Monday,25June2012 HowardHumphreys Director&LeadResearchAnalyst hhumphreys@seismicresearch.com.au XavierChabeur ResearchAnalyst xchabeur@seismicresearch.com.

au

CapitalStructure
StockCode(ASX) SharePrice OrdinaryShares TotalOptions ITMOptions FullyDilutedMarketCap Less:Cash* Add:Debt EnterpriseValue
*EndQ1cash+$6.1Mraising+$4.3rightsissue

VXR A$0.037 1,375m 38.5m A$46.3m (A$13.1m) A$33.2m

Directors&Management
NonExecutiveChairman ManagingDirector ExecutiveDirector NonExecutiveDirector NonExecutiveDirector NonExecutiveDirector ChiefOperatingOfficer AnthonyKiernan MichaelMulroney AnthonyReilly RayParry JohnNitschke AllanTrench IanSuckling

Source:VenturexResources

Top5Shareholders*
RegentPacific NorthernStarResourcesLtd StraitsMineralInvestmentsPtyLtd JPMorganNomineesAustraliaLtd CiticorpNomineesPtyLtd TotalTop5 25.1% 13.0% 6.2% 4.9% 3.5% 53%

*asat30May2012Source:VenturexResources

VXRSharePriceChart
A$ 0.12 0.10 0.08 0.06 0.04 0.02 0.00 Volume(m) Price(A$) m 10 9 8 7 6 5 4 3 2 1 0

Source:Bloomberg

TargetPrice: $0.10(seep.8) InvestmentOutlook: RiskAssessment: Recommendation: StrongBuy

Nearterm,lowcostcopperzincproducerfromthePilbara,WA
VenturexResources(ASX:VXR)isaimingtocommenceproducingcopper (Cu)andzinc(Zn),inconcentrates,atitsflagshipPilbaraCuZnProject (100% VXR), located close to Port Hedland in Western Australia (WA), duringthe2Hof2014.VXRhasestablishedasubstantialJORCcompliant Resourcebasecontaininginexcessof550,000tofCuequivalentwithina numberofhighgradeVolcanogenicMassiveSulphidetype(VMS)CuZn deposits (see Table 1). Preliminary results from VXRs Feasibility Study suggestalow(C1)cashcostofA$1.15/lbCuequivalent.

WhileVXRalreadyhasasubstantialResourcebase,thereisexploration potential within and external to the identified deposits, in particular at the35kmofprospective,nearsurfacemineralisationattheWhimCreek, Salt Creek and Liberty Indee Joint Venture (JV) areas. VXR is currently developing a drilling program to test downplunge extensions of the EvelyndepositatLibertyIndee,theSaltCreekdepositandtheBallaBalla prospect. VXR is also planning to drill test more regional targets within thebroaderMonsCupriarea.

TheCompanyrecentlyfinalisedastrategic15%shareplacementwithan ASX300goldproducerthatisoperatingintheAshburtonPilbararegion of WA, Northern Star Resources (ASX: NST). NST invested $6.5 million (M)andunderwroteVXRsrecent$4.5Mcapitalraising.Thecompanies have also entered into a Memorandum of Understanding (MoU) to explore potential options for the jointdevelopment of the Pilbara project,whichcouldresultinsignificantcostssavingsforVXR.

InadditiontothePilbaraproject,theCompanyisexploringforlargegold deposits in Brazil through its whollyowned subsidiary CMG Mineracao Ltda (CMGM). Out of the recent capital raisings, VXR has allocated A$1.0M to explore its Brazilian assets. The mostadvanced project in BrazilisSerreVerde(100%VXR),whichiscurrentlyawaitingthegrantof explorationlicences.SerreVerdehostsVXRshighestpriorityexploration targets.

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Company Overview

Background
VenturexResourcesLtd(ASX:VXRortheCompany)has,inthe lastthreeyears,establisheditselfastheonlyemergingcopper zinc producer in Australia. Since 2009, the Company has, throughacquisitionsandexploration,grownitsresourcesfrom less than 20,000t of contained Cuequivalent, to the current global resource base, containing in excess of 550,000t Cu equivalent (see Table 1). At the Pilbara CopperZinc Project (100% VXR), the Company now has control over the largest knownVMSdepositsinthePilbararegionofWA. VXRhasgrownitsresources...tothecurrentglobalresource base,containinginexcessof550,000tCuequivalent...

Table1:TotalCompanyResources*
Category Mt Cu% SulphurSprings 19.04 1.23 WhimCreek 0.97 1.40 SaltCreekZn 0.48 0.20 SaltCreekCu 0.53 3.66 MonsCupri 4.57 0.92 LibertyIdee 0.66 1.83 26.23 1.23 ContainedMetal 322kt Zn% 3.22 1.20 14.1 0.74 1.27 3.66 2.97 778kt Pb% 0.20 0.20 4.40 0.08 0.51 0.34 0.33 87kt Agg/t 17 9 107.1 2.5 24.2 35.9 20 17Moz

*alsoincludesminorgold(Au)creditsSource:VenturexResources

VolcanogenicMassiveSulphideDeposits
Volcanogenic Massive Sulphide (or VMStype) deposits are a typeofmetalsulphideoredepositthatprimarilyhostcopper, zincandleadbearingminerals,butalsooftenoccurwithsilver and gold. VMS deposits are created by volcanicassociated hydrothermal events in submarine environments. They often occurinclustersandaslensesofpolymetallicmassivesulphide minerals.TheFlinFlonbeltinCanadahosts27significantVMS depositsthatoriginallycontainedover154Mtofore. VMSdepositsareatypeofmetalsulphideoredepositthat primarilyhostcopper,zincandleadbearingminerals...

Board&Management
VXR'smanagementisheadedupbyMichaelMulroney,anew addition to the VXR team. Trained as a mineral geologist, Michaelhasover30yearsexperienceinthenaturalresources andfinancesectors.Michaelspent12yearsasageologistand mining executive and 11 years with the investment bank NM Rothschild & Sons (Australia), gaining extensive experience in project finance and mergers and acquisitions in the global resourcessector. "Michaelspent12yearsasageologistandminingexecutive and11yearswiththeinvestmentbankNMRothschild..." Michael has extensive experience with handson geology as well as project management and finance. More recently, MichaelwasanExecutiveDirectorofArgonautCapitalLimited, and Investment Director of AFM Perseus Fund Limited. He is also a NonExecutive Director on the Board of Acacia Coal Limited(ASX:AJC). "Michaelhasextensiveexperiencewithhandsongeologyas wellasprojectmanagementandfinance. Michael is supported by Tony Kiernan, VXRs NonExecutive Chairman; a solicitor with over 35 years experience in the managementandoperationoflistedpubliccompanies.Tonyis also the Chairman of BC Iron (ASX: BCI) and Uranium Equities (ASX: UEQ) and a director of Chalice Gold (ASX: CHN) and LiontownResources(ASX:LTR). "MichaelissupportedbyTonyKiernan,VXRsNonExecutive Chairman;asolicitorwithover35yearsexperience... Also on the Board is Dr Allan Trench, a geologist/geophysicist and business management consultant with around 20 years experienceintheminingindustry;andJohnNitschke,amining engineerwithover35years'experienceatcompaniesincluding OzMineralsandNewmontAustralia.

Figure1:ProjectDevelopmentTimeline*
Pilbara:BankableFeasibilityStudy Pilbara:ExplorationDrilling Pilbara:ResourceRemodelling Brazil:ExplorationDrilling Pilbara:Financing&Procurement Pilbara:PlantConstruction Pilbara:PlantCommissioning

*PleasenotethisisanapproximatetimelineputtogetherbySeismicResearchandVenturexResources.Itisconditionaluponpermittingamongotherfactors.

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Investment Outlook & Risk Assessment

InvestmentOutlook: RiskAssessment: Recommendation: StrongBuy

StrongMetallurgicalResults
AnimportantcomponentfordevelopinganyVMStypedeposit ismetallurgy.FinalmetallurgicaltestingfortheSulphurSprings undergroundandMonsCupriopenpitresources(seeTable3) highlights the potential for the production of two separate highgradecopperandzincconcentrates,withveryhighcopper andzincrecoveryrates.

InvestmentOutlook

MineLife&ResourceUpside
Under the interim results of the Bankable Feasibility Study (BFS) the initial mine life is estimated to be at least seven years, based on current reserves. But the Companys substantial resource base at the Pilbara CopperZinc Project, containing approximately 315kt Cu and 773kt Zn, has the potential to support a much longer mine life. VXR has only defined, for example, a Reserve over just 30% of the known ResourcesatSulphurSprings. VXRsresourcebasehasthepotentialtosupportamuch longerminelife[thansevenyears]. ThereisalsopotentialtoexpandcurrentResourceswithinand external to the alreadyidentified deposits. VXR has identified an exploration target to the west of the Sulphur Springs deposit, while the highgrade Evelyn deposit at the Liberty Indee JV is open at depth. This is not to mention the regions explorationpotentialforVMSdeposits,whichtendtooccurin prolific belts and clusters. The Flin Flon belt in Canada, for example,hostsorhashosted27significantVMSdepositsthat originallycontainedover154Mtofore. VXRhasidentifiedanexplorationtargettothewestofthe SulphurSprings,whileLibertyIndeeisopenatdepth.

Table3:SulphurSpringsLockedCycleFlotationResults
Grade HeadGrade Recovery CopperCon. ZincCon. Copper 1.75% 96.8% 26.4% 0.5% Zinc 4.11% 92.3% 1.3% 58.9% Silver 18g/t 45.5% 74g/t 56g/t Lead 0.2% 41.0% 1.1% 0.2%

Source:VenturexResources

RiskAssessment

MajorPartnerMitigatesRisk
NorthernStarResources(ASX:NST),anASX300goldproducer withinterestsintheAshburtonPilbararegionofWA,recently invested $6.5M inVXR at a premium to the previouslytraded priceandunderwroteVXRs$4.5Mrightsissue.Thissignificant investmentreducesshareholderriskbybringingcredibilityand highlighting the quality of the project. But VXR and NST also entered into a MoU for the jointdevelopment of the Pilbara project,whichcouldpotentiallyreduceprojectcapitalcosts. NST...recentlyinvested$6.5MinVXRatapremium...and underwroteVXRs$4.5Mrightsissue.

AHighMarginOperation
Interim results from the BFS, for an operation with a plant at Sulphur Springs that processes ore from both the Sulphur Springs and Whim Creek project areas, highlight a low operatingcashcost(C1)ofA$1.15/lbCuequivalent.Basedon the VXRs assumption that the plant will produce 27,000t of payableCuequivalent(inconcentrate)annually,andaCuprice of US$3.50/lb, gives a total annual operating profit for the PilbaraprojectofA$150.8M. "InterimresultsfromtheBFS...highlightalowoperatingcost (includingbyproductcredits)ofA$1.15/lb...

ProjectFinancingRisk
VXR has a number of options to finance the estimated pre production capital cost of A$236M. VXR is considering a number of project financing options, including strategic investment by major copper and zinc consumers and producers, debt financing, prepayment of offtake, equity financing, and any combination of the above. The uncertainty surrounding this financing need and the potential dilution of existingshareholders,however,presentsarisk. "VXRhasanumberofoptionstofinancetheestimatedpre productioncapitalcostsofA$236million."

Table2:PilbaraProjectOperatingProfit
27,000tp.a. 59.5Mlbsp.a. US$3.50/lb A$3.68/lb A$1.15/lb A$2.35/lb A$150.8Mp.a. *excl.taxSource:VenturexResourcesandSeismicResearch CuequivProduction(CuZnAg) CuequivProduction(CuZnAg) CuPrice CuPrice(AUDUSD0.95) CashCost(C1) OperatingMargin OperatingProfitAUD*

AUDCommodityPriceRisk
A significant appreciation of the Australian dollar ('AUD') or a drop in the copper and/or zinc price could have a substantial impact upon the economics of a mining operation at the PilbaraCopperZincProject.Thispriceandexchangerateriskis especially high when considering the current volatility and uncertainoutlookforglobalmarkets. "AnappreciationoftheAUDoradropinthecopperorzinc pricecouldhaveasignificantimpactuponprojecteconomics

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Project Overview

ThePilbaraCopperZincProject(100%)

ProjectLocation
The Pilbara CopperZinc Project (100% VXR) is located in the Pilbara region of northern WA, an area that produces more than 96% of Australias iron ore exports. The project is comprised of two major areas of VMSstyle mineralisation, Sulphur Springs and Whim Creek, which are both located within150kmofPortHedland(seeFigure2).WhimCreekisan area of historic mining, while Sulphur Springs is an area of virgin,primarilyundergroundmineralisation. TheprojectiscomprisedoftwomajorareasofVMSstyle mineralisation,SulphurSpringsandWhimCreek...

Table4:TotalCompanyReserves*
Category Mt SulphurSprings 5.66 WhimCreek 0.69 SaltCreekZn 0.36 SaltCreekCu 0.24 MonsCupri 2.82 LibertyIdee 0.36 10.1 ContainedMetal Cu% 1.90 1.70 0.20 4.10 1.10 2.20 1.67 169kt Zn% 4.30 1.10 12.8 1.30 1.80 4.50 3.63 367kt Pb% 0.20 4.20 0.20 0.80 0.40 0.40 41kt Ag g/t 18 8.9 109 3.2 32 40 25 8Moz

*alsoincludesminorgold(Au)creditsSource:VenturexResources

Figure2:PilbaraProjectLocation

Source:SeismicResearch

CentralisedProcessingFacility
VXR is planning to take a regional approach to develop the project.TheCompanyhasconsolidatedalloftheknownlarge VMSdepositsinthePilbararegion,sonowitplanstoconstruct aCentralisedProcessingFacility(thePlant),locatedatSulphur Springs,toprocessitsreserves.TheproposedPlantwillbeable toprocessanominal1Mtoforep.a.sourcedfromtwoopenpit minesatWhimCreekandanewundergroundmineatSulphur Springs. "...theproposedPlantwillprocessorefrom...WhimCreekand anewundergroundmineatSulphurSprings."

RegionalInfrastructure
The Pilbara project has good road access to ports and other essentialinfrastructure.HaulageroadsfrombothWhimCreek andSulphurSpringscanaccessmajorsealedhighwaystoPort Hedland.Thepresenceofasignificantamountofinfrastructure helps to keep capital expenditure required to commence production. "...haulageroadsfromWhimCreekandSulphurSpringscan accessmajorhighwaystoPortHedland..."

BankableFeasibilityStudy
After purchasing the Sulphur Springs assets in January 2011, VXR commenced a Bankable Feasibility Study (BFS). The BFS envisages an underground mine at Sulphur Springs, combined with two open pits at the Whim Creek project area. The ore from these multiple sources will be trucked to the Plant at Sulphur Springs, processed into concentrate, and exported to overseasmarketsviaPortHedland. OrewillbetruckedtothePlant,processedintoconcentrate, andexportedtooverseasmarketsviaPortHedland.

CapitalandOperatingCostEstimates
The operation will be a conventional milling and flotation circuit to produce separate, highgrade copper and zinc concentrates. Interim results from the BFS show that an operation producing 27,000t of Cuequivalent annually, has a verylowestimatedcashcostofA$1.15/lbofpayableCu(after byproduct credits). VXR expects, however, that this estimate could be reduced by incorporating its reoptimised, higher grade open pits at Whim Creek and Mons Cupri, which will resultinlowerstripratiosandhighergradeoreReserves. InterimresultsfromtheBFSshowthatthePilbaraCuZn ProjecthasaverylowestimatedcashcostofA$1.15/lb" VXR has also estimated a low preproduction capital cost of A$236M for the proposed 1Mt of ore p.a. operation, which includes the construction of an underground mine at Sulphur Springs, a 1Mt p.a. milling and flotation circuit, a paste plant, tailingsstorageandkeyinfrastructurefacilities.Whilethisup front capital requirement is generally low, additional cost savings could be realised through outsourcing and the use of shared infrastructure under a potential agreement with NST andahaulroaddevelopmentagreementwithAtlasIron(ASX: AGO). VXRhasalsoestimatedalowpreproductioncapitalcostof A$236Mfortheproposed1Mtoforep.a.operation...

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Project Overview
TheproposedoperationatPilbara,whichinvolvesaPlantthat willprocess1.0Mtoforep.a.,isexpectedtoproduce18ktCu, 30ktZnand0.25MozAgannually(inpayablemetal,seeTable 5).AtthepricesusedfortheinterimBFSnumbers,whichare around current spot prices, this production of payable metal generatesoverUS$200millionannually(seeTable5).

"TheproposedoperationatPilbaraisexpectedtoproduce 18ktCu,30ktZnand0.25MozAgannually."

Table5:AnnualPayableMetalProduction&Revenue
Metal Copper Zinc Silver

Production 18,000t 30,000t 0.25Moz

Prices US$3.50/lb US$0.95/lb US$25/oz TotalRevenue:

Revenue US$139M US$63M US$6.3M US$208M

Source:VenturexResourcesandSeismicResearch

MetallurgicalTesting AnimportantcomponentfordevelopinganyVMStypedeposit is metallurgy. Final metallurgical testing for samples from the Sulphur Springs (see Table 6) and the Mons Cupri resources highlight the potential for the production of separate high grade Cu and Zn concentrates, with very high recoveries of bothCuandZn. Table6:SulphurSpringsLockedCycleFlotationResults
Grade HeadGrade Recovery CopperCon. ZincCon. Copper 1.75% 96.8% 26.4% 0.5% Zinc 4.11% 92.3% 1.3% 58.9% Silver 18g/t 45.5% 74g/t 56g/t Lead 0.2% 41.0% 1.1% 0.2%

Source:VenturexResourcesandSeismicResearch

DepositsandResources

SulphurSprings(100%VXR)
Sulphur Springs, which is located next to the proposed Plant location and 162km southeast of Port Hedland (the Port), hosts the largest known VMStype deposit in the Pilbara; containing ~228kt Cu and ~608kt Zn. Sulphur Springs was acquired in early 2011 for A$26.2 million cash and offtake rights from a subsidiary of Toho Zinc Co., the worlds third largestzincproducer. SulphurSprings...hoststhelargestknownVMStypedeposit inthePilbara;containing~228ktCuand~608ktZn. At Sulphur Springs, VXR has defined a highgrade JORC compliantreserveof5.66Mtat3.0%Cuequivalent,amenable to largescale underground mining, that contains ~105kt Cu and~242ktZn(plusPbandAg,seeTable7).Giventheplanned Sulphur Springs production rate of 850kt p.a. at 3% Cu equivalent, this reserve could support a mine life of over six years. But the Company has only defined a reserve over just 30%oftheknownresources(seeTable7). "...reservescouldsupportaminelifeofover6years.But reserveshaveonlybeendefinedover30%oftheresources."

Table7:SulphurSpringsResources*
Category Mt Measured 4.3 Indicated 9.6 Inferred 5.2 Total 19.0 Containing approx. Cu 1.7% 1.3% 0.7% 1.2% 234kt Zn 3.4% 3.8% 2.0% 3.2% 614kt Pb 0.2% 0.2% 0.2% 0.2% 38kt Ag 18 18 14 17 10Moz

*alsoincludesminorgold(Au)creditsSource:VenturexResources

Figure3:PilbaraCopperZincProjectMap

Source:SeismicResearch&VenturexResources

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Project Overview

Table8:SulphurSpringsProbableReserves*
Category Mt Copper 4.3 Zinc 1.4 Total 5.7 Containingapprox. Cu 2.1% 1.1% 1.9% 104kt Zn 3.7% 6.0% 4.3% 242kt Pb 0.2% 0.3% 0.2% 13kt Ag 17 23 18 3Moz

WhimCreek&MonsCupri(100%VXR)

*alsoincludesminorgold(Au)creditsSource:VenturexResources

ResourceReview&Exploration
As part of the BFS currently underway, VXR is reviewing and updating the Sulphur Springs resource. The Company expects that this revision will improve grades, particularly for Zn. This review will also look to confirm the continuity of the central part of the deposit, which could increase the resource size, gradeandestimationconfidence. "...thisreviewwilllooktoconfirmthecontinuityofthe ...deposit,whichcouldincreasetheresourcesize." VXRhasalsoidentifiedanexplorationtargettothewestofthe existingresourcethroughaholewithaninterceptof16.9mat 0.47% Cu (from 367.1m). The hole (SSD050) intersected stringerstylecoppermineralisation,whichisoftenperipheral to a VMS system. The Company plans to conduct additional explorationdrillingtotestthisVMStarget. "VXRhasalsoidentifiedanexplorationtargettothewestof theexisting[SulphurSprings]resource..."

The Whim Creek and Mons Cupri deposits are both located ~200km of the proposed Plant location and 120km from Port Hedland. Whim Creek consists of a small, highgrade deposit underneath a historic open pit mine (see Figure X). While at MonsCupritheCompanyhasdefinedalarge,4.6Mtresource, containing ~41kt copper and ~60kt zinc (with potential lead, silver and gold credits, see Table X). Both deposits are amenabletoopenpitmining.

[BoththeWhimCreekandMonsCuprideposits]... areamenabletoopenpitmining."

DuringQ42011,VXRdrilledadeepdiamondhole(MCD008)at Mons Cupri that intersected highgrade sulphide ore, over a 17mintercept(fromof68m);thefullassayresultsofthishole arepending.Oncereceived,VXRexpectstheresultsfromthis hole will be Incorporated into resource estimation and a re designoftheproposedopenpit.

Table9:WhimCreek&MonsCupriResources*
Ag 24.2 8.8 21.5 18Moz *alsoincludesminorgold(Au)creditsSource:VenturexResources

Category Mt MonsCupri 4.6 WhimCreek 1.0 Total 5.5 Containingapprox.

Cu 0.9% 1.4% 1.0% 264kt

Zn 1.3% 1.2% 1.3% 330kt

Pb 0.5% 0.2% 0.5% 120kt

Table10:MonsCupri&WhimCreekReserves*
Category Mt MonsCupri 2.8 WhimCreek 0.7 Total 3.5 Containingapprox. Cu 1.1% 1.7% 1.3% 43kt Zn 1.8% 1.1% 1.7% 58kt Pb 0.8% 0.2% 0.6% 22kt Ag 32 9 27 3Moz

*alsoincludesminorgold(Au)creditsSource:VenturexResources

Figure4:MonsCupriResourceCrossSection

Source:SeismicResearch&VenturexResources

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Project Overview

SaltCreek(100%VXR)
SaltCreek,located260kmfromthePlantand110kmfromPort Hedland, presents an additional source of highgrade copper zincorefortheplant.VXRhasdefinedasmall1Mtatresource at a very highgrade of 5.1% Cuequivalent and a reserve of 597kt at 4.8% Cuequivalent. VXR is currently undertaking a conceptualstudytofasttrackproductionofhighgradeoreat Salt Creek to complement planned production from Mons Cupri,WhimCreekandSulphurSprings. "VXRiscurrentlyundertakingaconceptualstudytofasttrack productionofhighgradeoreatSaltCreek."

BrazilianGoldProjects
VXRswhollyownedBraziliansubsidiary,CMGMineracaoLtda (CMGM), controls several advanced and earlystage gold projects,withaglobaltenementportfoliocovering~1,200km2. TheSerraVerdeProject,theCompanysmostadvancedproject in Brazil, has excellent potential to deliver a significant gold discovery. VXR has allocated $1.0M from the recent capital raisingstoinvestinexploringitsBrazilianassets. "VXRhasallocated$1.0Mfromtherecentcapitalraisingsto investinexploringitsBrazilianassets."

LibertyIndeeJointVenture(70%VXR)
LibertyIndee, located around 295km from the Plant, hosts a small highgrade resource of 657kt at 3.3% Cuequivalent, which is open at depth (see Figure 5). The Company has identified, in the LibertyIndee region, a number of additional drillingtargetsovera12kmprospectivehorizon.Assayresults were received recently for eight drill holes, two of which intersected minor base metal sulphide mineralisation. VXR planstocommencedrillingattheEvelynDiscovery(seeFigure 5)inJulytotestthedownholeandoffholepotential. "VXRhasidentified,intheLibertyIndeeregion,anumberof additionaldrillingtargetsovera12kmprospectivehorizon..."

SerraVerdeProject(100%VXR)
The SerraVerde Project has hosted, overthe past 30years, a number of smallscale alluvial mining operations. Preliminary explorationhasconfirmedthepotentialofthisprojecttohost highgrade gold deposits. Of 91 bedrock samples assayed to date,29valuesexceeded1g/tAuand10exceeded31.1g/tAu (one ounce of gold per tonne). The highest grade to date is 254g/t Au. Recent assay results of up 2.63g/t Au have confirmed that gold mineralisation is contiguous between a numberofsmallscalemines. "TheSerraVerdeProjecthashosted,overthepast30years,a numberofsmallscalealluvialminingoperations."

Figure5:LibertyIndee,EvelynDiscovery

Source:SeismicResearch&VenturexResources

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Company Comparables & Valuation

Table11:ComparableASXListedCopperCompanies
Company CudecoLimited(ASX:CDU) DiscoveryMetals(ASX:DML) FindersResources(ASX:FND) HotChili(ASX:HCH) MarengoMining(ASX:MGO) IndophilResources(ASX:IRN) IntrepidMines(ASX:IAU) TigerResources(ASX:TGS) Average(excl.VXR) VenturexResources(ASX:VXR) SharePrice (A$) 3.1 1.415 0.275 0.42 0.14 0.345 0.445 0.24 0.037 EnterpriseValue (A$M) 438.3 695.8 83.6 56.8 118.1 202.8 151.6 168.6 239.5 37.8 CuResource1 (MtCu) 0.94 1.8 0.2 0.64 2.36 5.60 9.8 1.0 2.8 0.6 EV/tCopper (A$M/t)1 466.3 385.2 378.3 88.3 50.0 36.2 15.5 172.2 199.01 65.62 ProjectStage ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper ExplorerDeveloper

1.Copperequivalentresource,basedonrelativepricesSource:Bloomberg,companydataandSeismicResearch

CompanyValuation
AsillustratedinTable11,SeismicResearchhascalculatedthe enterprisevalue(EV)pertonne(t)ofcontainedcopper(Cu) forcomparableASXlistedcompaniesatasimilarstagetoVXR withJORCcompliantResources. SeismicResearchhasappliedtheaverageEV/tofcontainedCu for the selected ASXlisted comparables of A$199/t to the JORCcompliant resource at the Pilbara project. Applying the average EV/t of A$199/t, results in an implied EV for VXR of A$114.7M. Adding VXRs cash balance and dividing by the dilutedsharecapitalresultsinavaluationofVXR(excludingits Braziliangoldassets)of$0.093pershare.

TargetPrice
With copper deposits, the larger the resource, generally the lowerthegrade,whichresultsinapotentiallyhighercostmine and a lower EV/t Cu. Therefore, with VXRs smaller, higher grade deposit, a higherthanaverage EV/t could be justified. ButwearealsoconsciousofthefactthattheCompanysnew management, while providing some promising early results, needstoproveitself.Wethereforearecomfortableputtinga $0.1012monthpricetargetonVXR.

Figure6:ComparableASXListedCopperCompaniesEnterpriseValuePerResourceTonneofCopper(A$EV/tCu)
EV/Resource(A$/tCu) 500 450 400 350 300 250 200 150 100 50 0 Intrepid Mines

AverageEx.VXR(A$/tCu)

Indophil Resources

Marengo Mining

Venturex Resources

HotChili

Tiger Resources

Finders Resources

Discovery Metals

Cudeco Limited

Source:companydata,BloombergandSeismicResearch

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The Copper Industry

CopperDemand
Copperisanindustrialmetalwithmanyapplications,duetoits properties of corrosion resistance and thermal and electrical conductivity.Around67%ofrefinedcopperconsumedannually goestotheconstructionandelectronicsindustries(seeFigure 7). The remaining demand is spread almost evenly across industrialmachinery,transportandconsumerproducts.

Figure8:CapitalStockPerPerson

WhatisCopperUsedFor?

Figure7:UsesofCopper(2010)
11% 10% 35% Construction ElectronicProducts IndustrialMachinery 12% 32% Transport ConsumerProducts

Source:IMF,HSBC,theEconomist

CopperSupply
CopperSupplyOutlook
Muchofthegrowthintheoutputofcopperoreoverthepast 20 years has been sourced from large porphyrycopper mines in Chile and Peru (see Figure 9). But by 2015, three of the worlds largest copper concentrate producers (Grasberg, BinghamCanyon,andChuquicamata)areexpectedtorunout of open pit ore and switch to underground production. As a result,productionratesareexpectedtofall.

Source:BrookHunt

CopperDemandOutlook
Therecentgrowthincopperconsumption(andtheincreasein prices) has, to a large extent, been determined by China's urbanisation cycle. But China, already the worlds largest consumerofcopper,isonlyatthebeginningofitsurbanisation cycle in comparison to advanced economies like the U.S. and Europe (see Table 12). Meanwhile, India, another very populous developing nation, is a relatively small consumer of copper.IndialagsbehindChinaintermsofurbanisation;soit standstoconsumealotmorecopperinthecomingyears.

Figure9:ProductionofCuOresandConcentrates(kt)
1,600 1,400 1,200 1,000 800 600 400 200 0 Indonesia Australia US China Peru Other Chile

Table12:UrbanisationTrends,ChinaandIndia
Citieswith> 1mpeople Peopleliving incities China 221,by2025 (increaseof71) 1,000m,by2025 (increaseof350m) India 68,by2030 (increaseof26) 590m,by2030

Source:McKinseyGlobalInstitute,China:Mar09andIndia:Apr10

Qualitatively, consider two important facts about Europe and the U.S. when reading the above table: 1. today, Europe has only35citieswithover1millionpeople,and2.currently,the entireU.S.populationisonly~311million.Agoodquantitative measureofdevelopment,industrialisationandurbanisationin aneconomyisthecapitalstock*.Eventakingintoaccountthe recent surge in investment between 2000 and 2010, China is stillveryfarbehindmoredevelopednationsinAsiaaswellas theU.S.(seeFigure8)intermsofcapitalstockperperson.
*the capital stock can be loosely defined as the quantity of already produced durable goods, less depreciation, used in the production of othergoodsandservices.

Source:WorldBureauofMetalStatistics

DecliningMineHeadGrades
Mineheadgradeshavebeendecliningacrossthesector,from ~1.6%Cuin1980to~1.1%Cuin2010.Globalreserveshavean average grade of 0.94% Cu and global resources have an average grade of 0.71% Cu. These lower grades (in reserves andresources)areexpectedtoincreasethecostofproduction, therebyputtingupwardpressureonthepriceofcopper.

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Authors of this Report

Seismic Research

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