Further re: Independent Technical Review

Weatherly International Plc ('Weatherly' or the 'Company')

Further re: Independent Technical Review and Valuation of Central Operations

Further to its announcement earlier today, the Company wishes to clarify that the net present value estimate for the restart of production at its Central Operations by Coffey Mining of N$297.6 million (US$35 million) was calculated using a copper price assumption of US$5,500/t (approximately US$2.50/Ib).

The full announcement is as follows:

Weatherly is pleased to announce the results of an Independent Technical Review ('ITR') and valuation of its Central Operations (the Otjihase and Matchless Mines) conducted by Coffey Mining (SA) Pty Ltd ('Coffey Mining') as at 28 February 2010.

HIGHLIGHTS

·; Independent technical review by Coffey Mining confirms the robustness of Weatherly's plans to restart production at Otjihase and Matchless.

·; Coffey Mining site visits confirm that both mines have been maintained in good condition and that production can be restarted within six months.

·; Five-year mine plan prepared based on Reserves of 64,934t Cu, with significant upside potential.

·; Average annual production of approx. 7,000 tonnes of copper contained in concentrates over the five year period with production peaking at just over 9,000 tonnes in 2013/14

·; Average unit operating costs over the five-year plan of US$US$3,258/t of copper after all realisation costs and precious metals credits (C1).

·; Initial project capital requirements assuming all equipment is purchased outright estimated at approximately N$76.9 million at current exchange rates.

·; Approximately US$100m of tax losses available to offset against future earnings.

·; Funding package expected to include local equity partners, vendor and trade finance as well as contributions from Weatherly using the proceeds from the sale of assets within Namibia.

·; Coffey Mining estimates a base case NPV10% of N$297.6 million (US$35million) using a copper price assumption of US$5,500/t (US$2.50/Ib) or N$507.4 million (US$67 million) if February 2010 copper prices and exchange rates prevail over the five year period.

·; Payback period of 23 months and IRR of 46% using a copper price assumption of US$5,500/t or 17 months and 63% IRR if February 2010 prices are sustained

Rod Webster, Chief Executive Officer of Weatherly commented:

"The independent technical review completed by Coffee Mining confirms that our plans to restart mining operations at Otjihase and Matchless are robust and that the restart of operations can generate significant returns for Weatherly and its shareholders. Our five year plan has been limited only to verified reserves although Coffey confirms the considerable potential that exists to extend mine life through both the conversion of resources and increased pillar extraction. Coffey notes that each year of additional operation is estimated to increase cashflow by more than US$20 million using conservative copper price assumptions.

The overall operating cost is estimated at US$3,258/t (US$1.48/lb) which represents a considerable reduction from that applying prior to closure. This reflects the reduced overhead, the more selective mine design and reductions in manning as a result of the continuous rosters to be adopted. Another factor is the greatly reduced smelting cost now that the concentrates are no longer treated locally.

The company is now in the process of finalising its funding package for the restart of operations which is expected to include vendor and trade finance, appropriate hedging, and the likely participation of a local empowerment partner. We expect Weatherly's equity contribution to be funded from the proceeds of local asset sales with minimum reliance on the cash generated from the smelter sale."

For further information please contact:

Rod Webster, Chief Executive Officer Weatherly International Plc

+44 (0) 20 7917 2989

Richard Greenfield, Ambrian Partners Limited

+44 (0) 20 7634 4710

EXECUTIVE SUMMARY FROM COFFEY REPORT

Coffey Mining (South Africa) (Pty) Ltd ("Coffey Mining") has been commissioned by Weatherly Mining Namibia Limited ("Weatherly") to undertake an Independent Technical Review ("ITR") and valuation of its Central Namibian mines as at 28 February 2010. The Namibian operations were acquired by Weatherly International Plc in 2006 when it took over Ongopolo Mining and Processing Limited ("OMPL"), which it renamed Weatherly Mining Namibia Limited. Ongopolo Mining Limited ("OML"), a wholly-owned subsidiary of Weatherly, owns the mineral properties and associated infrastructure. 

Coffey Mining is an independent integrated mineral industry consulting firm, which has been providing services and advice to international mining companies and financial institutions since 1987. 

The scope of work for the ITR and valuation is for Weatherly's Central Namibian operations comprising the Otjihase and Matchless mines. Andrew Thomson has constructed a comprehensive plan to restart and operate both Otjihase and Matchless mines. This five-year plan is based on the mineral resources and ore reserves as at the December 2008 closure, and on recently compiled development and production forecasts, manpower requirements, operating and capital budgets, and cash flow model. . This ITR and valuation is based on this five-year plan Coffey Mining understands that it is Weatherly's intention to use the ITR and valuation as a document to present to the Weatherly board to support the re-opening of the mines, as well as a document to promote the mines to potential investors. 

The current mineral resource for Otjihase and Matchless mines is depicted in Table_1. It should be noted that some 5.8Mt of the Otjihase mineral resource is not included in the five-year plan. A significant amount (4.8Mt) of this mineral resource is found in the deeper Tigerschlucht compartment which would require some 3,000m of development to open up the block. Furthermore, the mineral resource at Matchless Western Extension (current mining operation) is open-ended at depth, and there is a historical non-JORC compliant "resource" of 1Mt located in the River, West and East Shoots below the old Matchless Mine, some 1800m to the east of the Western Extension Shoot.

Table 1

JORC Compliant Mineral Resources for Otjihase and Matchless Mines - March 2010

The mineral resources have been converted to ore reserves based on the five-year plan. Modifying factors applied for the resource/reserve conversion are considered by Coffey Mining to be appropriate and based largely on historical mine production data. 

The Ore Reserves of Otjihase and Matchless mines are presented in Table_2.

Table 2

JORC Compliant Ore Reserves for Otjihase and Matchless Mines March 2010

Table_3 summarises the production levels for the first five years, including the pre-production period, assuming that the go-ahead decision is given on 1 April 2010.

Table 3

Life of Mine Production Schedules

The five-year plan is based on a monthly steady state ROM tonnage sourced from Otjihase mine of 35,000tpm or a total ROM tonnage of 1,532,000 tonnes which is well below the Otjihase mineral reserve figure of 3.9Mt. A monthly steady state ROM tonnage of 15,000tpm or a total ROM tonnage of 735,000t is forecasted from the Matchless mine which is slightly (25kt) more than the Matchless mineral reserve.

Table 4 summarises the average unit cost expressed in ROM tonne for Otjihase and Matchless over the life of mine.

Table 4

Unit Working Cost Over the Life of Mine (N$/t ROM)

The average operating cost over the five year plan is estimated at $N410/t ore at the mine gate or, (using base case metal prices and exchange rates) a C1 cost of US$3,258/t (US$1.48/lb) of copper after all realisation costs (smelting and refining) and precious metals credits are taken into account.

The site visit confirmed that both Otjihase and Matchless mines are in good condition requiring minor repairs to get the mine operational; e.g. minor repairs to roadway, repairs to the main pump column below 24-Level, support of the Matchless portal, etc. Weatherly has provided a six month period to undertake the necessary repairs and general upgrades to support the five-year plan. During this period, Weatherly will begin its recruitment process which will be important in order to select appropriate candidates for a multi-skilled workforce.

The concentrator appears in reasonable condition although there is some equipment parts replacement necessary prior to commissioning. Various pieces of plant equipment have been tested during the care and maintenance period to ensure operability. The physical conditions and the management of the care and maintenance programme are regarded as adequate. As the plant previously operated at throughputs above 80,000tpm, at times, over the past 20 years, there is no reason to believe that the predicted ultimate plant throughput performance of 50,000tpm will not be achieved provided that the feed to the plant is as anticipated from the two mining operations.

The installed power capacity at the concentrator is approximately 10.5MW. In the current situation, no fatal flaw is evident. No major problems are anticipated with water management around the concentrator. The recent rainfalls experienced in the area have lead to some road degradation, especially around the tailings dam area and some earthwork reparations are necessary to facilitate access for people and equipment. According to Weatherly there are no mining permit/license issues regarding Otjihase and Matchless mines. Weatherly is aware of the potential environmental impact of the pyrite paddocks and a detailed plan for dealing with these is included in the environmental management plan.

A total capital expenditure of N$61.4M is required for Otjihase mine in the first two years with a further provision of N$8.125M in the following four years for ongoing capital expenditure. Coffey Mining has reviewed the capital requirements for Otjihase mine and is of the opinion that they are appropriate for the current five-year plan.

A total capital expenditure of N$39.9M is required for Matchless mine in the first two years with a further provision of N$8.125M in the following four years for ongoing capital expenditure. Coffey Mining has reviewed the capital requirements for Matchless mine and believe them to be appropriate for the current five-year plan. The latest estimates for the cost of rehabilitation upon closure of the mines are respectively N$0.34 million and N$8.2 million, both in 2008 money terms, for Matchless and Otjihase. Coffey Mining has adopted a very conservative approach by escalating the value by 5% per annum for seven years to arrive at a real term value that needs to be available by 2015. This amount was converted to a unit cost per tonne milled with the assumption that such contributions are made into a Trust as and when such production takes place. For Otjihase the contribution is calculated at N$7.5 per tonne milled and for Matchless N$0.65 per tonne milled. The forecasted operating costs for Otjihase mine is N$406 per tonne milled while Matchless mine has a slightly higher operating cost of N$419 per tonne milled

Table_5 presents the forecast cash flow over a five year period for the Otjihase and Matchless mines. 

The five-year mine schedule supplied by Weatherly has been adopted as realistic. 

Weatherly has used as a base case for the five-year plan the following:

§ Copper (Cu) price of US$5,500/t

§ Silver (Ag) price of US$14.50/oz

§ Gold (Au) Price of US$900/oz

§ Rand:US dollar exchange rate of R8.50:US$1.0

The base case copper price in Namibian Dollars is therefore more than 14% lower than the copper price on 19 February 2010. In Coffey Mining's opinion the base case prices are conservative as long term prices and do not reflect the fundamental change in the cost structure of global mine production, especially considering the decline of the US Dollar over the last few years by more than one third against a basket of currencies. This perception is endorsed by Standard Bank, the largest retail bank of South Africa, which has a forecast copper price of US$7,375/t for 2010 and US$7,900/t for 2011.

Table 5

Forecast Financial Performance of Otjihase and Matchless (in N$ million) for Base Case

Coffey Mining has calculated a Base Case post tax NPV @ 10% (NPV10) of N$$297.6 million and N$507.4 million if February 2010 prices would prevail over the modelled period. 

The results show that the project is very robust. Using a copper price of US$5,500/t and an exchange rate of N$8.50 per US$ would result in a real return (i.e. above inflation) of 46%, which is excellent in particular given that the project has much less risk than Greenfield projects to which much greater uncertainty is attached relating to their input factors. Both Matchless and Otjihase have a clear track record of mining, the deposits are well known, the metallurgy well established and the mines operating cost can be based on historical results.

With respect to operating cost there are opportunities to bring these down, the most important of which is connecting Matchless to the grid.

However, the most important upside to the projects is the additional resources that could possibly be brought into production. At Otjihase there is the possibility to extract reserves that have not been included in the five-year production forecast. Weatherly has based the five-year plan on a very conservative production forecast, mainly because of the difficult nature of pillar mining. It should be noted however, that pillar extraction ratios in the previously-mined Oblique and Hoffnung Compartments exceeded 85%, which is significantly higher than the 62% called in the five-year plan for the Kuruma East and Central pillars. Should these higher extraction ratios be achieved, then mining in the Kuruma East and Central Compartments could be extended by approximately 18 months. Furthermore, only 31% of the TCL pillar resource in the Otjihase Compartment will have been extracted by the end of the five-year plan. Thus there is definite opportunity to extend the production from this mining area beyond five years. It is probable, therefore, that the Life of Mine for Otjihase east of the Kuruma West Fault will be between seven and eight years.

At Otjihase the main shoot continues at depth, albeit at a narrower size and requiring substantial ramping down. It should also be noted that Shoots 2, 3 and 4 have yet to be explored in the Tigerschlucht Compartment and Shoots 3 and 4 remain unexplored in the Kuruma Compartment.

At Matchless, a drift could be developed back to the unmined portions of the ore shoots (River, West and East Shoots) 1800m to east. The drift could also serve as a drill platform to explore for potential shoots in between the original mine and the Western Prospect.

Each additional year of operation at steady state production levels would add, at base case prices and exchange rate, approximately N$181 million to the cash flow attributable to the UK shareholder and N$261 million at the prevailing prices and exchange rate. Discounted such cash flow would mean that Year 6 would add N$101 million for the base case and N$146 million for the prevailing prices case to the NPV10.

Finally, the base case copper price is substantially lower than prevailing prices, which are even lower than the forecast copper price for 2010 and 2011 by an institution such as Standard Bank. Although there is always a possibility that prices could drop for a period, it is unlikely that they would remain long at levels around US$5,500/t without substantially affecting the global supply of copper. It is therefore reasonable to ascribe a value to the project using a higher copper price.