INVESTMENT OPPORTUNITIES IN THE NIGERIAN MINING SECTOR ERIN MINERAL RESOURCES LTD EXPLORING NIGERIA Abuja 30 to 31 January 2012

INTRODUCTION PRESENTATION OUTLINE Erin Mineral Resources Ltd - a company profile. Nigerian mineral sector. History Government framework and controls supporting the sector’s development Investing in Nigeria’s Mineral Sector. Erin’s experience Positive developments Issues affecting investment

ERIN MINERAL RESOURCES LTD THE COMPANY Erin Resources Pty Ltd (Erin), an unlisted Australian incorporated company, is the parent company of Erin Mineral Resources Ltd (EMR). To date Erin has relied on contributions by its shareholders to fund its exploration activities in West Africa In Nigeria Erin has a first mover advantage in areas under-explored that have extensive artisanal Au zones opened up under the new Mining Act. The company currently has its headquarters in Abuja and a regional office in Gusau, Zamfara State.

ERIN MINERAL RESOURCES LTD THE COMPANY EMR is duly incorporated in Nigeria and engages solely in exploration of solid minerals in Nigeria and Senegal.

ERIN MINERAL RESOURCES LTD IN NIGERIA One of the world’s least explored Gold Provinces Potentially represents 25% of West Africa’s Gold Province Area Major shear zones and schist belts with extensive gold workings New Mining Law enacted to world standard to attract investment Erin actively seeks joint ventures with local Nigerian partners; with Erin providing funds and the technical skills to undertake exploration Developed a skill base of trained Nigerian geologists in 4 years

ERIN MINERAL RESOURCES LTD IN NIGERIA Erin holds interests in Tenements covering approximately 4,200 square kilometres in Nigeria.

ERIN MINERAL RESOURCES LTD IN NIGERIA 1,700 sq kms in joint venture 2,500 sq kms as Erin held exploration licenses The Tenements are held principally for their gold potential Project generation in Nigeria is focussing on other areas for their base metal, iron ore, tin/tantalum or rare earth potential Erin’s has committed in the order of USD9M on exploration in Nigeria since 2008

ERIN MINERAL RESOURCES LTD IN NIGERIA Erin has established 3 main JV project areas Favourable geotectonic settings; major shear zones with fault corridors Volcanic and sediment schist belts as favourable hosts Extensive artisanal and historic workings Soil sampling identified gold anomalies with strike lengths of more than 30km No previous modern exploration

NIGERIAN MINERAL SECTOR BRIEF HISTORY Exploration for several solid minerals (Sn, Nb, Pb, Zn, Au) goes back more than 100 years. Apart from coal, mining of minerals and metals was entirely in the hands of private enterprise, with British mining companies dominating. Commercial oil was discovered in 1956 and production commenced in 1958. During the 60s and 70s the predominantly foreign investors in the mining industry left Nigeria, allowing the industry to declined from large and medium scale mining to what is now only small-scale and artisanal mining. Early 70s the Nigerian Government decided to act as catalyst in the mining sector through the establishment of mining corporations which would use public funds for mining

NIGERIAN MINERAL SECTOR BRIEF HISTORY The expected economic advantages that informed the 1971 review of mining policy were never realised. In the late 90s the Government then initiated reforms aimed primarily at allowing the private sector to take a pivotal role in the growth of the sector, reorientation of government from ‘Owner-Operator’ to ‘Administrator-Regulator’, ensuring liberal and transparent access to mining titles, strengthening institutional and human capacity and strengthening geological data generation. The 2007 Act was based on international best practices and thus modelled after a number of successful mining jurisdictions. The aim of the new Act was to increase investment in the sector, both locally and internationally.

NIGERIAN MINERAL SECTOR GOVERNMENT FRAMEWORK The aim of the new 2007 Act and 2008 Policy were to increase investment in the sector, both locally and internationally. The 2007 Act was to be based on international best practices and thus modelled after a number of successful mining jurisdictions. All mineral resources are vested in the Government of the Federation for, and on behalf of, the people of Nigeria. Important features to be included were: Enactment of transparent laws, regulations and guidelines Creation of a favourable fiscal regime Setting up of institutional frameworks for the generation, storage and dissemination of geological and mining information Transparent access by the public to mining sector information Provision of clear safeguards for health, safety and the environment Rules for the succession and transferability of mining titles

NIGERIAN MINERAL SECTOR GOVERNMENT FRAMEWORK Specific provisions were included to attract investment. Security of tenure Competition for mineral titles based on “first come first served” basis Application of the principle of “use it or lose it” Time limits for granting titles Implementation of a Mining Cadastre administration system Introduction of Community Development Agreements and Environmental protection and mitigation measures Transferability of mining rights Exemption of customs and import duty on a list of equipment imported exclusively for mining operations Expatriate quota and resident permits for approved personnel Permission to retain a portion of foreign earnings in a domicile account Free transferability of funds

NIGERIAN MINERAL SECTOR GOVERNMENT FRAMEWORK Public release of the Regulations occurred in May 2011. Prepared in conjunction with private enterprise and industry bodies. Focus was to comply with the intent of the 2007 Act. This had been a problem previous attempts to issue the Regulations. A number of industry concerns still exist: The timing of seeking consent from landowners during the application for a Mineral Title The MCO to be involved in landowner compensation negotiations rather than acting as an arbitrator Preparation of Environmental Impact Assessments during exploration; this stems from the definition in the Act of “Mining Activities” that includes exploration An inappropriate level of investigation (Scoping Study detail) for holders of an Exploration Licence to make application for a Mining Lease Lack of recourse by the investor in relation to delays in application/approval processes caused by the Government

INVESTING IN NIGERIA’S MINERAL SECTOR ERIN’S EXPERIENCE Partial transfer of mineral titles Low level Government appreciation for modern exploration and mining requirements, and logistics Expensive to explore in Nigeria; no support logistics in-country Delays Issuance of ELs suspension and revalidation process; mid 2008 to end 2009 Import exemption for drill rig; Aug 2009 to Nov 2009 MMSD, Nov 2009 to Min. Finance Rig arrived Feb 2010 Exemption Mar 2010 Approvals Assignment of mineral titles; Feb 2010 to Nov 2010 Mineral title renewal; Mar 2010 to Oct 2010 Cancellation of applications; Jan 2010

INVESTING IN NIGERIA’S MINERAL SECTOR ERIN’S EXPERIENCE Landowner consents Environmental constraints on exploration companies Apparent ad-hoc cancellation of mineral titles Mineral title rental fees Payment of with-holding tax

INVESTING IN NIGERIA’S MINERAL SECTOR POSITIVE DEVELOPMENTS Current Government regime very approachable and supportive Re-instatement of a Director General for the MCO Availability of high quality airborne data Issuance of the Mining Regulations in 2011 Landowner consent changes Ideology within the endeavours of the 20 2020 plan

INVESTING IN NIGERIA’S MINERAL SECTOR ISSUES AFFECTING INVESTMENT Capacity for regulatory bodies Availability of tenement information Ability to achieve the benefits in the Act to attract investment Conversion of ELs to MLs Environmental compliance review Control of artisanal mining and activities by non-tenement holders

INVESTING IN NIGERIA’S MINERAL SECTOR ISSUES AFFECTING INVESTMENT Lack of recourse when delays occur Nigeria’s reputation Erin’s experience to raise capital in present market for gold exploration in Nigeria very difficult No major discoveries to reduce the high geological risk profile No established gold mining industry At times a negative political/security risk

INVESTING IN NIGERIA’S MINERAL SECTOR ATTRACTING INVESTMENT To develop a large mining sector Nigeria has to encourage (incentives) exploration, particularly in the current market where investors are likely to go to more established/lower risk countries Keep the cost of exploration low in terms of fees Improve the delivery of services/support as impacts directly on costs Overcome the difficulty of companies sourcing capital by having the Government creating a fund that investors can access, potentially see the Government have a return on the investment for projects that develop and encourages local ownership

INVESTING IN NIGERIA’S MINERAL SECTOR ATTRACTING INVESTMENT Key Nigerian stakeholders in the sector need to be aware that it is not easy to be an early exploration player (local or international). The level of real exploration/investment $’s relative to the opportunity is still very low. The real challenge for the Government, who have stated that they are serious to grow the sector, is how do they bring more exploration activity/ investment $’s into the country. Erin’s view is that a serious incentive scheme is necessary, until the sector matures, to encourage both local and international explorers to choose Nigeria over other investment destinations