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Broker Note, Caledon Resources, 12/12/2006 (Cannacord Adams)

Broker Note, Caledon Resources, 12/12/2006 (Cannacord Adams)

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Caledon Resources (London: CDN) Broker Note, 12/12/2006.
Caledon Resources (London: CDN) Broker Note, 12/12/2006.

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Jim Taylor 44.20.7050.

6648
jim.taylor@canaccordadams.com

Metals and Mining -- Base Metals and Minerals

Nick Chalmers 44.20.7050.6636
nicholas.chalmers@canaccordadams.com

Caledon Resources plc
Reborn as Australian coal producer
Acquires coking coal mine in Queensland
Caledon has acquired a 100% interest in the Cook coal mine in Queensland from Xstrata for the equivalent of around US$36 million. It also has an option to purchase the nearby Minyango coal exploration license area.

BUY CDN : AIM : £0.07 (£0.36*) TARGET PRICE: £0.12 (£0.59*) *Post 1-for-5 consolidation

Production from Q1 2007
A US$15 million investment program is planned to allow production to recommence in early 2007 and to build to a plateau of 1.8 million tonnes of coal per annum by mid2008. We estimate total operating costs at about US$54 per tonne, delivered FOB Gladstone.

Inside Executive summary ........................ 3 Background ..................................... 9 Project descriptions ..................... 15 Cook Coal Mine..............................15 Minyango Coal Project...................28 Chinese Gold Assets......................31 Appendix ........................................ 32

Steady-state operating cash flow of around US$29 million per annum
Our long-term average coal price for the 80% coking coal and 20% thermal coal mix likely to be produced at Cook is around US$70/tonne, giving a margin estimate of US$16 per tonne, or an average operating cash flow estimate of around US$29 million per annum.

Valuation
Our target price is based on a risked sum-of-the-parts NAV calculation. We have used a discount rate of 8%, which we consider appropriate once in production, to arrive at a NAV equivalent to £0.15 per share. We have then applied assumed risk factors to this figure to account for the risks that we see of recommencing production in line with the company’s targets. This results in our risked NAV estimate of £0.12 per share.

Share price data COB 11 December 2006.

Recommendation
We initiate coverage of Caledon Resources with a BUY recommendation and a target price of £0.12 per share, or £0.59 per share on a post share-consolidation basis.

Risks
We note that our valuation is highly sensitive to assumptions of the future coal prices. We also note that the valuation includes the option over the Minyango at cost. This project has the potential to deliver significant value, should exploration confirm the company’s expectations of coal quantity and quality. Canaccord Adams is the global capital markets group of Canaccord Capital Inc. (CCI : TSX|AIM) The recommendations and opinions expressed in this Investment Research accurately reflect the Investment Analyst’s personal, independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important information, please see the Important Disclosures section in the appendix of this document. 12 December 2006 2006-243

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Company Statistics (pre-money)
Symbol Share Price 52-week Range: Weekly Volume: Market Capitalisation: Cash Long-term Debt Enterprise Value CDN : AIM £0.07 £0.08-0.03 3.8M £24M £8M £6M £22M

Price Chart
8

7

US$47M US$16M US$12M US$43M

6 GBp

5

4

Historical Financials
6 mts to 30-Jun-06 -1.49 2.53 1.04 0.25 6.77 6 mts to 30-Jun-05 -0.96 0.00 -0.96 -0.36 3.61 12 mts to 31-Dec-05 -2.30 5.49 3.19 0.67 6.78

3

2
6 6 6 6 6 6 5 5 6 6 6 6 6 6 6 0 0 20 0 00 00 00 00 00 00 00 0 0 20 0 00 00 00 00 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 /2 / / /2 /2 05 04 03 04 03 02 05 06 02 01 01 12 12 06 11 / / / / / / / / / / / / / / / 04 19 03 20 18 06 20 06 23 09 02 21 16 07 30

Explortn & admin costs Other operating income Operating profit/loss Net earnings/loss Net current assets

£M £M £M £/shr £M

Source: Bloomberg

Forecast Earnings Summary
FYE Dec Total coal production Average coal price Average cash cost CFPS EPS 2007e 853 86 69 0.011 0.007 2008e 1,473 79 60 0.027 0.021 2009e 1,748 76 55 0.028 0.028

Company Description Caledon Resources is an AIM listed mining company that owns 100% of the Cook Coking Coal Mine and some associated infrastructure in Queensland's Bowen Basin. It also has an option to purchase the adjacent Minyango Coal Exploration License. It plans to re-develop the Cook operation and to commence production at the end of 2006, building to 1.8Mtpa coal from mid-2008.

kT US$/t US$/t £/shr £/shr

Source: Canaccord Adams estimates; company reports

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EXECUTIVE SUMMARY
Caledon has surfaced from a period of restructuring as an emerging middle tier coking coal producer, having previously focused on gold exploration in China. Through a series of transactions, the company has acquired the Cook Coal Mine, located in Queensland’s prolific Bowen Basin, and an option over the adjacent Minyango exploration license. It has recently completed equity and debt financings, which have funded the acquisition and the refurbishment of the mine and associated wash plant. Caledon formally agreed in August to purchase the Cook Mine from Xstrata for A$45.6 million (approx US$36 million) in cash. The transaction is expected to close later this month, subject to shareholder approval at an extraordinary general meeting scheduled for 13 December 2006. The company plans to bring the mine back into production around the end of this year or early 2007, and to ramp up to steady-state production of 1.8 million tonnes of coal per annum from mid-2008. We estimate total steady-state costs of production, including royalties, at US$54 per tonne of coal delivered FOB Gladstone. The mine is expected to produce around 80% coking coal and 20% thermal coal, for which our long-term forecast prices are US$74 and US$53 per tonne FOB respectively. (Our forecast long-term price for Cook coking coal of US$74 per tonne represents a 7% discount to Canaccord Adams’ long-term forecast for Australian hard coking coal, reflecting market consultant McCloskey’s view that, as a premium semi-hard product, Cook coal is likely to fetch an FOB price somewhere between the benchmark hard and semi-hard price.) With an average coal product sales price of US$70 per tonne, the indicated steady-state forecast gross margin would therefore be US$16 per tonne, or US$29 million per annum. Figure 1: Forecast coal production, price and cost profile
FYE Dec Production Coking coal Thermal coal Total coal production Coking coal price Thermal coal price Average coal price Average cash cost 2007e kT kT kT US$/t US$/t US$/t US$/t 699 154 853 93 52 86 -69 2008e 1,208 265 1,473 85 53 79 -60 2009e 1,433 315 1,748 81 53 76 -55 2010e 1,515 332 1,847 76 53 72 -54 2011e 1,476 324 1,800 72 53 69 -54 2012e 1,476 324 1,800 74 53 70 -54

Source: SRK Competent Person’s Report (Oct 2006) and Canaccord Adams estimates

JORC compliant in-situ measured and indicated resources are 126 million tonnes, within which recoverable run of mine reserves are 17 million tonnes, sufficient for the first 10 years of the operation. The likelihood of extensions to reserves beyond these levels was pointed to by independent consultant SRK, which stated in its recent Competent Person’s Report that it considers it highly likely that adequate accessible resources are available to extend the reserve to and beyond 40 million tonnes of recoverable coal, which would extend the mine life to over 20 years. The total capital cost of Caledon’s refurbishment programme is estimated by the company at approximately A$20 million (US$15 million), of which A$6 million has been

12 December 2006

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earmarked for the refurbishment of the mine and a further A$12-15 million for the coal preparation plant. Estimates for working capital and other owner’s costs are A$12 million and A$8 million respectively. Caledon’s development plan as outlined in its AIM re-admission document is to outsource mining to South African contractor Magatar, which is an experienced operator of the continuous mining equipment to be employed at the mine. The mining method is to combine customised continuous-mining units with continuous-haulage equipment to provide an efficient, flexible and highly productive mining system. Caledon has yet to finalise contract negotiations, but SRK has assumed fixed mining costs of A$33.50 per tonne of RoM coal for the Magatar operation in its Competent Person’s Report, this figure being based on projections provided by Caledon. We note that given the fixed-cost structure of the mining contract, any cost benefit of this new system compared to conventional continuous miner/shuttle car systems would accrue to the contractor, the benefit obviously being that any overrun would be borne by the contractor. However, we also note that Caledon may seek to finalise a mining contract which is not fixed cost, therefore allowing it to benefit from any cost-savings achieved by the proposed continuous mining-haulage system. Given the potential for cost savings and the economies of scale offered by the project, we feel the latter option would be the optimum outcome for Caledon. The coal processing plant washes and sorts the coal, on the basis of density, to reduce the ash content and to produce separate coking and thermal coal products. These are then loaded onto wagons using the existing rail loop that connects the plant with the state owned rail system, which transports the coal the 200 kilometres to export terminals on the coast. Queensland’s rail and port infrastructure is currently running at around its annual capacity of approximately 140-150 million tonnes of coal. As a consequence of the mining industry’s plans to increase production to 210 million tonnes of coal by 2010, port and rail capacity is being expanded with the aim of removing the current bottleneck within two years. In the interim, Caledon will have the right to part of Xstrata’s quota for rail and port capacity. Marketing of the coal will be undertaken by Xstrata under an agreement which lasts for two years. There is potential for additional reserves on the Cook license itself and further potential exists on the adjacent Minyango Exploration License, over which Caledon has an option to purchase 100% for total payments of A$40 million (US$30 million). Minyango hosts down-dip extensions of the coal being mined at the adjacent Blackwater and Curragh open pit mines, and strike extensions of the coal being mined at Cook. Company presentations refer to a non-JORC compliant global in-situ resource inventory of 500 million tonnes of coal and SRK quotes Queensland government estimates that in-situ resources within two seams to less than 300 metres of overburden total 205 million tonnes. We note, it is likely that only one of the two coal seams will be mined. Caledon’s management believes Minyango has the potential to be brought into production within a relatively short period, at a rate of up to two million tonnes per annum for over 20 years. Caledon’s initial work will focus on additional seismic and drilling programmes to better define the structural characteristics of the seams, coal quality and extent of resources on the property. Caledon has assembled an experienced management team for the project. This includes Peter Seear, as chief operating officer, and Mark Trevan, as managing director of its Australian subsidiary. Mr. Seear has almost forty years experience in the coal industry,

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including time in coal contracting and equipment manufacturing. Mr. Trevan joins Caledon after 25 years with Rio Tinto, where for the last nine years he was general manager – marketing for Rio Tinto Coal Australia.

Finances
At the end of November, Caledon raised a total of US$52 million (£26.5 million) in equity through the issue of 331 million shares at a price of £0.08 per share. Together with the 25 million shares to be issued in connection with the acquisition of MTP (the company that owns agency rights to the use of the proposed mining system in Australia) this will increase the (pre-consolidation) number of shares in issue from 338 to 694 million. Caledon will also receive US$12 million (A$15 million) in vendor financing from Xstrata in the form of a convertible loan note. Together with cash held at the end of June 2006 of US$16 million (£8 million), this takes Caledon’s total financial resources to US$79 million. Of this amount, US$36 million (A$46.5 million) will be paid to Xstrata for the purchase of the Cook Mine, and around a further US$7 million will be paid in stamp duty, transaction costs and financing fees. Approximately US$9 million is to be used for the deposit and first option payment in relation to the acquisition of the Minyango exploration license. (The next A$9.6 million option payment due in March 2007 is payable in shares or cash, at Caledon’s option. The company intends to fund the final payment of A$20.4 million, which is due by the end of 2007, from cash flow.) Including a cash payment of US$0.4 million as part consideration for the purchase of MTP takes the total initial cash outflow to US$51 million, which would leave cash of US$27 million at the end of 2006. Together with after-tax operating cash flow from Cook during the first year (2007), which we estimate to be US$14 million net of corporate G&A, the remaining cash balance will be used to fund the mine and plant’s refurbishment (US$15 million) and associated working capital and owners costs (US$15 million). By our calculations this would leave cash of around US$11 million, which we note would be insufficient to fund the planned feasibility programme and US$15 million (A$20.4 million) final option payment at Minyango. However, we note the potential for operating profit in 2007 to come in higher than our forecast, particularly if coking coal prices were to remain around current levels of US$115 per tonne, compared with our 2007 forecast price for Cook coking coal of US$93 per tonne. We also note that the company states in the readmission document that, if necessary, it may seek to raise additional debt or equity to meet the deferred Minyango payments and capital expenditure commitments over the next 15-months as they fall due.

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Figure 2: Summary production and financial forecast
FYE Dec Revenue Costs Corp G&A EBITDA DD&A EBIT Interest Tax Earnings Cash Flow Operating cash flow Invested cash flow Cash flow from financing activities Net cash flow Cumulative cash flow Cash balance 2006e US$M US$M US$M US$M US$M US$M US$M US$M US$M 2007e 73 -59 -6 8 -1 7 0 -2 5 2008e 117 -88 -6 23 -2 21 0 -6 15 2009e 132 -96 -6 30 -2 28 0 -8 20 2010e 132 -100 -6 27 -2 24 0 -7 17 2011e 123 -97 -6 21 -2 19 0 -6 13 2012e 126 -97 -6 23 -2 21 0 -6 15

US$M US$M US$M US$M US$M US$M

0 -53 64 11 11 27

8 -45 0 -37 -27 -12

19 -1 0 18 -9 6

20 0 0 19 10 25

17 0 0 17 26 41

13 0 0 12 39 54

15 0 0 14 53 68

Source: SRK Competent Person’s Report (Oct 2006), Canaccord Adams estimates

Valuation
Given its status as a development company, we consider that a sum-of-the-parts approach is the most appropriate valuation methodology for Caledon at this stage. We have also compared the valuation with other listed coal companies to provide context. Using a discount rate of 8%, which we would typically use for a non-precious metal producer located in Australia, we derive an NPV for the Cook Mine of A$148 million (US$116 million) for the first 10-years of operation, or A$230 million (US$181 million) for the potential 20-year life as supported by SRK’s expectation that additional resources will be converted to reserves (see summary cash flow model for Cook Mine in Figure 26). To arrive at our target price we have reduced the value of the first 10-years by 20% to take account of the risks that we believe are associated with achieving the targeted production levels and cost structure. We have reduced the value of the second 10 years of the project by 30% in recognition of the additional risks we believe are involved with completion and resource conversion. We have also allowed for the value of Minyango at cost (US$8 million first option payment), Caledon’s Chinese exploration interests (nominally valued at US$5 million) and the company’s stake in Dynasty Gold (US$2 million). We have also allowed for our estimate of residual cash at end of 2006 and the convertible debt provided by Xstrata. The following table gives a breakdown of our suggested valuation for Caledon.

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Figure 3: Valuation
8% discount rate Cook (yrs1-10) Cook (yrs 11-20) Minyango Chinese gold assets Dynasty stake Enterprise Value Net current assets Long-term debt Net Asset Value Pro-forma issued shares US$ per share* £ per share* Post 1-for-5 consolidation * Pro-forma, fully diluted 'in-the-money' Source: Canaccord Adams estimates Full value A$M 148 82 10 6 2 249 Risk US$M 116 65 8 5 2 196 27 -12 211 730 0.29 0.147 0.74 20% 30% 0% Risked Valuation 93 45 8 5 2 153 27 -12 168 730 0.23 0.117 0.59

With respect to this valuation, we note that the forecast operating costs are relatively fixed (mining and processing are both contracted) and that capital costs are relatively limited. As a result, even more than usual with this type of analysis, the main driver of the valuation relates to revenue, both in terms of production and coal price. With respect to the rate of production, we consider that the ability to control ground conditions at the operation is the most significant factor. We note that the planned mining method incorporates a revised bolting pattern which should allow mining in a given area to be completed more rapidly than previous methods. With respect to the coal price, we note that coking coal from Cook is categorised as being between hard and semi-hard in quality. Coal consultant McCloskey suggests that, as an independently-marketed product, it would sell at a discount of around 7% to McCloskey’s long-term forecast price for premium hard coking coal. In our base-case valuation, we have applied a similar discount to Canaccord Adams’ long-term forecast price for hard coking coal, which we note is somewhat lower than McCloskey’s. We note that if McCloskey’s suggested long-term price of US$84 per tonne for Cook coking coal was applied to our model, our risked valuation would increase from £0.12 per share to £0.16 per share. The following sensitivity table plots our risked NAV estimate for a range of coking coal prices and discount rates. We would point out that this sensitivity table assumes coking coal prices are flat from 2008 onwards, whereas in our base-case valuation our longterm flat price of US$74 per tonne comes in at year 2012.

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Figure 4: Risked NAV sensitivity to coking coal prices
55 0.02 0.02 0.02 0.02 0.01 60 0.05 0.04 0.04 0.03 0.03 Coking coal price (US$/t) 65 70 75 0.08 0.11 0.14 0.07 0.09 0.11 0.06 0.08 0.10 0.05 0.07 0.09 0.04 0.06 0.07 80 0.17 0.14 0.12 0.10 0.09 85 0.20 0.16 0.14 0.12 0.10

5% 8% 10% 12% 15%

Source: Canaccord Adams estimates

We note that our risked valuation in Figure 3 does not take account of the potential for additions to reserves, particularly from the Minyango license area, but also from Cook, beyond the 40 million tonnes assumed in our model. Nor does it take account of the potential to increase throughput at the coal plant, which was originally designed to process 3.5Mtpa of coal, some 75% greater than the anticipated production rate. We note that additional capital would be required to bring the plant up to its original design capacity and to expand existing mine site infrastructure to cope with the increased production rate. We have assembled a table of Australian listed coal companies and their consensus cash flow and earnings (Figure 28). This indicates that, on average, these companies trade on multiples of earnings ranging from 5.4-20.6 times (average 12.6) 2008 earnings and within the range of 3.8-17.4 (average 8.8) times 2008 cash flow. Applying these averages to Caledon’s forecast earnings and cash flow would suggest a value of £0.12-0.14 per share.

Investment Risks
The main risks to our target price, and rating, are attached to revenue (being a function of coking and thermal coal prices), the Australian/US dollar exchange rate and production volumes. The large amount of existing infrastructure and plant already on site, together with the planned use of contract miners and plant operators, results in relatively low budgeted capital costs and an operating cost structure that is largely fixed. The key risk to our valuation is that the company may not achieve its targeted production rate at the cost it has indicated should be possible, and we note that the valuation is particularly sensitive to coal prices. Risks relating to coal transport and marketing are limited by the two-year port and rail access deal and marketing contracts negotiated with Xstrata, although longer-term we note that the company will have to make its own rail and port arrangements. We also note the significant potential for additional exploration on the Minyango coal license area to better define coal resources, to establish the coking coal/thermal coal split of the seams, and also to get a better understanding of the structural geology of the area.

Conclusion
We consider that the refurbishment of the Cook Mine offers the prospect of generating significant cash flow in the short-term and the option over the Minyango license offers the potential for an increase in reserves and production rate in the future. We initiate coverage on Caledon with a BUY recommendation and a £0.12 per share target price (or £0.59 per share on a post-consolidation basis). We note that achieving

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Discount rate

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the operating targets at Cook would remove the risk factors that we have chosen to apply, with the result that our calculated NAV would increase by around 30% to £0.15 per share.

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BACKGROUND
Overview
Caledon Resources plc was admitted to London’s AIM market in 2003, initially focusing on four gold projects in Southern China. More recently, the company has taken equity interests in a number of companies through private placements. This included minority stakes in Afcan Mining Corp (owner of the Tanjianshan gold project in western China) and Dynasty Gold. However, mid-2005 brought a change of direction, with management agreeing to pursue the acquisition of an advanced-stage mining asset with the potential for near-term production and positive cash flow, with the intention of diversifying the company’s asset portfolio and balancing the risks posed by the hitherto focus on China. This new strategy was aided by a C$16.9 million (£8.5 million) increase in treasury funds following the company’s disposal of its interest in TSX-listed Eldorado Gold Corp (ELD:TSX) towards the end of last year (Eldorado had earlier acquired Afcan through an all-share transaction that valued the latter at a 75% premium to Caledon’s initial investment). The company’s search for an appropriate acquisition culminated in late 2005 with an approach from a third-party proposing Caledon purchase the Minyango coal property, an undeveloped brown-field coking coal asset in Queensland’s prolific Bowen Basin. Whilst in preliminary discussions over Minyango, Caledon became aware of a competitive tender for the adjacent Cook Mine by the latter’s owner, a subsidiary of Xstrata plc (XTA:LSE). Management subsequently decided to proceed with both the Minyango and Cook transactions, on the basis that Cook added existing production and supporting infrastructure, plus an estimated resource base of over 100 Mt of high-quality coking coal, to Minyango’s exploration potential. In June 2006 Caledon signed a heads of agreement with Xstrata to acquire Cook for a total consideration of A$45.6 million in cash, and the company’s shares were suspended from trading (by virtue of its size the transaction was deemed a reverse takeover under AIM’s rules). The principal acquisitions and disposals are scheduled to be completed following an extraordinary general meeting on 13 December 2006, at which shareholders will vote to approve the transactions and the recently completed £26.5 million equity financing. Assuming approval, the newly issued shares will be admitted for trading on AIM the following day (14 December 2006). In connection with the Cook and Minyango acquisitions, Caledon also agreed to purchase a company called MTP, owner of certain intellectual property rights and revenue royalties arising from mining technology that Caledon intends to use at Cook. A$5 million of the A$8.5 million purchase price will be settled through the issue of new Caledon shares at the placing price of £0.08 per share. A further A$3 million in shares will be paid, at the then prevailing market price of the shares, on completion of the Minyango acquisition, and the A$0.5 million balance of the total consideration will be settled in cash. MTP’s principal directors, Peter Seear and Mark Syropoulo, introduced Caledon to the Minyango and Cook acquisition opportunities, and will be appointed to Caledon’s board of directors. A summary of the transactions is presented in Figure 5 below. The company structure on completion of these transactions is summarised in Figure 6.

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Figure 5: Transaction summary
Transaction Acquisitions Cook Coal Minyango MTP Vendor/ Acquirer Xstrata Watami Trading Peter Seear Value A$M A$45.6M A$42.0M A$8.5M Transaction currency Cash Cash-plus-shares Shares Expected close Dec-06 Dec-07 Dec-06* Assets

Cook Coal Mine/Infrastructure, 132Mt coal resource. Minyango brown-field coal exploration property. Intellectual property rights to mining method technology.

* The final A$3M in shares is payable on completion of all Minyango payments. Source: Company press releases and AIM Re-admission Document

Figure 6: Post-transaction company structure

Source: AIM Re-admission Document, October 2006

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Share Structure
Caledon’s shares are listed on AIM under the ticker ‘CDN’. The shares were suspended from trading on 19 June 2006 following the announcement of the proposed acquisition of Cook, the transaction constituting a reverse takeover under AIM’s rules. Caledon had 338 million shares in issue prior to suspension, which at that time were trading at £0.0588 per share. During the suspension period, the company placed 331 million new shares at £0.08 per share, raising gross proceeds of £26.5 million. The placing, plus a planned one-for-five share consolidation to follow, is subject to shareholder approval at an extraordinary general meeting scheduled for 13 December 2006. If approved, the new shares will be admitted for trading on AIM the following day (14 December 2006). A further A$5 million in shares will be issued as part payment under the A$8.5 million MTP acquisition agreement. The company will therefore have approximately 139 million post-consolidation shares in issue, giving it a market capitalisation of £56 million based on the placing price. On a fully-diluted ‘in-the-money’ basis, Caledon will have 140 million shares outstanding. Figure 7: Share structure
Shares M 338.2 331.2 25.0 138.9 139.8 Price £ 0.06 0.08 0.08 0.40 0.40 Value £M 19.9 26.5 2.0 55.6 55.9 US$M 38.4 51.2 3.9 109.2 109.9

At June suspension Placing MTP acquisition On admission after 1-for-5 consolidation Fully diluted

Source: Company reports, Canaccord Adams estimates

Caledon’s largest institutional shareholders (pre-admission of the placing shares) include RAB Capital (9%), UBS Global (5%) and CIBC World Markets (3%). On admission of the placing shares, management will hold just over 7% of the company’s issued share capital.

Finances
Caledon had US$16 million (£8 million) of cash at its last balance sheet date of 30 June 2006. The US$36 million (A$45.6 million) Cook acquisition and initial deposit and option payment under the Minyango acquisition agreement (US$9 million) will be funded using the US$47 million (£23.7 million) net placing proceeds. The balance of the placing proceeds, plus a further US$12 million (A$15 million) which is to be raised through the issue of a convertible loan note to Xstrata, will be used to fund initial capital expenditure requirements at Cook (US$15 million) and initial working capital and owners costs (US$15 million). Caledon is still negotiating with Xstrata over the terms of the loan note, but it is expected to have an annual coupon of 9% and to be convertible into Caledon shares at a price equal to a 10% premium to the £0.08 per share placing price. The principal amount is repayable after a year if the note has not by that date been converted by Xstrata.

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The second, A$9.6 million option payment due in March 2007 is payable in shares or cash at Caledon’s option. The company intends to fund the final payment of A$20.4 million, which is due by the end of 2007, from cash flow. However, we note that Caledon states in its AIM re-admission document that, if necessary, it may seek to raise additional debt or equity to meet the deferred Minyango payments and capital expenditure commitments over the next 15 months as they fall due. Figure 8: Estimated Cash and debt position at end of 2006
Cash at 30 June 2006 Net placing proceeds Cook acquisition cost Stamp duty Initial Minyango payments MTP acquisition Xstrata loan proceeds Est cash at end 2006 Xstrata convertible loan note Debt £M 8 24 -18 -1 -5 0 6 14 6 6 US$M 16 47 -36 -2 -9 0 12 27 12 12 A$M 20 59 -46 -2 -12 -1 15 33 15 15

Source: Company announcements, Canaccord Adams estimates

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BOARD/MANAGEMENT
Robert Alford - Executive Chairman
Mr. Alford joined Caledon as non-executive chairman in February 2005. He took up the position of executive chairman in September 2006 in order to manage the company’s transition from Chinese-focused gold explorer to Australian coal producer. Mr. Alford previously spent over 20 years with Nelson Hurst Group plc, where he was latterly joint managing director. He is a member of Lloyds.

George Salamis - Chief Executive Officer
Mr. Salamis is one of the founding shareholders of Caledon and has held the position of managing director and chief executive officer since 2003. Prior to this, he has held senior management positions with several well-established mining companies, most notably Placer Dome Inc and Cameco Corp. His career in the mining industry spans over 20 years, involving assignments in many different regions of the world on various resource commodities. In recent years, he has also played integral roles, both executive and nonexecutive, in several large M&A transactions between major and junior miners, totaling over US$ 0.5 billion in value, in addition to participating in various major financing initiatives in the mining industry. Mr. Salamis holds a degree in geology from the Universite de Montreal/Ecole Polytechnique.

Peter Seear - Chief Operating Officer (proposed)
Mr. Seear has been actively engaged in the coal mining industry since 1977. He achieved chartered engineer status in the UK in 1983, and then proceeded to work for several contract coal mining companies. Additionally, he spent time with underground coal mining equipment manufacturers as an engineer, including 10-years with Joy Mining in South Africa and North America. He was also engineering and chairman of Cutting Edge Technology Pty Ltd in Australia for ten years. Mr. Seear holds a PMD degree from the Harvard Business School.

Mark Trevan - Managing Director of Caledon Coal Pty Ltd (proposed)
Mr. Trevan joined Caledon in September 2006 following a 25-year career with Rio Tinto, where he started as an accountant and progressed to hold senior executive roles in the areas of marketing, general commercial, corporate strategy and project feasibility. During his last nine years with the Rio Tinto group, Mr. Trevan was general manager – marketing for Rio Tinto Coal Australia, during which time the latter company opened two new coking coal mines. Caledon Coal is Caledon’s holding company in Australia.

Paul Ingram - Executive Director
Mr. Ingram has been based in south-east Asia for the past 15-years, during which time he has managed several major mineral exploration programmes for Menzies Gold Ltd, a company he joined in 1985 and with whom he has been managing director since 1989. Mr. Ingram manages all operations from project assessment to corporate acquisitions and financing, and has conducted project assessments in numerous countries including Australia, Mexico, Greece, Thailand, Laos, China, Malaysia and Myanmar. His work typically involves the design and implementation of innovative techniques for exploration in remote areas. In the early 1980s Mr. Ingram was a geological consultant for EMS Pty Ltd, where he advised clients throughout Australia on gold and base metal projects, a

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role which led eventually to the establishment of Menzies Gold. He is a member of the Australian Institute of Mining and Metallurgical Society and a Member of the Mining Industry Consultants Association.

Mark Syropoulo (proposed non-executive director of Caledon Coal)
Mr. Syropoulo has over 30 years’ experience in finance, much of it focused specifically on the mining, oil and gas sectors. He has occupied the position of managing director of Anglo Pacific Resources Plc, a diversified mining group with industrial mineral interests in the UK and metal interests in Australasia. He has also held several positions with various brokerage and financial institutions, dealing in corporate finance, broking and mergers and acquisitions advisory.

Graham Mascall (non-executive director)
Mr. Mascall has over 35 years of commercial, financial and transaction experience in mergers and acquisitions work, business development and project management in mining and mining finance. Over the course of his career he has worked as an executive for a number of mining and finance companies, including Billiton plc where in 2000, as chief executive for mergers and acquisitions – base metals and new business, he led the US$2.1 billion acquisition of Rio Algom Ltd. He has also worked for BHP Billiton plc, Deutsche Morgan Grenfell, Outokumpu Metals and Resources and Barclays Bank.

Nicholas Clarke (non-executive director)
A graduate of the Camborne School of Mines and a Chartered Engineer, Mr. Clarke has been involved in the mining industry since 1974 in a number of production and service capacities. In 1996 he was made managing director of CSMA Consultants, which was subsequently acquired by Wardell Armstrong International. During this period he managed numerous technical studies on mineral projects in Africa, Europe and the Former Soviet Union. He was author and project manager on a number of AIM and TSX CPR’s during this period, and was most specifically involved in the economic valuation of mineral assets. In 2004 Mr. Clarke joined Oriel Resources, an AIM and TSX quoted company with nickel and chrome assets in Kazakhstan, and was appointed managing director in 2005.

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PROJECT DESCRIPTIONS
COOK COAL MINE, QUEENSLAND
The Cook Coal Mine is located 30 kilometres south of the town of Blackwater in the south-central part of Queensland’s Bowen Basin, one of the world’s great coal provinces. The coal preparation plant (CPP) is located 14 kilometres north of the mine, at the site of the abandoned Leichhardt colliery. The Cook property is bounded to the east by the BHPMitsubishi owned Blackwater mine, one of Australia’s largest open-pit export-quality coal mines. There are currently 30 coal-mining operations in the Bowen Basin, collectively producing approximately 115 Mt per annum of coking coal. Open pit and underground production from the basin represents more than 50% of the world’s sea-borne coking coal. The vast majority of underground coking-coal mines in the Bowen Basin are longwall mining operations. Figure 9: Cook Coal Mine Location

Source: AIM Re-admission Document (Nov 2006)

Cook acquisition
Prior to its acquisition by Caledon, Cook was part of Xstrata’s Queensland Coal operations, which encompass two well-established mining complexes, Oakey Creek and Newlands-Collinsville-Abbot Point. In June 2006, Caledon and Xstrata signed a heads of

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agreement for the sale of Cook to Caledon, and an asset-purchase agreement was drawn up in August. A relatively small asset in the context of Xstrata’s overall coal portfolio, Cook has suffered from underinvestment in recent years, and was placed on care and maintenance prior to the sale negations with Caledon. Caledon is of the opinion that Xstrata wished to divest the asset as it required a disproportionate amount of management time, being the only small underground mine in the company’s Bowen Basin portfolio. The full A$45.6 million cash purchase price will be settled later this month, subject to shareholder approval of the transaction and capital raising at an EGM scheduled for 13 December 2006. An initial A$5 million down-payment was paid in July from Caledon’s existing cash reserves, and the A$40.6 million balance will be funded using the placing proceeds. The acquisition includes all mining rights to the Cook Mine resource, reserve, mine infrastructure and mining equipment; sub-leases over haulage roads; and access to the CPP, rail loop and load-out facilities. It also provides for a long-term rental agreement allowing Caledon use of the CPP, and outlines the terms of marketing and off-take arrangements for the sale of coking coal from Cook as well as rail and port access guarantees for the first two years of operations. Xstrata chose not to sell directly CRM, the company holding the Cook mining lease, as it wishes to retain the undeveloped northern part of the property. CRM has instead granted subleases to Caledon. All the other CRM assets described above were included in the sale. Caledon considers that the northern portion of the Cook resource has little commercial value without access to the remainder of the Cook property and the adjacent Minyango property.

MTP acquisition
In connection with its Bowen Basin acquisitions, Caledon is also purchasing the entire issued capital of Mining Technology Partnerships Pty Ltd (MTP), a company that owns revenue royalties arising from the mining technology that Caledon intends to use at Cook. The acquisition will be settled through a A$500,000 cash payment, the issue of A$5 million in new Caledon shares at the £0.08 per share placing price, plus an additional A$3 million in shares, to be issued at the then prevailing market price, on completion of all staged payments under the Minyango acquisition (see page 29). MTP and its principal directors, Peter Seear and Mark Syropoulo, introduced the potential acquisition of Minyango to Caledon, which in turn led to the company’s interest in Cook. Caledon proposed the acquisition of MTP in lieu of paying a direct introduction fee to Messrs Seear and Syropoulo. However, MTP is also the exclusive representative in Australasia of Magatar, the proprietor of certain intellectual property rights relating to the continuous mining-haulage technology that Caledon plans to use at Cook. MTP is entitled to receive revenue royalties equal to 5% of the per-tonne amount to be charged by Magatar arising from the use of the mining technology by Magatar at any mining contracts entered into in Australia (with the exception of Cook and Minyango), New Zealand and Indonesia.

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Production history
Cook was established by Broken Hill Proprietary (BHP) in 1975 to replace production from the failing Leichhardt Colliery to the north, which was eventually closed in 1982. BHP’s operations focused on the Castor Seam, which when washed produces exportquality coking and thermal coals. In 1983 the mine was sold to McIlwraith McEachern, whom subsequently sold it to Arco in 1989. Arco held Cook for four years, before selling to Oakbridge in 1993. Oakbridge sold 50% to Resource Management & Mining (RM&M) and 50% to Glencore International AG in 1994. RM&M sold their half share to Centennial Coal in 1997, and Xstrata took over Glencore’s interest in 2002. Xstrata subsequently purchased Centennial’s 50% share in April 2004, increasing its ownership to 95%. Tokyo Boeki Limited (TBL) purchased the outstanding 5% from Glencore as part of its coal-purchasing strategy. Xstrata replaced Centennial as the mine operator at this time. Both longwall and continuous mining techniques have been employed at Cook in the course of its operating history. Prior to placing the mine under care and maintenance, Xstrata was operating a board and pillar underground mine in the Castor Seam, utilizing conventional continuous mining equipment. Initial workings were also driven into the Argo Seam below. Production has fluctuated widely over recent years, due mainly to difficult geological and geotechnical conditions. Continuous miners have proved better equipped to deal with these issues, as the performance of longwall mining units is inhibited by the occurrence of extensive faulting in the area. Saleable coal production at Cook has averaged around 400,000 tpa over the past five years, but declined to around 200,000 tpa in the year to June 2005 (Figure 10). The coking coal product from Cook is currently railed 318 kilometer via the Blackwater rail system to the port of Gladstone for export. Figure 10: Cook historical production
700 600 500 400 kT 300 200 100 0 2001 2002 2003 RoM production 2004 2005

Saleable production

Source: CRM

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Geology and resources
The Cook Coal Mine lies in the southern part of the Bowen Basin, on the eastern limb of the Comet Anticline. The strata dips gently (less than five degrees) to the east, and strikes slightly east of north. The coal-bearing Rangal Coal Measures lie unconformably beneath 80-200 metres of claystones. The upper section of the Rangal group comprises four coal seams interbedded with sandstones, siltstones and claystones. Two of these seams, Castor and Argo, are of sufficient thickness for mining. The Castor Seam has been the primary source of historic production from Cook, and is encountered at a depth of approximately 170 metres from surface. The seam averages 2.8 metres in thickness and its product mix is approximately 55% coking quality and 45% thermal quality. The Argo Seam (which is actually a coalesce of two seams, Pollux and Orion) is encountered at a depth of around 183 metres, and is the primary target seam for mining by Caledon. Argo ranges in thickness from 2-6 metres, averaging between 4.5-5 metres. There is limited data on the quality of Argo Seam coal, but initial indications are that the coking/thermal split is higher in favour of coking coal compared with the Castor Seam. Caledon indicates that the split could be around 80-85% coking and 20-15% thermal, with the Pollux Seam material indicating higher coking-coal qualities than the Orion Seam material. Workings on the Castor Seam at Cook have been bounded by two major fault systems – the Kennedy fault to the north and the Tannyfoil fault to the east. Many smaller faults have also been identified through the progression of mine development, and the structural geology of the seam is now well understood. Figure 11: Cook Coal schematic cross-section

Source: SRK Competent Person’s Report (Oct 2006)

Over 3,000 boreholes have been drilled over the entire Cook and Leichhardt Collieries, of which 1,400 holes cover Caledon’s Cook project area. The Castor Seam was intersected by 1,350 holes, and the Argo Seam by 400 holes. The most recent resource estimation for Cook was compiled by McElroy Brian Geological Services (MBGS) in June 2005. Since calculation of that resource estimate, less than

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200,000 tonnes of coal has been mined from the Castor Seam, while none of the Argo Seam has been depleted. As part of its due diligence review of Cook Coal, SRK reviewed MBGS’ resource estimation and concluded that it satisfies the requirements of the JORC Code for mineral resource reporting. SRK points out that the area to the northeast of the Kennedy and Tannyfoil faults is not entirely included in the MBGS resource report, and believes it is an area which may yield a significant amount of additional resources. Figure 12: JORC compliant resources
Category Measured South of Kennedy Fault Seam Tonnes M Castor 7.7 Argo 53.9 Pollux 3.9 65.5 Argo 12.0 Pollux 6.1 18.1 83.6 5.3 5.3 88.9 North of Kennedy Fault Seam Tonnes M

Total Measured Indicated

Castor Argo Pollux

Total Indicated Total M&I Inferred Total Inferred Total Resources

20.3 2.6 20.0 42.9 42.9

Argo

42.9

Source: McElroy Brian Geological Services (June 2005) and SRK (October 2006)

SRK also prepared an independent estimate of reserves at Cook based on the MBGS resource numbers and a 10-year mine plan prepared by SMG Consultants. The estimated reserves are inclusive of the estimated coal resources, and are based on recovery factors ranging between 32-50%, depending on the mining method and panel layout. SRK notes that these extraction factors could possibly be optimised as more information becomes available during the mining process, and states that adequate accessible resources are available to justify 40Mt of ‘recoverable’ coal. No out-of-seam dilution has been applied to the RoM numbers as Caledon plans to leave behind around 0.5 metres of hanging-wall coal to support roof control. In-seam dilution is minimal. The reserves are reported as ‘saleable’ based on an overall yield of 89% from January 2008 onwards. Figure 13: JORC compliant reserves
Category Proved Probable Total Reserves Seam Argo Argo Tonnes M 5.93 11.15 17.08 Ash % 7 to 15 7 to 15 Saleable* M 5.21 9.92 15.13

*Saleable tonnes at 89% yield (dry-basis) Source: SRK (October 2006)

Coal quality
Coal quality data for the Argo Seam is scarce, and, based on currently available information, SRK concluded that only broad assumptions can be drawn. The data captured to date comes from two Xstrata boreholes, strip samples and a bulk sample (Figure 14). We note that a significant amount of coal from Xstrata’s trial Argo Seam

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workings has been washed in the past, yielding approximately 80% coking-quality product and 20% thermal-quality product. According to MBGS, the down-hole geophysical trace of the Argo Seam shows a consistent profile across the project area. MBGS concludes this indicates that the Argo Seam has a tendency to be reasonably consistent in terms of coal quality attributes, and that ash content and density could be expected to be regular across the project area. Despite the lack of coal-quality data for Argo, SRK assumes in its competent persons’ report that the product mix will be 82% coking coal and 18% thermal coal. This assumption is based on a coal-quality report by A&B Mylec published in September 2006. The moisture and ash parametres adopted by SRK (coking product 9.5% moisture and 8% ash, thermal product 9% moisture and 15% ash) are assumptions based on parametres shown in a frame agreement that Cook Colliery negotiated with the adjacent Blackwater Colliery. Caledon is currently testing a total of 32 data sources (drill core and bulk samples) for coal-quality purposes. Figure 14: Argo seam coal-quality database (MBGS)
Data Source Bulk samples Strip samples Bore core Predicted coke % 75.8 72.2 73.0 Ash % 7.6 7.2 8.6 Predicted thermal % 7.5 13.2 13.2 Ash % 11.8 9.1 11.4 Combined product % 83.3 85.4 86.2 Ash % 8.0 7.5 9.0 Flotation product % 4.9 3.8 4.3 Ash % 5.0 4.3 5.0

Source: Cook Due Diligence Report (SRK, September 2006)

Mining
Caledon plans to increase Cook’s run-of-mine (RoM) production from its most recent levels of 300,000 tpa to around 1.5 Mtpa by mid 2008, and to approximately 2 Mtpa over the longer-term. The existing mine-transport infrastructure and CPP has a design capacity of 3.5 Mtpa. The company envisages employing mining contractors, contract mine managers and wash-plant managers to achieve its production targets. The total initial investment required to upgrade the mine is estimated by Caledon at A$5.6 million (US$4.2 million). Caledon plans to resume underground unit mining operations at the Castor Seam by the end of 2006 or early in 2007. However, in the longer-term mining will be focused on the Argo Seam, which lies 10-20 metres below Castor. As mining will take place beneath the existing Castor Seam workings, the likelihood of encountering unknown geological structures which could adversely impact the proposed mining operations is deemed to be minimal. However, SMG’s preliminary mine design report identifies the potential for an adverse interaction between the Castor Seam and the proposed Argo Seam workings, particularly at goaf edges between Castor-workings panels, and concludes that further studies are needed to establish the probability, nature and extent of potential rib failure. The base-case mining plan developed by SMG works off the estimated reserve of 17 Mt, which would provide for a 10-year life of mine at the forecast RoM production rate of approximately 430 kt for the financial year ending June 2007, 1,400 kt in financial year 2008 and 2,000 ktpa thereafter. However, we note that SRK considers that adequate

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resources exist to provide approximately 40 Mt of recoverable coal, which could extend the life of mine to around 20 years at the currently forecast production levels. The initial phase of production is scheduled to run from the end of this year to 2009, and will be undertaken by Australian mining contractor Titan. Mining will focus on the Castor Seam, making use of existing access points and mine infrastructure. Production will come from two rented continuous miners, supported by a fleet of shuttle cars, and will follow a conventional board-and-pillar method similar to that employed prior to the recent cessation of operations. The second phase of production is expected to commence during the second half of calendar year 2007, and will be undertaken by South African-based mining contractor Magatar. The proposed Magatar operation involves a partial-extraction mining method, utilising a custom-built continuous-mining unit coupled with a Prairie continuous conveyor system. This set-up is expected to provide the necessary flexibility required to exploit the resource effectively. Magatar’s is a patented system, the agency rights to which are held by MTP in Australia. Caledon believes the system can achieve significantly higher productivity rates than the conventional continuous miner-shuttle car system employed at Cook to date. Figure 15: Continuous miner (top) and continuous haulage unit (bottom)

Source: Company presentation

We note that Cook will be only the second coal mine, and the first in Australia, to utilise the proposed continuous haulage system. The first such system to be applied at a coal mine is due to be in operation by year-end 2006 in South Africa. The technology was developed in the potash mines of Canada, where eight of the systems are currently in operation. The first such system has been in operation for more than a decade.

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Caledon has yet to finalise contract mining negotiations for the second phase of production, but SRK has assumed fixed mining costs of A$33.50 per tonne of RoM coal for the Magatar operation in its Competent Person’s Report, and we note that this figure is based on projections provided by Caledon. As outlined earlier, Caledon may seek to finalise a mining contract which does not have such a fixed-cost structure in order to benefit from any costs savings which may arise from the proposed mining system. We also note that Caledon would have the ability to ramp back up its conventional boardand-pillar operation to make up for some or all of any shortfall from the Magatar operation. LD Operations (LDO), a company established to provide dedicated mine-management services to the coal industry, will operate the mine under contract for Caledon. Figure 16: Forecast RoM and saleable production
2,500

2,000 1,500 kT 1,000 500

0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

RoM production

Saleable coal

Source: SRK (October 2006)

Processing
Caledon has entered into a long-term rental agreement with Xstrata for use of the latter’s coal handling and preparation plant (CPP) at Cook. The CPP has a nameplate capacity of 500 tph, which equates to an annual capacity of 3.5 Mt. The plant has been in operation since 1975 and employs standard coal-washing technology (jigs, dense media separation and cyclones). Figure 17: Simplified process flow-sheet

Source: CRM, Xstrata

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The condition of the CPP has deteriorated due to a lack of investment since its construction, and requires a significant amount of repair work to return it to an acceptable operating condition. In order to handle the increased volumes of RoM coal feed envisaged by Caledon, a flotation circuit may also need to be installed to prevent the fines circuit from overloading. This is particularly important given the higher proportion of fines in Argo Seam coal, which is expected to have coking properties across the full size range. SRK estimates that 17% of coal feed will be lost to fines pre-modification of the CPP, and 6% post. Caledon anticipates that a total investment of A$12-15 million (US$9-11 million) will be required to upgrade the preparation plant, including the addition of a flotation circuit. The planned upgrades essentially involve equipment add-ons, and so no significant downtime is expected. We note that SRK recommends that a full review of the process route is undertaken using representative size-by-size ‘washability’ data of the new Argo Seam RoM feed.

Infrastructure
SRK concluded that the existing mine infrastructure is generally in an acceptable condition, and is capable of sustaining continued operations at the current nominal capacity and of permitting expansion as envisaged under Caledon’s longer-term development plans. In terms of regional infrastructure, the Bowen Basin is host to four heavy-haul railway systems and five ship-loading terminals. However, due to overcapacity, rail and port access is severely constrained at present. Under the Cook purchase agreement, Xstrata agreed to provide the necessary rail and port access for Caledon’s production for the first two years of scheduled operations at Cook, at a time when access to rail and port facilities is expected to be particularly challenging. To the extent that Xstrata is unable to provide such access, Xstrata will acquire Cook coal directly at market prices on an open-book basis. Caledon must source its own rail and port access beyond the second year of operations (2009 onwards). Caledon expects rail and port allocation constraints to ease beyond 2008, as the Queensland Government has committed to make significant investment in infrastructure over the intervening period. Gladstone Port is currently being expanded by 30 Mt, to an annualised rate of 75 Mt, with work scheduled for completion by 2009. The rail-carrying capacity is also being expanded over the same period to match the port expansion. Despite these planned expansions, SRK recommends that scheduling of the upgrade of the Cook CPP be linked to confirmation of future availability of additional rail and port capacity. We note that Caledon believes that several producers in the region are overcommitted in terms of requested capacity use under Queensland’s ‘take-or-pay’ rail and port capacity-allocation system, and the company is confident of receiving offers to take up excess capacity as those producers seek to avoid penalty charges.

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Marketing
Xstrata is making its general marketing expertise available to Caledon on a take-or-pay basis for the first two years of Cook’s operation. Under the terms of the agreement, Caledon pays a marketing fee equal to the higher of 3% of gross revenue or US$2.75/t of coal sold. Caledon and Xstrata have agreed a production schedule (Nominated Annual Tonnage) of 900,000 tonnes of coal in 2007, escalating to 1.5 million tonnes in 2008. Caledon is limited to this production level until 2009 due to the rail and port constraints referred to above. Caledon mandated coal market consultant McCloskey evaluated the likely market price achievable for Cook coal, based on McCloskey’s forecast FOB prices for bench-mark Queensland hard and semi-hard coking coal. McCloskey concluded that, being a premium semi-hard product, Cook coking coal could achieve a price similar to or better than the mid-point of its forecast future prices for hard and semi-hard coals (Figure 18). Figure 18: McCloskey coal price forecasts
Coal Type 2007e 2008e Hard 110 110 Cook 100 100 Semi-hard 90 90 Source: McCloskey, September 2006 Base-case forecast (US$/t FOB) 2009e 2010e 2012e 110 100 80 100 90 75 90 80 70 2014e 85 80 75 2016e 90 84 78

Project parameters/valuation
We have used the CPR to guide the inputs to our cash flow model but have made a number of adjustments, particularly with regard to coal prices and the US$/A$ exchange rate, to reflect Canaccord Adams’ internal forecasts. We have based our production profile and operating cost structure (Figure 19) directly on the numbers presented in the CPR, which we note SRK based on estimates provided by Caledon. On this basis, we calculate total cash costs (inclusive of Queensland’s 7% state coal royalty) at approximately A$72 per tonne of saleable coal produced (US$54 per tonne) Figure 19: Operating cost assumptions
Item Caledon mining costs Magatar mining costs Infrastructure Mine-CPP haulage CPP costs G&A and insurance Marketing - higher of or Rail haulage Port handling Queensland State royalty Source: Competent Persons’ Report (SRK, October 2006) Unit A$/t mined A$/t mined A$/t mined A$/t mined A$/t washed A$/t washed % of revenue US$/t product A$/t product A$/t product % of revenue Value 37.5 33.5 1.5 2.75 4.25 2.43 3% 2.75 10.7 3.3 7%

We have assumed initial capital expenditure of approximately US$15 million in 2007, in line with company presentations, and have allowed for a further US$15 million in initial

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working capital and other owners costs. We note that Caledon’s estimated capex figure includes 15% contingency. To arrive at our base-case valuation we have used Canaccord Adams’ Australian forecast FOB prices for Australian hard coking coal (Goonyella) and thermal coal, as presented in Figure 20 below. As outlined on page 24, we note that Cook coal is a semi-hard product, which McCloskey believes could achieve a long-term price equal to around a 7% discount to its forecast long-term price for premium hard coal. We have therefore applied a similar discount to our own long-term hard coking coal price forecast of US$79 per tonne, which we note is somewhat lower than McCloskey’s long-term price forecast for hard coking coal of US$90 per tonne. Figure 20: Canaccord Adams coal forecasts
2007e 2008e 2009e 2010e Hard coking coal (Goonyella) US$/t 103.29 94.12 88.79 84.35 Implied Cook coking coal* US$/t 93.90 85.57 80.72 75.92 Thermal coal (Aus spot) US$/t 52.06 52.50 52.50 52.50 *Applying McCloskey’s Cook discount to Canaccord Adams coking coal forecasts Source: Canaccord Adams estimates 2011e 80.14 72.12 52.50 LT est 79.10 73.82 52.50

The following chart compares the forecast coking coal prices, as suggested by McCloskey against those of Canaccord Adams. Figure 21: Comparison of McCloskey and Canaccord Adams coking coal price forecasts
Coking c oal pric e for ec as ts (US$/ton n e)
120.00

110.00

100.00 McCloskey hard coking McCloskey suggested Cook 90.00 McCloskey semi-hard Canaccord Adams hard coking forecast 80.00 Adjusted Canaccord Adams forecast

70.00

60.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: McCloskey

We also provide a chart showing our forecast of the breakdown of operating costs and operating margin per tonne of coal sold, over the first 10-years of the operation’s life.

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Figure 22: Breakdown of average operating cost and operating margin per tonne
Forec as t operat i n g c os t s an d operat in g m argi n ( US $/t )
90 80 21 70 60 Cash costs (US$/t) 50 19 40 30 20 17 10 0 2006 2007 20082009 2010 2011 2012 20132014 2015 2016 16 18 20 Cash margin (US$/t) Cash margin Marketing and royalty Rail and port On-site costs Cash margin RH scale 22

Source: CRM and Canaccord Adams estimates

A summary of our base-case cash flow model of Cook using our discounted internal coking coal price forecasts is presented in Figure 26 in the appendix. The following sensitivity tables (Figures 23 and 24) plot the 10-year and 20-year NPV of Cook (assuming 100% equity funding and discount rates of 8% and 10%), against a range of flat (from 2008) coking and thermal coal prices. Figure 23: 10-year Cook NPV sensitivity tables
10-year NPV at 8% discount rate 50 -134 -112 -89 -66 -44 -21 60 -31 -9 8 24 41 56 Coking Coal price 70 49 65 81 97 113 129 80 122 138 153 169 185 201 90 194 210 225 241 257 273 100 266 282 298 313 329 344

20 30 40 50 60 70

10-year NPV at 10% discount rate 50 -123 -103 -83 -62 -42 -21 60 -30 -10 6 20 35 49 Coking Coal price 70 43 57 72 86 100 115 80 108 123 137 151 166 180 90 174 188 202 216 231 245 100 239 253 267 281 295 309

Thermal Price

20 30 40 50 60 70

Source: Canaccord Adams estimates

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Thermal Price

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Figure 24: 20-year Cook NPV sensitivity tables
20-year NPV at 8% discount rate 50 -193 -158 -123 -87 -52 -17 60 -33 -1 25 50 74 99 Coking Coal price 70 88 113 137 162 187 211 80 200 225 249 274 298 323 90 312 337 361 386 410 435 100 424 449 473 498 522 545

20 30 40 50 60 70

20-year NPV at 10% discount rate 50 -168 -138 -108 -78 -48 -18 60 -32 -4 18 40 61 82 Coking Coal price 70 72 93 115 136 157 178 80 168 189 210 231 252 273 90 264 285 306 327 348 368 100 359 380 401 422 443 463

Thermal Price

20 30 40 50 60 70

Source: Canaccord Adams estimates

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MINYANGO COAL PROJECT, QUEENSLAND
The Minyango property (EPC 699) is located in the immediate vicinity of the mining town of Blackwater in south-central Queensland. The 78 square-kilometer exploration tenement is bounded to the west by BMA’s (BHP Billiton-Mitsubishi Alliance) Blackwater mining lease, to the north by the Westfarmers’ Curragh mine, and to the south by the Cook property. The Blackwater open-pit mine has been in operation since 1968, and produced over 10 Mt of coking and thermal coal in the last financial year from seams which Caledon believes continue into the Minyango property. The Curragh mine has been in operation since 1982, producing approximately 7 Mtpa of coking and thermal coal from seams which are again thought to extend into the Minyango tenements. Figure 25: Minyango project location

Source: AIM Re-admission Document (Nov 2006)

While there is no compliant resource at Minyango, Caledon believes, based on historical coal data and adjacent mining properties, that the project can be developed into a producing mine within a relatively short timeframe, and at relatively low capital cost, utilising existing processing and transportation infrastructure at Cook. The company plans to undertake advanced exploration studies on potentially underground mineable portions of Minyango over the next 12-15 months, at the end of which it must have paid the A$40 million acquisition cost in full in order to retain the property. Local company QCoal Pty Ltd, which is affiliated to the vendor, has reserved rights to develop near-surface, potentially open-pitable portions of the deposit, but only within a limited defined area at one end of the property. QCoal also has the right to a 1.75% royalty on any future coal production from Minyango.

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Acquisition Agreement
Title to the Minyango property is held by Blackwater Coal, a wholly-owned subsidiary of BVI company Hazelhurst Holdings. Hazelhurst is in turn owned 100% by BVI company Watami Trading, the ultimate vending party. On 29 September 2006, Caledon signed an option agreement to acquire the entire issued capital of Hazelhurst for a total consideration of A$40 million, payable over a 15-month period. Caledon can exercise the option at any time during the option period, which ends on the tenth business day following the fulfillment of certain conditions, including shareholder approval of the transaction at the upcoming EGM. As part of the total consideration due, a non-refundable option fee of US$1.5 million (A$2 million) was paid to Watami in lieu of acquiring the option. The first staged payment of A$10 million is due to be paid to Watami no later than 10-days after admission of the placing shares. After this payment, Caledon has until six months and 45 days from the date of the acquisition agreement to undertake initial resource delineation and coal-quality studies on Minyango. Should Caledon decide to proceed with the project beyond this point, a further A$9.6 million is payable to Watami in cash, shares or a combination of the two (at Caledon’s election). Upon payment, Caledon would then be free to proceed with more advanced exploration studies on the project. Should it elect not to proceed with the project after these initial studies, Watami has the right to buy back all the shares in Hazelhurst in consideration for the full refund of all monies paid by Caledon to that date. Within nine months of the second staged payment, Caledon must make the final payment installment of A$20.4 million. This payment may be delayed by up to three months in the event that Caledon has not completed its planned feasibility work. However, if the company chooses not to proceed at this point and therefore declines to pay the A$20.4 million due, Watami has the right to buy-back 51% of Hazelhurst for a consideration expected to amount to A$15 million less the aggregate amount of any third-party borrowings of Hazelhurst and its subsidiaries at that time.

Geology and resources
Four coal seams within the Rangal Coal Measures occur in Minyango: Aries, Castor, Pollux and Orion (in stratigraphic order from top to base). These four seams commonly split and coalesce to form other seams, particularly towards the south where the Castor and Pollux seams combine to form the Gemini Seam. To the west of Minyango the Rangals are sufficiently shallow to be mined by open pit, as exemplified by BMA’s adjacent Blackwater operation. Of the four target coal seams, Caledon considers Aries, Castor and Pollux as offering potential for delineation of resources and reserves. These seams are of sufficient thickness to allow extraction via underground mining methods and, from the limited coal quality data available, Caledon believes all three can produce a high-quality thermal coal and an export-quality coking coal product.

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Exploration work to date suggests that the three coal seams of interest vary in seam and interburden thicknesses as follows: Aries Seam (1.3-9 metres) Interburden (0-20 metres) Castor Seam (1.5-11 metres) Interburden (0-25 metres) Pollux Seam (1.2-5.5 metres) The thicker areas of the Aries Seam are interpreted as coalescing of the seam with the Castor Seam, and the thicker intersections in the Castor and Pollux seams are thought to reflect coalescing of these two seams to form the Gemini Seam. The overall interburden thickness between Aries and Pollux ranges from 20 metres in the north to 50 metres in the southern end of the property. The interburden sediments generally consist of competent material suitable for underground extraction. Company presentations make reference to a potential resource of 500 Mt of coal, which is not JORC compliant and which we understand to be based on historical data accumulated since the 1960s. A total of 22 deep stratigraphic boreholes were drilled on the property between the 1960s and 1995, and a further 67 shallow boreholes were drilled in 2005 to target areas with potential for open-pit mining. According to SRK, many of the 22 deep drill holes did not intercept the coal seams and are therefore void of any coal-quality analysis. Those holes that did core the coal seams were not logged by wire-line geophysics, and therefore cannot guarantee core recovery of more than 95% as required under the JORC reporting guidelines for coal resources. Nevertheless, based on work completed to date and knowledge of coal quality from resources on adjacent properties, Caledon believes Minyango coal could provide a midvolatile hard coking product and a thermal by-product after beneficiation. The company expects a total yield of 70-85% providing mining dilution does not exceed 10% by weight.

Development plans
Caledon plans to undertake feasibility work on Minyango over the next 9-12 months at a total cost of approximately US$2.5 million. The first stage of the work programme will include preliminary-stage drilling (20 holes planned) and seismic studies to determine coal-seam continuity, coking-coal quality, and to provide an initial idea of the potential structural characteristics of the seams (faults and other potential disturbances). The second phase of the feasibility programme will include in-fill drilling to delineate a set volume of potentially underground mineable, drill-indicated material from within the 500 million tonne conceptual resource.

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CHINESE GOLD ASSETS
Prior to its move into the coal sector, Caledon was best known as a Chinese-focused gold explorer, holding a number of gold exploration assets in the country’s Guangxi and Yunnan provinces via various subsidiary companies and joint ventures.

Directly-owned gold assets
Caledon’s principal gold asset is an earn-in option on the Mojiang gold project in southwestern Yunnan. Mojiang Mining Ltd Co (MMLC) commenced mining at the property in 1980, establishing a mill and CIP plant in 1982 which has steadily produced 10,000 to 15,000 oz per annum, initially from underground high-grade ore and latterly through lower-grade open-pit ore. Since 2002, MMLC has produced around 40,000 oz of gold per annum from heap-leaching of oxide ore. In 2004, Caledon signed an agreement with MMLC to earn a 70% equity interest in the 7.2 square kilometer Mojiang mining concession and surrounding exploration tenements, as well as a 90% interest in exploration ground to be acquired in defined counties in southern Yunnan Province, in return for funding US$1 million of exploration expenditure over a three-year period and completing a feasibility study. Caledon commenced drilling at Mojiang in February 2006, with a view to completing a resource estimate by the end of the year. In addition to Mojiang, Caledon holds majority interests in the Hengxian, Gaolong and Badu exploration projects in Guangxi Province. These assets are held through subsidiary companies Blackwatch Resources and Blackwatch Mining.

Dynasty Gold Corp
During 2005, Caledon acquired a total of 7.2 million shares in Chinese gold explorer Dynasty Gold Corp (TSX.V:DYG), at a total cost of £1.1 million. Caledon’s interest represents approximately 10.6% of Dynasty’s total issued shares, which at Dynasty’s current share price has a market value of approximately C$2.1 million (US$1.8 million). Dynasty owns three advanced gold exploration projects in northern China – Hatu, Wild Horse and Red Valley. It has inferred resources of just under one million ounces of gold. Other noteworthy shareholders in Dynasty include AngloGold Ashanti Ltd (AU:NYSE) and Avocet Mining plc (AVM:AIM).

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APPENDIX
Figure 26: Cook coal mine summary cash flow model
FYE Dec CC production Magatar production Total ROM production Wash plant recovery Coking coal yield Thermal coal yield Coking coal price (FOB) Thermal coal price (FOB) Coking revenue Thermal revenue Exchange rate Gross revenue Cash operating costs Marketing fee Queensland royalty Total cash costs DD&A Total operating costs Pre-tax cash flow Taxation Net operating cash flow Capex Project free cash flow 10-year NPV at 8% DR 20-year NPV at 8% DR kT kT kT % kT kT US$/t US$/t US$M US$M US$/A$ A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M A$M US$M A$M US$M LoM Total 1,777 36,136 37,913 92% 28,467 6,249 2007e 732 316 1,049 81% 699 154 92.93 52.06 65 8 0.75 97 -68 -3 -7 -78 -1 -80 19 0 19 -39 -20 2008e 646 1,058 1,703 86% 1,208 265 85.30 52.50 103 14 0.75 156 -101 -5 -11 -118 -2 -120 38 -5 33 -2 32 2009e 348 1,549 1,897 92% 1,433 315 80.75 52.50 116 17 0.75 176 -109 -6 -12 -128 -3 -131 48 -14 34 0 34 2010e 51 1,954 2,005 92% 1,515 332 75.94 52.50 115 17 0.75 177 -114 -7 -12 -133 -3 -136 43 -13 31 0 30 2011e 0 1,954 1,954 92% 1,476 324 72.12 52.50 106 17 0.75 165 -111 -7 -12 -129 -3 -132 36 -11 25 0 25 2012e 0 1,954 1,954 92% 1,476 324 74.15 52.50 109 17 0.75 169 -111 -7 -12 -129 -3 -132 39 -12 28 0 27 2013e 0 1,954 1,954 92% 1,476 324 74.15 52.50 109 17 0.75 169 -111 -7 -12 -129 -3 -132 39 -12 28 0 27 2014e 0 1,954 1,954 92% 1,476 324 74.44 52.50 110 17 0.75 169 -111 -7 -12 -129 -3 -132 40 -12 28 0 27 2015e 0 1,954 1,954 92% 1,476 324 74.44 52.50 110 17 0.75 169 -111 -7 -12 -129 -3 -132 40 -12 28 0 27 2016e 0 1,954 1,954 92% 1,476 324 73.82 52.50 109 17 0.75 168 -111 -7 -12 -129 -3 -132 39 -11 27 0 27 2017e 0 1,954 1,954 92% 1,476 324 73.82 52.50 109 17 0.75 168 -111 -7 -12 -129 -3 -132 39 -11 27 0 27

82% 18%

2,142 328 3,294 -2,169 -127 -231 -2,526 -54 -2,580 767 -214 553 -54 499 148 116 230 181

7%

30%

8% DR 8% DR

Source: Canaccord Adams estimates

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Figure 27: Caledon summary financials
FYE Dec Production Coking coal Thermal coal Total coal production Coking coal price Thermal coal price Average coal price Average cash cost FYE Dec Profit and Loss Revenue Costs Corp G&A EBITDA DD&A EBIT Interest Tax Earnings Cash Flow Operating cash flow Invested cash flow Cash flow from financing activities Net cash flow Cumulative cash flow Source: Canaccord Adams estimates 2007e kT kT kT US$/t US$/t US$/t US$/t 699 154 853 93 52 86 -69 2007e US$M US$M US$M US$M US$M US$M US$M US$M US$M 73 -59 -6 8 -1 7 0 -2 5 2008e 1,208 265 1,473 85 53 79 -60 2008e 117 -88 -6 23 -2 21 0 -6 15 2009e 1,433 315 1,748 81 53 76 -55 2009e 132 -96 -6 30 -2 28 0 -8 20 2010e 1,515 332 1,847 76 53 72 -54 2010e 132 -100 -6 27 -2 24 0 -7 17 2011e 1,476 324 1,800 72 53 69 -54 2011e 123 -97 -6 21 -2 19 0 -6 13 2012e 1,476 324 1,800 74 53 70 -54 2012e 126 -97 -6 23 -2 21 0 -6 15 2013e 1,476 324 1,800 74 53 70 -54 2013e 126 -97 -6 23 -2 21 0 -6 15 2014e 1,476 324 1,800 74 53 70 -54 2014e 127 -97 -6 24 -2 22 0 -7 15 2015e 1,476 324 1,800 74 53 70 -54 2015e 127 -97 -6 24 -2 22 0 -7 15 2016e 1,476 324 1,800 74 53 70 -54 2016e 126 -97 -6 23 -2 21 0 -6 15 2017e 1,476 324 1,800 74 53 70 -54 2017e 126 -97 -6 23 -2 21 0 -6 15

US$M US$M US$M US$M US$M

8 -45 0 -37 -27

19 -1 0 18 -9

20 0 0 19 10

17 0 0 17 26

13 0 0 12 39

15 0 0 14 53

15 0 0 14 67

15 0 0 15 82

15 0 0 15 97

14 0 0 14 111

14 0 0 14 125

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Figure 28: Comparable Australian coal producers (mixed coking and thermal)
Price (local) 2.75 78.00 9.50 4.16 4.03 4.91 1.30 1.34 Shares Out (M) 302 87 215 188 79 187 808 194 Mkt Cap (US$M) 653 5,311 1,606 615 249 724 823 204 EV (US$M) 1,183 5,465 1,786 626 262 610 493 237

Consensus EPS
2007e 0.15 3.17 0.54 0.19 0.45 0.37 0.07 0.05 0.62 2008e 0.27 3.80 0.81 0.23 0.41 0.44 0.09 0.25 0.79 2007e 18.2 24.6 17.6 22.2 8.9 13.3 18.2 27.9 18.9

PE
2008e 10.1 20.6 11.7 18.4 9.7 11.1 13.9 5.4 12.6

Consensus CFPS
2007e 0.53 4.15 1.04 0.22 0.64 0.48 0.11 0.09 0.91 2008e 0.67 4.49 1.42 0.35 0.53 0.65 0.12 0.35 1.07

Company Centennial Coal Coal & Allied Excel Coal* Felix Resources Gloucester Coal Macarthur Coal New Hope Resource Pacific Average

Ticker CEY CNA EXL FLX GCL MCC NHC RSP

Currency AUD AUD AUD AUD AUD AUD AUD AUD

P/CF 2007e 2008e 5.2 4.1 18.8 17.4 9.1 6.7 18.9 11.9 6.3 7.6 10.2 7.6 12.0 11.1 14.9 3.8 11.9 8.8

*Share price represents Peabody take-out price Source: Company reports, Bloomberg

An analyst has visited the issuer’s main operations in Queensland, Australia and partial payment was received from the issuer for the related travel costs.

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APPENDIX: IMPORTANT DISCLOSURES Analyst Certification: Each authoring analyst of Canaccord Adams whose name appears on the front page of this investment
research hereby certifies that (i) the recommendations and opinions expressed in this investment research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the investment research.

Price Chart:*

* Price charts assume event 1 indicates initiation of coverage or the beginning of the measurement period.

Distribution of Ratings:
Global Stock Ratings (as of 1 December 2006) Rating Buy Speculative Buy Hold Sell

Coverage Universe # % 292 57.37% 56 11.00% 139 27.31% 22 4.32% 509 100.00%

IB Clients % 43.84% 67.86% 30.22% 13.64%

Canaccord Ratings System:

BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months. HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months. SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months. “Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or the relevant issuer.

Risk Qualifier:

SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.

Canaccord Research Disclosures as of 12 December 2006
Company Caledon Resources plc Disclosure 1A, 2, 4, 5, 7

1

The relevant issuer currently is, or in the past 12 months was, a client of Canaccord Adams or its affiliated companies. During this period, Canaccord Adams or its affiliated companies provided the following services to the relevant issuer: A. investment banking services. B. non-investment banking securities-related services. C. non-securities related services.

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2 3 4 5 6 7 8

In the past 12 months, Canaccord Adams or its affiliated companies have received compensation for Corporate Finance/Investment Banking services from the relevant issuer. In the past 12 months, Canaccord Adams or any of its affiliated companies have been lead manager, co-lead manager or co-manager of a public offering of securities of the relevant issuer or any publicly disclosed offer of securities of the relevant issuer or in any related derivatives. Canaccord Adams acts as corporate broker for the relevant issuer and/or Canaccord Adams or any of its affiliated companies may have an agreement with the relevant issuer relating to the provision of Corporate Finance/Investment Banking services. Canaccord Adams or any of its affiliated companies is a market maker or liquidity provider in the securities of the relevant issuer or in any related derivatives. 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9

10 11 12

13 14

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good faith and in the normal course of market making. Accordingly, Canaccord Adams or their affiliated companies, principals or employees (other than the authoring analyst(s) who prepared this investment research) may at any time have a long or short position in any such designated investments, Related designated investments or in options, futures or other derivative instruments based thereon. Some regulators require that a firm must establish, implement and make available a policy for managing conflicts of interest arising as a result of publication or distribution of investment research. This investment research has been prepared in accordance with Canaccord Adams’ policy on managing conflicts of interest, and information barriers or firewalls have been used where appropriate. Canaccord Adams’ policy is available upon request. The information contained in this investment research has been compiled by Canaccord Adams from sources believed to be reliable, but (with the exception of the information about Canaccord Adams) no representation or warranty, express or implied, is made by Canaccord Adams, its affiliated companies or any other person as to its fairness, accuracy, completeness or correctness. Canaccord Adams has not independently verified the facts, assumptions, and estimates contained herein. All estimates, opinions and other information contained in this investment research constitute Canaccord Adams’ judgement as of the date of this investment research, are subject to change without notice and are provided in good faith but without legal responsibility or liability. Canaccord Adams salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this investment research. Canaccord Adams’ affiliates, proprietary trading desk, and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this investment research. This investment research is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any designated investments discussed herein in any jurisdiction where such offer or solicitation would be prohibited. As a result, the designated investments discussed in this investment research may not be eligible for sale in some jurisdictions. This investment research is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared for general circulation to clients and does not have regard to the investment objectives, financial situation or particular needs of any particular person. Investors should obtain advice based on their own individual circumstances before making an investment decision. To the fullest extent permitted by law, none of Canaccord Adams, its affiliated companies or any other person accepts any liability whatsoever for any direct or consequential loss arising from or relating to any use of the information contained in this investment research.

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12 December 2006

Caledon Resources plc

Sales and Trading Toronto 1.800.810.8051 Calgary 1.403.508.3826

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Boston 1.800.343.7096 San Francisco 1.800.830.2608

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www.canaccordadams.com 1.617.788.1510 1.646.264.6017 1.514.284.1593 1.617.371.3728 1.416.869.7294 1.617.371.3817 1.416.869.7295 1.617.371.3879 1.416.869.7215 1.415.229.0683

Mark Maybank, CA, CBV, Director of Research (Global), Toronto Bruce McDonald, CFA, MA Head of Research (Canada), Calgary Eric Prouty, Head of Research (US), Boston Karl Keegan, MPhil, PhD, Head of Research (UK), London Mining and Metals Damien Hackett, London Steven Butler, MBA, Toronto Graeme Currie, Vancouver Gary Lampard, MA, MBA, Toronto Jim Taylor, London Orest Wowkodaw, CA, CFA, Toronto Wendell Zerb, PGeol, Vancouver Nick Chalmers, Associate, London Christopher Chang, Associate, Toronto Gary Hon, Associate, Toronto Nicholas Pickens, Associate, London Toni Wallis, PGeo, Associate Analyst, Vancouver John Vinnai, Associate, Toronto Energy Bruce McDonald, CFA, MA, Calgary Andrew Bradford, CFA, MA, Calgary Irene Haas, Houston Jim Joseph, London Wendy Liu, CFA, Calgary Terry Peters, MBA, Toronto Geir Sagemo, London Richard Wyman, MBA, Calgary Jeff Barber, MA, Associate, Calgary Teju Akande, Associate, London Arthur Grayfer, Associate, Calgary Michael Deng, MBA, Associate, Calgary Stephanie Joe, Associate, Houston Asad Rawra, CA, CPA, Associate, Toronto Lindsay Wheeler, Associate, Calgary Technology Jeff Rath, CFA, Toronto Dushan Batrovic, MBA, Toronto Anthony Chow, MBA, London Jonathan Dorsheimer, Boston Steven Frankel, MBA, Boston Colin Gillis, MBA, New York Catriona Hamilton, London Greg Harris, MBA, London Alan Howard, CFA, MA, London Avinash Kant, PhD, San Francisco Mark Kelleher, MBA, Boston Michael Kern, Boston David Lambert, CFA, Toronto Joanna Makris, MA, New York Peter Misek, CA, CPA, CFA, Toronto

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Life Sciences Karl Keegan, MPhil, PhD, London 44.20.7050.6633 Mike Booth, DPhil, London 44.20.7050.6635 David Bouchey, Ph.D., Boston 1.617.371.3891 Neil Maruoka, Toronto 1.416.869.3073 Joseph Pantginis, PhD, MBA, MSc, New York 1.646.264.6021 Matthew Scalo, San Francisco 1.415.229.0649 Theresa Chu, Associate, San Francisco 1.415.299.0699 Ben Sun, PhD, Sr Associate, Boston 1.617.788.1595 Guillaume van Renterghem, MSc, Associate, London44.20.7050.6650 Real Estate Jonathan Kelcher, CFA, MBA, Toronto Shant Poladian, CA, CPA, Toronto Sandy Poklar, CA, Toronto Consumer Robert J. Hastings, CFA, Vancouver Benoit Caron, MSc, Montréal Stephen Colbert, Boston Martin Gagel, CFA, MBA, Vancouver Chris Rankin, CFA, MBA, Toronto Scott Van Winkle, CFA, Boston Diederik Basch, CFA, Sr. Associate, Boston Yashwant Sankpal, Associate, Toronto Catherine Siu, CFA, Associate, Montréal Industrial Growth Robert J. Hastings, CFA, Vancouver Sara Elford, CFA, Halifax Robert Fay, MBA, Toronto Martin Gagel, CFA, MBA, Vancouver Eric Glover, CFA, San Francisco Mark Thompson, MSc, CFA, London Juan Plessis, MBA, CFA, Vancouver John Quealy, CPA, Boston Chris Rankin, CFA, MBA, Toronto Jeffrey Leung, Associate, Vancouver Mark Sigal, Associate, Boston Christy Taylor, Associate, Vancouver Tom Varesh, MBA, Associate, Toronto Max Vichniakov, MBA, Associate, Toronto Portfolio Strategy Nick Majendie, CA, MA, Vancouver Michael Rudd, CFA, Associate, Vancouver 1.416.869.3260 1.416.869.6595 1.416.869.3060 1.604.643.0177 1.514.844.3708 1.617.788.1573 1.604.643.7718 1.416.869.7325 1.617.371.3759 1.617.371.3764 1.416.869.3643 1.514.844.3108

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