.0 ( 94.8) (53.2) (111.4) (129.7)Net Interest 0.0 (8.9) (3.0) (2.6) (0.9)

Share Price (US$) $0.62 Share Price (C$) $0.76 Tax and Other 23.9 (2.1) 3.4 (6.9) (14.6)

Model Derived Model Derived Cash Flows From Investing Activities

Target Value (US$) $0.68 Target Value (C$) na Acq.of Property, Plant and Equip. (29.8) (8.0) (2.7) (5.5) (5.8)NPV (US$) $1.21 NPV (C$) $1.50 Exploration Expenditure 0.0 0.0 0.0 0.0 0.0

Other 1.2 0.0 0.0 0.0 0.0Ordinary Shares (M) 64.5

Opti ons + Notes (M) 0.8 Cash Flows From Financing Activities

Net Change in Borrowings 0.0 0.0 0.0 (45.0) (11.6)Market Cap (US$M) $40 Market Cap (C$M) $49 Dividends Paid 0.0 (0.0) (0.0) (0.0) (0.0)

Other (6.3) 0.0 0.0 0.0 0.0

Net Increase In Cash Held 20.9 0.6 (5.0) (17.9) 36.8

PRICE ASSUMPTIONS Cash At End of Year 54.5 55.1 50.1 32.2 69.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.88 0.94 0.83 0.88 0.92Copper UScents/lb 323.0 315.7 185.0 250.0 290.0 BALANCE SHEET ANALYSIS - US$MGold US$/oz 696 873 888 925 925 (Dec Year End) 2007A 2008E 2009E 2010E 2011ESilver US$/oz 13.4 15.0 12.8 14.0 14.0 Current AssetsMolybdenum US$/lb 30.7 30.0 13.5 15.0 15.0 Cash and Liquids 54.5 55.1 50.1 32.2 69.0

Other 39.1 39.1 39.1 39.1 39.1

Non-Current Assets

Investments 1.8 1.8 1.8 1.8 1.8

Fixed Assets 136.0 136.0 132.1 122.8 111.8FINANCIAL SUMMARY Other 22.8 0.0 0.0 0.0 0.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Current Liabilities

NPAT (pre-Abs) (US$M) 45.4 0.6 -8.8 17.7 37.5 Borrowings 17.5 17.5 17.5 17.5 17.5EPS (US$ps) 0.7 0.0 -0.1 0.3 0.6 Creditors 0.0 0.0 0.0 0.0 0.0

PER (x) 1.1 50 50 2.8 1.3 Other 29.9 0.0 0.0 0.0 0.0EPS Growth (%) +>100.0 -98.4 ->100.0 +>100.0 +>100.0EBITDA (US$M) 115.7 29.4 -9.4 41.8 69.4 Non-Current Liabilities

EBITDA per Share (US$ps) 1.8 0.5 -0.1 0.6 1.1 Borrowings 76.6 76.6 76.6 31.6 20.0

EV/EBITDA (x) 0.6 2.4 -8.1 1.2 0.0 Other 16.2 16.2 16.2 16.2 16.2Dividend (US$ps) 0.0 0.0 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 0.0 0.0Yield (%) 0.0 0.0 0.0 0.0 0.0 SHAREHOLDERS FUNDS 114.0 121 .6 112 .8 130.5 168.0P/FCF (x) 1.5 64.0 NM 1.5 0.8 Net Cash/(Net Debt) (39.7) (39.1) (44.1) (17.0) 31.4FCF Yield (%) 65 2 NM 68 122 Net Debt/Equity % 34.8% 32.1% 39.1% 13.0% -18.7%


Sales Revenue 167.3 114.4 50.4 153.5 199.5Other Revenue 0.0 0.0 0.0 0.0 0.0 Piedras Verdes 86 15 -5 31 57

Operating Costs 70.3 90.0 46.6 100.4 117.0Gross Operating Profit 97.0 24.4 3.8 53.2 82.4 Capital spending 29.8 8.0 2.7 5.5 5.8Depreciation 10.8 7.8 6.4 14.6 16.3 Corporate and Other Costs 7.0 3.8 4.0 4.0 4.0Exploration and Royalties 0.6 1.3 2.7 7.4 9.1

Corporate and Other 7.0 3.8 4.0 4.0 4.0 Total EBIT 79 12 -9 27 53EBIT (not incl associates) 78.6 11.6 -9.3 27.2 53.0Less Net Interest Expense 10.3 8.9 3.0 2.6 0.9

Pre-Tax Profits 68.4 2.7 -12.3 24.6 52.1Less Tax 22.9 2.1 -3.4 6.9 14.6Plus Associates less Divds 0.0 0.0 0.0 0.0 0.0Less Minorities 0.0 0.0 0.0 0.0 0.0

NPAT (pre-Abs) 45.4 0.6 -8.8 17.7 37.5Net Abnormals -13.7 5.5 0.0 0.0 0.0Reported Profit 31.7 6.1 -8.8 17.7 37.5

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT/DIVISIONNPV US$M Attributable Contained Mine Percent 2007A 2008E 2009E 2010E 2011E

Metal Li fe Copper Production Owned

Piedras Verdes 172.5 (Mt) (Years) Piedras Verdes 100% (000t) 24 19 12 28 31Net Cash & Other -74.2 Copper Reserves 0.70 14.3

Corporate & Other -19.0 Copper Resources 0.80 16.4Hedge Book 0 Cu Guesstimate 0.70 14.4 Cu Cash Cost US$/lb 1.30 2.18 1.72 1.63 1.70

*Co-Product Basis

TOTAL NPV (US$M) 79.2

NPV per Share (US$) 1.21



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Page 20 of 25

Inmet Mining IMN CASH FLOW ANALYSIS - C$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E

As at 26-Feb-09 Analysts:Recommendation Market Perform David Cotterell Cash Flows From Operating Activities

Receip ts From Customers 417.6 216.9 967.9 123 6.4 11 81.5

Payments To Suppliers 0.0 0.0 (627.0) (568.1) (587.0)Net Interest (1.3) 35.4 48.8 (17.6) (10.9)

Share Price (US$) $22.02 Share Price (C$) $27.19 Tax and Other 11.0 72.2 (100.2) (192.7) (168.0)

Model Derived Model Derived Cash Flows From Investing ActivitiesTarget Value (US$) $22.68 Target Value (C$) $28.00 Acq.of Proper ty, P lan t and Equ ip . (345.9) (802.5) (311.5) (156.1) (113.1)NPV (US$) $26.44 NPV (C$) $32.64 Exploration Expenditure 0.0 0.0 0.0 0.0 0.0

Other (14.8) 220.6 0.0 0.0 0.0Ord inary Shares (M) 48.3Options + Notes (M) 0.0 Cash Flows From Financing Activities

Net Change in Borrowings 88.9 114.6 0.0 (50.0) (50.0)Market Cap (US$M) $1,063 Market Cap (C$M) $1,313 Dividends Paid (9.7) (9.7) (8.0) (6.4) (5.8)

Other (8.0) 166.9 0.0 0.0 0.0

Net Increase In Cash Held 137.9 14.6 (3 0.0) 2 45.5 246.8

PRICE ASSUMPTIONS Cash At End of Year 522.5 537.1 507.1 752.6 999.4(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.88 0.94 0.83 0.88 0.92Copper UScents/lb 323.0 315.7 185.0 250.0 290.0 BALANCE SHEET ANALYSIS - C$MZinc UScents/lb 147.5 85.5 66.3 85.0 100.0 (Dec Year End) 2007A 2008E 2009E 2010E 2011EGold US$/oz 696 873 888 925 925 Current Assets

Silver US$/oz 13.4 15.0 12.8 14.0 14.0 Cash and Liquids 842.4 581.0 551.1 796.6 1043.4Molybdenum US$/lb 30.7 30.0 13.5 15.0 15.0 Other 198.4 224.4 224.4 224.4 224.4Pyrite US$/t

Non-Current Assets

Investments 32.3 17.5 17.5 17.5 17.5

Fixed Assets 871.0 1950.5 2167.0 2239.2 2262.6

FINANCIAL SUMMARY Other 104.4 67.8 0.0 0.0 0.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Current Liabilities

NPAT (pre-Abs) (C$M) 419.6 278.5 194.4 374.1 326.0 Borrowings 13.0 109.7 109.7 109.7 109.7

EPS (C$ps) 8.7 5.8 4.0 7.7 6.8 Creditors 145.2 191.4 191.4 191.4 191.4PER (x) 3.1 4.7 6.8 3.5 4.0 Other 27.6 29.9 9.7 8.0 6.4EPS Growth (%) 3.7 -33.6 -30.2 92.4 -12.9

EBITDA (C$M) 770.0 642.9 361.7 666.9 593.0 Non-Current Liabilities

EBITDA per Share (C$ps) 15.9 13.3 9.1 13.8 12.3 Borrowings 234.3 384.8 384.8 334.8 284.8EV/EBITDA (x) 0.9 1.9 3.5 1.4 1.1 Other 235.9 257.7 257.7 257.7 257.7

Dividend (C$ps) 0.2 0.2 0.2 0.2 0.1 Minority Interest 0.0 0.0 (0.0) 0.0 0.0

Yield (%) 0.7 0.7 0.7 0.6 0.5 SHAREHOLDERS FUNDS 1392.5 1867.8 2006.7 2376.1 2697.9P/FCF (x) 13.1 NM NM 3.5 3.5 Net Cash/(Net Debt) 595.1 86.5 56.6 352.1 648.8FCF Yield (%) 8 NM NM 28 28 Net Debt/Equity % -42.7% -4.6% -2.8% -14.8% -24.1%

PROFIT AND LOSS STATEMENT - C$M DIVISIONAL EARNINGS (EBIT) - C$M(Dec Year End) 2007A 2008E 2009E 2010E 2011E (Dec Year End) 2007A 2008E 2009E 2010E 2011E

Sales Revenue 1101.2 928.7 970.9 1236.4 1181.5Other Revenue 13.0 20.3 -3.0 0.0 0.0 Cayeli 224 118 68 106 137Operating Costs 519.2 521.2 614.6 545.6 562.0 Pyhasalmi 138 91 -9 40 53

Gross Operating Profit 595.0 427.9 353.3 690.8 619.5 Troilus 10 29 59 85 0

Depreciation 36.2 44.6 85.0 82.5 88.1 Ok Tedi 187 134 106 93 101Exploration and Royalties 8.6 10.6 11.0 10.9 13.4 Las Cruces 0 0 37 124 166Corporate and Other 21.2 14.4 11.5 13.0 13.0 Petaquilla 0 0 0 0 0

EBIT (not incl associates) 529.0 358.3 245.8 584.4 504.9Less Net Interest Expense -31.3 -26.3 -48.8 17.6 10.9 Capital spending 345.9 802.5 311.5 15 6.1 113.1

Pre-Tax Profits 560.3 384.6 294.6 566.8 494.0 Corporate and Other Costs 21.2 14.4 11.5 13.0 13.0Less Tax 140.7 106.1 100.2 192.7 168.0Plus Associates less Divds 0.0 0.0 0.0 0.0 0.0 Total EBIT 529 358 246 584 505Less Minorities 0.0 0.0 0.0 0.0 0.0

NPAT (pre-Abs) 419.6 278.5 194.4 374.1 326.0Net Abnormals -2.0 -61.6 0.0 0.0 0.0

Reported Profit 417.6 216.9 194.4 374.1 326.0

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT/DIVISIONNPV US$M Attributable Contained Mine 2007A 2008E 2009E 2010E 2011E

Metal L ife Attributable Production

Cayeli 380.9 (Mt) (Years)Pyhasamli 133.8 Copper Reserves 1.66 5.1 Copper Production (000t) 83 81 111 128 125

Troilus 100.5 Copper Resources 6.22 19.2 Zinc Production (000t) 87 76 67 74 74Ok Tedi 161.8 Cu Guesstimate 4.62 14.3 Gold Production (000oz) 234 242 241 238 106

Las Cruces 658.6 Zinc Reserves 0.91 9.3 Pyrite Production (000t) 509 558 400 550 550

Petaquila -174.7 Zinc Resources 1.04 10.6 Molybdenum Production (000t) 0 0 0 0 0Net Cash & Other 70.1 Zn Guesstimate 0.89 9.0Corporate & Other -55.2 (Moz) (Years)Hedge Book 1 Gold Reserves 1.77 1.8

TOTAL NPV (US$M) 1276.4 Gold Resources 5.61 5.7NPV per Share (US$) 26.44 Au Guesstimate 3.89 3.9 Cu Cash Cost US$/lb 2.29 2.15 1.96 1.78 1.92

*Co-Product Basis



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Page 21 of 25

Katanga Mining KAT CASH FLOW ANALYSIS - US$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E 2011E

As at 26-Feb-09

Recommendation Underperform Analysts: Cash Flows From Operating Activities

David Radclyffe Receipts From Customers (0.0) 365.1 354.9 617.8 573.6 573.6Paymen ts To Supp li ers (34.0) (444 .5 ) (337 .1 ) (409 .9) (334.5) (334 .5 )Net Interest 14.3 12.5 21.1 27.0 23.9 23.9

Share Price (US$) $0.36 Share Price (C$) $0.45 Tax and Other (4.1) 10.2 (10.0) (34.8) (43.6) (43.6)

Model Derived Model Derived Cash Flows From Investing ActivitiesTarget Value (US$) na Target Value (C$) na Acq.of Property, Plant and Equip. (227.9) (308.3) (64.8) (38.4) (14.7) (14.7)NPV (US$) $6.08 NPV (C$) $7.51 Exploration Expenditure (0.5) (2.5) (2.0) (2.4) (2.5) (2.5)

Other 0.0 429.7 0.0 0.0 0.0 0.0Ordinary Shares (M) 206.3Options + Notes (M) 9.7 Cash Flows From Financing Activities

Net Change in Borrowings 150.0 0.0 (72.0) 0.0 0.0 0.0Market Cap (US$M) $74 Market Cap (C$M) $92 Dividends Paid (0.0) (0.0) (0.0) 0.0 0.0 0.0

Capital Stock 6.2 (21.6) 0.0 0.0 69.0 69.0

Net Increase In Cash Held (96.0) 40.5 ( 109.8) 159.4 271.4 271.4

PRICE ASSUMPTIONS Cash At End of Year 100.7 141.3 31.5 190.9 462.3 462.3(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.93 0.94 0.83 0.88 0.92BALANCE SHEET ANALYSIS - US$M

Copper UScents/lb 323 316 185 250 290 (Dec Year End) 2007A 2008E 2009E 2010E 2011E 2011ECobalt UScents/lb 3072 3877 1650 2000 1000 Current Assets

Cash and Liquids 100.7 141.3 31.5 190.9 462.3 462.3Other 27.8 27.8 27.8 27.8 27.8 27.8

Non-Current Assets

Investments 0.0 0.0 0.0 0.0 0.0 0.0

Fixed Assets 320.3 2710.1 2730.1 2705.8 2653.1 2653.1FINANCIAL SUMMARY Other 0.0 0.0 0.0 0.0 0.0 0.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Current Liabilities

NPAT (pre-Abs) (US$M) -47.8 -77.7 -35.1 81.2 101.7 Borrowings 0.0 0.0 0.0 0.0 0.0 0.0EPS (ps) -53.9 -34.2 -14.7 39.2 48.0 Creditors 43.5 100.0 100.0 100.0 100.0 100.0PER (x) 50 50 50 0.9 0.8 Other 23.7 6.0 6.0 6.0 6 .0 6.0EPS Growth (%) ->100.0 36.6 57.1 +>100.0 22.2

EBITDA (US$M) -13.6 -58.7 20.2 210.1 239.5 Non-Current Liabilities

EBITDA per Share (ps) -16.0 -27.2 9.3 97.3 110.9 Borrowings 267.5 267.5 195.5 195.5 195.5 195.5EV/EBITDA (x) -14.4 -3.4 11.8 0 .4 -0.8 Other 0.0 578.5 578.5 578.5 578.5 578.5Dividend (ps) 0.0 0.0 0.0 0.0 0.0 Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0

Yield (%) 0.0 0.0 0.0 0.0 0.0 SHAREHOLDERS FUNDS 114.1 1927.1 1909.3 2044.5 2263.2 2263.2P/FCF (X) NM NM NM 0.5 0.4 Net Cash/ (Net Debt) (166.8) (126.3) (164.0) (4.6) 266.7 266.7FCF Yield (%) NM NM NM 214 272 Net Debt/Equity % 146.1% 6.6% 8.6% 0.2% -11.8% -11.8%

PROFIT AND LOSS STATEMENT - US$M DIVISIONAL EARNINGS (EBIT) - US$M(Dec Year End) 2007A 2008E 2009E 2010E 2011E (Dec Year End) 2007A 2008E 2009E 2010E 2011E 2011E

Sales Revenue 0.0 365.1 354.9 617.8 573.6Other Revenue 0.0 0.0 0.0 0.0 0.0 KAMOTO 0 -83 6 173 199 199Operating Costs 0.0 344.8 295.0 367.5 293.0 NIKANOR 0 80 0 0 0 0Gross Operating Profit 0.0 20.3 59.9 250.3 280.6Depreciation 0.0 19.6 45.8 63.6 68.4Exploration and Royalties 0.0 4.8 8.1 13.7 13.0 Total 0 -4 6 173 199 199Corporate and Other 34.0 96.5 35.0 30.0 30.0

EBIT (not incl associates) -34.0 -100.5 -29.0 143.0 169.3 Financial MultiplesLess Net Interest Expense 14.3 12.5 21.1 27.0 23.9Pre-Tax Profits -48.3 -113.0 -50.1 116.0 145.3 ROA (%) NM NM NM 4.9 5.4 5.4Less Tax -0.4 -35.2 -15.0 34.8 43.6 ROE (%) NM NM NM 4.0 4.5 4.5Plus Associates less Divds 0.0 0.0 0.0 0.0 0.0 ROIC (%) NM NM NM 6 7 7Less Minorities 0.0 0.0 0.0 0.0 0.0 0.4NPAT (pre-Abs) -47.8 -77.7 -35.1 81.2 101.7 272Net Abnormals 0.0 0.0 0.0 0.0 0.0Reported Profit -47.8 -77.7 -35.1 81.2 101.7

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT/DIVISIONNPV US$M Attributable Contained Mine 2007A 2008E 2009E 2010E 2011E 2011E

Metal L ife Production - CopperKAMOTO 1585 (Mt) (Years) KAMOTO (000t) 100% 0 21 45 63 67 67NIKANOR 0 Copper Reserves 2.3 29 NIKANOR (000t) 100% 0 3 0 0 0 0Corporate & Others -177 Copper Resources 10.6 132 Total Copper 0 24 45 63 67 67Net Cash -94 Cu Guesstimate 3.5 44

Production - Cobalt

Cobalt Reserves 0.3 29 KAMOTO (000t) 100.0% 0 1 5 6 6 6

TOTAL NPV (US$M) 1,313 Cobalt Resources 1.1 132 NIKANOR (000t) 100.0% 0 2 0 0 0 0NPV per Share (US$) 6.08 Co Guesstimate 0.4 44

Cu Cash Cost US$/lb NM 2.69 1.57 1.49 1.48 1.97*Co-Product Basis



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Page 22 of 25

Quadra Mining QUA CASH FLOW ANALYSIS - US$MTSX (Dec Year End) 2007A 2008E 2009E 2010E 2011E

As at 26-Feb-09 Analysts:Recommendation Market Perform David Cotterell Cash Flows From Operating Activities

Receipts From Customers 136.4 571.0 435.7 590.1 546.6Payments To Suppliers 0.0 ( 331.4) (344.4) (389.7) (373.1)Net Interest (39.1) 8.9 0.8 (0.1) 2.7

Share Price (US$) $2.79 Share Price (C$) $3.44 Tax and Other 21.3 (36.0) (13.9) (37.1) (33.2)

Model Derived Model Derived Cash Flows From Investing ActivitiesTarget Value (US$) $3.24 Target Value (C$) $4.00 Acq.of Property, Plant and Equip. (144.1) (214.4) (44.9) (42.9) (31.0)NPV (US$) $9.35 NPV (C$) $11.54 Exploration Expenditure 0.0 0.0 0.0 0.0 0.0

Other (14.4) 0.0 0.0 0.0 0.0Ord inary Shares (M) 65 .9Options + Notes (M) 12 .0 Cash Flows From Financing Activities

Net Change in Borrowings 116.7 (145.2) 0.0 0.0 0.0Market Cap (US$M) $160 Market Cap (C$M) $197 Dividends Paid 0.0 (0.0) (0.0) (0.0) (0.0)

Other 139.0 0.0 0.0 0.0 0.0

Net Increase In Cash Held 215.8 (147.0) 33 .3 120.3 112.0PRICE ASSUMPTIONS Cash At End of Year 263.6 116.6 149.9 270.2 382.2(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Exchange Rate C$/US$ (CAD) 0.88 0.94 0.83 0.88 0.92Copper UScents/lb 323.0 315.7 185.0 250.0 290.0 BALANCE SHEET ANALYSIS - US$MGold US$/oz 696 873 888 925 925 (Dec Year End) 2007A 2008E 2009E 2010E 2011ESilver US$/oz 13.4 15.0 12.8 14.0 14.0 Current AssetsMolybdenum US$/lb 30.7 30.0 13.5 15.0 15.0 Cash and Liquids 263.6 116.6 149.9 270.1 382.1

Other 98.0 98.0 98.0 98.0 98.0

Non-Current Assets

Investments 0.0 0.0 0.0 0.0 0.0

Fixed Assets 366.1 559.6 575.7 586.9 592.5

FINANCIAL SUMMARY Other 61.5 0.0 0.0 0.0 0.0(Dec Year End) 2007A 2008E 2009E 2010E 2011E

Current LiabilitiesNPAT (pre-Abs) (US$M) 157.0 143.3 49.4 131.4 117.7 Borrowings 0.0 0.0 0.0 0.0 0.0EPS (US$ps) 2.7 2.1 0.7 1.9 1.6 Creditors 45.0 45.0 45.0 45.0 45.0PER (x) 1.3 1.7 4.6 1.8 2.1 Other 29.4 0.0 0.0 0.0 0.0EPS Growth (%) -23.2 -22.7 -63.6 +>100.0 -15.5

EBITDA (US$M) 330.5 414.3 103.1 200.9 174.4 Non-Current LiabilitiesEBITDA per Share (US$ps) 6.4 5.3 1.3 2.6 2.2 Borrowings 145.2 0.0 0.0 0.0 0.0EV/EBITDA (x) 0.3 0.4 1.2 0.1 -0.5 Other 68.6 68.6 68.6 68.6 68.6

Dividend (US$ps) 0.00 0.00 0.00 0.00 0.00 Minority Interest 0.0 0.0 0.0 0.0 0.0Yield (%) 0.0 0.0 0.0 0.0 0.0 SHAREHOLDERS FUNDS 498.4 660.6 710 .0 841.4 959.1P/FCF (x) NM NM 5 1.3 1.4 Net Cash/(Net Debt) 118.4 116.6 149.9 270.1 382.1FCF Yield (%) NM NM 20.9 75 70 Net Debt/Equity % -23.8% -17.6% -21.1% -32.1% -39.8%

PROFIT AND LOSS STATEMENT - US$M DIVISIONAL EARNINGS (EBIT) - US$M

(Dec Year End) 2007A 2008E 2009E 2010E 2011E (Dec Year End) 2007A 2008E 2009E 2010E 2011E

Sales Revenue 491.0 571.0 435.7 590.1 546.6Other Revenue 2.9 -48.4 0.0 0.0 0.0 Robinson 177 261 46 129 80Operating Costs 233.0 275.7 314.2 352.3 339.8 Carlotta 0 -2 7 43 72

Gross Operating Profit 261.0 246.9 121.5 237.8 206.7 Sierra Gorda 0 0 0 0 0Depreciation 13.8 20.7 27.9 29.7 23.8 Malmbjerg 0 0 0 0 0Exploration and Royalties 27.8 32.0 17.5 27.4 22.8Corporate and Other 17.6 23.9 13.6 12.0 12.0 Capital spending 144.1 214.4 44.9 42.9 31.0EBIT (not incl associates) 201.8 170.3 62.5 168.6 148.1 Corporate and Other Costs 17.6 23.9 13.6 12.0 12.0Less Net Interest Expense -3.9 -8.9 -0.8 0.1 -2.7Pre-Tax Profits 205.7 179.2 63.3 168.5 150.9 Total EBIT 202 170 63 169 148Less Tax 48.8 36.0 13.9 37.1 33.2Plus Associates less Divds 0.0 0.0 0.0 0.0 0.0Less Minorities 0.0 0.0 0.0 0.0 0.0NPAT (pre-Abs) 157.0 143.3 49.4 131.4 117.7Net Abnormals -19.9 -30.2 0.0 0.0 0.0Reported Profit 137.1 113.0 49.4 131.4 117.7

DIVISIONAL VALUATION RESERVES & RESOURCES PROJECT /DIVISIONNPV US$M Attributable Contained Mine Percent 2007A 2008E 2009E 2010E 2011EMetal Life Copper Production Owned

Robinson 149.8 (Mt) (Years) Robinson 100% (000t) 60 72 64 66 57Carlotta 187.7 Copper Reserves 1.05 8.3 Carlotta 100% (000t) 0 3 23 31 28Sierra Gorda 0.0 Copper Resources 3.10 30.8 Sierra Gorda 100% (000t) 0 0 0 0 0Malmbjerg 0.0 Cu Guesstimate 1.23 9.7 Total copper 60 76 87 97 85Net Cash & Other 434.0 Moly Reserves 0.00 0.0Corporate & Other -63.6 Moly Resources 0.65 0.0 Gold ProductionHedge Book 21 Mo Guesstimate 0.51 0.0 Robinson 100% (000oz) 108 126 103 108 47

(Moz) (Years) Molybdenum ProductionGold Reserves 0.77 6.7 Malmbjerg 99% (000t) 0 0 0 0 0

TOTAL NPV (US$M) 728.9 Gold Resources 3.14 27 .4NPV per Share (US$) 9.35 Au Guesstimate 1.11 9.7 Cu Cash Cost US$/lb 1.67 1.55 1.45 1.58 1.89

*Co-Product Basis



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Page 23 of 25

Disclosures

Analysts Certification

I, David Radclyffe, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities orissuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or

views expressed in this report.

I, David Cotterell, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities orissuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this report.

I, Tony Robson, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities orissuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this report.

General Disclosure

The information and opinions in this report were prepared by both BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Lte./Ltd., collectively(BMO NB) and BMO Capital Markets Limited (U.K.), (BMO CM Ltd).

BMO NB and BMO CM Ltd. are not subject to U.S. rules with regard to the preparation of research reports and the independence of analysts.BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montrealand its subsidiaries BMO NB in Canada, BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Capital

Markets Ltd. and BMO Capital Markets Corp. are affiliates of BMO NB. Bank of Montreal or its subsidiaries (BMO Financial Group) haslending arrangements with, or provide other remunerated services to, many issuers covered by BMO NB research. A significant lendingrelationship may exist between BMO Financial Group and certain of the issuers mentioned herein. The opinions, estimates and projectionscontained in this report are those of BMO NB and BMO CM Ltd. as of the date of this report and are subject to change without notice. BMONB and BMO CM Ltd. endeavour to ensure that the contents have been compiled or derived from sources that we believe are reliable andcontain information and opinions that are accurate and complete. However, BMO NB and BMO CM Ltd. make no representation or warranty,express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liabilitywhatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO NB, BMOCM Ltd or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primary basis ofinvestment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particularinvestment needs of any investor. This material is for information purposes only and is not an offer to sell or the solicitation of an offer tobuy any security. The research analyst and/or associates who prepared this report are compensated based upon (among other factors) theoverall profitability of BMO NB, BMO CM Ltd. and its affiliates, which includes the overall profitability of investment banking services. BMONB, BMO CM Ltd., or its affiliates expect to receive or will seek compensation for investment banking services within the next 3 monthsfrom all issuers covered by BMO NB. BMO NB, BMO CM Ltd. or its affiliates will buy from or sell to customers the securities of issuersmentioned in this report on a principal basis. BMO NB, BMO CM Ltd. or its affiliates, officers, directors or employees may have a long orshort position in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The

reader should assume that BMO NB, BMO Capital Markets Ltd., BMO Capital Markets Corp., Bank of Montreal or their affiliates may have aconflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein.

Company Specific Disclosures

Alcoa Inc. (AA-NYSE) 6, 7, 9, 10AC Frontera Copper Corp. (FCC-TSX)

Alumina Limited (AWC-ASX) Global Alumina Corp. (GLA.U-TSX)

Anglo American PLC (AAL-LSE; AAUK-NASDAQ) 5 HudBay Minerals Inc. (HBM-TSX) 5

Antofagasta Plc (ANTO-LSE) 5 Inmet Mining Corp. (IMN-TSX)1, 3, 7,10A, 12

Anvil Mining Ltd. (AVM-TSX) 1, 3, 7, 10A International Ferro Metals (IFL-LSE) 5

Baffinland Iron Mines Corp. (BIM-TSX) 2, 3, 7, 10A Ivernia Inc. (IVW-TSX)

BHP Billiton Ltd. (BHP-ASX; BHP-NYSE) 5 Katanga Mining Ltd. (KAT-TSX)

Capstone Mining Corp. (CS-TSX) Kumba Iron Ore Ltd. (KIO-JSE)

Centenario Copper Corp. (CCT-TSX) 2, 3, 7, 10A MMX Mineracao e Metalicos, SA (MMXM3-BRZL) 5, 11

Century Aluminum Co. (CENX-NASDAQ) 5 Quadra Mining Ltd. (QUA-TSX)

2, 3, 7, 9

10ACCliffs Natural Resources (CLF-NYSE) Rio Tinto Plc (RIO-LSE; RTP-NYSE) 5, 9, 10C

Eurasian Natural Resources (ENRC-LSE) 5 Talvivaara Mining Company Plc (TALV-LSE) 5

European Nickel Plc (ENK-AIM) Teck Cominco Ltd. (TCK.B-TSX; TCK-NYSE)1, 3, 4, 57, 9, 10A

First Quantum Minerals Ltd. (FM-TSX) 4, 5 Vale (RIO-NYSE)

FNX Mining Company Inc. (FNX-TSX)1, 3, 7, 9,10AC Xstrata Plc (XTA-LSE) 5

Freeport-McMoRan Copper & Gold (FCX-NYSE)


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Page 24 of 25

Disclosure Key:

1 - BMO NB has provided advice for a fee with respect to this issuer within the past 12 months.

2 - BMO NB has undertaken an underwriting liability with respect to this issuer within the past 12 months.

3 - BMO NB has provided investment banking services with respect to this issuer within the past 12 months.

4 - BMO NB, BMO Capital Markets Corp., BMO CM Ltd. or an affiliate beneficially owns 1% or more of any class of the equity securities of

this issuer.

5 - BMO NB, BMO Capital Markets Corp., BMO CM Ltd. or an affiliate makes a market in this security.6 - BMO Capital Markets Corp. or an affiliate has managed or co-managed a public offering of securities with respect to this issuer withinthe past 12 months.7 - BMO Capital Markets Corp. or an affiliate has received compensation for investment banking services from this issuer within the past12 months.8 - BMO Capital Markets Corp. or an affiliate or its officers or partners own options, rights, or warrants to purchase any securities of thisissuer.9 - BMO Capital Markets Corp. or an affiliate received compensation for products or services other than investment banking serviceswithin the past 12 months.10A - This issuer is a client (or was a client) of BMO NB, BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12months: Investment Banking Services.10B - This issuer is a client (or was a client) of BMO NB, BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12months: Non-Investment Banking Securities Related Services.10C - This issuer is a client (or was a client) of BMO NB, BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12

months: Non-Securities Related Services.

11 - An employee, officer, or director of BMO NB is a member of the Board of Directors or an advisor or officer of this issuer.

12 - A member of the Board of Directors of Bank of Montreal is also a member of the Board of Directors or is an officer of this issuer.13 - A household member of the research analyst and/or associates who prepared this research report is a member of the Board ofDirectors or is an advisor or officer of this issuer.

14 - The research analysts and/or associates (or their household members) who prepared this research report directly or beneficially own

securities of this issuer: None

Distribution of Ratings (Dec. 5, 2008)

Rating BMO BMO BMO StarmineCategory Rating Universe I.B. Clients* Universe**Buy Outperform 37% 40% 50%Hold Market Perform 54% 55% 43%Sell Underperform 9% 5% 7%

* Reflects rating distribution of all companies where BMO Capital Markets has received compensation for Investment Banking services.** Reflects rating distribution of all North American equity research analysts.

Ratings Key

We use the following ratings system definitions:OP = Outperform - Forecast to outperform the market;Mkt = Market Perform - Forecast to perform roughly in line with the market;Und = Underperform - Forecast to underperform the market;(S) = speculative investment;NR = No rating at this time;R = Restricted Dissemination of research is currently restricted.

Market performance is measured by a benchmark index such as the S&P/TSX Composite Index, S&P 500, Nasdaq Composite, as appropriatefor each company. Prior to September 1, 2003, a fourth rating tierTop Pickwas used to designate those stocks we felt would be the bestperformers relative to the market. Our six Top 15 lists which guide investors to our best ideas according to six different objectives (large,small, growth, value, income and quantitative) have replaced the Top Pick rating.

Dissemination of Research

Our research publications are available via our web site http://bmocapitalmarkets.com. Institutional clients may also receive our research viaFIRST CALL Research Direct and Reuters. All of our research is made widely available at the same time to all BMO NB, BMO Capital MarketsLtd., BMO Capital Markets Corp. and BMO Nesbitt Burns Securities Ltd. client groups entitled to our research. Please contact your investmentadvisor or institutional salesperson for more information.


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Conflict Statement

A general description of how BMO Financial Group identifies and manages conflicts of interest is contained in our public facing policy formanaging conflicts of interest in connection with investment research which is available athttp://equityresearch.bmogc.net/conflict_statement.asp

Additional Matters

TO U.S. RESIDENTS: BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd., affiliates of BMO NB, furnish this report to U.S.residents and accept responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S.person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp. and/or BMO NesbittBurns Securities Ltd.

TO U.K. RESIDENTS: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by theFinancial Services Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons whohave professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000(Financial Promotion) Order 2005 (the Order) or (II) high net worth entities falling w

bmo copper miners - strategies for an active copper sector

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