Tony Locantro Author

Locantro’s Life – speculative investment newsletter

Forward Looking Statements

This Presentation may include statements that could be deemed “forward-looking” statements. Although Gold Australia Pty Ltd (the “Company”) believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those expected in the forward-looking statements or may not take place at all.

No Offer to Sell or Invitation to Buy

This Presentation is not, and should not be considered to, constitute any offer to sell, or solicitation of an offer to buy, any securities in the Companies mentioned and no part of this Presentation forms the basis of any contract or commitment whatsoever with any person. The Company does not accept any liability to any person in relation to the distribution or possession of this Presentation from or in any jurisdiction.

Disclaimer

Gold Australia Pty Ltd (ACN 131 793 416) is an authorised representative of AustAsia Financial Planning Pty Ltd (AFSL 229 454).

Gold Australia Pty Ltd has made every effort to ensure the reliability of the views and recommendations expressed. Gold Australia Pty Ltd research is based upon information known to us or which was obtained from sources which we believe to be reliable and accurate at time of publication. However, like the markets, we are not perfect. This presentation is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular viewer have not been taken into consideration. Individuals should therefore discuss, with their financial planner or adviser, the merits of each recommendation for their own specific circumstances and realise that not all investments will be appropriate for all subscribers. To the extent permitted by law, Gold Australia Pty Ltd and its employees, agents and authorised representatives excluded all liability for any loss or damage (including indirect, consequential or special loss or damage) arising from the use of, or reliance on, any information whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Gold Australia Pty Ltd and AustAsia Financial Planning Pty Ltd hereby limits their liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.

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Disclosure of Interest

Gold Australia Pty Ltd, AustAsia Financial Planning Pty Ltd, its Directors, employees and consultants may have personal interests in the majority of the companies covered in this report (both direct and indirect).

Managing Director of :

◦ Locantro Capital Pty Ltd, a corporate advisory service

◦ Locantro Asset Management Pty Ltd, fund manager to Locantro Speculative Investments Limited - an unlisted speculative fund.

◦ Gold Australia Pty Ltd, publisher of Locantro’s Life - a speculative investment newsletter

Developed an interest in the ASX during employment in the NSW and Qld Police Services

Ex-Associate Director at one of Australia’s largest full service stockbroking and financial services firm, Patersons Securities.

Had major roles in several successful IPOs (IGO and MML) and also assisted other companies with IPOs, capital raisings, corporate advice and on-market support.

Author of The Green Room, The First Complete Guide to Speculating in the Australian Stock Market.

Keynote Speaker/presenter/panellist at industry events (Trading & Investing Seminars & Expo 2012, Gold Coast Resources Showcase, Gold Symposium 2012).

Regular panellist on Sky Business News channel’s Your Money Your Call and guest panellist on Boardroom Radio. (Appearing Tuesday October 23 with Julia Lee and David Hunt)

Quoted in investment publications and newspapers (The West Australian, The Australian, The Australian Financial Review, Resources Roadhouse, Raremetal Blog, Goldseek, BRW Magazine).

About Tony Locantro

Don’t make bets!

Gold would not get to $1,000 US before 2050 - Dec 2005 Ran on 28th March 2008!

1. Removing the stresses in your life

Mirror in the shower when shaving

Same socks

Reverse sensors

Remove the wall of worry so I shaved my head

Becoming a better speculator

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50

100

150

Nov Dec JanFeb

Mar

2011-2012

2010-2011

STRESS LEVELS

2. Get educated!

• The Winning Habits of Warren Buffet and George Soros, Mark Tier

• One Up On Wall Street, Peter Lynch

• Devil Take The Hindmost: A History of Financial Speculation, Edward Chancellor

Becoming a better speculator

3. Buying odd numbers of shares

Instead of 10,000, 50,000, 100,000 shares

buy an odd number Eg. 19,879 or 68,332 etc.

Why? Because it helps when taking profits into strength.

Major issue as an advisor was clients not being able to sell. Fear of a share price going higher and breaking a neat parcel. Not a cure but I found it does help!

Becoming a better speculator

4. Subscribe to my newsletter, Locantro’s Life.

Becoming a better speculator

Very tough two years for those in the junior resource sector, gold and silver juniors not immune. This was despite some positive signs late 2011/early 2012.

Sell in May and go away? Some now replace May with February!

Juniors sold down below cash backing in June/July 2012 which was ridiculous. Some of the most brutal selling I have seen since entering the industry in 1998.

Little or no recognition of management, in-ground resource and growth potential. Fundamentals replaced with a combination of fear and stupidity!

The Speculative Market

The selling in June/July 2012 came from a very low base and for seasoned speculators many already undervalued stocks managed to halve again and then some. Unfortunately when the best buying opportunities arise we are either short of cash,

courage or both!

Then all of a sudden…….

The Big Issue (not the Magazine)

Source: Yahoo Finance

Things got really Sirius

“Fear” transformed into the “Fear of missing out”

Sirius’s share price rocketed (5.7c to a recent high of $2.99)

With this came….

Near-ology (anyone fairly close to the discovery or not so close but looking for the same thing). MAT, BUX, SFX, MEU (6.2c to 29c in South Australia) and more recently BFE.

Fans, promoters and doubters. Heated discussion on the likes of Hotcopper and broking offices. Clear victory for the fans.

Major impact on other exploration stories such as SBR and PEX who reported high-grade hits.

Mini-exploration bubble underway and I would expect the next major discovery to be pounced on. FOMO!

FOMO

Daytrading frenzy has returned. Technical analysis now being applied to the junior resource sector. One of the recent runners PEX was described as “the quietest stock on Hotcopper”.

Forums now buzzing with talk of stocks going to 20c, 50c, $1.00, $2.00, $5.00 and so on. Not hearing of any going to 17.5c, 53.5c, $1.28 or $6.89!

Far too much expectation now being built into some stocks. Major discoveries over the years are very rare (Prominent Hill, Tropicana, Degrussa, Merlin, Carrapateena, Nova. I remember fondly when Ramelius Resources (RMS) in May 2007 announced 48m @ 154 g/t gold. Biggest intersection I have been involved in and the best month of my career!

As lofty expectations are not met we will see traders lamenting losses and moving on.

Observations

Fads aren’t a bad thing for us investors to get involved in, nor do they lack fundamentals, but they often follow the same pattern:

• The sudden bombardment of scary, supply shrinking and demanding increasing rhetoric being preached by newsletter types.

• A sudden staking surge of wannabe mining companies.

• An inflow of institutional money followed by a parabolic rise in stock prices… for 3 to 6 months.

• The fad becomes old news and the money dries up for the pretenders.

• The tried, tested and true mining plays (within the sector) still continue on – just as they were many years before [the product sector hype].

• The pretenders move onto the next fad.

Source: Aaron Hoddinott

Fads

Much like boy bands, investment fads rise quickly and are forgotten just as fast.

Only the true rock stars last……

in music and geology.

Source: Aaron Hoddinott

Fads

Much like boy bands, investment fads rise quickly and are forgotten just as fast.

Only the true rock stars last……

in music and geology.

Northern Star (NST)

Management

Share structure & major shareholders (tell you a lot about the company).

Quality of projects and political risk. (not always a barrier as we saw with West Africa).

Grade and size (low or high, big or small). Sometimes gold juniors grow rapidly from humble beginnings. Some deposits can make massive profits around 1 g/t!

Total production costs.

Enterprise Value (EV) market cap/ ounces in the ground. Some may have low EV’s but the Buckley family of tree of getting it out of the ground!. Use it as a guide only. Remember it is all about costs and profit at least until the blow-off phase where hardly anyone will give a toss!

Growth potential

They say “Good shares are never cheap” It is all about backing the right people, right projects at THE RIGHT PRICE!

What I Look for in Gold Juniors

Spin out from Alliance Resources (AGS) in January 2011 at 25c per share.

Victorian focussed emerging gold producer with an exploration focus in Western Australia (gold-copper).

Own a fully refurbished gold processing facility at Maldon Vic (replacement value of $15m).

JORC-compliant inferred Resources totalling 245,000oz of gold.

Re-processing Kangaroo Flat flotation concentrate tailings (total costs estimated below $650 per ounce).

Ore processing agreement with A1 Gold Mine.

Have had ground issues accessing the Alliance South Deposit.

Permitting delays at Wehla (trial open pit).

Aim to become a 30,000oz pa producer, small start but what growth lies ahead?

Market cap <$20m

Octagonal Resources (ORS)

Kestanelik Project NW Turkey.

Maiden inferred resource of 5.9 million tonnes at 2.4 g/t gold for 462,000

oz gold

70% of the resource is within 50 metres of surface.

The Resource is based on drilling on only 3.5 kilometres of the more than 22 kilometres of veins that have been identified at Kestanelik

Drilling is ongoing and positive results continue to extend gold mineralisation on all the veins, both along strike and at depth.

Interesting board appointments, Morrice Cordiner (previously Andean Resources 10-11c > $8.00) and more recently Robert Reynolds (Ex-Chairman Avoca Resources/Alacer Gold).

What caught my attention was the similarities to Andean and the potential for Kestanelik to grow significantly.

Mightn’t be at a rock bottom price (mkt cap >$60m) and some further success may already be factored in but the result flow has been impressive.

Chesser Resources (CHZ)

The Greg Wilson factor. Greg was a key player in the exploration success of Integra Mining (IGR) at Salt Creek and Majestic.

Share price has struggled, company has suffered due to a lack of cash.

Rights issue at 2c (underwritten to $1m) closed 17 October 2012.

Allotment of new shares expected on 25 October 2012.

Two exciting gold exploration projects, Snake Hill and Northern Zone Deeps. Looking for major deposits!

Strategic landholding (East Kalgoorlie Project tenements). Surrounded by Silver Lake Resources/Integra Ming, Southern Gold.

A small inferred resource of 22,850 ounces of gold at Georges Reward (Blair North Prospect) where mineralisation is similar to Southern Gold’s (SAU) Cannon Gold Resource of 896,000t at 3.3 g/t Au for 94,500 ounces.

Potential to develop into a very heavily traded gold junior on exploration success.

Northern Mining (NMI)

In a Gold Bubble

Key is to find who can cook a roast and hold a conversation, same applies when selecting the right gold stocks!

In a Gold Bubble

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Locantro’s Life