Research Note

March6,2012

EMEDMiningPublicLtd.
RioTintoFinancingAgreementsinPlace
FinancialSummary(US$)
Paradigm Estimates
(y/e Dec.31)

CompanyProfile(C$)
Sector Ticker StockRating ClosingPrice 12MthTarget previously PotentialROR Metals EMDT,EMEDL

Buy
$0.21 $0.40 $0.50 90% 856.5 1,051.8 $180 $221 $0.37 $0.01

FY11e FY12e FY13e Consensus Estimates FY12e FY13e

Net Revenue 0.0 0.0 51.2 0.0 48.4

CFPS (0.02) (0.02) 0.02 0.00 0.01

P/CF nmf nmf 10.5 x nmf 21.0 x

EPS (0.01) (0.01) 0.01 0.01 0.02

P/E nmf nmf 21.0 x 21.0 x 10.5 x

SharesO/SBsc(M) SharesO/SFD(M) MktCap,Bsc(M) MktCap,FD(M) NAV/sh* WorkingCapital/sh

*Pershfiguresareperdilutedsh

Source:Companyfilings,ParadigmCapitalInc.,IBESConsensusEstimates InvestmentThesis.WeviewtheRioTintomineasanattractiveandvaluableasset,particularlygiventhecurrent bullishcopperpriceenvironmentanddearthofnewmineproductionforecasttocomeonlineinthenearterm. RioTintoisapastproducingminewithlowtechnicalriskforarestartofoperations,andsubstantialpotentialfor resourceandminelifeexpansion.ThesepositiveattributesarenotfullyreflectedinEMEDsshareprice,butthis islikelytochangerapidlypendingsuccessfulcompletionoftheminepermittingprocess.

Company Description EMEDMiningislistedontheAIMmarketoftheLSE and on the TSX. EMEDs flagship brownfield Rio Tinto Copper mine in Spain represents an exceptional opportunity for EMED to produce copper at a relatively low acquisition and startup cost. EMED is currently targeting commissioning of thefacilitybylate2011,subjecttotimelyreceiptof permits.Initialproductionisforecasttobe~80Mlb Cuat$1.52/lbcashcost. Research Team JeffWoolley,CFA,Analyst 416.361.9557 jwoolley@paradigmcap.com DavidDavidson,Analyst 416.360.3462 ddavidson@paradigmcap.com SantoRanieri,Analyst 416.364.3161 sranieri@paradigmcap.com GrantMoenting,Associate 416.360.1397 gmoenting@paradigmcap.com 1-Year Stock Chart
EMEDMiningPublicLtd.(EMDCA)
0.28 0.26 0.24 0.22 0.2 0.18 0.16 0.14 0.12 0.1 0.08 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Event
EMED has moved the Rio Tinto mine restart one step closer to reality with the successful negotiationof nonbindingfinancingagreementsforanaggregate~$200M,sufficienttofund the full startup capital requirements. With financing agreements in place, the funding overhangontheshareshasbeenresolved.EMEDcontinuestonegotiatewiththeAndalucian Government for the grant of the key Administrative Standing permit, which will allow rehabilitationworkatRioTintotocommence.

Details
On March 5, EMED entered into a nonbinding $175M loan facility with Goldman Sachs, repayableover7yearsthoughdeliveryofphysicalcopperproductionequivalentto~15% ofplannedproduction. On February 6, EMED announced a private placement with Chinas Yanggu Xiangguang Copper (XGC) for $15M (representing ~10% fully diluted interest in EMED), and XGC will provideEMEDwitha$15Mcapitalcostoverrunfacility.Importantly,XGCalsobecomesa cornerstonecustomerforRioTintoscopperconcentrates,withofftakerightsfor25%of aggregateproduction. Negotiations with the Andalucian Government for grant of Administrative Standing continuetomakeprogress.ThegovernmenthasrequestedthatEMEDassumecontrolof additionalhistorictailingsandwastedumplandscurrentlyownedbythirdparties,which we believe is indicative of increasing political approval for the project. Management is optimisticthatAdministrativeStandingcouldnowbegrantedbyQ3/12.

Price(CAD)

Volume(Thousands)

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Volume
Source: FactSet Prices

EMEDMiningPublicLtd.

Conclusion
We have updated our financial forecasts for the company to reflect updated permitting expectations for Rio Tinto, and now look for permits to be granted in late 2012 and mining operationstocommenceinlate2013.Thepermittingdelaytotheprojectstartup,combined withtheincreasedenvironmentalbondingrequirementsandtheannouncedprivateplacement byXGC,lowersourNAVto$0.37/shfrom$0.47/sh.Wecontinuetobelievethereissignificant upsidetoourbasecasevaluationoftheRioTintomineandlookforthegrantofAdministrative Standingasthenextmajorcatalyst.Weareloweringourtargetpriceto$0.40(from$0.50).We maintainourBuyrecommendation.
ParadigmCapitalInc,IIROC/TSXmember1 Ourdisclosurestatementsarelocatedattheendofthisreport

Estimate Changes (C$) NEW

FY12e
Rev.(M) EPS CFPS

OLD
FY12e 125.9 0.05 0.07 FY13e 239.1 0.11 0.14

FY13e 51.2 0.01 0.02

0.0 0.01 0.02

Source:ParadigmCapitalInc.

Research Note

ProgressContinuesinRioTintoPermitting
EMEDhascontinueditsconsultationswiththeJuntadeAndaluciaandhasbeensuccessful ininformallyresolvinganumberofenvironmentalandtechnicalissueswiththeregulators andappearstobegainingsupportforaminerestartfromallpoliticalparties.Asignificant advancementinthepermittingprocesswasannouncedinDecemberwhentheAndalucian Government requested that EMED introduce an environmental and restoration program on all Rio Tinto Copper mine lands, including those not already owned by the company. Accessandcontroloftheadditionaltailingsdamsandwastedumplandscurrentlyowned by third parties would benefit the region through a more comprehensive and unified environmental oversight, as well as provide EMED improved operational flexibility. This appears to be a significant request by the government and presumably advances the review process for Rio Tinto by addressing an outstanding concern of the government necessaryforthegrantofAdministrativeStanding. EMED has since responded to the governments requests for additional technical documentation,andtheAndalucianGovernmenthasalsoreferredthesedocumentstothe central government review bodies. Note, a prerequisite to EMED implementing an augmented longterm environmental management plan for the entire property is the granttothecompanyoftherightofoccupationforallRioTintolands,orAdministrative Standing.TheAndalucianGovernmenthasindicateditsdesirethatanoverallprojectplan for Rio Tinto be completed and approved by Q3/12. However, the upcoming regional electionsscheduledforMarch25mayprovideadditionalincentiveforthegovernmentto completeitsreviewandgrantofAdministrativeStandingearlier.

FinancingAgreementsinPlace
TheestimatedcapitalcostrequirementfortherestartoftheRioTintominehasincreased to~$175Mfromtheinitial~$125Mestimate.Thisincreasehasbeenwidelyexpectedand is the result of EMEDs agreement to incorporate a larger mine footprint into its environmental rehabilitation plan, as well as an increase in environmental bonding requirements. Although the increased rehabilitation commitments add to the overall project capital cost, they also provide EMED with much improved operational flexibility and the additional land required should an expansion of the mine be considered in the future. Recent financing agreements with Xiangguang Copper Co. (XGC) and Goldman Sachsforinexcessof$200M(conditionaluponthegrantofAdministrativeStandingrights) meantheRioTintorestartisnowfullyfunded. On February 6, EMED entered into a financing and offtake agreement with Yanggu XiangguangCopperCo.(XGC)foranaggregatefundingpackageof$30M.XGCwillprovide EMED$15Mbywayofasubscriptionfor105Mordinarysharesatapriceof9penceeach (~$0.14/sh), and arrange for a $15M cost overrun support debt facility. In addition, XGC willbegrantedofftakerightsfor30%ofthecopperconcentratesproducedfromRioTinto each year until the delivery of a cumulative quantity equivalent to 25% of Rio Tintos production for the first 10 years of commercial operations. Following completion of the private placement, XGC will have a ~10% ownership interest in EMED. We view this agreementwithacornerstonecustomerasastrongendorsementforthemine. On March 5, EMED announced a second financing agreement with Goldman Sachs for $175M in project finance. The financing is in the form of a copper presale agreement, whereby EMED will receive an upfront payment of $175M and, in return, the company will deliver the equivalent value of copper to Goldman Sachs on a monthly basis over a 7yearperiod.Thecopperpresalehasbeennegotiatedatalowcopperpriceof~$2.20/lb, but importantly covers only a relatively small portion (~15%) of production and avoids potentiallysignificantequitydilution.Webelievethisfinancingagreementisbeneficialto theprojectandalleviatestheremainingprojectfinancingconcerns.
ParadigmCapitalInc,IIROC/TSXmember2March6,2012

Research Note

MaintainBuyRecommendation
EMEDcontinuestomakeprogressinitsnegotiationswiththeJuntadeAndaluciatopermit and restart the Rio Tinto mine. While the ongoing delay for the grant of Administrative Standing is disappointing, we note that the Andalucian Government has expressed growingsupportforRioTintoandhasintensifieditsreviewprocess.Weremainoptimistic that EMED will be granted the required permits to restart Rio Tinto and now look for project permits to come in late 2012 (consistent with recent indications from the Andalucian Government). Consequently, we have delayed our estimated start to mining operations at Rio Tinto to late Q3/13. We have also augmented our initial capital cost requirement for a restart to mining operations to $175M from $125M to reflect the augmented environmental management and rehabilitation commitments agreed to by management, and incorporated the impacts of the ~10% private placement in EMED by XGC. The net impact is a reduction in our NAV to $0.37/sh from $0.47/sh. We do not currently incorporate any value for the substantial resource expansionpotential thatwe believeexistswithintheRioTintopitandtheneighbouringSanDionisiodeposit.Despite the reduction to our NAV/sh, we believe the recent conditional financing agreements negotiated by EMED and the ongoing permitting discussions with the Andalucian Governmentarepositivedevelopmentsforthecompanythatareincrementallylowering theoverallprojectrisk.However,thekeycatalystforthesharepriceremainsthegrantof project Administrative Standing by the government. We are lowering our target price to $0.40(from$0.50).WemaintainourBuyrecommendation.
Figure 1: Rio Tinto Forecast Production and Cash Cost Profile

125 Copper Production (mlbs) 100 75 50 25 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

$2.00 $1.80 $1.60 $1.40 $1.20 $1.00 Cash Cost (US$/lb Cu)

Copper Production

Cash Cost

Source:Companyfilings,ParadigmCapitalInc.

ParadigmCapitalInc,IIROC/TSXmember3March6,2012

Research Note

Figure 2: EMED Summary NAV

Euro millions DEVELOPMENT ASSETS 100% Rio Tinto (10% DCR) Total OTHER ASSETS Working Capital Proceeds from recent Capital Raising Exploration Properties Cash from Exercise of Warrants & Options Other Total TOTAL ASSETS LIABILITIES Trade Payables & Social Security Contingent Liabilities Other Total TOTAL LIABILITIES

C$ millions

C$ Per Share

$256.3 $256.3

$358.8 $358.8

$0.34 $0.34

$9.7 $10.7 $50.0 $16.7 $0.0 $87.0 $343.3

$13.5 $15.0 $70.0 $16.7 $0.0 $115.2 $474.0

$0.01 $0.01 $0.07 $0.02 $0.00 $0.11 $0.45

$11.8 $70.0 $0.0 $81.8 $81.8

$16.6 $70.0 $0.0 $86.6 $86.6

$0.02 $0.07 $0.00 $0.08 $0.08

NET ASSET VALUE

$261.5

$387.4

$0.37

Long Term Exchange Rate 1.00 US / C$ 1.40 C$ / Euro

Shares Outstanding (MM) 856.45 Basic XCG Shares Warrants / Options Fully Diluted 105.38 90.00 1051.83

Source:Companyfilings,ParadigmCapitalInc.

ParadigmCapitalInc,IIROC/TSXmember4March6,2012

Research Note

Disclaimer Section
1. 2. 3. Paradigm Capital Inc. expects to receive or intends to seek compensation for investment banking services from the subject companies in the next 3 months. Paradigms disclosure policies and research distribution procedures can be found on our website at www.paradigmcap.com. Paradigm Capital research is available on First Call, Reuters or at www.paradigmcap.com. Issued by Paradigm Capital Inc.

Stock Coverage History

3/30/11 Initiating target ($0.50)

Research Rating System Paradigm Capital uses the following rating recommendation guidelines in its research:
Recommendation Buy Buy (Spec) Hold Sell Total # of Companies 146 33 21 6 206 % of B/H/S 71% 16% 10% 3% What our ratings mean: Buy Expected returns of 20% or more over the next 6 to 12 months. Speculative Buy - Expected returns of 20% or more over the next 6 to 12 months on high-risk development or "pre-revenue" companies, such as junior mining and early stage biotech companies. Hold - Expected returns of +/-20% over the next 6 to 12 months. Sell - Expected returns of -20% or more over the next 6 to 12 months.

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ParadigmCapitalInc,IIROC/TSXmember5March6,2012