Dividends put this deal-making junior

Centrex Metals Ltd (ASX:CXM) is a rarity. In the junior resources sector, where profits are scarce and dividends even more scarce, Centrex has delivered two special fully franked dividends to shareholders in the past 12 months. The second special dividend of 5 cents a share, delivered last month, follows an announcement by the company in late 2012 of its intention to review its capital management strategy with the aim of solving advanced project development funding requirements through dilution, in return for foreign investment.

To this end, the company already has three Chinese backed joint ventures in place over iron ore and base metal projects.

The strategy is a major departure from the generally accepted resources development model that often does not see significant returns to shareholders until an asset moves through the development phase and into production, an often-lengthy timeline.

The Centrex development model involves the company funding projects from acquisition and through early Drilling at Centrex’s Fusion Project. exploration itself, before seeking foreign investment in return for project equity to fund advanced development toward becoming a shareholder in a selection of diversified mining through a joint venture. projects. To increase its foreign investment networks beyond China, the company has taken on the high-profile former senior trade Once feasibilities are completed, Centrex along with its commissioner AK Tareen as a strategic advisor based in India. foreign partner would take the project to market via a float for project financing, at which point Centrex becomes a Centrex has a diversified set of assets within , including minority shareholder. iron ore, zinc-lead and gold projects, as well as port infrastructure.

The strategy brought its first tangible results in 2010 with Its iron ore portfolio in includes, the Eyre Iron the completion of the Company’s largest deal to date with Magnetite Joint Venture (Centrex 40%/WISCO 60%), Bungalow Wuhan Iron & Steel (Group) Company (WISCO), that Magnetite Joint Venture (Centrex 70%/Baotou Iron and Steel along with development funding for its Eyre Iron Group 30%), Kimba Gap Magnetite Project (Centrex 100%), and Magnetite Joint Venture saw payments totalling $78 Wilgerup DSO Hematite Project (Centrex 100%) all around 100km or million directly to Centrex. less from export infrastructure, including the company’s own conditionally approved Joint Venture (Centrex This result lead the way for shareholders to be rewarded in 50%/WISCO 50%). February 2013 and again in January 2014, when the Board announced special dividends totalling $31.4 million. In line with its strategy, Centrex has reported significant progress in After payment of the latest dividend, Centrex will hold a isolating the funding requirements for its magnetite joint ventures cash balance of $34.5million, of which $28.6 million is from the company’s current cash flow reserves, including the recent uncommitted. signing of a supplementary deed with WISCO for its Eyre Iron Magnetite Joint Venture. Centrex management says its current cash position will be, in part, used to develop a new metals portfolio to provide The new arrangements provide a funding path options to take the JV’s the potential for short to medium-term value recognition flagship Fusion Project through to the end of a bankable feasibility from smaller-scale assets, to balance out its historical study with Centrex further diluting to 30 per cent in return. longer-term iron ore portfolio value. In all cases, the The pre-feasibilty study for the Bungalow Magnetite Joint Venture is company will advance its exploration assets with the aim also under review by the Baotou Iron and Steel Group which holds an of attracting further foreign investment and working option to invest a further $16 million to complete the BFS and take DIRECTORS/MANAGEMENT their interest to 50 per cent.

David Klingberg AO John den Dryver Non-Executive Director Centrex’s metals portfolio in includes, the Chairman Goulburn Zinc-Lead Joint Venture (Centrex 65%/Shandong 5th Kiat Poh Mr Bingqiang Lu Geo-Mineral Prospecting Institute 35%) with Shandong spending Non-Executive Director Non-Executive Director Graham Chrisp Ben Hammond $2 million in exploration in 2014 and an ability to fund the project Non-Executive Director Chief Executive Officer through to production for an 80% interest. Exploration is also Jim Hazel Gavin Bosch under way by Centrex at the nearby Gundaroo and Woolgarlo Gold Projects (Centrex 100 %). REGISTERED OFFICE T: +61 (0) 8 8100 2200 Unit 1102 F: +61 (0) 8 8232 0500 147 Pirie St WEB: www.centrexmetals.com.au ASX CODE: CXM