Phoenix Global Mining Ltd Mining – Initiating Post-IPO Coverage 08 August 2017 Stock Data Copper in Idaho, USA Share Price: 3.50p Investment Case Market Cap (M): £8.0 To invest in Phoenix Global’s proposed re-opening of the Empire Mine in Idaho, USA is EV (M): £6.5 an investment in an SX/EW copper mine which aims to produce 7kt pa of cathode copper from resources within 100m of the surface, with an estimated mine life of at least 10 years. Price Chart Good Exploration Potential 4.5 There is excellent potential to increase the existing ore resources which are currently 4.0 12.8Mt grading 0.53% copper. Phase II of the proposed mine work programme includes 3.5 7,500ft of core drilling and this is expected to further add to the ore resources. The second objective is to reopen several old adits allowing for underground mapping, sampling, and 3.0 drilling of the shallow sulphides under the oxides. 2.5 Upside Potential 2.0 Jun-17 Jul-17 Apart from the upside as discussed under the exploration potential, we believe a significant boost in valuation could come from higher recoveries that are modelled at 65%. In using one large heap, the ore leached in the early stages of the proposed mine 7 Week Range life will be subject to more than 30 days leaching, and we believe that the additional 2.75p 3.50p 4.50p leaching time will result in higher copper recoveries. The sensitivity to recovery rates is discussed under the valuation section on page 32. Company Summary Base Valuation Phoenix Global Mining is aiming to restart the Empire Brandon Hill Capital has valued the copper heap leach operation, based on the existing Copper Mine as a heap leach ore resource, which gives a 10 year mine life NPV 8% of US$36.3M, unfinanced, with an SX/EW mine in Idaho, USA. Following a successful restart, IRR of 29% on a 100% of project basis. At the time of writing, this valuation represents funds will be directed to a Phoenix Global Mining share price of US$0.16 or 12p based on the 80% ownership exploration to extend mine life of the copper SX/EW project alone, fully diluted post the IPO. and develop a sulphide mine. Longer term potential MAIN SHAREHOLDERS HOLDING In the longer term, the project has excellent potential to become a sulphide copper Management 13.56% mine, producing a copper concentrate with precious metal credits. Historically, there Bank Heritage 4.99% ExGen Resources Inc. 4.92% have been numerous sulphide drill intercepts from beneath the oxide cap. At depth, these Cheviot Capital (Nom) Inc. 4.29% range from the surface to 131m and typically average over 1.4% copper and contain good General Mediterranean 3.33% precious metal credits. Holding SA Source: Phoenix Global Mining Ltd Research: Peter Rose [email protected] www.brandonhillcapital.com This is a marketing communication. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Non-US research analysts who have prepared this report are not registered/qualified as research analysts with FINRA, may not be associated persons of the member organisation and may not be subject to NASD/NYSE restrictions on communications with a subject Company, public appearances and trading securities held by a research analyst account. Disclosures can be found at the end of the report. Brandon Hill Capital Phoenix Global Mining Ltd Post-IPO Coverage 08 August 2017 Contents Copper in Idaho, USA 1 Executive Summary 3 Company History 6 Project Location 6 The Empire Project 7 The Copper Market 30 Valuation 32 Investment Risks 36 Appendix A – Directors & Management 37 Appendix B – Company Structure 39 Research Disclaimers 41 Brandon Hill Contact List 43 Brandon Hill Capital 2 Phoenix Global Mining Ltd Post-IPO Coverage 08 August 2017 Executive Summary Phoenix Global Strategy The strategy of Phoenix is to develop an open pit oxide copper mine at the old Empire mine site in Idaho, USA. Using heap leaching followed by solvent extraction and electro winning (“SXEW”) to produce copper cathodes and this has early production potential. The cash flow that this operation generates will be used to explore for additional oxide mineralisation and for shallow sulphide mineralisation. The Asset The Empire Mine is located in the Alder Creek Mining District in Custer County, central Idaho, approximately 5.5km southwest of the town of Mackay. Mackay is on Highway US-93 approximately 140km west of Idaho Falls. It consists of 55 contiguous mining claims covering an area of 3.315km2. Approximately 90% of the Empire Mine deposit is on patented claims. Patented claims are land where the Federal Government has passed title to the claimant. A person may mine and remove minerals from a mining claim without a mineral patent. However, a mineral patent gives the owner exclusive title to the locatable minerals, surface and other resources. Management This is a strong point for Phoenix. A good team has been assembled. Both the chief technical officer and chief executive officer are graduates on the Camborne School of Mines with extensive global experience in the mining industry. Ryan McDermott has recently been appointed the CEO of Konnex. He has over 30 years’ experience as a geologist and more importantly, was recently responsible for permitting a new mine into production in Idaho for GHRMC. The Chief Geologist was previously a consultant at Empire where he worked on planning and implementing drilling programmes and on the geological evaluation of the property. He brings a wealth of experience to Phoenix and has a detailed knowledge of the area surrounding Empire. A Brownfields Site The leases cover an area which has previously been mined and that have been partially explored by numerous companies over the past 50 years. This has led to the establishment of a JORC compliant resource. Significant metallurgical test work has also been conducted on the drill core and bulk metallurgical samples which has shown that acceptable metallurgical recoveries can be obtained in copper, gold and silver. The exploration and metallurgical test work is covered in depth on pages 10 to 16 of this report. Valuation We have valued 100% of the heap leach project, unfinanced, and based on a ten year mine life at US$36.3M, using an 8% discount rate. Importantly, this valuation is based on only a 65% recovery, which itself was based on a 30-day leach cycle. The internal rate of return is calculated to be 29%. The fact that the mine will operate one large heap suggests that a significantly higher recovery will be achieved and the project shows a high degree of sensitivity to recovery rates. Infrastructure The Empire Mine Project is accessible from Mackay, Idaho, via a well-maintained, 5.5km long, all-weather gravel road. Access throughout the claims, including to old workings and drill pads, is by four-wheel-drive vehicle along further gravel roads and tracks. Mackay is a small town with a population of approximately 550, and is located 5.5km to the northeast of the project area. Custer County covers an area of 12,787km2 and has a population of 4368. The area has sufficient power and water available to operate the Empire Project. Brandon Hill Capital 3 Phoenix Global Mining Ltd Post-IPO Coverage 08 August 2017 What is the upside? Brandon Hill believes that there is plenty of upside with this project. 1. Initially we expect this to come from exploration with the orebody open along strike and at depth. 2. The 61% recovery rate as mentioned in the SRK Competent Persons Report is based on a crush seize of 38mm. We believe that a crush seize of 25mm will yield significantly better recoveries, which combined with a significantly longer leach time than 89 days can only have beneficial results. Hence, we have run the BHC model with a 65% recovery factor. 3. Then, once the heap, is fully leached for copper, which we believe will deliver better than a 65% recovery, the heap can be neutralised and leached for gold and silver. This will effectively double the mine life. 4. Sulphide resources – following the IPO, the Company will be able to explore the known shallow sulphide mineralisation and this should considerably improve the current project economics. 5. This project would certainly benefit from any reduction in the US tax rates that the President is proposing. Including the state taxes, the company tax rate used in the model 42%. We have run our model with a combined federal and state tax rate of 25% and this boosted the NPV to US$49.0M and the IRR to 34.6%. The Current Exploration Programme The exploration programme was divided into three phases. Phase 1 was to construct a new set of wire frames that more accurately represent the situation at the Empire Mine. To help achieve this, the area was overflown by drones, and as many as possible of the old drill holes had their co-ordinates re-calibrated for the new grid. This phase has now been concluded, and phase 11 is currently in progress. Following the successful IPO, the drilling programme has been extended. Originally there were to be 23 holes drilled for 5,343ft. These included 16 RC holes, 5 HQ diamond holes and 2 PQ diamond holes. Following some savings made on the vehicle budget, the drilling programme was extended to 28 holes for a total of around 7,500ft.