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EUROZINC MINING CORPORATION TAKEOVER PROPOSAL for VEDANTA RESOURCES Plc

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EUROZINC MINING CORPORATION TAKEOVER PROPOSAL for VEDANTA RESOURCES Plc Private and Confidential August 28, 2006 EUROZINC MINING CORPORATION TAKEOVER PROPOSAL FOR VEDANTA RESOURCES plc TABLE OF CONTENTS Sl. No. Particulars Page No. I Market Data and Valuation Summary 1-1a II Key Financial and Operational Parameters at a Glance 2-5 III Basic Financial and Operational Data 6-8 IV Share Structure and Key Valuation Assumptions 9 V Background 10-11 VI Operations, Resources and Exploration 11-22 VII Industry Trend 23-34 VIII Peer Group Comparison Snapshots 35-42 IX Canada Base Metal Hot Deals 43-47 X EuroZinc and Lundin Merger Announcement 48-52 XI EuroZinc’s 2nd Qtr Management’s Discussion & Analysis (Jun 06) 53-63 APPENDICES I EuroZinc’s 2nd Qtr Financial Report (Jun 06) 1-13 II EuroZinc’s Consolidated Financial Statements (2005-04) 1-29 III Lundin’s 2nd Qtr Financial Report (Jun 06) 1-26 IV Lundin’s Financial Statements (2005-04) 1-57 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 EUROZINC MINING CORPORATION MARKET DATA SUMMARY TSX (SYMBOL: EZM) AMEX (SYMBOL: EZM) CURRENT MARKET PRICE: (August 25, 52-Week High: 2006) CDN$ 3.49 /US$3.25 TSX: CDN$ 3.31 Low: AMEX: US$ 2.97 CDN$ 0.77/ US$1.05 STOCK RATING: MARKET OUTPERFORMER INDUSTRY OUTPERFORMER EZM VS. S&P TSX COMPOSITE EZM VS. S&P TSX CAPPED MATERIALS VALUATION SUMMARY MARKET MULTIPLE APPROACH (Based on 2007P) UNDERVALUED CAPM Assumptions: Cost of Capital: 8.8% MULTIPLE APPROACH 2 YEAR 2 YEAR 2 YEAR 2 YEAR FORWARD FORWARD FORWARD FORWARD P/E P/CF P/SALES EV/EBITDA (Industry (Industry (Industry (Industry Average 7.6) Average 5.5) Average 2.9) Average 4.8) Based on Industry P/E Average 9.3 7.2 8.6 9.2 (Value in US$) Normal Forward P/E (Based on CAPM) 4.36 Normal Trailing P/E (Based on CAPM) 4.18 VALUATION BASED ON MODELS: UNDERVALUED Assumptions: Cost of Capital: 8.8%, Sustainable Growth Rate: 6.5% (Value in US$) MODELS DISCOUNT FREE CASH FLOW RESIDUAL INCOME CASHFLOW MODEL MODEL MODEL Based on 2006P 4.35 4.65 8.44 Based on 2007P 6.75 7.80 16.90 2006 YEAR END TARGET ACQUISITION PRICE RANGE DOWNSIDE RISK CONSENSUS US$ 4.00-4.25 PRICE US$ 2.38 PRICE US$ 5.8 1 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. EUROZINC: LONG-TERM VALUATION INDICATORS VALUE (US$ '000) 2007P 2006P 2005 2004 MARKET CAPITALIZATION (CURRENT, SEPT. 6, '06) 1,653.10 NET WORTH 670.04 545.45 231.03 137.25 ENTERPRISE VALUE 764.94 639.25 420.99 390.61 MARKET CAP/2005P NETWORTH 7.16 MARKET CAP/2005P EV 3.93 MARKET CAP/2007P NETWORTH 2.47 MARKET CAP/2007P EV 2.16 BASED ON RESERVES PROVEN, MEASURED & INFERRED TONNES L-T AVG. VALUE (US$ '000) NET POTENTIAL RESERVE VALUATION ('000) PRICE(US$) EARNINGS OVER LIFE* (US$ '000) COPPER 23913 1.04 54,128,510.28 ZINC 32720 0.53 37,743,992.40 TOTAL 91,872,502.68 22,049,400.64 PROVEN RESERVE/ CURRENT MARKET CAP MULTIPLE 55.6 13.3 2006P NET WORTH MULTIPLE 168.4 40.4 2006P EV MULTIPLE 143.7 34.49 PROBABLE & INDICATED RESERVE TONNES L-T AVG. VALUE (US$ '000) NET POTENTIAL VALUATION ('000) PRICE(US$) EARNINGS OVER LIFE* (US$ '000) COPPER 29448 1.04 66,657,314.88 ZINC 67454 0.53 77,811,224.43 TOTAL 144,468,539.31 34,672,449.43 TOTAL PROVEN AND PROBABLE VALUE (US$ '000) NET POTENTIAL RESERVE/ EARNINGS OVER LIFE* (US$ '000) TOTAL 236,341,041.99 56,721,850.08 CURRENT MARKET CAP MULTIPLE 143.0 34.3 2006P NET WORTH MULTIPLE 433.30 103.99 2006P EV MULTIPLE 369.72 88.73 Note : Net Potential Earnings Over Life has been calculated at a net margin of 24% against 38.8% of 2006P net margin. Prepared by: Dr. S. S. Mohanty President CEO 1a SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 KEY FINANCIAL AND OPERATIONAL PARAMETERS AT A GLANCE SOURCES AND USES OF FUNDS Property/Plant/Equipment, Total - Net Total Equity 700.0 Total Long Term Liabilities 600.0 500.0 400.0 300.0 200.0 (MILLION US$) (MILLION 100.0 0.0 2007P 2006P 2005 2004 YEAR REVENUE AND INCOME INDICATORS 1000 Total Revenue Operating Income 800 Net Income 600 400 (MILLION US$) 200 0 2007P 2006P 2005 2004 YEAR RETURN INDICATORS 350% 300% Return on Investment 250% Return on Equity T Return on Share Capital 200% 150% PER CEN 100% 50% 0% 2007P 2006P 2005 2004 YEAR 2 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 70.0% MARGIN INDICATORS 60.0% 50.0% T 40.0% 30.0% PER CEN 20.0% EBIDTA Margin EBIT Margin 10.0% Net Profit Margin 0.0% 2007P 2006PYEAR 2005 2004 100% 350% DUPONT ANALYSIS 300% 80% 250% 60% 200% 40% 150% PER CENT PER CENT 100% 20% 50% 0% 0% 2007P 2006P 2005 2004 YEAR Net Profit Margin Revenue to Total Assets Return on Equity Total Assets/Total Equity CAPEX/ASSET RETURN INDICATORS 250.0% 200.0% 150.0% 100.0% PER CENT 50.0% 0.0% 2007P 2006P 2005 2004 Return on Investment Operating Cash Flow/ Gross Fixed Assets YEAR Net Earnings/CAPEX Operating Cash Flow/CAPEX 3 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 500% GROWTH INDICATORS 400% Revenue Growth Net Earnings Growth 300% CAPEX Growth 200% PER CENT 100% 0% 2007P 2006P 2005 -100% YEAR ASSET/ASSET DEPLETION TO REVENUE INDICATORS 100% 80% 60% 40% PER CENT 20% 0% 2007P 2006P 2005 2004 Revenue to Total AssetsYEAR Operating Cash Flow/ Gross Fixed Assets Dep. & Dev. Expenses/Revenue LIQUIDITY INDICATORS 250% 200% 150% 100% PER CENT 50% 0% 2007P 2006P 2005 2004 YEAR Current Ratio Quick Ratio 4 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 LIABILITY SUSTAINABILITY INDICATORS 160.0% 140.0% Debt to Total Assets 120.0% Long-term Debt to Shareholders' Equity 100.0% Current Liabilities to Shareholders' Equity 80.0% 60.0% 40.0% 20.0% 0.0% 2007P 2006P 2005 2004 YEAR 5 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 BASIC FINANCIAL AND OPERATIONAL DATA Annual Income Statement PARTICULARS Year Ended 12/31 2007P 2006P 2005 2004 Total Revenue 878.5 610.9 314.93 123.18 Cost of Revenue, Total 217.0 162.5 112.98 49.68 Gross Profit 661.5 448.4 201.96 73.5 Selling/General/Administrative Expense 18.6 12.0 8.88 4.99 Research & Development 12.3 9.8 0.53 0 Depreciation 67.8 42.2 23.22 13.3 Interest Expense - Operating 4.8 12.8 10.81 8.95 Investment Income - Operating 13.9 8.4 26.52 -6.97 Unrealized Losses (Gains) 27.9 38.9 7.56 22.13 Other Operating Expenses, Total 21.6 12.6 5.44 11.28 Total Operating Expense 383.9 299.2 195.94 103.36 Operating Income 494.6 311.7 118.99 19.82 Net Income Before Taxes 494.6 311.7 118.99 19.82 Provision for Income Taxes 132.6 74.8 30.66 4.14 Net Income After Taxes 362.1 236.9 88.34 15.68 Net Income Before Extra. Items 362.1 236.9 88.34 15.68 Net Income 362.1 236.9 88.34 15.68 Income Available to Com Excl ExtraOrd 362.1 236.9 88.34 15.68 Basic Weighted Average Shares 574.3 560.8 523.61 394.91 Basic EPS Excluding Extraordinary Items 0.63 0.42 0.17 0.04 Diluted Weighted Average Shares 295 574.3 533.23 412.95 Diluted EPS Excluding ExtraOrd Items 1.23 0.41 0.17 0.04 6 Prepared By: Dr. S. S. Mohanty President & CEO SMART Intl. Holdings, Inc. Private & Confidential August 28, 2006 Annual Balance Sheet PARTICULARS Year Ended 12/31 2007P 2006P 2005 2004 Cash and Short Term Investments 167.2 125.5 27.6 29.25 Accounts Receivable - Trade, Net 126.8 94.5 66.03 35.07 Total Inventory 48.5 36.3 8.52 17.12 Prepaid Expenses 7.9 5.2 3.04 3.51 Total Current Assets 350.4 261.5 105.18 84.94 Property/Plant/Equipment, Total - Gross 524.3 386.5 230.18 224.7 Accumulated Depreciation, Total -137.5 -69.7 -31.83 -13.51 Property/Plant/Equipment, Total - Net 386.8 316.8 198.35 211.19 Intangibles, Net 122.4 129.7 103.03 68 Other Long Term Assets, Total 72.6 56.8 42.03 55.73 Total Assets 932.2 764.8 448.59 419.86 Payable/Accrued 68.2 58.4 47.41 42.96 Current Port. of LT Debt/Capital Leases 7.5 17.2 11.23 27.98 Income Taxes Payable 85.5 64.6 21.98 8.23 Total Current Liabilities 161.2 140.2 80.61 79.16 Total Long Term Debt 25.5 15.3 38.91 103.94 Other Long Term Liabilities 75.4 63.8 98.04 99.52 Total Long Term Liabilities 100.9 79.1 136.95 203.46 Total Liabilities 262.1 219.3 217.56 282.61 Common Stock 95.4 178.6 150.78 128.39 Retained Earnings (Accumulated Deficit) 534.2 319.7 82.79 -5.55 Other Equity 16.2 14.56 4.49 4.11 Currency Adjustments 24.2 32.6 -2.54 14.41 Total Equity 670.0 545.45 231.03 137.25 Total Liabilities & Shareholders' Equity 932.1 764.75 448.59 419.86 Shares Outs - Common Stock Primary Issue (Million) 295 574.3 537.6 479.54 7 Prepared By: Dr.
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