Cluff Gold Plc - Clf - Broker Recommendation (wh Ireland)

UK EQUITY RESEARCH

25th January 2007

NATURAL RESOURCES

69½p

BUY

CLUFF GOLD PLC* Cluff Begins Development on 2 Key Projects

Target Price Market Cap Index Shares in Issue NAV Net Cash

107p £31.66m Aim 45.55m N/A $21m

Cluff Gold plc (“Cluff”/ “the company”) has begun developing both its Kalsaka (Burkina Faso) and Angovia (Ivory Coast) projects. Cluff has retained the services of Banlaw Africa as its mining contractor, a company which has extensive West African experience and has a client list including Newmont, Goldfields, and AIM Resources. The company has also appointed a Project Engineer.

Performance (%)

Absolute

Aim

1 month:

-9

-11

The Angovia project development has recently been strengthened by the definition of

3 months:

+16

+8

additional resources. Angovia now comprises 330,000 ounces of gold (oz Au), comprising

12 months

-2

+5

High/Low 12 months:

both oxide and sulphide resources of 6.15 million tonnes (mt) at a grade of 1.7grammes per tonne (g/t) Au . The oxide resources which will be first developed equate to 3.7mt at

83 - 57

1.4g/t Au for 170,000oz Au. Mineralisation remains open at depth (i.e. into the sulphide 85

zone) and along strike, meaning that there is the potential for additional oxide resources to

80

be defined in the vicinity of the mineralisation known of to date, which could be processed

75 70

cost effectively as part of this mining plan. Cluff can also ascertain the additional sulphide

65

resources from deeper drilling. A further drilling programme is planned for H1 2007.

60

Jan 07

Dec 06

Oct 06

Nov 06

Sep 06

Jul 06

Aug 06

Jun 06

Apr 06

May 06

Mar 06

Jan 06

Feb 06

55

Last Results

Finals, Sept 5

Next Results

Interims, Feb 07

Next Event

AGM, Oct 19

Reuters/BBG

CLF.L / CLF LN

Drilling has re-commenced at Baomahun, Sierra Leone and the results are the first holes are very encouraging – mineralisation has been confirmed to extend along strike and down dip in the Western Zone.

High grades have been encountered in these new

intersections – in the order of 7m at 5.76g/t Au from 96m depth and 8m at 7.67g/t Au from 139m depth. Cluff has still only explored approximately 25% of this mineralised trend. We anticipate another resource update for Baomahun, following the 880,000 ounce resource inventory, with the focus being upgrading the inferred resources into the

Change in Recommendation

No

indicated category so the company can start a pre-feasibility study in H2 of this year. Cluff’s discovery costs for Baomahun are impressive - less than US$5/oz. We retain our buy recommendation on Cluff, as we believe that the company is well positioned to deliver the markets desire of cash flow from its two smaller projects, whilst maintaining its focus on advanced exploration at Baomahun – the company’s biggest

Analyst

Key Sales Contact

Louise Collinge +44 (0)207 220 1692 [email protected]

project. Cash flow from the Burkina Faso and Ivory Coast assets will be used to progress Baomahun.

Laurie Beevers +44(0)161 819 8724 [email protected]

*WH Ireland acts as NOMAD and broker to Cluff Gold plc. Any research on this company should not be relied on as objective or impartial. This note is intended for institutional investors only and is not for distribution to private clients.

WH Ireland Limited, 11 St James’s Square, Manchester, M2 6WH WH Ireland is authorised and regulated by The Financial Services Authority and is a member of The London Stock Exchange. Important disclosures and certifications regarding companies that are the subject of this report can be found within the disclosures page at the end of this document.

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Summary Cluff Gold listed on AIM on 15th December 2004 with a suite of assets in west Africa. Prior to Cluff Gold, Chairman and CEO Algy Cluff formed Cluff Resources, which was subsequently acquired by Ashanti Goldfields, and then Cluff Mining, which became Ridge Mining. The most advanced project is the Kalsaka project in Burkina Faso (of which Cluff has a 78% interest), approximately 150km north of the capital, Ouagadougou. This deposit has a reserve of 290,000 oz, and nearby potential to increase resources once the plant is developed. The Angovia district has potential for a substantial deposit of near surface, heap leachable oxides. With the plant already on site, this project could provide cash flow for very little investment, and certainly no debt. The Baomahun deposit in Sierra Leone is the company’s key focus as it has the potential to have a large resource inventory. Cluff is currently spending $5m in order to earn a 60% interest in the project, which currently has a resource of 880,000 oz. Cluff also has some interesting exploration ground in Mali which, although early stage, looks prospective. Fig 1: Life Cycle of a Mining Company’s Share Price

Source: Taken from Cluff presentation

We have added the above picture as it illustrates the natural shape of a one project company’s share price graph through exploration, discovery, then ultimately through feasibility, decision to develop to development and production. The point is that Cluff is not a one project company but has four key projects, to ensure that the share price should continue to rise as value is constantly added, through progression of one or more of the projects. WH Ireland

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Angovia, Ivory Coast The Angovia project is located within the Mt. Yaoure permit area, which is 40km northwest of Yamoussoukro, the political capital of the Ivory Coast. The project contains the old Angovia Gold Mine, which was in production from 1998 until 2003. The mine reportedly produced over 180,000 oz of gold from heap leaching 2 million tonnes of oxide material. There is much artisanal activity on the site now. Infrastructure is good as there is a HEP dam 6km from the mine site. Cluff has a 90% interest in the Angovia project, which it acquired in late 2004 from the previous owners COMINOR, a subsidiary of the French uranium company, COGEMA. This acquisition included COMINOR’s technical database and plant. The Mt. Yaoure permit consists of the Birimian age units (approx 2.2ba), consisting of mafic metavolcanics, felsic volcanic intrusions and minor conglomerates, which are intruded by ultramafic and calc-alkaline plutonic intrusions. Locally, the geology has been hydrothermally altered and intruded by dyke swarms and larger intrusions. The rocks have been affected by local and regional folding. Weathered lateritic material overlays the stratigraphy, and is the source of the oxide deposits. The actual orebody is a quartz vein which varies from 3 to 10 metres in width. The known mineralisation is open along strike and at depth. Mineralisation appears structurally controlled as opposed to lithologically controlled and relates to sheared and brecciated zones within intermediate volcanic rocks. There appears to be a series of these veins, in a linear trend, some of which occur within the oxide layer. Cluff currently has a resource of 330,000 oz, a recent 70% increase – the result of an independent resource estimation undertaken by Ankobra Resource Services, and reported by SRK. This resource update has put an additional 25% of the resources into the indicated category.

This increase has resulted from the drilling programme of 2006

which has defined the resources in 4 target areas, all within 2km from each other. The plant, which Cluff already owns, will be located in an area central to resources. We feel it acceptable in the short term to assume the oxides are heap leachable, as that was the processing method for the 5 years in which the mine was in operation. COGEMA experienced recoveries of 80% with its heap leaching operations. The oxides are crucial as this means the company should be able to cheaply process the material and should be able to commence production without requiring project finance, thereby generating cash flow. The sulphides (essentially a continuation of the oxides at depth) will form a different project, with a more complex and capital intensive plant. We feel the company should focus on exploring more potential near surface oxide resources.

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Table 1: Angovia Resources (lower cut-off 0.5g/t Au, upper cut-off 20g/t Au)

Resource Characteristics

Resource Category

Tonnes (millions)

Grade (g/t Au)

Ounces Au

Oxidised

Indicated

2.78

1.4

130,000

Inferred

0.93

1.4

40,000

Sub-total

3.71

1.4

170,000

Indicated

0.87

2

60,000

Inferred

1.57

2

100,000

Sub-total

2.44

2

160,000

Indicated

3.65

1.6

190,000

Inferred

2.5

1.8

140,000

Total

6.15

1.7

330,000

Sulphide

All Material

Source: Company data / WH Ireland research

Kalsaka, Burkina Faso The Kalsaka project is Cluff’s most advanced, having a completed bankable feasibility study.

The project is located approximately 150km north west of the capital,

Ouagadougou. Cluff owns 78% of Kalsaka, with 12% held by IMARB and the government has a 10% free carried interest. The licence area forms a folded greenstone belt (the “Birimian Series”) area between 2 granitic intrusions.

Outcropping gold mineralisation has been identified at several

locations within the licence area, but there have only been two areas drilled in detail, therefore only two areas have been included in the feasibility work. These areas are highlighted in red on the diagram (overleaf). The two pits closer to the south form the Kalsaka Hill Orebody, while the 2 smaller pits in the north (750m north of Kalsaka Hill) are the K-Zone Orebody. The total measured and indicated resources at both Kalsaka Hill and the K-Zone are 10.9 million tonnes at 1.5g/t gold, equating to 500,000 oz, and a further 2.8 million tonnes of inferred resources at 1.1g/t for 100,000 oz.

As inferred

resources cannot be converted to reserves, the measured and indicated resources converted to reserves of 290,000 ounces of gold. These reserves comprise near surface, oxidised deposits which are heap leachable. Cluff has began development at Kalsaka, and has appointed Banlaw Africa Ltd as the mining contractor, and will look into financing options for the project, some portion of which will be debt.

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Fig 2: Kalsaka Mining Area

Source: Company data / WH Ireland research

Although Kalsaka may be a small project financially, it remains of interest in terms of potential upside. The schematic diagram, Fig 2 shows the site, with the red areas being pits defined in the BFS. The blue areas are additional prospects of interest, along the same strike as the open pits (therefore the company has prior geological understanding) which will soon be explored with a view to adding resources in the area, and commissioning a plant with additional capacity so as to enable production to be increased. We believe there is the potential for the company to define resources in these neighbouring discrete areas. Fig 3: Kalsaka and Yako Permits

Source: Company data / WH Ireland research

In addition to the prospects around the Kalsaka project, Cluff has also been granted the exploration licence immediately to the south of the Kalsaka belt, and already has a resource of 150,000oz on its Koupela Nagsene prospect, Yako permit, therefore adding credibility to the prospectivity of that belt. The company also has 5 additional target areas along the same belt to further explore.

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Baomahun, Sierra Leone We believe Baomahun represents Cluff’s “company maker” project.

A site visit has

demonstrated the potential to define further resources based on the strike length, a good geological understanding and a sensible exploration programme. Cluff’s Baomahum project is located 180km due east of Freetown, the country’s capital. The site is accessible by roads, of which over half the journey is on good asphalt roads. Currently there is diesel generated power on the site but a visit showed pylons leading most of the way towards the project. These pylons were erected in conjunction with a major hydroelectric dam project which was put on hold due to the civil war over the past decade.

There are hopes that this project will be re-instated, therefore there is the

possibility that cheaper power will be provided to the project area. The project comprises 2 exploration licences, Baomahun and Victoria, both of which are in the name of Winston Mines Limited. Cluff has the right to acquire a 60% interest in these licences, through spending US$5m or completing a bankable feasibility study, which ever is earliest. The company has currently spent over US$3m, so is well on the way to completing the transaction. respectively.

The licences cover an area of 51.8km

2

and 85.5km2

The company is looking to consolidate its land holding on the Kangari

greenstone belt. There is considerable history of gold and gold production in the area. Gold was first discovered in the area in the 1920s. A small amount of mining was undertaken during that time, but there are no records for this. In the 1960s the Sierra Leone Geological Survey explored the area, undertaking soil sampling and drilling. A variety of companies also looked at the project throughout the 1970s and the early 1980s and mapping, further drilling and trial mining took place during this time.

Winston Mining obtained the

exploration licences in 1985 and between that time and 1993, an adit was driven into the deposit and fan drilling was undertaken.

The operations ceased in 1993 as rebels

destroyed the site during the country’s civil war. Activity in the area recommenced by Winston Mines in 2004, when the company re-entered the adit, and took channel samples at 1 metre intervals along the adit walls. This adit has been of the utmost importance to the exploration team, as it has enabled the company to essentially visualise the centre of the deposit. As fan like drilling was undertaken at the end of the drive, this area has been classed as “indicated” in terms of the company’s resource statement. The adit was visited on the recent site visit and the trenches, drilling, and mineralisation were seen. Another notable point is the large number of artisanal miners panning for gold in the thin layer of surface oxides covering the bedrock deposit. Geologically, much of Sierra Leone is underlain by Archaean terrain, comprising granites, gneisses and sedimentary rocks, which form the West African Craton. The Baomahun Project is located in the Sula Mountain/ Kangari Hills Greenstone Belt, which consists of folded and sheared metasediments and metavolcanics. These form the country rocks of WH Ireland

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the deposits. The localised geology consists of a variety of schists – these have been identified and logged by the field geologists who identified the transition in and out of more dominant minerals, and include biotite-quartzite schist, cordierite schist, garnet-mica schist and garnet cummingtonite schist – banded iron formations (BIF) which tend to be interlayered within the schists, and amphibolites (i.e those rocks which have undergone a more intense metamorphism). The geological team on site have developed a good understanding of the controls on mineralisation. They note a BIF association with gold mineralisation, but only in BIF areas where the rocks have been structurally distressed, meaning either along the contacts with BIF and schist, or where the BIF has been internally sheared. This appears to have encouraged gold deposition. The gold is not necessarily found within the BIF layers, but where there is gold mineralisation there are usually BIF units in the vicinity. Gold is always associated with the presence of sulphides, and more specifically, is either associated with arsenopyrite and/or pyrrhotite. The company now only begins assaying for gold when the geologists see the first signs of sulphides coming into the core, as they know from experience there will be no gold prior to that. Fig 4: Airborne Magnetic Map

Source: Company data / WH Ireland research

There are 3 discrete zones which have been initially targeted by the company for drilling and resource estimation. These are, the Eastern Zone, the Central Zone and the Western Zone. The company flew airborne magnetic geophysics over the 2 licences, and this has identified the BIF units (see figure 1) within the area, and therefore has given the company a clear focus on future exploration. The geophysics map also shows the locations of the WH Ireland

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three zones currently with resources. In addition it shows the areas which have been soil sampled (these have also been trenched now), and it also shows the areas to be soil sampled next year. The Eastern Zone - 12 holes have been drilled in the eastern zone. This was the first area targeted by the company as it contains the adit previously described. In this zone it is the presence of pyrrhotite which influences gold mineralisation, but in addition, it is the amount of arsenopyrite which drives the gold grade. The whole area has a resource of 380,000 oz, but 40,000 oz are classified as indicated due to the drilling pattern and level of understanding in and around the adit area. Fig 5: Baomahun Core, Eastern Zone

Source: Analyst’s photograph

A recent drill hole for this area, DDH47 has one particular mineralised intercept of 16m grading on average 20.16g/t Au (see picture opposite).

Interestingly, this drill hole has

also revealed another mineralised horizon below the one already known about, which is interpreted to be part of an en echelon array of structures forming along the same strike. The Western and Central Zones – 17 holes have been drilled in each zone. The controls on mineralisation are the same as for the eastern zone, i.e. BIF and sulphide association, however, gold mineralisation is more closely associated with the presence of arsenopyrite in the central zone than pyrrhotite. Cluff has recently drilled in between these two zones and interpretation to date is that mineralisation between these two zones is continuous. Cluff has interpreted that all three zones are on the same structural trend and that the rocks are folded in between the Central and the Eastern Zones. WH Ireland

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A report was written in 1992 for Harry Winston, entitled “Characterisation of an ore sample from the Baomahun Gold Deposit: Chemistry, Mineralogy and Metallurgical Testwork”. Importantly, the study concluded that 95.2% of the gold is free milling. It also stated that approximately 95% of the gold could be recovered by a variety of standard processing routes – including gravity concentration and cyanidation. The company will undertake metallurgical work in the near future, but we believe that this document is a good endorsement of the metallurgy for the time being. The company’s exploration plan involves systematic soil sampling, followed by trenching, parallel to the line of soil samples, with 2 trenches per soil sample line. It is from these trenches that drill targets are defined. The company is steadily progressing north with the soil and trench samples, with the area north of the Western Zone currently being trenched. Further north the company has been soil sampling, and has identified areas suitable to trench. This exploration plan is simple but effective:- stick within the BIF areas (generated by airborne geophysics), soil sample, trench, drill, in a continuous progression moving north. Because of this, we feel the project is being well managed, and there is scope for additional resources to be defined along the length of the BIF belt. The drilling in 2006 has resulted in the definition of a further 362,000, an over 70% increase on the previous resource for the project, which now stands at 880,000 oz, with an average grade of 3.2g/t Au. The drilling programme comprised 4400m of diamond drilling, and comprised the results from holes DDH029 to DDH048. Table 2: Baomahun Mineral Resources

Resource Class

Resource Area

Tonnage

Grade (g/t Au)

Ounces Au

Indicated

East

240,000

5

40,000

Inferred

East

2,080,000

4.8

320,000

Inferred

Central

2,210,000

3.9

280,000

Inferred

West

4,120,000

1.9

250,000

Total Indicated

East

240,000

5

40,000

Total Inferred

All areas

8,410,000

3.1

840,000

All Categories

All areas

8,650,000

3.2

880,000

Source: Company data / WH Ireland research

The results of 3 recently drilled holes have been released. These holes have confirmed the along strike and down dip extent of mineralisation in the Western Zone – which when combined with the knowledge that only 25% of this mineralised belt has currently been drill tested, is highly encouraging. Exciting intersections are as follows: 7m at 5.76g/t Au WH Ireland

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from 96m depth, 8m at 7.67g/t from 139m depth and 8m at 1.38g/t Au from 80m. Cluff expects a second diamond drill rig to arrive on site in February, which will speed up the 30,000 planned metres which we believe will lead to both an increase in the resource inventory, plus an increase in the confidence category into more measured and indicated resources. Cluff hopes to initiate a pre-feasibility study into Baomahun in H2 2007.

Karbasso, Mali Fig 6: Karbasso Licence

Source: Company data / WH Ireland research

Mali represents Cluff’s grass roots exploration. The company has signed a JV agreement with Kadiel Mining, in which it has a 90% interest in the Karbasso licence area, situated in southern Mali, close to the Ivory Coast. The concession has been carefully selected as it is along strike, on the main mineralised belt in the country, from Resolute’s 5m oz Syama mine, and Etruscan Resources permit, the drilling of which has returned some good intersections.

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Peer Group Comparison Table 3: Comparable Companies

Country

Listed

Share price (US$)

Sierra Leone, Ivory Coast, Burkina Faso, Mali

AIM

1.35

61,420,400

21,000,000

40,420,400

1,443,000

28.01

Sierra Leone

TSX/AIM

0.23

67,235,000

1,800,000

65,435,000

1,400,000

46.74

Equigold

Ivory Coast

ASX

1.22

209,781,000

45,200,000

164,581,000

3,494,900

47.09

Perseus Mining

Ghana, Ivory Coast, Kyrgyzstan

ASX

0.38

33,930,000

4,680,000

29,250,000

949,000

30.82

Burkina Faso Ivory Coast, Mali, Niger, Burkina Faso, Ghana, South Africa

TSX

1.36

180,888,500

24,780,000

156,108,500

3,660,000

42.65

TSX

3.31

333,429,500

22,601,500

310,828,000

2,325,000

133.69

Ivory Coast

TSX

3.29

679,558,000

10,000,000

669,558,000

11,000,000

60.87

Axmin

CAR, SL

TSX

0.85

142,562,000

7,578,000

134,984,000

3,327,000

40.57

Goldbelt Resources

Burkina Faso

TSX

0.96

56,737,500

11,168,000

45,569,500

1,138,000

40.04

Semafo Inc

Burkina Faso

TSX

1.63

313,590,500

32,366,000

281,224,500

4,947,400

56.84

Avnel Gold Mining

Mali

TSX

0.77

42,933,500

2,017,000

40,916,500

1,334,000

30.67

Company

Cluff Gold Mano River Resources

Orezone

Etruscan Golden Star Resources

Market Capitalisation (US$)

Cash (US$)

Enterprise Value (US$)

Attributable Resources (oz)

EV/ Resource Ounce (US$)

Source: Company data / WH Ireland research * Data as of 25th January 2007

The above table contains details of companies active in the West African region. The average EV per resource ounce of the peer group is US$51. The table clearly shows that when considering EV/ resource ounce, Cluff is undervalued in comparison to its peers. If it were to be valued at the mean EV/resource ounce this would equate to £1.07 per share. This is based on current resources and does not take into account exploration potential in the large strike extent of Baomahun, the potential in the Kalsaka and Angovia areas, and the grass roots area in Mali.

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West Africa Sierra Leone – Sierra Leone has recently emerged from a 10 year civil war which began in 1991 when the Revoltionary United Front (RFU), led by former army corporal Foday Sankoh, campaigned against the then President Momoh. The UN intervened in 1999, but the civil war was officially declared over in 2002. During the war, diamonds were being used in exchange for arms from Israel, and were referred to as blood or conflict diamonds. The country is working towards reconstruction, and the extraction of natural resources, namely diamonds and gold, has helped the post conflict economy. Sierra Leone has long been well regarded as prospective for diamonds and gold, and in the last few years the country has begun to encourage foreign interest in the industry again. Companies such as Sierra Leone Diamonds, Mano River Resources, Axmin, Sierra Rutile, Koidu Holdings, African Diamonds, Argyll Resources, in addition to Cluff, have all been active in Sierra Leone – an endorsement on the improving political situation. Ivory Coast – The Ivory Coast was formerly seen as the most stable and wealthy country in west Africa. This changed in 2002 when a civil war began. For the 30 years prior to this the country was renowned for ethnic diversity with harmony, and its well developed economy. The civil war has divided the country in 2 – the government controlled south and the rebel controlled north. The northern muslims, including many immigrants from Burkina Faso and Mali who have long lived in the country working in agriculture, especially cocoa farming, began to feel they were politically disadvantaged.

Fighting has now

stopped, but the situation remains tense, and a buffer zone between the north and the south is maintained by the UN. Disarmament has not yet begun. Cluff’s Angovia project is well within the government controlled south of the country.

Regarding mining, the

country has favourable geology and a robust mining code, dated 1995, which encourages foreign investment. Randgold and Ashanti are active in the Ivory Coast in conjunction with several juniors, including Etruscan Resources, Equigold, and Golden Star Resources. Burkina Faso – Burkina Faso remains one of the poorest countries in the world. The country’s economy is reliant on cotton production.

It has significant gold resources.

Droughts continue to affect the country, and desertification causes problems for farming. The country has been linked to the conflicts in neighbouring countries, including accusations of involvement in diamond smuggling by rebels in Sierra Leone.

Many

Burkinabes have a history of working in the Ivory Coast but relations are strained as the Ivorians have accused Burkina Faso of backing rebels in the north of the country. Burkina Faso has in turn accused the Ivory Coast of mistreating Burkinabes who live there. Regarding mining, there is a modern mining law, 2003. There are exploration companies operating in Burkina Faso, including AIM resources who has an advanced zinc project in the country. Other active mining/ exploration companies in the country are High River Gold, Orezone, Etruscan, Goldfields and Randgold.

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Mali – Mali is relatively under-explored and is a stable multi party democracy (since 1992) with a modern mining code. These factors lead it to be an attractive country for gold mining and foreign investment. The country is known historically for gold production. Many companies are active in Mali, including Randgold Resources, Anglogold Ashanti, Glencar, IAMGold, Resolute Resources, Nevsun Resources and Avnel Gold Mining. Fig 7: Cluff’s Countries of Operation

Source: Company data / WH Ireland research

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Directors and Management Algy Cluff, Chairman and CEO – Mr Cluff has been involved in the natural resources industry for over 30 years. In 1972 he formed CCP to bid for North Sea oil licences, and then subsequently Cluff Oil Ltd which acted as the management company for CCP. He then founded and was chairman of Cluff Resources.

From the early 1980’s, Cluff

Resources became focused on mineral exploration in Africa and was eventually acquired by Ashanti in 1996. Mr Cluff then formed Cluff Mining, now Ridge Mining and was with the company until he resigned in 2004. He formed Cluff Gold in 2003. Nicholas Berry, Non-Executive Joint Deputy Chairman – Mr. Berry is chairman of Stancroft Trust Ltd, and a number of other public companies. He joined the Cluff group in May 2004. Edward Haslam, Non Executive Joint Deputy Chairman – Mr. Haslam was CEO of Lonmin from 1999-2004. He qualified as a metallurgist whilst working for British Steel. He then joined Falconbridge in 1978.

He worked in various international marketing positions

before being appointed by Falconbridge to Western Platinum Ltd as Marketing Director. In 1997 he was appointed Managing Director of Lonplats and subsequently appointed to the Lonmin board in 1999. He joined Cluff Gold in May 2005. Douglas Chikohora, Technical Director –

A Chartered Engineer with over 20 years’

experience in the mining industry. His experience covers rare earth minerals and base and precious metals with various companies including Cluff Resources, which he joined in 1987 and where he was in charge of the exploration and development of the Ayanfuri mine in Ghana. After the acquisition of Cluff Resources by Ashanti Goldfields in 1996, Mr Chikohora joined Cluff Mining plc (now Ridge Mining plc) in June 1996 before being appointed managing director of Cluff Mining (West Africa) Limited, responsible for its West African gold interests. He joined Cluff Gold plc in January 2004. Charles Lutyens, CFO – Mr Lutyens was formerly Managing Director of Rio Tinto India and Head of Project Finance for the Rio Tinto group. He has extensive knowledge of project finance and business development in emerging economies and has worked in natural resources for over 20 years. He has in depth experience of working in partnership with investors, banks, governments, multi-lateral and donor institutions and has negotiated a significant number of financings, joint ventures, acquisitions and investment agreements with host governments. Mr Lutyens also advises a group of governmental donor agencies, including the UK's Department for International Development (DFID) on issues affecting private sector investment in developing country infrastructure. Eileen Carr, Non-Executive Director – Ms. Carr is a qualified accountant and has over 20 years experience in finance in the resources sector. She was previously Finance Director of Cluff Resources until the Ashanti acquisition, after which she continued to work for the parent company. She also worked for Marc Rich (now Glencore) and has held various WH Ireland

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other corporate financial roles in resources companies. She is an Executive Director of Monterrico Metals, and CFO of Alexander Mining. She joined Cluff Gold in November 2003. Bobby Danchin, Non Executive Director – Mr Danchin is a geologist and a chemist. He recently retired from Anglo American where he was CEO of the exploration and acquisition department and group deputy technical director.

He is a Non Executive

Director of Gold Mines of Algeria. He is also a director of the South African Council of Geosciences and a member of the Australian CSIRO Mineral Resources Sector Advisory Council. He joined the group in May 2004. Tim Wadeson, Non Executive Director – Mr Wadeson is a mining engineer. He was the group technical director of Anglo American having worked there from 1993-1999, and prior to that he was Technical Director of Minorco. Mr Wadeson is a Non Executive Director of Mwana plc and Highland Gold. He joined Cluff Gold in May 2004.

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Disclosures WH Ireland Recommendation Definitions Buy Expected to outperform the FTSE All Share by 15% or more over the next 12 months. Outperform Expected to outperform the FTSE All Share by 5/15% over the next 12 months.

Share Price Target The share price target is the level the stock should currently trade at if the market were to accept the analyst’s view of the stock and if the necessary catalysts were in place to effect this change in perception within the performance horizon.

Stock Rating Distribution

Market Perform Expected to perform in line with the FTSE All Share over the next 12 months.

Recommendation

Underperform Expected to underperform the FTSE All Share by 5/15% or more over the next 12 months. Sell Expected to underperform the FTSE All Share by 15% or more over the next 12 months. Trading Buy Expected to rise by 15% or more in absolute terms within 3 months Trading Sell Expected to fall by 15% or more in absolute terms within 3 months

Total Stocks

Percentage

Buy Outperform

6 25

10% 40%

Market Perform

26

43%

Underperform

4

7%

Sell

0

0%

Total

61

100%

This table demonstrates the distribution of WH Ireland recommendations. The first column illustrates the distribution in absolute terms with the second showing the percentages.

Conflicts of Interest Policy This research is classified as being “non-objective” as defined by the FSA’s Conduct of Business Rule 7.16.5.

Speculative Buy The stock has considerable level of upside but there is a higher than average degree of risk.

Please refer to www.wh-ireland.co.uk for a summary of our conflict of interest policy.

Analyst Certification The research analyst or analysts attest that the views expressed in this research report accurately reflect his or her personal views about the subject security and issuer. Furthermore, no part of his or her compensation was, is, or will

Disclaimer This research recommendation is intended only for distribution to market counterparties and intermediate customers as defined under the rules of the Financial Services Authority and is not directed at private customers. This note contains investment advice of both a general and specific nature. It has been prepared with all reasonable care and is not knowingly misleading in whole or in part. The information herein is obtained from sources which we consider to be reliable but its accuracy and completeness cannot be guaranteed. The opinions and conclusions given herein are those of WH Ireland Ltd. and are subject to change without notice. Clients are advised that WH Ireland Ltd. and/or its directors and employees may have already acted upon the recommendations contained herein or made use of all information on which they are based. WH Ireland is or may be providing, or has or may have provided within the previous 12 months, significant advice or investment services in relation to some of the investments concerned or related investments. Recommendations may or may not be suitable for individual clients and some securities carry a greater risk than others. Clients are advised to contact their investment advisor as to the suitability of each recommendation for their own circumstances before taking any action. No responsibility is taken for any losses, including, without limitation, any consequential loss, which may be incurred by clients acting upon such recommendations. The value of securities and the income from them may fluctuate. It should be remembered that past performance is not necessarily a guide to future performance. For our mutual protection, telephone calls may be recorded and such recordings may be used in the event of a dispute. Please refer to www.wh-ireland.co.uk for a summary of our conflicts of interest policy and procedures.

WH Ireland

be directly or indirectly related to the specific recommendation or views expressed in this research report.

Companies Mentioned * see table 3, page 11 Share Price Date/Time Company Name

Recommendation

Price

Price Date/Time

Buy

73p

09:30 25/01/2007

Cluff Gold

Summary of Company Notes N/A Summary of Security Recommendations N/A

*Current Analyst (CA), Previous Analyst (PA)

16

NATURAL RESOURCES

Contacts Chief Executive Laurie Beevers 0161-832-2174 [email protected]

Small & Midcap Sales Gary Marshall 0113-346-2852 [email protected]

Deputy Chief Executive Head of Corporate David Youngman 0161-832-2174 [email protected]

Peter Morrison 0113-346-2854 [email protected]

Head of Research Matthew Davis 0113 346-2847 [email protected] Natural Resources Louise Collinge 0207-220-1682 [email protected] James Picton 0161-819-8855 [email protected] Philip Haydn-Slater (Sales) 0207-220-1667 [email protected] Small & Midcap Research Keith Ashworth-Lord 0113-346-2847 [email protected]

Rachel Newton 0113-346-2850 [email protected] Sales Trading Nick Beardsmore 0113-346-2840 [email protected] Sonia Hough 0113-346-2856 [email protected] Gabby Wray 0113-346-2842 [email protected] Les Ames 0207-220-1686 [email protected] Research Assistant Gill Randall 0113-346-2841 [email protected]

Liz Burrows 0113-346-2849 [email protected] John Cummins 0113-346-2844 [email protected] Matthew Davis (Head of Research) 0113-346-2847 [email protected] Emerging Companies Anne Margaret Crow 0121-616-2101 [email protected] WH Ireland Limited 11 St James’s Square Manchester M2 6WH T: 0161 832 2174 F: 0161 839 5706 www.wh-ireland.co.uk

WH Ireland is a member of The London Stock Exchange and is authorised and regulated by The Financial Services Authority.