View
365
Download
1
Category
Tags:
Preview:
DESCRIPTION
Day 1- Session 3: Precious Metals Sector Objective Capital Global Mining Investment Conference 2010 Stationers' Hall, City of London 28-29 September 2010 Speakers: Arthur Vestey - Cheviot Asset Management Saul Singer - Fusion Alternatives Murray Nye - RX Exploration Angelos Damaskos - Sector Investment Managers Lts
Citation preview
GLOBAL MININGINVESTMENT CONFERENCE 2010
STATIONERS’ HALL ● CITY OF LONDON ● TUESDAY-WEDNESDAY, 28-29 SEP 2010www.ObjectiveCapitalConferences.com
Investment Conferences
Gold & Silver OutlookArthur Vestey – Investment Manager, Cheviot Asset Management
Investing in Physical DiamondSaul Singer – Chief Investment Officer, Fusion Alternatives
Gold & Silver Production in North AmericaMurray Nye – CEO, RX Exploration Inc.
Gold DynamicsAngelos Damaskos – Fund Manager, Sector Investment Managers Ltd.
DAY 1 - SESSION 3: PRECIOUS METALS SECTOR
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
33
Gold & Silver Outlook
Arthur Vestey
Cheviot Asset Management
28th September 2010
4
10 Year Gold & Silver
GOLD SILVER
Source: Bloomberg
5
Why Silver ?
6
The History of Silver
7
Gold/ Silver Ratio 2007-2010
Source: Bloomberg
8
Silver Usage
“Silver is the best technology stock you can own” David Morgan
9
Gold/ Silver Availability
10
Gold & Silver Bubble?
11Source: Bloomberg
Gold vs NASDAQ Secular Bull Market Comparison
12
Diminishing Marginal Productivity of Debt in the US Economy (in Dollars)
“You can’t bail out debt with debt”
13
USD Purchasing Power 1971-
14
1966: “In the absence of the Gold Standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value... deficit spending is simply a scheme for the
confiscation of wealth. Gold stands in the way of this insidious process.”
2009: “The rise in gold and silver is strictly a monetary phenomenon and is an indication of the very early stage of an endeavour to move away from paper currencies’.”
2010: “Fiat money has no place to go but gold…If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal
mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”
Alan Greenspan Quotes
15
Current View
Silver Equities, 30%
Bullion, 40%
Gold Equities, 30%
- Central Fund of Canada [CEF.US]
- Market Cap $1bn + - Mainly small/ mid cap
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
Fusion AlternativesInvestment Diamond Specialist
Legal Disclaimer This presentation contains certain forward-looking information. This
information is based on current expectations and assumptions that are subject to a variety of risks and uncertainties that are difficult to predict. Actual results could differ materially from those expressed in any forward-looking statements. Fusion Alternatives assumes no obligation to update these forward-looking statements as a result of new information or future events.
The information presented within this presentation is subject to change without notice. The information is presented as promotional material, Fusion Alternatives holds no responsibility to the accuracy of the information nor shall be held liable for any use, distribution or implementation of this information.
Fusion Alternatives does not intend to provide investment advice through this presentation. The information in this presentation is not to be construed as an offer to buy or sell, or the solicitation for an offer to buy or sell any security or asset. The presentation is for information purposes only and does not constitute a complete service or performance.
Content Executive Summary Industry overview Diamonds as an alternative investment asset class Barriers to entry Fusion Alternative products About Us Contact information
Executive Summary1. Prices of investment diamonds set to remain strong
into near future – 14%-17% absolute annual returns.
2. Diamond industry far ahead of other commodity or alternative investment markets in terms of pricing and liquidity.
3. Fusion Alternatives offers clients a suite of products facilitating a professional, discrete and efficient exposure to investment diamonds.
INDUSTRY IN TRANSITION The diamond industry has undergone tremendous
change and development over the last decade.
Shift from being a supply controlled to a demand driven industry
Transition creates unique opportunities for new ideas/ paradigms to emerge.
Diamond Pipeline
Mining Costs
$6b
Rough Diamond
Production
$12b
Sales to Manuf.Sector
$14b
Polished Exports
From manuf.Sector
$20b
Finished DJ in Wholesale
Market
$35b
DJRetailSales
$70b
Significant value addition
Sources: FA & Idex
Supply Side: Rough Diamond production Heavily Concentrated80% of global production controlled by 5 major
players. No world class discovery made this decade.High concentration levels will continueNo significant rise in production in the near-term.
Demand > supply for larger, better quality diamonds. Diamond production growth low-to-mid digit range in terms of carats 10%-12% in terms of value
Rough Diamond Production Outlook
020406080100120140160180200
0
5
10
15
20
25
30
00 02 04 06 08 10(e) 12(e) 14(e) 16(e)
(Ct M
il)
($b)
Production by value - $ billion Production by quantity - carats million
Demand side Global demand has trended upwards for the last 7
years. Demand growth > production growth. Trend somewhat mitigated by inventory stockpiles held by
major producers Stockpiles now diminished to minimum working levels
Demand Drivers Growing emerging market demand (Gulf, Chindia and Turkey,). High-end jewellery market Internet sales
Global Retail DJ Sales – Demand Side
$56 $58$54 $55 $57
$61$65 $68
$73$78
$66$74
$80$85
$0
$20
$40
$60
$80
$100
($ B
illio
ns)
The whole picture: Supply vs. Demand
Source: RBC, Rio Tinto, De Beers, FA
-10%
-5%
0%
5%
10%
-35%
-25%
-15%
-5%
5%
15%
25%
35%
00 01 02 03 04 05 06 07 08 09
10(e
)
11(e
)
12(e
)
Dia
mon
d D
eman
d G
row
th
Dia
mon
d Pr
oduc
tion
Gro
wth
Diamond Production Growth Diamond Demand Growth
Diamonds as an investment asset classPortable and liquid store of wealth
Stable and accepted monetary value
Traded on numerous physical and screen exchanges around the world
Increasingly standardized pricing & gemological characteristics
Obstacles to the emergence of investment diamonds - solutions Price Transparency Standardized and globally accepted pricing mechanisms, indicators
and benchmarks (e.g. Rapaport Price List) Existence of large physical and virtual/online open secondary
markets
Liquidity Sophisticated global primary physical markets – NY, Antwerp,
Mumbai, Tel Aviv, Dubai. Online ‘screen trading’ markets Annual trade in dealer market $4b
Standardization of asset classes Independent Gemological Laboratory Grading Reports
Investment Diamonds Polished diamonds with the highest ranges of
homogeneous gemological characteristics. (Round Shape, 1-4ct size, D-H colour, IF-VS2 clarity, +Very Good make, GIA/HRD/GCAL certified)
No strong correlation with other investment class.
Relatively non-volatile price movements
Inelastic downward price sensitivity.
Diversification
Diamonds DJ-Gold Russell Global
Wine
Diamonds 1
DJ-Gold 0.91 1
Russell Global 0.52 0.47 1
Wine 0.94 0.97 -0.35 1
Based on 10 years of monthly data
Price Movements
0
50
100
150
200
250
300
350
400
450
Jan-01Jul-01Jan-02Jul-02Jan-03Jul-03Jan-04Jul-04Jan-05Jul-05Jan-06Jul-06Jan-07Jul-07Jan-08Jul-08Jan-09Jul-09Jan-10Jul-10
Inde
x Ja
n '9
1=10
0
Diamond Price DJ Precious Metals Russell Global DJAIG
Investment Diamond Price Expectations
Investment diamonds increased by 20% and 38% in 2007 and 2008 respectively.
Down 12% in 2009 and up 18 percent YTD.
Demand set to outstrip supply into medium-term.
Expected natural price growth rate of investment diamonds into medium-term is 14%-18%.
How To Invest In Diamonds Investors looking for an exposure to investment
diamonds currently have two choices:
1. Purchase shares of diamond miners2. Directly purchase and hold diamonds
Purchase Diamond Mining Equities -Disadvantages Most of the major diamond mines are small parts of the
global mining conglomerates so no significant gearing to diamond price.
Buying shares of small independent producers as a point of entry exposes investors to significant political, topographical and operational risk.
Equities are an imperfect substitute for exposure to the underlying commodity. Diversification benefits are reduced as the equities are correlated with broader share markets.
Direct Purchase of Diamonds -Disadvantages Investor is not an expert, very technical industry so investor
might purchase diamonds with inferior investment grade characteristics
Investor has to directly arrange for insurance and storage, which can be quite expensive
Limited portfolio effect as most investor will not be able to purchase large quantities of stones with diverse characteristics
Relatively illiquid for non-industry participants -hard for individual investor to sell at a good price
Emergence of Professional Investment Diamond Market Over the last 2 years there has been a number of
diamond funds launched. Predominantly European based ETF funds. Respective investment managers have erred in
product development. Key to successful diamond investment product is
PRICE TRANSPARENCY & LIQUIDITY
Pricing and Valuation of Polished Diamonds There are thousands of categories of gem-quality polished
diamonds. The Investment Managers will invest in investment grade
diamonds which are grouped into homogeneous categories based on gemological features of the diamond.
Most investment grade diamonds have traditionally been valued in the dealer market by an extrapolation off a generally accepted Price List – i.e. the Rapaport Price List.
The emergence of deep and liquid B2B trading platforms has introduced real-time pricing and valuation data for polished diamonds.
Pricing transparency for polished diamonds is far more advanced than other alternative asset classes which are actively traded for investment purposes (e.g. Art, Wine, Rare Coins, Uranium)
Fusion Alternatives – Breaking the Barriers to Entry Fusion Alternatives is the only investment manager
specializing in diamonds as an alternative investment asset class.
Fusion Alternatives has created a number of different products giving clients a professional, discrete and efficient exposure to investment diamonds.
Products & Services
Managed accounts Private viewings and sale of special investment diamonds Fund Online investment diamond buying platform Investment diamond trading desk Research
About Us No other investment management team specializes in
diamonds.
Management team fuses experience garnered from professional and investment services together with unprecedented experience within the diamond industry.
Fusion Alternatives’ Advisory Committee consists of leading figures from financial, commodity and diamond industries.
Sound Bites1. Prices of investment diamonds set to remain strong
into near future – demand to continue to outstrip supply.
2. Diamond industry far ahead of other commodity or AI industries in terms of pricing and liquidity. All the pieces of the puzzle exist.
3. Diamonds are set to emerge as a true alternative investment asset class in near future.
4. FA is positioning itself to capitalize on these developments.
Fusion AlternativesTelephone #1: +44-(0)207-183-0244 (UK)
Telephone #2: +1-954-762-7639 (USA)
Email: saul@fusionalternatives.cominfo@fusionalternatives.com
Website: www.fusionalternatives.com
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
September 2010
Safe HarbourThe following presentation may include certain “forward-looking statements” within the meaning of the United StatesPrivate Litigation Reform Act of 1995 and applicable Canadian Securities Laws. All statements, other than statements ofhistorical fact, included in the presentation, including, without limitation, statements regarding potential mineralizationand reserves, exploration results, and future plans and objectives of RX Exploration Inc., are forward-looking statements.Words such as “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “intend”, “believe” and other similar expressionsare forward-looking statements. Forward-looking statements are not guarantees of future results and conditions butrather reflect our current views with respect to future events and are subject to risks, uncertainties, assumptions andother factors, and actual results and future events could differ materially from those anticipated in such statements. Therecan be no assurance that such forward-looking statements will prove to be accurate.
Some of the important factors that could cause actual results to differ materially from our expectations are disclosedunder the heading “Risk Factors” and elsewhere in documents filed from time to time with the Canadian provincialsecurities regulators. We base our forward-looking statements on information currently available to us and we do notassume any obligation to update them, except as required by law.
An additional Cautionary Note to Investors – In the event that we use certain terms in this presentation, such as“resource”, “measured resource”, “indicated resource” and “inferred resource”. U.S investors are cautioned that, whilesuch terms are recognized and required by Canadian Securities Laws, the United States Securities and ExchangeCommission does not recognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unlessthe determination has been made that the mineralization could be economically and legally produced or extracted at thetime the reserve determination has been made. U.S. investors should not assume that all or any part of measured orindicated resources will ever be converted into reserves. In addition, “inferred resources” have a great amount ofuncertainty as to their existence and as to whether they can be mined legally or economically. Accordingly, informationconcerning descriptions of mineralization in this presentation may not be comparable to information made public bycompanies that are subject to the SEC’s Industry Guide 7.
46
High Grade Gold and Silver Producer
– Cash flow positive, no debt, no gold or silver hedge
– High-grade gold and silver production from the Drumlummon Mine in Montana US (100% owned).
– Mine opened in May 2010, forecasted production of 15,000 ounces gold equivalent to December 2010.
– Expected production in 2011 of 50,000 ounces of gold equivalent.
– Fully permitted 1,000 ton per day mill leased by RX currently operating at 180 tons per day, ramping up through 450 tons per day in Q1 2011.
– Goal is to increase production beyond 1,000 tons per day mine and mill rate
– Aggressive exploration drill program has identified multiple gold and silver veins on the property.
– Current NI 43-101 resource of 70,703 ounces Au and 1,915,560 ounces Ag (September 2009).
• NI 43-101 resource: 155,518 tonnes grading 15.6 grams per tonne Au, and 422 grams per tonne silver
47
Marysville, Montana is located 25 miles North-West of Helena, Montana’s capital city.Contact Mill, Philipsburg, 114 miles by road southwest from Marysville
Location of Mine and Mill
Drumlummon Mine
Phillipsburg Mill
Helena
48
USA
- Year round access by paved roads- Grid power at mine and mill- $15 million spent in past two years opening mine.
Marysville, MT
Drumlummon Mine
Patented Ground
Staked Claims
1 km
N
Bald Butte Mine
The property consists of 48 patented mining claims and 132 staked claims totaling 2,680 acres
Drumlummon: Property Map
49
Drumlummon Vein
Frankie Vein
North Star Vein
400 Level Adit
Empire Vein
N
500 metres
Charly VeinD Block
Xmas Vein
St Louis Vein
9-hr Workings
Castletown Vein
Drumlummon: Known Veins
0
200
400
600
800
1000
1200
1400
1884
1889
1894
1899
1904
1909
1914
1919
1924
1929
1934
1939
1944
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
2009
History of the Drumlummon Mine
1876: Drumlummon deposit discovered by Thomas Cruse.
1883 - 1910: Montana Co. puts mine into production with two shafts and 25 miles of drifts down to 1,600 foot level. Loses claim dispute in 1901 and floods mine.
1910: Montana Co. loses claim dispute. Closes mine.
1910 - 1929: St Louis Company achieves minor production.
1941 - 1951: Montana Rainbow Co. restarts production in 1946. Mill burns down.
2007: RX consolidates all land claims, initiates surface drilling, completes NI 43-101 report. Begins underground rehabilitation of old workings on 400 foot level.
2008: Charly Vein system discovered
2010: RX reopens the mine
51
Price of gold in USD
Development Progress 2009 - 2010
52
Press Release Date
March 2009 Water discharge permit granted by Montana DEQ, completing necessary permits for mining.
December 2009 Water treatment plant commissioned. Dewatering of mine begins.
April 2010 Ramp accesses Charly vein system. Samples include 2.3 metres of 107.2 grams per tonne gold and 1,904 grams per tonne silver
May 2010 RX leases gravity floatation mill – Starts production at 90 tons per day
July 2010 June production of 1,206 ounces of gold and 33,717 ounces of silver (90-180 tons per day)
August 2010 July production of 1,378 ounces gold and 20,981 ounces of silver (182 tons per day)
53
Development Progress (cont.)
Today - 400 level haulage drifts and ramps fully operational for mining – over 500 ton per day ore and waste capacity
By September 2010, 18,432 metres of drilling and three hanging wall drill stations completed
Water pump/treatment plant dewatering mine at 100 ft depth per month.Mine currently dewatered to below 600 level.
Charly Vein
Milling Progress
Existing mill 114 miles from mine accessible by paved highway ($20.50 per ton hauling cost)
1,000 ton per day capacity in two circuits including crusher, regrind mills, gravity and flotation circuits
1.5 million tons of tailings space currently available at the mill site
$30,000 per month plus per ton milling fee
Operating at 180 tons per day in August (accelerating to 250 tpd in September)
To date RX has processed 10,000 tons of ore from Drumlummon
54
Mill Recoveries
− Mill recoveries on gravity circuit: 92%− Mill recoveries on floatation circuit: 90%− Dore bar refinery charge: 1%− Float concentrate smelter charge: 8%
*These numbers are before Net Smelter Return Royalty average at 2%
55
56
Continuous Mining and Milling ScheduleTons per
DayTons in Period
Grade Au Eq (opt)
Grade Au Eq (gpt)
Ounces RecoveredOunces*
Sept. 2010 225 4,500 0.40 13.7 1,800 1,489
Q4 2010 270 21,870 0.40 13.7 8,784 7,264
Q1 2011 450 40,500 0.40 13.7 16,200 13,397
Q2 2011 450 40,950 0.40 13.7 16,380 13,546
Items Costs
Mining $70/ton
Milling $55/ton
Transportation $21/ton
Capital Costs: (15 months)Mining -Milling -Drilling -
$4.0 Million$2.0 Million$3.0 Million
* Assumes all recovery, refinery and NSR charges
Selected Drill Results to Date
57
Drill Hole From (m) To (m) Width (m) Gold (g/t) Silver (g/t)
Charly Vein
DDH 08-05 119.5 121.4 1.8 37.8 1,081
DDH 08-15 122.9 125.8 2.9 44.1 1,393
DDH 08-26 123.8 125.6 1.8 33.5 350
DDH 08-28 143.2 145.5 2.3 51.8 381
DDH 08-29 1.2 3.6 2.4 9.9 1,821
DDH 09-102 73.2 76.8 3.7 41.1 573
D-Block
DDH 09-111 9.7 16.5 6.8 21.1 58
DDH-10-115 7.0 12.5 5.5 16.7 57
DDH 10-120 4.3 12.3 8.0 19.8 45
DDH-10-123 29.9 32.3 2.4 26.6 317
Exploration – Surface Drilling
58
Drill Stations
Company has planned 1,280 metres of drilling from two surface drill pads in Phase I of surface program
59
Exploration – Underground Drilling (8,000 metres)
Plan View 800 Level 3 Dimensional View
Company has planned 60 drill holes from drill station #9 - not all shown here - for a total 8,000 metres (Phase 1 & 2)
N
Drill Station #9
Proposed Drill Holes
450’ level
800’ level
Other Property TargetsOnly 5% of property has been explored
60
Patented Ground
Staked Claims
1 km
N
Bald Butte Mine
Bald Butte – Surface Drilling
61
600 ft level400 ft portal 400 ft level
Albion Vein600 ft portal
Genesse Veins RXBB Site 1
RXBB Site 2 400 ft level
800 ft level 600 ft level
anomalous gold inquartz-flourite brecciaat 1000 ft level
RXBB Site 3
RXBB Site 4
Proposed Drill Site RX EXPLORATION NBALD BUTTE PROJECT
Old Workings DRILL HOLE TARGETSnot to scale
Target Areas 2010
Phase I - 1,250 metres
Exploration Drill Program (Phase I & II)
62
− Drilling to be completed in Q1 2011− Phase I & II underground drilling to target Targeting Charly vein, X-mas
vein, Drumlummon vein, and Castleton vein− Phase I surface drilling to target Targeting Empire vein, Drumlummon
North vein and Frankie vein− NI 43-101 report for Drumlummon Mine to be updated in Q1, 2011
Drilling Metres Cost
Phase I Drilling
Underground 4,000 $332,000
Surface 2,530 210,000
Phase II Drilling
Underground 4,000 332,000
Surface 3,470 288,000
Total 14,000 $1,162,000
Permitting and Community RelationsRX has received all permits and exemptions required for
production:
o Approval of exploration license including water discharge by the Montana Department of Environmental Quality
o Approval of small miner exemption which permits the company to mine so long as surface operations do not exceed five acres
o Approval of the alternative mine rescue capabilities by the U.S. Mine Safety and Health Administration
63
o Approval of the ventilation, escape and evacuation plan by the U.S. Mine Safety and Health Administration
RX has been conducting regular Town Hall meetings to encourage community involvement and has addressed all of the concerns of the people of Marysville
The RX Exploration Team
Management
CEO: Murray Nye – Co-founder, director, principal of Venbanc, Inc., an investment and merchantbank specializing in the structuring and financing of start-up companies; provides follow-upfinancial and management advisory assistance.
CFO: Max Polinsky, B.Comm – Co-founder, director and principal of Venbanc, Inc.
Director of Mining Operations: Mike Gunsinger – Mike was employed for 40 years by PatrickHarrison and Co., underground mining contractor, servicing major mining companies such as Incoand Noranda, and the US Military. Established his own underground contracting company and hasbeen active in Utah and Montana.
Consulting Mine Geologist: Ben Porterfield – Ben leads a team of geologists at theDrumlummon mine. He was formerly a geologist for Kennecott, focused on their Terra goldproject in Alaska.
Board of Directors
John O’Donnell (B.A. Econ, L.L.B.) ChairmanMurray NyeMax PolinskyBill Fisher (P.Geo.) Former Chairman, Aurelian Resources and VP Exploration, Boliden Ltd.John Ryan (CGA) President, Spruce Ridge ResourcesEdward Ellwood (MBA) Management ConsultantPaul Teodorovici Property Management Consultant 64
Share Capital
RX Exploration was recently listed on the TSX Venture Exchange and began trading on August 4th, 2010.
Listing TSX-V
Symbol “RXE”
Recent share price1 CAD $0.55
52 week low–high CAD $0.165–$0.65
Shares outstanding 111.4 million – basic
198 million – fully diluted
Market capitalization CAD $61.3 million
Cash recently raised CAD $7.9 million
Share ownership
RX Management (~20%);
Spruce Ridge Resources (~10%)
Funds (May 2010) Sprott Asset Management
(4.6% basic or ~ 5.1% fully diluted)
1 As of September 14th, 2010
65
RX Exploration: Why Invest?
– Cash flow positive, no debt, no metals hedge
– Production of 15,000 ounces gold equivalent in 2010, 50,000 ounces gold equivalent in 2011
– High grade gold and silver with average grade 14 grams per ton gold equivalent
– Aggressive 14,000 metredrilling program to expand 43-101 resource
– Exploration of adjacent properties
66
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
Sector Investment Managers Ltd
JUNIOR Mining fund
Gold dynamics presentation
SEPTEMber 2010
Historical background to the credit crunch
Productivity gains during the last decadestimulated global economic growth
Shift of wealth to Emerging Markets in energyand commodities super-cycle
Risk taking was encouraged whilst slack controlby regulators failed to detect fraud
Large high-profile cases (Madoff, AIG) but alsomillions of small scale fraud
Sentiment change in 2008 Real estate and related financing was exposed first dragging financial institutions
down
Domino-effect triggered run on banks by speculators causing long-term investors tosell
Collapse of Lehman triggered massive de-leveraging and flight to US Dollar
Share prices were decimated and all equities were affected
Gold assets sold-off too in the rush for liquidity
Gold would have performed differently had it not been for this liquidity crunch as theworld faced collapse of the banking system
Uncle ben to the rescue? US FED threw unprecedented amounts of money at problem banks
It also provided massive liquidity into the system
The FED led other governments in raising stimuli packages
Result was that the world was saved of banking collapse but state debt rose todangerously high levels
One way out is a gradual devaluation of the crisis currencies through printing ofmoney
The US Dollar, British Pound and the Euro look set to suffer
Current situation
Money has low cost – liquidity is ample
With interest rates close to zero the cost of staying out of the market is high
Investors are keen to recover last year’s losses
Corporate profits have exceeded estimates because of cost cutting, not top-linegrowth
Fundamental problems persist in the economy:
Unemployment at levels not seen for decades Banks’ commercial loan book looks worrisome FDIC says number of troubled banks 416, the highest number in 15 years FDIC’s “contingent loss reserves” fell 30% to $10.4bn in just three months
All above factors are favourable for gold
Gold price drivers
Investors need alternative store of value to money
Traditional demand stalwarts, jewellery and industrial fabrication suffer byweak economy
Investment demand is soaring:
ETFs have surged in value; Evidence of Chinese buying mounts Russian, Indian and Bangladesh Central Banks have been reported buying WGC reported in July that in 2009, for the first time since 2000, central banks
became net buyers of bullion
Gold bullion, derivatives or equities?
Gold bullion is on a rising trend
ETFs track its price, less costs but there are many variants
Gold mining shares offer operational gearing
A gold miner operating at $700/oz makes $600/oz profit selling gold at $1,300
If gold rose to $1,600, gold bullion or ETFs would rise by 23%
The gold miner cited above would increase its profit by 50%
Growth in cash flow and profits could cause its share price to rise significantly more
The most important factor is such a strategy is to minimize stock-specific and otherrisks
Junior miningoeic focusing primarily in gold mining
Diversified portfolio of smaller gold miningshares
High conviction strategy focusing in a maximumof 40 holdings
Seeks large resources in safe political areas
Daily traded FSA-authorised OEIC offering aneffective allocation tool
Net Asset Value of £32.5 million as at 27.9.10
Avoid pure exploration risk Large resources that can be acquired at a reasonable price No serious environmental problems Experienced, proven management team Little or no debt and no hedging Strong cash flow on a PCF multiple below the average of
peer group Increasing production with reasonably long life Low cost per ounce produced Prospective resource – open at depth and along strike
HOW DO WE INVEST IN smaller GOLD SHARES?
How to invest and important notices
For dealing/inquiries on Junior Mining call Marlborough Fund Managers Ltd tel: 0808 145 2501 Junior Mining is eligible for SIPPs and ISAs For further info and documentation visit:
www.juniormining.co.uk
Risk Warning: This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. The value of shares can go down as well as up.
Opinion expressed whether in general or both on the performance of individual securities and in a wider economic context represents the views of Sector Investment
Managers Ltd at the time of preparation. They are subject to change and should not be interpreted as investment advice. Sector Investment Managers Ltd and Marlborough Fund Managers Ltd are authorised and regulated by the Financial Services Authority
Other sponsors & participating organisations:
GLOBAL MININGINVESTMENT CONFERENCE 2010
Lead sponsors:
Media partners:
Recommended