CAH.

asx
Buy

Catalpa resources Limited

CATALPA RESOURCES LIMITED Share Price (last):

1 Jun 2010
$1.45
Valuation: $2.02
Latest +100koz Producer, Hedge Book Reduces Risk
Brief Business Description:
Catalpa Resources Limited (“Catalpa”, “CAH”, “Company”) is an emerging
New mid-tier gold producer
ASX listed mid tier gold company, currently focussing on the open pit
development of its 100kozpa Edna May Gold Project, located ~300km east Hartleys Brief Investment Conclusion
of Perth in WA. The Company also has a 30% share of the Cracow Gold New +100kozpa gold producer from the Edna
May project. Low grades offset by excellent
Mine, located in Queensland and operated by Newcrest Mining Limited. hedge book. Also 30% of Cracow goldmine.
Catalpa’s share of production from Cracow is ~30kozpa.
Chairman & MD
Edna May Commences Production Peter Maloney (Non-Exec. Chair)
Catalpa has recently completed its first gold pour at its 100% owned Edna Bruce McFadzean (MD)
May project, approximately 2 months ahead of the original schedule. The Top Shareholders
HSBC Custody Nom Aust Ltd 16.8%
Company has completed construction, with production ramping up to yield
ANZ Nom Ltd Cash Income A/C 8.3%
~90koz in FY2011 from Edna May. The pour caps a very busy year for Citicorp Nom Pl 5.2%
WA Resources: Gold

Catalpa which included the merger with its major shareholder Lion Selection Company Address

Group, completion of construction of Edna May, a capital reconstruction, the Level 1, 9 Havelock Street
West Perth, WA, 6005
restructuring of its debt, as well as raising ~A$59m.
Issued Capital 161.3m
Low Grades Boosted by Attractive Hedge Book - fully diluted 174.5m
The Edna May deposit is relatively low grade at just over 1g/t Au. However, Market Cap $234.0m
with a large mill, low strip ratios, efficient mining practices and recoveries of - fully diluted $253.0m
Cash (31 March '10) $26.4m
~92%, the Company is targeting life of mine cash costs of ~A$640/oz.
Debt (31 March '10) $50.0m
In addition, 70% of the operations production is hedged at an average price EV $257.6m
EV/Resource Oz $137/oz
of A$1,557/oz for five years, yielding excellent margins. This delivery price EV/Reserve Oz $241/oz
compares well to the current spot price of ~A$1,450/oz.
FY2009A FY2010F FY2011F
We see this hedge book, as well as Edna Mays long mine life, as key Prod (koz Au) 0.0 26.0 120.1
differentiating factors from its peers. The hedge book removes short to Op Cash Flw -3.3 4.4 66.9
medium term revenue risk, with the 10 year mine life enabling exposure to NPAT -6.8 -1.9 36.5
CF/Share (cps) -4.6 1.9 33.2
long term gold price movements. We note that if the gold price does move
EPS (cps) -4.7 -1.2 22.6
above A$1,557, CAH still has almost 50% of its total targeted production P/E -30.8x -116.5x 6.4x
unhedged. N.D. / equity na 0.4 0.0
ROE -15.3% -1.6% 23.1%
Cracow Provides Steady Ongoing Cashflow
The Company’s 30% ownership of Cracow also generates annual total Resources (koz Au) 1,886
Reserves (koz Au) 1,068
cashflow of ~A$12m. Whilst Cracow has a relatively small reserve base, we
expect the mine life to be at least four years given the operations long 2.00
Catalpa Resources
2.5
operational history and exploration potential. 1.80
1.60 2.0

Initiate Coverage with a Buy Recommendation 1.40

1.20 1.5
We see Catalpa as a good quality emerging gold producer, with its excellent A$ 1.00 M
0.80 1.0
in the money hedge book underpinning margins and substantially reducing 0.60
risk. Edna May has upside via the likely addition of high grade underground 0.40 0.5
0.20
ore, as well as mine life extensions. At full capacity, Catalpa should produce 0.00 0.0
+130kozpa, positioning the Company firmly within the ASX mid tier gold Jun-09 Oct-09 Jan-10 May-10
Source: IRESS
sector.
Volume - RHS
CAH Shareprice - LHS
Sector (S&P/ASX SMALL RESOURCES) - LHS

The Company is trading at a substantial discount to our $2.02 per share

valuation and compares favourably to its peers on a number of key metrics. Author:
We expect the Company to be re-rated as Edna May is successfully Andrew Muir
Senior Resources Analyst
commissioned, and initiate coverage of Catalpa Resources Limited with a
Ph: +61 8 9268 3045
Buy recommendation. E: andrew_muir@hartleys.com.au

Hartleys Limited ABN 33 104 195 057 (AFSL 230052) 141 St Georges
Page 1 of 21 Terrace, Perth, Western Australia, 6000
Hartleys does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the
firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
Hartleys Limited Catalpa Resources Limited 1 June 2010

SUMMARY MODEL
Catalpa Resources Limited Share Price June 2010
CAH $1.45 Buy

Key Market Inform ation Directors Com pany Inform ation

Share Price $1.45 Peter Maloney (Non-Exec. Chair) Level 1, 9 Havelock Street
Market Capitalisation $234m Bruce McFadzean (MD) West Perth, WA, 6005
52 Week High-Low $1.96-$1.445 John Row e (Non-Exec. Dir) Tel: +61 8 9321 3088
Issued Capital 161.3m Barry Sullivan (Non-Exec. Dir) Fax: +61 8 9321 8804
Issued Capital (fully diluted inc. ITM options) 174.5m Murray Pollock (Non-Exec. Dir) w w w .catalparesources.com.au
Options 14.6m@$A0.97 Graham Freestone (Non-Exec. Dir)
Hedging 352koz @ A$1,557/oz
Yearly Turnover/Volume $93.3m/311.5m shares Top 10 Shareholders m shares %
Liquidity Measure (Yearly Turnover/Issued Capital) 187%
Valuation $2.02 HSBC Custody Nom Aust Ltd 27.04 16.8%
ANZ Nom Ltd Cash Income A/C 13.40 8.3%
Financial Perform ance Unit FY2009A FY2010F FY2011F FY2012F Citicorp Nom Pl 8.40 5.2%
National Nom Ltd 7.40 4.6%
Net Revenue A$m 0.1 27.1 172.0 180.0 Cogent Nom Pl 5.95 3.7%
Total Costs A$m (6.9) (22.1) (92.3) (87.3) Lion Manager Pl 4.82 3.0%
EBITDA A$m (6.8) 5.0 79.7 92.7 J P Morgan Nom Aust 3.78 2.3%
Depreciation/Amort A$m (0.2) (5.0) (17.2) (21.4) Creasy Mark Gareth 3.22 2.0%
EBIT A$m (7.0) 0.0 62.6 71.3 Reneagle Pl Sharnem Inv A/C 1.88 1.2%
Net Interest A$m 0.2 (1.3) (10.5) (8.5)
Pre-Tax Profit A$m (6.8) (1.3) 52.1 62.8
Tax Expense A$m 0.0 (0.6) (15.6) (18.8) Reserves & Resources Mt g/t Au Koz Attrib.
NPAT A$m (6.8) (1.9) 36.5 43.9
Abnormal Items A$m - - - - Resources
Reported Profit A$m (6.8) (1.9) 36.5 43.9 Edna May (M+I+I) 48.10 0.99 1,526 1,526
Greenfinch (M+I+I) 4.00 1.02 130 130
Cracow (M+I+I) 3.00 8.10 800 230
Total 55.10 1.38 2,456 1,886
Financial Position Unit FY2009A FY2010F FY2011F FY2012F
Reserves
Cash A$m 32.3 19.6 56.4 105.3 Edna May 25.5 1.09 892 892
Other Current Assets A$m 4.4 9.6 20.3 20.9 Edna May Stockpiles 1.6 0.65 34 34
Total Current Assets A$m 36.7 29.2 76.8 126.2 Greenfinch 2.5 1.07 86 86
Property, Plant & Equip. A$m 7.5 104.0 102.1 97.8 Cracow 0.80 7.10 188 56
Exploration A$m 1.5 73.7 70.8 72.0 Total 30.4 1.22 1,200 1,068
Investments/other A$m 3.7 3.3 3.3 3.3
Tot Non-Curr. Assets A$m 12.6 181.0 176.3 173.1 Production Sum m ary Unit FY2009A FY2010F FY2011F FY2012F
Total Assets A$m 49.3 210.2 253.1 299.3 *Attributable
Payable Gold Metal 000oz 0 26 120 125
Short Term Borrow ings A$m (0.0) (7.8) (7.8) (7.8) Cash Cost $A/oz 0 673 703 633
Other A$m (4.2) (12.2) (10.2) (10.6)
Total Curr. Liabilities A$m (4.2) (20.0) (17.9) (18.4) Price Assum ptions Unit FY2009A FY2010F FY2011F FY2012F
Long Term Borrow ings A$m (0.1) (57.2) (50.0) (30.0)
Other A$m (0.4) (11.7) (27.3) (43.2) Gold US$/oz 874 1,068 1,100 1,050
Total Non-Curr. Liabil. A$m (0.5) (68.9) (77.3) (73.2) Exchange Rate A$/US$ 0.75 0.89 0.89 0.83
Total Liabilities A$m (4.7) (88.9) (95.2) (91.6) $A Gold A$/oz 1,170 1,195 1,239 1,273

Net Assets A$m 44.6 121.3 157.8 207.7

Hedging Unit FY2009A FY2010F FY2011F FY2012F
Cashflow Unit FY2009A FY2010F FY2011F FY2012F
Total Forw ard Sales - Gold 000oz - - 70 70
Operating Cashflow A$m (3.3) 4.4 66.9 92.6 Forw ard Gold Price $A/oz 0 0 1,557 1,557
Income Tax Paid A$m - (0.3) - (2.9)
Interest & Other A$m 0.3 (1.0) (10.5) (8.5) Sensitivity Analysis Valuation ($/s) NPAT EPS (¢) CFPS (¢)
Operating Activities A$m (3.0) 3.1 56.4 81.1
Base Case 2.02 36.5 22.5 33.3
Property, Plant & Equip. A$m (7.1) (89.9) (8.2) (8.2) Exchange Rate +10% 1.89 32.6 20.2 31.0
Exploration and Devel. A$m (1.5) (10.9) (4.2) (10.0) Exchange Rate -10% 2.18 40.9 25.4 36.1
Investments A$m - 6.4 - - Gold Price +10% 2.17 40.4 25.1 35.8
Investm ent Activities A$m (8.6) (94.4) (12.5) (18.2) Gold Price -10% 1.88 32.3 20.0 30.7
Operating Costs +10% 1.84 30.4 18.9 29.6
Repayment of Borrow ings A$m (0.0) (0.0) (7.2) (20.0) Operating Costs -10% 2.21 42.3 26.2 37.0
Equity A$m 41.1 80.3 0.0 5.9 *N.B. NPAT, EPS, CFPS forecasts are for FY2011
Dividends Paid A$m - - - -
Financing Activities A$m 41.1 78.6 (7.2) (14.1)
Share Price Valuation (NAV) Est. $m Est. $/share
Net Cashflow A$m 29.5 (12.7) 36.8 48.8
Edna May (NPV @ 10%) 237.6 1.36
Ratio Analysis Unit FY2009A FY2010F FY2011F FY2012F Cracow (NPV @ 8%) 36.1 0.21
Exploration 25.0 0.14
Cashflow Per Share A¢ (4.6) 1.9 33.2 39.2 Cash 26.4 0.15
Cashflow Multiple X (31.5) 75.4 4.4 3.7 Forw ards 90.8 0.52
Earnings Per Share A¢ (4.7) (1.2) 22.6 26.3 Corporate Overheads (17.6) (0.10)
Price to Earnings Ratio X (30.8) (116.5) 6.4 5.5 Total Debt (65.0) (0.37)
Dividends Per Share A¢ - - - - Tax Losses 7.8 0.04
Dividend Yield % - - - - Options & Other Equity 11.6 0.07
Net Debt / Equity % na 0.4 0.0 na Total 352.8 2.02
Interest Cover X 0.0 6.0 8.4 -
Return on Equity % na na 23% 21%

Analyst: Andrew Muir Last Updated: 01/06/2010

Phone: +61 8 9268 3045

Sources: IRESS, Company Information, Hartleys Research

Page 2 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

HIGHLIGHTS
Company highlights include:
• Completion of the merger with its major shareholder Lion Selection Limited
Two production
centres • 30% owners of the Cracow Gold Mine in Qld

• Developed the 100% owned Edna May Gold Project in WA for first gold pour in
April 2010
• Two production centres set to deliver annualised gold production of ~130koz
at cash costs around A$620/oz
Forecast attributable
annualised production • 70% of Edna May production hedged at A$1557/oz over 5 years
of 130koz at cash cost
of ~A$620/oz BUSINESS OVERVIEW
Catalpa was originally listed on the ASX as Westonia Mines Limited in 2002 with
the Edna May project and surrounding tenements covering the vast majority of the
Westonia greenstone belt. After completing the purchase of the Big Bell gold
processing plant, the Company undertook a bankable feasibility study into the
Listed as Westonia development of Edna May in 2004. Development was not justified at the time due
Mines Limited in 2002 to insufficient returns at the prevailing gold price (2004 average gold price
A$556/oz).

In 2008, the Company changed its name to Catalpa Resources Limited, and re-
examined the potential for the development of Edna May due to the much higher
gold price (2008 average gold price A$1,034/oz). In late 2009, the Company
Name changed to completed a merger with its largest shareholder, Lion Selection Limited (“Lion”),
Catalpa Resources following a capital reconstruction, to give the Company its current form. The
Limited in 2008, then merger, via a scheme of arrangement, saw Lion contributing 30% of Cracow, with
merged with Lion Catalpa contributing 100% of its Edna May operation.
Selection in late 2009
Fig. 1: Catalpa Gold Operations

Australian located
projects in WA and
QLD

Source: Catalpa Resources Limited

Page 3 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

EDNA MAY GOLD PROJECT

Fig. 2: Edna May Snap Shot

EDNA MAY

• Interest: 100%

• Operation: Open pit, with underground potential

• Strip Ratio: 2:1

• Annualised Production: 100koz Au

• Processing Capacity: 2.8Mtpa, increasing to 3.2Mtpa

• Reserve: 1.01Moz Au

• Resource: 1.66Moz Au

• Target Life of Mine Cash Cost (C1): A$636/oz

Main gold producing • Average Cash Operating Margin: A$72m pa

asset located in the • Hedging: 352,317oz @ A$1,557.5/oz (~70% of first 5 years production)
Westonia Greenstone
Source: Catalpa Resources Limited
Belt

The Edna May project is located within the Westonia Greenstone belt, half way
between Perth and Kalgoorlie in Western Australia. The area has had historic mining
Historic underground on and off since 1911. Most of the mining has been via underground methods,
mining on & off since though there was an open cut operation between 1986 and 1989 operated by ACM
1911 Gold Limited on the main Edna May deposit. ACM underground mining was
terminated in 1991 when barren pegmatites were intersected and the inflow of
groundwater was unable to be effectively dealt with by the pumping capacity at the
time.

The mineralisation at Edna May is contained within the Edna May gneiss,
Mineralisation
Greenfinch gneiss and the Golden Point gneiss. Current resources are 52.1Mt @
contained within the
0.99g/t Au for 1.66Moz. Total reserves are 29.6Mt @ 1.06g/t Au for 1.01Moz gold.
Edna May Gneiss
The targeted annual production rate of ~100kozpa gives a 10 year mine life for the
project on a reserve basis. Whilst the overall resource and reserve grades are
relatively low, we understand that there is some high grade mineralisation contained
Forecast annualised within arcuate quartz veins in the gneiss. These higher grade quartz veins were the
gold production at main target during underground mining, with periods of historic mining returning
Edna May of 100koz average grades of +20g/t Au. We understand that the distribution of these zones is
not fully understood as yet, and consequently the higher grades have been
conservatively modelled, giving the potential for grade overcalls when the open pit
ore is processed.
10 year mine life
Catalpa started construction in July 2009, with earth moving operations for the open
pit development commencing in November 2009. The treatment plant is a standard
First gold pour was in carbon in leach gold plant, having being refurbished following its use at the Big Bell
late April 2010 operation between 1989 and 2000. Catalpa commissioned the gravity and carbon
recovery circuits in mid April 2010 for its first gold pour in late April 2010, some two
months ahead of the original schedule.

Total capex of A$92m The initial throughput rate of 2.8Mtpa is planned to increase to 3.2Mtpa from mid
to re-start operations 2012. The total capital cost, including open pit pre-strip, is budgeted at $92m, of
which the $46m plant construction cost is at a guaranteed maximum price. We
understand that if the cost of the plant construction comes in under budget, the

Page 4 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Company and the construction contractor split the difference between budget and
actual cost.

Fig. 3: Edna May Operations Plan (LHS) & Plant (RHS)

Source: Catalpa Resources Limited

Targeting life of mine Even though the reserve grade is relatively low, the good metallurgy of the ore, the
cash costs of large plant size, and simple open pit mining methods have the Company targeting
A$636/oz life of mine cash costs of A$636/oz. Recoveries are 88% in oxide ore and 92% in
fresh ore.

We understand that at the applied cut-off grade the ore zones are large and
Large low grade homogenous, which should result in minimal dilution during the mining process. In
orebody, dilution addition, the average grade of all assays from drilling within the Edna May gneiss is
effect minimal 0.9g/t Au. This compares to a break even grade of 0.4g/t Au, implying that there is
little risk of unprofitable ore being processed. Steady-state production is likely to be
achieved around August 2010.

Golden Point
While the Company is focused on the commissioning and ramp-up of the Edna May
operations it has also continued with resource definition and exploration activities in
Near surface order to extent mine life. Recent drilling at the Golden Point prospect within the
intercepts at Golden Golden Point Gneiss, located only a few hundred metres from the current Edna May
Point has the potential operations continues to delineate encouraging mineralisation including:
to increase ore
reserves and increase • 8m @ 3.39g/t Au from 52m;
mine life • 3m @ 8.21/t Au from 83m; and
• 9m @ 4.79/t Au from 58m.
The results from this drilling have recently been incorporated into a JORC compliant
resource and reserve, which the Company has recently released. The initial reserve
Initial 37Koz reserve for Golden Point is 37koz; however, we understand that this reserve only goes down
for Golden Point to 100m depth. The mineralisation remains open below this as well to the south,
indicating good potential for further resource and reserve upgrades in the future.

Page 5 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Fig. 4: Golden Point Plan (RHS) & Cross Section (LHS)

Source: Catalpa Resources Limited

Underground Potential
The Company has undertaken substantial drilling at depth, identifying some high
High Grades at depth grade mineralisation with good potential to be accessed via the existing underground
infrastructure. Whilst this mineralisation represents an opportunity to augment the
low grade open pit material with high grade ore, the Company has yet to undertake a
study into the viability of an underground operation. However, based on the drill
intercepts to date, the grades appear to be able to support a small underground
operation.

Existing decline in Any underground opportunities would be accessed via the existing decline on the
place but would need footwall between the two ore bodies. However, the decline would need dewatering
to be refurbished and refurbishment before being able to be accessed. The Company will further
assess the strike and down dip extension of the Golden Point Gneiss which appears
to remain open down dip and down plunge.

Fig. 5: Edna May and Golden Point Mineralised Zones

Mineralisation below
300m has not been
included in the current
Resource

Source: Catalpa Resources Limited

Page 6 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Regional Exploration Potential

The Company has initiated a regional exploration program focused on exploring
Untested targets untested ‘greenfields’ targets within its tenements over the Westonia Greenstone
within 15km radius of Belt. The targets are located within a 15km radius of the Edna May plant and include
processing plant ‘gold-in-auger’ anomalies, untested historical workings and Edna May ‘look-alike
magnetic lows’. Recent work has involved regional RAB drilling comprising 345
holes for 6,116m. One anomaly (Townrow East), located only 1km from the Edna
May open pit, defined a broad 35m downhole intercept of gold anomalism containing
3m @ 1.15g/t Au. The intercept occurs in the favourable hanging wall position of a
mineralised Edna May Gneiss dyke.

Shallow drilling of broad auger anomalies at Stoneman, Battler West and Colossus
North has enabled interpretation for the probable source of the gold anomalism and
Anomalous areas of allowed for more detailed deeper drilling which is proposed. As well as targeting
gold requiring drill- some of the above targets, the drill testing of the historical workings at Battler and
testing other ‘magnetic low’ targets surrounding the Rutherfords Reward gold mine is
proposed.

Fig. 6: Regional exploration targets around Edna May

Source: Catalpa Resources Limited

Page 7 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

CRACOW GOLD PROJECT

Fig. 7: Cracow Snap Shot

30% interest in the CRACOW

Cracow Gold Project
in QLD • Interest: 30% CAH; 70% NCM

• Operation: Underground

• Annualised Production: 100koz Au for ~30koz attributable

Unhedged
• Processing Capacity: 0.44Mtpa

• Reserve (attributable): 56koz Au

• Resource (attributable): 230Moz Au

• Cash Cost (C1): <A$600/oz

• Unhedged

Source: Catalpa Resources Limited

The Cracow gold mine is located in central Queensland, ~500km north-west of

Brisbane. The underground mine commenced operations in November 2004 and is
Mine life likely to be
producing ~100koz pa. Ore throughput capacity exceeds 400ktpa with ore currently
extended through
being sourced from the Royal, Sovereign, Klondyke, Kilkenny and Crown
resource conversion
mineralised zones. The gold mineralisation occurs in steeply dipping low
sulphidation epithermal fissure quartz veins developed at the intersection of major
structures. The mine is operated by Newcrest. Catalpa acquired its interest in the
First right of refusal project through the merger with Lion Selection Limited and receives 30% of the gold,
on Newcrest’s 70% minus its share of operating and capital costs as well as exploration expenses.
interest should NCM Catalpa has first right of refusal on Newcrest’s 70% share of the mine, should
choose to sell Newcrest choose to sell the project.

Total CY2009 production was 104koz at cash cost of A$505/oz. As at 31 December

2009, reserves were 188koz at a grade of 7.1g/t Au. Resources were ~800koz at a
Catalpas share of grade of 8.1g/t. Given production of 100koz pa, the reserves imply a remaining mine
Cracow production is life of around two years. However, Catalpa believes that this mine life is likely to be
~30koz of gold per extended via the conversion of inferred resources as well as exploration success, as
annum evidenced by the delineation of additional mineralisation at both Kilkenny and the
discovery of the Phoenix structure.

Fig. 8: Cracow Operations

Source: Catalpa Resources Limited

Page 8 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Catalpa’s 30% share of gold produced at the Cracow Gold Mine for the first quarter
of CY2010 was 6,437oz Au at cash operating cost of A$610/oz. Cracow is unhedged
and continues to be fully exposed to the high A$ gold price providing a strong cash
flow stream.

RESOURCES AND RESERVES

Fig. 9: Resources and Reserves
Reserves & Resources Category Mt g/t Au Koz Attrib.
Resources
Edna May M+I+I 48.1 0.99 1,526 1,526
Current Resource of Greenfinch M+I+I 4.0 1.02 130 130
1.9 Moz Au Cracow M+I+I 3.0 8.10 800 230
Total M+I+I 55.1 1.38 2,456 1,886

Reserves
Edna May P+P 25.5 1.09 892 892
Edna May Stockpiles P+P 1.6 0.65 34 34
Current Reserve of
Greenfinch P+P 2.5 1.07 86 86
1.1 Moz Au
Cracow P+P 0.80 7.10 188 56
Total P+P 30.4 1.22 1,200 1,068
Source: Catalpa Resources Limited

COMPARATIVES
GOLD COMPARATIVES
Fig. 10: ASX Peer Market Capitalisation: Producers (A$m)
900 Market Capitalisation
800

700

600

500
A$m

400

300

200

100

0
OGC

CGX

NGX
DOM

TRY

RMS

NGF
FML
GDO

RDR
CTO
MML

CRE
IAU
RSG

BDG
TAM
MDL
KCN

CAH

BCD
SBM

AXM
ALD

SLR
AVO

Source: IRESS; Prices at close of 24 May 2010

Catalpa has a market capitalisation around A$240m (at a price of $1.50) and current
comparable resource base to Medusa Mining Limited (MML), and Focus Minerals
Limited (FML) at ~1.9Moz.

Page 9 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Fig. 11: Producers JORC Compliant Reserves (LHS) and Resources (RHS)
4 Reserves 14 Resources
4 12

3
10

3
8

Moz Au
Moz Au

6
2

4
1

2
1

0 0
OGC

CGX

NGX

OGC

CGX

NGX
DOM

DOM
TRY

TRY

RMS
NGF

NGF
FML

FML
GDO

GDO

RDR
CTO

CTO
MML

MML
CRE

IAU

CRE
RSG

BDG

RSG

BDG
TAM
MDL

MDL
KCN

CAH

BCD

KCN

CAH

BCD
SBM

AXM

SBM

AXM
ALD

ALD

SLR
AVO

AVO
Source: Company Reports

Catalpa’s targeted annual production rate of ~100kozpa for the Edna May Project
implies a 10 year mine life on a current reserve position.

Fig. 12: Producers EV/ Oz Charts: Reserves (LHS) and Resources (RHS)
1,800 EV/Reserve Oz 600 EV/Resource Oz
1,600

500
1,400

1,200 400

1,000
A$/oz

A$/oz

300
800

600 200

400
100
200

0 0
CGX
OGC

NGX
DOM

TRY
CRE
NCM

LGL

RMS

FML

NGF
RDR

GDO
MDL

CTO
NGX

CGX

OGC

MML
DOM
KCN

TRY

CAH

BCD
SBM

AXM

CRE
ALD

LGL

IAU
BDG

NCM

RSG
FML

NGF
GDO

TAM
MDL
AVO

CTO
MML

KCN

CAH

BCD

SBM

AXM
SLR

ALD
BDG

RSG

AVO

Source: Hartleys Estimates

On an EV to reserve ounce basis, Catalpa is well below the producer average.

On an EV to resource ounce basis, Catalpa is just below the producer average of

~A$150/oz. The Company is looking to increase its current resource position through
an accelerated near mine and regional exploration program.

Page 10 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

FINANCIALS
Given that the Catalpa – Lion Selection merger had yet to occur as at June 30 2009,
and that the Company was still very much in development mode for Edna May, the
financial performance for FY2009 was not representative of the Company going
Good margins boost forward.
cash flows once Edna
May comes online, Based on our assumptions, as detailed in our valuation section, Catalpa makes a
with maiden profit small loss in FY2010 as the Company completes development of Edna May though
forecast for FY2011. whilst receiving cashflow from Cracow, moving into a profit making position in
FY2011 following a full year of production from Edna May.

FINANCIAL PERFORMANCE
Fig. 13: Financial Performance
Financial Performance Unit FY2009A FY2010F FY2011F FY2012F
Net Revenue A$m 0.1 27.1 172.0 180.0
Total Costs A$m (6.9) (22.1) (92.3) (87.3)
EBITDA A$m (6.8) 5.0 79.7 92.7
Depreciation/Amort A$m (0.2) (5.0) (17.2) (20.8)
EBIT A$m (7.0) 0.0 62.6 71.8
Net Interest A$m 0.2 (1.3) (10.5) (8.5)
Pre-Tax Profit A$m (6.8) (1.3) 52.1 63.4
Tax Expense A$m 0.0 (0.6) (15.6) (19.0)
NPAT A$m (6.8) (1.9) 36.5 44.4
Abnormal Items A$m - - - -
Reported Profit A$m (6.8) (1.9) 36.5 44.4
Source: Catalpa Resources Limited; Hartleys Research Estimates

BALANCE SHEET
Fig. 14: Balance Sheet
Financial Position Unit FY2009A FY2010F FY2011F FY2012F
Cash A$m 32.3 19.6 56.4 106.8
Other Current Assets A$m 4.4 9.6 20.3 20.9
Total Current Assets A$m 36.7 29.2 76.8 127.7
PP&E + Development A$m 7.5 104.0 102.1 98.0
Exploration A$m 1.5 73.7 70.8 69.8
Investments/other A$m 3.7 3.3 3.3 3.3
Tot Non-Curr. Assets A$m 12.6 181.0 176.3 171.2
Total Assets A$m 49.3 210.2 253.1 298.9

Short Term Borrowings A$m (0.0) (7.8) (7.8) (7.8)

Other A$m (4.2) (12.2) (10.2) (10.6)
Total Curr. Liabilities A$m (4.2) (20.0) (17.9) (18.4)
Long Term Borrowings A$m (0.1) (57.2) (50.0) (30.0)
Other A$m (0.4) (11.7) (27.3) (42.4)
Total Non-Curr. Liabil. A$m (0.5) (68.9) (77.3) (72.4)
Total Liabilities A$m (4.7) (88.9) (95.2) (90.8)

Net Assets A$m 44.6 121.3 157.8 208.1

Source: Catalpa Resources Limited; Hartleys Research Estimates

Page 11 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

CASH FLOW
Fig. 15: Cash Flow Statement
Cashflow Unit FY2009A FY2010F FY2011F FY2012F
Operating Cashflow A$m (3.3) 4.4 66.9 92.5
Income Tax Paid A$m - (0.3) - (3.9)
Interest & Other A$m 0.3 (1.0) (10.5) (8.5)
Operating Activities A$m (3.0) 3.1 56.4 80.2

PP&E + Development A$m (7.1) (89.9) (8.2) (8.2)

Exploration A$m (1.5) (10.9) (4.2) (7.5)
Investments A$m - 6.4 - -
Investment Activities A$m (8.6) (94.4) (12.5) (15.7)

Repayment of Borrowings A$m (0.0) (0.0) (7.2) (20.0)

Equity A$m 41.1 80.3 0.0 5.9
Dividends Paid A$m - - - -
Financing Activities A$m 41.1 78.6 (7.2) (14.1)

Net Cashflow A$m 29.5 (12.7) 36.8 50.4

Source: Catalpa Resources Limited; Hartleys Research Estimates

DEBT AND EQUITY

As at 21 May 2010, the Company had 161.275M shares on issue, 6.94m listed
options and 8.079m unlisted options on issue, exercisable at various dates and
times.
A$65m debt facility,
drawn to A$50m as at At 31 March 2010, the Company had cash of A$19m, and had drawn down ~A$50m
31 March 2010 of its A$65m debt facility. Of the A$65m debt, we understand that A$7m of cash is
required to be retained within a cash retention account, making the effective debt
position A$58m. The debt facility was put in place as part of the finance package for
the construction of Edna May. Of this, A$10m was a Mezzanine Loan Facility (MLF)
with Macquarie Bank.

However, the Company has since undertaken a restructuring of the debt to convert
Recent restructure of the MLF into senior debt. The change has not altered Catalpa’s total debt position,
Mezzanine finance but should lower the ongoing interest costs by 2.5% pa on the A$10m converted.
component of debt Macquarie has consequently forgone its entitlement to 6.06m Catalpa options with
an exercise price of A$0.825 that were part of the MLF package. In consideration for
this, Catalpa has issued Macquarie with 500,000 CAH fully paid ordinary shares.

Recent A$20m raising In conjunction with the debt restructure, Catalpa undertook a share placement to
to boost working raise A$20m, with the funds to be used to accelerate resource and exploration
capital and advance drilling at Edna May as well as provide a working capital buffer during the
exploration commissioning phase of Edna May.

HEDGING
Excellent hedge book As part of the financing package for Edna May, the Company took out a substantial
of 350koz at flat forward hedging package of 352koz of gold at a delivery price A$1,557/oz. The
A$1,557/oz delivery schedule is ~70kozpa over five years.

Given Edna May’s production profile of ~100kozpa, this represents 70% of the
operation’s annual production over the first five years. However, as Cracow
contributes ~30kozpa, the hedging represents only 54% of total annual production.
As the hedges are currently substantially in the money, we see little risk of defaulting
on any hedge commitments as the Company could easily sell the forwards.

Page 12 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

DIRECTORS, SENIOR PERSONNEL

AND MAJOR SHAREHOLDERS
The following information has been taken directly from Catalpa Resources Limited
website and latest Annual Report.

DIRECTORS
Mr Peter Maloney – Non Executive Chairman
Mr Maloney, has broad commercial, financial and management expertise and
experience. In a long career with WMC Resources, he held the positions of
Treasurer, Executive Vice President Americas, and Manager Commercial and
Marketing –WA. He has also been Executive General Manager, Finance at Santos
and Chief Financial Officer at FH Faulding. Mr Maloney has also been a director of
several companies and organizations including Indophil Resources and Barra
Resources, and was chairman of Southern Health, the largest health care provider in
Victoria, during a period of improvement in management and financial performance.
He has been Chief Financial Officer of Lion Selection (and its predecessor
companies) since 2003. Mr Maloney has been an Executive Director of Lion
Manager since August 2007.

Mr Bruce McFadzean – Managing Director

Mr McFadzean, a mining engineer, brings over 30 years of management, mining,
processing and project "start up" experience to the organisation, half of which was
gained in the employ of global resources brands, Rio Tinto and BHP Billiton. Mr
McFadzean has broad commodity experience in gold, iron ore, diamonds and
nickel/cobalt and in a wide range of roles including corporate, managerial, technical
and operational. Mr McFadzean is a Non-Executive Director of Venture Minerals
Limited.

Mr John Rowe – Non Executive Director

Mr Rowe brings a wealth of geological and business development skills to the
Company. Mr Rowe has 35 years experience within the Nickel and Gold industries of
Western Australia. He has held a variety of positions in mine management,
exploration and business development and was previously employed as an
executive of Lion Ore in Australia. Mr Rowe is also a Non-Executive Director of
Panoramic Resources Limited (PAN).

Mr Barry Sullivan – Non Executive Director

Mr Sullivan is an experienced and successful mining engineer with a career
spanning 40 years. His initial mining experience was gained in the South African
gold mining industry, followed by more than 20 years with Mount Isa Mines. In the
final 5 years of his tenure with MIM, Mr Sullivan was Executive General Manager
responsible for the extensive Mount Isa and Hilton operations. More recently, Mr
Sullivan has been working with a number of smaller exploration and mining
companies. Mr Sullivan is a Non-Executive Chairman of Exco Resources, Non-
Executive Director of Sedimentary Holding also a Non Executive Director for Lion
Selection.

Page 13 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Mr Murray Pollock – Non Executive Director

Mr Pollock is a businessman with 40 years experience within the mineral resource
sector, principally in drilling. Mr Pollock is a drilling and mine management services
consultant for several companies.

Mr Graham Freestone – Non Executive Director

Mr Freestone has over 30 years experience in the finance and natural resources
industry in Australia and internationally. He has a broad based finance, corporate
and commercial background obtained from various senior finance positions with the
Shell Group, Acacia Resources and AngloGold. Graham was comprehensively
involved in the float of the Shell Group’s mineral interests through Acacia Resources
Limited.

SENIOR PERSONNEL
Mr Erik Palmbachs – Chief Financial Officer
Mr Palmbachs is an experienced CFO and holds an MSc in Mineral Economics and
a Bachelor of Business (Accounting). He is a member of the Australian Society of
Accountants (AASA, CPA) and has an impressive resume with over 30 years hands-
on experience, much of which was gained in the resources sector.

Mr Stuart Pether – General Manager- Operations

Mr Pether is an experienced Mining Engineer and holds a BEng (Mining) with an
impressive resume with over 20 years hands-on and technical experience in the
resources sector. Mr Pether has worked in various operational, managerial, technical
and corporate roles in Australia and Canada in his career covering several
commodities predominately in gold, nickel and zinc. Mr Pether is equally skilled in
both open pit and underground mining environments.

Mr John Fraser – Resident Manager

Mr Fraser holds a BSc(Eng) in Metallurgy, Minerals Processing Option, and has over
25 years of processing experience covering operational and technical roles. This
includes recent project management and commissioning experience. In Mr Fraser’s
career he has predominately worked in the nickel and minerals sands commodities.

Mr Adrian Pelliccia –Manager Geology

Mr Pelliccia holds a B.Sc. Hons (Geology), a Postgraduate Diploma in Applied
Finance and Investment and is a Member of the Australasian Institute of Mining and
Metallurgy. He has worked in various operational, technical and corporate roles in
his career within the gold and nickel industries of Western Australia and Victoria. Mr
Pelliccia is experienced in mineral resource evaluation and developing and leading
operational geological teams in both underground and open pit environments.

Page 14 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Fig. 16: Economic Exposure of Key Management

Options Shares Total Exposure
Name Position
(‘000) (‘000) (‘000)
P Maloney Non Executive Chairman 1,379.6 1,379.6
B McFadzean Managing Director 924.8 97.4 1,022.1
M Pollock Non-Executive Director 386.6 1,754.4 2,141.0
B Sullivan Non-Executive Director 45.5 111.0 156.5
J Rowe Non-Executive Director 181.8 95.7 277.5
G Freestone Non-Executive Director 58.2 58.2

Total 1,539 3,496 5,035

% of Total Issue 2.17% 2.86%

Source: Catalpa Resource Limited; all numbers in thousands

MAJOR SHAREHOLDERS
Fig. 17: Top 10 Shareholders as at 31 May 2010
Holder Units Held (m) % Units Issued

1 HSBC Custody Nom Aust Ltd 27.04 16.8%

2 ANZ Nom Ltd Cash Income A/C 13.40 8.3%
3 Citicorp Nom Pl 8.40 5.2%
4 National Nom Ltd 7.40 4.6%
5 Cogent Nom Pl 5.95 3.7%
6 Lion Manager Pl 4.82 3.0%
7 J P Morgan Nom Aust 3.78 2.3%
8 Creasy Mark Gareth 3.22 2.0%
9 Reneagle Pl Sharnem Inv A/C 1.88 1.2%
10 Goldrich Hldgs Pl 1.53 1.0%
77.42 48.0%

Source: Catalpa Resources Ltd; all numbers in millions

Page 15 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

VALUATION
METHODOLOGY
$2.02/share valuation We have a sum of parts valuation for Catalpa of $2.02 per share. This is dominated
for Catalpa by our NPV10 for Edna May of $1.36 per share, our NPV8 for the hedge book of
52cps and NPV8 for Cracow of 21cps.

Fig. 18: Catalpa Valuation

Share Price Valuation (NAV) Est. $m Est. $/share
Edna May (NPV @ 10%) 237.6 1.36
Valuation dominated
Cracow (NPV @ 8%) 36.1 0.21
by Edna May, Hedges
Exploration 25.0 0.14
and Cracow
Cash 26.4 0.15
Forwards 90.8 0.52
Corporate Overheads (17.6) (0.10)
Total Debt (65.0) (0.37)
Tax Losses 7.8 0.04
Options & Other Equity 11.6 0.07
Total 352.8 2.02
Source: Hartleys Estimates

Edna May
We have been conservative in our valuation of Edna May by only incorporating the
Edna May, Greenfinch and Golden Point reserves as well as stockpiles (29.6Mt @
Conservative 1.06g/t for 1.01Moz). Our valuation is based on initial production of ~90kozpa for
valuation assumptions FY11, 95koz in FY12 and then ~100kozpa from FY13 onwards once the plant
for Edna May with no throughput is increased to 3.2Mtpa. We have average life of mine costs of
additional resource ~A$650/oz. Based on the current reserves, we model a mine life of 10 years. This
conversion or results in total recovered gold of ~950koz, using an average recovery of ~92%,
underground ore though with lower recoveries during the first few quarters. We see room for valuation
uplift via:

• open pit resource and reserves expansions,

• the addition of high grade underground production,

• the delineation of any additional higher grade feed, as well as

• regional exploration discoveries.

Cracow
Our Cracow valuation is based on a mine life of ~4.5 years, with consistent annual
Assumed +4 year mine
production of ~100koz, of which 30% is attributable to Catalpa. Life of mine cash
life for Cracow, but
further extensions costs are assumed to be ~A$590/oz.
likely Total production under this scenario is ~490koz, of which ~150koz is attributable to
Catalpa. Whilst this is significantly above the current reserve base, we expect
reserves to be steadily replenished over this period, and note that these recovered
ounces are still less than the current ~800koz resource base.

Given the long history of mining at Cracow, we see good potential for mine life
extensions, however, at this stage will retain our 4 year life in our valuation.

Page 16 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

Fig. 19: Annual Gold Production

140 740

120 720
700
100
680
Production peaks at

Koz Gold
80

A$/oz
130koz in FY13 & 14 660
in our scenario 60
640
40
620
20 600
0 580
2HFY10 FY11 FY12 FY13 FY14 FY15 FY16

Edna May Cracow A$ Cash Cost

Source: Hartleys Estimates

Hedge Book
To attribute a value for the hedge book independent of either Edna May or Cracow,
we have undertaken a DCF on the value difference between our forecast gold price
and the hedge price (A$1,557/oz), assuming constant delivery of 70kozpa over 5
years. This methodology derives a value for Catalpa’s hedge book of ~A$91m, or
57cps.

Fig. 20: Hedged & Unhedged Production – assuming A$1,200/oz

spot gold price
140 1600

120 1400
1200
Hedge book allows 100
significant margins 1000
Koz Gold

80 A$/oz
800
60
600
40
400
20 200
0 0
2HFY10 FY11 FY12 FY13 FY14 FY15 FY16
Unhedged production Hedged production
A$ Cash Cost Effective Received price

Source: Hartleys Estimates

Other
Our valuation incorporates the full A$65m debt, the A$19m in cash as at March 31
2010, as well as the A$7m in cash in the retention account for the debt.

Page 17 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

SENSITIVITIES
Hedge book lowers As can be seen from our sensitivity analysis, due to the Catalpa A$ denominated
valuation sensitivity to hedge book, the Company is less exposed to variations in exchange rates and the
exchange rate and gold price.
gold price
Fig. 21: Valuation Sensitivities on A$353m valuation
+10% -10% +10% -10%
A$m A$m % change % change
Exchange Rate 330 381 -6% 8%
Operating Costs 320 385 -9% 9%
Gold Price 378 328 7% -7%
Source: Hartleys Estimates

Spot valuation By way of comparison, a valuation using the current spot exchange rate (AUDUSD:
increases to 0.85) and spot gold price (US$1,210/oz), yields a valuation of $2.27/share, with the
$2.27/share valuation for Cracow and Edna May increasing, whereas the hedge book value
decreases as expected.

RISKS
We see the key risk for Catalpa being lower than anticipated production from Edna
May which could cause a default on the debt facility.

Low grades for Edna To minimise this risk, the Company will need to maintain the efficient movement of
May means that CAH open pit ore to the mill, as well as the mill being able to treat the ore at the designed
will need to maintain capacity, with recoveries being close to expectations. Given the relatively large size
efficient mining, of the open pit and therefore ease of mining efficiently, we do not see a lack of
maintaining mill earthmoving as a likely impediment. Conversely, we see the underperformance of
throughput and the plant as the largest risk. However, given that the metallurgy of the ore is well
achieving targeted understood due to it having being treated historically, as well as the substantial
recoveries metallurgical testwork undertaken by the Company, we believe that this risk has
been mitigated as best as can be prior to start up.

SIMPLE S.W.O.T. TABLE

Strengths Strong management team
Exceptional in the money hedge book
Low geological risk at Edna May due to extensive drilling and large
orebody

Weaknesses Low grade yields less margin for error

Cracow has perception of short mine life
Moderate debt position

Opportunities Possible potential to purchase remainder of Cracow

Further acquisitions beyond Cracow and Edna May to boost
production

Threats Good hedge book and long mine life may be attractive to predators
General rise in industry costs threatening margins
Source: Hartleys Research

Page 18 of 21
Hartleys Limited Catalpa Resources Limited 1 June 2010

INVESTMENT THESIS &

RECOMMENDATION
Good quality, lower We see Catalpa as a good quality emerging producer, with a solid base lode
risk emerging production of 30koz pa from Cracow, with Edna May boosting production to over
producer ~130kozpa once the plant upgrade has been completed in ~2 years time. The
Company has substantial upside to Edna May with potential high grades from
underground that could substantially boost production given the relatively low grade
from the open pit. In addition, there is good potential for mine life extensions via
Hedge book and long
exploration success as evidenced by the recent good drill results from Golden Point.
mine life differentiate
CAH from its peers Whilst the grade of Edna May is low relative to its peers, the operation is not high
cost given the large capacity of the plant. The excellent hedge position also builds in
a large degree of comfort allowing Catalpa to yield margins substantially above
those delivering into spot prices.

Initiating coverage The Company also has excellent management with significant development
with a Buy experience. As production from Edna May continues to ramp up, we expect the
recommendation Company to be re-rated. The Company is trading at a substantial discount to our
$2.02 per share valuation, and has attractive forward looking earnings ratios and
cashflow multiples, as well as comparing favourably to its peers on a number of
multiples. We recommend Catalpa Resources Limited as a Buy.

Page 19 of 21
HARTLEYS RESEARCH COVERAGE LIST
Hartleys Research Coverage Hartleys
Nam e Ticker Last M. CAP EV Research Industry
Price* (A$m ) (A$m ) Recom m endation
Oil & Gas
1. Woodside Petroleum Ltd WPL 43.49 33,802 37,980 Buy Major
2. Nexus Energy Ltd NXS 0.265 254 576 Neutral Developer / Explorer
3. Carnarvon Petroleum Ltd CVN 0.350 240 211 Buy Producer / Explorer
4. Tap Oil Ltd TAP 0.920 144 83 Buy Producer / Explorer
5. Cooper Energy Ltd COE 0.445 130 34 Buy Producer / Explorer
6. Otto Energy Ltd OEL 0.095 102 79 Buy Explorer / Producer
7. Strike Energy Ltd STX 0.240 79 71 Buy Explorer / Producer
8. Adelphi Energy Ltd ADI 0.415 70 60 Buy Producer / Developer
9. Red Fork Energy Ltd RFE 0.450 62 34 Buy Explorer / Producer
10. Amadeus Energy Ltd AMU 0.190 58 101 Buy Producer / Explorer
11. First Australian Resources Ltd FAR 0.062 41 22 Speculative Buy Explorer / Producer
12. Entek Energy Ltd ETE 0.170 38 29 Speculative Buy Producer / Explorer
13. European Gas Ltd EPG 0.150 30 94 Speculative Buy Producer / Explorer
14. Sun Resources NL SUR 0.058 20 15 Speculative Buy Explorer / Producer
15. Oilex Ltd OEX 0.088 19 1 Neutral Explorer / Producer
Sub-Total 35,089 39,391
Resources
1. Riversdale Mining Limited RIV 9.65 1,818 1,550 Speculative Buy Coal
2. Atlas Iron Limited AGO 2.040 912 767 Buy Iron Ore
3. Western Areas NL WSA 4.09 732 911 No Rating Nickel
4. Dominion Mining Limited DOM 2.730 282 301 Speculative Buy Gold
5. Silver Lake Resources Limited SLR 1.565 280 249 Speculative Buy Gold
6. Catalpa Resources Limited CAH 1.460 236 274 Buy Gold Producer
7. Intrepid Mines Limited IAU 0.550 235 188 Speculative Buy Gold
8. Gold One International Limited GDO 0.275 221 292 Buy Gold
9. Jabiru Metals Limited JML 0.310 171 146 Buy Zinc-Copper
10. Tanami Gold NL TAM 0.040 142 184 No Rating Gold Producer
11. Focus Minerals Ltd FML 0.046 132 125 Speculative Buy Gold Producer
12. Magma Metals Limited MMB 0.520 85 64 Speculative Buy PGM-Cu-Ni
13. Peninsula Minerals Ltd PEN 0.037 51 42 Buy Uranium Developer / Explorer
14. Emmerson Resources Limited ERM 0.210 43 30 Speculative Buy Junior Explorer
15. Hazelw ood Resources Ltd HAZ 0.210 40 35 Speculative Buy Junior Developer
16. YTC Resources Limited YTC 0.230 38 25 Buy Junior Explorer
17. Centaurus Metals Ltd CTM 0.060 36 29 Speculative Buy Iron Ore Developer
18. Ausquest Limited AQD 0.145 33 7 Speculative Buy Junior Explorer
19. Shaw River Resources Limited SRR 0.150 30 23 Speculative Buy Junior Explorer
20. Ferrum Crescent Limited FCR 0.170 27 25 Speculative Buy Iron Ore
21. Orion Gold NL ORN 0.025 19 15 Speculative Buy Gold
22. Impact Minerals Limited IPT 0.130 15 11 Speculative Buy Junior Explorer
23. Southern Gold Limited SAU 0.088 12 8 Speculative Buy Junior Explorer
Sub-Total 5,417 5,183
Industrials
1. West Australia New s Hdgs Ltd WAN 6.61 1,532 1,807 Buy Media
2. Monadelphous Group Limited MND 12.810 1,102 970 Buy Mining Services
3. Clough Limited CLO 0.775 527 587 No Rating Oil & Gas Services
4. Mermaid Marine Australia Ltd MRM 2.50 465 599 Buy Oil(C
& Gast Services
ti )

5. Fleetw ood Corporation FWD 8.500 459 452 Neutral Consumer & Mining Services
6. Austal Limited ASB 2.19 412 423 Speculative Buy Capital Goods
7. Macmahon Holdings Limited MAH 0.550 404 376 Buy Mining & Civil Construction
8. Ausdrill Limited ASL 1.845 386 608 Buy Mining Services (Drilling &
9. NRW Holdings Ltd NWH 0.960 241 306 Buy C & Civil
Mining t tConstruction
Mi i )

10. Cash Converters Limited CCV 0.595 216 173 Buy Retail & Consumer Finance
11. Decmil Group Limited DCG 1.440 176 143 Buy Mining & Civil Construction
12. Imdex Ltd IMD 0.725 141 155 Buy Oil & Gas / Mining Drilling
13. Southern Cross Electrical SXE 1.110 134 118 Speculative Buy S
Mining Services (Electrical)
E i i
14. Lycopodium Limited LYL 3.240 125 110 Buy Mining & Industrial Services
15. Neptune Marine Ltd NMS 0.235 113 142 Speculative Buy Oil & Gas Services
16. RCR Tomlinson Ltd RCR 0.850 112 156 Buy Mining & Industrial Services
17. Sw ick Mining Services Ltd SWK 0.380 90 139 Speculative Buy Mining Services (Drilling)
18. VDM Group Limited VMG 0.360 76 95 Buy Mining & Civil Construction
19. Pacific Energy Ltd PEA 0.280 52 107 Buy Mining Services / Pow er
20. LogiCamms Limited LCM 0.870 52 42 Buy Resource Services
21. Nomad Building Solutions Ltd NOD 0.145 20 43 Neutral Residential & Mining Services
Sub-Total 6,836 7,549

GRAND TOTAL 47,342 52,124

Source: IRESS, Hartleys Research. * 1 Jun 2010

Page 20 of 21
 HARTLEYS CORPORATE DIRECTORY
Research
Trent Barnett Head of Research +61 8 9268 3052 Institutional Sales
Andrew Muir Senior Resources Analyst +61 8 9268 3045 Carrick Ryan +61 8 9268 2864
Mike Millikan Resources Analyst +61 8 9268 2805 Justin Stewart +61 8 9268 3062
David Wall Oil and Gas Analyst +61 8 9268 2826 Simon van den Berg +61 8 9268 2867
Nikki Ermongkonchai Industrial Analyst +61 8 9268 2837 Steven Boyce +61 8 9268 2817
Janine Hodges Research Assistant +61 8 9268 2831 Nick Wheeler +61 8 9268 3053
Wealth Management
Corporate Finance Nicola Bond +61 8 9268 2840
Grey Egerton- Head of Corporate Finance +61 8 9268 2851 Bradley Booth +61 8 9268 2873
Warburton Adrian Brant +61 8 9268 3065
Richard Simpson Director - Corporate Finance +61 8 9268 2824 Nathan Bray +61 8 9268 2874
Paul Fryer Director - Corporate Finance +61 8 9268 2819 Sven Burrell +61 8 9268 2847
Dale Bryan Director - Corporate Finance +61 8 9268 2829 Simon Casey +61 8 9268 2875
Ben Wale Manager - Corporate Finance +61 8 9268 3055 Tony Chien +61 8 9268 2850
Matt Szwedzicki Manager - Corporate Finance +61 8 9268 3047 Travis Clark +61 8 9268 2876
Scott Weir Corporate Finance Exec. +61 8 9268 2821 David Cross +61 8 9268 2860
Nicholas Draper +61 8 9268 2883
John Featherby +61 8 9268 2811
Registered Office Ben Fleay +61 8 9268 2844
Level 6, 141 St Georges Tce John Georgiades +61 8 9268 2887
Perth WA 6000 John Goodlad +61 8 9268 2890
Australia Andrew Gribble +61 8 9268 2842
Neil Inglis +61 8 9268 2894
Postal Address Murray Jacob +61 8 9268 2892
GPO Box 2777 Gavin Lehmann +61 8 9268 2895
Perth WA 6001 Shane Lehmann +61 8 9268 2897
Australia Steven Loxley +61 8 9268 2857
Contact Details Andrew Macnaughtan +61 8 9268 2898
Telephone: +61 8 9268 2888 Christian Marriott +61 8 9268 2828
Facsimile: +61 8 9268 2800 Scott Metcalf +61 8 9268 2807
Website: www.hartleys.com.au David Michael +61 8 9268 2835
Email: info@hartleys.com.au Nicole Morcombe +61 8 9268 2896
Note: personal email addresses of company employees are Jamie Moullin +61 8 9268 2856
Chris Munro +61 8 9268 2858
structured in the following manner:
Michael Munro +61 8 9268 2820
firstname_lastname@hartleys.com.au
Ian Parker +61 8 9268 2810
Ian Plowman +61 8 9268 3054
Hartleys Recommendation Categories
Margaret Radici +61 8 9268 3051
No Rating No recommendation. Charlie Ransom (CEO) +61 8 9268 2868
Buy Share price appreciation anticipated Elliott Rowton +61 8 9268 3059
Speculative Buy Share price appreciation anticipated but it is higher Conlie Salvemini +61 8 9268 2833
risk than a “Buy”. For the share price to rise it may David Smyth +61 8 9268 2839
be contingent on the outcome of an uncertain or Greg Soudure +61 8 9268 2834
distant event. Sonya Soudure +61 8 9268 2865
Neutral Take no action. Stock is already trading near the Dirk Vanderstruyf +61 8 9268 2855
Marlene White +61 8 9268 2806
share price target and there are no foreseeable
near term catalysts.
Reduce / Take Stock is trading above the share price target and
profits there is a near term negative catalyst that could
cause temporary weakness.
Sell Significant price depreciation anticipated

Disclaimer/Disclosure
The author of this publication, Hartleys Limited ABN 33 104 195 057 (“Hartleys”), its Directors and their Associates from time to time may hold
shares in the security/securities mentioned in this Research document and therefore may benefit from any increase in the price of those
securities. Hartleys and its Advisers may earn brokerage, fees, commissions, other benefits or advantages as a result of a transaction arising
from any advice mentioned in publications to clients.

Any financial product advice contained in this document is unsolicited general information only. Do not act on this advice without first consulting
your investment adviser to determine whether the advice is appropriate for your investment objectives, financial situation and particular needs.
Hartleys believes that any information or advice (including any financial product advice) contained in this document is accurate when issued.
Hartleys however, does not warrant its accuracy or reliability. Hartleys, its officers, agents and employees exclude all liability whatsoever, in
negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law.

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