Investor Relations – FAQs

Q: How did an industry newcomer win such a valuable concession opportunity over the established, integrated aluminum companies?

A: Global Alumina was founded by industrial development experts who acted early and decisively on their vision of assisting Guinea to capture the tremendous additional value inherent in processing its rich bauxite resources through development of world-class, green-field alumina refineries. Prior to Global Alumina’s initiative, the established aluminum companies invested heavily in refining capacity elsewhere, including Australia and Brazil, where low-cost expansions were able to serve growing demand. Now that the industry recognizes that additional (higher-cost) green-field capacity will be necessary to serve the future growth, many of these traditional companies, including Alcoa, Alcan, CVRD, Chalco, UC Rusal and Mitsubishi, are considering refinery development in Guinea. Guinea Alumina, however, enjoys a five-year development advantage and the advantage of priority access to existing scarce rail and port infrastructure.

Q: How will Global Alumina fund its share of capital required to build Guinea Alumina’s first alumina refinery?

A: Global Alumina will use the proceeds from the sale of two-thirds interests in Guinea Alumina to fund its future, one-third capital requirements for Guinea Alumina. Global Alumina structured the two-thirds sale so it would retain joint control over Guinea Alumina and realize sufficient proceeds to fund its share of Guinea Alumina’s then estimated $1 billion in continuing capital requirements without having to raise additional capital. If additional capital is required, Global Alumina would make every effort to minimize potential dilution to its shareholders.

Q: Can you provide some indication of value and potential for Global Alumina stock?

A: One value indicator is the price paid by sophisticated investors who have an opportunity to conduct extensive due diligence on the Company, including material non-public information. In the most recent joint venture transaction, each of BHP Billiton and Mubadala paid a price for their joint venture interest equivalent to $2.06 per share. Prior privately placed share offerings for $50 million, $50 million and $20 million were priced at $2.25, $2.00 and $2.00, respectively.

More generally, Global Alumina enjoys five major advantages that contribute to the value and potential of its stock: Access to the world’s largest bauxite reserve in a country favorably disposed to foreign investment; the planned creation of highly efficient, low-cost refineries; strong joint venture partners to support financing and rapid development; flexible alumina sales contracts in place and an experienced management team.

Q: How will Global Alumina sell its one-third share of the alumina production?

A: Global Alumina already has entered into two, 20-year, take-or-pay alumina sales contracts. One is with DUBAL for 15 percent of the refinery’s output or 45 percent of Global Alumina’s ongoing one-third allocation, and one with Glencore for 420,000 metric tons-per-year or almost 40 percent of Global Alumina’s one-third allocation. Alumina pricing is confidential under each contract, but the average price is 13.25 percent of the three-month forward price of aluminum on the London Metal Exchange.

Q: How do you assess and deal with political risks associated with an investment in Guinea?

A: Guinea is less developed politically and legally than many Western countries. It is, however, a constitutional democracy with established institutions that are trending toward greater transparency and accountability. However, Guinea has been trying with World Bank support to induce refinery investment for decades, recognizing the refinery industry as a powerful poverty alleviation tool. These efforts and beliefs, along with the limited precedent of direct foreign investment, means Guinea Alumina’s refinery project is very broadly and deeply supported. It is generally held that a business like this is vital to the country's economy and will improve the lives of its citizens, and thus it is in the best interests of any government or leader to protect that business.

Q: Does Global Alumina have any growth potential?

A: Absolutely. There is evidence of substantially more bauxite within Guinea Alumina’s concession area than the initial phase of the initial refinery will require. Additionally, the infrastructure access advantage Guinea Alumina enjoys offers the opportunity to expand the JV to two refineries with capacity of 4.8 million metric tons-per-year each before our competitors start producing.

Q. What are the major development milestones in the development of the refinery?

A. Because Guinean bauxite is so abundant, high-grade and exists virtually on the surface, Global Alumina does not consider exploration or exploitation of the bauxite ore among its major development milestones. Fundamentally, there are five major pre-construction milestones: (1) concession award; (2) environmental and social approvals to construct and operate; (3) feasibility analysis; (4) finalize construction arrangements and (5) financing; that lead to project construction and then initial alumina production and export.

Global Alumina quite successfully brought its first project through most of the pre-construction milestones. The "concession" in our case encompasses the exclusive right to mine substantial bauxite reserves and to build and operate its new refinery, and also priority access to limited capacity rail and port infrastructure and attractive fiscal incentives. All major government approvals have been granted, and Global Alumina determined feasibility and commenced arranging construction and financing prior to completing the joint venture arrangement with BHP Billiton, DUBAL and Mubadala. Since completion, the parties have agreed to conduct a bankable feasibility study according to BHP Billiton standards, including completion of the construction and financing arrangements, to be completed by the end of 2007. Construction is expected to commence in April 2008 and initial operations in mid-2011.

Q. When will you begin production?

A. Our preliminary plan is to commence production in the year 2011. Currently, Guinea Alumina is conducting, with the support of Bechtel, a bankable feasibility study to be completed by the end of 2007. The final schedule will be determined by this study.

Q. What role does each of the joint venture partners play?

A. Each of Guinea Alumina's joint venture parties plays an important role beyond capital contributions in the company's success. Specifically, each contributes to the management of the company via pro rata participation on its board of directors and via seconding key employees.

BHP Billiton has appointed the CEO, CFO and project director positions. Likewise, BHP Billiton is delivering its extensive development and operational experience and expertise through a technical services agreement. DUBAL and Mubadala bring their professional smelter operations and investment management disciplines as well as their sharp focus on developing and building necessary strategic footholds in bauxite and alumina. Global Alumina brings its professional development expertise and entrepreneurial drive, and has appointed the deputy project director and the general manager of the Guinean subsidiary company.