Assets, Experience, Growth

ASX ANNOUNCEMENT - 28 October 2015

MINING AND OFF-SITE PROCESSING STUDY FOR BARBARA COPPER-GOLD PROJECT COMPLETED

Key Points:

• Study completed for open pit mining at the Barbara Joint Venture Copper-Gold Project in North Queensland at a Feasibility Study level of assessment.

  
  

• The study indicated that Off-site Processing of the Barbara deposit is a financially robust project outcome.

  
  

• Key outcomes of the Feasibility Study included:

  • Life-of-mine pre-tax cash-flow of $A17.0 million (based on copper price of A$7450/t, gold price of A$1308/oz and silver price of A$22/oz);

  • Ore to be transported to Mt Isa and Cloncurry for toll treatment;

  • Total payable metal production of 16,223 tonnes of copper, 2,753oz of gold and 43,327oz of silver;

  • Mine life of 21 months, based on production from two open pits (North and South); o JORC (2012) Indicated Mineral Resource of 3.25Mt at 1.71% Cu, 0.15g/t Au and 2.76g/t Ag and Inferred Mineral Resource of 1.49Mt at 1.34% Cu, 0.16g/t Au and

    2.17g/t Ag;

  • Probable Ore Reserve of 818,000t grading 2.23% Cu, 0.20g/t Au and 2.78g/t Ag; and

  • Pre-tax Net Present Value (NPV8%) of A$14.0 million and an Internal Rate of Return (IRR) of 87%.

    
    

• The Mining and Offsite Processing Study demonstrates that the Barbara Project is highly sensitive to the copper price, with a 10% increase in the Australian Dollar copper price delivering an additional A$11.6M to the project's pre-tax cash-flow.

  
  

• Regional exploration across multiple areas targeted for potential additional near-surface resources completed. Results show low grade copper mineralisation in the initial holes at Neso and Proteus prospects.

  
  

• While the Feasibility Study has outlined a robust open pit copper project, Syndicated and CopperChem have agreed to pursue a number of alternative avenues to realise value from Barbara and the Company's other Queensland tenements as part of a revised corporate strategy outlined today (see separate ASX release).

Syndicated Metals Limited (ASX: SMD - 'Syndicated' or 'the Company') today reported the key results of the Feasibility Study on open pit mining at its Barbara Joint Venture Copper-Gold Project in North Queensland. The Feasibility Study was funded and undertaken by its joint venture partner CopperChem Limited as part of its earn-in requirements to the Barbara joint venture.

The Feasibility Study (summarised below) has defined a financially robust, short-term open pit copper project (Probable Ore Reserve of 818Kt at 2.23% Cu, 0.20g/t Au and 2.78g/t Ag) with a Pre- Tax free cash flow of A$17 million, based on total payable metal production of 16,223 tonnes of copper, 2,753oz of gold and 43,327oz of silver.

The Project has an estimated 21-month mine life, based on the development of two open pits with processing to be completed in Cloncurry and Mt Isa under a toll-treatment scenario.

Barbara Mining and Offsite Processing Study

Feasibility Study Summary & Key Assumptions

The Mining and Offsite Processing Study is based on the production of copper, gold and silver metal, with ore to be mined from two open pits at the Barbara Project (the North pit and the South pit).

The Study assumes that the mined ore would be trucked to offsite facilities for processing, with sulphide ore to be processed at Glencore's Mt Isa operations and oxide ore to be processed at CopperChem's Great Australia Mine (GAM) operations under a toll-treatment arrangement.

The following key assumptions have been made for the Barbara Copper Project (BCP) Mining and Off-Site Processing (MOSP) Study:

At these prices, Queensland State Government royalties are estimated at 4.24%, 5.0% and 5.0% for copper, gold and silver respectively. The assumption is also made that a viable market exists for BCP product at both the Glencore Mt Isa operations and the CopperChem GAM operations for the duration of the project.

Financial Model

Key findings are as follows:

• Mine life: 21 months

• Pre-production cost: $32.1 million

• Total operating cost: $76.3 million

• Total revenue (life-of-mine): $125.4 million

• Net cash flow pre-tax (life-of-mine): $17.0 million

• Discount rate 8%

• Pay back: 17 months

• IRR pre-tax: 87%

• NPV pre-tax (at 8% discounted) $14 million

Mineral Resource

As part of the Study, CopperChem completed an updated Mineral Resource estimate for the Barbara Copper-Gold deposit (see ASX announcement 18 July 2014). The Barbara Mineral Resource was calculated using Ordinary Kriging (OK), within the constructed 0.5% Cu wireframe, and based on all available drilling data is:

• 4.75 million tonnes grading 1.59% copper and 0.15ppm gold for 75,000 tonnes of contained copper and 23,000oz of contained gold.

The Mineral Resource (within the 0.5% Cu wireframe) is classified as either Indicated or Inferred, based on a range of factors including drill-hole spacing and various statistical/geostatistical parameters, and is summarised below:

Ore Reserve

The Probable Ore Reserve estimated as part of the Feasibility Study is based on, and inclusive of, the above stated Mineral Resources. The Barbara MOSP considers only the Indicated Mineral Resource that is economically mineable using Open Pit mining methods with the application of appropriate modifying factors as detailed in Table 1 and summarised below. The maiden Ore Reserve estimate for the Barbara Copper Project is:

Production

Production from the BCP, based on both oxide and sulphide ore sources, would comprise 18,200 tonnes of copper-in-ore expected to be mined and processed over 21 months, resulting in payable metal production of 16,223 tonnes of copper, 2,753 ounces gold and 43,327 ounces of silver.

Planned Mining & Mining Inventory

The Barbara site layout is shown below, showing coordinates from the local mine grid, along with final pit designs, surface topography, and tenement boundaries:

Figure 1 - Barbara Copper Project Site Layout

Barbara Copper Project Site layout

AMC Consultants were engaged to carry out designs for a waste rock dump (WRD), waste water dams, and access roads.

WRD final and staged designs were completed to ensure that potential acid forming (PAF) waste rock is covered by a minimum 5m thick non-acid forming (NAF) waste rock in all directions. The WRD final design contains all waste rock coming from the South Pit and North Pit.

A diversion channel was designed around the North Pit to divert runoff water during mining and after closure.

AMC completed pit optimisation using Whittle Four-X software (W4X) to determine the size of a potential open pit, and to generate a series of pit shells to be used for mine design and scheduling. CopperChem provided pit optimisation inputs, at December 2014, for metal prices, metal recoveries, royalties, selling costs, ore processing costs, ore haulage cost from Barbara to Mt Isa and to CopperChem's Great Australia Mine (GAM) south of Cloncurry, road maintenance cost, mining cost, and general and administrative operating costs.

The study manager provided pit slope parameters based on the recommendations of Pells Sullivan Meynink Engineering Consultants (PSM). AMC used the mining model, with allowances for ore loss and waste rock dilution, for pit optimisation.

Pit optimisation was completed separately for the South and North Zones, using indicated and inferred resource blocks. There are no measured resource blocks in the Barbara resource model. Pit optimisation results indicated that open-pit mining of the Barbara deposit is economically viable.

Open-pit mining of the South Pit is possible through staged development, by mining a series of cutbacks that provide ore feed for processing while smoothing waste rock movement requirements.